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For those of you too young to remember, or those of you who have
forgotten the salient issues of the Love Canal
debacle and would like a quick refresher, here is a summary of what happened
over thirty years ago. All this information is courtesy of Wikipedia
Early
history
The name Love
Canal came from the last name of
William
T. Love, who in the early 1890s envisioned a canal
connecting the two levels of Niagara River separated by
the Niagara Falls. He believed it
would serve the area's burgeoning industries with much needed hydroelectricity. After 1892,
Love's plan changed to incorporate a shipping lane that would bypass the Niagara Falls. At that
time, the only means of delivering electricity was by using direct current. This method
ultimately failed as its practicality was no longer valid. Only one mile (1.6 km) of the canal,
about fifteen feet wide and ten feet deep, stretching northward from the Niagara River, was ever dug. (For one solution to the
falls trans-shipment problem, see Welland Canal.)
Use as toxic waste disposal site
In 1920, Love's land was sold in public auction to the City of Niagara Falls, who began using the
undeveloped area as a landfill for chemical waste
disposal. The canal was at the time an ideal site for development as a
chemical landfill; the ground was largely impermeable clay, and the
surrounding area was sparsely populated, if populated at all. The city
disposed of the waste from its thriving petrochemical industry into Love Canal
and later the United
States Army allegedly began using the site as well, burying
waste from its experiments in chemical warfare.
In 1942, Hooker Chemical and Plastics Corporation (a subsidiary
of Occidental
Petroleum) expanded use of the site, and, by 1947, acquired
the land for its own private use. In the subsequent five year period, the
company buried about 22,000 tons of toxic waste in the area. Once
the site had been filled to capacity in 1952, Hooker closed the site to
further disposal, back-filled the canal and covered it over with four feet of
supposedly impermeable clay. At the time of the closure, Niagara Falls' population was expanding
rapidly. The local school board was desperate for land, and attempted to
purchase expensive property from Hooker Chemical. The board wanted to build a
new elementary school in an area of the property that had not yet been used
to bury toxic waste. The corporation refused to sell on the grounds of
safety, and took members of the School Board to the canal and drilled several
bore holes through the clay, showing that there were toxic chemicals below
the surface; however the board refused to capitulate. Eventually, faced with
the property being condemned and/or expropriated, Hooker Chemical relented,
and sold on the condition that the board buy the
entire property for a dollar. In the agreement, Hooker included a seventeen
line caveat that explained the dangers
of building on the site:
“Prior to the delivery of this instrument of conveyance, the grantee
herein has been advised by the grantor that the premises above described have
been filled, in whole or in part, to the present grade level thereof with
waste products resulting from the manufacturing of chemicals by the grantor
at its plant in the City of Niagara Falls, New York, and the grantee assumes
all risk and liability incident to the use thereof. It is therefore
understood and agreed that, as a part of the consideration for this
conveyance and as a condition thereof, no claim, suit, action or demand of
any nature whatsoever shall ever be made by the grantee, its successors or
assigns, against the grantor, its successors or assigns, for injury to a
person or persons, including death resulting therefrom,
or loss of or damage to property caused
by, in connection with or by reason of the presence of said industrial wastes.
It is further agreed as a condition hereof that each subsequent conveyance of
the aforesaid lands shall be made subject to the foregoing provisions and
conditions.”
Shortly thereafter, the board began construction on
the 99th Street
School in its originally intended location. The building site was forced to
relocate when contractors discovered two pits filled with chemicals. The new
location was directly on top of the former chemical landfill. During
construction, the clay seal which Hooker had put in to stop the chemicals
seeping out was broken through.
In 1957, the City of Niagara Falls constructed sewers for a
mixture of low-income and single family residences to be built on lands
adjacent to the landfill site. The sewer beds were constructed of gravel, the
clay cap over the chemical pit was broken again and the walls of the canal
were breached; all of these allowed chemicals to seep from the canal. The
construction of the LaSalle Expressway restricted groundwater from flowing to
the Niagara River. Following the wet winter
and spring of 1977, the elevated expressway turned the breached canal into a
virtual overflowing bathtub.
Health
problems, activism, and site cleanup
In the following years, residents began making
repeated complaints of strange odors and
"substances" that surfaced in their yards. City officials were
brought to investigate the area, but did not act to solve the problem. Beginning
in 1978, Lois Gibbs, the president
of the Love Canal Homeowners' Association, led an effort to investigate
community concerns about the health of its residents. The neighborhood
had an extremely high rate of cancer, and an alarming number of birth
defects. Mrs. Lobosco at the 99th Street School was constantly ill. With
further investigation, Gibbs discovered the chemical danger of the adjacent
canal. This began her organization's three year fight to prove that the
toxins buried by Hooker Chemical were
responsible for the health problems of local residents. Throughout the
ordeal, the homeowners were opposed not only by Hooker Chemical (now Occidental
Petroleum), but also government of many levels. These
opponents argued the area's endemic health problems were unrelated to the
toxic chemicals buried in the canal. They believed the chemicals had been
successfully contained within the former landfill. Since the residents could
not prove the chemicals on their property had come from Hooker's disposal
site, they could not prove liability. Mrs. Lobosco
continued to be ill throughout the legal battle, unable to sell her property
and move away.
The 99th
Street School, on the other hand, was located
within the former boundary of the Hooker Chemical landfill site. While it was
successfully closed and demolished, neither the school board nor the chemical
company was willing to accept liability. This complicated matters for the
homeowners' association, which was now battling with two organizations
spending vast amounts of money to disprove negligence.
