May 1, 2006

That enormous sucking sound you hear down around the Gulf Coast, isn’t floodwater receding, it’s insurers heading for higher ground.

Just Like a Good Neighbor, State Farm Is (no longer) There.

You’re In Good Hands With Allstate, unless those hands happen to be in hurricane or earthquake territory.

These two major insurers have had enough and you can’t really blame them. In about a month, another hurricane season is scheduled to hit or miss Ol’ Miss and these companies have shareholders to worry about.

That might sound callous. It’s business. Add local State Farm or Allstate agents to the small businessmen ravaged by the first ballots cast under a new regime called Climate Change. George Bush has been right all along. We desperately need regime change, it’s just that he’s been after the wrong regime.

There are going to be some hard words slung in the direction of insurers. They are correct in what they are doing and we need to take notice, change some things around, and the first thing to look at is Gulf Coast development. Trent Lott is not God. Not yet, anyway.

Since we have spent decades and, in some cases, centuries revamping, re-arranging, weeding out and filling in nature’s buffers along the Gulf, we came to think somehow that it mattered. It doesn’t.

Having spent those same decades and, in some cases those same centuries building a social and economic order in New Orleans, establishing a truly great example of superior culture in a hundred different ways (with several glaring deficiencies), we thought and expected it would last. It hasn’t.

We spent a much shorter period, mostly the past two decades glitzing a painfully susceptible Mississippi coast in LasVegas style. The money and power behind that travesty calls on the National Treasury to fish their chestnuts out of the fire. Assuming (and it’s a big assumption) that Trent Lott fails in his efforts to scam relief funds, the National Treasury will have more sense than that.

It may not.

God knows, government continues to fail us with saddening regularity and this may be just one more example. We are, quite accurately, shareholders in this nation of ours, certainly every bit as much as those who elect to invest in State Farm or Allstate. The difference is that our investment was thrust upon us rather than voluntary. We haven’t the option to sell-short in a down market and, largely because of this, the Trent Lotts in our government would have us heal their wounds rather than take the loss they set themselves up for.

Joe Annotti, of the Property Casualty Insurers Association of America, says

"It's a political problem, and it's an economic problem -- that's what makes it so difficult."

Dead wrong, Joe. It’s an actuarial problem. That’s what insurance is based upon, actuarial projection and the projections say we’re getting warmer and stormier and far more vulnerable in a climate that shows no retreat from increasing chaos.

Americans surely hate defeat. Our first instinct is to rebuild the damned place, march down into the jaws of whatever nature can throw our way and tough it out, make it work. That very brand of Americanism is what Congress responded to with tens of billions in relief. They do a lot of things badly in Washington, but they have ears to hear when the Anthem plays.

Unfortunately for the hundreds of thousands out of work and out of their homes along the ravaged coast, Congress and the relief agencies have been damned slow to do anything useful other than shuffle paper.

Unfortunate as that may be, it’s a revocable investment and ought not to be made blindly. The Dust Bowl of the thirties displaced an entire area of our country and they never returned, made lives in other states, shook it off and moved on.

It won’t make me popular to say it, but the Gulf Coast is our era’s Dust Bowl. Time to pack it up, pull it down, restore what can be restored and let nature have its way, a way that we’ve done much to enhance.

The Gulf of Mexico will rise substantially over several decades, the hurricanes will get larger and stronger and Trent Lott’s casino strip will be but an abandoned breaker against the waves.

Katrina put the federal flood insurance program $23 billion in the red and that money is a mere drop in the bucket of future liability. So, we’re substantially left with two options along the ravaged Gulf Coast

1. Put our money on red and spin the wheel with Trent
2. Or pay attention to where less self-serving interests have gone and follow State Farm and Allstate out of town.

If the casinos, resorts, private homes and businesses can afford unsubsidized insurance, good for them. What Mississippi, Louisiana, Texas, Florida, the Carolinas and Georgia dare not ask, is for the federal government to continue to hedge their private bets in the face of sure disaster.

We’re $125 billion down at the table in Trent's casino and a month away from the annual hurricane season.

The smart money’s cashing in what chips they have left.

Get out of the Archives and read what Jim's writing today