Gulf Oil Spill Disaster: The Trigger of American Economic Collapse?

May 16, 2010

This article is written to analyze the potential economic fallout of the Gulf of Mexico oil rig explosion that occurred on April 20, 2010. I maintain that this incident could be the trigger of the American economic collapse. My expertise is in the insurance risk management and claims field. So, let’s look at what is going to happen as this disaster unfolds over time.

The oil drilling platform that burned and sank was drilling a well about 50 miles off the Louisiana coast. The derrick, the Deepwater Horizon, is owned by Transocean Ltd., and was leased to British Petroleum (BP). It was connected to the ocean floor by a “riser”…a 5,000 foot pipe that is now kinked like a garden hose. But the leaks are at the sea floor, not in the pipe. If BP, the lessee, cannot close the valve at the mile-deep wellhead, they may have to drill another well to relieve pressure. Some experts estimate that it could take two months to cap the well at the mile-deep ocean floor. And every day, somewhere between 1,000 and 5,000 BARRELS (200,000 to 1 million gallons) of crude oil float to the surface of the Gulf of Mexico.

The leading edge of the oil slick is about to make landfall at the Louisiana, Alabama and Mississippi coasts. But there exists the possibility that the oil spill may be caught by the Gulf Stream…the powerful, warm, and swift Atlantic Ocean current that originates in the Gulf of Mexico, exits through the Strait of Florida, and follows the eastern coastlines of the United States and Newfoundland before crossing the Atlantic Ocean.

And, we are just about to enter the Hurricane season, which extends from June 1st to November 30th. Any hurricane that enters the Gulf of Mexico will disperse the surface oil to parts unknown. There is no predicting which coastlines could be coated with crude oil. Any Gulf hurricane will impede and stall cleanup efforts as well as vastly expanding the geographic footprint of the spill. Cleanup cost could multiply exponentially.

So, we may be witnessing the humble beginnings of a disaster that could potentially affect the American coastline from Texas to Newfoundland.

Insurance Claims Issues

First Party Claims

There will be a flood of first-party claims, which are claims for direct loss or damage to covered property. But most Commercial Property insurance policies exclude pollution-related losses unless the loss was caused by a “specified cause of loss,” usually named in the policy…and usually confined to occurring on the insured premises.

Tens of thousands of claims will be filed under the Business Income and Extra Expense sections of commercial insurance policies. Untold number of businesses will be adversely affected by the oil spill, such as resort owners, commercial fishermen and shrimpers, coastal rental property owners, seafood wholesalers, most tourist-related business at the seashore, and charter fishermen.

But once again, BI and EE coverage requires direct physical loss to covered property. So, many businesses will be shocked to discover that even though they have Business Interruption insurance, it does not mean that they have a legitimate BI claim.

Even those policyholders that do have acceptable and covered BI claims may be limited in their monetary recovery by the policy language. The period of restoration usually does not include any increased period of time due to the enforcement of any ordinance or law that may require a policyholder to mitigate the effects of, or clean up the pollutants.

So most policyholders will be out of luck by filing claims with their own insurance companies. More on this later.

This denial of coverage will spell the bankruptcy and end of tens of thousands of coastal businesses. The ripple effect from those businesses to their customers and suppliers, as well as the families employed by all parties, will be catastrophic.

Third-Party Claims

Another huge consideration is the certainty of third-party claims. First-party insurers that pay claims related to the oil spill will subrogate (seek recovery) against those parties responsible and liable for the damages. Then consider all of the business that will file third-party claims directly against the parties responsible and liable for the damages. The list will continue to mount over the coming decade or longer. Timing will be crucial in this matter, since many of the responsible parties may have already exhausted their liability coverage and their corporate assets. Lawyers may find that many responsible parties will close their doors, effectively barring recovery.

Post-Katrina Insurance Industry Reality

In the wake of Hurricane Katrina, scores of insurance companies paid claims that they had originally denied. Sympathetic courts ordered them to pay claims that were arguably not covered. The same kinds of pressures will be brought to bear on ALL insurance companies in the aftermath of this oil spill disaster. In these kinds of widespread catastrophes, insurers will be required to pay claims that they may not owe simply because they CAN PAY. That takes some of the political pressure off of states and Washington.

