Flood Insurance Premiums rise following Katrina and Sandy beyond what Some can Afford

Posted by PITHOCRATES - June 9th, 2013

Week in Review

Few things are as enjoyable as a beachfront view.  What a way to live.  Seeing the sunrise over the ocean.  Breathing that sea air.  Walking out your door to the water’s edge.  How lucky those lucky few are who live on the ocean’s edge.  Of course, there are some drawbacks to living on the ocean’s edge (see After Sandy, a new threat: Soaring flood insurance by Katie Zezima and Meghan Barr, Associated Press, posted 6/10/2013 on Yahoo! News).

George Kasimos has almost finished repairing flood damage to his waterfront home, but his Superstorm Sandy nightmare is far from over.

Like thousands of others in the hardest-hit coastal stretches of New Jersey and New York, his life is in limbo as he waits to see if tough new coastal rebuilding rules make it just too expensive for him to stay.

That’s because the federal government’s newly released advisory flood maps have put his Toms River home in the most vulnerable area — the “velocity zone.” If that sticks, he’d have to jack his house up 14 feet on stilts at a cost of $150,000 or face up to $30,000 a year in flood insurance premiums…

Officials are urging people to elevate their houses now because they are eligible for federal financial aid. About $350 million of New York City’s and $600 million of New Jersey’s Sandy relief funding has been allocated for the repair of single- and two-family homes, which could help defray the cost…

Several months before Sandy hit, Congress quietly passed the Biggert-Waters Flood Insurance Reform Act, a bill that authorized skyrocketing premium increases for people in flood-prone communities.

It was a desperate attempt to keep the program financially solvent after it was nearly bankrupted by an onslaught of claims from Hurricane Katrina, which forced the federal government to borrow about $17 billion from the Treasury.

Borrowing $17 billion from the Treasury?  That means borrowing $17 billion from the taxpayers.  And that’s the sad truth.  The people who don’t enjoy living on the ocean’s edge are the ones who end up paying for storm damage suffered by those living on the ocean’s edge.  People who shouldn’t be subsidizing someone’s dangerous home location.  Unless these people throw open their doors for all of us to come over and spend a few weeks on the beach with them.

Living on the ocean’s edge is both beautiful and dangerous.  Those who enjoy the beauty should pay for the privilege of enjoying that beauty.  Yes, it’s sad these people lost so much from Sandy.  But it was their choice to live there.  And they should pay all the costs required to live there.  Including all their insurance costs.  Like every other home owner must do that doesn’t have that gorgeous ocean view.

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Britain trying to Spread the Risk and Cost of Floods to those who Don’t Live in Floodplains

Posted by PITHOCRATES - December 9th, 2012

Week in Review

Insurance manages financial risk.  One of the earliest forms of insurance was marine insurance.  For it was very risky shipping things across the ocean.  Sometimes storms damaged ships.  Requiring the crew to jettison some cargo to make the damaged ship seaworthy.  So all shippers paid a little extra to provide something we called ‘general average’.  So when the ship reached its destination those who still had cargo aboard could sell it.  While those whose cargo went overboard to make the ship safe for everyone else got this insurance money.

Those who were taking a risk bought insurance to manage their risk.  So that in the event of a loss they mitigated their financial losses.  This is a very important fundamental of insurance.  Those who take a risk pay the costs of managing that risk.  A blacksmith working in an inland community didn’t contribute to the general average.  Because he had no risk exposure on that ship.  So to reiterate, risk takers pay the cost of insurance to mitigate their potential financial losses.  Which the free market does brilliantly.  Except when an activity is so risky that everyone exposed to a risk will suffer a loss.  As in flood insurance (see Flood insurance warning by MP Jonathan Evans posted 12/9/2012 on BBC News Wales).

The existing deal, reached in 2008, obliges insurers to provide cover for high-risk properties while the UK government continues to fund improved flood defences…

The Association of British Insurers (ABI) is calling on the government to share the financial risk for the areas with the most homes at significant flood risk…

“The reason for that is that people who are at risk of flood, lots of those people being in Wales, a quarter of a million houses across the UK, those people are probably paying about a half of what the real risk of flood is,” he said…

“No country in the world has a free market for flood insurance with high levels of affordable cover without some form of government involvement.”

“We could have a complex system in which we could potentially see a charge of £20 or £30 across the board for everybody – whether affected by flood or not – with everybody doing their bit.

“But that could be viewed as being unfair on the poor.”

The problem with flood insurance is that everyone engaging in risky behavior by living in a floodplain will suffer a loss.  If a flood washes away every home they will have to rebuild every home.  Instead of everyone paying a little bit to pay for one or two lost homes everyone will have to pay a lot.  To cover the replacement value of their own home.  Because there is no way to spread the risk when everyone suffers a loss.

When your insurance premium is the value of the home your insurance is not insurance.  You’re just putting some money aside so you can buy your house again in another 10 years or so.  Or however often a floodplain floods.  Which is the risk people take by living in floodplains.  Or should be.  But governments step in and have the responsible living outside of floodplains subsidize the risky behavior of those living in floodplains.  By subsidizing the cost of their irresponsible behavior with taxpayer money.

Yes, it is heart-wrenching to see the devastation of a massive flood.  Like in New Jersey and New York following Hurricane Sandy.  And seeing those homeowners lose everything.  Especially those who did not renew their federally provided flood insurance (it is a federal requirement to buy flood insurance when buying a house in a floodplain.  But there is no federal requirement to renew that coverage once the initial term of that policy expires).  Because it was too costly.

Coastal areas have beautiful vistas.  Which is why people take risks and move into floodplains.  But if they do they should bear the financial costs.  Not those living responsibly.  With far less beautiful vistas.

