Right Turn

Will the Boomers Sacrifice?

2010-09-04T06:20:00.000-07:00

In August the U.S. Department of Labor reported that our economy lost 54K jobs overall, mainly because Census workers were let go, but gained 67K jobs in the private sector. This was touted by President Obama as progress. Compared with the economic performance of the last 2 years it can be called progress.

This is little comfort to the almost 15 million people who are still counted as unemployed and the many million more who are no longer counted as unemployed because they have given up looking for a job. This discouragement has broad and deep effects on our nation overall.

On the one hand, I can’t help but notice in my travels that many restaurants are still crowded, airports seem busy, and my local grocery store appears to be doing as it has been. You would think these places would be more vacant than they are on a Tuesday night. But the people still shop. Why?

The effects of the recession are not evenly distributed. For the vast majority of people, the 90% who are still employed, there has not been a major disruption to their lifestyle other than being more aware of debt and being more careful in some of the things they buy. We certainly don’t appear to be in the midst of a depression.

This brings up the idea that we may be in a new normal in terms of the economic structure of our economy. Europe has been known for its high unemployment rates and slow growth for several decades since an extravagant social welfare state took hold after World War II. If you are unemployed in Europe and content with a job, a paycheck, and a lot of vacation time, a social welfare state is not all that bad.

For those of us who are entrepreneurs, a social welfare state is stifling. The higher taxes are discouraging and the risk you may fail may not be worth starting a new venture or expanding a current business may not be worth it.

At this time America has to think through what country it wants to be. We are an aging population because the baby boomer generation is getting older and will require more healthcare and is likely to demand their social security checks keep coming. But who pays for their right to retire comfortably?

That’s the big question of the next 25 years in America. America needs economic growth to fund a social welfare state. Yet, the current policies of the Obama administration do not encourage risky entrepreneurial activities needed to foster growth. In certain respects it is less of a headache to simply make a decent, steady living than to start a new or grow an existing business.

The older generation will have to ask itself how much debt it is comfortable passing on to their children to pay for their benefits? Because of the trillions in dollars a year our nation is adding to its debt already, it is clear that the arrangement of having younger people pay to subsidize older people is not sustainable. With older people increasingly making up the biggest voting demographic, the prospect of them voting to cut their own benefits is unlikely. The situation is not hopeful.

Moving towards a sustainable path is the task of the current generation and policymakers. The level of debt is unsustainable. Everyone knows this. So now is the time to phase-in reduced benefits. This is a moral issue that will be left to the older, baby boom generation. Let’s hope they care enough about their children’s and their nation’s future to have a mature dialogue and separate their wants from their needs. America has been a great nation because of its sacrifice. Let’s hope that notion is not a thing of the past.

162K New Jobs in March

2010-04-04T17:27:00.000-07:00

That's a great thing! Looks like Obama's policies are working. At this pace we'll be singing Kumbuya in gatherings around the country within 6 months. All the questions of macroeconomics have now been solved. Just throw government money out there, borrow trillions, tax all the Joe the Plumbers out there (but don't you dare tax me), and never get discouraged even after 15 months and several million newly unemployed persons.

The next 2 months should be even better since only 48K new government Census jobs were created, which is comparatively low at this point from a historical standpoint. The 123K new private sector jobs appeared with 48K temp workers, 27K in healthcare, 17K in manufacturing, 15K in construction. Heck, even mining gained 8K jobs.

I suspect we will get a steady-state like this for the rest of the year in terms of job gains after the Census hiring in April and May, and subsequent firing in June, comes and goes. The unemployment rate will probably go up as more unemployed people enter the labor force and are again counted in the rate. Towards the end of this year and into next year you'll probably see a downtrend again as new tax rates kick in, interest rates and borrowing costs go up, and healthcare compliance costs go up. The good news is that if employment does go up more than I expect we will likely have massive inflation or, if the Fed takes away the sugar too soon to head inflation off, a double dip recession. In the long term, all the borrowing will probably lead to a massive global depression if the foreign entities who are lending don't behave exactly as we hope and take low interest rates and cash in at just the "right times". But, in the long run we're all dead anyway right?

Some Random Obamacare Comments

2010-03-23T16:50:00.001-07:00

1. By 2019 there are reports that there will still be 21M uninsured. The new coverage to 32 million does not cover everybody since, depending on the estimate, there are more than 32M uninsured people.

2. CBO did a static analysis that yielded the "cost savings" and "no budget deficit" with this bill. There are a number of assumptions unique specifically to that bill. Put your thinking cap on though. Do you really believe you can lay a $500B tax on rich people and have no effect on investment, and thus, job prospects? CBO doesn't measure the alternative use of the $500B tax transfer from private to public sector.

3. One of my favorites is the description I saw of how children can stay on their parents plan until age 26. So 26 is now deemed a child? If my kids are still loafing on my insurance plan that long, there's a chance I've done something wrong. In any event, except for cases where young adults have handicaps, this is ridiculous.

4. The only possibly good points were the coverage for pre-existing conditions. But it could have been handled in a more efficient manner through establishing high-risk pools for these people to subsidize them or work out some sort of tax scheme. Otherwise, it's very likely insurance premiums will go up for small businesses.

5. The evil insurance companies will have to pass on the costs of these mandates. It will become less affordable and more costly as a direct result of this legislation than it would have been compared to the status quo. No doubt Obama will come out angry and blame insurance around January, after the elections, when they jack their premiums to their business customers because of the mandates.

6. Congress will not allow a tax in 2018 they couldn't stomach in 2010. This will undercut the savings that yielded a magically budget neutral effect on the overall budget deficit.

7. Holding hospitals accountable for "results" incentivizes doctors to take patients most likely to have a good outcome so they get "results". Too bad if you're old, fat, perceived as lazy by the doc...

8. Primary care docs will make references to specialists so long as the threat of a lawsuit is there. With this bill, it will likely incentivize even more pointless CYA references.

9. The idea that a central point of data administered by the center for medicare and medicaid (CMMS) will lead to great effectiveness will only be useful if the doctors use them. Medical technology has long been available. If the docs, who the hospitals revolve around, don't use it (as they haven't) it seems wishful thinking to believe they will do so now to such a degree will get major benefits. Although this is potentially ripe for benefits. But me of lil' faith!

10. Expecting CMMS to run efficiently is wishful thinking. Expecting an Agency like this to play a key role in cost containment is a joke. Who knows maybe all the GS-12s and 13s and the contractors they bring in will manage a miracle. Maybe they'll be uber-motivated to squeeze costs out. I'm sure they'll work round the clock rather than clocking out at 3:30. I'm sure.

11. This puts a ridiculous, unsustainable cost burden on the states. States share Medicare costs with the Feds. Guess how the Feds are paying for this? By cutting funding reimbursement to docs and to states who won't be able to say no. If I were the Governor of a state I would be horrified about what this is going to do to my budget over the next decade. They're already facing massive budget cuts. You ain't seen nothing yet.

12. This will also crush private health insurance in the long run. As we march towards single payer, that was the real intent anyway wasn't it?

Obama promised to take a scalpel to budget cuts in his campaign. He could have done that by dealing with the specific problems such as the problem with people with pre-existing conditions. Instead, he took out his sledgehammer and gave us all an uppercut.

No Market Crash Yet

2010-03-22T07:47:00.000-07:00

I came in this morning and the stock market is actually up after they passed Obamacare last night. I was expecting a massive selloff. Healthcare stocks are up!

The past 18 months have thrown a monkey wrench in my former belief that I've held all my life about the stock market being basically rational. I always knew there was an emotional twist. But the path the stock market has followed is almost purely emotional and irrational. I believe success in investing requires the ability to forecast the likely moods of the herd. Thinking that the stock market will not grow by 50% in the same year that millions more people are unemployed, would be rational. Despite the layoffs and general malaise the Dow keeps going up. Why? There is really little connection between main street and wall street. You may be able to make money from that if you can reasonably understand the likely mentality of herds. Maybe tracking sentiment somehow. I haven't figured it out yet.

The Dow Jones is at about 10,800 today. It keeps going up. I had thought the Obamacare debacle would trigger a selloff. Maybe it will happen later in the week but not yet. The Dow is greatly over-valued. I still expect the Dow to plummet to about 8500 by the end of this year. We'll see what happens.

Obamacare Details

2010-03-21T17:22:00.000-07:00

What is particularly interesting is how the numbers work. At a cost of $940B over 10 years, the Congress is assuming it will cost $29,375 for each one of the $32M uninsured people. This is about $2,937 per year as a median assuming the $940B takes account of normal inflation. Given what my current insurance policy costs, this seems low to me. Between your portion and your employer portion, who really pays $3K annually for healthcare? It is probably more like $10K but even if it is only $5K instead, it ups the cost by several hundred billion dollars.

The other features are the "savings" of raiding Medicare, which is like robbing Peter to pay Paul because Medicare is still paid for by the federal government, even if it is not an "on-budget" item. Medicare is intended to take the 2.9% payroll tax and pay it out to beneficiaries, as a sort of pay-as-you go fund depending on the type of enrollment. But Medicare is projected to go insolvent by around 2017 http://www.commonwealthfund.org/Content/Newsletters/Washington-Health-Policy-in-Review/2009/May/May-18-2009/Trustees-Report-Projects-2017-Insolvency-Of-Medicare-Hospital-Fund.aspx . Since the 2.9% is not really adequate, I wonder what they're really going to with it? Cutting $500B probably makes it go insolvent quicker and/or gives doctors an even greater incentive to refuse these patients since they will be paid even less for serving them. Since it was an Alice in Wonderland entitlement to begin with, maybe that's ok.

There are so many other bizarre things that this bill does that it will take several more posts in another day. The thing that's kind of funny to me is if this is so urgent and such a great moral crusade, why wait until 2014? It seems a lot of folks looking for free guvmint healthcare tomorrow are going to be disappointed.

From a CBS news article:

I. Cost:
$940 billion over ten years.

II. Deficit:
Would reduce the deficit by $143 billion over the first ten years. That is an updated CBO estimate. Their first preliminary estimate said it would reduce the deficit by $130 billion over ten years. Would reduce the deficit by $1.2 billion dollars in the second ten years.

III. Coverage:
Would expand coverage to 32 million Americans who are currently uninsured.

IV. Health Insurance Exchanges:

The uninsured and self-employed would be able to purchase insurance through state-based exchanges with subsidies available to individuals and families with income between the 133 percent and 400 percent of poverty level.
Separate exchanges would be created for small businesses to purchase coverage -- effective 2014.
Funding available to states to establish exchanges within one year of enactment and until January 1, 2015.

V. Subsidies:

Individuals and families who make between 100 percent - 400 percent of the Federal Poverty Level (FPL) and want to purchase their own health insurance on an exchange are eligible for subsidies. They cannot be eligible for Medicare, Medicaid and cannot be covered by an employer. Eligible buyers receive premium credits and there is a cap for how much they have to contribute to their premiums on a sliding scale.
Federal Poverty Level for family of four is $22,050

VI. Paying for the Plan:

Medicare Payroll tax on investment income -- Starting in 2012, the Medicare Payroll Tax will be expanded to include unearned income. That will be a 3.8 percent tax on investment income for families making more than $250,000 per year ($200,000 for individuals).
Excise Tax -- Beginning in 2018, insurance companies will pay a 40 percent excise tax on so-called "Cadillac" high-end insurance plans worth over $27,500 for families ($10,200 for individuals). Dental and vision plans are exempt and will not be counted in the total cost of a family's plan.
Tanning Tax -- 10 percent excise tax on indoor tanning services.

VII. Medicare:

Closes the Medicare prescription drug "donut hole" by 2020. Seniors who hit the donut hole by 2010 will receive a $250 rebate.
Beginning in 2011, seniors in the gap will receive a 50 percent discount on brand name drugs. The bill also includes $500 billion in Medicare cuts over the next decade.

VIII. Medicaid:

Expands Medicaid to include 133 percent of federal poverty level which is $29,327 for a family of four.
Requires states to expand Medicaid to include childless adults starting in 2014.
Federal Government pays 100 percent of costs for covering newly eligible individuals through 2016.
Illegal immigrants are not eligible for Medicaid.

IX. Insurance Reforms:

Six months after enactment, insurance companies could no longer denying children coverage based on a preexisting condition.
Starting in 2014, insurance companies cannot deny coverage to anyone with preexisting conditions.
Insurance companies must allow children to stay on their parent's insurance plans through age 26.

X. Abortion:

The bill segregates private insurance premium funds from taxpayer funds. Individuals would have to pay for abortion coverage by making two separate payments, private funds would have to be kept in a separate account from federal and taxpayer funds.
No health care plan would be required to offer abortion coverage. States could pass legislation choosing to opt out of offering abortion coverage through the exchange.
**Separately, anti-abortion Democrats worked out language with the White House on an executive order that would state that no federal funds can be used to pay for abortions except in the case of rape, incest or health of the mother.