Monstrous insurance loss payments can bankrupt insurance companies. But even worse are these politically-motivated claims for which the insurance company had not collected a premium. Do not be surprised to see many insurance companies fold in the wake of this ecological disaster if they are required to settle claims politically. And all insurance companies are backed up by reinsurance companies. The reinsurers will be hit with losses also, adding more ripples throughout the worldwide economy.

Lawsuits

In war, there is an old saying; “Kill them all…let God sort ‘em out.” That is kind of the philosophy of trial lawyers. In giant commercial enterprises such as BP, there will be dozens of entities that are involved…the parent company, subsidiary companies, contractors and suppliers. Trial lawyers customarily target the entities with the deepest pockets…plus everyone else. The lawsuits have already begun, and will name every business entity even remotely connected to the operation of the Deepwater Horizon oil platform. Every entity named in the lawsuits will be forced to defend itself.

And here’s where it gets even more complicated.

Many contracts between businesses and contractors contain a Hold Harmless clause that forces the contractor or vendor to absolve the business from liability, or at least to provide legal defense for the business. Common sense will tell you that subcontractors or vendors will have lower liability limits than the controlling entity, like BP. So lower liability limits will max out quickly.

The lawsuits will continue to be filed, and it will take years of legal wrangling to begin seeing damage awards meted out by all the various courts that will be involved.

Gigantic lawsuits and gigantic jury awards have the very real possibility of bankrupting the companies responsible for this oil spill.

Political Realities

Your Washington politicians have already passed legislation that protects their oil company buddies while exposing Americans to immense cleanup costs and business losses. A law passed in response to the 1989 Exxon Valdez spill in Alaska makes BP responsible for cleanup costs. But the law sets a $75 million limit on other kinds of non-cleanup damages. So, Federal law limits how much BP has to pay for damages such as lost wages and economic suffering in the Gulf Coast oil spill, despite President Barack Obama’s assurances that taxpayers will not be on the hook.

But the hue and cry from the Gulf Coast will be so great that Washington will feel entirely compelled to swoop in and start writing checks. The Hurricane Katrina/Rita debacle of 2005 is a scab on Washington’s skin that they don’t want torn off. And no Congressman is going to take a position against helping the poor Gulf fishermen and the rest of the populace that makes their living from Gulf and gulf-shore businesses. And despite Obama’s assurances, there is no way that he would refuse to sign a disaster relief law.

All of that means that the Federal Government will print more paper money and go deeper in debt. But printing paper money will hasten hyperinflation. And in order for Washington to go deeper in debt, foreign nations must by American debt securities. Eventually, foreign nations will cease cutting their own throats and say no to Washington.

Tens of thousands of Gulf Coast businesses will cease operations in the months to come. Banks that hold loans and mortgages on those businesses…as well as the loans and mortgages of the employees now thrown out of work…will suffer financial losses. Hundreds of thousands of coastal residences will be unemployed. Cars will be repossessed. Home foreclosures will escalate. Credit card companies will hold uncollectible accounts. Even the local Dairy Queen could suffer economic losses when the surrounding coastal community’s economy collapses.

And we haven’t even left the Gulf of Mexico yet. If the Gulf Stream moves the oil up the Eastern Seaboard, multiply all these predictions by an X factor.

Conclusion

As you see, the economic impact of the oil spill will reach around the world. Companies in the UK will be affected. Likely some insurers at Lloyd’s of London are involved. Reinsurance companies will take hits, which might affect companies in Germany, Switzerland, France and Bermuda. Domestic insurers will likely pay claims due to political pressure. Banks will suffer losses. Businesses will close. Unemployment will spike. Most importantly, it will place crushing pressure on Washington to fix the problem with money…and Washington withstands pressure like a Dixie cup under an elephant’s foot.

