March 12, 2011
Can America Survive a Catastrophe?By Steve McCann
Japan has experienced one of the worst earthquakes in recent history, the Middle East is in flames and turmoil, the threat of a war in that region becomes more of a reality by the day, China is flexing its muscle and plans to dominate Asia and the world, the US national debt is approaching 100% of the Gross Domestic Product, the annual federal budget deficit will exceed an unimaginable $1.6 Trillion and the current leader of the United States, safe in his plush bunker, is without a clue and is more interested in his re-election and the trapping of office.
President Obama either fails to understand or is deliberately oblivious to the fact that the major responsibility of those in government is to be certain a country is capable of surviving a worst case scenario such as war, massive economic downturn or a catastrophic natural disaster.
It has been predicted that California has a 99% chance of a major devastating earthquake in the next 30 years. The central part of the United States extending to the east coast, in an area that has recorded four of the largest earthquakes ever in North America, could experience a cataclysmic earthquake sometime in the next 50 years. The cost of these events may well be in the multi-Trillions of dollars.
The economy, so wedded to the world financial structure and socialist economic policies, has a very high probability in the short and long-term of repeating the wreckage the country has recently undergone.
Yet the current regime in Washington D.C. does not seem to understand or care that the policies they are pursuing will leave no margin for error in the event of an apocalyptic natural or man-made calamity.
The wealth of the United States has always been its fallback position in order to come through wars and recessions or cope with natural disasters. The country's enormous gross domestic product (GDP) has allowed the government to spend (by reducing taxes if necessary and borrowing) whatever monies were necessary to offset the losses incurred from these events and/or to re-start the engine of the economy.
This nation has had an unlimited credit card and until recently used it somewhat wisely. As long as the United States maintained a reasonable debt to GDP ratio (less than 50%) and kept the annual budget deficit to less than 3% of the GDP, then it always had the ability to survive a tragedy of unimagined proportions.
The Obama administration and their fellow travelers in Congress appear to care little for the long term survival of this country. They are in the process of squandering the nation's wealth and thus its wellbeing in their headlong determination to "fundamentally change the country".
This, let the consequences, unintended or otherwise, be damned approach to governing will put the United States in a position where it will not have at its disposal the funding and economic activity necessary to recover from whatever overwhelming debacle the country may encounter in the future.
At the end of 2008 the total publicly held debt of the US Government stood at 65.2% of GDP. In the four years of the Obama administration the debt will increase $5.8 Trillion (equal to the entire debt incurred by the United States since its inception up to and including 2001). This will result in the country having a debt to GDP ratio of 105% by 2012, a mere 21 months from now.
It has been acknowledged by a consensus of economists that unemployment, as a result of the Obama agenda, will remain in the 8-9 percent range over the next three to four years. This government refuses to recognize the need for spending reduction, opting instead to adopt new entitlement programs and, as part of its war on wealth, dramatically raise any and all taxes on the private sector. That component coupled with the massive new regulations already passed and proposed will result in inflation adjusted stagnant GDP growth.
Without significant repeal of the Obama tax and regulatory policies and changes in the entitlement programs and overall reduction in government expenditures, the current spending proposals and impact of the trillions needed for Obamacare, Social Security, and Medicare and interest payments will result in the debt to GDP ratio exceeding 135% by 2019.
Recently the bond ratings of Greece, Portugal, Ireland and Spain have been downgraded (Greece to junk bond status). Not only is the entire European Union threatened with collapse because of the excessive debt and budget deficit policies of these countries, but the entire world economy. In the case of Greece the debt to GDP ratio is 125% and the annual budget deficit is 13.6% of the GDP. Greece can no longer borrow money (except at excessively high interest rates) and must turn to the European Union for a bailout in order to pay debts.
By comparison, the United States, if it remains committed to the Obama agenda, will experience a debt to GDP ratio of 100% and an annual budget deficit of 11.5% of GDP this year. This nation is becoming the next Greece.
In the event of a disaster, the United States, unlike Greece or Ireland, will not have the European Union or the IMF to turn to, where then will the monies come from if the worst occurs?
How do we pay the recovery costs associated with a catastrophic natural disaster? From whom do we borrow the money without paying a usurious interest rate and forcing the country into further decline? Can we expect our traditional allies, who will find themselves in a similar situation, to come to our aid?
As to a dramatic economic downturn, the traditional tools used to come through a recession or depression will not be available. Would the debt holders of the bonds of the United States concur with significant tax reductions to spur the economy, or would they agree to finance more debt as a stimulus?
Would the United States choose as an alternative hyper-inflation by continuing to printing more dollars in order to mitigate the debt, in a potential repeat of the devastating experience within the Weimar Republic in the 1920's? A strategy which would ultimately plunge the citizenry into a dramatically reduced standard of living, excessive unemployment and societal upheaval.
If the United States continues on its present course, these are the only choices the country will have, yet never in the history of this nation have we had an administration and a political party so willingly, and with no second thoughts, place their agenda and philosophy ahead of the survival of the United States. This may well border on treachery of the worst sort, as it violates the allegiance owed by our elected leaders to preserve and protect the long-term welfare and well-being of the people and the nation.