Money

This Is Yet Another Glaring Example Of Why The EU Is A Mind Blowing Failure

The debt crisis in Europe just seems to get worse with each passing day, and it is yet another glaring example of why the EU is a mind blowing failure.  The EU is made up of 27 nations that all have their own economic policies, and 17 of those nations are trying to use the euro as a common currency.  But when you have 27 different governments pulling in different directions, it is inevitable that there are going to be major problems.  The stunt that Greek Prime Minister George Papandreou just pulled is a perfect example of the nightmare that the EU has become.  European officials worked really hard to pull together a deal to address the debt crisis (of course the deal was a total mess, but that is another matter), and a couple of days later Papandreou decides that Greece should hold a national referendum on it.  It is so bizarre that it almost defies words.  But that is what happens in the EU.  Someone else always wants to have a say.  Someone else always wants to throw a fly into the ointment.  Someone else always want to throw in their two cents.  The EU is a bureaucratic nightmare and this latest episode is yet another example of that fact.  First the politicians in Europe come up with an idiotic plan that is going to make the financial crisis much worse, then Papandreou comes forward and pulls a stunt that shatters what little confidence the financial markets still had in Greece.  That is why the EU should break up.  It is a total failure and it is time that we all admitted it.

Financial markets reacted in horror to the news that Papandreou wants Greece to hold a referendum on the debt deal.

Apparently Papandreou wants the Greek people to willingly choose the harsh austerity measures contained in the package.  To be honest, that is not entirely unreasonable considering the tremendous economic damage that austerity measures have already done to the Greek economy.

So if there is a referendum, will the Greeks vote for the package?

That is not at all certain.

As month after month of protests have shown, austerity measures have been extremely unpopular in Greece.

But a lot of Greeks are not too keen on rejecting the bailouts and being forced to leave the euro either.

Both alternatives would be extremely unpleasant.

Greek Prime Minister George Papandreou apparently believes that the Greek people will vote in favor of the debt deal.  He made the following statement on Tuesday….

“We have faith in our citizens, we believe in their judgment and therefore in their decision. All the country’s political forces should support the (bailout) agreement. The citizens will do the same once they are fully informed”

Predictably, global financial markets were shocked by the announcement by Papandreou.  The Dow was down another 297 points on Tuesday, and bond yields for the PIIGS shot up significantly.

It really is mind blowing to watch what is happening to some of the bond yields over in Europe.

The yield on 1 year Greek bonds is now over 200 percent.  If you want to see what a financial meltdown looks like, just look at this chart.

The yield on 2 year Irish bonds is now over 9 percent, and the yield on 2 year Portuguese bonds is now over 20 percent.

Most importantly, the yield on Italian bonds continues to surge higher.

The higher those bond yields go, the worse things are going to get for Europe.

And those bond yield are skyrocketing in spite of rampant bond buying by the European Central Bank.

A CNBC article from earlier today noted the extraordinary intervention by the ECB that we are witnessing right now….

“Yesterday we had one of the biggest ever days of peripheral sovereign bond buying from the Securities Market Program, with some banks estimating that over 5 billion euros of peripheral sovereign bonds were purchased via the ECB’s bond buying program in an effort to keep a lid on peripheral sovereign bond yields” said Mike Riddell, a fund manager at M&G Investments in London.

Europe is falling apart financially and politicians all over Europe are furious with Papandreou right now.  The following comes from an article by Ambrose Evans-Pritchard that was published earlier today….

The Greek referendum – if it is not overtaken by a collapse of the government first – has left officials in Paris, Berlin, and Brussels speechless with rage. The ingratitude of them.

The spokesman of French president Nicolas Sarkozy (himself half Greek, from Thessaloniki) said the move was “irrational and dangerous”. Rainer Brüderle, Bundestag leader of the Free Democrats, said the Greeks appear to be “wriggling out” of a solemn commitment. They face outright bankruptcy, he blustered.

A number of European politicians are warning of severe consequences for Greece.  For example, the Finnish minister of European affairs and foreign trade, Alexander Stubb, even declared that if Greek citizens do not vote the right way it will mean an exit from the eurozone for Greece….

“The situation is so tight that basically it would be a vote over their euro membership”

If Greece ends up rejecting the bailout package, it would essentially mean a complete and total debt default by Greece.  The following is what Nobel prize-winning economist Christopher Pissarides said about the potential consequences of a “no” vote….

“In the scenario of a ‘No’ vote Greece would declare bankruptcy immediately, they would default immediately. I can’t see them staying within the euro”

But there is no guarantee that a referendum will actually be held.  The Greek government has been thrown into a state of chaos and is on the verge of collapse.

To many, it seems more likely that the government will fail and that we will see early elections in Greece.  For example, the following is a quote from an anonymous Greek trader that was posted in an article on Business Insider this morning….

I believe the present government will be history by the end of this week. Most probably this evening actually, when the already scheduled emergency cabinet meeting is to be held.

The important question to be resolved is whether the present government will be replaced by an interim national unity government for several months ratifying in parliament the Eurogroup decisions of last week and then proceeding with elections, or else whether national elections will be immediately announced with probable dates the 4th or 11th of December.

But in the final analysis, it is not the Greek government that is the problem.

The reality is that the way the eurozone was constructed was fatally flawed from the very beginning.

It was inevitable that trying to force 17 different countries with 17 different economic policies to use a common currency was going to end up creating a huge mess.

People all over Europe know this is true.  Just consider the following quotes….

* Stephane Deo, Paul Donovan, and Larry Hatheway of Swiss banking giant UBS: “Under the current structure and with the current membership, the euro does not work. Either the current structure will have to change, or the current membership will have to change.”

* EU President Herman Van Rompuy: “The euro has never had the infrastructure that it requires.”

* Former German Chancellor Gerhard Schroeder: “The current crisis makes it relentlessly clear that we cannot have a common currency zone without a common fiscal, economic and social policy”

* Professor Giacomo Vaciago of Milan’s Catholic University: “It’s clear that the euro has virtually failed over the last ten years, even if you are not supposed to say that. We pretended to be Germans, but it was an illusion”

So why should those of us living in the United States care about all of this?

Well, it is because a financial collapse in the EU could plunge the entire globe into a horrific economic nightmare.

Today, the EU actually has a larger economy and a larger population than the United States does.  The EU also has more Fortune 500 companies that the United States does.

If Europe experiences a financial crash, it is going to send shockwaves to the very ends of the earth.

Another reason why Americans should care is because what is happening right now in Greece, in Italy and in some of these other countries is eventually going to come to the United States.

Just like Greece, we are in debt up to our eyeballs.

Just like Greece, our politicians thought that they could pile up gigantic mountains of debt indefinitely.

Just like Greece, this debt is going to have very, very serious consequences.

Just like Greece, we are going to have mass economic rioting in our streets.

The road that Greece is going down is the exact same road that the United States is going down.

Yes, the Federal Reserve could step in and print up trillions and trillions of dollars, but that would not solve our problems.  The truth is that a hyperinflationary crash can be even worse than a deflationary crash.

What is happening in Greece is just the beginning.  A bunch of other eurozone nations are also rapidly approaching a date with destiny.  At some point the United States is going to experience massive problems as well.

