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James Turk: Dollar rally attempt fails
7:31p ET Saturday, September 10, 2005
Dear Friend of GATA and Gold:
The $52 billion appropriated by Congress last week
for hurricane relief was all deficit spending,
borrowed money, and the relief spending that
follows, described in the Associated Press story
appended here, may be as well -- perhaps more than
$300 billion.
Infinite money, all the time ... with no impact on
the dollar's value?
Apparently the U.S. government thinks so, or
doesn't care.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
Katrina's Costs Could Approach that of War
By Donna Cassata
Associated Press
Saturday, September 10, 2005
http://news.yahoo.com/news?
tmpl=story&u=/ap/20050910/ap_on_go_ca_st_pe/katrina_calculating_costs
_3
WASHINGTON -- One storm could end up costing almost as much as two
wars.
Although estimates of Hurricane Katrina's staggering toll on the
treasury are highly imprecise, costs are certain to climb to $200
billion in the coming weeks. The final accounting could approach the
more than $300 billion spent in four years to fight in Afghanistan
and Iraq.
Analysts inside and outside government agree that the $62 billion
that Washington has spent so far was merely the first installment of
perhaps an unparalleled sum.
"I cannot put a cost figure on it," Vice President Dick Cheney said
Thursday in a visit to the hard-hit states.
The government never has dealt with a disaster of this scale: 90,000
square miles of the Gulf Coast affected, with hundreds of thousands
of people displaced and an entire metropolitan area under water.
In 1992 the devastation of Hurricane Andrew in Florida and Louisiana
cost $35 billion. The price for the 6.7-magnitude temblor in the
Northridge area of Los Angeles in 1994 was $15 billion to $20
billion.
Members of the Louisiana congressional delegation say it could cost
$100 billion just in New Orleans.
As for the overall toll, G. William Hoagland, the top budget adviser
to Senate Majority Leader Bill Frist, R-Tenn., said: "We're
obviously over $100 billion. I just don't know how much over."
As the House approved President Bush's second spending request
Thursday, the chairman of the House Appropriations Committee
predicted that lawmakers would repeat the effort in a few weeks. "It
will be the greatest appropriations outlay for a disaster in the
history of doing this," said Rep. Jerry Lewis, R-Calif.
The imprecision in calculating the costs reflects a Washington
process of handling a crisis and the uncertainty of when the furious
spending in the immediate aftermath will slow significantly.
Sounding like engineers, number crunchers talked of "burn rate" --
how much and how fast money was being spent.
The weekend after the hurricane hit Florida, Alabama, Mississippi,
and Louisiana, the government still was writing checks for close to
$2 billion per day on items such as the 17 million meals ready to
eat, tens of thousands of trailers to house refugees, and contracts
to rebuild highways and bridges.
That amount slowed to about $1 billion per day last week and was
expected to drop off in the weeks ahead.
At first, Congress decided to give the Bush administration the money
it requested, comparing the situation to that in days after the
attacks of Sept. 11, 2001.
Now the Office of Management and Budget and the appropriations
committees in the House and Senate are contacting government
agencies to find out what they need for relief, recovery, and
rebuilding.
They may get mind-boggling answers because Katrina has shattered all
the models on picking up the pieces.
Insurers and actuaries have dealt with the wind damage from
hurricanes but not the impact on buildings and roads of an entire
city engulfed in bacteria-laced, sewage-tainted water, possibly for
weeks.
"An entire metropolitan area flooded is something we don't have a
lot of experience with," said Rade Musulin, an actuary with the
Florida Farm Bureau.
Among the lingering questions are:
-- What will be rebuilt and who does the work?
-- In writing the insurance checks, is it the government or private
companies?
-- How long do food stamps and other assistance last?
-- And how much do federal officials provide?
Homes, levees, and even the two new light-rail systems in New
Orleans have to be repaired or razed.
"It depends on how this proceeds," said Dan Crippen, a former
director of the Congressional Budget Office. "The compensation
costs for refugees -- you can't keep them in sports stadiums
forever. It depends on how quickly they're employed, have homes, how
much public assistance. There are so many unknowns here."
The various states and the District of Columbia that have provided a
safe haven for evacuees will be sending their bills to Washington.
Texas' two senators, in a letter to Bush, asked about reimbursement
for enrolling refugees in Medicaid. The city of New Haven, Conn.,
has estimated that caring for 100 families that it has offered to
house would cost $80,000 each, a bill of $8 million.
Mississippi signed a contract for $5.1 million to repair the
Interstate Highway 10 bridge in Columbia. If the contractor can
finish the work ahead of schedule, a $100,000-a-day bonus is
promised.
The images from New Orleans underscore another question.
"Who would pay to replace the Superdome?" asked Scott Lilly, a
former appropriations staffer, now a senior consultant with the
Center for American Progress.
Robert Lichter, a statistician who studies the use and misuse of
numbers in public policy, cautioned against reading too much into
the early figures.
"Assume that all estimates are self-interested and all estimates are
too low," Lichter said, especially those coming out of
Washington. "The government is like a contractor -- whatever it
says, triple."
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