Therefore, I submit to you that the April 20th Gulf of Mexico oil disaster could very likely be the trigger of the collapse of the American economy.

© Copyright 2010, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.

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Secession and The Berlin Wall

November 9, 2009

I’m writing this article on November 9, 2009, which is the 20th anniversary of the “fall” of the Berlin Wall. What actually happened on this date twenty years ago was that the East German government announced that East Germans and West Germans would be allowed to visit each other freely. Throngs of East Germans climbed onto and crossed the wall. Over the next few weeks, people on both sides of the wall used sledge hammers to knock holes in the wall and topple large sections. Later, demolition crews removed most of the rest of the wall. German reunification was completed on October 2, 1990.

This event was a mind-blowing visual and emotional event worldwide, as we saw TV images of euphoric crowds celebrating, dancing and weeping at the Berlin Wall. Few really believed that the Soviet Union would collapse after only 69 years of existence. The Soviets rivaled the USA in military might, and they were as imperialistic as the Americans, exporting Communism around the globe.

But their Union unraveled, beginning in 1989 with the “glasnost” political reforms of Soviet President Mikhail Gorbachev. In 1990, newly-elected Russian President Boris Yeltsin led the Russian Congress to formally declare Russia’s sovereignty over its own territory, and began passing laws to supersede Soviet law. Russia was the largest republic in both territory and population in the Soviet Bloc.

A national referendum was held on March 17, 1991, with the majority of the USSR’s population voting for preservation of the Union in nine out of fifteen republics. But it didn’t matter. After the attempted coup d’etat against Gorbachev in 1991, Yeltsin emerged as the strongman, and Latvia and Estonia declared their independence.

By December of 1991, The Soviet Union had dissolved.

I was in Berlin in December 2003, performing with the Atlanta Symphony Orchestra Chorus and the Berlin Philharmonic. The Hilton Hotel where we stayed was only a couple blocks away from Checkpoint Charlie, one of the most prominent and widely-known points of passage between East and West Berlin. We walked to Checkpoint Charlie and were surprised to find that, even fourteen years after the Fall, East German buildings still looked gaunt and forbidding.

This little bit of history should give secessionists all over America a boost in morale.

Consider these six points:

1. The largest of the republics regained its sanity and seceded. That should give the Texas Nationalist Movement additional hope and perspective in their quest for a New Texas nation.

2. The bigger they are, the harder they fall. Prior to collapse, the USSR had the second largest economy in the world after the USA. The Soviet economy was a centrally-planned economy based on state ownership of industry and management of every facet of commerce. Washington is repeating the same central planning errors the Soviets could not make work. If the second largest world power in human history can dissolve, so can Number One.

3. Most of the people in the Soviet Union voted to maintain the Union, even though it had been the source of oppression and death for 69 years. That shows you how much suffering people will endure willingly like sheep. That also shows you that the suffering masses desperately need moral leadership.

4. Small republics like Latvia, Estonia, Lithuania and the rest of the 15 republics eventually became sovereign nations once more. They have thrived since. Small American states will also thrive when they become nations once again.

5. The USSR dissolved because the republics rejected national laws that conflicted with local laws. The republics also refused to pay tax revenue to the Moscow government. This caused havoc in Moscow. In the US, 39 American states have enacted sovereignty resolutions that assert their 10th Amendment rights. The American states are on the right path. Now will they do the right thing? (see Cowardice In State Government

6. The greatest complication for the American Federal Government, far greater than any complication that befell the Soviet Union, is that the US Dollar is the world’s reserve currency…the Ruble wasn’t. The nations of the world are forsaking the dollar because of Washington’s criminal counterfeiting ways over the years. Just as creditors can force a corporation into bankruptcy, the nations of the world will force Washington into bankruptcy and eventually the USA will dissolve.

So the fall of the Berlin Wall was much more significant to your future than you ever realized. Don’t miss the valuable lessons here. Just because America doesn’t have a big concrete wall doesn’t mean that we don’t have barriers to liberty. Oppressive government must be summarily rejected, and free people have a duty to either alter or abolish it.