The epicenter for the financial collapse of 2008 was the United States.

The epicenter for the next financial collapse will almost certainly be Europe.

When Europe goes down, the rest of the world will be dragged down with them.

The next wave of the economic collapse is coming.

You better get ready.

The One Percent: Gigantic Government + Gigantic Corporations = Massive Wealth Inequality In America

Today, there are protests all over America that are targeting “the one percent” and all of the wealth and power that they have accumulated.  Unfortunately, many of the solutions that these protesters are advocating simply will not work and will not lead to less wealth inequality.  To understand this, you have to understand how we got to this point.  Over the past several decades, our federal government has exploded in size and our large corporations have exploded in size.  In fact, we have seen this pattern happen pretty much all over the world.  Governments and corporations all over the globe are getting much bigger.  Whenever you have very, very large concentrations of money and power like that, it is going to lead to massive wealth inequality.  The Occupy Wall Street protesters would like to frame this debate as “socialism vs. capitalism”, but the truth is that wherever you find big government you will almost always find big corporations, and wherever you find big corporations you will almost always find big government.  Sure, they spar once in a while, but the reality is that big government and big corporations work in tandem most of the time.  Sometimes big government has the upper hand and sometimes big corporations have the upper hand, but they are both collectivist institutions.  Wherever you find collectivism in the world, you will find an elite that receives most of the benefits while the rest of the population suffers.  In the United States today, our gigantic government is thriving and our gigantic corporations are thriving and the middle class is rapidly shrinking.  The solution to this is not to replace one form of collectivism with another form of collectivism.  Rather, what we need is to go back to what our founding fathers intended.  They were extremely suspicious of large concentrations of wealth and power, and they intended for us to live in a capitalist system where individuals and small businesses had the freedom to compete and thrive.

Today, Democrats tell us that we need an even bigger government and that we need to redistribute even more wealth to the poor.  But the bigger the government gets, the more poor people we seem to have.  As you will see below, the only people that seem to be thriving from big government are the bureaucrats.

Republicans tell us that we need to make life better for the big corporations.  But the reality is that the bigger our giant corporations get, the faster the middle class shrinks.  The big corporations are shipping millions of our jobs out of the country, and they are magnets for wealth and power.  If you are not aware of how overwhelmingly dominant corporations have become in our society, just read this article.

Democrats should not be defending big government, and Republicans should not be defending the abuses of the big corporations.

Whenever big government and big corporations work together there is going to be massive income inequality, and massive income inequality is not a good thing.

Yes, there are always going to be some people that do much better than others (and there is nothing wrong with that), but we should not have a system which is designed to funnel almost all of the wealth and almost all of the power to a very small minority.

In essence, this article is arguing the following….

Gigantic government = bad.

Gigantic corporations = bad.

This was the view of our founding fathers, and this is what we need to get back to.

Let’s take a look at some of the results of our current system.  Let’s start with income inequality caused by big government.

Today, the Washington D.C. region has the highest median household income in the entire nation.  According to the most recent numbers, median household income in the D.C. area is $84,523.

So what is the cause of this?

Well, it is not because Washington D.C. is a great center of industry or finance.  Rather, it is because the federal government is spending over 3 trillion dollars a year and is showering huge piles of cash on hordes of bureaucrats.

In a recent article, I noted some of the mind blowing statistics that show how bureaucrats in Washington D.C. are living the high life at our expense….

*When you total up all compensation (including health care and benefits), the average income for a federal worker in the Washington D.C. area last year was $126,369.

*In 2005, 7420 federal workers were making $150,000 or more per year.  In 2010, a whopping 82,034 federal workers were making $150,000 or more per year.  That is more than a tenfold increase in just five years.

*In 2005, the U.S. Department of Defense had just nine civilians earning $170,000 or more.  When Barack Obama took office, the U.S. Department of Defense had 214 civilians earning $170,000 or more.  In June 2010, the U.S. Department of Defense had 994 civilians earning $170,000 or more.

*Last year, federal employees “earned” approximately 447 billion dollars in total compensation.

As I have written about previously, our gigantic federal government also empowers the big corporations to continue to accumulate staggering amounts of wealth and power.  This is one reason why the big corporations contribute so much money to political campaigns.  The big corporations (and the elite that own and run them) have much more influence over the political process than we do.  They have spent decades buying politicians and getting laws passed that tilt the rules of the game radically in their favor.

This is something that our founding fathers did not want to happen.  In a 2010 article, Rick Ungar noted that there were very significant restrictions on corporations in the early days of America….

After the nation’s founding, corporations were, as they are today, the result of charters granted by the state. However, unlike today, they were limited in how long they were permitted to exist (typically 20 or 30 years), only permitted to deal in one commodity, they could not own shares in other corporations, and their property holdings were expressly limited to what they needed to accomplish their corporate business goals.

There was a lot of wisdom to that approach.  Our founding fathers knew that corporations would become giant magnets for wealth and power if they were allowed to grow unchecked.

Today, multinational corporations completely and totally dominate the global economy.  The following comes from a recent article I posted on The American Dream….

Corporations not only completely dominate the U.S. economy, they also completely dominate the global economy as well.  A newly released University of Zurich study examined more than 43,000 major multinational corporations.  The study discovered a vast web of interlocking ownerships that is controlled by a “core” of 1,318 giant corporations. But that “core” itself is controlled by a “super-entity” of 147 monolithic corporations that are very, very tightly knit.  As a recent article in NewScientist noted, these 147 corporations control approximately 40 percent of all the wealth in the entire network

These giant corporations are so dominant that it is nearly impossible to compete with them.  The number of small businesses in America is shrinking fast.

According to the Bureau of Labor Statistics, 16.6 million Americans were self-employed back in December 2006.  Today, that number has shrunk to 14.5 million.

This is exactly what we would expect to see under “corporatism“, but under true capitalism we would expect to see the exact opposite.

As the federal government and the big corporations continue to grow, the middle class is being wiped out.  If you doubt that the middle class is shrinking, just read this article.

Yes, there is a limited role for the federal government to play and there is a limited role for corporations to play.  But right now things are radically, radically out of balance.

This is creating a tremendous amount of income inequality in the United States.  The middle class is being systematically destroyed, and the growth of the gap between the one percent and the rest of us just continues to accelerate.

This was certainly illustrated by numbers that were recently released by the Congressional Budget Office.  The very wealthy have done extremely well over the last 30 years.  For the rest of us, things have not been so great.  The following figures come from a recent blog post by the director of the Congressional Budget Office….

CBO finds that between 1979 and 2007:

  • For the 1 percent of the population with the highest income, average real after-tax household income grew by 275 percent (see figure below).
  • For others in the 20 percent of the population with the highest income, average real after-tax household income grew by 65 percent.
  • For the 60 percent of the population in the middle of the income scale, the growth in average real after-tax household income was just under 40 percent.
  • For the 20 percent of the population with the lowest income, the growth in average real after-tax household income was about 18 percent.

Meanwhile, as a recent USA Today article noted, the middle class continues to falter in the majority of the communities around the United States….

A USA TODAY analysis of Census data found the Reno area was among 150 nationwide where the share of income going to the middle class — generally made up of households that make $20,700 to $99,900 a year — shrank from 2006 to 2010. Metro areas where the middle class’ share of income dropped outnumbered those where it grew by more than 2-to-1.

