Credit Crisis Threatens Katrina Recovery

NEW ORLEANS (AP) - There are major worries in New Orleans over
what a prolonged recession and tight credit market will do to the
city's long and arduous recovery from Hurricane Katrina.
The big loser would be the city's commercial sector, not the
projects slated for federal funding.
A lack of sufficient credit would smother not just companies
trying to start up or expand, but also any new jobs that would come
about.
That would cut off the flow of cash that developers need to
build new homes and first-time homeowners need to buy them. And it
would make it tough for the city to sell bonds to finance
rebuilding projects on its appointed timeline.
A real estate expert calls the idea "terrifying."

(Copyright 2008 by The Associated Press. All Rights Reserved.)