XI. Individual Mandate:

In 2014, everyone must purchase health insurance or face a $695 annual fine. There are some exceptions for low-income people.

XII. Employer Mandate:

Technically, there is no employer mandate. Employers with more than 50 employees must provide health insurance or pay a fine of $2000 per worker each year if any worker receives federal subsidies to purchase health insurance. Fines applied to entire number of employees minus some allowances.

XIII. Immigration:

Illegal immigrants will not be allowed to buy health insurance in the exchanges -- even if they pay completely with their own money.

The Implications of Obamacare

2010-03-20T07:20:00.000-07:00

It looks like Obamacare is going to pass in the U.S. House tomorrow.

The long term implications, to me, range from complete disaster to little effect. In the complete disaster scenario America is on a course to look like Western Europe for the next generation. This is great if you enjoy structural unemployment of 12%, lack of opportunities for entrepreneurship, and having to deal with bureaucrats to get a sign off on basic medical procedures.

On the other hand, maybe this will mean nothing because business people in America won't care in the long term about how heavily they're taxed. In the short term they'll of course be angry and declare Obama the embodiment of evil. Ultimately, the rich are the people who will pay the bills under our new bizzaro world politics universe. You will have a whole lot of people who will essentially get free healthcare now. That's great for them. Who wants to pay for something when you don't have to? This assumes the rich will mindlessly continue to make a whole lot of money for the Feds to take. I know enough rich people to know that a lot of them care little for anything other than making money. Practically, you probably can tax people up to 60% to 75%. What else is an entrepreneurial guy going to do? Write poetry? If the rich sheep keep working and investing, all will be good.

So maybe Obamacare will be a great thing. Maybe all the people who are adamently opposed to it will be among the first to get in line to collect the benefits. Last I checked, nobody is refusing to cash Social Security checks or receive their Medicare benefits. It all hinges on the rich. Keep on working you rich people. Keep my gifts coming.

So, Where We At?

2010-03-08T12:51:00.000-08:00

It's been over 2 months since my last entry. And nothing has really changed. 3 days ago, we learned that another 36K jobs were lost in February. We're still said to be in "recovery". The healthcare bill is still not passed. And our president is still putting up rinky dink "job creation" proposals every day saying we need to get the economy started again. Yep. I heard that one before. It's March 2010. Is it still Bush's fault? Next month will be the month we start gaining jobs. Yep. And if we lost more jobs in March, we'll get some the month after that.

Meanwhile the country's deficit is ballooning. It's slated to expand by almost $10 Trillion through 2020 thanks to Obama's latest budget proposal. That assumes we grow signficantly during that timeframe. For a labor force of about 150M people, I'm sure that's nothing to be too concerned about. It'll probably work itself out. That $10T divided by 150M equals almost $67K per worker. I'm sure future workers can afford to pay the extra $67K after 2020 to make it up since we'll be so prosperous thanks to Obama's new hope and change utopia.

What Does Obama Not Fund?

2010-01-02T18:23:00.000-08:00

I saw an article from a state-controlled media outlet, commonly known as the Associated Press, in which they had the following comment in regard to the US Labor Dept Head:

"They follow through on President Barack Obama's campaign promise to boost funding for the Occupational Safety and Health Administration, increase enforcement and safeguard workers in dangerous industries."

The article was typical drivel. The thing that caught my eye was Obama's promise to boost funding for this Agency. It made me think: What does he not fund or how does he decide we're not going to spend money on this or that? This is like an individual person who just decides one day that he wants a new TV. So he gets a new HD TV. The next day he wants to order Pizza so he orders pizza. Maybe the day after that he's sick of his old Ipod. So he gets a new one. If you want it you get it. Why wait or budget or delay getting what you want?

At what point does President Obama stop and make a judgment about what might be nice to have and what we as a nation can't keep spending money on? Now that we're almost $2 Trillion in the hole in just a single year of his presidency, when does he decide that enough is enough?

What Will Business Do?

2009-12-23T07:07:00.000-08:00

Yesterday, a caller to Rush Limbaugh made a point that small businesses across America should shut down for a few weeks, lay off their employees, and help flood state unemployment offices with new applicants in response to the healthcare bill. Not just the healthcare bill but the raft of new taxes that will fall on people earning $250K or more. These are small business owners. The basic crux of what he was saying was that business runs the country and not politicians. They should shut down the money spigot and this will make big government plans unworkable.

There is an idea in economic theory regarding tax policy and how high the tax rate has to be to discourage new investment. At what point do excessive taxes literally make it preferable for business people not to work and just shut it down? The president's economic team believes it is 60%. This means that the federales have to take 60 cents of every $1 for business people to finally say: Enough!

How small business responds to their new tax obligations will be interesting. I know enough wealthy people to know that I may have been wrong in thinking that a 40% marginal tax rate was already discouraging. The relatively small sample of wealthy folks I know will probably not scale down the business as a form of protest. Thus, they deserve to be taxed. If you are unwilling to take a stand and shut it down at some sacrifice to your own income than you deserve to have people in Congress tell you what you can and cannot keep. Most of the people in Congress, including the President, have never actually produced much in their lives or created a job or done much more than basically tell others what to do via academic writings. Many of the people passing these laws tend to view business people as mindless sheep with no real intellectual depth beyond just seeking to make a buck. They may be right.

That's why I am interested to see what's going to happen and how the people who are going to pay for all this will respond. I assume they'll take it on the chin, huff and puff, and ultimately just shut up, rollover, and pay the extra taxes Obama and the liberals have in store for them. If they do, they deserve to pay every tax that's been levied on them. And in the coming years when we need to do a massive fix to pay for the looming Social Security crisis, these people will be tapped for that. And the same for Medicare. And the same for Cap and Trade. Politicians are getting away with letting the majority make no sacrifices in terms of paying extra taxes to get these types of giveaways. Why would an average person be against this healthcare reform? Since they pay literally no to little in taxes and will now get healthcare benefits that is cheap and free in many cases, why would you not be for that?

The healthcare taxes are just the first of a lot of future taxes the rich will be paying. I hate to agree with Rush Limbaugh's caller because in almost any normal time it would seem wacky. But this is not normal times and we are morphing into a socialist welfare state that is not the America I thought I knew. I don't happen to be in the position where I have a few million in assets and an income in the $500K+ range so that I would be the one faced with this decision. I acknowledge it's easier for me to write this than for someone else to do this. If the rich can't stand up now, they deserve what they get and should shut up and pay their masters.

Paul Samuelson Isn't Dead Yet

2009-12-14T16:52:00.000-08:00

Today the renowned economist Paul Samuelson died. His legacy made mathematics a central part of graduate economics and his influence is felt today in Obama's economic policies. He basically believed the geniuses he trained at MIT could and should manage the U.S. economy.

Unfortunately, these views still prevail every time Obama steps out and pronounces that we spend more to rejuvenate the economy. Paul Samuelson essentially advocated that when the economy is bad, government should step in and prop it up by spending as a short-term measure to stimulate demand. He basically helped advocate Keynesian economics for a new generation of the best and the brightest in the 1950's and 1960's.

Reading the old timers like Samuelson, John Kenneth Galbraith, and even Keynes is like reading up on early 20th century phrenology or eugenics. It's interesting for the time. But we have a better, or should have by now, a better idea of what's under the hood. No, head size is not a meaningful measure of intelligence. Nor is the idea that any central planner no matter how high an IQ can truly manage the complicated interaction of a vast economy.

Let's hope that as the old masters die away, their ideas die away with them. So that we can finally move ahead and improve the lives of millions of people who are struggling with unemployment, confusion, and bosses who don't know what's going on in the nation's capital.

Don't Look Now, But Back Come the Fat Cats

2009-12-13T19:08:00.001-08:00

Today, President Obama is quoted as follows:

President Barack Obama lashed out at Wall Street, calling bankers "fat cats" who don't get it, in an escalation of tensions with the industry.
Mr. Obama, speaking on the eve of Monday's meeting with the heads of major banks at the White House, said he would try to persuade bankers to free up more credit to businesses, with the aim of boosting job growth. But the president also expressed frustration with banks that the government has assisted.
"I did not run for office to be helping out a bunch of fat cat bankers on Wall Street," Mr. Obama said in an interview on CBS's "60 Minutes" program on Sunday.
"They're still puzzled why is it that people are mad at the banks. Well, let's see," he said. "You guys are drawing down $10, $20 million bonuses after America went through the worst economic year that it's gone through in -- in decades, and you guys caused the problem. And we've got 10% unemployment."

At this point, all I ask is for a degree of professionalism in the job you hold. Is that too much. Calling bankers "Fat Cats"? What is this? Are we back to the Monopoly game caricature days?

See my last post, but yes, it makes sense for bankers not to be making loans. It's your own policies and the Fed Bank's policies that are giving them every incentive in the world to do. An interest free loan where they turn around and buy a T-Bill for 3 to 4 percent from the government that lent them the money. I'd say that's an incentive to not lend since there's little risk, wouldn't you? This man has been told how great he is by his sycophants for so long, I don't think he knows how to take responsibility for the stupid things he's done. Bad policies have consequences. Why lash out when your only seeing the fruits of what you've done? Just admit your mistakes and change your approach. Instead he just increases spending, pushes harder for an awful healthcare, energy, and other miscellaneous plans. The last thing a liberal can do is admit they're wrong. So I understand it, I just wish we were dealing with normal people.

Why Aren't Banks Lending to Small Business?

2009-12-08T06:09:00.000-08:00

This question is in the news often and held up often as a potential obstacle to an economic recovery. I would suggest that a primary reason is due to Fed policy and 0% interest rates. If you are a bank and have had a bad year and have a lot of commercial real estate loans outstanding that may yet go bad in 2010, you would be smart to use Fed policy to your advantage. This means that you would take a 0% loan from the Fed discount window and invest much of it in 3% or 4% treasury bonds.

This bank money would have went to borrowers who aren't necessarily bad borrowers but may not be the absolute best credit risks. A portion of bank lending that would have went to marginally ok borrowers to start a business is not going to them because banks have probably decided it is obviously less risky to pocket a net gain of 3% to 4% rather than lend it and incur a risk that your borrower may not pay it back, especially because this is a bad economy. Even if a business idea is good it could still tank in this environment. So banks end up lending to only very good credit risks. Which makes sense. But those who have sterling credit are often not the high-end entrepreneur risk takers that make fortunes and spur economic recoveries. People with no debt whatsoever tend to be pretty practical people. Not all debt is bad provided that it is incurred to provide an investment with a solid stream of future income.

Unless banks stop acting in their self interest and pocket the spread they can get between T-Bills and Fed 0% rates, lending will probably stay poor. And an economic recovery will not be gangbusters. This is an example of the unintended consequences of government intervention.

11K Jobs Lost

2009-12-04T05:52:00.000-08:00

There is something fishy in todays numbers. Maybe the BLS has been told what they can report and to stop with all the negative numbers. Not clear why ADP numbers from Wednesday were 169K and this was only 11K. Something isn't jibing.

Can Somebody Please Create a Job?

2009-12-03T14:17:00.001-08:00

During today's no-holds barred, I am open to (almost) anything "jobs summit", President Obama calls out for the creation of new jobs.

"The president said there were some ideas that could be put to work almost immediately and other ideas that will become part of legislation for Congress to consider. He listed "moving forward on an aggressive agenda for energy efficiency and weatherization" as a prime candidate for quick action."

"Weatherization", if you look on the recovery.org website has already taken a lot of the stimulus "jobs" in various states. I am not sure if I want to laugh or cry that our president doesn't really appear to know how to foster a robust economy and the creation of new jobs and is looking to legislation from an overwhelmingly liberal Congress to do the trick. I am not sure what he meant by:

"But he said he puts a lot of faith in American ingenuity and industry. "We can't go back to business as usual," he said."

We can't go back to business as usual? What the heck does that mean? Job creation is actually not that complex a process to figure out. The fact that we're in December and he's finally thinking about this indicates he's in serious trouble and he's doing some CYA work here. You can't really expect to add various taxes on the people with capital and than expect the people with capital to put it to work to create jobs. At least I didn't think so. But maybe I missed that economics lesson.

How's "growing the economy from the bottom up", as Obama pledged to do during the campaign, working out?

A Book And A Movie

2009-12-02T17:43:00.000-08:00

I am about to finish a great book: Same kind of different as me. http://www.amazon.com/Same-Kind-Different-Modern-Day-International/dp/084991910X/ref=sr_1_1?ie=UTF8&s=books&qid=1259804780&sr=8-1

My domestic partner (the woman formerly known as my wife in olden, pre-PC, dark days of ignorance) and I just watched a great movie: Once. http://www.amazon.com/Once-Glen-Hansard/dp/B000X1Z0BU/ref=sr_1_1?ie=UTF8&s=dvd&qid=1259804815&sr=8-1

Check em out!

Bush Really, Really, Really Sucked!