So just how well is the top one percent doing compared to the rest of us?

The following statistics should be a wake up call for all of us….

*According to the Congressional Budget Office, the top one percent is the only group that saw its share of our national income increase between 1979 and 2007.

*According to a joint House and Senate report entitled “Income Inequality and the Great Recession“, the top one percent of all income earners in the United States brought in a total of 10.0 percent of all income income in 1980, but by the time 2008 had rolled around that figure had skyrocketed to 21.0 percent.

*Between 1979 and and 2007, the average household income of the top one percent of all Americans soared from $346,600 to $1.3 million.

*In the United States today, the wealthiest one percent of all Americans have a greater net worth than the bottom 90 percent combined.

*As the “one percent” thrives, the share of the pie being enjoyed by the middle class is shrinking.  According to Heidi Shierholz, an economist with the Economic Policy Institute, about 53 percent of all income went to the middle class back in the 1970s, but today only about 46 percent of all income does.

*According to Harvard Magazine, 66% of the income growth between 2001 and 2007 went to the top one percent of all Americans.

*The wealthiest one percent of all Americans now own more than a third of all the wealth in the United States while the poorest 50 percent of all Americans collectively own just 2.5% of all the wealth in the United States.

*The wealthiest one percent of all Americans own over 50% of all the stocks and bonds.

*The top 0.01% of Americans make an average of $27,342,212.  The bottom 90% make an average of $31,244.

*This is all happening at a time when the United States as a whole is slipping.  Ten years ago, the United States was ranked number one in average wealth per adult.  In 2010, the United States fell to seventh.

*Income inequality is not just growing in the United States.  Today, the wealthiest one percent of the earth’s population controls 39% of the wealth.

There is certainly nothing wrong with being wealthy.  If you and your family work really hard and provide great value to the community around you then you should greatly benefit.

But a system that is designed to systematically drain wealth from the general population and transfer it into the hands of an ultra-wealthy elite is not what our founding fathers ever hand in mind.  At the time of our founding, England was dominated by big government (the monarchy) and by big business (the East India Company, for example).  Our founders warned us over and over about the potential abuses that can happen when very large concentrations of wealth and power are allowed to dominate a society.

Unfortunately, the Occupy Wall Street movement has it all wrong.  They recognize the overwhelming wealth and power accumulated by the one percent, but most of them are advocating even more collectivism as the answer.

Some of them even say that they want to “end capitalism” altogether.  Michael Moore says that he is not part of the one percent and that he wants to “end capitalism”, even though he has made millions upon millions of dollars from his various projects.

But socialism and communism never bring equality.  Like other forms of collectivism, socialism and communism almost always bring more tyranny and they almost always funnel most of the financial rewards to a very small elite.

Others simply wish to see the U.S. government transfer more wealth from the hands of the rich to the hands of the poor.

Helping the poor is certainly a noble goal, and handouts can certainly ease suffering at least temporarily.  But handouts are never a permanent solution and they can cause large numbers of people to end up becoming completely and totally dependent on the government.

Back in 1980, government transfer payments accounted for just 11.7% of all income.  Today, government transfer payments account for 18.4% of all income.

So has the plight of the poor gotten better?

No, we now have more than 45 million Americans on food stamps, last year we had the largest increase in the number of Americans living in poverty in U.S. history and the middle class continues to shrink rapidly.

The truth is that what poor and middle class Americans really need are opportunities.  Handouts will keep people alive, but they will not give people hope and a future.

What Americans really need is an environment where they can find jobs or start small businesses.  Unfortunately, the environment for small businesses in this country is incredibly toxic and millions of our good jobs have been shipped overseas.  The big corporations have discovered that they can make even bigger profits by sending jobs to countries where it is legal to pay slave labor wages.  To say that we need big corporations because they are the ones that “create jobs” is simply not true anymore.

So now we have tens of millions of Americans that we have to take care of every single month.  There is nothing wrong with helping them survive, but giving them even more handouts is not going to permanently solve anything.

We need to have a population that is empowered to work hard, produce wealth and create a bright future for their families.

Instead, what we have is a system that greatly rewards the top one percent and that is pushing all of the rest of us toward poverty.

Gigantic government plus gigantic corporations is always going to equal massive wealth inequality.

The bigger we allow government to grow and the bigger we allow corporations to grow, the worse it is going to get.

So is any of this going to change any time soon?

Well, considering the fact that the vast majority of our politicians are in the pockets of the big corporations, I would not be getting your hopes up.

 

The 9-9-9 Plan: Is The Herman Cain Tax Plan A Good Idea?

As he continues to heavily tout his “9-9-9 plan”, Herman Cain has seen his popularity soar.  But is the Herman Cain tax plan a good idea for America?  Without a doubt, the “9-9-9 plan” is simple and it is easy to remember.  To most Americans, it sounds like a low tax plan.  But is that the truth?  As you will see below, Herman Cain’s 9-9-9 plan will actually raise federal taxes on some middle income Americans to as high as 37 percent.  If the other Republican candidates understood this, they would be jumping all over Cain.  But instead the best that most of them seem to be able to do is to make jokes about it.  For example, Jon Huntsman said that he thought that the 9-9-9 plan “was the price of a pizza when I first heard about it.”  That is a funny line, but the reality is that the future of our tax system is very serious business.  Our economy is dying and our nation is drowning in debt.  We need some very real solutions to our very real problems.  So let’s take a closer look at the 9-9-9 plan that Herman Cain is proposing….

The one great thing about the 9-9-9 plan is that it would completely eliminate the current tax code.  That should be the starting point for any proposal for reforming our current system of taxation.

Under Herman Cain’s plan, all current federal taxes would be eliminated.  Social Security taxes would be eliminated, estate taxes would be eliminated and capital gains taxes would be eliminated.

All current tax deductions and loopholes would be eliminated as well.

So far so good.

Under the 9-9-9 plan, the current tax system would be replaced with a 9 percent personal income tax, a 9 percent business income tax and a 9 percent national sales tax.

Uh oh.

9 sounds like a low number, but when you add tax on top of tax on top of tax they can add up very quickly.  The truth is that some Americans would end up paying significantly more taxes under the Herman Cain tax plan.

Even Herman Cain is admitting this.  The following is what Cain said about his plan the other day on NBC’s Meet The Press….

“Some people will pay more”

So who will be paying more?

Will it be the those at the top of the food chain?

No, the reality is that the Herman Cain tax plan would represent a substantial tax hike for millions of middle income families.

According to ABC News, an average family of four with a yearly income of just under $50,000 (i.e. the median household income), would pay approximately $2,725 more to the federal government in taxes under the 9-9-9 plan.

Well, that doesn’t sound good.

That doesn’t sound like a recipe for economic recovery.

But if you are a middle income small business owner, the news is much worse than that.

Under Herman Cain’s tax plan, some small business owners could end up paying up to 37 percent of their incomes in taxes to the federal government.

Here is how that breaks down….

#1) First they would pay the 9 percent personal income tax.