DumpDC. Six Letters That Can Change History.

Copyright © 2009, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.


The Stockholm Syndrome For States

September 10, 2009

According to Wikipedia, the “Stockholm Syndrome” is a psychological response sometimes seen in abducted hostages, in which the hostage shows signs of loyalty to the hostage-taker, regardless of the danger or risk in which they have been placed. The syndrome is named after a 1973 bank robbery in which the bank robbers held bank employees hostage for six days. In this case, the victims became emotionally attached to their captors, and even defended them after they were freed from their six-day ordeal.

This time, the captor is the Federal Government in Washington, and the 50 states are its captives.

The powers-that-be in Washington are accelerating the destruction of the United States of America. And the state governments stand by idly.

President Obama is proving to be “the new Boss, same as the old Boss.”

• He has not removed troops from Iraq to end our military presence there. Most troops that were removed from Iraq were redeployed to Afghanistan. The war in Afghanistan has been escalated. From that war, the American military has expanded that war into Pakistan. The fighting in Pakistan has a very real possibility of destabilizing the Pakistan/India relationship, which has been a decades-long powder keg.

• The operation of the American Embassy in Iraq, the largest embassy in the history of the world, continues unimpeded. America’s not leaving, folks.

• The American military is presently building new US military bases in Colombia, South America.

• Washington is still working behind the scenes to cause unrest in Iran, and an air strike is still an option. Covert military ops have been happening inside Iran for years.

• Washington has established an African Command for the US military, further expanding American hegemony worldwide.

• Congress is spending money like there is an infinite supply of it. They now own General Motors. They’ve bailed out carmakers, investment banking companies, lenders and brokerages with hundreds of millions of dollars that they don’t have.

• The Cap and Trade legislation, which would be the largest tax increase in the history of the USA, is still alive.

• The Congress wants to pass health care legislation which will change health care in America, and not for the good.

• The Obama Administration is surrounding itself with advisors who are avowed Communists, Socialists, and Marxists.

• The Federal Reserve continues to operate unchecked, with no oversight by anyone whatsoever.

• The Transportation Safety Administration tightly regulates all air travel within the borders of the United States. Piss them off and you don’t fly.

• The manipulation of the American economy by Washington continues. Between Federal Reserve monetary policy and a Congress that never saw a bill it would not fund, unemployment rises. Foreclosures mushroom. Bank failures increase. Bankruptcy is at an all-time high.

I could go on and on, but I think I’ve made my point.

Most Americans SEEM to be unhappy with the way our nation is being run right now. Obama’s approval numbers have slid to a place that only about 50% of those polled approve of his work. And NO ONE trusts Congress.

The tyranny of Washington continues. Washington has long forgotten that the Federal government was invented by the States to serve THEM.

The tail has wagged the dog since Lincoln lived in the White House.

The “State of the Union” means more than a propagandist’s dream on a January evening in Congress. The state of our Union is desperately bad and getting worse.

How much longer will the states allow themselves to be victims of a kidnapping?

How much longer will the states accept the devastation of our way of life that is pouring out of Washington like feces from a sewer pipe?

How much longer will states tolerate being ruled by an unconstitutional military-backed junta that has stolen our nation?

How much longer will states allow their own citizens to be taxed to death by a government no longer accountable to those very citizens?

When will states awaken from their long slumber and once again realize that they are sovereign and independent, and that they have the power to shake off the heavy burden of Federal tyranny?

Will it take hyperinflation to wake up the states? How high will the unemployment rate have to be? How high will the taxes have to get? How many unfunded Federal mandates will have to be imposed? Will a new law about firearm confiscation or regulation of ammunition be enough? What if Washington decides to once again make it illegal for citizens to own gold, and begins to confiscate gold?

Will the states continue to be the indentured servants of the Washington plantation until the day that the plantation collapses? Then, what will the states do? Will they become sovereign once again and assert their freedom, or simply look for another “Massa?”

