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WEBMISTRESS speculates:
This song was inspired by the devastation caused by levee failures in New Orleans during Hurricane Katrina in 2005; the entire city was catastrophically flooded. While the initial destruction was bad enough, the ensuing suffering of the city's refugees continued long afterwards. Stevie's song acknowledges the pain of the city, but also honors their rich heritage and their ability to come back from such tragedy and continue on. New Orleans culture is famous for its parties, especially Mardi Gras with its beads and costumes; the wild times on the aptly named Bourbon Street; the supernatural ghost sightings and hauntings many claim to have experienced; the historic French Quarter. Apparently, Stevie enjoys Anne Rice's famous New Orleans-set 1994 vampire novel Interview with the Vampire; she associates it so strongly with the city that Anne Rice gets prominently mentioned despite not living there. We all know she's fascinated by vampires, so it's not surprising.
I have heard Stevie perform this in New Orleans and I can testify that her song was much appreciated by many who experienced the traumatic events of that time.