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The fundamental truth of New Orleans is that it was a disaster waiting to happen - by geography (most of the city being below river level) - by construction (the design oversight in the maximum load capacity of the base of the drainage walls) and by correction (the dredging and civil work by the Corp of Engineers that eliminated all the natural accumulation areas in the South Louisiana coast). Add a hurricane and human nature (betting this one was like all the rest and would just blow over) and you have the disaster on the Southern coast that Katrina left.
But the point that I want to make is that the tragedy was compounded by the desire to control more than anything - meaning that no one wanted (or still wants) to cede control of their little part of that world. When you look at the city, parish, state and federal agencies - who runs the show? The answer is that no one really does, everyone just wants to hold on to their part of the pie and let the others be dammed. And that, more than any other reason, is why New Orleans is in the situation that it is in today.
But the question that you have to ask is - who would you trust to handle such a job? Do you seriously want the Federal Government to have the power raze what is left of the city, declare Eminent Domain and confiscate the ruined properties and auction them off to the highest bidder? That might be the best option to bring the city back to life (and to establish areas too unsafe to be rebuilt), but who wants that degree of power in one person?
No one in the State government of Louisiana is going to be given that power with all the local politics involved and no one from a local level seems to have enough moral authority to lead such an endeavor. And given the outrageous demands of the politicians from LA after the flood for funds, who is going to be trusted to administer that amount of money?
This was a Great Fire of London moment - a time to rebuild and rationalize something that was destroyed. Sadly, that moment has passed, and no one was there to be the Wren or Hooke of New Orleans to restore the city. It would have been nice to see more leadership in the rebuilding effort - but in the end, given the byzantine complications of local political structures - what do you expect?