The Boy Scouts of America have a two-word slogan: “Be Prepared.” Every ten-year-old scout in America knows that he should prepare for both good and bad. The sovereign states of the united States of America would do well to adopt the Boy Scout slogan and start preparing for an uncertain future.

My prediction is that the majority of the American states are so inured to the Federal shackles that they will stay with Washington no matter what. The states have developed a love for their own captors…the Stockholm Syndrome lives.

© Copyright 2009 by Russell D. Longcore.


Expatriation: Top Ten Destinations for the Wealthy To Reside

July 3, 2009

Expatriation is a hot topic here in America. People with assets watch aghast as their assets lose value while the Federal Government steamrolls American banks, investment companies and insurers.

And it’s not just “the wealthy” that are scared of the future. Middle class people who were planning to retire soon have realized dramatic losses in their pensions and 401K funds. Retirees are experiencing the same things. And what will happen to the retirees of America’ auto companies, now bankrupt and under Federal control?

May thousands of Americans are seriously considering moving to another nation. They seek financial and political stability, less repressive government and a lower cost of living.

CNBC recently did a study to find out where the safest havens for wealth are on earth. They studied and compared things like education for children, economic and political stability, legal considerations, employment and business opportunities, tax and immigration, conveniences, and cultural sophistication.

Switzerland came up Number One in all categories.

The list of the Top Ten, in inverse listing, is:

10. Dubai
9. Monaco
8. Isle of Man
7. Cayman Islands
6. Isle of Jersey
5. Hong Kong
4. New York City, NY
3. Singapore
2. London, UK
1. Switzerland

Switzerland is a democratic confederacy that was founded in 1291. Seven hundred years later, it is still the best government on earth. It has not been invaded by enemies since before 1291. It minds its own business and protects the business of those who do business in Switzerland.

Its legendary banking laws offer the best security and secrecy in the world today. Most of the bank secrecy and tax haven nations of the world have copied Switzerland’s methods. Other nations despise Swiss banking laws, and constantly attack them. Politicians and governments looking to plunder the wealth of its citizens view Swiss traditions of private banking, fierce independence and anonymity as obstacles to their plunder. And, the age-old tradition of armed neutrality stands as the exception and example to the imperialism and aggression of other nations. Simply stated, it puts other nations to shame.

But many investors and owners of wealth prefer Switzerland and the Swiss franc. And, despite what you may read in the news and hear on TV, Swiss banking security is still one of the best on earth.

What’s good for the wealthy is also good for the smaller investor. Don’t wait until the collapse of the American Federal Government. Don’t wait for massive hyperinflation of the Dollar to steal the rest of your wealth. Prepare yourself NOW for the coming storms.

Seriously consider moving your money to more secure investment climates.

See the slide show for the Top Ten Safe Havens at: Top Ten Safe Havens


National Universal Health Care: Could It Work In The USA?

June 30, 2009

The United States is the only nation in the industrialized world without a universal health care system. The oldest universal health care system is in Germany, which had its inception in 1883 under Chancellor Otto von Bismarck.

Let’s lay an important ground rule before we begin. Traditional insurance policies cover unexpected but predictable occurrences. For example, an auto policy covers an unexpected collision. But that policy does not cover maintenance costs which are a normal part of owning a vehicle. Health insurance has become maintenance insurance over the years, paying for everything from regular checkups and tooth cleaning to heart transplants. And, with some group insurance copays at $5 to $20, the concept of deductibles is becoming archaic.

So, in considering a single-payer cradle-to-grave government healthcare system, the old concepts of insurance and risk must be put aside. Single-payer healthcare is NOT INSURANCE in the strictest sense. It is a massive Social Security-type program, into which tax revenues flow and from which health care payments flow out to health care providers.

This article does not advocate a single-payer government-run healthcare system. But it does look at what a single-payer system might look like, and reasons why it will not work.

In December 2008 The McKinsey Global Institute issued an exhaustive 122-page report on health care costs in America, entitled “Accounting for the costs of US healthcare: A new look at why Americans spend more.” The best estimate of American healthcare costs is about $2.1 trillion annually.

