Tag Archives: Hurricane Harvey

Congress Exploits Hurricane to Raise Debt Ceiling, by Ron Paul

Posted on September 11, 2017 | Leave a comment

Raised as it is every times it comes up, the debt ceiling hasn’t enforced fiscal discipline on Washington. However, it does temporarily shine a light on the debt, which isn’t a bad thing. From Ron Paul at ronpaulinstitute.org:

Former White House Chief of Staff Rahm Emanuel famously counseled politicians to never let a crisis go to waste. Sadly, this week President Trump and congressional leaders of both parties showed that they have taken this advice to heart when they attached a debt ceiling increase and an extension of government spending to the over 15 billion dollars Hurricane Harvey relief bill.

This maneuver enabled Congress to avoid a contentious debate over whether to pass a clean debt ceiling increase or to pair it with spending cuts. After all, few members of Congress want to be accused of blocking a bipartisan deal to help those suffering from Harvey over what the media will spin as a “right-wing anti-government” crusade.

Combining hurricane relief with a debt ceiling increase and an extension of government funding had bipartisan support. Days before President Trump sat down with Democrats to hammer out a deal, Capitol Hill was abuzz with talk about a Senate GOP plan to attach a debt ceiling increase and an extension of government funding to the hurricane bill.

If, as was reported in the media, the GOP leadership objected to Trump’s deal, they could have refused to bring it up for a vote. After all, as Senator John McCain wrote this week, Congress does not work for President Trump. But, the deal quickly passed in the House and the Senate with large bipartisan majorities. As is common in DC, the parties agreed on the principle, and they only squabbled over the details.

A refusal to raise the debt ceiling would not cause the government to default; it would simply force Congress to set spending priorities and make real spending cuts. In contrast, raising the debt ceiling allows Congress to continue to run up more debt in order to grow the government. The American people will pay for these deficits either directly through an increase in the income tax and other federal taxes, or indirectly through the inflation tax.

To continue reading: Congress Exploits Hurricane to Raise Debt Ceiling

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On Repairing/Rebuilding 100,000+ Damaged Houses, by Charles Hugh Smith

Posted on September 10, 2017 | 2 comments

Rebuilding Houston is going to be expensive and difficult. From Charles Hugh Smith at oftwominds.com:

Almost lost in all the dollar estimates of property damage is the human loss, suffering and stress.
I am not an expert in repairing flood damage, or in dealing with insurance companies, FEMA or all the other pieces that will go into homeowners getting the funding needed to repair or rebuild their homes.
But I do know a bit about construction after 44 years in the field, and I have been soberly reflecting on the many hurdles that face everyone involved in restoring / repairing tens of thousands of homes, more or less all at the same time.
Preliminary estimates set the number of flood-damaged homes in Houston at around 100,000. More recent estimates put the number at around 40,000.
No one yet knows how many homes in Florida have been damaged by Hurricane Irma, but the number will undoubtedly be a big one.
Here are some semi-random thoughts on the challenges of repairing/rebuilding so many dwellings in as short a period of time as possible:
1. The average cost of homes in Houston is reportedly around $300,000. Many coastal areas in Florida are similarly valued. Just as a guess, many of the affected homeowners probably have mortgages in the $200,000 range.
It’s been reported that only 1 in 6 in the affected areas of Houston have flood insurance, suggesting 85% of those whose homes were rendered unlivable will need to borrow money to fund the repairs.
It seems federal agencies offer homeowners loans for this purpose, or access to what is effectively a second mortgage.
If the repaired home will be worth $300,000–questionable, perhaps, for those houses which have been repeatedly flooded by lesser storms–then how much money will homeowners be willing to borrow to keep the home?
If a homeowner has $50,000 equity and a $200,000 mortgage, and he has to borrow $100,000 to make the home livable and replace all the ruined contents, does it make financial sense to have $300,000 in mortgages on a house that’s worth $250,000? How much is the emotional connection to the home and neighborhood worth?
How many homeowners simply can’t afford to borrow the sums needed?

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America Can’t Afford to Rebuild, by Raúl Ilargi Meijer

Posted on September 9, 2017 | 1 comment

Start toting up the rebuilding costs for Hurricanes Harvey and Irma and you come up with a big, unpayable number. From Raúl Ilargi Meijer at theautomaticearth.com:

A number of people have argued over the past few days that Hurricane Harvey will NOT boost the US housing market. As if any such argument would or should be required. Hurricane Irma will not provide any such boost either. News about the ‘resurrection’ of New Orleans post-Katrina has pretty much dried up, but we know scores of people there never returned, in most cases because they couldn’t afford to.

