The Uncle Sam All-Risk Insurance Company is Back in Action

September 14, 2008 by  
Filed under Insurance, Money and Behavior

Our Best Wishes to the Good Folks in Galveston, Texas 

To everyone in Texas who suffered a personal loss from Hurricane Ike, Mr. ToughMoneyLove extends you sympathy and hope for a rapid recovery. 

I also hope that you have excellent insurance and that you are current on your premiums.  

I hope that we don’t end up paying your insurance premiums in the form of another increase in the federal deficit.  We’ve already done this in response to the Katrina debacle (and I’m sure the federal government is still bleeding money to the Katrina “victims.”) 

But Please Move Somewhere Else 

Finally, our hope is that you find another place to live that is not near Galveston. 

Do I sound frustrated?  Well I am frustrated.  The hard truth is that Mr. ToughMoneyLove is disturbed that our government has assumed the role of insurer of first and last resort.  (Did I say “our” government? It doesn’t really feel like it belongs to me.  I only get the bills.)  What is worse, so many people now expect this behavior, including for natural disasters that are 100% certain to occur.  It’s wrong and I’m sick of it. 

An Epidemic of Government Rescues and Bailouts

Just in 2008, the government committed billions to the Bear Stearns rescue and the Fannie May and Freddie Mac takeovers, effectively providing financial insurance to these grossly mismanaged enterprises.  The feds are plotting as I am writing this to do something for Lehman Bros.  Ford, GM, and Chrysler are no doubt carefully putting together their respective government bailout strategies.  The list seems never ending. 

I fully expect that the taxpayers are going to get a huge bill for re-building Galveston and environs.  The people of Galveston are good, tough folks who deserve help but I don’t want to pay to rebuild a stick of Galveston?  Why?  Because there shouldn’t be anyone living there.  It’s a weather disaster waiting to happen.  Statistically, Galveston is affected by a hurricane every 3.04 years.  Hurricane disasters have happened to Galveston before Ike and they will happen after Ike.  And I for one don’t want to pay for it.  I also don’t want to see people killed because they don’t have the sense to move or even evacuate when told.

You Can’t Stop Mother Nature with Money 

As of August 2006, Congress had enacted $82 billion in emergency supplemental appropriations for Katrina related rebuilding, including going to extraordinary lengths to fortify substantial areas of New Orleans against the natural movement of water.  This is on top of diversion to New Orleans of billions of already budgeted FEMA and other government funds.  Those people shouldn’t be living there either.  It’s gonna happen again, as the forces of nature are always superior to futile attempts to control them.   It’s the same for financial disasters caused by gross mismanagement. 

The Oil Companies Can Solve Their Own Problems 

Now readers are thinking “What about the refineries? Who will work there?”  My answer is that I don’t care.  They will find folks willing to make the drive or they can move their refineries somewhere else.  I have lost all empathy and respect for the oil industry, starting with OPEC and Hugo Chavez, right on down to our local gas stations that jerked retail gasoline prices over $4.00 before Ike even hit the coast.  The oil companies have plenty of money and a heckuva lot better cash flow than our federal government.  Let them handle their own problems, including building and staffing refineries where people don’t have to endure hurricanes on a regular basis.  The net cost to me will be less.  Any pennies I save on gas by having refineries adjacent to tanker ports are easily sucked up by disaster relief funds.  The lives that will be saved are worth it no matter the cost of gasoline. 

OK, I feel better after my rant.  I’m curious, is anyone else upset by the increased role of the Uncle Sam All-Risk Insurance Company?

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7 Responses to “The Uncle Sam All-Risk Insurance Company is Back in Action”
  1. Preach on brother! I’d like to know when Uncle Sam was replaced with Everyone Who Screwed Up’s sugar daddy. Take some personal responsibility for Pete’s sake.

    To prevent such stupidity from occurring on the corporate side, I’d like to see a mandatory repayment of all compensation from any board member and all other executives down to the director level. All wages, bonuses, and proceeds from stock options that were received for the previous 3 years after the government has to bail out a corporation b/c of their piss poor managerial skills.

  2. goldenrail says:

    “I’m curious, is anyone else upset by the increased role of the Uncle Sam All- Risk Insurance Company? ” – Yes.
    Just as much as I was when I heard San Francisco was arguing for terrorism emergency funds from the Federal government for earthquake emergencies – ‘because an earthquake is a bigger threat to SF than terrorism.’ Yes, but you live there expecting an earthquake.

  3. PT says:

    I think our States (Louisiana and Texas) should do a better job of restricting what types of building should go on in these zones. Somehow the Fed should put the pressure on them to implement strict requirements.

  4. I couldn’t agree more.

    Where I live, it’s not uncommon for certain areas to flood every few years and the government then step in to compensate everyone who lost their house. Sorry folks, they call it a flood plain for a reason, and you chose to live there.

  5. MGL – That’s an interesting comment because in most states (including ours) it’s illegal to build any permanent structure (even a fence) inside the 100 year flood plain adjacent to any regulated body of water, including the tiniest of rivers. Yet places like New Orleans and Galveston (which seem to now flood every 3-5 years) keep building away.

  6. goldenrail says:

    Mr. ToughMoneyLove, I’m interested in your perspective on the new AIG Fed bail-out.

  7. Goldenrail – I will be posting about this soon but what you are witnessing are the death rattles of American capitalism. It used to be that in a capitalistic ecocomy, the winners thrived and the losers disappeared. Now, the losers become government owned entities and the winners pay the bills. The car companies are next in line. Socialism is not too far down the road from there.

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