Like many of the issues publicized in the Democratic media, the "health care crisis" is just a government failure, little more. The government has meddled with the health system for over a century. The first regulation of life insurance occurred in New York State when Met Life claimed that a now illegal concept called Tontine Insurance was immoral and therefore should be illegalized and regulated. Met's newly founded competitor, Equitable, invented Tontine Insurance. It was a form of gambling based on survival plus life insurance. There were two elements, life insurance plus a lottery instead of a cash value. The lottery proceeds were paid to the last survivors of a given cohort. So if you entered the Tontine in 1865, probably by 1910 or 1920 the last survivors in your age bracket would be left and if you were one of them you collected a big windfall, like a million bucks or something (today's million bucks was worth $80,000 back then).
Anyway, Met Life didn't like the competition and the popularity of Tontines and so had them illegalized. Thus began regulation of life insurance, of which health insurance is derivative.
Regulation inevitably serves producer interests and insurance is no exception. Health insurance also is influenced by provider lobbies, which are many. So the health coverage crisis is a product of provider and insurance industry influence on the regulation of coverage.
To solve the problem that the pro-regulation Republicans and Democrats create:
1. Eliminate all mandates on coverage
2. Deregulate providers
3. Provide tax credits for purchase of individual health insurance
4. Legalize ultra-high deductible policies, with deductibles as high as $20,000
5. Permit tax credit individual retirement accounts so that individuals can easily save for the difference between the deductible and their losses
6. Legalize free health zones whereby foreign providers can operate in partnership with but free of interference from US providers
With regard to number 6, a large range of elective operations are now being performed overseas for as little as 10 percent of the cost of the same operation in the US. US firms ought to partner with foreign ones in the globalization of health care. Quality standards that exceed US levels can be established by talented providers, much as Japanese auto companies found ways to significantly exceed US quality standards in the automotive field.
Currently, globalized health care depends on travel to a foreign country. If the US establishes free health zones exempt from provider-driven regulation, then low-cost foreign providers can set up shop here, much as Japanese auto companies have.
De regulation and ending of health care socialism, rather than increasing it, will end the government-induced health care coverage crisis.
Tuesday, February 2, 2010
Hamlet is Us
When the market is down in January, don't expect a good year. In 2008, I noticed that the market was down in January and I went ahead and invested in gold stocks anyway. I was hammered that fall. Marketwatch quotes S&P's Sam Stovall as saying that this "barometer's track record is dicey, as it often fails to identify the start of new bull markets, such as the market-turnaround years of 1982 and 2003."
At 11:01 The Street noted that gold broke 1100 (I like that kind of symmetry, 11:00, 1101, it goes with my coin flipping method of investing). I'm not convinced that gold will remain firm in the short term just yet, although I've been wrong plenty of times before. Kitco today indicates that the 30 day change in the gold price has been slightly positive.
Jon Nadler of Kitco concludes his report today with this remark:
"If you are in the short-term end of the spectrum of players, excitement will not be lacking, on an hourly basis, even. The bigger picture remains unconvincing on several levels for medium-term speculators."
Also on Kitco, Roger Wiegand has a summary of the derivatives blow up over the past ten years.
Here are some of Wiegand's points:
"USA and other nations’ central bankers pumped currencies and bonds to the moon...TARP money was stolen from taxpayers and funneled through conduit AIG to crooked, failed bankers to reliquify their balance sheets with free money. They are supposed to lend some out for growth but are holding it tight earning free interest from the government; taking no risks...Crooked bankers discovered they are “Too Big To Fail” and are doing it all over again with a tacit “no penalty” understanding. Estimated derivative balances today are $204 Trillion Dollars. No one will stop them until everything collapses in one final crashing swoon."
I have a Hamlet problem. I fear the further fall of gold and rise of dollars in light of the likelihood of dollar demand in case of a global issue such as defaults by Greece or Spain (logically that should not happen but the big investors insist on the safety of the dollar). But I also fear the long term prospects for the dollar given the fragility of the banking system and the likelihood of further inflationary movement.
At 11:01 The Street noted that gold broke 1100 (I like that kind of symmetry, 11:00, 1101, it goes with my coin flipping method of investing). I'm not convinced that gold will remain firm in the short term just yet, although I've been wrong plenty of times before. Kitco today indicates that the 30 day change in the gold price has been slightly positive.