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Hurricane Sandy Generates Economic Activity at the Expense of those who Lost Their Homes

Posted by PITHOCRATES - November 25th, 2012

Week in Review

Hurricane Sandy left a swathe of destruction in its path.  But it turns out there is a silver lining to this death and destruction.  It’s providing an economic stimulus.  A regular Keynesian stimulus bill.  Only without the messiness of having to get a majority vote in Congress.  Something the politicians can really get behind.  If only they could get a hurricane generating machine (see Sandy Seen Boosting U.S. With as Much as $240 Billion Rebuilding by Jeff Kearns, Susanna Pak and Noah Buhayar posted 11/23/2012 on Bloomberg).

John Cataneo is working his 20 employees overtime and still can’t keep up with demand from customers who need plumbing repaired after superstorm Sandy. He says he’s hired two new workers and may need more…

Cataneo’s experience shows how the storm is giving the U.S. Northeast — and the rest of the country — an economic boost that may eventually surpass the loss of business it caused. Reconstruction and related purchases and hiring may range from $140 billion to $240 billion and increase U.S. economic growth by 0.5 percentage point next year, assuming $50 billion in losses, according to Economic Outlook Group LLC, a Princeton, New Jersey-based forecasting firm.

Well, that’s good news, isn’t it?  Up to $240 billion in new economic activity.  Wow.  Guess hurricanes are good things.  A blessing.  Providing new jobs.  Injecting new money into the local economy.  Why, there hardly is a downside.  Except for this (see After Sandy damage, insurance adjusters may bring more bad news by Ben Berkowitz, Michelle Conlin and Jonathan Allen posted 11/23/2012 on Reuters).

After another day of pumping out their swampy, moldy houses, neighbors in Breezy Point in New York City huddled at the quaint generator-powered firehouse Wednesday night, stamping their feet to stay warm. Neighbors picked at food from tin cans and sipped soups from Styrofoam cups as they lamented the growing holes in a safety net they thought they had: homeowner’s insurance.

“They’re covering five shingles and a piece of gutter, and that’s it,” says Kathleen Valentine, a fire alarm dispatcher who spent the night of Superstorm Sandy working while her house filled with water and dead fish. Her insurance agent from Narragansett Bay Insurance Company said her policy would pay only for wind damage. She is still waiting for someone from the federal flood insurance program to show up…

The trouble is, many homeowners don’t read those policies closely enough to realize that most don’t cover flooding. They don’t always get both homeowner’s insurance, usually provided by a private company, and flood insurance provided through the U.S. government’s National Flood Insurance Program.

Only 14 percent of homeowners in the Northeast hold flood insurance policies, according to the Insurance Information Institute.

Federal law requires flood insurance to mortgage any home in a designated high-risk floodplain. But once the initial policy, usually for a year term, expires, no law says you have to renew it, and many people don’t because banks don’t make them.

In New Jersey, only 231,000 of the homes in the 20 coastal counties had flood insurance, according to FEMA.

There’s a reason why private insurance companies don’t sell flood insurance to people living in high-risk floodplains.  The cost of the policies would be so high to cover the losses in the event of a flood (pretty much rebuilding all houses in the area) that no one would buy the insurance.  So why bother?  Which is why the federal government provides flood insurance.  So they can spread the cost of flood claims to people who don’t live in high-risk floodplains.  Something insurance companies can’t do.  Because they don’t have the power to tax or print money.  But even the policies the government sells are too expensive for 86% of the people living in high-risk floodplains.  So they don’t buy them.  And suffer the consequences when the flood comes.

So that blessing of Keynesian-like economic stimulus?  The money to pay for it comes from in part insurance companies who can’t invest that money elsewhere.  In part from the federal government, further increasing the federal deficit which is ultimately paid by the taxpayers.  But mostly from the people who lost everything and have to pay out of pocket to rebuild their lives.  This is the blessing of that economic activity.  The destruction of lives so other people can prosper.

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Superstorm Sandy Recovery Slower in Less Affluent Areas where People Feel Abandoned

Posted by PITHOCRATES - November 4th, 2012

Week in Review

After George W. Bush used his special secret powers to steer Hurricane Katrina into New Orleans and then blew up the levees protecting the city because he hated poor minorities (that’s what some on the Left believe), the media attacked him for the federal response.  Nothing was done fast enough.  Or good enough.  And the reason was because George W. Bush hasted poor minorities.  But many have placed a lot of blame on the mayor and governor.  For not following New Orleans’ evacuation plan.  Especially the mayor for waiting so long to give the evacuation order.  Probably few will ever be satisfied with placing the blame for the aftermath of Katrina.  For they could have done a lot of things better.

Katrina is past history.  A tragedy.  But a learning opportunity.  After that experience all levels of government should be able to operate as a finely oiled machine to bring quick relief to anyone suffering a Katrina-like event.  And now we’ve had one.  Hurricane Sandy (or Superstorm Sandy).  So how is the Sandy aftermath going?  Well, if you read some reports, you’d think you were reading about Katrina again (see ‘This is our Katrina’: Misery for 2.5 million STILL without power after six days as lawlessness and fear take over New York’s outer boroughs by Rachel Rickard Straus and Snejana Farberov posted 11/3/2012 on the Daily Mail).

Almost one week after superstorm Sandy struck the East Coast with its ferocious force, power was still out to some 2.5 million customers due to damages, down from 3.5 million on Friday, the U.S. Department of Energy’s Office of Electricity Delivery & Energy Reliability claimed.

The state with the largest number of outages by far is still New Jersey with 32 percent of customers without power, it said it a report.

And as the lights begin to flicker on in Lower Manhattan, nine percent of customers across the state of New York still do not have power, followed by seven percent in Connecticut.

This comes as residents of the Rockaways in Queens continued to struggle without power, heat or food for a sixth day as their neighborhood slowly descended into chaos.

‘It’s chaos; it’s pandemonium out here,’ said Chris Damon, who had been waiting for 3.5 hours at the site and had circled the block five times. “It seems like nobody has any answers.”