#2) Secondly, they would pay 9 percent on all business income.  There would not even be a deduction for wages paid out.  This would hit some small businesses incredibly hard.  In fact, small businesses that have a very tight profit margin could be totally wiped out by this.

A lot of people have assumed that the 9 percent tax on businesses is only on corporations.  But that simply is not the case.

In a recent article, Paul Krugman of the New York Times explained what the 9-9-9 plan really says….

From comments I see that some readers believe that Cain’s second “9″ is a profits tax, which I’ve argued in the past probably falls on capital owners. But it isn’t: it’s a tax on all business income, defined as sales minus purchased inputs and dividends — but with no deduction for wages.

Ouch.

Okay, so now we are up to 18 percent for small business owners.

#3) The 9-9-9 plan also calls for a 9 percent national sales tax.  Of course the truth is that very few people will spend all of their money on things that the national sales tax is imposed upon, but theoretically this could add another 9 percent to an individual’s tax burden.

So now we are up to a potential total of 27 percent for small business owners.

The 9-9-9 plan would also make sales taxes absolutely crushing in some areas of the United States.  For example, it has been projected that once you throw in state and local sales taxes, some areas of the country could be facing a combined sales tax as high as 17 percent once the 9-9-9 plan is implemented.

Cain’s plan would also set the stage for a VAT tax to be implemented.  Many countries in Europe have already implemented a VAT tax, and quite a few liberal politicians in the U.S. have been eager to institute one here.

The potential dangers of a VAT tax were described in a recent article by Dean Clancy….

A VAT is a form of national sales tax that is collected at every stage of the process from the initial sale of raw materials to a manufacturer to the final sale of a finished product to an end-consumer. It’s the most insidious of all taxes, because it is built into the price of everything and consumers can’t see how much of the price is due to the tax. When taxes rise, prices rise, but consumers mistakenly assume that’s just market forces at work. Politicians love a VAT: it lets them take a lot more money out of our wallets. And VATs usually exist side by side with income taxes, not in lieu of them. Taxpayers should hate VATs for the same reasons politicians love them.

Politicians love “new revenue streams”, and once they get opened up they rarely ever get closed.

#4) Anyway, getting back to the main issue, so how do we get up to 37 percent for small business owners under the 9-9-9 plan?

Well, Herman Cain has also been heavily touting “the Chilean model” as a replacement for Social Security.

Under the Chilean model, all citizens are absolutely required to contribute 10 percent of all income to private pension plans.  Workers in Chile do not have the option to opt out of the system.

So if “the Chilean model” is adopted to replace the current Social Security system, that would mean that an extra 10 percent mandatory “tax” would be added on top of the 9-9-9 plan.

That would mean that many middle income small business owners could end up paying up to 37 percent of all of their income in taxes.

Is that something that you could afford to do?

When you add in state taxes, local taxes, property taxes and the dozens of other taxes that Americans pay each year, many middle income Americans would end up paying out over 50 percent of their incomes in taxes.

So much for a low tax plan.

So where in the world did Herman Cain get the idea for the 9-9-9 plan?

Well, there are some that are now claiming that he got the 9-9-9 plan from a video game.

Yes, seriously.

The following is an excerpt from a recent article in  The Daily Mail about the 9-9-9 plan….

Though he claims to have received the idea from a bank employee named Richard Lowrie Jr. in Ohio, observers are now questioning if the true inspiration is the tax code used on the SimCity video game.

The game, originally invented in 1989 allows players to plan and run virtual cities. The fourth version of the game, which came out in 2003, taxes players nine per cent for industrial taxes, nine per cent for residential taxes and nine per cent for commercial taxes.

Does that sound familiar?

Let us hope that this is not true.  Let us hope that Herman Cain did not get his tax plan from a video game.

But in any event, perhaps it is time to take a closer look at Herman Cain.

For example, did you know that he was once the chairman of the Kansas City Federal Reserve Board?

That is not a good sign.

As I have written about so many times, the Federal Reserve is at the very heart of our economic problems.

But Herman Cain does not intend to abolish the Federal Reserve.  In fact, he is very fond of the Federal Reserve.  He is on record as saying that a comprehensive audit of the Federal Reserve is not even needed.

The following is what Herman Cain once had to say about the need for an audit of the Federal Reserve….

Some people say that we ought to audit the Fed. Here’s what I do know. The Federal Reserve already has so many internal audits it’s ridiculous. I don’t know why people think we’re gonna learn this great amount of information by auditing the Federal Reserve.

I think a lot of people are calling for this audit of the Federal Reserve because they don’t know enough about it. There’s no hidden secrets going on in the Federal Reserve to my knowledge.

That is so sad.  There is a lot to like about Herman Cain.  But obviously his 9-9-9 plan is not well thought out, and he is a big time apologist for the Federal Reserve.

During the financial crisis, the Federal Reserve made $16 trillion in secret loans to the big Wall Street banks and to their friends.

That dollar figure is larger than the total value of all goods and services produced in the United States for an entire year.

If Congress had not passed a one time limited audit of the Federal Reserve we would have never learned about those loans.

So how in the world can Herman Cain claim that there is no need to audit the Fed?

Once again, there are definitely some things to like about Herman Cain, but when it comes to economics, taxation and the Federal Reserve, he is way out of his league.

So what is the alternative to the 9-9-9 plan?

The alternative should not be to go back to our current system of taxation.  It is broken beyond repair and needs to be abolished.

If we are going to tax income, we need a system that will be fair and not full of loopholes, that will not overly burden the poor, that will encourage businesses to stay in the United States, that will limit the size of the federal government and that will be easy to understand and implement.

But the truth is that until the federal government completely shuts down the Federal Reserve and the IRS we are going to be enslaved to debt and we are going to be paying much higher taxes than we should be.  We are operating in a debt-based monetary system which is designed to transfer wealth away from the American people.  We desperately need to change this.

It is entirely possible that we could have a system that did not tax income at all.  For much of U.S. history, that was the case in this nation.  It would certainly be possible to do it again.

So right now is definitely a time for some bold new ideas.

Unfortunately, the 9-9-9 plan is not going to be the solution to much of anything.

 

You Know That Your City Has Become A Hellhole When….

All across America there are cities and towns that were once prosperous and beautiful that are being transformed into absolute hellholes.  The scars left by the long-term economic decline of the United States are getting deeper and more gruesome.  The tax base in many areas of the nation has been absolutely devastated as millions of jobs have left this country.  Hundreds of cities are drowning in debt and are desperately trying to survive.  Last year, city government revenues in the United States fell by another 2.3 percent.  That was the fifth year in a row that we have seen a decline.  Meanwhile, costs associated with health care, pensions and virtually everything else continue to explode.  So what are cities doing to make ends meet?  Well, one big trend that we are now witnessing is that many U.S. cities have been getting rid of huge numbers of employees.  If you can believe it, 72 percent of all U.S. cities are laying workers off this year.  Social services and essential infrastructure programs are also being savagely cut back in many areas of the country.  The cold, hard truth is that most of our cities are flat broke and things are going to get even worse in the years ahead.

So how do you know if your own city has become a hellhole?

Well, a few potential “red flags” are posted below….

You know that your city has become a hellhole when most of the street lights get repossessed because of unpaid electric bills.

You know that your city has become a hellhole when it announces that it will no longer prosecute domestic violence cases in order to save money.