2009-12-02T17:20:00.000-08:00

Last night, President Obama claimed:

"Throughout this period, our troop levels in Afghanistan remained a fraction of what they were in Iraq," Obama said. "Commanders in Afghanistan repeatedly asked for support to deal with the reemergence of the Taliban, but these reinforcements did not arrive."

Apparently Donald Rumsfeld the then-Secretary of Defense begged to differ:

"The president's assertion does a disservice to the truth and, in particular, to the thousands of men and women in uniform who have fought, served and sacrificed in Afghanistan," Rumsfeld said. He urged Congress to review the claim in the upcoming debate to "determine exactly what requests were made, who made them, and where and why in the chain of command they were denied."

Normally, the media would check out a statement like that from a President during a major policy address. But why should they bother fact checking now? He just says stuff. And it's ok. It's Obama.

169K Private Jobs Lost

2009-12-02T05:41:00.000-08:00

Today an ADP report said we lost another 169K jobs in November. That it is December 2 and we're still seeing this is itself really amazing. But I assure you it's good news because the rate of decline is slower than it was last month when we only lost 195K jobs. On Friday, the official Labor Dept numbers come out. Will be interesting.

Obama hosts a job summit tomorrow to distract from the still awful jobs market over 10 months into his presidency. I guess it takes 5 years at least for people to realize they want to make money and act in their self interest to get a job or start a business. Obviously, the fact that you still have this is due to lousy economic policies since people always have an inherent tendency to want or need to work. The job summit dog and pony show will convey the "we're doing something" mentality. The Romans used the games to distract people, Obama uses a job summit.

Christmas at the White House: An Oprah Primetime Special

2009-11-25T17:33:00.001-08:00

Looks like it's going to be an Oprah and Obama Christmas. Dude, You gotta be kidding!

http://www.thrfeed.com/2009/11/abc-announces-oprah-obama-christmas-special.html

What Does America Value: Security or Vitality?

2009-11-24T16:15:00.001-08:00

I prefer an America that is young, vibrant, and exciting and I am willing to take the risk. After reading this article, where do you fall?

http://www.nytimes.com/2009/11/24/opinion/24brooks.html?_r=1

Economist Insanity?

2009-11-23T09:29:00.001-08:00

The National Association of Business Economists predicts some good things for the U.S. economy in 2010.

"The latest survey by NABE notes that sluggish consumer spending will continue to weigh on the economy. But it predicts rebounds in housing, growth from business spending as more companies restock lean inventories, and a rise in stock prices."

To me, it seems the height of insanity to believe that housing will rebound in 2010. The federal homebuyer tax credits will expire next year, interest rates can only go up, people without jobs don't tend to buy houses, and the number of foreclosures is not likely to stop increasing anytime soon. I suppose it is possible that the nominal value of housing will increase IF inflation starts to take off. In the absence of a more general inflation, as a consequence of current Fed policy, I don't see how housing prices will go up all that much if at all.

I can see how restocking lean inventories makes sense. Although some of that may already be happening. I wouldn't expect a massive increase in business spending.

Finally, I can't see how stock prices will continue to rise. The Dow Jones Ind Average is already at 10,500 and I think it's been over-valued for a long time. How much does NABE expect this to rise? Are we going to 12,000! I have admittedly been wrong, and mystified frankly, by how it has persisted at the plus-10,000 number for this long. Nonetheless, it makes no sense to think the stock market is going to rise significantly.

All in all, I understand the models these people use to make these forecasts. I just think they're insane in using them to predict things that make little intuitive sense. Maybe once the "stimulus" money runs out and the Fed stops the magic tricks with the money supply will see a massive wave of new optimism in the economy. Despite the fact that employers will have significant increases in their operating expenses due to new taxes in a variety of areas. How did that Saturday night vote in the Senate go?

Barack's Asian Job Creatin

2009-11-21T06:45:00.000-08:00

More words from President Obama: http://news.yahoo.com/s/ap/20091121/ap_on_bi_ge/us_obama_jobs

He says his trip to China will create more jobs. This despite the fact that nothing tangible was actually accomplished. Or that one of the major gripes of the Chinese has been that he's imposed tariffs on some of the Chinese made goods we import such as tires. Or that he's devalued the dollar, which negatively impacts global trade flows from China's perspective although it props up our export industries. We can see all the massive job gains we've had from the implementation of a cheap dollar, export driven approach though can't we? It doesn't matter. All of a sudden Barack is a fan of free trade and all the jobs it can in fact create.

Another day another few billion dollars. More good soundin words. Our amateur hour, who wants to be president, night rolls on. How many more hours til last call?

Who Is John Thune?

2009-11-18T11:34:00.000-08:00

NY Times columnist David Brooks recently wrote a column about the senator from South Dakota who I have always thought would make a great presidential candidate. http://www.nytimes.com/2009/11/13/opinion/13brooks.html?_r=1

Hopefully he will catch on. He has a real shot of beating O'Nightmare in 2012. He's conservative, honest, articulate in an aw-shucks sort of straightforward way. And he's a handsome dude, which I've found from personal experience, has never hurt :) A guy like Thune would be a whole lot better than Palin, Romney, Huckabee or the other cast of characters in the GOP. Hopefully he's interested.

Gold. Raisin the Roof.

2009-11-11T10:52:00.001-08:00

When gold was $1,000 an ounce, I said to friends it would easily go to $1,500 and possibly even $2,000 over the next couple of years. To predict that is complete insanity. My friends think it's nuts. And it probably is. But it is up over $1,100. That's kind of nutty.

I still think I'm right. When government borrows money on a ludicrous scale that they have little hope of ever recovering, the value of the dollar tanks. Simply put, it takes more dollars to buy stuff like gas, gold, and other commodities. Eventually inflation will kick in, though probably not for awhile.

Because I can see Obama's soul in the same way Bush said he could see Vlad Putin's soul :-) I believe Obama doesn't really care that he's emptying the Treasury. His friends in academia will eventually write how great and courageous he was as a president in the books to come over the next several decades. All the while the task of "fundamentally remaking America" as he pledged to do is underway. A remade America will look a lot like Europe in the 1970's. We'll have double-digit unemployment, declines in entrepreneurship and business activity, and less and less innovation. But we'll have "free healthcare" - eventually. It will be a great place for those with little ambition and few goals in life.

There's always hope though. The American people may wise up yet as the nation's finances get worse and worse.

Comin My Way

2009-11-10T08:24:00.000-08:00

It seems that economists have revised their unemployment rate forecasts up to 10.5%. http://www.cnbc.com/id/33824139

This is up from forecasts 6 months ago when people were between the 9.5% and 10.2% range. I have said 12% by the end of 2010 all along. I stand by that today. The reason is that this recession has 2 waves. Wave 1 is about coming to an end. It's the natural cyclical variation in an economy after a shock like we had last September. It should have already ended but Obama confusion has set in.

Wave 2 is coming. Most economists are missing this because they are slaves to panel data sets and modeling. Forecasting the future is as much about intuition as it is analysis. Wave 2 is due to Obama policies becoming law, "stimulus" spending being wound down, and the Fed putting the brakes on liquidity, which they will have to do. Wave 2 is going to be ugly but will hit when the Senate passes a healthcare bill that will start a frenzy of panic for small business owners trying to figure out what it means and being horrified when they do finally figure it out. It has implications.

So, we'll see. I could actually see it going even higher than 12%. Hopefully, it won't hit me.

Economic Modeling and "Saving" 650K Jobs

2009-11-02T11:58:00.000-08:00

President Obama's claim that the stimulus has saved 650K jobs is a great example of the poverty of using static analysis in economic modeling. Most of the stimulus is said to have gone to save public sector jobs such as teachers and police with the idea that these would have been cut without it.

Suppose these jobs were cut. Suppose all 650K would have been laid off. A dynamic economic modeling approach where actual decisions would have been made by each person in the absence of the stimulus would likely reveal it is much lower. For example, suppose all 650K were laid off. How would they react? If all of them literally sat home on the couch and didn't look for a new job, the number would be right. What you would expect is that at least a portion of them would have looked for and found some other work. Further, the amount of taxpayer money (a portion of the $787B that has been spent) that was diverted back to temporarily save these jobs could have gone to economic producers such as businesses. Perhaps if government actions like this that choke off business investment weren't attempted maybe we'd have a sustainable recovery underway by now and new jobs would have been created for a portion of these 650K to fill. We'll never know. How many job openings have been postponed that would have arisen without massive government intervention policies? Unlike the government, I won't guess.

Anyway, a more thorough dynamic model would not view all public employees as merely passive couch potatoes who wouldn't look for a new job elsewhere. When the temporary stimulus runs out and public employees have to paid out of the normal flow of tax revenues, we will find out. We'll probably see these jobs on the chopping block in a year or two and we can test the thesis later. The only long-term way to keep government funded jobs going is for tax revenues to rise as taxable income rises as people go back to work. A stimulus like this only delays the inevitable day of reckoning. Enjoy the growth while it lasts.

Singin That Ole Tune Again

2009-11-01T20:05:00.000-08:00

My favorite recurring Obama line is that he didn't get us into the mess but he's trying to clean up the mess. It's clever. He's right on one hand. He inherited a bad fiscal and economic downturn that was well underway before he was sworn in. On the other hand, people aren't completely stupid enough to believe that his policies, which essentially boil down to borrow and spend more, start a trillion dollar overhaul of healthcare, and regulate, are going to help restore anything.

Who knows how many more people have to endure this pain simply because business is scared to death of President Obama's policies.

So how long should it take for the economy to recover? I thought that by early Summer things could start to go back up under sound economic policies. We had an artificial boost in growth in the 3rd quarter. Nobody believes it is going to get better than that anytime soon. I wonder what his timeframe is? Does it take a year? Two years? Five? Is there any reason why we shouldn't already start to see businesses hiring again? I think I know.

650K New Jobs Created (Or Saved)

2009-10-30T04:14:00.000-07:00

The latest numbers from a WSJ article http://online.wsj.com/article/SB125689799688318277.html?mod=WSJ_hpp_sections_business

$339B of the $787B has been spent and 650K jobs created (or saved). That's only $521,539 per job. As I have said before, that is one great job! When the President publishes these numbers its bad enough. When the people believe something like this, it's unforgiveable. In that case, the American people deserve what they've voted for. You like Socialism? Let's see how it plays out. Enjoy the ride.

I think I've come to a point where I see the train coming and I, along with a multitude of others, are crying out that it's coming and its going to whack us hard. Yet, people don't seem to pay attention to it. The only thing left is to brace yourself and let it hit. Maybe then people will realize they are in the midst of a train wreck.

Prediction: It's Your Fault

2009-10-29T19:33:00.000-07:00

I have almost no doubt by next year at about this time, and probably earlier, Obama's approval ratings will be hovering around 40% as the economy remains mired in double-digit unemployment and as the guvt money to "stimulate" the economy runs out like sand through fingers. My opinion is that Obama will react by accusing the American people of a failure of will, blame them for refusing to follow him and embracing "politics as usual", and will start to come apart at the seams. I don't think the man will be able to personally handle the failure that follows from advocating insane liberal policies. I believe the lesson he and his fellow liberals will learn is that its your fault. Anyone who knows liberals knows they can't possibly acknowledge that its evidence of the intellectual bankruptcy of their ideas. Silly cult like faith doesn't die easily.

Da Economy is 'On the Grow'

2009-10-29T06:55:00.000-07:00

Today a report came out that said 3rd quarter U.S. GDP grew at a decent 3.5% annualized pace. I guess the recession is over. There is no doubt that Obama will stand up and give a speech declaring that his government spending policies are responsible. He has pumped almost $200B of the $800B stimulus into the economy and, more significantly, the Fed has basically flooded the economy with about $2Trillion dollars!

Unfortunately, the recession is actually a long way from over. How an economy grows is actually surprisingly easy to understand. The bottom line is that people invest money in a product or service that people want to buy. As more people buy the goodie, more people are needed to help supply it. This creates jobs, gives people a goodie they like, and is repeated millions of times for companies both big and small. The majority are in small companies.

Despite all the government spending and all the fascinating economic theories espoused by people like Paul Krugman, the fact is the basic facts don't change. Smart people can tinker with money policies, microeconomic tax policies to influence individual behavior via incentives, or just plain give people Obama guvt money. All these things are short term. The plain fact is that unless people are doing what was described in the previous paragraph these tinky dink academic economic theorists will not get us out a recession.

People always have a vested interest in making money and are naturally inclined to want to take risks and start or enhance a business. But there are limits to how much risk they will take when they perceive that government doesn't really have their interests in mind or understand what they face when they embark on a business venture. Current government policy is incoherent. It heaps new taxes on people and has the added disadvantage of being big and confusing because it is not yet transparent. Since business people have to plan long term, it is delaying a serious American economic recovery.

So celebrate the good news. America: You grew. Don't worry about the money you borrowed or how you will pay it back. For tomorrow will be dealt with tomorrow. In the long run we're all dead anyway. Carpe Diem!