Initially, the organization had been frustrated by
the lack of a public entity that could advise and defend them. Gibbs has said
that at the beginning, she also met considerable public resistance to her
community organizing and doors slammed in her face. The mostly middle-class
families did not have the resources necessary to protect themselves, but many
did not see any alternative to leaving their homes and were resistant to the
idea.
By 1978, Love
Canal became a national
media event with articles referring to the neighborhood
as "a public health time bomb." On August 7, 1978, United States
President Jimmy Carter declared a
federal emergency at Love
Canal, and those living
closest to the site were relocated. Scientific studies were not able to prove
conclusively that the chemicals were responsible for the ill health of
residents. Some scientists thought the chemicals were responsible. Other
scientists thought that the evidence was inconclusive, although there was a
possibility that the residents could be harmed but would be unable to prove
it. There were eleven known or suspected carcinogens identified, one of the most
prevalent being benzene. Geologists were recruited
to prove that underground swales were responsible for carrying the chemicals to the
surrounding residential areas. Once there, they explained, chemicals leached
into basements and evaporated into household air. On May 17, 1980, the EPA announced the result of blood tests that showed
chromosome damage in Love
Canal residents. Residents
were told that this meant they were at increased risk of cancer, reproductive
problems and genetic damage. Other studies were unable to find harm.
With the growing evidence and two years of effort by
Lois Gibbs and other residents, President Carter declared a state of
emergency at Love
Canal on May 21, 1980 and the EPA agreed to
evacuate Mrs. Lobosco and 700 other families
temporarily. Eventually, the government relocated more than 800 families and
reimbursed them for their homes, and Congress passed the Superfund law holding
polluters accountable. Occidental
Petroleum was sued by the EPA and in 1995 agreed to pay $129
million. The cleanup of the site was investigated, designed, and overseen by
the environmental consulting firm Conestoga-Rovers & Associates, based in Waterloo, Ontario, Canada.
Aftermath
Today, houses in the residential areas on the east
and west sides of the canal have been demolished. All that is left on the
west side are abandoned residential streets. Some older east side residents,
whose houses stand alone in the demolished neighborhood,
chose to stay.
Though the containment area is still enforced, new
development began in the early 1990s. Recreational buildings have been built
against a thin, chain-link fence that keeps the toxic area separated from the
safe one. The neighborhood has been renamed Black Creek Village,
and many families now live there.
Love Canal, along with Times Beach, Missouri, share a
special place in United
States environmental history as the two
sites that in large part led to the Comprehensive Environmental Response
Compensation and Liability Act (CERCLA). CERCLA is much more commonly
referred to as "Superfund" because
of the fund established within the act to help the clean-up of locations like
Love Canal.
* * * *
* * * * * * * *
As the title of this essay states, the financial equivalent of that
arrived on our doorstep when two of Bear Stearns’ hedge funds blew up
just a few weeks ago. There are many stories about this floating around the
Internet, so I’m not going to dwell on it here. However, I must include
a link to a least one recent story of the expected fall-out from all of this.
Here’s Ambrose Evans-Pritchard at his best in this July 5th
story from The Daily Telegraph in the U.K….Credit
Crunch Will 'shred investment portfolios to ribbons'
The cow pie that BS (love the way that fits!!!) stepped
in was Collateralized Debt Obligations (CDOs),
Synthetic CDOs and Credit Default
Swaps (CDS) associated with sub-prime mortgages. This is not just a Bear
Stearns phenomenon, as this mortgage problem infects most Wall Street
firms…plus pension, hedge and mutual funds…plus a lot of banks,
both in North America and overseas.
Right now the problem is only with the sub-prime tranches, but the ABX Index shows that this
problem also infects the Alt-A tranches as well. So
far, the AA and AAA tranches are still holding
their own. However, as the real estate implosion gathers steam this year,
even these tranches will bow to the pressure of the
market. Actually they should be valued at less than what they show right now,
as when Merrill Lynch tried to sell some of these ‘prime’
mortgage tranches, they were offered only 85 cents
on the dollar. That’s 15 percentage points below what the ABX Index has
got them priced at right now!
But I digress…
I have a bit of working knowledge about these
financial instruments, but as they say, a little knowledge can be a dangerous
thing. That all changed on July 5, 2007.
A URL of a pdf file
submitted by Jesse in Bill Murphy’s MIDAS commentary over at www.lemetropolecafe.com made me think
back to the Love
Canal incident.
The rather catchy title of "Investment Landfill: How
professionals dump their toxic waste on you" got my
undivided attention. This is the first "CDO/CDS for Dummies"
yet published. As mentioned in a previous paragraph, CDO stands for
Collateralized Debt Obligation and CDS is the shorthand for Credit Default Swap.
The author has a keen grasp
of the whole sordid mess and explains it in plain English. Now anyone can
understand it. I had...what I thought…was a pretty good grasp of the
whole thing, but realized that I didn't by the time I was half way through. From
one end to the other, it is recommended reading by all and sundry. This is
the sort of article that you can pass along to your semi-financially
illiterate friends rather than trying to explain it yourself.
However, to save a lot of time, if you already know (or think
that you already know) what this is all about, the real 'meat' on the
current situation starts on page seven under the heading "Out of Bonds and into the Ether". And,
finally, here is the URL…
http://goldnews.bullionvault.com/files/Investment_Landfill.pdf
A Tip of the Hat goes to the writer...Director Paul
Tustain over at www.bullionvault.com
Ed Steer
Director
Gold Anti-Trust
Action Committee
www.GATA.org
GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S.
Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe
at www.GATA.org. GATA is
grateful for financial contributions, which are federally tax-deductible in
the United States.
 
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