An Overused Worn Out Cliche
And now for another understatement; we truly are living in unprecedented times - aren't we? I mean, just when the world appeared to be growing so close - with the fall of the Berlin Wall, Reunification, the Euro Zone, the emergence of the Asian Tigers - there seems to be so many headline grabbing events that highlight our differences, our uneasiness and our distrusts in one another.
This past week the world witnessed the horror and pain that can be inflicted by nature's full fury. Not only have the U.S.'s southern Gulf States have been ravaged by the effects of hurricane Katrina, but specifically - the extensive levee system surrounding New Orleans, Louisiana failed catastrophically. With Katrina's storm surge first topping and then weakening the levees, this led to three key breaches to the protective dykes, ultimately owing to the submergence of much of the City of New Orleans - a dish [bowl] shaped city situated largely below sea level. Because first responders appeared overwhelmed by the enormity of the situation, divisive and derisive accusations ranging from racism to class bigotry have already been leveled internationally throughout the mainstream press.
To suggest that the resulting flooding of New Orleans hampered relief efforts, at this point, is an overused worn out cliché - but no one can deny that the blame game has begun in earnest. At issue is who knew what and when? Administration officials and emergency response organizations [FEMA] have made claims that they had no idea - to what extent - the levee system could or would be breached?
Enter James Lee Witt, former FEMA director circa 1995, who spoke for the cameras of CNN this past weekend - informing us that as far back as 1995 FEMA personnel had conducted drills in New Orleans mocking the inevitable occurrence of just such a situation. This illumination amounts to an indictment of the current regime in light of cuts made or redirection of federal funding in recent years; funding intended to improve and strengthen the protective levee system around New Orleans.
What all of this shows; to me, is that officialdom was more than adequately warned of the impending disaster and yet consciously - over the long term - failed to take adequate and responsible steps to prevent the inevitable. As a result, when the levees broke, destruction was of an unprecedented scale - and felt the most amongst those who had the least, the average Jane and Joe.
Jane and Joe....This Bud's For You
I find this callous disregard in the face of very well articulated dire predictions and warnings eerily familiar. For years, organizations such as GATA have been sounding alarm bells about the poorly constructed illusory levees supporting the decaying fiat financial system. Officials at both the Fed and Treasury have long stood accused of surreptitiously rigging the price of gold, inflation statistics, other key economic indicators, along with the resultant value of the U.S. dollar as well as interest rates to shore up a critically inadequate and unstable financial system. All of these actions and decisions have been made consciously too, despite dire warnings from sound money advocates that have been branded as 'nonsensical fringe players - gold bugs'.
For the same number of years, monetary officials have been repeatedly warned of the susceptibility of the U.S. [and by extension global] economy and financial system to gathering storm clouds. It has long been postulated that the existence of the Perfect Financial Storm, churning at sea, would some day come ashore and have the U.S. economy in its crosshairs - and could topple and/or wreak systemic havoc in not just the U.S. economy, but the global financial system.
The economic fallout from hurricane Katrina may well be the catalyst - the nonlinear event - that directs this perfect financial storm on to the shores of American financial system. It's difficult to understate the damage to the U.S.'s energy infrastructure. In the words of Dan Gilligan, head of the Petroleum Marketing Association,
"If the Gulf is the heart of the oil industry, we've suffered a heart attack."
In addition, the crucial port facilities at the bottle neck/choke point of the Port of New Orleans have greatly impeded the transshipment and free flow of many bulk goods on the Mississippi River. Adding this consternation to an arguably 'already compromised' global energy situation and we have a potent confluence of events which has already seen dramatic gasoline, natural gas and distillate price spikes throughout much of the western world.
The big question, in my mind, will the current crop of central planners and market manipulating interventionists be able to build high enough and strong enough dykes [rig data and the markets] to stem the prospects of a rising tide of global hyper inflation? If there is even an ounce of truth to the Matthew Simmons thesis on Peak Oil coupled with the unfolding events on the U.S. Gulf coast - then we are most surely staring at the potential for a coming winter full of energy shortages, just as the levees surrounding New Orleans were guaranteed to fail if a hurricane struck in excess of Category 3. This is not rocket science folks, heart attacks typically leave the patient weakened and at best - highly susceptible to complications or recurrence. Whether or not news outlets like CNBC want to acknowledge this as such, at the end of the day, is quite irrelevant. If, as and when this perfect financial storm finally comes ashore and the illusory financial levees break; those who have been making claims that the economy and financial system are strong and resilient are, no doubt, going to be doing their fair share of finger pointing. They will blame everyone but themselves and the true and deepest misery will again be shouldered by those who don't understand or are least equipped to deal with it. The more things change, the more they stay the same - just another overused worn out cliché.