$194B Already Spent

2009-10-22T18:14:00.000-07:00

In a followup to yesterday, it appears $194B of the "stimulus" has been spent. That's only $194K per million new jobs. That's a darn good job. http://www.google.com/hostednews/ap/article/ALeqM5i-95E_TCyqYX0CBZ5xQAV_V3VWyQD9BG76902

Stimulus Saved 1M Jobs

2009-10-21T19:47:00.001-07:00

Nancy Pelosi, that renowned economist, setup the econometric model, isolated the key variables, get her R-squared to a point she liked it, and has decreed that the stimulus has saved 1M jobs. At a price tag of $787B that's only $787K per employee in just 9 months. Not a bad way to make a living if your one of the lucky million! I'm not sure how much has been spent. At this rate a check is bound to show up in my mailbox at some point. There are about 140M employed people to begin with (and shrinking). Maybe they can claim we all have a saved job thanks to their effort at some point. Thank you for my job dear leader!

According to one district, $34M from the Federales didn't create any jobs. http://www.newswest9.com/Global/story.asp?S=11356601# But what do the local yokels know about how much they did or didn't spend? They can't count past 12, right?

Why Can't You Just Write A Check? Seriously?

2009-10-15T14:50:00.000-07:00

From Obama's trip to New Orleans, my favorite quote of the day.

The storm killed some 1,600 people in Louisiana and Mississippi — and damage has been estimated at roughly $40 billion.... "I expected as much from the Bush administration, but why are we still being nickeled and dimed in our recovery?" asked Gabriel Bordenave, 29, of New Orleans.
"I wish I could write a blank check," Obama replied, promoting Bordenave to shout back, "Why not?"

Why not? Really? When the government is bailing out banks at $700B, spending $787B in "Stimulus", giving $50B to the auto industry, $13B to seniors, expanding healthcare by about $800B in 10 years, $3B to cash for clunkers, an $8K homebuyers credit (which will be expanded), and aslo giving away billions in other treats to community colleges, wind farms and solar, expanding unemployment benefits, what's another $40B for the folks in New Orleans? Seriously?

Smoking Bans and the Well Meaning

2009-10-15T09:09:00.001-07:00

A new government report shows that second smoking may lead to a heart attack.
http://news.yahoo.com/s/ap/20091015/ap_on_he_me/us_med_smoking_bans

Thus, the evidence is clear that we must ban smoking in public places. There comes a point where well meaning people have to basically stop caring so much. I sometimes feel as though the government thinks it cares more for me than my own mother. It's going to protect me from secondhand smoke, save me via seatbelt laws, help me if I have a flood, get unemployed, need food stamps and housing, and give me a check and ensure I have healthcare when I'm old.

I can't help but think that there is a price I have to pay in order for all these wonderful gifts. The dollar price is clear enough. I do pay about 6.2% of every dollar I earn for that check that will come from the Treasury when I'm old. Assuming the fund is still solvent in 25 years. That's a big assumption. There is also the 3.1% I have to pay for my medicare gift.

Then there's the basic enjoyment people get from eating out, drinking soda and alcohol, or smoking cigarettes or cigars. I personally do not understand the attraction of cigarettes. I do smoke cigars. But it is more often a social thing and it helps me unwind. It's my guilty pleasure I suppose. But I've made many friends because of our common interest in cigars.

I get a sense that all this caring can't help over time but make people maybe a little dependent on its source. I like to think I care about myself and can weigh risks and rewards regarding how much I drink and smoke, what and where I eat, how I enjoy my leisure time, and so forth. Apparently, the government folks from on high feel they need to help me by studying the matter and than drawing clear lines about what I can and cannot do based on the results of the analysis.

I know that at some point I am going to die. I know that at some point I am going to get sick. I know that life is filled with risks from driving to entering into a bar where people smoke to possibly crossing the street. I am thinking that this type of control and this general lack of maturity in the population is taking its toll and government mandates are only going to increase in the coming years. When people can't police themselves and act somewhat modestly, the police have to step in and regulate and create more and more laws to deal with the more and more forms of lawbreaking. Maybe this is where we are. Maybe the government is justified. Maybe the American people no longer really deserve to be respected as reasonably capable to act responsibly. So long as we have what we need, what do we care? Just give me my checks and protect me from myself and others. Thank you dear leaders.

$250 For Every Senior

2009-10-14T16:27:00.001-07:00

Step right up folks. Obama pledged to pay 50M senior citizens $250 each. Why not? They vote right? How much do we need to vote for Obama? Give me $1,000 and I'll pull the lever for you. Add it on. It's only another $13B in spending. The carnival continues.
http://news.yahoo.com/s/ap/20091014/ap_on_go_pr_wh/us_social_security_obama

My Budget Deficit Quote of The Day

2009-10-14T05:23:00.000-07:00

From Ms. Judy Shelton writing in the WSJ:

"By the end of 2019, according to the administration's budget numbers, our federal debt will reach $23.3 trillion—as compared to $11.9 trillion today. To put it in perspective: U.S. federal debt was equal to 61.4% of GDP in 1999; it grew to 70.2% of GDP in 2008 (under the Bush administration); it will climb to an estimated 90.4% this year and touch the 100% mark in 2011, after which the projected federal debt will continue to equal or exceed our nation's entire annual economic output through 2019."
http://online.wsj.com/article/SB10001424052748704107204574470961505506386.html?mod=WSJ_hpp_RIGHTTopCarousel

Here's another one from the Seeking Alpha site http://seekingalpha.com/article/166199-what-s-next-for-gold-and-the-dollar?source=email:

"It goes without saying that part of the gold price advances were also caused by further weakness of the U.S. dollar. Is the greenback now finally finding some support at current levels? We have our doubts and continue to be bearish on the U.S. dollar for several reasons. Although we think that the risk for strong inflationary pressures have fallen somewhat, it is clear that the U.S. does not have too much interest in a strong currency. With the amount of government debt now at record levels, the last thing the U.S. wants is a strong currency.
Also, the U.S. dollar’s role as the world’s sole leading currency is coming to an end, and, although it will remain an important currency, its share of world currency reserves is going to fall further from here.The recent rumors that the greenback will be replaced as the “oil currency” gives clear evidence that the relative importance of the U.S. dollar is falling.
Although the current amount of government debt is almost mind blowing, we don’t think that it is a hopeless situation. Compared to the size of the U.S. economy it is still manageable but in our view drastic measures to correct the unpleasant situation need to be taken."

I wonder if the auther would consider starting a new $800B over 10-year new healthcare entitlement a drastic measure to correct the unpleasant situation.

The bottom line of a weak dollar for you:
1. Commodity prices will increase. You will pay more for food and gas. This is because as the dollar loses value, these assets see their prices rise as investors flood money towards them instead of investing in assets with dollar denominations such as bonds, etc. Plus, exported goods from other countries will become relatively more expensive. The positive of this is that goods we produce for export will become cheaper so maybe we can sell more to the rest of the world. If you work in an industry that exports goods you may benefit.

2. Your debt may not be a big deal. If the value of the dollar plunges, your home values may rise as more people use money to invest in physical assets such as real estate. Your home value may go up as a result in the long run. Also, a weak dollar will likely lead to inflation.

Overall, 1 and 2 means it's good for what you own and in devaluing your debt. It's bad if you got to buy food and gas.

3. The worst thing about a devalued dollar is that it alters business investment decisions negatively and long term planning is confused for those who have to think about boring business stuff like where should we open a new store? should we expand a line of goods? open a new factory? Since jobs don't grow on trees and are a consequence of these types of things, it's really bad news for you. But cheer up. At least you'll have free healthcare!

My Blogging Slowdown

2009-10-12T16:51:00.000-07:00

In recent weeks my ire has not been raised as it has been throughout the year. I am increasingly resigned to the feeling that this is how it's going to be for awhile. No sense in getting a rise from it.

The other day I was having a conversation with a friend who is a big fan of the Constitution and America's founding fathers. He mentioned that the Founders knew that if the government grew to be too big, people would start to vote for it to get even larger so they could personally get as many goodies out of it as possible. The Founders cautioned that a Democracy can't long exist if that's the case. I have heard that before. It's about where we are. I am resigned to it.

As I read the daily paper, alarm bells go off on at least several pages every day. I have blogged ad nauseum about a variety of things. In recent weeks it's been reported that as the dollar is sinking as commodity prices are rising. Foreign exchange markets are moving away from the dollar as the reserve currency. The dreadful ramifications of that are too long for me to explain today. But rest assured, it's not good for our country. And who really cares anyway? It's all a bunch of jibberish. The dollars sinking? What does that mean? So long as I can buy a can of Coke for 75 cents, to me it's not sinking. Just give me my healthcare. And save me money from expanding this entitlement while you're at it. Make sense? Iran is vociferously threatening Israel, which they've always done. But now the actually have real nukes and a religous fanatic at the helm. The death toll is rising in Afghanistan. Our economy shed another 263K jobs last month and within about a month or two we'll have 10% unemployment. But that's old news.

It seems we're in a new country. We're remaking America. While she was imperfect, I will miss her. What comes next and how it will look is anybody's guess. I sense the adults are no longer really in charge. We're no longer concerned with the price tag of anything, we just seem to buy and do whatever we want as a nation. There's a real immaturity in our country and in our leaders. Adults have ambitions too. It's just that a mature adult realizes that he has to weigh seriously the price tag and that how much you spend really matters. Mature people know limits. Then again, maybe maturity is overrated. Why have tomorrow what you can have today? We can have it all and we're worth it. Right?

I am coming to accept the new America. In my angrier moments I'd say this is God's judgment and our various moral and social breakdowns are finally extracting a price. But who the heck am I to say what God is doing?

Government Debt Will Kill Us

2009-10-12T09:14:00.001-07:00

http://online.wsj.com/article/SB10001424052748704429304574467071019099570.html

This is well worth reading about the consequences of the national debt and the idea we'll pay it off later.

Ford's Sales Are Down

2009-10-01T14:28:00.000-07:00

I know it is shocking but Ford reported a decline in sales for September. http://news.yahoo.com/s/nm/20091001/bs_nm/us_usa_autosales

As I've written, expect this to continue for awhile for other car companies. Why the government does these little "Cash for Clunkers" gimmicks is mystifying. Ah, not really. I suppose the government wants to look good for the masses. At least they can say they did something when really it's nothing. But it plays well in the Styx.

Fed the Magic Dragon

2009-09-26T11:24:00.000-07:00

This article just reiterated my concerns about Fed policy. http://www.ft.com/cms/s/0/c2f7e3d4-a9e9-11de-a3ce-00144feabdc0.html

I have been shocked by the summer stock market rally for about 3 months now. The Dow Jones was almost at 10,000 before it started falling this week. I can find no rational reason why it has or will continue to stay at anything above 8,000 to 8,500 levels. If I am right, a lot of investors are going to lose a lot money pretty soon.

The article linked above says the government is propping it up and the Fed is creating artificially high asset prices through its ludicrous, short sighted policy of printing money and holding Fed discount rates at 0% to 0.25%. If this continues not only are we going to see the stock market fall we are on the verge of another economic collapse. I sincerely hope that what I am seeing is wrong because this could have very negative social consequences. If the number of unemployed people grows to depression type levels we are in for a major upheaval, crime, and all other kinds of very serious problems.

Despite the Fed's magic tricks, you can't prop up a needed correction artificially. It will come if you maintain stable policies and let the market correct itself. I am starting to sound like Ron Paul. He seems to be the only political figure who is recognizing the ramifications of what the Fed is doing.

Another Healthcare "Myth"

2009-09-26T06:23:00.000-07:00

People will go to jail if they don't pay the tax to ensure they have government healthcare. http://www.politico.com/livepulse/0909/Ensign_receives_handwritten_confirmation_.html?showall

Oh did I say "tax"? Obama said it wasn't a tax on last week's sunday shows. No, its just a moral thing that people have to now pay up to $3,800 a year to the government whereas they didn't have to before this plan. But it's not a tax. Definitely not a tax. To paraphrase Obama don't be so stupid people. Let's talk and be serious. C'mon people.

Are Conservatives for Keeping Free Healthcare Goodies?

2009-09-25T04:55:00.000-07:00

I have been reading recently that conservative critics are arguing that one of the flaws of Obama's plan is that people will essentially have to pay more for their healthcare. http://thehill.com/opinion/columnists/dick-morris/59853-obamacare-taxes-for-everyone

Here is a quote from the article: "According to the Congressional Budget Office, the average uninsured person or family will have to pay between 15 and 20 percent of his or their total income on health insurance (counting premiums, deductibles and co-payments) before any of the subsidy in the Baucus bill kicks in. Even in the more generous House bill, the tab that the uninsured must pay is very, very high."

After this mess plays its course, conservatives will need to move in the future towards having people pay more for their healthcare. Unlike Obama's bill they won't be taxed and pay the government. But they will need to pay the doctor and hospital instead of the government if sanity is to be restored to the provision of healthcare services.

