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.

Advertisements

Health Insurance…the Government Way: Buy Insurance or Go To Jail

January 7, 2010

Part of the legislation squirming through the bowels of the Federal Beast is a prohibition for insurance companies to exclude an applicant because of pre-existing conditions. That really sounds nice and fair, doesn’t it? But there is perception and then there is reality.

In nearly every other market for insurance, the pre-existing condition underwriting makes no sense. But when insurance companies began writing large groups for health insurance, like with a large corporation with thousands of workers, they made the BUSINESS DECISION to accept those with pre-existing conditions. But be assured that everybody in the group paid higher premiums to keep that business profitable. And, if the insurance company was losing money on that piece of business, it would likely not offer to renew at the next renewal date.

Compare the pre-existing conditions exclusion to other types of insurance…your homeowners coverage, for example. If you had a house with a pre-existing condition, that would mean you’d had claims before for one particular problem, and that you had not gotten that problem fixed. Let’s say that your problem was that your basement flooded every time that it rained hard. You had no drainage and no way to prevent the flooding.

So the insurance company, instead of being able to decline coverage for you, or at least exclude coverage for your flooding, would have to accept your risk. They know up front that they are going to pay claims on your house flooding. The only thing that the insurance company can do to remain profitable is to charge a higher premium for you and everybody else.

You might get your pre-existing conditions covered, but you may not be able to afford paying the premium to get the coverage. But here is how the insurance companies and the Washington criminals will run it.

What will happen then? The populace will whine, and the politicians will either subsidize the individual premiums, or they will impose price controls on the insurance companies…or both. Either way, the politicians will enact more laws that screw up the health insurance industry, or redistribute more money to quiet the sheeple.

Price controls may bankrupt some insurance companies. I wonder what the Congress and president will do when their interference in the insurance market cause the insolvency of some insurance companies? Will they pronounce them “too big to fail,” and nationalize them? Remember what Florida did after the spate of hurricanes a few years ago. Florida created Citizens Property Insurance. It is the high risk pool for Florida property owners that need insurance. So, in effect, the state of Florida got into the insurance business as the insurer of last resort. Citizens is one major hurricane away from bankruptcy, which means that it will also bankrupt the State of Florida.

The same thing will likely happen with health insurance and Washington. DC’s interference will ruin some companies, and DC will become the insurer of last resort. That also means that DC will get the sickest patients and the highest health care costs. You might see the public option imposed on everybody as a way for Washington to take control.

The mind boggles.

Oh, by the way…in the present health insurance bill, US citizens will be subject to massive fines and long jail terms if they do not buy health insurance from private companies.

That’s what passes for health care reform in the good old USA circa 2010.

The news media is TOTALLY silent and politicians see nothing wrong with it.

If you think I’m kidding, watch this video:


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.


Cowardice in State Government

November 2, 2009

The United States was organized with a Federal structure. Under that structure the national government was supposed to have two overriding dicta: to safeguard the States from foreign invasion and domestic violence, and provide a Republican form of government to the States. (Article IV, Section 4 of the Constitution)

It should have been pretty easy to protect the States. A wide ocean on the east and west, and peaceable borders on the north and south do the government’s job for them without spending a penny. So, they should have been focusing all their attention on providing the states with a Republican form of government. Instead, what we have now is a fascist police state.

I don’t think that qualifies as a Republic.

A republic is a representative democracy, as opposed to a direct democracy. The key word is “representative.” The states were supposed to be the pre-eminent players. In the beginning, the Senate chose who would be President of the USA, and the Senators were there in Washington to represent the interests of their states.

Over the past 200 years, Washington has turned the government we were promised into the government we were trying to prevent. Could any absolute monarchy or dictatorship be any worse than what we have now? King George didn’t lay on a combined tax burden nearing 50% and trillions in debt.

The states of the Union have become little more than big counties, subservient geographic entities owned by Washington. For reasons too numerous to list here, the states allowed Washington to usurp nearly all of their power. The fecklessness of every state’s political leaders mocks this nation’s Federal system, and has destroyed the most important checks and balances against Federal tyranny.

Make no mistake. No one truly expects the Federal Government to check and balance itself…where would be its motivation to do that? No, the final arbiters were supposed to be the states.

The states had many arrows in their quivers to control the Federal Government. One of the most effective should have been nullification. Simply put, if Washington enacts laws that the states interpret as unlawful, the states could ignore the new laws like they never happened. Modern states are unwilling and afraid to use nullification against Washington.

