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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Health Care Legislation: The Future of Health Care in America

March 28, 2010

(This is a reprint of an article I posted at http://www.DumpDC.com)

You didn’t really think that I could resist weighing in on this health care debacle, did you? With my 35-plus year background in the insurance business, I think I can bring some unique perspective to the table.

I don’t know for sure what is in the bill. But from what I read all over the Internet, there are a few features that need early discussion.

First, this bill has a name already. But, on the day that President Obama signed the bill, Vice President Joe Biden whispered in Obama’s ear that this was a “Big F**king Deal,” which was picked up by microphones and broadcast around the world. So, from now on, I will refer to this bill as the BFD.

One bound copy of the BFD

The agenda hidden in plain sight

The BFD is not about providing health insurance coverage for the 32-40 million ESTIMATED Americans without health insurance. It’s about a government takeover of a giant portion of this nation’s economy, and fascism.

How do I know for sure?

Well, let’s use the low end of the estimates, 32 million. I’m only using that because the government always lies, and the true number is probably a lot lower. And let’s say that the annual premium for the best health insurance policy you can buy is $5,000 per year per person regardless of age. Then do the math. 32 million uninsured people times a $5,000 annual premium per person is only $160 Billion.

Congress and President Obama could have bought every uninsured person in America a deluxe insurance plan for only $160 Billion. But that’s not what they did.

This bill is estimated to cost over 900 Billion dollars…and they ALWAYS underestimate on the low side.

So, as I said, this ain’t about insuring the uninsured.

But it IS about demographics.

Demographics and Two Major Players

The health care providers didn’t fight this bill. That’s because right now there are a lot of uninsured people that use the hospital Emergency Room as a free clinic. But under the BFD, all of those people will either pay for coverage, or the Federal Government will pay for their coverage. The days of hospitals providing free health care to the poor and indigent will be gone. The health care providers see the tidal wave of health care benefit money that will hit their shores. All they have to do is soak it up.

The health insurance industry didn’t fight this bill, either. That’s because they see 32 million people (questionable estimate) that aren’t paying premiums that will begin buying insurance. And many of those people will get the DC crowd to pay their premiums for them through “low income” subsidies. In addition, the health insurance companies already have the trained staff to help DC roll out this health care law and administer it for the DC bureaucrats. More money for the insurers.

What pact did the big insurance companies make with the devil?

The insurance industry has not fought this BFD. They have not used their club in the closet. So, the logical conclusion is that the insurance industry has made a yet-to-be-discovered pact with the DC Devils to enrich themselves at the public’s expense.

All of the insurance companies domiciled in the USA have investment portfolios. Part of their money is always invested in government securities. That means bonds and other debt instruments. These can be Federal, State or even municipal bonds. But they all hold a large percentage of US securities.

Their bond holdings are sufficiently large that if they suddenly sold even a small portion of the bonds, it would collapse the entire bond market. And with the volatility of the dollar, and the mind-boggling Federal debt that is constantly growing, the value of all government bonds is dropping like a stone.

The insurance companies know this. They already know that they could cause the bond market to meltdown any day that they began selling off government securities. The US Federal government would finally be proven to be bankrupt. So, in essence, they have created a government interference insurance policy for themselves that protects them from Washington’s meddling in their business. It’s the equivalent of the old “club in the closet”…the weapon you bring out when it’s needed. And NOTHING prevents them from threatening DC with that club.

One of the features of the BFD is that pre-existing conditions will no longer be considered in underwriting a health insurance policy. In practice, this will mean that I could wait until my doctor diagnoses me with terminal cancer before I buy an insurance policy. Then, I pay my copays and stick it to the insurance company.

Another feature is that there will be no lifetime cap on benefits. Underwriting and actuarial considerations are worthless when an insurance company cannot calculate the limits of their loss exposures. Insurance ceases to be insurance…a transfer of risk…when there ceases to be any risk. Under the BFD, health insurance becomes a healthcare welfare system.

No insurance company would ever agree to this…unless underwriting and actuarial decisions don’t matter anymore. That would only occur if there was some entity above the insurance company that was going to pay all the benefits. Guess who?

Health Care Rationing is Inevitable

Here’s the way for Washington to screw up any economic activity:

1. Tax it
2. regulate supply and demand
3. impose price controls
4. impose wage controls
5. impose limits on profits, or “windfall profits” taxes

The DC bunch is going to do this with health care. The health care industry will naturally shrink in size as many people realize that it makes no economic sense for them to continue in this path.