Conservatives should not be arguing that liberals want to take away the free goodies and that's bad. The bottom line is that whether you are insured or uninsured, for the system to work fairly people do need to pay more for what they use. If they don't use healthcare services they pay less. If conservatives frame this argument as though the plans are bad because patients will be responsible to pay more, that will come back to bite them when the American political pendulum swings back and they are in charge again.

Home Sales Drop. Duh!

2009-09-24T13:07:00.000-07:00

I posted a few months ago that all the hysteria about the housing market was overblown because people buy homes in the Spring. Those numbers don't represent recovery. Today, existing home sales were reported to have dropped by 2.7%.

This is very likely to continue. I'm only surprised that most economists were surprised. You know what? Car sales are also going to drop over the next several months. The economy is on life support due to the technocrats at the Fed. Plus, yes, a nearly $800B government pork plan can't help but prop up some spending to keep the illusion rolling through the end of this year. So it won't be disastrous again until early to mid 2010.

You can fool some of the people some of the time. But illusions and Federal Reserve Bank magic tricks can't be played forever. Eventually, real people have to take real risks and invest. With this president's policies and the amateur night comedians he has put in charge of economic policy, I don't see a sustained recovery. Hopefully, I am wrong.

Superman Don't Need No Airplane

2009-09-22T17:00:00.000-07:00

Today President Obama was in New York telling Israeli and Palestinian leaders to finally resolve their going on like 3,000 year feud. I guess it's only been 60 years now since the modern state of Israel was founded though.

http://news.yahoo.com/s/ap/20090922/ap_on_go_pr_wh/us_obama ... and I quote:

"Simply put, it is past time to talk about starting negotiations — it is time to move forward," Obama declared, displaying an unusual level of public frustration as he prepared to sit down with Netanyahu and Abbas for joint talks after meeting with each separately. "We cannot continue the same pattern of taking tentative steps forward and then stepping back."
Spanning over two hours all together, the talks found all leaders promising to work to resume peace negotiations but also often using language described as "blunt" and "direct." Both leaders kept stressing with Obama their own priorities and fears. Obama in return emphasized a need to take risks and give up some things for a bigger goal, said a senior administration official."

I suppose that I am pessimistic about the odds of success here. But who knows? Maybe Superman can come in and save the day.

The site of Obama lecturing these people reminds me of a Muhammed Ali anecdote - Ali gets on a plane. The flight attendant says he needs to put on his seatbelt. Ali replies "Superman don't need no seatbelt. The attendant replies "Superman don't need no airplane either".

At some point a man runs up against the limits of reality. I am not sure Obama's view and understanding of the world has fully achieved the balance between having hopes and dreams and being just plain realistic in what a man can reasonably hope to achieve through his efforts.

Here's to you Superman. May your dreams of peace in the middle east come to fruition. And may my dreams of winning the lottery, flying to Mars by flapping my arms, and eating Cheesecake factory cheesecakes without gaining weight all come true. A man can hope.

The "Just Say No" Party

2009-09-16T10:27:00.000-07:00

Today Sen. Max Baucus came out with a healthcare plan, a year in the making. Two WSJ quotes from Republicans struck me:

1. "The bill was swiftly denounced by Senate Minority Leader Mitch McConnell, who complained it would cut Medicare, which provides insurance to the elderly, and impose new tax burdens on families and small businesses."

2. Mike Enzi - "Mr. Enzi warned that "if you have Medicare Advantage [the Baucus] bill could reduce your coverage."

I am not for new taxes. But these Republicans are complaining that Medicare will be cut? So the GOP is for a certain type of government healthcare but just not the Obama one? Why aren't these folks for cutting government whenever you can in one form or another, especially when a Democrat is proposing it?

I understand why the GOP lost and squandered the 12 years they had power and the 6 years they had both the presidency and the Congress from 2001-06. This party has no overall guiding principles. The motto appears to that whatever Obama is for we're against. Republicans should be advocating that we have to return to individual responsibility so that when you require a healthcare service you pay for it except in catastrophic scenarios where the out-of-pocket deductible is more than $10K or some other number. That's where insurance should kick in. We've divorced personal responsibility and any consequences from how we pay for and use healthcare. I've been conditioned to think I shouldn't pay anything at a doctors office more than my $10 or $20 copay too. But is it realistic to think that can go on forever?

Instead of restoring sanity and making people responsible and not just shielding them from every possible hardship that may arise, the GOP just continues to pander. If they can't live without Medicare and the bigger government it represents they deserve to be in the minority. There really is no place to go for an average conservative person.

Wall Street Moralizing

2009-09-15T06:28:00.000-07:00

I have known my share of Wall Street people. While there's no one Wall Street job, generally the financial industry based in Manhattan is a tough place to work with lots of hours. People who work there are generally competitive and have a goal of making a lot of money. My first job out of college was as a trainee with a stockbroker firm. After about two days, I realized I didn't like it so it didn't stick. The folks who work there aren't necessarily brilliant people or uniquely special.

Obama's speech to Wall Street yesterday was loaded with the term "responsibility", "crisis", and "risk". My sense is that your average Wall Street financial guy hears what the president said yesterday and finds it somewhat condescending. They don't tend to feel that they are irresponsible to clients or take unnecessary risks. Although some really are awful people. Generally, most are not though.

Obama's problem is that he paints everything with a broad brush. Everything is a systematic crisis. He doesn't really get too far into the details to understand that there are specific things that need to be changed in healthcare, finance, or whatever else. You don't need to blow everything up or talk so broadly that nobody knows if what you're saying applies to you or not. I realize details aren't inspiring. But they're called for when things are complex and answers require nuance and sometimes subtlety. A big hammer or remaking America or offering a new framework isn't the answer to every problem.

The Inspirer in Chief

2009-09-10T16:29:00.000-07:00

In yesterday's Obama big wing ding thing of a speech, he made quite a pitch. He said we have to look beyond economics because healthcare is a moral issue. I agree to a point. Healthcare is both a moral and an economic issue. In this issue, as in much of life, they are very much connected.

First, it's an economic issue because it is allocated via transactions with people getting paid for a value added skill they have, people paying because they are in need of the service provided by that skilled person, and time being used. All of these are known as constraints in economic terms. It has all the hallmarks of your classic microeconomics models that you learn as an undergraduate. The money and the time are a scarce resource because we don't live in a world of infinite resources in terms of time or money. We have to choose to maximize the best use of the persons skills to benefit the greatest number of those in need of those skills. For this they pay cash and hopefully, it is efficient so that neither time, money, or skills are wasted.

Second, it is a moral issue. There is a right to LIFE, liberty, and the pursuit of happyness. Be happy people! The primary question is who is the arbiter of morality? In modern America, we look at the government as the only entity for these types of things who can help provide what is morally just or what we deem to be social justice. Why should the poor not get the same type of care that the rich get? This question is about as profound as the songwriter's question: Why do fools fall in love?

The goal of any healthcare plan should be to strike a balance between not literally handing things to people to actually rob them of their dignity while not so harsh as to cause them to steal bread because they cannot eat otherwise. The healthcare proposals do not necessarily achieve a right balance. What happens if people simply don't pay the individual 2.5% tax on income or $3,800 per year that they will now have to in order to comply with the plan? Is jail an option? What if they can't pay it? What about the employer who can pay it on paper because they're rich but they have to layoff a few employees because their cost structure just increased? Is it moral if it leads to greater job loss?

All in all, morality is never so black and white. It should be a little concerning to all of us when we look to government to help us and especially when a government invokes the cause of morality to do so. This has been a bad idea since even before the Christian Crusades. Obama recognized in his speech that we are inherently distrustful of government and said it was good to be. He turned it around though and essentially asked us all to trust him. We have to get over it in order for this moral man to do what is moral. Even if I trusted him, I would still not be able to trust what he's setting in motion. We would do well to listen to the author Joseph Conrad before we give up being the only advanced nation without universal coverage:

"The scrupulous and the just, the noble, humane, and devoted natures; the unselfish and the intelligent may begin a movement - but it passes away from them. They are not the leaders of a revolution. They are its victims."

Eventually, Obama will depart from the stage. And who will be making these decisions after he leaves? Will they be wise? A government program once started does not stop when the man who set it in motion exits. You can trust him? You should be very concerned where any major government program goes. Government in this country is well beyond the point where it should be. Starting another one only further entrenches it. Is this really what we want?

The Massive Debt President

2009-09-08T10:35:00.000-07:00

Here's a quote from then-Senator Barrack Obama:

“Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren,” Obama said in a 2006 floor speech that preceded a Senate vote to extend the debt limit. “America has a debt problem and a failure of leadership.”Obama later joined his Democratic colleagues in voting en bloc against raising the debt increase.

Today, President Obama is asking the Senate to raise the debt limit beyond the $12.1 TRILLION dollar limit. For a president who spends more per day than most countries see in a year, this is delicious irony. Unless you're young and have to eat what he's serving up for you in the future.

Michael Moore Say: Capitalism is Evil

2009-09-06T17:08:00.000-07:00

I think this dude is getting dumber by the day. http://www.reuters.com/article/lifestyleMolt/idUSTRE5850F320090906 When Moore first started, I actually thought Roger and Me was pretty good in a 60 Minutes, gotcha sort of way. But it really went downhill pretty fast. The F-911 was a mindless Bush Bash with its constant "we're gonna smoke em'out" references to old western TV shows and interviews of hillbillies to make some mean points at the expense of a few southerners.

In his new movie, Mr. Moore apparently wants to replace capitalism with democracy. Despite centuries of political thought expounding on the link between the two, according to Mr. Moore, they are now mutually exclusive so that you can have one with the other. Is he suggesting that America is capitalist but not a democracy? I suppose we're more a Republic. So maybe the genius is technically right and America is not in fact a democracy.

The type of thought embodied by Mr. Moore makes clear why it is wise to spend at least some time during the course of your life doing a regular job without a lofty, noble purpose in it. Just doing something because you have to pay the bills. A career as a documentary filmmaker is probably fascinating. For Mr. Moore to arrive at the broad brush conclusion that "capitalism is evil" means his best years are long behind him. Maybe the hardwiring in his brain is set and the capacity for insightful thought is no longer there. This is a caution for anybody getting older to not fall into that trap. Your brain neurons do set and it gets harder to incorporate new information that doesn't fit within your existing paradigms. I'll make a note. NOTE TO RIGHTWING BLOGGING SELF: DON'T STOP CONSIDERING OTHER PERSPECTIVES.

A 9.7% Unemployment Rate

2009-09-04T06:00:00.000-07:00

But we only lost 216K jobs in August. For football fans the jobs data over the last 3 months has been akin to a team going 2-14 last season and now playing at about a 4-12 or a 5-11 level this season. It is still awful, the schedule was soft because you were a losing team starting in a depressed position, but you have a few guys who can play so that it's not a total collapse.

Looking beyond the clutter and in the details of the BLS report that monitors job losses, there are two very alarming trends. First, the total raw number of unemployed persons actually rose by 466K and employment fell by 392K. Second, another 143K people dropped out of the labor force. These are in Table A in the following link. http://www.bls.gov/news.release/empsit.nr0.htm

The "unemployment" line and the "not in labor force" line tend to go in different directions. In August the unemployment line went up significantly, which means that people are looking for jobs and not finding much. If they go back to leaving the labor force that's bad too, although the rate wouldn't top 10 or go up much. It's a case the unemployed being hopeful in August and that's why the rate went up significantly. More people are counted in the unemployment rate in August.

All in all, we are still akin to a 5-11 team. Looking ahead you don't necessarily see the makings of a good team because there are still a bunch of weak players such as Obama, a Democratic Congress, etc. plus you have fundamentals such as low interest rates, coming tax increases, looming bank failures, a debt problem, a ridiculous healthcare agenda, stimulus pork that isn't working, and a Fed that can't pump money into the well forever. It's one thing to go from 2-14 to 5-11. We may even go to 7-9 at some point this year. It's quite another thing though to go to 12-4 and contending for a title. With a president and congressional leaders and current economic policymaking that doesn't understand basic free markets, incentives, and business cycles, I have a hard time believing we're going to be making a championship run anytime for at least several years when we get a new administration who hopefully understands how to build a team. Although that's not inevitable because you do have teams that lose for decades. I hope that's not the case for America.

Will Somebody Please Think of the Children?

2009-09-03T05:55:00.000-07:00

President Obama was going to give an inspirational message to school children. They're assignment was to write an essay about what they can do to "help the president?"

http://www.foxnews.com/politics/2009/09/03/white-house-withdraws-students-help-obama/

I actually find it a sad state of affairs when people are so distrustful of the president that anything he proposes is deemed to be sinister. There would be nothing shocking about this if it were Eisenhower, for example, asking it during the 1950s. The problem is that government has become such a central part of people's lives and its reach is being expanded that you can't help but think we're entering a period where our basic freedoms are being chippeed away. Were the government a relatively small part of our lives and not involved in everything from finance to healthcare to education to so many other things, this type of thing would not feel like yet another intrusion into our lives.