Here is a summary list of its findings:

1. Administration costs in the US are much higher than in most countries around the world. This partly due to the privatization of some health care, resulting in profits for shareholders.
2. Pharmaceutical costs: Direct-To-Consumer Advertising encourages use of newer, more expensive drugs, a practice only allowed in the USA. Also, pharmaceutical lobbyists were successful in getting Congress to ban collective bargaining for Medicare Part D, resulting in the highest drug prices in the world. Also, the patent system for new drugs allows drug manufacturers to patent and charge more for non-novel medications.
3. The absence of a universal system that prevents risk-pooling, and the selective underwriting done by insurers. This leaves millions uninsured, and the uninsured avoid treatment until problems are more critical and more expensive.
4. Huge fees of specialist physicians for their procedural skills, rather than primary care that emphasizes preventive health care, early diagnosis and disease management.
5. Defensive medicine: Excess costs and duplication of health procedures in order to protect medical providers from malpractice lawsuits. Lawsuits and jury awards themselves don’t cause a large amount of monetary damage, but the tort system creates a culture in which physicians are paranoid and make health care decisions with lawsuits in mind, rather than patient interests first.
6. ICU Care: The costs of care at the end of life are wildly inflated, many times eclipsing the health care costs incurred in an entire lifetime. This is partly due to heroic efforts of lifesaving, pain management, and poor records.
7. Electronic Medical Records (EMR) systems would be of great benefit in managing living wills, advanced care directives and previous treatment records. Without EMRs, doctors regularly order redundant tests and procedures because medical information management is so inefficient.

The McKinsey report doesn’t recommend a universal healthcare single-payer system. It simply tries to provide accurate information to those who will be making policy regarding healthcare in the USA.

Here is what a universal healthcare system might look like. This takes the best characteristics from healthcare systems around the world.

1. Funding through individual taxation for wage earners and self employed persons. Low income persons subsidized. Should tax be based upon age? Should the tax be calculated as a percentage of income, like in the IRS Tax Tables and FICA payments?

2. Medicare, Medicaid, the VA healthcare system and all other Federal healthcare systems would be rolled into the universal system. That would include the healthcare benefits for Federal workers and members of Congress.

3. No individual underwriting. All living persons of US citizenship are covered. Non-citizens with taxable earnings could be taxed and covered.

4. No deductibles. Copay for any doctor visit of $5-$20.

5. Prevention-based health care at the General Practitioner level. Compensation based upon health of the patients. Healthier patients, doctor makes more money.

6. Medical school 100% paid by government in exchange for 10 years service as a Federal employee. This would include additional training in medical specialties. Compensation levels could be set lower since there would be no school debt.

7. FedGov sets minimum standards for care. Insured persons are free to choose their own doctors. Patients can choose specialists without first seeing Primary Care Physician.

8. No insurance company precertifications necessary.

9. System includes mental health, nursing home and hospice care.

10. FedGov sets prices for pharmaceuticals, medical procedures and medical supplies. FedGov sets wages for all medical employees, including administrators, nurses, med techs and doctors.

11. Tort reform. If health care was universal from cradle to grave, torts would be limited since the patient would automatically be eligible for additional medical care required by malpractice, an unintended consequence of treatment or a medical complication. Doctors would still be liable for negligence, but awards would not need to compensate the individual plaintiff/patient for anticipated medical care into the future.

12. Electronic Medical Records, a database of all medical records for each patient, accessible by all medical providers. Would eliminate all duplication. Living wills and advance care directives would be part of every patient file. This has the potential to drastically reduce end-of life invasive care and duplication of procedures.

13. Individual health insurance policies would still be available for those that wanted a higher level of care, and would be excess insurance, like a Personal Umbrella policy.

14. Private medical providers, including doctors and hospitals, would still exist, offering custom care for those willing to pay extra for it.

I know this is a cursory look at universal healthcare. I know I’ve left out important features and benefits. But I’m trying to wrap my mind…and yours…around a concept that I fear is in our immediate future.

The big insurance companies have completely screwed up the health insurance marketplace in the United States. So, if they get left at the dock when this new ship sails, I won’t shed any tears. They get what they deserve.