Another strong arrow used to be withholding funds from Washington. But with the enactment of the income tax, that arrow was broken, and Washington takes the tax money directly from the people.

I say all of that about the states of the United States in general, but specifically as it relates to monetary policy in America. The US states have allowed…even empowered…Washington to destroy the monetary system of the USA through the Federal Reserve and fractional reserve banking.

The Federal Reserve, a consortium of PRIVATE banks, prints counterfeit currency for the Federal Government. Fractional reserve banking laws allow all the rest of the other banks to counterfeit by creating credit (money) out of thin air.

State political leaders are so clueless and visionless that they have laid down and allowed Washington to endanger the very economic security of each American state through the institutional counterfeiting of the Federal Reserve and all other American banks.

These are some of the reasons that I am not encouraged and excited to know that 39 states have passed some type of 10th Amendment resolution, thereby taking a position that they might just do something in the future, by God. The steely resolve is inspiring, isn’t it?

But where is the state legislature and Governor that will notify Washington that there is a new “nullification sheriff” in town? When will some state begin nullifying the laws coming out of Washington, and refusing to allow them to be obeyed in that state? When will a state refuse to enforce Federal legislation? When will a state slap the cuffs on a Federal law enforcement officer who is trying to enforce Federal law in a state that has nullified Federal law?

Where is that state that will be true to its origins, and allow nothing but gold and silver coin (specie) as tender in payment of debts (Article I, Section 10)?

As a beginning step, how about if a state stops tax withholding and makes the payment of state income and property taxes mandatory in gold or silver coin or electronic gold? That would begin inculcating the citizens in a small way to once again consider gold and silver coin as money. I realize this idea doesn’t work in Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming, since none of them have a state income tax. But it would work for their property taxes, and both will work everywhere else in America.

Any state could facilitate the exchange of Federal Reserve Notes for specie by making such transactions exempt from sales tax. The exchange of FRN currency for specie, which are both legal money, are in essence a “currency exchange,” no difference substantively from changing dollars to Euros, Yen or Pesos.

One of the reasons that a gold/silver monetary standard would work so well for Texas is its petroleum exports. A New Texas with a gold standard would demand gold or silver specie as the only settlement of petro and natural gas transactions from any other country.

But you see, taking a position like that would directly challenge the power of Washington and the Federal Reserve. The paper money they issue says “this note is legal tender for all debts, public and private.” If a state refused to accept Federal Reserve Notes for payment of state income or property taxes, they might have a fight on their hands.

A principled stand like this over money might also help repudiate the scurrulous IRS case of Robert Kahre in Nevada. Mr. Kahre is now beginning a Federal prison term for paying his employees’ wages by using legal tender gold coins. Kahre was acquitted on all 161 counts of tax law violations back in 2007. But the IRS tried him again (double jeopardy, anyone?) and a jury convicted him in 2009. Keep in mind that gold and silver coins are legal tender in the United States, just like Federal Reserve notes. But no one embarrasses the IRS, and Kahre has now paid the price. His life as a free man is over.

State political leaders have no stomach and no backbone for a fight with Washington. Those American citizens in favor of state secession might look to these issues as a barometer of how their state political leaders would react to a political or economic meltdown. If a state won’t protect itself now, why should anyone believe that it will take principled stands later?

There is craven cowardice in the halls of state government in every state in the United States of America. Legislators and state executives go along to get along. Many look at state office as a springboard to Federal office. Few serve their constituents…most serve Washington, the Federal Reserve and banking interests.

“So that’s how liberty dies…to thunderous applause.” Princess Padme, watching the Senate in Revenge of the Sith

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.


Sustaining The Unsustainable: Mantra For Government Madness

August 5, 2009

I first saw this term used by writer James H. Kuntzler. It could be the rallying cry of all of the USA.

Think about our federal government and our economy, which has been regulated nearly to death by our federal government over the last 100 years:

• The United States Federal Government is bankrupt.
• Some states, cities and other municipalities are either bankrupt, or teetering on the brink.
• Our currency, the Dollar, is the world’s reserve currency. It supplanted the British Pound Sterling as world reserve currency in the early 20th Century. Now, many nations around the world wish to stop using the dollar as reserve. Confidence in the dollar is ebbing rapidly.
• The national debt is rising faster and faster as Washington borrows from around the world. Washington cannot service the debt it has, much less more debt. So it prints more worthless currency.
• The housing bubble is far from over.
• The foreclosure and debt default crises are far from over.
• Unemployment continues to rise, and the national rate is far higher than reported.
• The US went from a manufacturing economy to a service economy in two generations. But widespread wealth is created in manufacturing.
• Bad debt is omitted from financial statements to create illusions of financial solvency.
• We perfected Second Generation Warfare, which is the military of various nations fighting each other in vast array.
• Because of Washington’s foreign policies since WWII, we have created lots of enemies that will cheer at our demise.
• Heavy reliance on foreign oil supply makes us vulnerable to political turmoil.
• Heavy reliance on foreign food supply makes us vulnerable to political turmoil or world climactic changes.

