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Thread: Here's something topical- Federal Flood Insurance

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    Default Here's something topical- Federal Flood Insurance

    I throw this out for discussion.

    While I sympathize with Irene's vicitims , the aftermath raises some interesting questions :

    1. Should there be Federal Flood Insurance ? Doesn't it encourage people to live in flood prone areas ? Why are we building in flood zones ? If people want to build too close to a river or the ocean shouldn't THEY bear the risks of storm damage and/or flooding ?

    2. Shouldn't there be a serious re-think about our land use policies ? A BIG share of the blame for Katrina goes to the Army Corps of Engineers for decades of trying to mess with the natural flow of the Mississippi , futzing around with wetlands, building levees and canals in the wrong places etc. etc. A similar argument was made about the Forest Service policies which ended up increasing the severity of Western forest fires a few years ago.

    3. Why aren't we imitating the Dutch who have avoided the kind of flooding problems that we deal with on a regular basis ?

    4. Why aren't we expanding and deepening river beds in the Northeast so they can handle more water ?

    5. Why are many Third World countries doing a better job of land and water management than we are ? Canada never seems to get this kind of flooding and they have a LOT fewer dams than we do ? Is there a connection ? They also don't have National Flood Insurance afaik.

    I would argue for an overall policy more in harmony with things like naturally flowing waters and historical flood plains.

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    Default Re: Here's something topical- Federal Flood Insurance

    ... I'm up for trying an experiment to see whether this thread is allowed to remain or not ...

    - investor issue #1 - potential for flood damage ... or more specifically the potential for having to pay for the repair of flood damage out of one's own pocket ... is a major component in establishing real estate valuations in flood prone areas. Thus the discontinuation of federally subsidized national flood insurance would cause a marked drop in market values for properties within the '100 year flood plain' gov't designated areas.

    - investor issue #2 - mortgage finance ... or more specifically the likelihood of mortgage originators to continue offering mortgages on properties located within the '100 year flood plain' if uninsured against flood damage ( since the mortgage lender would bear the majority of flood damage risk to their 'collateral' ). Arguably the discontinution of federally subsidized national flood insurance would force all present and future ( mortgaged ) homeowners of flood plain properties to pony up private flood insurance premiums ( at much higher non-subsidized rates ) in addition to their mortgage payments. This in turn would render many flood plain properties 'unaffordable' by their current owners and/or would-be future owners ( thus exacerbating the falling property values issue above ).

    As was discussed in detail in the aftermath of Hurricane Katrina, gov't subsidized flood insurance essentially provides 'affordable' flood insurance for homeowners in flood-prone areas ... at the expense of forcing taxpayers in NON-flood-prone areas to bear a significant portion of the actual cost of said insurance. In terms of economic statistics, those owning properties in flood-prone areas tend to be either 'poor' or 'rich'.

    I would also add that the existing National Flood Insurance Program is only authorized to continue until the end of September 2011 ... at which point a new congressional authorization for spending future taxpayer money on future subsidized flood insurance will be required for the program to continue.

    It just so happens that a gentleman acquaintance of mine owns a property in NJ that falls within the '100 year flood plain' ... actually within the 'just about every year' flood plain since he docks his sailboat in the adjoining river. New NJ state regulations binding on state mortgage lenders beginning this year forced him to either purchase flood insurance for this property or terminate his mortgage ... despite the fact that he was easily able to handle the cost of near annual flood damage repairs out of pocket. He paid off the mortgage in cash in order to avoid the new gov't mandated insurance costs.

    As to your other points, they arguably lack ECONOMIC basis for discussion.

    ~
    Last edited by Melonie; 08-31-2011 at 10:42 AM.

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    Default Re: Here's something topical- Federal Flood Insurance

    I thought they did. For one thing they'd involve SPENDING ( taxes, bond issues ) if we adopt Dutch flood control planning and methodology.

    Likewise for hydrological studies and remedial programs for those perpetually flooding N.J. rivers.

    Arguably for overdeveloping - asphalt and concrete do NOT absorb floodwater.

    All of the above directly affect land values , tax assessments and revenues, land use and related investment so I respectfully argue that it is chock full of "economic " content. In fact, I gave that very question serious thought BEFORE posting on this topic, at all.

    Btw, Mel, I for one am very glad that the reports of your departure from Dollar Den, and maybe S-Web as a whole, were greatly exaggerated. Welcome back

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    Default Re: Here's something topical- Federal Flood Insurance

    Ffederal flood insurance is not viable.Iit is a program that is costly and again requires people who don't live in a hazardous area to subsidize those who do.