Added Damon: ‘I feel like a victim of Hurricane Katrina. I never thought it could happen here in New York, but it’s happened.’

With little police presence on the storm-ravaged streets, many residents of the peninsula have been forced to take their protection into their own hands, arming themselves with guns, baseball bats and even bows and arrows to ward off thugs seeking to loot their homes…

City Councilman James Sanders said he fears that things are going to get even worse.

‘We have an explosive mix here,’ he said. ‘People will take matters into their own hands.’

Sanders has directed much of his anger and frustration at LIPA, calling on the City Council to investigate the utility for ignoring the Rockaways for so long.

‘LIPA has failed the people of the Rockaways,’ he said. ‘It’s a question of class… serving the richer areas of Long Island and ignoring the Rockaways…’

Stranded neighbors largely have been relying on volunteers delivering food, water and other basic necessities while the Red Cross and FEMA were still nowhere in sight…

In a Coney Island apartment block, where tenants huddle together in one room and human waste spills out of the toilet, tenant Jeffery Francis despairs that help is not getting to Brooklyn faster.

We are scavenging for food like animals,’ he told the New York Daily News. ‘We are in a crisis and no one will help us. Look at us. We are misery. Everyone cares about Manhattan. No one is looking out for us. Nothing…’

While power is likely to be returned to Manhattan’s East and West Villages, Financial District, Chelsea, Chinatown and the Lower East Side by the weekend, according to the power company Con Edison outages in Brooklyn, Queens and Staten Island are not expected to be repaired for another week.

Across Staten Island residents are also increasingly frustrated they are being passed over while other parts of New York and New Jersey receive aid and attention…

For power companies, the scale of the destruction was unmatched – more widespread than any blizzard or ice storm and worse than the aftermath of Hurricane Katrina.

‘It’s unprecedented: fallen trees, debris, the roads, water, snow. It’s a little bit of everything,’ said Brian Wolff, senior vice president of the Edison Electric Institute, a group that lobbies for utilities.

Initially, about 60 million people were without power in 8.2 million homes and businesses.

By Wednesday night, that number had fallen to roughly 44 million people in 6 million households and businesses and today around 3.6 million are without power.

Manhattan and Long Island getting power before the less affluent areas hit by the storm?  That sounds like what the Left claimed the Bush administration was doing in New Orleans.  Now either President Obama hates poor minorities, too.  Or neither he nor George W. Bush hate poor minorities.  More likely the Democrat-friendly media reported every New Orleans failing because they hated George W. Bush.  While they will make no such claims in the Sandy aftermath because they love President Obama.

It would probably be better to have a Republican in the White House during the Sandy recovery.  Because the media would be relentless attacking the administration for every misstep.  While a lesser federal effort under a Democrat administration will get a more positive treatment in the media.  So there would be more urgency under a Republican administration to help people than there would be under a Democrat administration.  Especially poor people and minorities.  Who the Left says Republicans hate.  Especially when this is happening a week before an election.

Had Sandy happened with George W. Bush in office running for reelection they would have excoriated him for hitting the campaign trail.  For not expending every last effort in the recovery process.  It would have been just like Katrina.  But President Obama can hit the campaign trail.  For he walked New Jersey with Governor Christie.  And that was enough.  Of course the people in Brooklyn, Queens, Staten Island, New Jersey and in the other areas struggling to recover from Sandy probably want more.  Especially when they see the lights coming on in Manhattan when they have no power, food or heat.  And have to defend themselves from roving mobs of looters.

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Governor Cuomo cuts Government Regulations to Speed Fuel Deliveries into New York Harbor

Posted by PITHOCRATES - November 4th, 2012

Week in Review

The crisis in the northeast following super storm Sandy has shown why we are ‘addicted’ to oil.  For when everything else fails us it’s what we turn to most (see New York Harbor Reopens, Bringing Hope to the Fuel-Hungry by Martha C. White posted 11/2/2012 on CNBC).

On Friday, Cuomo signed an executive order allowing distributors and transporters to bring gasoline, diesel and kerosene into New York State without being required to meet typical registration requirements.

How do you make things work faster and more efficiently?  Get rid of governmental regulations.  That’s right, when you need things to operate at their best you remove government.  You don’t add more government.  Just think how much better the economy would be if it was this way all of the time.  If it was we probably wouldn’t have a U-6 unemployment rate of 14.6%.

But other means of getting fuel into the area were still limited. And that’s not such good news for drivers who have spent hours lined up for gas or for thousands of homeowners who have been forced to use gas-powered generators to light homes darkened by Sandy.

Attack oil all you want but there is a reason why we’re addicted to it.  It’s the fuel that brings food to our grocery stores.  It’s the fuel that lets us drive to someplace that didn’t lose their electric power so we can find food and shelter.  And it’s the fuel that lets us heat our homes and refrigerate our food when we lose our electric power.  Oil is the go-to fuel when everything else fails us.  It’s Old Reliable.  And at times the difference between life and death.

The Oil Price Information Service reported that two big pipelines were scheduled to resume partial operations Thursday and Friday, although the oil they carry only moves at a rate of three to five miles an hour.

Even if the ports and pipelines were running at full capacity, though, getting that fuel into people’s cars presents other challenges.

One is the ongoing power outages. “We are all dependent on utilities for electricity and that includes service stations and bulk terminals,” Tom Kloza, chief oil analyst at OPIS, said via email…

At the retail level, tankers won’t deliver fuel to a gas station that doesn’t have electricity to power its pumps. As of Thursday, the American Automobile Association estimated that only 35 to 40 percent of gas stations in New York City and New Jersey were operating. On Long Island, the estimate was 30 to 35 percent.