Jon Nadler of Kitco concludes his report today with this remark:
"If you are in the short-term end of the spectrum of players, excitement will not be lacking, on an hourly basis, even. The bigger picture remains unconvincing on several levels for medium-term speculators."
Also on Kitco, Roger Wiegand has a summary of the derivatives blow up over the past ten years.
Here are some of Wiegand's points:
"USA and other nations’ central bankers pumped currencies and bonds to the moon...TARP money was stolen from taxpayers and funneled through conduit AIG to crooked, failed bankers to reliquify their balance sheets with free money. They are supposed to lend some out for growth but are holding it tight earning free interest from the government; taking no risks...Crooked bankers discovered they are “Too Big To Fail” and are doing it all over again with a tacit “no penalty” understanding. Estimated derivative balances today are $204 Trillion Dollars. No one will stop them until everything collapses in one final crashing swoon."
I have a Hamlet problem. I fear the further fall of gold and rise of dollars in light of the likelihood of dollar demand in case of a global issue such as defaults by Greece or Spain (logically that should not happen but the big investors insist on the safety of the dollar). But I also fear the long term prospects for the dollar given the fragility of the banking system and the likelihood of further inflationary movement.
Prepare Now to Escape Obama's Retirement Trap
Jim Crum and Chris Johansen both forwarded an e-mail containing Ron Holland's article "Prepare Now to Escape Obama's Retirement Trap." Holland offers a nightmare scenario for the private employee benefit system. While I don't think it will happen, it very well could. I was interested that Theresa Ghilarducci and Alicia Munnell, two pension researchers from academia, figure in this scenario.
My reaction to this scenario is that while it is certainly possible, there are three stumbling blocks: the political power of plan sponsors, the lack of value added to the government of confiscation of plan assets in the event of a crash (there will be little to confiscate) and the potential aggravation of middle class voters.
First, the political power of corporate America and labor unions combined, both of which interests have heavy investments in the current employee benefit system, will likely forestall attacks on the system as now constituted. Nothing has ever been done to the US pension system that was completely unpalatable to either of these two interests. Note that the recent health care proposal met with some labor union resistance. If health reform ever passes, the limits on rich union health plans will be deleted. Perhaps more so for pensions, which have advocates on Wall Street and in the banking and insurance industries as well as big labor and corporate America generally. While politicians are greedy fools, they respond quickly to their corporate bosses.
Munnell and Ghilarducci can devise plenty of benefit schemes, but when big business calls and calls heavily, Congress listens carefully.
Holland notes that the dollar's days are numbered because of federal debt. He writes that the US government is thrashing about, looking for additional revenue. All true. Holland argues that "wealth confiscation" is a realistic likelihood, that there is $15 trillion in retirement assets, and Congress might well tax or otherwise confiscate this money. Holland states that Alicia Munnell proposed a mandatory federal retirement system that would be financed by taxing existing pension assets.
Teresa Ghilarducci, another pension researcher now at the New School, advocates putting $600 up to $12,000 plus 5% of your compensation above $12,000 into a "Guaranteed Retirement Account". This would be accompanied by a cap of $5,000 on contributions to 401(k) plans and a tax on retirement plans' income. Also, there would be a prohibition on international investments (I'll bet commodities too, but that's just a guess).
Holland suggests that a "crisis" such as a downgrade of US treasuries or a run on the dollar could trigger a move like this. He notes:
"At some time during the next decade, a global run on treasury debt and the dollar will also likely take the American stock market down past lows not seen since the financial meltdown crisis in 2008 and 2009. The 50% to 75% stock market pullback during the actual bankruptcy of the Washington debt and paper dollar will send shock waves through retirees and current plan participants as their private retirement plan balances plummet." Upon the stock market crash, argues Holland, the American public will be bamboozled into switching to Ghilarducci's retirement concept, a new federal plan.
