We haven’t heard nearly the whole story yet on Japan. I fear that tens of thousands of bodies have yet to be discovered, with thousands more likely dragged out to sea and missing. I fear that the nuclear situation in that country will not be adequately resolved, adding the element of radioactivity to the flooding, collapse, fire and chaos already consuming much of that nation. I fear that an already troublesome fiscal situation will be exacerbated by the widespread devastation. And I fear that America could be next.
I was surprised at the amount of friends and neighbors who saw the video footage of the tsunami as it happened. It wasn’t until yesterday afternoon that I saw, for myself, the wall of water and debris which overtook farms, houses, businesses, vehicles, and people in Sendai City. My heart broke. I could not imagine what it would have been like for those people, driving to their homes or offices or just trying to restore some sense of normality in the immediate aftermath of the earthquake, unaware of the death and destruction rapidly advancing from the sea to the east.
Shortly thereafter, as I tried to gather my thoughts and finish some work at the end of a busy Friday afternoon, I thought of how close my office is to Charleston Harbor. I thought of my father on the coast. I thought of my brothers and their families in southern California, and of my mother in the bay area.
I believe in the greatness of the American spirit. I believe that we are capable of surviving and recovering and rebuilding from any number of challenges, but then I think of our financial situation, and I wonder.
On a micro level, it has been years since Joanna and I had any sort of respectable emergency fund. We have a solid support system in family and friends in case of catastrophe, and I’m sure that we will get back to where we want to be in the coming years, but in the meantime I cannot help but feel increasingly vulnerable to the unexpected. On a macro level, our state governments are for the most part woefully underwater, and with its own looming fiscal disaster, the federal government is hardly in any place to provide a solid support system. From coast to coast, from the San Andreas Fault to hurricane alley, America is vulnerable. And that vulnerability is made that much worse because our fiscal house is in shambles.
On January 10, 2011, a guest blogger at the Christian Science Monitor posited that Japan was already nearing its “go over the cliff” moment, as the nation struggled with the biggest public debt in the world. Already, Bill Bonner noted, 60 percent of all tax revenues in Japan are earmarked solely for servicing the debt, which amounts to 200 percent of GDP.
“How do they pay government expenses?” Bonner asked. “They borrow more money!”
Strictly in economic terms, yesterday’s earthquake and tsunami are two natural disasters that Japan can ill afford. In this day and age, when nearly every man, woman and child has a smartphone with still photo and video capabilities, hundreds of photos and videos have streamed out of the beleaguered nation over the past 24 hours — taken separately, it is all too apparent that the disaster could easily be the most expensive in the history of the world (Hurricane Katrina was America’s most costly at roughly $125 billion); taken together, and considering that nation’s fiscal situation, it makes me wonder how Japan will recover at all.
Meanwhile, here in South Carolina–a state that, between hurricanes and earthquakes, is no stranger to natural disaster–the projected budget shortfall for fiscal year 2012 is $877 million, according to the Center on Budget and Policy Measures. In California, a state with a history of mudslides, wildfires and earthquakes, the budget gap for 2012 is projected to be $25.4 billion. Considering the geography of the so-called “Ring of Fire,” the only area which has not recently seen a disturbance has been North America. And, yet, with a $25.4 billion shortfall, I’m not so certain that California could sustain a hit similar to that which struck Japan — at all.
The world is changing, folks, and we need to have our proverbial ducks in a row financially in order to absorb and survive. Just as my wife and I, excited about the arrival of a new baby at any point in the next four weeks or so, have made sure that our budget has been appropriately adjusted to accommodate differing circumstances, our state governments absolutely must understand that fiscal solvency is more than just a campaign year aspiration — it is vital to save lives.
Now, before somebody accuses me of politicizing an absolute tragedy, it should be noted that exercising fiscal discipline in anticipation of later need is not an inherently conservative or liberal idea. It is inherently left or right for a kid to stash his allowance money away so that he may be able to buy a new bicycle or X-Box game by summer? Of course not. The same goes for fiscal discipline in the face of golly-we-might-be-next; common sense and preparation transcends political punditry and partisanship.
In the meantime, please pray for those who lost everything, and those who gave all.