The winds and tidal surge were devastating.  Downing power lines like falling dominoes.  But once the power lines are back up electric power will flow again.  Imagine if they had to rebuild the power generating infrastructure, too.  If the areas affected by super storm Sandy were powered by clean energy of the future.  Wind power and solar power.  If these were swept away like falling dominoes, too, it would take months to install new solar arrays and windmills.  In fact, it would take so long that they would probably attach the grid in those areas to a coal-fired power plant.  Until they could rebuild the clean power of the future.  While the detested coal-fired power plant (detested by the Left) shoulders the load comfortably.  Allowing those ravaged by super storm Sandy to return to normalcy quicker.  In fact, it would be far less costly just to leave these areas connected to a coal-fired power plant.  And smarter.  Because there will be other super storms coming that will just sweep the new solar arrays and windmills away like the previous ones.

If you’re interested in protecting human life during trying times you should embrace oil and coal.  As one will allow people to live when everything else is failing them.  And the other will allow the restoration of power as soon as the power lines are restored.  Something that solar and wind won’t do.

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Mother sacrifices her Body to Shield her Children from their Collapsing House

Posted by PITHOCRATES - March 10th, 2012

Week in Review

What is love?  Is it a racing heart beat when you’re with someone special?  A flushing of the cheeks from a kiss?  The automatic date on a Friday night that is mutually understood?  No.  It’s none of these things.  These are only emotions.  Feelings.  True love is sacrificing yourself in your love for others.  Like a soldier falling on a live hand grenade to save fellow soldiers.  A husband giving up his seat in a lifeboat and dying so his wife can live.  Or a mother willing to sacrifice everything to shield her children from a collapsing house (see Hero Mom, Stephanie Decker, Recounts Saving Kids From Tornado, Losing Legs by MATT GUTMAN posted 3/5/2012 on ABC News).

As the sky glowered black and Stephanie Decker felt the monster tornado begin to suck her house into its vortex, she knew it would not hold and she had no choice but to shield her two young kids with her own body. She lost her legs in the process…

She was determined to keep her kids safe, and her actions saved them, but at a steep cost. Not only was her home lost, but both of her legs had to be amputated late Friday — one just below the knee, the other just above it…

Both her legs were smashed. She’d also suffered a punctured lung.

Her children, however, were unscathed…

In the wake of her injuries, a benefit fund has been set up for Stephanie Decker at Fifth Third Bank, 392 S Indiana Ave, Sellersburg, IN, 47172.

The strongest love is that love between mother and child.  A mother will do anything to protect her children.  And won’t stop fighting until she has given everything that she can give.  Like Stephanie Decker.  Hero.  Mother.  So think about this hero the next time you’re about to criticize a woman for being just a mother.  For there is no higher calling.  To raise a family.  And to experience this pure love.  A love so strong that a mother will sacrifice everything without hesitation for that love.  Something no career can match.  Unless you’re falling on a live hand grenade to save your fellow soldiers.

May God help Mrs. Decker and her family through this most difficult time.  And may her benefit fund overflow with generosity.

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Fukushima now Stable 9 months after Earthquake/Tsunami, Still no Chernobyl

Posted by PITHOCRATES - December 17th, 2011

Week in Review

The Fukushima disaster was bad.  But it wasn’t Chernobyl bad.  And it doesn’t appear it’s going to get Chernobyl bad.  No doubt to the dismay of antinuclear environmentalists everywhere (see Japan to declare ‘cold shut-down’ at Fukushima posted 12/16/2011 on BBC News Asia).

An earthquake and tsunami in March knocked out vital cooling systems, triggering radiation leaks and forcing the evacuation of thousands of people.

Mr Noda’s declaration of a “cold shutdown” condition marked the stabilisation of the plant.

The government says it will take decades to dismantle it completely.

It took about 9 months to make these reactor cores stable.  And there has been some radiation released here and there.  But nothing like in the Ukraine when Chernobyl blew up and wafted it’s radioactive debris across Europe.  Remember, Chernobyl was the result of an exercise gone wrong.  Human error.  Fukushima was hammered with first an earthquake.  Which it withstood.  Then a tsunami.  Which it withstood, too.  Unfortunately, the electrical switchgear that powered its cooling pumps became submerged in salt water.  Something that doesn’t mix well with electricity.  And the cooling pumps failed.  Then the reactors overheated.

As bad as a nuclear accident is there must be a lot of people who thought that if we must have one at least it happened in Japan.  And, no, not because anyone wishes the Japanese any ill will.  Fukushima has been out of the news for half a year or so.  And yet they only stabilized it now.  Which means that for 6 months or so few have paid attention to the worst nuclear accident since Chernobyl.  Tells you a lot about the Japanese.  No one doubted that they would take care of this problem.  For they have an in-depth understanding of the technology they use.  And can respond to any accident that their engineering let’s pass.

Can you imagine if this happened in Iran?

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Keynesians like Tax, Spend and Inflation. Those living in the Real World Don’t.

Posted by PITHOCRATES - August 29th, 2011

Trying to get Economic Traction during Periods of Inflation is like trying to crawl up a Slippery, Muddy Slope

Good news.  Consumer spending is up (see Consumer spending rebounds, calms recession fears by Lucia Mutikani posted 8/29/2011 on Reuters).

The Commerce Department said on Monday consumer spending increased 0.8 percent on strong demand for motor vehicles, after slipping 0.1 percent in June…

When adjusted for inflation, spending rose 0.5 percent last month, the largest gain in 1-1/2 years and the first increase since April.

Half of one percent.  Wow.  If it wasn’t for inflation that could have been 0.8%.  Now is this good news?  Or is it just the back-to-school summer bump?  People buying those things they have to.  So their kids can go back to school.

Despite the rise in spending last month, economists remain worried about the slow pace of income growth. Income gained 0.3 percent after advancing 0.2 percent in June.

Disposable income increased 0.3 percent, but when adjusted for inflation fell 0.1 percent — the first decline since September.

Thanks to inflation, a gain in disposable income became a loss.  No wonder people aren’t spending.  They have no money. 

