Juggling Dynamite

A reasonable cap on coverage for high risk properties is critical. There are no endless funds available to governments/taxpayers especially today with already record debt at every level.  Everyone must focus on mitigation and risk reduction first as well as increasing the onus on individuals for greater self-insurance as this prompts us to make more cost-effective allocation decisions about where and how we choose to make our buildings.

The government is facing billions of dollars in flood insurance claims following hurricanes Harvey and Irma, and residents that live in flood-prone homes are applying for government buyouts though the Federal Emergency Management Agency, also known as FEMA. So can the financially-troubled National Flood Insurance Program move fast enough to help residents before they accept federal funding to rebuild?

This video explains the steep challenges facing the NFIP, which was roughly $25 billion in debt before the costly back-to-back hurricanes.  Here is a direct video link.

You can also see the current rules around flood insurance in the US here.

Imagine massive terrorist events inflicting on going pain and loss and everyone just continually cleaning up the mess without anyone asking or talking about what we can do to stop the cycle.  And then putting some of the terrorist commanders in charge of our response plans.  That’s where we are at with today’s extreme weather event coverage and response.  Ours is a world upside down.  But it’s not so easy as just blaming corporations and governments.  The blame game won’t suffice.  From the ground up:  the onus is on all of us individually to adapt and lead the change we need to see.

Houston Mayor Sylvester Turner has tapped the former head of U.S. operations for oil giant Shell to lead Houston’s post-Hurricane Harvey recovery effort. Marvin Odum was the chair of Shell for eight years. He retired in 2016. Hurricane Harvey killed at least 82 people, flooded thousands of homes and destroyed billions of dollars of property. It also caused widespread environmental contamination, triggering a half-million-gallon gasoline spill and the release of up to 5 million pounds of pollutants into the air. For more, we speak with best-selling author and journalist Naomi Klein.  Here is a direct video link.

As Central Banks move to reduce their QE-created balance sheet assets, the ‘monetary tightening’ is a headwind for today’s heavily levered global economy, stocks and corporate debt.

Hoisington Investment Management’s Lacy Hunt and CNBC’s Rick Santelli discuss monetary tightening in an extremely over-leveraged economy. Here is a direct video link.

Santelli Exchange: The secular downtrend in Treasury bond yields from CNBC.

“If we are talking the long term bond yields, central banks have very little influence. Long yields over time are determined by inflationary expectations. Something that’s know as the Fisher equation and the reason that long yields are low not only in the United States, but around the world, is because the inflation rate is very depressed… The action of the world’s central banks, in my opinion, are actually serving to lower, not raise, inflationary expectations. The Federal Reserve has tightened four times. The rate of growth in the money supply is decelerating very substantially. Bank loans have moderated even more substantially than the rate of growth in the money supply. The velocity of money is falling. So to summarize, what I would say is when you have an extremely over-leveraged economy such as we do today, a little bit of monetary tightening goes a long way.

…The ability of central banks to influence the long term rates by acting on the short term rates in very very limited, and in fact it’s often contradictory. For example, when the Fed was expanding their balance sheet under QE1 and QE2, a lot of folks called that money printing and said it would be inflationary and the bond yields actually rose because the bond market is so sensitive to the rate of inflation. When the Federal Reserve allowed the balance sheet to contract very slightly between QE1 and QE2 and then again between QE2 and QE3, money supply growth came off, the economy decelerated, and bond yields declined…”