You know that your city has become a hellhole when it simply stops sending out pension checks to retired workers.

You know that your city has become a hellhole when it rips up asphalt roads and replaces them with gravel because gravel is cheaper to maintain.

You know that your city has become a hellhole when it eliminates the entire public bus system.

You know that your city has become a hellhole when nearly half of all the people living there can’t read.

You know that your city has become a hellhole when one out of every ten homes sells for under $10,000.

You know that your city has become a hellhole when you can literally buy a house for one dollar.

You know that your city has become a hellhole when you have hundreds of people living in the tunnels underneath your streets.

You know that your city has become a hellhole when three of your past five mayors have been sent to prison for corruption.

You know that your city has become a hellhole when nearly half of the public schools in the city get shut down because of a lack of money.

You know that your city has become a hellhole when you have dozens of young people rampaging in the streets that are thirsty for revenge and that are armed with bats, pipes and guns.

You know that your city has become a hellhole when it is considered to be one of the 10 most dangerous cities in the world.

You know that your city has become a hellhole when thieves defecate in the back seat after they have broken into your car and taken your things.

You know that your city has become a hellhole when prostitution and drug dealing are two of the only viable businesses that remain in the city.

You know that your city has become a hellhole when the police chief announces that the police department will no longer respond to calls about burglary and identity theft due to very deep budget cuts.

Many of the examples above may seem humorous at first glance, but the truth is that they reveal just how deeply tragic our economic decline really is.

This is one of the reasons why I write about our trade deficit over and over and over.  Every single month, tens of billions of dollars more wealth goes out of the United States than enters it.  Every single month, we are getting poorer as a nation.  Every single month, we lose more jobs and businesses.

Any politician that tells you that he or she can solve our economic problems without fundamentally addressing our horrific trade imbalance is lying to you.  That means that there are a whole lot of liars in both political parties.

If the number of good jobs continues to decline, the plight of the average American family is going to continue to get worse.  Home sales will continue to hover around record lows.  The American people will continue to become increasingly frustrated with the economy.

The signs of decline are all around us.

Quit listening to the politicians and just open up your eyes and look.

So do any of you have any additional signs that a city has become a hellhole to add to the list above?  Please feel free to leave a comment with your thoughts below….

25 Signs That A Horrific Global Water Crisis Is Coming

Every single day, we are getting closer to a horrific global water crisis.  This world was blessed with an awesome amount of fresh water, but because of our foolishness it is rapidly disappearing.  Rivers, lakes and major underground aquifers all over the globe are drying up, and many of the fresh water sources that we still have available are so incredibly polluted that we simply cannot use them anymore.  Without fresh water, we simply cannot function.  Just imagine what would happen if the water got cut off in your house and you were not able to go out and buy any.  Just think about it.  How long would you be able to last?  Well, as sources of fresh water all over the globe dry up, we are seeing drought conditions spread.  We are starting to see massive “dust storms” in areas where we have never seem them before.  Every single year, most of the major deserts around the world are getting bigger and the amount of usable agricultural land in most areas is becoming smaller.  Whether you are aware of this or not, the truth is that we are rapidly approaching a breaking point.

If dramatic changes are not made soon, in the years ahead water shortages are going to force large groups of people to move to new areas.  As the global water crisis intensifies, there will be political conflicts and potentially even wars over water.  We like to think of ourselves as being so “advanced”, but the reality is that we have not figured out how to live without water.  When the water dries up in an area, most of the people are going to have to leave.

And yes, it will even happen in the United States too.  For example, once Lake Mead dries up there is simply no way that so many people are going to be able to live in and around Las Vegas.

Right now, most of us take for granted that we will always have access to an unlimited amount of clean water.

But when you take a hard look at the data, it quickly becomes clear that everything that we have always taken for granted about water is about to dramatically change.

That following are 25 signs that a horrific global water crisis is coming.  The first 12 facts are about the United States, and the last 13 are about the rest of the world….

#1 Today, the United States uses approximately 148 trillion gallons of fresh water a year.

#2 According to the U.S. government, 36 U.S. states are already facing water shortages or will be facing water shortages within the next few years.

#3 Since 1998, the level of water in Lake Mead has plunged by more than 50 percent.  Lake Mead supplies about 85 percent of the water used in Las Vegas, and at this point the lake has 5.6 trillion gallons less water than it used to have.  Lake Mead is falling so fast that some believe that the Hoover dam could actually stop producing electricity in a few years.  Needless to say, that would be a total disaster for that entire region of the country.  In addition, if things continue at the current pace, it is being estimated that Lake Mead will run completely dry some time around the year 2021.

#4 According to the U.S. National Academy of Sciences, the U.S. interior west is now the driest that it has been in 500 years.

#5 The Ogallala Aquifer, which is a massive underground lake that stretches from South Dakota all the way to Texas, is rapidly drying up.  The Ogallala Aquifer is believed to be the largest body of fresh water in the world, and right now it is being drained at a rate of approximately 800 gallons per minute.  Right now it covers approximately 174,000 square miles, and since the 1950s we have drained enough water from it “to half-fill Lake Erie“.  Once upon a time, the Ogallala Aquifer had an average depth of about 240 feet, but today the average depth is just 80 feet.  If something is not done, we will definitely see a return of the Dust Bowl days of the 1930s.  We need to start listening to the experts.  Just consider what David Brauer of the Ogallala Research Service had to say when asked about the future of the Ogallala Aquifer….

“Our goal now is to engineer a soft landing. That’s all we can do.”

#6 A federal judge has ruled that the state of Georgia has very few legal rights to Lake Lanier.  Lake Lanier is the main water source for the city of Atlanta.  Millions more people are expected to move into the Atlanta area in the coming years, and this is creating an absolute nightmare for city officials.

#7 It is estimated that California only has a 20 year supply of fresh water left.

#8 It is estimated that New Mexico only has a 10 year supply of fresh water left.

#9 Things have gotten so dry in Arizona that now giant “dust storms” have been blowing through the city of Phoenix.

#10 Texas is has experienced one of the driest stretches that it has ever seen.  Right now, approximately 81 percent of the state of Texas is experiencing “exceptional drought” conditions, and wildfires have burned an astounding 3.6 million acres in the state.

#11 Approximately 40 percent of all U.S. rivers  and approximately 46 percent of all U.S. lakes have become so polluted that they are are now considered to be too dangerous to fish in, swim in or get drinking water from.

#12 Eight states in the Great Lakes region have signed a pact banning the export of water to outsiders – even to other U.S. states.

#13 It is being projected that by the year 2030, global demand for water will be 40 percent higher than it is today.

#14 Worldwide demand for fresh water tripled during the last century, and is now doubling every 21 years.

#15 According to USAID, one-third of the population of the earth will be facing severe or chronic water shortages by the year 2025.

#16 Of the 60 million people added to the world’s cities every year, the vast majority of them live in impoverished areas that have no sanitation facilities whatsoever.

#17 It is estimated that 75 percent of the surface water in India is now contaminated by human and agricultural waste.

#18 If you can believe it, according to a UN study on sanitation, far more people in India have access to a cell phone than to a toilet.