The report also showed inflation pressures remain elevated. The personal consumption expenditures price index, or PCE, rose 0.4 percent after slipping 0.1 percent in June.

Compared to July last year, the index was up 2.8 percent, the largest increase since October 2008, after advancing 2.6 percent in June.

Whoa.  The PCE rose 2.6% in June?  No wonder we have no money to spend.  These higher prices are the same as taking a 2.6% pay cut.  That’s why consumer spending is flat.  Inflation is shrinking the money in our wallets faster than we can spend it.

Trying to get economic traction during periods of inflation is like trying to crawl up a slippery, muddy slope.  You struggle to ascend 3 feet then pause to rest.  And slide 2 feet back down.  Or, based on the disposable income numbers above, you slide 4 feet back down.  Ending up worse off than when you started.

The hell with Inflation, let’s just keep Heating up that Economy with Artificial Demand

Yes, inflation is bad.  It destroys real economic growth.  Real wealth.  And the standard of living.  But Keynesians love it.  And they want more of it (see Changing target posted 8/27/2011 on The Economist).

The gap between the performance of inflation and that of nominal GDP is so big that some economists, such as Scott Sumner of Bentley University, are dusting off an old idea. They are calling for central bankers to switch targets. Rather than directing monetary policy to hit inflation targets (as they have done for the past 20 years) central bankers should take aim at nominal GDP (or NGDP)…

Advocates of nominal GDP targeting claim that it would achieve greater macroeconomic stability.

In other words, they say the hell with inflation.  Let’s just keep heating up that economy with artificial demand.  Until real demand catches up. 

So were they wrong all this time?  And if so, why would we think they got it right now?  I mean, they have a history of being wrong.  And a change in policy is an admission that they were wrong.

They tried something like this before.  During the Seventies.  Where we had both high unemployment.  And high inflation.  You know what finally fixed that?  Ronald Reagan.  Who wasn’t a Keynesian.

The Central Premise of Keynesian Economics is any Spending is Good Spending

So why are they still taken seriously?  If Keynesians have a record of failure, why is Keynesian economics still the mainstream thought?  Because it empowers government.  And government spending.

It’s a religion to them.  And they never lose their faith.  Despite a long record of failure.  Besides what other economics school puts a bunch of Poindexters in charge of economic policy?  Telling American people what’s best for them?  Despite never having done anything themselves in the private sector?  This is about as close to an aristocracy that you can get in America.

To get an idea of how out of touch with reality these economists are, consider their central premise.  Any spending is good spending.  No matter where that money comes from.  Because they don’t look that far back.  They don’t see alternate uses of money.  Or the loss and sacrifice that often accompany ‘stimulus’ spending.  They just see the ‘goodness’ of spending.  And nothing better illustrates this than their love of disasters (see Disaster isn’t a stimulus package by Jeff Jacoby posted 8/28/2011 on boston.com).

“One of the most reliable results of any natural disaster,’’ remarks economist Russell Roberts, “is the spreading of bad economics.’’

And how they love to spread bad economics.  Where any spending is good spending.  Even if it takes loss of life and destroyed cities to initiate that spending.  Consider the following:

Japan’s Earthquake and Tsunami

Three days after disaster struck, the Huffington Post published Nathan Gardels’s essay celebrating “The Silver Lining of Japan’s Quake.’’ Urging his readers to “look past the devastation,’’ he rejoiced that “Mother Nature has accomplished what fiscal policy and the central bank could not.’’ Now the Japanese would have lots of bridges to build, “entire cities and regions’’ to reconstruct, and information networks to revamp.

“The result of all the new wealth creation,’’ Gardels concluded, “will be money in the pockets of Japanese.’’

9/11

“It seems almost in bad taste to talk about dollars and cents after an act of mass murder,’’ wrote Paul Krugman in The New York Times less than 72 hours after the atrocities of 9/11, but the terrorist attacks could “do some economic good.’’ After all, Manhattan would “need some new office buildings’’ and “rebuilding will generate at least some increase in business spending.”

Hurricane Katrina

Barely had the storm subsided when J.P. Morgan economist Anthony Chan was assuring CNN/Money that hurricanes tend to stimulate growth. Granted, New Orleans had been shattered, said Chan, but “over the next 12 months, there will be lots of job creation, which is good for the economy.’’

Southern California wildfires

“This will probably be a stimulus,’’ University of San Diego economist Alan Gin told the Los Angeles Times, since “there will be a huge amount of rebuilding … financed by insurance payments.’’

Sure, some people will benefit from the economic activity to rebuild from a disaster.  But a lot of people will have already lost by then.  And will lose even more via higher insurance premiums.  Higher taxes.  Or higher inflation.  Because there’s no such thing as a free lunch.  Someone ultimately has to pay.

Or, said in another way…

More than 160 years ago, the French political economist Frederic Bastiat skewered such attitudes in a now-famous parable: A boy breaks a shopkeeper’s window, and everyone who sees it deplores the pointless destruction. Then someone insists that the damage is actually for the good: The six francs it will cost the shopkeeper to replace his window will benefit the glazier, who will then have more money to spend on something else. Those six francs will circulate, and the economy will grow.

The fatal flaw in that thinking, Bastiat wrote, is that it concentrates only on “what is seen’’ – the glazier being paid to make a new window. What it ignores is “what is not seen’’ – that the shopkeeper, forced to spend six francs on that, has lost the opportunity to spend them on better shoes, a new book, or some other addition to his standard of living. The glazier may be better off, but the shopkeeper isn’t – and neither is society as a whole.

Would a Keynesian leave his or her car in a bad neighborhood with the doors unlocked and the key in the ignition?  To encourage someone to steal that car?  So they can stimulate the economy by buying a new car?  That would result in new spending.  And they believe all spending is good spending.  But somehow I don’t think they would.  Not with their car.  Your car, perhaps.  But not theirs.