And Katrina took place 12 years ago, well before the financial crisis. How do you think this will play out today? Houston is a rich city, but that doesn’t mean it’s full of rich people only. Most homeowners in the city and its surroundings have no flood insurance; they can’t afford it. But they still lost everything. So how will they rebuild?

Sure, the US has a National Flood Insurance Program, but who’s covered by it? Besides, the Program was already $24 billion in debt by 2014 largely due to hurricanes Katrina and Sandy. With total costs of Harvey estimated at $200 billion or more, and Irma threating to cause far more damage than that, where’s the money going to come from?

It took an actual fight just to push the first few billion dollars in emergency aid for Houston through Congress, with four Texan representatives voting against of all people. Who then will vote for half a trillion or so in aid? And even if they do, where would it come from?

To continue reading: America Can’t Afford to Rebuild

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Government ‘Aid’ Makes Disasters Worse, by Ron Paul

Posted on September 4, 2017 | Leave a comment

You should be sitting down for this: governments generally make things worse! With that shock out of the way, here’s Ron Paul at ronpaulinstitute.org:

Texans affected by Hurricane Harvey, including my family and me, appreciate the outpouring of support from across the country. President Donald Trump has even pledged to donate one million dollars to relief efforts. These private donations will be much more valuable than the as much as 100 billion dollars the federal government is expected to spend on relief and recovery. Federal disaster assistance hinders effective recovery efforts, while federal insurance subsidies increase the damage caused by natural disasters.

Federal disaster aid has existed since the early years of the republic. In fact, it was a payment to disaster victims that inspired Davy Crockett’s “Not Yours to Give” speech. However, the early federal role was largely limited to sending checks. The federal government did not become involved in managing disaster relief and recovery until the 20th century. America did not even have a federal agency dedicated solely to disaster relief until 1979, when President Jimmy Carter created the Federal Emergency Management Agency (FEMA) by executive order. Yet, Americans somehow managed to rebuild after natural disasters before 1979. For example, the people of Galveston, Texas successfully rebuilt the city following a major hurricane that destroyed the city in 1900.

FEMA’s well-documented inefficiencies are the inevitable result of centralizing control over something as complex as disaster recovery in a federal bureaucracy. When I served in Congress, I regularly voted against federal disaster aid for my district. After the votes, I would hear from angry constituents, many of whom would later tell me that after dealing with FEMA they agreed that Texas would be better off without federal “help.”

Following natural disasters, individuals who attempt to return to their own property — much less try to repair the damage — without government permission can be arrested and thrown in jail. Federal, state, and local officials often hinder or even stop voluntary rescue and relief efforts.

FEMA is not the only counterproductive disaster assistance program. The National Flood Insurance Program was created to provide government-backed insurance for properties that could not obtain private insurance on their own. By overruling the market’s verdict that these properties should not be insured, federal flood insurance encourages construction in flood-prone areas, thus increasing the damage caused by flooding.

To continue reading: Government ‘Aid’ Makes Disasters Worse

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Perturbations Anon, by James Howard Kunstler

Posted on September 4, 2017 | Leave a comment

James Howard Kunstler sees the next few months fraught with peril. From Kunstler at kunstler.com:

Happy Labor Day everybody. Forward from here, things get jiggy. The nation faces a pile-up of events as we turn the corner on summer and head into the spook-house of autumn.

This will be the week when the reeking after-effects of Harvey’s journey through Houston become super-vivid. It’s going to be hot-hot-hot there all week, perfect conditions for mold to creep through untold square-footage of soggy sheetrock and plenty of nutriment in the toxic gumbo of lingering standing water for mosquitoes and bacteria to breed like crazy. Bigger surprises will be waiting for some:

HOUSTON (CNN) — A Texas homeowner returned to his flood-marred home Friday in the aftermath of Hurricane Harvey to a shocking surprise: a 10-foot gator in his living room. Brian Foster made the discovery while assessing how badly the water had damaged his house near Lake Houston, north of Houston….

The news media are already calling Harvey the costliest storm in US history, with estimates running to $180 billion. But damage assessments are incomplete for highways, surface roads, bridges, railroad tracks, water and sewer systems, public buildings, dams (Addicks and Barker), natural gas terminals, and port facilities, not to mention homes and business structures. Texas is the nation’s number one cotton producer and the storm blew away many temporary cotton bale storage modules following a bumper harvest. Corn, soybeans, and cattle were also affected.