#19 In the developing world, 90 percent of all wastewater is discharged completely untreated into local rivers, streams or lakes.

#20 Every 8 seconds, somewhere in the world a child dies from drinking dirty water.

#21 Due to a lack of water, Saudi Arabia has given up on trying to grow wheat and will be 100 percent dependent on wheat imports by the year 2016.

#22 In northern China, the water table is dropping one meter every single year because of drought and overpumping.

#23 Incredibly, a new desert the size of Rhode Island is created in China every single year because of drought and overpumping.

#24 In China, 80 percent of all major rivers have become so horribly polluted that they do not support any aquatic life at all at this point.

#25 Collectively, the women of South Africa walk the equivalent of the distance to the moon and back 16 times a day just to get water.

To learn more about the coming global water crisis, check out the short video posted below….

Right now, more than a billion people around the globe do not have access to safe drinking water.

That number is going to keep increasing.

Without enough fresh water, people cannot grow enough food.  Global food prices are already starting to skyrocket, and the coming global water crisis certainly is not going to help matters.

A massive, massive disaster is on the horizon.  The era of gigantic amounts of cheap food and “unlimited” amounts of clean water is over.

A horrific global water crisis is coming.

You better get ready.

Dumpster Diving?

Have you ever thought about getting your food out of a trash can?  Don’t laugh.  Dumpster diving has become a hot new trend in America.  In fact, dumpster divers even have a trendy new name.  They call themselves “freegans”, and as the economy crumbles their numbers are multiplying.  Many freegans consider dumpster diving to be a great way to save money on groceries.  Others do it because they want to live more simply.  Freegans that are concerned about the environment view dumpster diving as a great way to “recycle” and other politically-minded freegans consider dumpster diving to be a form of political protest.  But whatever you want to call it, the reality is that thousands upon thousands of Americans will break out their boots, rubber gloves and flashlights and will be jumping into dumpsters looking for food once again tonight.

So is this actually legal?

In some areas, dumpster diving is considered to be legal.  In other areas, dumpster divers are technically breaking trespassing laws.  Although in most areas the police have so many other problems that they aren’t really concerned about cracking down on dumpster divers.

One of the biggest issues facing dumpster divers is safety.  Crawling around in back alleys and side streets in the middle of the night is not exactly the safest thing to do.  But the lure of large amounts of free food is enough to keep some people coming back over and over again.

During the recent economic downturn, the popularity of dumpster diving has exploded.  Today, there are dumpster diving meetup groups, dumpster diving Facebook groups, and even entire organizations such as Food Not Bombs that openly encourage their members to go dumpster diving.

If your family was going hungry, would you go dumpster diving?

You might be surprised at who is doing it.  Dumpster diving is not just for the homeless and the unemployed anymore.  A lot of people that have decent jobs have picked up on the trend.

Just check out the following example from a recent MSNBC article….

A programmer by day, Todd takes to the streets of North Carolina by night, digging through Dumpsters at drug stores and grocery stores all around his rural neighborhood.

“You would be simply amazed at what businesses throw out,” he said. “I’ve only had to buy two loaves of bread all year. … Last week I had a trunk full of cereal, cookies, chips and ramen noodles.”

Todd slinks in and out of smelly places with low-light flashlights to evade rent-a-cops who will shoo him away.  Most nights, his 14-year-old son comes along.

Dumpster diving has become such a prominent trend that even big television news networks are doing stories about it….

The truth is that dumpster diving is just another sign of the times.

Food prices continue to rise and this is putting incredible stress on the budgets of average American families.  We just saw another huge rise in food prices during the month of August.  Just check out the following data from a recent article posted on The Economic Policy Journal….

The index for finished consumer foods jumped 1.1 percent (13.2 percent annualized) in August, the third straight rise. Over thirty percent of the August advance can be traced to meat prices, which climbed 2.4 percent (28.8 percent annualized). Higher prices for processed poultry and eggs for fresh use also were major factors in the increase in the finished foods index.

If you are married and have a couple of children it can cost a lot of money to feed them every single month.  It is not hard to understand the allure of dumpster diving for people that are having a hard time making ends meet.

Other Americans are choosing to dumpster dive because they believe that it helps them live a simpler lifestyle.  There is a growing movement of people in America that are rejecting all of the “consumerism” that we see all around us.

Today, the average U.S. household has 13 different credit cards.  We are constantly being bombarded with ads that tell us that we need more stuff in order to be happy.

Well, a lot of people have decided that is a lot of bunk and they are doing whatever they can to simplify.

Other dumpster divers are absolutely horrified by how much food is wasted in America.

It has been estimated that 263,013,699 pounds of food is thrown out in the United States every single day.

Can you imagine?

We are probably the most wasteful nation on the planet.  With the number of hungry people in the world, it is absolutely criminal how much food that we waste.

So in that sense, it is probably a good thing that dumpster divers are saving some of that food from the landfills and are finding positive uses for it.

But what is going to happen when the economy gets even worse and we start seeing fights over the food that has been left in dumpsters?

In my recent special report about poverty in America, I noted that 46.2 million Americans are now living in poverty.  For now, the U.S. government is helping feed over 45 million Americans through the food stamp program, but what is going to happen once the social safety net starts to break?

The number of good jobs in America continues to decline, and thousands more Americans fall into poverty every single day.  Things have gotten so bad that other countries are actually making videos that make fun of our poverty.

This country is rapidly losing confidence in our leaders and hopelessness is spreading like wildfire.  Today it was revealed that Barack Obama’s disapproval rating has now set a new high of 55%.  Not only that, 62% of the American people disapprove of the way that he is handling the economy.  It turns out that they don’t really think much of the Obama jobs plan after all.

Unfortunately, even though our economy is rapidly falling apart and most of our leaders are either deeply corrupt or completely incompetent, most Americans are still way too apathetic.  If you can believe it, the American people spend a whopping 53 million minutes a month on Facebook.

Hopefully we can get more Americans to wake up.  Hopefully we can get them to understand that they need to get active, that they need to prepare and that they need to get their priorities in order.

Right now, dumpster diving is cute and fun and an interesting way to save money, but in the future there will be millions of Americans digging around in trash cans if we don’t get this economy turned around.

This country is rapidly changing, and not for the better.

Do You Now Understand Why You Need To Prepare For Emergencies? This Has Been The Worst Year For Natural Disasters In U.S. History

There has been a natural disaster that has caused at least a billion dollars of damage inside the United States every single month so far this year.  According to the National Oceanic and Atmospheric Administration, there have been 10 major disasters in the United States this year.  On average, usually there are only about 3 major disasters a year.  At this point, disasters are happening inside the United States so frequently that there seems to be no gap between them.  We just seem to go from one major disaster to the next.  Last year, FEMA declared an all-time record of 81 disasters inside the United States.  This year, we are on pace for well over 100.  We just got done dealing with Hurricane Irene, and now we are dealing with historic wildfires in Texas and unprecedented flooding up in the northeast part of the country.  This has been the worst year for natural disasters in U.S. history, and we still have nearly four months left to go.  Hopefully after everything that has happened this year it has become abundantly clear to all of us why we need to prepare for emergencies.  The world is becoming an increasingly unstable place, and you never know what is going to happen next.

