How many people are out of a job due to relocation and flooded offices, etc?
I imagine that some bigger companies will relocate some of their essential divisons to other offices around the nation. Non-national companies with their only offices in NOLA will probably relocate to the surrounding area if they can. Smaller mom-and-pop operations are going to have to work the hand-out circuit until they can either find a new job, set up a new place of business, or move-in with family/friends etc.
Assume worst-case scenario: The area is gone. Uninhabitable. Renamed "Katrina Bay". 500,000 people displaced.
I still don't think it will be that bad. The hand-outs will ease the recovery, for sure. Businesses will set up shop elsewhere. People will move to other cities.
In fact, it could be a good thing if the rebuilding is done by area companies. If a mega-corp (like Halliburton, fuck them and their fucking fuck fucky fuck shit piss cock) gets the contract, it's going to be a huge money hole like Iraq. But if you give all that rebuilding money to local companies, you could rebuild the regional economy as well as the city itself.
It's a chain-reaction: Hire thousands of workers to rebuild the city and clean it up. Bring in cooks to cook for them. Bring in stores for them to get food and supplies at. Build the schools and universites and bring them in, etc etc etc.
It's going to be a big down-payment, but if Bush doesn't fuck it up, this could be a blip on the economic radar. Rebuild New Orleans as the city of the future or something.
Summary: Go New Deal-style on this. Put money in to jobs, not corporation pockets.