As the BFD unfolds, and the regulations start to affect doctors, the number of doctors will diminish. Some will retire early, some will switch to other careers, premed students will switch majors, and most doctors will just sing “Nobody knows the trouble I’ve seen.”

Some doctors will opt out of the government benefits system and stop treating anyone covered by the BFD. But that brings up another possible scenario. If the number of participating doctors drops, and rationing inevitably begins, I can see Washington stepping in and forcing doctors to treat BFD patients. Think about it. Doctors are licensed in every state. Congress could easily pass a new law that mandates all licensed doctors to accept BFD patients and BFD benefits…or no license for the doctor. What’s to stop Congress from doing this? Nothing.

But some medical professionals will adapt and prosper.

Doctors are going to watch as their incomes shrink. But some will think of ways to escape the American healthcare system while still practicing medicine.

That means an escape from America.

Canadians have been coming to American doctors and hospitals for decades to escape the rationing in Canada. Now it’s America’s turn to run for the border.

Over the next ten years, thousand of doctors, nurses and other medical professionals will set up shop outside the USA. They will establish clinics and surgical practices “just across the border” with the most modern and advanced medical treatment facilities possible…free from Washington’s crushing burden of regulation.

Expect the offshore medical industry, or commonly called “Medical Tourism” to explode in Mexico, the Caribbean (and Cuba, once Castro dies) and Latin America, in places like Panama and Costa Rica. Read more about Medical Tourism HERE.

For example, the prestigious Johns Hopkins University’s Center for Global Health opened the Hospital Punta Pacifica in Panama City, Panama in 2006. It is the most advanced hospital in Panama and rivals any great American hospital. Medical tourism will be a huge cash cow for this facility as health care falls apart in America.

Big Pharma is Smiling

The pharmaceutical industry has entered in the Promised Land. They will negotiate their pricing with the government, and the government health care will promote and buy their products. All Big Pharma has to do is continue paying bribe money to Congress.

The Swami Predicts…

1. Health care rationing nationwide
2. Price controls on everything related to medical treatment
3. Hundreds of hospitals close their doors
4. Dozens of health insurance companies close their doors
5. Thousands of doctors stop practicing medicine in the US
6. Thousands of doctors and nurses become Federal employees
7. Pharmaceutical companies’ stock value soars
8. Mortality rates in America creep upward due to rationing
9. Hyperinflation must occur as DC monetizes debt with paper money
10. The US economy collapses and America enters a Dark Age

OR…

11. Courageous states of the United States secede and the United States dissolves into the ashbin of history.

Which will YOU choose?

Secession is the Hope for Mankind. Who will be first…and wisest?

DumpDC. Six Letters That Can Change History.

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


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:


State Secession: Trying To Beat the World’s Worst Record

November 12, 2009

If you can’t think of reasons that state secession is a better solution for liberty than working within “the system,” consider the record of the Federal Government of the United States.

Sure, you can ultimately lay the blame on all of us, since we are the ones who allow the atrocities of Washington to continue. But for now, let’s look at Washington’s record of achievement over the last 150 years.

War of Northern Aggression – 1860s. The North wages war on a confederation of seceding states who left lawfully. Over 600,000 men died on both sides.

Reconstruction: 1860s-1870s. The North plunders the South.

Fractional reserve banking: counterfeiting by another name. Born in the 1800s, perfected by the Federal Reserve and central banking system of the USA.

Spanish-American War – 1898. “Remember the Maine?” A complete lie told by newspaperman WR Hearst, bought by the public and Washington to go to war.

Federal Reserve: established in 1913. For 96 years, it has mismanaged the economy and counterfeited currency.

IRS and the Income Tax (16th Amendment): 1913. What starts out as a small tax becomes a leviathan. What starts out as a small division of the Treasury becomes the most feared weapon of Washington.

World War 1: 1914 -1918. 117,000 dead Americans, 205,000 wounded. The US had no business in a European family war but President Wilson had other ideas.

Depression I: 1929 – 1940s. The Federal Reserve caused it.

New Deal: 1933-1936 FDR’s massive government jobs program, plundering the wealth of the USA. Fascism by another name.

