(Adds details, quote) By Jeff Franks and Russell McCulley NEW ORLEANS, Aug 29 (Reuters) - New Orleans rang bells and threw wreaths of remembrance into its waterways on Wednesday to mark the second anniversary of Hurricane Katrina, the powerful storm that devastated the historic city and killed more than 1,400 people. Memorial events took place across the U.S. Gulf Coast where Katrina came ashore on Aug. 29, 2005 and caused an estimated $80 billion in damage in the costliest U.S. natural disaster. New Orleans Mayor Ray Nagin choked with emotion at a groundbreaking ceremony for a memorial to the Katrina dead. He and Army Gen. Russel Honore, who ran the Katrina military relief effort, rang bells, as did many of the 200 people attending the ceremony, at 9:38 a.m., the moment Katrina's massive storm surge broke through levees and flooded the low-lying city. "We move on and we fight for the existence of this city," Nagin said. "And as we recover, we're never ever, ever going to forget those who lost their lives." "We ring the bells for hope that the promise that was made in Jackson Square will become a reality and restore confidence in government at all levels," he said in an apparent dig at President George W. Bush, who was in town with first lady Laura Bush to mark the anniversary. Bush famously made a nationally televised speech from Jackson Square in the French Quarter promising federal aid after days of chaos in the flooded city. Many feel he did not deliver because New Orleans still has only 60 percent of its pre-storm population and thousands of homes and buildings sit damaged and deserted. Across the Gulf Coast, nearly 62,000 families, some of them victims of Hurricane Rita which struck Louisiana and Texas three weeks after Katrina, still live in government-provided trailers, the Federal Emergency Management Agency said. Bush, in remarks at a newly reopened school in the Lower Ninth Ward, the impoverished neighborhood that was wiped out by the storm, defended the government's performance. He said $114 billion in federal money had been allocated to the storm-stricken area and New Orleans looked much better than it did on his previous visits. "This town is coming back, this town is better today than it was yesterday and it's going to be better tomorrow than it was today," Bush said. "It's one thing to come give a speech in Jackson Square, it's another to keep paying attention whether or not progress is being made. And I hope people understand we do, we're still paying attention," he said. He went on to neighboring Mississippi, whose coastal towns were badly damaged by Katrina and are still recovering. In the hard-hit New Orleans neighborhood of Gentilly, City Councilwoman Cynthia Hedge-Morrell threw a wreath with flowers into the still waters that two years ago raged through the city. The canal is contained by floodwalls that, like others in the city, failed under a surge of water from Lake Pontchartrain. After the storm, studies found the levee system had been poorly constructed. Breaches allowed water to flow in and flood 80 percent of the city. Many residents who did not evacuate were trapped in their attics and on their roofs as the water rose. "In memory, let's ring our bells at 9:38 when our levees broke, a man-made catastrophe," Hedge-Morrell said. About 70 people walked from the Industrial Canal levee breach that swamped the Ninth Ward to Congo Square near the French Quarter where heavy rain quickly ended their protest against insufficient government aid programs. "We want our money," read one of their signs. "I see a lot of stress and depression. You see it in people's faces. Some people still aren't back in their homes," said protester Albert Bell, 68. Nagin gave a $1 million check from the city to help build the Katrina memorial, which will be a series of walkways in the spiral form of a hurricane and will include a mausoleum for the unclaimed bodies of more than 100 Katrina victims. Sandra Brown, 62, who lives near the memorial site, said she went to the groundbreaking ceremony to remember the dead. "I'm sad because the neighborhoods haven't progressed too much and I'm saddened by the loss of lives. Overall, it's a sad day," she said.