The only constant in human existence is change. People have always had to adapt or die. There is nothing different going on in the present day.

Washington has created nearly every societal problem we face today. They wish to solve the problems by creating new programs and laws that will create new problems. And on it goes. Washington has created unsustainable economic climates and markets. The “blowback,” or unintended consequences of their regulation, is the change they cannot control. They appear to believe that more interference will fix the blowback of their former interference.

Amidst that effort, they wish to sustain the unsustainable. Said another way, they want to re-inflate the bubbles.

I cannot think of one government program that is sustainable in its present form. Even a program such as the US Post Office cannot sustain itself in its present form, as the numbers of mail pieces continues to shrink year to year.

I cannot think of one proposed government program that is sustainable in any form. Not health care…not bailouts…not stimulus programs.

Let’s look at the list of examples in the light of “unsustainability:”

– The Federal Government is bankrupt. How much talk have you heard about shutting down Federal programs? How much have you heard about drastically shrinking all Federal Spending? The present size of Federal Government is unsustainable, yet they want it to grow.

– Bankrupt state governments like California should have closed their doors when they could not balance their state budget in accordance with state law. But they continue trying to sustain the unsustainable.

– The dollar is going the way of the currency of Zimbabwe. Massive inflation is inevitable. The Federal Reserve must continue to print worthless currency to sustain the unsustainable. Washington has a tiger by the tail, and if they let go, the tiger will devour them.

– Washington must continue to borrow from other nations, or the house of cards blows away. To stop borrowing, or to have another nation refuse to lend, would force Washington into insolvency. Its present debt instruments would become worthless instantly.

– The housing bubble was built upon easy credit. If the nation’s lenders went back to the old days in which you had to put 10% or 20% down to buy a home, some current empty housing inventory would likely never be purchased. The housing disaster, brought to you by your Federal Government, will likely never recover to its bubble days. Bubbles are unsustainable.

– The financial industry around the world tasted of the American mortgage market. When it went bad, the whole world’s financial markets caught a cold. There are trillions of dollars in bad debt that must be dealt with, but that have not been disclosed yet. The current financial industry is unsustainable long into the future.

– American jobs are continuing to leave America for foreign shores. Consumers do not need to consume at the bubble pace, which relied on easy credit. The hot economy was unsustainable when you remove easy credit.

– Politicians promise millions of new jobs, and then offer government stimulus money to make it happen. But the stimulus is temporary and the jobs are not sustainable. Manufacturing jobs are leaving America forever. Because of layers of Federal regulations, American-made goods are not competitive.

– Generally Accepted Accounting Principles (GAAP) is a forsaken and rejected concept. When a financial statement can be prepared to take bad debt off the books, it no longer accurately reflects the true financial health of the entity. Over time, it will affect investors as they can no longer invest with true expectation of any future profit.

– Nations no longer line up their armies on the battlefield and shoot at each other. They have jumped to Fourth Generation Warfare, which is the guerilla warfare method. Second Generation warfare is helpless against Fourth. Yet, the American military industrial complex hurtles forward building unnecessary jet fighters and offensive weaponry. Wars of invasion are unsustainable.

– Bullying other nations with disrespectful foreign policy is unsustainable. Yet little changes from one administration to the next…except more bullying.

– Energy dependence is unsustainable. Energy independence is sustainable, and that has to include nuclear power to generate electricity.

– Food dependence is unsustainable. Food production in America has been supplanted by price supports for all manner of commodities, including corn for ethanol. But ethanol is not profitable or sustainable without government subsidy. And subsidies are not sustainable.

Washington is on a mad quest to sustain the unsustainable. This is the very reason that they can never succeed. This is the reason that they cannot change to being honest in their dealings. This is the reason they must continue on this path until the inevitable collapse occurs.

God help us when that collapse finally occurs. Not only will the United States collapse, but it will take the world economic system down with it.


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