We are so beyond the point of government being too big that it's not even worth pondering new government "solutions" to whatever challenges we face. At this point people need to stop asking government to do things for them. The problem is that normal people are now relying on it for everything from retirement to insurance if there's a natural disaster to unemployment benefits and whatever else. The system is already beyond its scope. The only thing to do now is wholescale cut it down at every level. We all need to stop looking to the government to meet our needs. If we can't do that, we deserve to have our freedoms reduced. With freedom comes responsibility. You can't give childred unlimited freedom. We all need to be adults and stop looking to government as though it is our parents.

Obama is Going to Get Specific

2009-09-02T08:38:00.000-07:00

President Obama has decided to start offering up his own details on healthcare. For the past several months, he's deferred to liberals in Congress to write his healthcare overhaul plan for him. He's now going to take charge! It's eye of the Tiger, Rocky Balboa time.

This is sure to enrage his fanatical liberal base. For them, a public option was merely an intermission before the real end of having a one-payer healthcare system run entirely out of the federal government. Obama will probably propose a Co-Op type of approach with no public option. This is still not optimal and does not go towards reducing healthcare costs overall. The best scenario is to have people pay more out of their pocket for what they actually use and to increase competition by allowing healthcare to go across state lines. Currently, you have co-pays, healthcare restrictions per state, and lawsuit threats that result in doctors ordering tests that may not be need. The reason doctors order tests is not so much to collect extra fees, as Obama suggested, but to cover their rears legally.

This new approach depends on him winning over independents. He's going to have to win more of them than he loses from his base. I think he's going to have a hard time doing that given his radical economic spending policies. They may already be gone because of the Obama credit card spree. A Co-Op is something that can be undone or modified down the road by future presidents. So it's not as big an irreversible disaster as anything with the term "public" in it. It depends on the specifics of the Co-Op though and if it is left to the private market as the mechanism for resource allocation. If not it's just a new name for the same piece of ... (chocolate bar in the pool).

George Will Say: Get Out of Afghanistan

2009-09-01T12:30:00.001-07:00

http://jewishworldreview.com/cols/will090109.php3

A Leader Takes Responsibility

2009-09-01T07:50:00.000-07:00

I learned a long time ago that you to have to take responsibilities for your actions, that doing is harder than criticizing, and that you can't blame others for your circumstances or make excuses for too long. Sooner or later you have to hone up to your mistakes and be thankful for your successes. Nobody inherits perfect circumstances no matter what your walk in life. We all wish we could change certain things. Eventually we all have to come to terms with the things we can and cannot change and determine, within those constraints, a way forward.

The following quote from the Obama spokesman in a Reuters article made me realize the core reason why I have a sense that the Obama presidency is going to fail so miserably. The quote is an indication of a type of character.

"The White House sought on Monday to pin the blame for the grave state of the war in Afghanistan on the Bush administration, which made Iraq its top military priority. 'This was underresourced, underfunded, undermanned and ignored for years,' White House spokesman Robert Gibbs said. 'The president is focused on ensuring that we meet measurable benchmarks. ... It's going to take some doing.'"

There's nothing particularly bombshell or out of character for that quote. I've been hearing the "it's Bush's fault" thing since Obama's campaign started well over 2 years ago. He owes Bush a great deal because in normal times there would be no chance a nobody like Obama could be president.

The problem for Obama is that it's now September 1. He's been president for a good amount of time now. He's building a track record. To blame Bush for the recent problems in Afghanistan is wrong and it's actually a lack of grace. The fact is that things happen in the world. It is not really Bush's fault that Afghanistan is heating up right now. Truth be told, it isn't necessarily even Obama's fault. Politicial leaders actually have less control over things than they think. It was cheesy and in poor taste to simply blame Bush. There was no need to blame anybody. Just deal with the situation as best you can. Why blame Bush, at this point?

The problem for Obama is that he doesn't appreciate that it's always easier to criticize as he did during his campaign. But after you're in office you begin, or should begin, to realize that it's actually a pretty tough job once you roll up your sleeves and make decisions within real constraints that don't lead to perfect outcomes. Obama should be realizing that by now. You would expect his appreciation for the constraints and real challenges Bush faced would humble him a little bit so that the nonstop criticism would at least be a little scaled back. But no. In the end, Obama is going to lose respect for this. Any man in any walk of life who endlessly criticizes deserves that fate.

What's Happening in Afghanistan and Pakistan?

2009-08-27T08:43:00.000-07:00

Not much it would seem, if you relied on the mainstream media. When this type of stuff happened under GW Bush it was headline news and evidence of how catastrophic his Iraq policy was. The death toll was conveniently provided on a daily basis back then.

http://news.yahoo.com/s/ap/20090827/ap_on_re_as/as_pakistan_blast
But now, with Obama, the ramp up in casualties since Obama has shifted focus to that region doesn't seem to spark the outrage it once did. To be kind, it is at least reported. There's just no outrage. It's Obama's now. We all know he can't be criticized.

I've said this repeatedly and I'll say it again. That is a part of the world we are best served to leave alone. There are real terrorists there. They do want to kill Americans. But there we are best served by a defensive strategy. Going there on the offense is a no-win situation. Defensive strategies that contain the potential damage are sometimes appropriate. There are simply too many potential suicide bombers who have nothing to lose and do not place much value on human life in that region for us to win by going head-to-head. Yes, Iraq is different than that place. There are a number of criminals in Iraq to be sure. However, Iraq had and still has a good chance of entering into the modern world. Relatively speaking, I do not believe that to be true of Afghanistan and the tribal regions of Pakistan. We need to get out of there as soon as possible.

Ted Kennedy and Liberalism

2009-08-26T02:38:00.001-07:00

Senator Ted Kennedy died last night. In the article it was stated that during the course of his 4 decade career in the Senate he "helped enact measures to protect civil and labor rights, expand healthcare, upgrade schools, increase student aid and contain the spread of nuclear weapons. "There's a lot to do," Kennedy told Reuters in 2006. "I think most of all it's the injustice that I continue to see and the opportunity to have some impact on it." Later, the article quotes him "I've benefited from the best of medicine, but I've also witnessed the frustration and outrage of patients and doctors alike as they face the challenges of a system that shortchanges millions of Americans."

As I read the article I thought about how wonderful sounding and pretty noble are these ambitions. On the face of it, who doesn't care about upgrading schools? My kids go to school. I want that. The spread of nukes? It's no good. Stop it. Healthcare for all? It would be great if all Americans could get the same care as Ted Kennedy. Who could be against that?

And yet, after over 4 decades, what thwarts these grand goals? Perhaps reality? Maybe? The problem for liberals, and why I can't be a liberal, is because society is far too complex for simple prescriptions to the challenges Ted Kennedy fought to remedy. And government solutions are not the best mechanism for addressing such inequalities. They actually can serve to hinder remedies. If the answer to every social problem were to have the government spend money or set up a program or provide a direct remedy for it, our myriad of problems would have been solved already.

Unfortunately, anyone who lives life recognizes over time that there are limits to what you can do in terms of time, money, energy, and people. As you mature you realize there are things you can and cannot do. Neither you can nor "we" can achieve all we set out to do. Americans of a college age are fed the idea that they can and should do something to change the world in one way or another. Often, as President Obama said at a college commencement speech, it is recommended they find meaning in their lives by doing government service rather than the menial, apparently empty pursuit of a business career.

I would suggest that the best place to start seriously addressing these problems is to start from the bottom up. You can start by being a faithful friend, spouse, employee, father, student, neighbor. Start local. If our energies were more directed to helping people develop strong character we might find that over time we actually have less social problems to address. Unfortunately the same liberal people who care about people in general don't stress individual character. They focus on the need for community and tolerance and the need to live well together. But how can that be successful if uniquely individual traits such as integrity, honesty, knowing right from wrong, and generally being responsible for your own actions is not stressed? You can't have a strong communal character if a collection of strong individuals with character don't exist within it. To develop character traits you do have to make judgments about what constitutes right and wrong behavior. Liberals are harsh judgers in the few areas they allow for it. But they don't focus on essentials. Government and a stress on community morality plays a role. But it is not nearly a complete answer.

This is not an excuse to be passive and sit back and watch injustice. Conservatives should be and actually are in my experience very passionate in supporting the local activities that make up a better community. That's good. That's more lasting. That's a reason I am a conservative who never got swept up by the grand sounding rhetoric that we should use government to solve every problem as Ted Kennedy espoused.

Hopefully Ted Kennedy will rest in peace. Hopefully we who follow him will be a bit more realistic, mature, modest, and local in how we approach solving problems. While it is foolish to think we can have heaven on earth, we may find we achieve greater success than he did if we go that route.

Outrageous Myths About Healthcare

2009-08-25T10:09:00.001-07:00

President Obama has slammed his internet, cable TV, and other un-American critics, like those who have gone to recent townhalls, for putting forth "outrageous myths" about his healthcare reform plans. Here are just a few myths to consider:

1. Death Panels. I blogged about this in a previous entry on August 16. To sum it up, yes there are no direct calls for a panel to decide who lives and who doesn't. If my brain shut off at that point and I were inclined to go watch daytime's Jerry Springer or Dr. Phil now I might be content to say "of course there'll be no death panels." However, by "cutting costs" at the same time you're adding to healthcare rolls and eventually rationing healthcare due to budget constraints, as happens in countries where socialized medicine has occured, you will eventually need to convene folks to decide how to best allocate scarce resources. In this case, the scarce resource is time, money, and doctor availability, and the person to whom this resource may not be allocated to is granny. A public option is a highway to socialized medicine. If you read this blog and you still don't understand this by now, go back to bed. I can't help you at this point.

2. End-of-Life Decisions. This is very similar to number one. No. There is nothing explicit on page x, y, or z on any of the healthcare bills that I haven't read that directly says anything along the lines of "granny: you've lived a long life. Don't you think it's time to go now? Living another 6 months will cost us too much. Do it for the team. Pull the plug." However, it is not unreasonable to infer that if this is passed, these decisions will take on more importance. We have an ageing population and scarce reasons. An insightful person could surely piece together how end-of-life decisions will be crucial in the not so distant future in light of massive budget constraints, government debt, scarce medical resources, and a growing number of people on government run healthcare rolls. So it's not in the bill necessarily but should we not really be forward thinking people? Bury our heads in the sand, perhaps?

3. Wait times for surgery will increase. It is getting ridiculous that anybody would consider this argument a myth. Again, budget constraint. Time. Cost. Scarce resources. Are more doctors going to appear? Can nurse practitioners do surgery? Money. Money. Did I say MONEY! Counter intuitively, this actually could be a myth if more doctors pursue specializations in relatively higher paying surgeries rather than lower margin family practices. So, if more doctors go in surgery specializations where the money is, it's possible this could be a myth. Although, the lawyers will need their piece and this could actually discourage it. Overall, this is not a myth because of the experience of other countries with socialized medicine. Prez: Logic is not on your side on this one.

4. Illegal immigrants would get coverage. Well, here the President is clever because they caveat this by saying they wouldn't "automatically" get coverage. But of course they will get coverage because, as the president said a few days ago, we're a compassionate society. I don't necessarily disagree with extending all human beings coverage in dire circumstances. It's just that a myth is not a myth when it's true and you said it yourself Mr. Prez.

5. This would pay for abortion. Again, would it "have to" pay for abortions or would it simply pay for abortions? Just like I don't "have to" have an abortion but if somebody does decide to do so, my understanding is that this will pay for that abortion. It is morally reprehensible to take money from citizens, a majority of whom no longer agree with it, to finance those who do make this ugly choice. The question is if it funds any abortion. If so, than it does pay for abortion and is justly repugnant and not a myth. I don't honestly know if this is in the bill. If not, great. I'm happy to be wrong here if this is indeed a myth.

6. Private insurance will be eliminated. It won't be eliminated but it will sure become an unattractive option for all those now receiving "free" healthcare or to those employees who pay more than 8% of their payroll on providing healthcare. Technically, it won't immediately eliminate private insurance across the board. Down the road it may. In the short term, it will eliminate private insurance options for many individually because their employer will drop it and/or they can't afford it on their own as compared to the "free" or cheap public option subsidized by a government that doesn't have to earn a profit because they can always print new money. Private insurance can't do that. It depends on who's perspective you are talking about. But from the perspective of many, this bill will essentially eliminate private insurance as a viable option in the near term.

All in all, it's a sad state of affairs when even somebody as dim as me can blow a whole through President Obama's rhetoric. I welcome his attempt to explain this and make clear what he intends. Go sell it. The problem is not the salesmanship so much as the product. You may be able to sell ice to eskimos but don't try to sell me poop in a bag and tell me it's lunch!

Clunkers Ends. Auto Sales Collapse to Follow.