The Colonial Pipeline’s hookups to the refineries west of Lake Charles, Louisiana, won’t reopen fully until Tuesday at the earliest. The pipeline conveys 40 percent of the gasoline consumed from Atlanta to Washington, D.C. and extends up to the New York metro area. By next weekend Hurricane Irma looks like she’ll be slamming into the US Atlantic coast somewhere between Jacksonville and the Carolina Outer Banks as a category 3 or 4 event. There’s even talk today of possible cat 5. Will there be enough gasoline on hand for the folks at risk to evacuate? Stand by on that.

To continue reading: Perturbations Anon

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15 Trillion Gallons Of Keynesian Goodness? by David Stockman

Posted on September 2, 2017 | 2 comments

If does not increase an economy’s wealth to destroy and then rebuild. Frédéric Bastiat called the belief that it does “the broken window” fallacy. From David Stockman at lewrockwell.com:

If you ever wondered why our monetary central planners and their Wall Street megaphones are so clueless about the on-going deterioration of capitalist prosperity in America, look no farther than this bit of tommyrot from JPMorgan’s chief economist. Therein one Michael Feroli avers that Harvey’s estimated 15 trillion gallon deluge on Houston may appear to be crushing tens of billions of residential, commercial and industrial properties, but not really.

Alas, what finally appears to be real news from CNN is not all that. By the lights of Feroli’s economics, Harvey is a fake disaster that will lead to an increase in GDP!

As a general rule, hurricanes tend to be a short-run depressant and a medium-run boost to economic activity. Sources within the insurance industry as well as J.P. Morgan’s insurance industry research team estimate that the physical damage will be in the $10-$20 billion range…….Total damage, and total rebuilding, should be greater than this amount, as invariably there will be uninsured losses that will be repaired. Even taking this into account, we believe the overall impact on GDP in Q3 and Q4 should be positive but very small, consistent with the historical experience. For this reason, we are not changing our top-line GDP forecast.

We could send him Bastiat’s essay on the “broken window fallacy” and be done with it. After all, $30-50 billion (or even more depending on the final storm phases) of perfectly good capital stock—-drilling rigs, oil and gas platforms, refineries and chemical plants, office buildings, hotels and shopping malls, public roads and utility lines and hundreds of thousands of residences and apartment units—are being destroyed or badly impaired.

That subtracts from societal wealth pure and simple: There is no economic growth or Keynesian goodness to it!

Indeed, if that simple proposition were not true, why leave it to the chance of Mother Nature having one of her episodic hurricane tantrums? The geniuses on Capitol Hill might as well be encouraged to deploy demolition crews around the country to foster the need for vast rebuilding efforts in their wake, thereby sending the GDP growth stats soaring and Home Depot’s stock to new all-time highs.

To continue reading: 15 Trillion Gallons Of Keynesian Goodness?

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A Hot Mess, by James Howard Kunstler

Posted on September 1, 2017 | Leave a comment

James Howard Kunstler finds potential catalysts for cataclysm in Hurricane Harvey and the impending debt ceiling contretemps. From Kunstler at kunstler.com:

It wasn’t until more than a week after Hurricane Katrina slammed into New Orleans in 2005 that the full extent of the damage was recognized and so it will go with the hot mess where Houston used to be. Mostly, it is inconceivable that the business activity which made Houston the nation’s fourth largest city and, according to Chris Martenson, equal to the 10th largest economy in the world, will ever return to what it was before August 26, 2017.

The major activity there has been the refining and distribution of oil products, and no activity is more central to the functioning of the US economy. So the public and our currently clueless leaders across the political spectrum, plus a legacy news media lost in the carnival of race and gender freak shows, is about to discover the dynamic relationship between energy and an industrial economy.

The pivot in this relationship is banking, which enables the conversion of oil’s raw power into everything else that goes on in a so-called advanced economy. The popular assumption is that federal disaster relief can compensate for all losses. That assumption may go out the window with the Houston flood of 2017. And no amount of federal aid can compensate for the hours, days, and weeks that will tick by as businesses struggle to return to something like their former level of normal operation.