Thankfully, the U.S. has not experienced a disaster on the level of Hurricane Katrina so far this year, but what makes this year different is that we have never seen so many major disasters happen so rapidly.  Since the beginning of the year we have had to deal with record-setting winter storms, nightmarish tornadoes, “once in a century” earthquakes, historic flooding all over the country, severe drought and some of the worst wildfires the U.S. has ever experienced.

Is there a reason why the United States is being hit by major disaster after major disaster or is all of this just a really unfortunately coincidence?  The following are just a few of the nightmarish natural disasters that the U.S. has had to deal with so far this year…..

Texas Wildfires

At this point, the state of Texas has been on fire for nearly 300  consecutive days.  This has been the worst wildfire season that Texas has ever experienced.

So far, an astounding 3.6 million acres has been burned.  Vast stretches of Texas have been transformed into desolate wastelands.

Over the past week alone, the Texas Forest Service has responded to more than 180 new fires.  The incredibly dry weather and the scorching temperatures have combined to turn the state of Texas into a tinderbox.

One massive wildfire near Austin, Texas has burned approximately 1,400 homes and continues to spread.  The state desperately needs rain and it needs it now.

To get an idea of just how fast the fires in Texas are spreading, just watch this video.

Historic Drought

Right now, approximately 81 percent of the state of Texas is experiencing “exceptional drought” conditions.  Not only has this created an ideal environment for wildfires, it is also absolutely crippling ranchers and farmers.

Farmers in Texas have lost over half of the cotton crop so far.  This is likely to cause clothing prices to rise substantially in the months ahead.

Ranchers in Texas have been forced to slaughter huge numbers of cattle because the drought has made it incredibly difficult to feed them.  Sadly, the number of U.S. cattle is now down to its lowest level since 1963.

You might want to stock up on beef.  In the coming months the price of beef is likely to go significantly higher.

It is hard to describe just how bad things are down in Texas right now.  Overall, it is estimated that the drought has caused  more than $5 billion in damage to the agricultural industry so far.

But wait, there is more bad news.  In fact, if things don’t improve soon we could see massive problems with winter wheat.  Just check out what an article recently posted on Yahoo news had to say….

The bad news does not stop there. Winter-wheat-planting season runs from September through October and rain is vital to germination. Texas and Oklahoma produce almost a third of winter wheat in the U.S. – the hard wheat used in bread products. This week, Bloomberg financial news quoted wheat economists predicting a 50% jump in winter-wheat prices. If the dearth of rain continues and there is no moisture in the soil to germinate the wheat, prices could climb higher still.

Flooding In The Northeast

We just got done with Hurricane Irene, and now Tropical Storm Lee is dumping huge amounts of rain all over the northeast United States.  In fact, there has been so much rain up in Pennsylvania that more than 100,000 people were evacuated from the Wilkes-Barre area on Thursday because of rising waters on the Susquehanna River.

Rivers and creeks all over Pennsylvania, New York and New Jersey are flooding.  The region desperately needs a break from rain, but it does not look like that is going to happen quite yet.

The big problem is that many of these areas had already been hit really hard by Hurricane Irene.  As a result of Hurricane Irene, millions of people lost power and dozens of people lost their lives.  Hurricane Irene caused the worst flooding that Vermont had experienced since 1927, and the total economic damage from Irene could reach as high as $16 billion.

Now there are three more storms in the Atlantic that we will have to keep an eye on.  Hopefully Tropical Storm Nate, Tropical Storm Maria and Hurricane Katia will not cause major problems, but with the way this year has been going you never know what is going to happen.

Disturbing Earthquakes

As I have written about previously, the number of major earthquakes around the globe is significantly increasing.  Back in 2001, the world had 1361 earthquakes of magnitude-5.0 or greater.  This year, we are on pace to have over 2800, which would be the highest number this decade by far.

Just a couple of weeks ago, the U.S. experienced two of the weirdest earthquakes that it has seen in ages.  The earthquake in Virginia that made headlines all over the nation is being called a “once a century” earthquake.  The east coast very rarely sees anything like this happen.

The earthquake in Virginia was felt all the way down in Georgia  and it was felt all the way up in Ottawa, Canada.  It was felt as far west as Cleveland, Ohio.

In Washington D.C., the earthquake caused quite a bit of panic.  Congressional buildings were evacuated and so was the Pentagon.  The earthquake actually cracked the Washington Monument and it also caused significant damage to the U.S. Treasury building.

That exact same day, there was another very “unusual” earthquake in another area of the United States.  A magnitude-5.3 earthquake shook the area along the Colorado/New Mexico border.  That was the largest earthquake that region had experienced in more than 40 years.

Sadly, it is not just the U.S. that has been hit by significant earthquakes this year.  Just check out what a recent article in the Guardian had to say about what has been going on around the globe so far this year….

6.2 or above earthquakes have hit New Zealand, the Philippines, Japan, the Fox Islands, Papua New Guinea, Mexico, Indonesia, Fiji, Thailand, Burma, Vanuatu, Argentina, Chile and Iran in the first six months of 2011.

Tornadoes

With all of the other natural disasters that we have had recently, it is easy to forget that we just went through one of the worst tornado seasons of all time.

In a recent article, I discussed the incredible damage that some of these monstrous tornadoes did….

The United States experienced a truly bizarre tornado season this year.  In April, there were approximately 600 tornadoes all across America.  That is the most tornadoes that have ever been recorded in a single month inside the United States.  Usually, we only have about 1,200 tornadoes for the entire year.

The massive tornado outbreak in the southeast at the end of April is being called the worst natural disaster since Hurricane Katrina.  One F5 tornado that ripped through the Tuscaloosa, Alabama region was reportedly a mile wide and some scientists estimated that it had winds that exceeded 260 miles an hour. By the time it passed, Tuscaloosa resembled a war zone.

The tornado that ripped through Joplin, Missouri a few months ago is being called the deadliest single tornado in more than 60 years.  It ripped a path of destruction more than a mile wide and more than 6 miles long directly through the city.  One British newspaper has some amazing before and after pictures of Joplin that you can view right here.

After viewing pictures such as those, what else is there to say?

Sadly, there were a lot of other major disasters this year that deserve be discussed as well.

For example, I have not even mentioned the nightmarish flooding along the Mississippi and Missouri rivers.  River systems all over the central part of the country experienced “hundred year floods” this year.

So why is all of this happening?  Is there a reason for all of this chaos, or has it just been one of those years?

Whatever your opinion is, what we all should be able to learn from this year is that it is imperative that we all get prepared ahead of time for emergencies.

Natural disasters can strike at any time.  Whether it is a hurricane, a tornado, a flood, an earthquake, a volcano or a wildfire, if you wait until the disaster strikes to prepare then you are going to be too late.

But most natural disasters are only temporary.  Even more frightening is what an economic collapse, a war, a deadly plague, a nuclear disaster, an EMP strike or a weapon of mass destruction could mean.

As we have seen during so many disasters in the past, when something really bad happens food and supplies vanish from store shelves almost immediately.  If transportation is cut off, you could be on your own for an extended period of time.

Our world is becoming a highly unstable place.  If someone had told you all of the crazy things that were going to happen this year, would you have believed them?

