I worked as an intern in the office of the mayor of Detroit during the riot summer of 1967, and I know what happened to that city during the riot and after. The riot destroyed some commercial strips, but the high crime that persisted for years afterward resulted in the emptying out of large parts of the city, the destruction of the value of commercial and residential real estate, and a population drop from 1,670,000 in 1960 to 900,000 in 2004.
Something similar has been going on recently in New Orleans. The population of the central city declined from 484,000 in 2000 to 462,000 in 2004 -- one of the biggest percentage declines in the nation. It seems unlikely that many of the small wooden houses in neighborhoods dominated by the criminal underclass will be habitable after the waters recede, nor will it be worth anyone's money to rebuild them. New Orleans may suffer a population loss similar to Detroit's in a much smaller period of time.
The suburbs are more likely to be rebuilt, and the gambling casinos and the historic structures of the French Quarter and the Garden District will be, too, to the maximum extent possible. The tourist trade, which has recently been New Orleans' biggest employer, will likely revive, and the city's great restaurants will likely reopen.
But New Orleans' heritages of upper-class complaisance and political corruption -- the result of the city's French tradition -- work against a more broadly based commercial and economic revival. Without changes in these attitudes, historic New Orleans may revive, but the city will become little more than a theme park, like Venice, and not the great commercial beehive it once was.