    Again it's a program that takes money from my family and I to pay fr something I get no benefit from.

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    Default Re: Here's something topical- Federal Flood Insurance

    In this country we socialize losses...... Not a political statement

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    Default Re: Here's something topical- Federal Flood Insurance

    Quote Originally Posted by mikef View Post
    In this country we socialize losses...... Not a political statement
    At the risk of getting ( God Help Us ! ) "political" , the question is : Should we do that ? Is it economically fair and/or advisable to do that when people live on flood plains ?

    In Asia, almost every rice farmer lives in a flood prone area. Most of their houses are built on stilts ! And they don't have basements.
    Last edited by Eric Stoner; 09-01-2011 at 07:01 AM.

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    Default Re: Here's something topical- Federal Flood Insurance

    Btw, Mel, I for one am very glad that the reports of your departure from Dollar Den, and maybe S-Web as a whole, were greatly exaggerated. Welcome back
    As I said, this is purely a ( one time ) experiment ...


    I thought they did. For one thing they'd involve SPENDING ( taxes, bond issues ) if we adopt Dutch flood control planning and methodology.

    Likewise for hydrological studies and remedial programs for those perpetually flooding N.J. rivers.

    Arguably for overdeveloping - asphalt and concrete do NOT absorb floodwater.

    All of the above directly affect land values , tax assessments and revenues, land use and related investment so I respectfully argue that it is chock full of "economic " content.
    Cutting through the bull$#!t, you know as well as I do that the major limiting factor where potential dam construction, potential dredging, etc. are concerned is NOT economic. And if I dare point out what it actually is, poof off this thread would go to the political content dumper.


    Federal flood insurance is not viable. It is a program that is costly and again requires people who don't live in a hazardous area to subsidize those who do.
    Yes, but ... the minute this starts being discussed in detail ... i.e. middle class taxpayers in Trenton wanting to 'force' the predominantly minority 'poor' property owners in Passaic NJ out of their houses by forcing them to pay the actual cost of insuring their subprime mortgaged homes against flood damage - poof off this thread would go to the political content dumper.


    In this country we socialize losses...... Not a political statement
    Unfortunately it instantly becomes a political statement the minute the possibility of ending the socialization of losses for a particular group of beneficiaries is mentioned.


    Hopefully this provides some perspective why I can't seem to find an acceptable method of both achieving meaningful financial discussions and totally avoiding political overtones to surface on this and a host of other timely / economically important topics. And if an acceptable method can't be found, there's really no reason for me to stick around on a DD forum thus limited to discussing the proper filing of estimated taxes, methods of repairing credit scores, and the handful of other highly limited financial topics that aren't linked at the hip to gov't policy / politics. Besides the fact that the answers to all of these limited topics have already been posted repeatedly, many other DD readers are capable of supplying additional info.

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    Default Re: Here's something topical- Federal Flood Insurance

    Quote Originally Posted by Melonie View Post
    As I said, this is purely a ( one time ) experiment ...




    Cutting through the bull$#!t, you know as well as I do that the major limiting factor where potential dam construction, potential dredging, etc. are concerned is NOT economic. And if I dare point out what it actually is, poof off this thread would go to the political content dumper.




    Yes, but ... the minute this starts being discussed in detail ... i.e. middle class taxpayers in Trenton wanting to 'force' the predominantly minority 'poor' property owners in Passaic NJ out of their houses by forcing them to pay the actual cost of insuring their subprime mortgaged homes against flood damage - poof off this thread would go to the political content dumper.




    Unfortunately it instantly becomes a political statement the minute the possibility of ending the socialization of losses for a particular group of beneficiaries is mentioned.


    Hopefully this provides some perspective why I can't seem to find an acceptable method of both achieving meaningful financial discussions and totally avoiding political overtones to surface on this and a host of other timely / economically important topics. And if an acceptable method can't be found, there's really no reason for me to stick around on a DD forum thus limited to discussing the proper filing of estimated taxes, methods of repairing credit scores, and the handful of other highly limited financial topics that aren't linked at the hip to gov't policy / politics. Besides the fact that the answers to all of these limited topics have already been posted repeatedly, many other DD readers are capable of supplying additional info.
    With the current state of the world in general and this country in particular, economics and politics are certainly intertwined. I thought your "51 %" rule was a good one and I'm trying to follow it.

    Returning to topic; land use issues , buying a house, whether or not to get flood insurance etc. all have serious economic implications.

    As I said, I think EVERYONE can do a better job of self editing to make sure that their own posts have a serious economic thrust. Afaic, it doesn't necessarily mean that they have to be apolitical. Only that the "politics" be nothing more than corollary to the main point.

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