World War II: 1941-1945. Another European war, we had no dog in this fight. FDR baited the Japs into attacking Pearl Harbor, giving him political cover.

Cold War: The US and the USSR escalate preparations for war to new heights, spending hundreds of billions of dollars on weapons.

Korean War: 1950 -1953. 36,000 Americans dead, 96,000 wounded.

Viet Nam: 1950-1975. 58,000 dead Americans, 303,000 wounded.

Creation of three letter agencies: HEW, HHS, CIA, FDA, FCC, DOA, DOD, EPA, and the list goes on…

New Cabinet bureaucracies: Energy, Education, Homeland Security, etc.

Grenada invasion, 1983. 19 Americans dead, 116 wounded.

Panamanian invasion 1989: 23 Americans dead, maybe 3,000 civilians killed.

Bosnian War: 1992-1995. US sends troops under UN flag, millions of civilians made refugees.

Gulf War 1999: President George HW Bush commits a massive force to Kuwait. 379 Americans die, 776 wounded in a 100-hour war.

Iraq: 2003-present. About 5,000 Americans dead, over 35,000 wounded (that they’ll admit to). That doesn’t count casualties of our mercenaries…I mean contractors.

Afhganistan/Pakistan: 2001-present. About 1,000 Americans dead, over 4,500 wounded. That doesn’t count casualties of our mercenaries…I mean contractors.

TSA: 2001-present: Domestic airline travel done “the government way.”

Let’s not forget…

• Counterfeiting, bailouts, nationalization and massive inflation: Just another way that Washington says “you belong to me.”

• Regulation of every facet of human life: Try to think of a second of your life that is not regulated in some way by Washington. Quick answer: that second does not exist.

• Two party political system: two sides of the same coin, both Washington cheerleaders and sycophants. Both want to spend unconstitutional money.

• Out of control military, bases in 130 nations.

Here is the point to this litany of tyranny. The government of the United States of America has screwed up the entire planet through their actions over the last 150 years. The events of currency collapse and inflation in our not-too-distant future will reverberate throughout every nation on earth.

States of the United States that choose to secede will certainly be affected by the implosion of the Washington government. But, could any new nation ever match the “Hall of Shame” listed above?

New American nations, formed from the seceding United States, would be little pinpoints of light and liberty. If their only guiding principle was to not make the same mistakes that the US government made over the last 150 years, they would be destined for success.

How could they fail?

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


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.


Bribery: Also Known As Lobbying

October 23, 2009

The health insurance companies of America are lining up at the doors of Congress to commit legalized bribery like never before. In this time in which Congress and the President are trying to craft some type of health care legislation, insurers want to make certain that their feet are firmly under the table.

America’s Health Insurance Plans, the national association representing nearly 1,300 member companies providing health insurance coverage, reports that it spent $2.4 million just from July through September.

The non-partisan group Center for Responsive Politics reports that some drug companies are also outdoing previous efforts at buying influence. Pfizer has spent $16.3 million lobbying so far in 2009, and Amgen spent $9.2 million so far this year. Those amounts far outpace their 2008 bribes.

So, let’s run a total:

$ 2,400,000
$16,300,000
$ 9,200,000
$27,900,000

That doesn’t count individual companies like US Healthcare, Aetna, Kaiser Permanente, Humana, United Healthcare or any others. That also doesn’t count October and November.

But remember…there are 435 members of Congress and 100 Senators, one president and one vice president who is also president of the Senate. That totals 537 people. Divide the bribery total above by 537 and you see that each elected official could potentially have received $51,955.00 in contributions just from these lobbyists.

Remember also that the bribery is not done. Remember also that the opponents to this health care bill are also lobbying and bribing.

Even the AARP has spent a mind-boggling $15.1 million in lobbying bribes this year, which is less than they spent in the first three quarters of 2008.

Don’t worry about the insurance companies, though. Their profits are secure, and Congress will NEVER leave them out.

Why?

The insurance companies have vast investment portfolios. A big part of their portfolios are government bonds and other government securities. If the insurance companies sold off even 1 or 2% of their holdings at once, they could cause the bond markets to collapse overnight. Washington knows this and won’t allow it to happen. So, insurers will get pretty much anything they desire.

As the old saying goes…“when money talks, all the bullshi* walks.” Don’t believe ANY headlines that tell you the insurance companies are dithering and worried. They have NO WORRIES.