The Obama Administration is a Keynesian Administration

Inflation destroys real economic growth.  Real wealth.  And the standard of living.  Yet it’s the favorite policy tool of Keynesian economists.  Well, that and devastating disasters.  To other people, that is.  Not to them.

These people don’t live in the real world.  They live in the fairyland of academia.  It’s a world of theory.  Not reality.  Where they can tell each other how brilliant they are.  Despite all their failures.

And the scary thing is this.  These are the people guiding U.S. policy.  The Obama administration is a Keynesian administration.  While the Great Recession lingers on, these people live comfortably.  Thinking up the next thing they can do to help this economy.  And us.  Because they know what’s best for us.  And they don’t even have to ask us.  Not that they would want to.  Or would.

And their record so far?  Why, it’s so good that they want to change the way the Fed targets monetary policy.  And by ‘good’ I mean bad.  Very, very bad.  For they say if it ain’t broke don’t fix it.  And they’re trying to fix it.  So it must be broke.  Very, very broke.

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Anti-Nuclear Crowd yearns for Chernobyl in Japan

Posted by PITHOCRATES - March 13th, 2011

Enough of Exploiting Japan’s Disaster for Political Gain

First it was an environmentalist saying global warming caused the 8.9 magnitude earthquake.  A sure grasping of straws in their quest to move man back into the cave.  Then it was anti-nuclear power Rep. Edward Markey of Massachusetts, the senior Democrat on the House Natural Resources Committee, who said we should learn from Japan’s near Chernobyl-like disaster.  And move back into the cave.  And now it’s Senator Joe Lieberman, chairman of the Senate Homeland Security and Governmental Affairs Committee, chiming in (see “Put the brakes” on nuclear power plants: Lieberman by Will Dunham posted 3/13/2011 on Reuters).

“I don’t want to stop the building of nuclear power plants,” independent Senator Joe Lieberman, chairman of the Senate Homeland Security and Governmental Affairs Committee, said on the CBS program “Face the Nation.”

“But I think we’ve got to kind of quietly put, quickly put the brakes on until we can absorb what has happened in Japan as a result of the earthquake and the tsunami and then see what more, if anything, we can demand of the new power plants that are coming on line,” Lieberman added.

Put the brakes on?  What, he wants to slow down from the breakneck speed we’re building new nuclear power plants and bringing them on line?  That’s going to be pretty hard to do considering the speed we’re going at.  I mean, when was the last time we built a nuclear power plant in the United States?

It’s not about what happened at the Fukushima Power Plant, it’s about what hasn’t Happened

We’re missing the big picture here.  The nuke plants didn’t kill or wipe out cities yet.  Like the earthquake-tsunami one-two punch has.  Let’s not lose sight of that little fact (see Nuclear Overreactions posted 3/14/2011 on The Wall Street Journal).

Part of the problem is the lack of media proportion about the disaster itself. The quake and tsunami have killed hundreds, and probably thousands, with tens of billions of dollars in damage. The energy released by the quake off Sendei is equivalent to about 336 megatons of TNT, or 100 more megatons than last year’s quake in Chile and thousands of times the yield of the nuclear explosion at Hiroshima. The scale of the tragedy is epic.

Yet the bulk of U.S. media coverage has focused on a nuclear accident whose damage has so far been limited and contained to the plant sites. In simple human terms, the natural destruction of Earth and sea have far surpassed any errors committed by man.

So in the grand scheme of things, the Japanese nuclear plants are minor players in this great tragedy.  Even that embellishes their role.  Much of Japan lies in waste.  Because of the earthquake and the tsunami.  The nukes so far have been innocent bystanders in the death and destruction.  But it’s all we focus on.  Even though they haven’t really done anything yet.  But under the right set of circumstances that don’t currently exist…they could.   So we use the big ‘what if’ to further shut down the already shutdown American nuclear power industry.  Why?  Simple.  Because congress can’t place a moratorium on earthquakes or tsunamis.

So back to that question.  When was the last time we built a nuclear power plant in the United States?

But more than other energy sources, nuclear plants have had their costs increased by artificial political obstacles and delay. The U.S. hasn’t built a new nuclear plant since 1979, after the Three Mile Island meltdown, even as older nuclear plants continue to provide 20% of the nation’s electricity.

So Senator Joe Lieberman wants to tap the breaks on a car that’s been parked and in the garage since 1979.  How does he do it?  Where does the genius come from?

No coal.  No oil.  And now no nukes.  Translation?  No power.  I guess we should practice our hunting and gathering skills.  Because we’re going to need them when we move back into the cave.  Of course, we’ll have to eat our food cold.  You know.  Carbon footprint.  From those foul, nasty, polluting campfires.

In America, Coal, Oil and Nuclear Power all Wear Black Hats

Some in Congress just love the planet so much.  They want to get rid of coal and oil and replace them with clean energy.  Which means nuclear power.  Because windmills and solar panels just won’t produce enough power.  Especially when they want us all driving tiny little electric cars that are going to suck more juice off our strained electrical grid.  And just how strained is our electric grid?  Remember the Northeast Blackout of 2003

High summer currents caused power lines to sag into untrimmed trees.  As lines failed some power plants dropped off the grid.  This strained other power plants.  And other power lines.  More lines failed.  More plants dropped off the grid.  This cascade of failures didn’t end until most of New York, Pennsylvania, Ohio, Michigan and Ontario lost power.  It was huge.  And if you experienced that hot, stifling, August blackout, you know that windmills wouldn’t have helped.  There was no breeze blowing.  And solar panels wouldn’t have helped you sleep at night.  Because there’s no sun at night.  No.  What would have helped was some big-capacity power generation.  Like a coal plant.  An oil plant.  Or a nuke plant.

Energy demands increase with population.  And with electric cars.  We need more generation capacity.  And the only viable green solution is nuclear power.  And now we’re dilly dallying about the dangers of clean nuclear power because of what didn’t happen in Japan (see Japan Does Not Face Another Chernobyl by William Tucker posted 3/14/2011 on The Wall Street Journal).

