A Bleeding And Wounded Earth!
I'm sure by now you have all heard the story. On April 20th, 2010, the Deepwater Horizon oil rig exploded in the Gulf of Mexico and killed eleven people while injuring seventeen more. It has become the biggest oil spill in U.S. history and has been called the "worst environmental disaster America has ever faced" by President Obama. (1) After the explosion, we saw one incompetent attempt after another to stop the spill, none of which even came close to working. Eventually, British Petroleum (BP), the company who had been leasing the oil rig, resorted to drilling two relief wells in an effort to stop the flow of oil. As of now, the relief wells are still not completed, and likely they will not be finished until August. (2)
The oil spill has reached Louisiana, Mississippi, Alabama, and northwest Florida. Thousands of animals, including sea turtles, dolphins, and birds, have been killed. Meanwhile, giant plumes, made of a mixture of oil, gas, and seawater, have been found radiating around the blown-out well in all directions. The plumes contain toxic gases, including methane, which threaten the air supply for both animals and humans in the area. (3)
While BP officials can't seem to figure out what they are doing, the response of the Obama Administration has been underwhelming to say the least. Obama did visit the Gulf a couple times to tell BP to clean up the mess, but he really showed no sense of urgency until his approval rating started to drop. Even at that point, Obama's best strategy seemed to be going on television and using mild vulgarity to make threats. (4) Meanwhile, scientists have complained about the lack of coordination of the oil spill research efforts. Christopher F. D'Elia, the dean of the School of the Coast and Environment at Louisiana State University, stated, "Whatever the federal government is up to -- it may be well planned internally within the federal government, but the involvement of the outside research world is inadequate in my view." (5)
President Obama seems very proud of the fact that he negotiated a $20 billion fund from BP for the Gulf spill victims. (6) However, that money won't be nearly enough to cover the damages inflicted by this disaster. US lawyer Kenneth Feinberg, the man Obama appointed to oversee the fund, stated, "There's no question that the property value has diminished as a result of the spill. That doesn't mean that every property is entitled to compensation." He further went on to say, "There's not enough money in the world to pay everybody who'd like to have money." (7)
Despite the fact we have seen other large oil spills before, such as the Mexican Ixtoc 1 spill in 1979 and the Alaskan Exxon Valdez spill in 1989, very little money has been spent on oil spill cleanup technology over the years. The oil companies know the risks of deep water drilling, and they should have been more prepared for the recent spill in the Gulf of Mexico. Although BP claims they have spent $29 million on safer drilling operations research, they did not research oil spill cleanup technology at all. (8)
The extent of the damage caused by this catastrophe remains unknown. It is likely that the effects on sea creatures, our food supply, and the citizens of the Gulf coast will be felt for years to come. The Obama Administration will likely try to use this event to pass sweeping new energy laws. Should the bureaucrats succeed, Americans will see their cost of energy increase exponentially.
A Crumbling Economy!
President Obama has claimed for the last few months that the U.S. economy is "recovering." He claims his stimulus plan is working and that we are "heading in the right direction." Yet I keep seeing headlines that say things like "U.S. Consumer Confidence Crumbled in June." (9) With the expiration of first time home-buyer tax credits of up to $8000, pending home sales plunged 30% in May. This was surprising to many in the real estate business since economists were expecting a drop of only 10.9%. (10) Perhaps it is good that the homebuyer credit program is over since it appears our government wasn't running it very efficiently. CNN reported that over $28 million was stolen from the program, including $9.1 million by prison inmates. (11)
Meanwhile, Barack Obama's special mortgage program, designed to help homeowners make their housing payments easier, has been a stunning failure. More than a third of the 1.24 million borrowers who were enrolled in the program have dropped out with 155,000 participants leaving the program in May 2010 alone. According to John Taylor, chief executive of the National Community Reinvestment Coalition, "The foreclosure-prevention program has had minimal impact." (12)
As of early July 2010, the unemployment rate in this country sits at 9.5%. This is actually a drop from the June rate of 9.7%, but only because 652,000 people have stopped looking for work altogether and are no longer considered unemployed. According to an Associated Press report, the United States has 7.9 million fewer jobs than it did when the recession began. (13) Federal Reserve chairman Ben Bernanke has predicted that the unemployment rate will stay high. "The unemployment rate is still going to be high for a while, and that means that a lot of people are going to be under financial stress." (14) Bernanke also stated, "My best guess is we'll have a continued recovery, but it won't feel terrific." (15)
While Obama and Bernanke talk about recovery, banks in this country are still being shut down. Recent closures include banks in Florida, Nevada, California, Nebraska, Mississippi, and Illinois. Over eighty banks in the United States have been shut down by regulators in 2010. (16) As smaller banks continue to close, we may eventually be left with only two or three very large banks. Of course, that would probably make the task of launching a brand new monetary system much easier.
Just how bad is the U.S. economy? One thing we need to keep in mind is that the money Obama used for his massive stimulus package was borrowed from other countries. The United States is broke, and Obama's unbridled spending has put this country on the brink of a debt that could exceed the value of its gross domestic product by 2012, based on reports from the International Monetary Fund. (17)
Budget crises on the state level abound as well. The state of Illinois has raised its retirement age to 67. Arizona, New York, Missouri, and Mississippi plan to make people work more years to collect pensions. Colorado has cut pensions for all its workers, including past, present, and future. California and New Jersey have already cut, or are looking to cut, pensions as well. The situation in Illinois is so bad that R. Eden Martin, president of the Commercial Club of Chicago, warned, "We're within a few years of having some of the pension funds run out of money." He further stated, "Funding for the schools is going to be cut radically. Funding for Medicaid. As these things all mount up, there's going to be a lot of outrage." (18)
We now live in a world with a global economy, and because of that, some elements of economic distress are beyond the control of even our own government. The financial collapse in the European Union, particularly within Spain, Portugal, and Greece, has been a cause of great concern to economists and other finance experts. Jeff Tjomehoj, a research manager for Lipper Inc, said, "It weighs a lot on the financial system because what we're really talking about is the health of European banks, and our banks are going to have a lot of exposure to them." The economy of Greece has collapsed to the point their debt is now valued at "junk" status. (19)
The president of the European Commission, Jose Manuel Barroso, is so concerned about the debt crisis in Europe that he has warned that democracy could disappear in Spain, Portugal, and Greece. His concern seems based on the fact that all three of these countries have histories of military coups, and without economic stability, it could open the door for new dictators to come in and take over. (20)
