NATION, Page 21Now, the Financial AftershocksThe cleanup may top $10 billion, and the whole U.S. will payBy George J. Church/Reported by Hays Gorey/Washingon andLee 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.