Now, here is why I don’t think that the system outlined above will work.

1. The Federal Government is broke. They are already running trillion dollar annual deficits. In order to stave off governmental collapse, the Federal Reserve is printing paper money as fast as it can. Eventually, inflation will sink the ship of state. To absorb the healthcare system into the Federal Government which represents about one-seventh of the economy, is a bridge too far.

2. Funding this new healthcare system would require increasing taxes significantly. Insurance premiums would be turned into tax payments. There is presently an IRS business deduction for insurance premiums for corporations. The business lobbyists won’t want to give up this deduction and will fight it.

3. Pharmaceutical companies lobby Congress. They will fight any system that controls drug prices and threatens their profits.

4. Trial Lawyers have a powerful lobby in Congress. They will fight medical malpractice tort reform.

5. Medical providers, the American Medical Association and other medicine-related groups have powerful Congressional lobbyists. They will fight reforms, just like they do now.

6. Insurance companies will be forced out of business if the Federal Government takes over the healthcare system. Insurance companies hold trillions of dollars in US bonds and other municipal securities. They will threaten Congress with the collapse of the bond market if Congress passed a new system that leaves them out. All the insurance companies would have to do to crash the bond market and cause the collapse of the Federal Government is to sell off a small percentage of their bond holdings all at once.

In conclusion, I recommend looking at any Obama Administration proposal for universal healthcare in light of the competing groups in the medical field. Each group must be bought off for their cooperation, and in turn each one will buy off Congress to get what they want. Some things never change.

The single payer healthcare system that emerges from Capitol Hill, the system that will affect the healthcare of each American, should adopt as its logo the duckbilled platypus.

That’s the animal that looks like it was designed by a committee.


State Secession: The Redress of Grievances

June 22, 2009

Secession is much in the thoughts and on the lips of many Americans today. We all witnessed “tea parties” on April 15th across the nation as people expressed their disgust with government and confiscatory taxation. On that day, Texas Governor Rick Perry actually made comments in favor of Texas secession. He was widely derided by the national media.

Look back at the plight of the American colonies in the 18th century. They experienced heavy taxation and ever-increasing regulation from King George. Their individual rights as English citizens were trampled or ignored. In individual colonies, small minorities of colonial citizens banded together to seek independence from England. Only after repeated abuses from the King, and repeated entreaties to the King went unheard, did the colonies band together and secede, each colony declaring that it was a sovereign nation.

All through the first 60 years of the 19th century, state secession was a recurring topic. During the Andrew Jackson presidency in 1832, South Carolina advanced the concept of nullification, stating that it had the right to nullify high Federal tariffs, and that it also had the right to secede from the Union. Jackson fought and won this battle over nullification and secession.

But secession reared its head again in the late 1861 when the eleven Southern states did secede and form the Confederate States of America, a sovereign nation.

In each instance, patriots sought peaceful and legal means to resolve their differences.

When Thomas Jefferson wrote the Declaration of Independence, he wrote that “they should declare the causes which impel them to the separation.” He wrote that “Governments long established should not be changed for light or transient causes,” but that they had a “duty to throw off such government.” Much of the remainder of the document was the listing of the tyrannical acts of the King, and the actions of the colonies to gain a remedy. Then he says that “Our repeated petitions have been answered only by repeated injury.” Finally, Jefferson summarizes by asserting that each state is, and by right ought to be, free and independent states.

In the coming days, some American state may actually give secession some serious thought. Along that line, I make the following observations.

State legislatures that intend to give serious debate and credence to the idea of secession from the United States of America must not do so lightly. Rick Perry of Texas was not serious about a new Republic of Texas. He was simply delighting a crowd with rhetoric and applause lines. His words simply kept his name in the headlines for a few days of free publicity.

A State that is serious about secession had better begin creating a “paper trail” showing all of the “petitions” they have made to Washington that were answered by repeated injury. They should make additional petitions with the expectation that additional injuries will ensue. This should not be a difficult task, but merely a time-consuming one.