I agree that the stock market is capable of falling by 75%. However, confiscation of the $15 trillion in retirement assets is unlikely to be very helpful. To retire Baby Boomers in an acceptable way will cost $15 trillion. Let's say there are 50 million boomers earning an average of $40,000. If each retires at age 67 and receives an annuity of $30,000, the cost will be (not really but an order of this magnitude): $30,000 x 10 x 50 million = $15,000,000,000,000, $15 trillion. So I'm not sure what the Federal government would gain by taking the $15 trillion from the retirement funds and putting it into a government plan. It's a wash.
Of course, the current allocation of the 15 trillion on deposit is skewed heavily toward the higher income earners. But do you believe that this massive number of potential higher-income retirees, with tremendous voting power (much more than the people who don't have assets) will quietly watch the government take its assets, even given an emotional crash? And if the stock market falls so that the pension assets are worth half that, how would the government benefit?
This scenario assumes that the chief goal of the US government is to impoverish the affluent. While I do believe that the government is in the process of impoverishing us, rich and moderate income, I do not believe that they will do this in a heavy handed way. They can destroy the nation simply through the Fed and inflation.
Thus, I think the more realistic scenario is inflation. Inflation was invented to limit tax revolts. It slams people on pensions the hardest, and Americans have docilely accepted bankers' propaganda via university academics and media sources that inflation helps them. Since Americans have behaved like drooling idiots about inflation since World War II, it seems a safe bet that they will continue to do so.
It is the duty of the Federal Reserve Bank to extract wealth from the hard working and give it to the non-working, both as welfare for the poor and mostly welfare for the rich, especially stock holders and derivatives investors. Why bother with directly confiscating pension money when all the Fed needs to do is print money, hand it to commercial banks, who in turn lend it to government, hedge funds and investment bankers, who then repay the loans in depreciated dollars as everyone else in the country sees their savings and wages decimated? I think something like that is more likely than confiscation of pension assets. Confiscation is too messy and too controversial. Inflation is a good way to get the suckers to thank you for stealing from them.
Nothing beats a nice healthy inflation to feed government and Wall Street snakes.
My reaction to this scenario is that while it is certainly possible, there are three stumbling blocks: the political power of plan sponsors, the lack of value added to the government of confiscation of plan assets in the event of a crash (there will be little to confiscate) and the potential aggravation of middle class voters.
First, the political power of corporate America and labor unions combined, both of which interests have heavy investments in the current employee benefit system, will likely forestall attacks on the system as now constituted. Nothing has ever been done to the US pension system that was completely unpalatable to either of these two interests. Note that the recent health care proposal met with some labor union resistance. If health reform ever passes, the limits on rich union health plans will be deleted. Perhaps more so for pensions, which have advocates on Wall Street and in the banking and insurance industries as well as big labor and corporate America generally. While politicians are greedy fools, they respond quickly to their corporate bosses.
Munnell and Ghilarducci can devise plenty of benefit schemes, but when big business calls and calls heavily, Congress listens carefully.
Holland notes that the dollar's days are numbered because of federal debt. He writes that the US government is thrashing about, looking for additional revenue. All true. Holland argues that "wealth confiscation" is a realistic likelihood, that there is $15 trillion in retirement assets, and Congress might well tax or otherwise confiscate this money. Holland states that Alicia Munnell proposed a mandatory federal retirement system that would be financed by taxing existing pension assets.
Teresa Ghilarducci, another pension researcher now at the New School, advocates putting $600 up to $12,000 plus 5% of your compensation above $12,000 into a "Guaranteed Retirement Account". This would be accompanied by a cap of $5,000 on contributions to 401(k) plans and a tax on retirement plans' income. Also, there would be a prohibition on international investments (I'll bet commodities too, but that's just a guess).
Holland suggests that a "crisis" such as a downgrade of US treasuries or a run on the dollar could trigger a move like this. He notes:
"At some time during the next decade, a global run on treasury debt and the dollar will also likely take the American stock market down past lows not seen since the financial meltdown crisis in 2008 and 2009. The 50% to 75% stock market pullback during the actual bankruptcy of the Washington debt and paper dollar will send shock waves through retirees and current plan participants as their private retirement plan balances plummet." Upon the stock market crash, argues Holland, the American public will be bamboozled into switching to Ghilarducci's retirement concept, a new federal plan.
