TIME: Almanac 1993/TIME Almanac 1993.iso/time/110689/p21

Text File | 1992-09-23 | 7.3 KB | 137 lines

                xz╞                                                          NATION, Page 21

Now, the Financial Aftershocks


The cleanup may top $10 billion, and the whole U.S. will pay

By George J. Church/Reported by Hays Gorey/Washingon and Lee
Griggs/San Francisco


     At 5:04 p.m. last Tuesday, precisely a week after the
devastating earthquake, church bells pealed throughout San
Francisco to mark the city's survival and recovery. But a few
churches declined to join in the commemoration, which had been
requested by Mayor Art Agnos, because the reverberations from
the tolling might have brought cracked belfries tumbling down.
About 90 minutes after the clangor of the bells died out came
the ominous rumbling of yet another aftershock, one of thousands
that have done little discernible damage but are likely to keep
rattling the nerves of residents for weeks.

    The sequence was almost too patly symbolic of the situation
of San Francisco and its surrounding Bay Area. On the surface,
the city had almost returned to normal. By subway under the bay,
by ferry across it and by circuitous routes around the area, the
vast majority of employees found their way back to reopened
businesses, despite the continuing closure of the San
Francisco-Oakland Bay Bridge and two freeways. The colossal
traffic jams that planners feared never developed. Tons of
rubble from collapsed walls and shattered windows had been
hauled off by a fleet of dumptrucks that came from as far away
as Palo Alto (35 miles). Virtually all San Francisco streets
were open, though yellow tape still closed off hundreds of
sidewalks adjacent to cracked buildings that might yet collapse.
The World Series resumed Friday night at Candlestick Park, and
even the tourist business showed signs of revival. To prepare
for a meeting of 5,000 plastic surgeons, the Moscone Convention
Center was forced last week to evict 1,000 homeless people, who
were shifted to Army barracks in the Presidio and to the
helicopter carrier U.S.S. Pelileu, which served as a floating
dormitory. By apt coincidence, the Society for Traumatic Stress
Studies held its convention, as scheduled, in San Francisco
last week.

    But the area was speckled with damage that will take weeks
or even months to clean up and repair. The shattered portion of
the I-880 freeway in Oakland will have to be torn down, and the
Embarcadero Freeway, a double-decker that skirts downtown San
Francisco, is riddled with cracks in the support columns.
Officially, it is supposed to reopen next spring, but one
structural engineer who has examined it says, "I'd never go
back on that s.o.b. again. No matter how much they shore it up,
there is no way to make it safe." Pier 45, the city's main
fishing pier, was closed because inspectors found deep fissures
running the length of the pier floor. With no alternative pier
to sail from, the 150-boat commercial-fishing fleet has been
idled just as the herring and Dungeness crab season was about
to open. Other damage ranged from cracks in the paving of the
main runway at Oakland International Airport to the rotting of
125,000 crates of strawberries at Watsonville, in the South Bay
area, spoiled when electrical failure knocked out refrigeration
equipment. And somewhere in Oakland 200 snakes and lizards,
including a 6-ft. python, are at large, having escaped from
twisted cages at the East Bay Vivarium. Fortunately, none are
poisonous.

    The quake was far and away the costliest natural disaster
in U.S. history in terms of dollars -- thankfully, not lives.
The confirmed death toll reached 64, and seems very nearly
complete. Only six people are still listed as missing; probably
only one or two bodies, if any, remain to be dug out of the
mangled cars on I-880. More than 3,000 people were injured and
14,000 made homeless. Estimates of property damage, however, are
rising rapidly. The unofficial tally hit $7.2 billion last week,
and is expected to top out somewhere between $10 billion and $12
billion -- enough to produce a financial aftershock that will
reverberate throughout California and the country.

    Only about one in five Bay Area homes was covered by
earthquake insurance, and generally for only 85% to 90% of its
value. (Earthquake insurance can cost as much  as $800 a year
for a $200,000 house.) Jack Byrne, chairman of Fireman's Fund,
figures that insurers will eventually shell out $2.5 billion to
repair earthquake damage. They stand to recover perhaps
two-thirds of that from international reinsurers -- Lloyd's of
London is the biggest -- which protect insurers against
catastrophic losses. Still, the earthquake claims, coming less
than a month after the devastation caused by Hurricane Hugo,
could set off a chain reaction. Reinsurers might become
reluctant to continue backstopping American insurers, which in
turn would write fewer policies and raise premiums -- and not
just on earthquake insurance.

    California, where America's tax revolt began in 1978 with
Proposition 13 rolling back property levies, will have to
consider a tax boost. The state has begun payments out of a $1
billion emergency fund, but Governor George Deukmejian does not
intend to drain that fund, and even if he did, more would be
required. The Governor is expected to call the state legislature
into special session in another week or so to decide how much
more relief is needed and how to pay for it. It is hard to see
how any significant amount could be made available without a
hike in either sales or gasoline taxes. Deukmejian, who has
taken a Bush-like antitax position, said last week that such a
boost  "would be a last resort."

    In Washington Congress quickly passed, and President Bush
signed, a measure making $3.4 billion available to disaster
victims, mostly in California; $2.85 billion of that will be
new money. Legislators pointedly exempted the relief funds from
the spending cuts mandated by the Gramm-Rudman-Hollings law,
but, in a somewhat surprising burst of honesty, agreed to count
them as part of the budget deficit. Though New York Democratic
Senator Daniel Patrick Moynihan asserted that the relief money
will have to be made up by cuts in other programs, that is most
unlikely, and no one in Washington will even whisper the T word.
Most likely, the $3 billion, and more that California lawmakers
warned they will request later, will be financed by simply
running the money-printing presses a bit faster and making the
budget deficit larger and more intractable.

    One way or another, and at whatever cost, the earthquake
damage will be repaired. The bigger question is whether the Bay
Area's prosperity will be affected over the long term. Though
the region's economy is still growing, at least since 1983 it
has fallen behind that of the Los Angeles area, and the Bay Area
has lost relative importance as a financial, insurance and
manufacturing center. It is too early to tell whether the
earthquake will affect that trend, especially since the Los
Angeles area is equally, if not more, vulnerable to the fearsome
Big One.

    The Bay Area quake, officially known as the Loma Prieta
Quake after a mountain perched almost atop the epicenter, was
retrospectively upgraded last week to 7.1 on the Richter scale,
vs. an original 6.9. Big all right, but still not the Big One.