Many businesses will never recover, especially the smaller ones that support the big one — the little tool and die shops, the construction outfits, the trucking and shipping concerns, the riggers and pipefitters, the cement companies, and so on. All of that activity existed in highly rationalized chains of on-time production and service and nothing will be on-time in Houston for a long time to come. The arguments over insurance coverage have not even begun, and then there is the question of how businesses in this perpetual flood zone will renew their insurance. Or how might they relocate to higher ground? And how do they pay for that? And where is higher ground in this vast, swampy lowland?

To continue reading: A Hot Mess

 

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Posted in Collapse, Debt, Economy, Energy, Government

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What Harvey Wrought, by Patrick J. Buchanan

Posted on September 1, 2017 | Leave a comment

Hurricane Harvey may make many more Americans realize that the government is spending a lot of money overseas that could better be spent fixing up America. From Pat Buchanan at buchanan.org:

Like 9/11, Hurricane Harvey brought us together.

In awe at the destruction 50 inches of rain did to East Texas and our fourth-largest city and in admiration as cable television showed countless hours of Texans humanely and heroically rescuing and aiding fellow Texans in the worst natural disaster in U.S. history.

On display this week was America at her best.

Yet the destruction will not soon be repaired. Nearly a third of Harris County, home to 4.5 million people, was flooded. Beaumont and Port Arthur were swamped with 2 feet of rain and put underwater.

Estimates of the initial cost to the Treasury are north of $100 billion, with some saying the down payment alone will be closer to $200 billion. In inflation-adjusted dollars, the cost of Harvey will exceed that of the Marshall Plan, which rebuilt Europe after World War II.

Though the country has appeared united since the storm hit, it is not likely to remain so. Soon, the cameras and correspondents will go home, while the shelters remain full, as tens of thousands of people in those shelters have only destroyed homes to return to.

When the waters recede, the misery of the evacuees left behind will become less tolerable. Then will come the looters and gougers and angry arguments over who’s to blame and who should pay.

They have already begun. Republicans who balked at voting for the bailout billions for Chris Christie’s New Jersey after Hurricane Sandy ravaged the coast in 2012 are being called hypocrites for asking for swift and massive federal assistance to repair red state Texas.

And whereas George W. Bush soared to 90 percent approval after 9/11, no such surge in support for Donald Trump appears at hand.

Indeed, the sneering and sniping began on his first visit to Texas.

He failed to celebrate the first responders, they said. He failed to hug any of the victims. He failed to show empathy. First lady Melania Trump wore spiked heels boarding Marine One for Texas.

To continue reading: What Harvey Wrought

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Somebody Said That? 8/31/17

Posted on August 31, 2017 | Leave a comment

From Houston:

Support the Second Amendment!

http://www.zerohedge.com/news/2017-08-30/houston-stiffens-prison-sentences-looters-5-years-life-police-chief-vows-crackdown

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10 Hurricane Harvey Stories That Will Give You Hope for America, by Daisy Luther

Posted on August 31, 2017 | Leave a comment

There are some good people out there. From Daisy Luther at theorganicprepper.com:

While it’s true there are a lot of stories about division and heartlessness, there are many stories coming out of storm-torn Texas that will give you hope for humanity again. Kindness and love for our neighbors isn’t dead, despite a politically divided country. This is proof that we can work together and give selflessly.

This isn’t to underplay the death and destruction, but to highlight our humanity in the face of disaster.

Below, you can find 10 of my favorite heart-warming stories so far.

  1. Four teenage boys rescued more than 50 people in Houston.  After waking up to discover his beloved truck was under water, a 17-year-old Texas boy enlisted his younger brother and two other teens to get on a fishing boat and rescue more than 50 people – and their pets – and bring them to the safety of a local shelter. (source)
  2. Members of the Cajun Navy resuscitated an elderly woman found floating face-down in the flood water. As they were guiding their boat down a waterway that was formerly a road, three volunteers realized that what they initially thought was debris was an elderly woman. They jumped in and began resuscitating her in the water, saving her life. They were able to reunite her with her family and say she is doing well. This isn’t the first time that the Cajun Navy has thrown themselves wholeheartedly into a rescue effort, and Houston is welcoming their contributions. (source)
  3. When a stranded woman went into labor, a human chain, a fire department, and a dump truck got her to the hospital. Luckily for a woman who went into labor early, the neighborhood worked together to get her to the hospital in time to give birth. As her new baby girl required intensive care immediately after she was born, it was a good thing that she was not born at home. (source)

To continue reading: 10 Hurricane Harvey Stories That Will Give You Hope for America

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