Rep. Ed Markey (D., Mass.), a longtime opponent of nuclear power, has warned of “another Chernobyl” and predicted “the same thing could happen here.” In response, he has called for an immediate suspension of licensing procedures for the Westinghouse AP1000, a “Generation III” reactor that has been laboring through design review at the Nuclear Regulatory Commission for seven years.

Talk about the irony of ironies.  The Soviet-era nuclear reactor at Chernobyl was the most dangerous ever used.  That reactor went ‘Chernobyl’ because of its design.  A graphite core that caught fire.  And no containment vessel that let plumes from that fire spread radioactive fallout throughout western Russia and Europe.  If the Soviets had used the type of reactor that’s getting all the media attention in Japan, there would have been no Chernobyl disaster.  And now the irony.  Rep. Markey wants to suspend licensing of the world’s safest nuclear reactor (the Generation III) by citing the world’s most dangerous reactor that Japan doesn’t even use. 

But facts don’t matter when you’re just against nuclear power.  No matter how safe the Generation III design is.  Or the fact that it doesn’t even need cooling pumps. 

On all Generation II reactors—the ones currently in operation—the cooling water is circulated by electric pumps. The new Generation III reactors such as the AP1000 have a simplified “passive” cooling system where the water circulates by natural convection with no pumping required.

Despite this failsafe cooling system, there are calls to stop the licensing.  To put the brakes on.  To move back into caves.  All because of what didn’t happen at Fukushima.  What didn’t happen at Three Mile Island.  But what did happen in a Hollywood movieThe China Syndrome.  (But that’s a whole other story.)

If a meltdown does occur in Japan, it will be a disaster for the Tokyo Electric Power Company but not for the general public. Whatever steam releases occur will have a negligible impact. Researchers have spent 30 years trying to find health effects from the steam releases at Three Mile Island and have come up with nothing. With all the death, devastation and disease now threatening tens of thousands in Japan, it is trivializing and almost obscene to spend so much time worrying about damage to a nuclear reactor.

What the Japanese earthquake has proved is that even the oldest containment structures can withstand the impact of one of the largest earthquakes in recorded history. The problem has been with the electrical pumps required to operate the cooling system. It would be tragic if the result of the Japanese accident were to prevent development of Generation III reactors, which eliminate this design flaw.

Looking at Japan with Awe and Reverence

Japan has been nuclear since 1966.  They now have some 53 nuclear reactors providing up to a third of their electricity.  Yes, Japan lies on the Ring of Fire.  Yes, Japan gets hit by a lot of tsunamis.  And, yes, they now have a problem at a couple of their reactors.  But the other 50 or so reactors are doing just fine.  Let’s stop attacking their nuclear program.  So far they’ve done a helluva job.  And the Japanese know a thing or two about nuclear disasters.  They lived through two.  Hiroshima.  And Nagasaki.  Which make Chernobyl look like a walk in a park.  If anyone knows the stakes of the nuclear game, they do.  And it shows.

We should be looking at Japan with awe and reverence.  If they can safely operate nuke plants on fault lines and in tsunami alley, then, by God, we should be able to do it where things aren’t quite as demanding.  And should.  It is time we put on our big-boy pants and start acting like men.  Before we give up on all energy and move back into the cave.  And down a notch or two on the food chain.

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Japan’s Nuke Plants/Coastal Communities withstood the Earthquake but not the Tsunami

Posted by PITHOCRATES - March 12th, 2011

The Awesome Power of Water

Japan’s most powerful earthquake caused a lot of damage.  But the tsunami’s damage may be even greater.

In 1923 the 8.3 magnitude Kanto quake killed 140,000 people.  In 1995 the 7.2 magnitude Kobe quake killed 6,400 people.  The 8.9 magnitude that just hit may have even killed fewer people.  The official count just recently exceeded 1,000.  But we’ll never know.  Japan’s buildings may have withstood this quake.  But the tsunami that followed made coastal communities just disappear. 

In Minamisanriku some 10,000 are missing.  That’s more than half of its population.  And that’s just one coastal community.  Others no doubt suffered the same fate.  The water just came in so fast (see The town that drowned: Fresh pictures from the port where 10,000 people are missing after it was swept away by the megaquake by Jo MacFarlane posted 3/12/2011 on the UK’s Daily Mail).

It only took a few minutes for the 30ft wave to wash the town away with terrifying force. The locals desperately tried to escape to higher ground. But most did not stand a chance.

During an earthquake you can stand in a doorway.  If the building survives you’ll probably be okay.  But there’s not much you can do when a 30 foot wave races toward you.  Other than run away.  To high ground.  Because a 30 foot wave is about as tall as a 3 story building. That’s a lot of water.  And nothing will stop it.

Never let a Good Crisis go to Waste

First it was an environmentalist looking to exploit the Japanese earthquake in the name of global warming.  Now an American congressman wants to exploit the earthquake to hinder the growth of nuclear power (see Japan quake disaster shows U.S. at risk of Chernobyl-type event by Alexander Bolton posted 3/12/2011 on The Hill).

Rep. Edward Markey of Massachusetts, the senior Democrat on the House Natural Resources Committee, warned Saturday that the U.S. is vulnerable to the type of nuclear accident that has sent waves of fear through northeast Japan…

Markey said he hoped the Japanese would act swiftly to bring the situation under control and avoid a Chernobyl-style disaster.

I’m glad he made this statement.  Because I don’t know if the Japanese knew the full extent of what they were facing.  I mean, they’re only up to their elbows in it.  How could they see things as clearly as a politician in Washington?  I’m sure the Japanese ambassador will bestow him with gifts, grateful for this erudite observation.