Then, when the citizens of that State can bear no more Federal tyranny, secession and state sovereignty may appear to be the logical choice.

But I believe that the weight of the potential negative consequences of a state secession will prevent any state from actually seceding from the Union. I do not believe that there is any one American state that will ever secede from the Union. I do not believe that that brand of courage exists anywhere in America.

I do believe that the Federal government could collapse, and then from that collapse could emerge sovereign states. But that eventuality is radically different than the 1776 or 1861 secessions.


Secession: Is There Any State That Could Successfully Secede?

June 15, 2009

I’ve recently offered the opinion that any person who loves and desires liberty has but two choices:

1) Moving to a state that seceded from the United States
2) Emigration to another country

The more I look at the realities of state government here at the end of the first decade of the 21st Century, I am beginning to seriously question whether any current state of the Union has what it takes to even seriously consider secession, much less actually complete a formal secession from the Union.

If any of you watched the movie “The Matrix,” you’ll remember the scene in which Thomas Anderson (not yet Neo) was being removed from the Matrix. In this scene, he awakens before the fluid has been drained from his pod. As he jerks the intravenous lines out of his arms, he peers over the edge of the pod and sees hundreds of other pods below…just like his. They are all storage batteries for the Matrix, kept alive to power the system.

Are the fifty states of the USA any different? Is there any one state that can and will throw off its IV lines and reject the Washington Matrix?

The state governments have been run by Washington for decades now. Many of the DC Congress members got their start in state houses across America. That is where they got a taste for being part of the ruling class. So, state legislatures seem to be the farm system for DC politics.

A government is a body of people usually notably ungoverned. The laws that the legislators and Congress members pass exempt themselves regularly. Those exemptions become perquisites (perks) of power.

Because the ruling class is so inured to the trappings of nobility, I gravely doubt whether the present-day state legislators have the ability, morality or courage to cast off from the national sinking ship and seek their own fortunes.

Secession would naturally force any state to radically alter its methods of governance. Otherwise, it would be “mini-me” of Washington.

Here is a short list of the challenges a state will face from secession:

1. The Washington money pipeline will be turned off. How will that state raise revenues? The citizens of that state will expect their taxes to diminish equal to the former Federal burden. If the state tries to sop up the tax revenue that was going to Washington, the citizens could revolt.
2. What will that State do if Washington doesn’t accept their secession? Will it form a state militia and defend its borders? War against Washington is serious.
3. Would the new State reject the jurisdiction of the Federal courts, and thus refuse to accept legal challenges to its secession in any court but its own? What will that State do with seated judges who are anti-secession?
4. Any state that has no history of self-governance will have no clue what to do. States like Texas, which was a sovereign nation before statehood, will be better equipped to move forward.
5. A seceding state will need a founding document, such as a constitution. Why should anyone believe that politicians who either ignore or violate the present Constitution would suddenly become statesmen with consciences?
6. Every state function will have to be evaluated to determine its necessity. However, if a new state government sets about to create new agencies to mimic the DC government, it will not work. “Meet the new boss…same as the old boss.”
7. Will the new State deliver the mail?
8. What will they use for money? US currency? Will the new State mint its own currency, or simply authorize and regulate bank-issued currency?
9. Would the states that share borders with the seceding State honor the secession and seek diplomacy and trade?
10. Would the DC government allow aircraft from the seceding State to fly over US territory, or create a “no-fly zone?” Would the US allow open borders?

You see? Secession, while easy to discuss, is very difficult to perform.

My conclusion here is this: I do not know of a single American state that comports itself in a liberty-leaning manner in 2009. I do not know of a single state that presently squirms under the thumb of Washington. I don’t see any single state that is serious about secession and becoming a sovereign nation unto itself. Therefore, why should I believe that the secessionist movement in America is anything more than the musings of a powerless, disgruntled minority?

If you know of an American state that is trying to “live liberty”, let me know what it is.

I wonder if any state has people with the intelligence required to secede and then become what the original states were, laboratories of liberty.