I agree that the stock market is capable of falling by 75%. However, confiscation of the $15 trillion in retirement assets is unlikely to be very helpful. To retire Baby Boomers in an acceptable way will cost $15 trillion. Let's say there are 50 million boomers earning an average of $40,000. If each retires at age 67 and receives an annuity of $30,000, the cost will be (not really but an order of this magnitude): $30,000 x 10 x 50 million = $15,000,000,000,000, $15 trillion. So I'm not sure what the Federal government would gain by taking the $15 trillion from the retirement funds and putting it into a government plan. It's a wash.
Of course, the current allocation of the 15 trillion on deposit is skewed heavily toward the higher income earners. But do you believe that this massive number of potential higher-income retirees, with tremendous voting power (much more than the people who don't have assets) will quietly watch the government take its assets, even given an emotional crash? And if the stock market falls so that the pension assets are worth half that, how would the government benefit?
This scenario assumes that the chief goal of the US government is to impoverish the affluent. While I do believe that the government is in the process of impoverishing us, rich and moderate income, I do not believe that they will do this in a heavy handed way. They can destroy the nation simply through the Fed and inflation.
Thus, I think the more realistic scenario is inflation. Inflation was invented to limit tax revolts. It slams people on pensions the hardest, and Americans have docilely accepted bankers' propaganda via university academics and media sources that inflation helps them. Since Americans have behaved like drooling idiots about inflation since World War II, it seems a safe bet that they will continue to do so.
It is the duty of the Federal Reserve Bank to extract wealth from the hard working and give it to the non-working, both as welfare for the poor and mostly welfare for the rich, especially stock holders and derivatives investors. Why bother with directly confiscating pension money when all the Fed needs to do is print money, hand it to commercial banks, who in turn lend it to government, hedge funds and investment bankers, who then repay the loans in depreciated dollars as everyone else in the country sees their savings and wages decimated? I think something like that is more likely than confiscation of pension assets. Confiscation is too messy and too controversial. Inflation is a good way to get the suckers to thank you for stealing from them.
Nothing beats a nice healthy inflation to feed government and Wall Street snakes.
Pelosi's Children Illegally Use Military Jets for Personal Travel
Legendary blogger Doug Ross wrote a blog on January 31 (h/t Larwyn) about Nancy Pelosi's children using military jets to travel illegally. Ross writes:
>"Is it a legitimate use of military jets to transport the Speaker of the House and her favored Congressional coterie for routine travel? Even if you believe it is -- and, personally, I do not -- any rational taxpayer would admit that it is monumental waste of money. Military flights cost between $5,000 and $20,000 per hour to operate. The Speaker and her passengers routinely reimburse the Air Force $120 to $400 for each flight.
"Since Nancy Pelosi took over as Speaker in 2006, she's rung up millions in military travel expenses to commute between San Francisco and Washington.
"Worse still, she also appears to have liberally requisitioned entire flights for the personal use of her used these flights to shuttle her children and grandchildren back and forth to DC. That is, unaccompanied by any member of Congress, her kids, in-laws and grandchildren are utilizing entire using military passenger jets for their route."
Ross provides extensive documentation. Quoting Ross's conclusion:
"Pelosi must resign. Or she should be forcibly removed out of office. These activities, if not outright criminal, smell to high heaven."
>"Is it a legitimate use of military jets to transport the Speaker of the House and her favored Congressional coterie for routine travel? Even if you believe it is -- and, personally, I do not -- any rational taxpayer would admit that it is monumental waste of money. Military flights cost between $5,000 and $20,000 per hour to operate. The Speaker and her passengers routinely reimburse the Air Force $120 to $400 for each flight.
"Since Nancy Pelosi took over as Speaker in 2006, she's rung up millions in military travel expenses to commute between San Francisco and Washington.
"Worse still, she also appears to have liberally requisitioned entire flights for the personal use of her used these flights to shuttle her children and grandchildren back and forth to DC. That is, unaccompanied by any member of Congress, her kids, in-laws and grandchildren are utilizing entire using military passenger jets for their route."
Ross provides extensive documentation. Quoting Ross's conclusion:
"Pelosi must resign. Or she should be forcibly removed out of office. These activities, if not outright criminal, smell to high heaven."
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