2009-08-24T10:53:00.001-07:00

I trust that by now everybody who needs a new car and happens to have a clunker to trade in has done so. The program ends tonight. Dealers are assured they will get their money even if the government bureaucrats haven't been as efficient as they no doubt will be with healthcare when it comes to paying them the $3,500 to $4,500 they're owed. It's been a solid couple of weeks of sales for auto dealers with all these new cars movin' on out the door. It will undoubetedly have an impact on GDP and jobs in the next series of reports that come out. Happy days are here again!

And now comes the fun part. As surely as the gimmick spurred new car sales it will crush them in the weeks and months ahead. It's a sad state of affairs. Auto dealers should probably not spend the wad just yet. The likely forecast is rain, rain, and more rain. The busy season was fun while it lasted wasn't it?

Oh and don't forget, soon we will enjoy "Cash for Refrigerators". http://news.yahoo.com/s/bw/20090824/bs_bw/aug2009db20090821304909
This sequel is sure to be action packed. So, consumers don't put the credit cards back in the wallet quite yet. You too can be part of $300M taxpayer giveway. The budget wasn't as high as the $3B for the original. But it's sure to have laughs, love, action. Shop early and often. I hear they're already planning for a trilogy to be announced soon at a theatre near you.

Why We Didn't Crash

2009-08-24T06:36:00.000-07:00

Today I left a comment to E.J. Dionne's Washington Post article "Why We Didn't Crash". http://www.washingtonpost.com/wp-dyn/content/article/2009/08/23/AR2009082302034.html
It actually angers me that space in a national newspaper is taken up by people who have basically nothing substantive to add to the conversation. Dionne is a good example of a guy who has been around for a long time and is now just someone who is famous for simply being famous. You know him so you read him but the guy is not much more substantive than a fat uncle who cherishes the simplistic lessons he learned at Woodstock.

----
Mr. Dionne,
The premise of this article is so completely ridiculous, it's hard to imagine how you keep your job. You could certainly argue that Ben Bernanke, who you don't mention by the way, was ultra-aggressive in his handling of monetary policy by essentially printing money via open market operations and holding fed discount rates at 0%. It's hard for banks not to recover to some degree when they have such low borrowing costs and the ability to lend at higher rates.

On the other hand, what fiscal policy measures has Obama conducted that would lead you to believe he spearheaded a "recovery"? The "Stimulus" money hasn't flowed through anything yet. His regulatory actions have, if anything, further confused the markets, and his proposals wreak havoc on business people who need to mkae long term plans. Oh, plus the massive debt that his policies, his, have created. Putting money on a credit card to usher in growth, is not serious policy to lead to sustainable growth.

You proceed to imply that we're out of the mess. You're right in a sense. We didn't crash in the short term due to Bernanke's manipulation of monetary policy. You confidently argue that "things could have been a whole lot worse" but you don't know that. They could have gotten better if prices had been allowed to adjust in various markets and the Obama administration allowed things to fail. There is obvious short term agony in this. But markets work like this and it's best for the general welfare in the longer term and the only way to a sustainable recovery. There are no short cuts. The quicker things fail, the quicker they can adjust provided there is transparency in how policymakers conduct themselves.

You also don't seem to appreciate that investors make long term business cases and this president's intervention is a net negative on that. I can vouch for this with my own company. We are planning cuts in the years ahead and not expecting growth. People form long term expectations. With Obama and bigger government, you don't take risks or plan optimistically if you are even somewhat reasonable.

A Debt of $9 Trillion Over 10 Years

2009-08-21T16:45:00.000-07:00

And that does not include the $1 Trillion plus in national healthcare. That's up from the Obama team's forecast. Over the last several decades we accumulated a deficit of over $11 Trillion, to put it into perspective.

http://www.reuters.com/article/newsOne/idUSTRE57K4XE20090821

I don't need to comment today. This speaks for itself.

Healthcare: It's a Jesus Issue Now

2009-08-20T09:51:00.000-07:00

Our president has declared that "we are God's partners in matters of life and death". As a Christian, I have always believed that God works His will through the people He has created. We are to live by faith knowing we don't understand everything. He certainly loves His creation and gives us gifts, knowledge, creativity, and all that makes up a human person. But partners? I don't know if I am a "partner".

This also assumes the "we" he is referring to is individuals. In that sense no, I am not a partner with God. If he is saying the "we" is liberal democrat politicians and the government in general is a "partner" we have real problems. The government is allowed by God and is ideally intended to serve the welfare of the people in practical ways. Taking it to mean that the government has the authority or in some sense is a unique partner with God or even close to that level is fraught with danger.

I know that I shouldn't give Obama too much credit for thinking this through. He sort of says stuff and you think you get the idea of what he's saying. I obviously don't think he wants to institute a theocracy administered by the Federales. If Obama was a song he'd be good melody, harmony not so great, and the substance of the words would be pointless and circular. He's a good 3-minute tune but you have to make sure you don't think too hard about what he's saying.

Is China Really All That and a Bag O'Chips?

2009-08-19T06:09:00.000-07:00

I have long suspected that American reliance on China to fuel its growth for exports and as the lender who finances our debt has always been suspect to me. China seemingly has pockets that don't end. How is everybody else struggling but they seem flush with cash? How do they do it?

I confess to not having an army of data to support these assertions. Maybe China has been incredibly responsible and foresighted and is well positioned for this time. Maybe, as I've read, China has an unsustainable, easy money policy that may be setting up their economy for a major crash. Plus, it is always easier to grow from low levels but there comes a point when growth rates are harder to come by as you get bigger and bigger. This may not be good long term news for America if our sugar daddy's funds start to go south. I know China has been buying up commodities in everything from diamonds to aluminum to whatever else in places around the world. What happens if these investments don't pan out exactly as envisioned?

I am a little skeptical about China. It's just my intuitive sense that all can't be that great. I think it's something to watch.

The Public Option. Ah, it Ain't That Important

2009-08-17T15:41:00.000-07:00

Our president is apparently changing his tact on a public option run by the government. Where will we get hundreds of billions in new efficiencies to be squeezed out of America's 7,500 hospitals now? A cooperative. I am a little concerned because with only more than 1300 private health insurance companies in the private market, what will the lack of one more option do? The reluctance to tackle this monopoly is a bit confusing. I guess we'll see the details of our president's new plan when Congress writes it for him. He can't be expected to write his own plan and lead here. C'mon people. You didn't elect him to seriously lead, just to give good speeches, spend trillions of dollars of borrowed money for the short term, and just be a generally cool guy right? He's a great campaigner. Not so great a president.

Government Death Panels and Dear Ole Grannny

2009-08-16T07:01:00.000-07:00

Where is there talk about goverment death panels in the recent healthcare bill? As far as I can tell it is nowhere to be found.

Does this mean that because it is not in the current bill in sect. x.y.z there won't be death panels in which government bureaucrats decide whether or not to "pull the plug" on Grandma? No. The problem is that in the long run the cost of providing healthcare will increase dramatically as more and more migrate to a "free" or lower priced piblic healthcare option, and business will as I've outlined in detail in previous posts. As costs increase and run up against a predetermined budget constraint which limits how much more can be spent, bureaucrats will need to decide how they deem it best to allocate scarce resources. Don't worry because the new 150,000 government bureaucrats the Federal government needs to hire to oversee it will do their best.

As these bureaucrats or a national health board or something like that meet they will need to provide guidelines as to what constitutes cost effective treatment. If they have a system with a limited number of doctors and nurse practitioners and a caseload that is more than they can handle, invariably a choice needs to be made given the immediate situation. If this means we have at any given point in time, come say 2022, and there are 8,000 kids under the age of 18 and 11,000 Grandmas in need of immediate care, the kids will get likely get the treatment. Grandma may die. These actions and the subsequent result is probably why some critics are calling it a death panel.

It may be very reasonable in light of the situation from society's standpoint to treat the kids and not Granny. However, the better way is to expand the constraint and not put authorities in the position of having to make such a decision. We should encourage more doctors, improve incentives via having people pay more for what they use, make patients more accountable for their choices, and incentivize industry and especially doctors to integrate technology to better run their practices. Oh, and we need desparately to do away with lawsuits so that doctors don't prescribe treatment and make referrals solely for lawsuit avoidance reasons, as they do in droves right now. To argue that a government public option will achieve these objections and at lower cost is truly laughable and actually a bit embarrasing.

So, yes it is likely that getting the government into healthcare will at some point require death panels. I know it is not explicitly in the bill. The purpose of analysis and an analytical mind though is to draw connections. Any sheep can read something as though its a technical manual on how to setup a stereo. As the President likes to say "I am willing to have a serious discussion" as he trivializes his opposition. So, yes, let's be serious and start thinking about the future consequences of our actions today.

Bernanke's Gift Has to End (At Some Point)

2009-08-14T16:07:00.000-07:00

I have mixed feelings about Ben Bernanke, the Federal Reserve Grand PooBa. On the one hand, the man was shrewd. He basically pumped so much money into the economy and kept Fed discount window interest rates so low that banks almost couldn't help but survive. His actions probably did save the economy from a financial collapse. The low interest rates have helped enormously. He's also been fairly transparent and predictable. All the money he's pumped in via open market operations and buying various instruments has helped in the short term. You could certainly argue that he did a wonderful job in the short term. Monetary policy is what is driving this short term "recovery" despite the daily barrage of nonsensical economic policies from our President.

On the other hand, it can be argued that he is artificially propping up a host of assets that need to come down to levels that reflect reality. The school of thought, which I subscribe to, is that the quicker prices adjust, the quicker we can truly recover. The fact remains that people are still borrowing too much and the housing market is still in serious danger. If and when interest rates rise, it will swamp a whole lot of people who borrow, which is most homeowners. His low interest rate gifts can only go up from here. And he can't essentially monetize the debt indefinitely. At some point the private economy has to lead the way out of the recession and not clever Fed policies designed at manipulating key variables.

My own sense is that this recession is different from previous ones. The reason is that some key variables and incentives are in place that likely will not last forever. Interest rates on 30 year mortgages are extremely low and inflation is extremely low. Where can they go? In addition, welfare benefits can't run out indefinitely, an $8K first time home buyers credit will end, and even gimmicks such as cash for clunkers aren't going to be funded for much longer. This is in contrast with 1981-82 where the rates were high and you could see how lowering them could prove beneficial. In that case, there were obvious barriers to growth and obvious remedies to remove them even if they were indeed painful during the cure phase. It's the opposite this time. The barriers are not as clear and the issues are a little more complicated given the breadth of the current crisis.

So while I applaud his efforts given the hand he was dealt, in which he had a part in dealing due to his tenure throughout the decade at the Fed, he cannot change the underlying substance of what's really happening in the economy. Consumers are horrified because of jobs and businesses, including my own, are making business plans that include cost containment strategies moving forward. I don't have a wealth of data sets to pore through as he does. From what I see and hear from people with money is that we will certainly get beyond where we were. How could we not given where we were? But we are not in the midst of a true recovery. That's not necessarily Ben's fault. What is Ben's fault, possibly, is that his policies delayed a true recovery because they were the artificial actions of a technocrat. I can't critique him too much because monetary policy is being conducted in a way that is at least recognizable to sensible people. Fiscal policy is another matter.

Ben seems between Barrack and a hard place.

New Study Says Fat People are Stupid and Lazy

2009-08-13T07:14:00.001-07:00

According to Yahoo News... http://news.yahoo.com/s/livescience/20090812/sc_livescience/highfatdietmaymakeyoustupidandlazy

Maybe donuts are to blame for Homer Simpson's foibles...

Retail Sales Consumption

2009-08-13T07:00:00.000-07:00

There is an economic news report today that retail sales fell 0.1% in July even as the cash for clunkers (CFC) program was in full gear. This was below the already low expectations and surprising to most economists. Why should it be?

If people are incentivized to buy a car wouldn't you think they would have to offset that expense somewhere else? Unless you expect people to buy a new car and stock up on that new HDTV set they've always wanted in the same month. Who needs to have a budget constraint?

This illustrates the short-sightedness of government policy with the CFC program. Retail sales went down in the short term as people shifted the basket in terms of what they bought in July. The government will also find that people will shift their basket over a longer time horizon when auto sales plummet in the late Fall and into the Winter. Why would they do this? Because people with an interest in buying cars are likely to be doing so now. This will likely also happen in home sales when the $8K first-time buyers credit expires in November. You can expect to see home buying retreat late into the Winter and into next year because $8K is a nice chunk of change.

The Obama economists are essentially playing games with incentives motivated by the stuff they learned in microeconomics classes. The idea is that you try to alter behavior and shift the demand curves out by making goods relatively less expensive. These micro-econ models run up against the problem that they aren't taking into account any longer term timeframe due to the fact that the increase in temporary purchasing power will cause the demand curve to shift back in a short period of time. So long as we have good Q3 growth who cares, right?

The Best Spender in History

2009-08-12T12:04:00.000-07:00

I found something that makes Barrack Obama the greatest president in our history -- in this one respect.