Chernobyl-style disaster?  I doubt it.  He’s comparing apples to oranges.  Different reactor design (the Chernobyl reactor was a unique Soviet-era design considered to be the most dangerous reactor type in the world).  Different technology.  Different safety precautions.  And, due to its physical size, no containment vessel.  Nothing at all like the Japanese reactors.  Or the American ones.

Japan’s reactors did okay during the earthquake.  Their problems didn’t really start until coastal areas disappeared in the wake of the tsunami.  Yeah, it’s possible that the US Pacific coast could suffer a similar seismic event.  It does sit on the Ring of Fire.  But earthquake-tsunami one-two punches are more probable in Japan than they are on the US Pacific coast.  What happen in Japan could happen in the US.  Just as a meteorite could crash into a nuclear reactor.  Anything is possible.  But the odds favor certain events in certain places. 

Here’s a newsflash.  Life is dangerous.  Driving in a small, fuel-efficient car is dangerous.  Your odds are greater dying in one of those cars than in a nuclear accident.  But we’re not going to stop building small cars, are we?  And neither should we use what’s happening in Japan to further hinder an already hindered industry.

Is it Chernobyl bad or Three Mile Island Bad?

So what is the danger with those nuclear reactors in Japan?  A lot of people are opining.  And they’re not saying the same thing.  So who do we believe?  Depends on which experts you trust more (see Health risk from Japan reactor seems quite low: WHO posted 3/12/2011 on CNBC).

The World Health Organization (WHO) said Saturday that the public health risk from Japan’s radiation leak appeared to be “quite low” but the WHO network of medical experts was ready to assist if requested.

So CNBC has a source that says it may not be that bad.  While The New York Times has a source that says things are bad and can get worse (see Danger Posed by Radioactivity in Japan Hard to Assess by William Broad posted 3/12/2011 on The New York Times).

“The situation is pretty bad,” said Frank N. von Hippel, a nuclear physicist who advised the Clinton White House and now teaches international affairs at Princeton. “But it could get a lot worse.”

Even Japanese officials appear to be contradicting each other (see Japanese Government Confirms Meltdown posted 3/12/2011 on Stratfor).

Japan’s Nuclear and Industrial Safety Agency (NISA) said March 12 that the explosion at the Fukushima Daiichi No. 1 nuclear plant could only have been caused by a meltdown of the reactor core, Japanese daily Nikkei reported. This statement seemed somewhat at odds with Japanese Chief Cabinet Secretary Yukio Edano’s comments earlier March 12, in which he said “the walls of the building containing the reactor were destroyed, meaning that the metal container encasing the reactor did not explode.”

How about hearing from a guy that isn’t there but went through his own nuclear reactor crisis.  In Pennsylvania (see Three Mile Island Meltdown: Richard Thornburgh’s Advice for Japan by Eleanor Clift posted 3/12/2011 on The Daily Beast).

Richard Thornburgh is watching the developments in Japan with a keen sense of déjà vu. He had been in office as Pennsylvania governor only 72 days when he was confronted with a potentially catastrophic event at the Three Mile Island nuclear reactor near Harrisburg. It was resolved without cost to human life, or the environment, which by no means is certain in Japan.

Though what occurred in Japan is the result of a natural disaster, the Republican says, the challenge officials face is identical: “To get a grip on what the facts are.”  That’s difficult when you’re dealing with complicated technology and an abundance of experts, often with their own agendas…

Thornburgh’s advice to his counterparts in Japan is to “just keep plowing ahead on getting a grip on the facts. Make sure the right experts are in place. The quality of the facts is going to determine the quality of the outcome…”

Watching the television coverage of Japan disaster and the ominous news of an explosion at one of its nuclear power plants, he cautions that “there’s nothing inherently unsafe about an explosion—it depends what exploded.” The Japanese have paid careful attention to safety and standards, unlike the Russians, who confronted a similar catastrophe with their reactor at Chernobyl in 1986. When he visited Chernobyl years earlier, Thornburgh recalls, it didn’t even have a containment facility.

So what exactly did explode (see Nuclear power industry watches warily as Japan’s aging reactor is hit hard by Joel Achenbach posted 3/12/2011 on The Washington Post)?

The explosion was not nuclear. Industry officials said it was created by the release of hydrogen gas that mixed with oxygen and exploded.

The building around the reactor vessel is partially destroyed, but Japanese officials say the primary vessel and the reactor core within are intact.

“If the reactor vessel is breached . . . then this radioactive stuff starts coming out in copious amounts,” said Robert Alvarez, a former senior adviser to the Department of Energy who studies nuclear power at the Institute for Policy Studies in Washington.

Well, perhaps we know this much.  A non-nuclear explosion occurred.  There is no real radioactive fallout.  And we can compare and contrast what we know now about what we knew then. 

As at Fukushima, the Three Mile Island accident was triggered by a disruption of water flow to the reactor. Several instruments failed and operators did not realize that pressure was building inside the reactor. A heavy secondary containment shield ultimately prevented all but a tiny amount of radiation from escaping into the environment.

The Chernobyl disaster, in contrast, was caused by a crude reactor design and at least six fatally flawed decisions by operators during a risky test. A huge power spike and the bad decisions drove the reactor out of control. An explosion then blew the reactor apart and spewed radioactive debris for a week.

Unlike U.S. and Japanese nuclear plants, Chernobyl lacked the heavy shielding that eventually halted the Three Mile Island disaster – and that all of Japan desperately hopes will prevent Fukushima Daiichi’s unit one from melting down.

Yes, there’s uncertainty.  But it appears that what’s happening in Japan is less Chernobyl.  And more Three Mile Island.  If it turns out this way this won’t be so bad after all.  And it will say a lot about Japan’s nuclear power industry.  For Three Mile Island didn’t get hit with an earthquake AND a tsunami.

Right now all eyes are on the nukes.  People are holding their breath.  Once they secure the power plants, though, it will be anticlimactic.  For the real work will then only begin.  The cleanup.  The rebuilding.  And the wakes. 

God give the Japanese strength.

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