It seems like with each passing year things are getting crazier and crazier.  Yes, we can all hope that things will return to “normal”, but we would be foolish if we also did not take precautions.

As I have written about before, the global economy is starting to collapse, the fabric of society is coming apart and the earth itself seems to be going crazy.

We certainly do live in interesting times.  The years ahead promise to be some of the most exciting in human history.  But those that are unprepared could end up going through a massive amount of pain.

So please prepare while there is still time.  You will not always be able to run out to Wal-Mart and buy up all of the cheap stuff that you need.

Anyone with half a brain can see the dark storm clouds gathering on the horizon.  Very, very difficult times are coming, and you do not want to enter them unprepared.

12 Things That We Can Learn From Hurricane Irene About How To Prepare For Disasters And Emergencies

Whenever a major disaster or emergency strikes, millions of lives can be turned upside down in an instant.  Fortunately Hurricane Irene was not as catastrophic as originally projected, but millions of people did lose power and at least 35 people lost their lives.  Large numbers of homes were destroyed and the economic damage from Hurricane Irene is going to be in the billions of dollars.  Now that Hurricane Irene has passed, this is a good opportunity for all of us to look back and learn some important lessons about how to prepare for disasters and emergencies.  The reality is that a major disaster or emergency has happened somewhere in the United States almost every single month so far this year, and it is only a matter of time before you and your family will be faced with another disaster or emergency.

No plan is perfect, but if you have a plan you are going to be far better off than if you do not have a plan.  September is “National Preparedness Month“, so now is a great time to focus on preparing your family for the future disasters and emergencies that are inevitably coming.

The following are 12 things that we can learn from Hurricane Irene about how to prepare for disasters and emergencies….

#1 Disasters And Emergencies Are Inherently Unpredictable

When a disaster or an emergency strikes, you never know what is going to happen.  Even a storm such as Hurricane Irene that was tracked for weeks can end up being highly unpredictable.

For example, while a tremendous amount of attention was paid to New York City, the reality is that some of the worst damage ended up being caused in Vermont.  Hurricane Irene actually caused the worst flooding that Vermont has seen since 1927.

The following is how the governor of Vermont described the devastation that was caused in his state by this storm….

“It’s just devastating,” Gov. Peter Shumlin said Monday. “Whole communities under water, businesses, homes, obviously roads and bridges, rail transportation infrastructure. We’ve lost farmers’ crops,” he said. “We’re tough folks up here but Irene … really hit us hard.”

#2 During A Major Disaster Store Shelves Become Empty Very Rapidly

What do we see happen every single time there is even a minor disaster or emergency?

Every single time, food and other emergency supplies disappear from store shelves in a matter of hours.

If you do not have at least a couple weeks of food stored up you are being totally foolish.

In fact, considering how unstable the world has become, it is amazing that only a small percentage of the population has enough food stored up to be able to last for at least six months.

If an economic apocalypse happens, a major war breaks out, an EMP attack takes place, a huge comet strikes the planet or weapons of mass destruction are used in this country, you may not have access to mass quantities of very cheap food any longer.

Get prepared while you still can.

#3 Always Have A “Go Bag” Ready

When disaster strikes, you may only have a couple of minutes before you have to race out the door.

Your “go bag” should contain some food, some water, a flashlight, a battery-powered radio, some cash, copies of your most important documents and any medicine that you may need.

#4 Know Your Escape Routes And Always Have Maps Of The Area In Your Vehicle

Have a plan and know where you are going to be heading in the event of an emergency.

If you don’t have a plan or if you don’t give yourself enough time, you could end up dead.  A number of people died during Hurricane Irene while they were in their cars.  The following is one example that was noted in a recent CNN article….

A 64-year-old woman was found dead Sunday by Whitemarsh, Pennsylvania, police after her family grew concerned when she did not show up for work. Her body was found a half-mile from where her car was abandoned in a deluged creek, police said.

#5 During A Major Disaster Or Emergency There Is A Good Chance That You Will Lose Power For An Extended Period Of Time

During Hurricane Irene, more than 5 million people lost power.  That is why it is crucial to have a battery-powered radio, a battery-powered (or solar) flashlight and extra batteries in your home.

Know what you are going to do once the power goes out.  Anyone that has been through an extended power outage knows how life can change almost instantly once the power goes down.

#6 Have Enough Water Stored Up

What was one of the biggest problems in the aftermath of Hurricane Katrina?

It turned out that one of the most critical problems was a very serious shortage of bottled water.

Yes, even after Katrina dumped unprecedented amounts of water on New Orleans one of the biggest problems was still a lack of water.

If you do not have clean water to drink, you can die within just a few days.

So when planning for disasters and emergencies, please be sure to store up enough water.

#7 During A Natural Disaster, Major Transportation Routes May Be Shut Down

A lot of people were horrified to find roads closed or washed out during Hurricane Irene.  Just because you are used to traveling on certain roads it is not safe to assume that they will always be available during disasters and emergencies.

#8 Have Respect For The Sheer Power Of Natural Disasters

We live at a time when people like to make a joke out of anything, but major natural disasters are not to be trifled with.

If you do not respect nature, you can end up dead.  Amazingly, some people were actually out boating and canoeing during Hurricane Irene.  According to one CNN article, one 53-year-old man that tried boating during Hurricane Irene was later found dead….

One man in Croton, New York, died Sunday while boating along with four others down the Croton River, said Lt. Russell Haper, a spokesman for the Croton police. The boat overturned in the strong rapids. The 53-year-old man was found dead after a three-hour rescue effort. The other men were pulled safely from the water.

#9 Living Near Water Can Be Very Dangerous

If you live near the ocean or near a major river, you need to understand that the potential for danger is always there.

Even if you live a good bit in from the coast, the danger for substantial flooding is always there.  The following is how one CNN article described the situation in Philadelphia at the height of Hurricane Irene….

Outside Philadelphia, waters had already climbed to street-sign levels in Darby, Philadelphia Mayor Michael Nutter said, with the water sending “couches, furniture, all kinds of stuff floating down the street.”

#10 During A Major Disaster Bring In All Objects From Outside

During any disaster that involves high winds, anything that is left outside can quickly become a very dangerous projectile.  The last thing that you want is for the wind to pick up heavy objects and send them crashing into your home or the home of a neighbor.  If you know that a major storm is coming, please bring in everything that you can from outside.

#11 Have A Plan But Be Flexible

Your best chance of making it through a disaster or emergency is to have a plan.  But that doesn’t mean that you should always stick with that plan.  Disasters and emergencies are inherently unpredictable, so it will be very important to be as flexible as possible.

#12 If You Wait Until Disaster Strikes To Prepare It Is Too Late

Right now is the time to prepare for the next disaster or emergency.  If you wait until an emergency happens, you will be out of luck.  You need to develop a disaster plan for yourself and your family if you do not have one already.

If you plan on storing up food, water, medicine and other emergency supplies, you need to do it ahead of time.  Victory belongs to the prepared, and if you think that you will never wind up in the middle of a major disaster you are just being foolish.

Hurricane Irene was a terrible storm, but fortunately it was not nearly as bad as it could have been.

Hopefully this storm will serve as a wake up call for many of us.

The next time that a disaster strikes, we may not be let off the hook so easily.

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