“The Obama administration is projecting that when the current budget year ends on Sept. 30, the imbalance will total $1.84 trillion, more than four times last year's record-high.”

Without the stimulus it may have only been about twice as much.

There is a website I go to occasionally to get deals on cigars (cigarbid.com). I can attest to how spending on stuff you like is addictive. That site is great. Unfortunately, you spend more than you ordinarily would and end up valuing the higher quantity of good stogies you get less. For Obama, at some point no matter how good you think the deals are, you have to stop spending and be disciplined. Whenever I have gone on a spree at cigar bid, I am reminded of my stupidity when it shows up on my statement at some point. I don’t think Obama’s got that bill yet. Or maybe he really doesn’t care about it since we need 3rd quarter, credit card inspired growth… All he wants, I think, is your approval for the illusion that he's turning things around in the here and now.

FedEx is better than the Post Office

2009-08-11T11:39:00.000-07:00

President Obama gave an analogy today about FedEx and UPS doing better than the Post Office. The implication is that if we have a "public option" your insurance plan and private insurance will do great. Of course, all he wants to do is give a menu for people to choose. Who can be against something so simple? C'mon people. Is he saying that because the Post Ofice sucks, his public plan will also suck? Why introduce it if it's going to suck? I don't know... who can understand the point of today's lesson in Obama-World rhetoric. A couple of things to note about this.

First, healthcare is infinitely more complex than a postal delivery system. To be sure, FedEx and UPS have advanced supply chains and excellently integrate technology into their business processes. But it is a fairly simple system to understand from point-of-order to point-of-delivery even if the quality of the execution differs between FedEx and the Post Office.

Second, the Post Office doesn't have as many stakeholders nor does it make life or death decisions. It doesn't make up 1/6th of the U.S. economy. Nor does it have major medical and technology advances that make treatment life-saving but also expensive.

Third, the government doesn't require certain mandates on what FedEx or UPS can or cannot deliver. UPS doesn't have limits on what it can charge or who it can serve or where it can go and when.

Fourth, Obama is not simply offering another option. There are already over 1,500 insurance options for people to choose from regardless of their employment. He is pricing it (8% payroll tax and a 2.5% individual tax) in a way that makes it fairly compelling for small to mid-size employers to switch. It is also clearly a bridge to a national healthcare plan and results in significant new taxes (up to 5.4%, and sure to grow, for the evil millionaire people) to fund it.

This is not an exhaustive list. But the bottom line is that comparing healthcare to delivery services is another example of how Obama is adept at creating false arguments to show a supposed parallel. This type of misdirection is actually condescending if you think about it. He is very good at offering rhetoric. He doesn't offer solid analysis but for people who aren't all that thoughtful and/or don't have the time to really think about what he's saying, you might be charmed.

Hello Doctor

2009-08-08T17:54:00.001-07:00

According to a Wall Street Journal article, dogs get better treatments than humans in Britannia. And I hear the dental care is da best.

Is the Labor Force Shrinking?

2009-08-07T11:32:00.000-07:00

Following on the previous post, I can't help but think it is bad news that 637K people dropped out of the labor force in one month. If they had stayed in it during July and been counted as unemployed, the unemployment rate would have actually been 9.8% insted of 9.4%. This variable goes up and down from month to month. When people are encouraged and out looking it tends to go up. When they're not, they drop out. Plus, the third paragraph of the BLS release says that 584K additional people in July are now considered long-term unemployed. That's a massive number by the way.

Suppose all 637K people re-enter the labor force and come back and don't find work during August and there is another 300K job losses. The 637K plus the 300K assumed new job losses would be added to the existing 14,462K. This would amount to 15,399K unemployed persons and an unemployment rate of exactly 10% assuming the total civilian labor force stays constant at 154,504K people. So how does a massive rise in this number portend a recovery?

Call it a mystery and get Sherlock Holmes on the case because I want to know why so many people are no longer counted as being in the labor force? Did these people drop off the face off the earth? I know we're looking for good news. But geesh! Have we all lost our minds?

"Only" 247K Jobs Lost in July

2009-08-07T05:54:00.000-07:00

That is a marked improvement from previous months. http://news.yahoo.com/s/ap/20090807/ap_on_bi_go_ec_fi/us_economy

It's interesting that if you look at the actual BLS website http://www.bls.gov/news.release/empsit.nr0.htm report in Table A, that the civilian labor force and actual employment is shrinking and that the number no longer considered in the labor force is increasing. This indicates that people are dropping out of the job market and are no longer apparently looking for work. This would not be counted in the unemployment rate but is very real if you are one of those 637K people who dropped out in the month of July.

It looks like manufacturing was the big gainer because GM and Chrysler plants reopened. Manufacturing still lost jobs but not by as much in past months. Government, education, and health, and tourism were the only industries that actually gained jobs. It will be interesting to see over the next several months if the dribs and drabs of job losses and if private sector job creation will occur outside of the basic staples that did report job growth. In the months ahead, you should expect to see manufacturing and construction job growth due to the government credit card spending. Of course that's not real long term growth, just a wealth transfer from taxpayers via government spending. It will also be interesting to see what happens in housing now that the prime buying season is coming to an end and banks are picking up the pace on foreclosing.

We are not yet out of the recession and into recovery. We will recover when professional services, retailers, and manufacturing (not due to government spending) start to hire. It is always the private sector that leads to a recovery. Government, education, and parts of healthcare do not meet that criteria.

How Your Job is Affected by the Healthcare Bill

2009-08-07T04:13:00.000-07:00

Suppose you work for a company with 50 people and everybody's salary is $60K annually. Your employer has a payroll of $3M. They currently provide everybody with a healthcare plan that costs them $600 per month, $7,200 per year per employee. You pay the remainder. The $7,200 per year times 50 employees amounts to $360K per year that they have to pay to compensate their employees for the healthcare benefit. In addition, it is very typical for the employee to kick in something, usually about 15% to 25%. Suppose, for the sake of this example, you kick in an extra $200 per month or $2,400 annually. This adds an extra 120K to the cost for all 50 employees.

The employer now has a "public option" to pay an 8% tax on his payroll of $3M. This would cost them a total of $240K. Compared with the $360K they were paying and the additional benefit of $120K that employees no longer have to pay this is a total benefit now of $240K (from $360K + $120K - $240K = $240K). This amounts to a $4,800 per employee. I am a little unclear on how the 2.5% income tax on individuals who don't have insurance works. But if it applies to the $60K earner it amounts to $1,500 per employee. This too is cheaper than the employee paying the extra $200 per month previously. If I understand it right, this tax would reduce the $120K of the employee share amount down. The 50 employees would pay $75K now instead of the $120K they currently have to pay. Still a compelling reason to "voluntarily choose" a "more competitive" public option because of the way the feds have priced this. This only compares the current out-of-pocket and not the future out-of-pocket costs more likely to be incurred if employees working for a private option company get insurance on their own.

The argument President Obama puts forth in support of this is that if you like your health insurance you can keep it. Maybe. Maybe not. If your employer decides to pay the tax you have to buy it yourself out of pocket. Buying a personal family plan can easily run between $500 to $1K per month. Compared with just paying $1,500 annually or $125 per month, you've got to really love your private health plan. Suppose the employer does decide to keep private insurance. If his competitors do not, they can cut costs and can sell what they're offering at less cost. There is also a proposal to add a tax to employers who keep private insurance though the rate is still TBD. This would make it even more expensive for an employer to maintain private insurance and the incentive to move to public would be greater still.

Ultimately, costs get passed on to consumers. This hurts the company who doesn't go for the public option. The employees will likely have to take a pay cut to compensate for the high benefit cost. The competitors with the public option company may increase salary because they get lower quality healthcare. Overall, workers who don't value health benefits will be likely to go to a job with a public option and vice versa.

Overall, there are serious ramifications to the health proposal that I don't think policymakers are seriously advertising. This bill is very likely over time to further complicate long term employment and is likely to usher in a higher "structural unemployment rate" as is the case in Europe where they routinely have 10% unemployment rates due to these types of policies. Maybe this is what America wants. Obama repeatedly and clearly said he was going to remake America. Is this what you had in mind?

Oh No - Not the Brooks Brothers Crowd

2009-08-05T17:49:00.000-07:00

Earlier I heard about how our uniter, post-partisan President Obama took a shot at the "Brooks Brothers crowd" who is protesting the trillion plus dollar healthcare plan he's proposing at town hall meetings throughout the country. Since I like to wear Brooks Bros, I enjoyed this comment from our man who pledged to bring us together.

This reminds me of the ridiculous types of speeches FDR used to give about the evil rich. I especially liked his "grilled millionaire" speech for its simplistic stupidity in advancing class warfare. Have Brooks Bros wearers become the new face of evil in America? Who knew? I just became a member of this crowd because I like the non-iron shirts.

When Does Federal Deficit Spending Stop?

2009-08-05T17:10:00.000-07:00

It looks like the Senate is going to extend the "cash for clunkers" program. They spent $1 billion so far and now are going to add another $2 bills. It's shocking that this is now considered such a low amount. Hey, only $3 billion total! We got away cheap today.

At what point does the Obama administration and Congress feel that they're spending too much money? Do they have an arbitrary number they might reach where they say, ok we won't spend another trillion or hundred billion or whatever else this year? I realize federal budgeting is not exactly like personal budgeting since I can't double my spending and than just print more money for myself or tax others to get the extra income I need to support my extra spending. But still. Doesn't there come a point when somebody in charge becomes seriously concerned about the spending? Just curious.

Federal Tax Receipts Go Down. But We're Creating a New Entitlement?

2009-08-04T06:08:00.000-07:00

The following picture tells a thousand words. It shows how individual and corporate taxes paid to the federal government have plummeted during the last year. Yet, we are spending trillions and starting a new major public healthcare option that will eventually lead to socialized medicine. I guess so long as the credit card spending hits in the 3rd quarter and GDP goes up temporarily, it's ok? Equating Federal tax revenue with federal spending would be a responsible policy. The revenue is the source of all the federal spending that Obama wants. At some point the well runs dry. This is not just Obama's doing since previous presidents have run budget deficits. But Obama is taking deficit spending to levels that are well beyond what his predecessors did for a false hope called "stimulus". If ever we needed a pro-business economic policy and a president and congress who understood how to help business it would be now.

Goodbye Doctor. Hello Nurse Practitioner

2009-08-03T10:48:00.001-07:00

http://news.yahoo.com/s/time/20090803/us_time/08599191422200

There aren't enough primary care doctors to support a national health "public option" sort of system. So get to know your nurse. You'll soon be seeing more of him or her...

This is actually an interesting idea. It's a way of getting around the doctor shortage problem and having lower paid people do diagnosis that doctors previously did. It's virtue is lower cost. Its drawbacks are:

It is hard to argue you would get better quality care overall. Even though doctors don't spend more than 5 or 10 minutes with their current patients, why should we believe NPs would do so? You would now get 5 minutes with an NP rather than a doctor.
It's also hard to believe that nurse practitioner's wouldn't eventually demand higher salaries given that their workload and responsibilities will dramatically increase. So in the long run the cost savings would thin out a bit.
Would have to be concerned with legal issues if lesser trained NPs prescribe medicine and have more errors relative to the doctors they're replacing. I've got to believe there will be some lawsuits involved with NPs recommending things that may be above what they know.
Are NPs currently doing nothing at a hospital? I assume NPs are busy and that they're not idle. So where is the new army of NPs going to come from to replace or takeover from doctors the influx of caseloads? Isn't this just a shortcut where the idea is to train people on a relatively easier track than the M.D. route?
Could lead to even more specialization for better doctors. If a doctor is now essentially doing the same thing as an NP or just an overseer for extreme cases the NP can't deal with, why would they get a massive pay boost from a hospital if NPs are doing most of the work? If a doctor is good, why would they put up with getting squeezed by a government payer who is looking to "save money" by paying them less?

Overall, we're now ratcheting down the visit a notch. But quality will be the same. What do doctors know anyhow? We should have done this years ago (assuming it was just this easy).

The Road to a Single Payer Healthcare System

2009-08-03T09:07:00.000-07:00

Obama said that is his ultimate goal in an interview he gave two years ago. It's in the following video: http://www.breitbart.tv/uncovered-video-obama-explains-how-his-health-care-plan-will-eliminate-private-insurance/

It may take 15-20 years to get there because he said you can't get there immediately. But the man has a plan even if he's not honest and open about it.

This is why people distrust politicians so much and why Americans have become so cynical about the whole process. If only they would lay out the issues in an honest and open way they might get more respect. On the other hand, they are probably right in calculating that we won't vote for them if they are open and honest. It's an awful feedback loop. The country is becoming worse off with every day that passes because of it.

Eventually it Has to Happen On This Road

2009-08-02T18:19:00.000-07:00

Obama is not ruling out his campaign pledge to enact tax increases for those earning less than $250K. http://blogs.abcnews.com/george/2009/08/geithner-wont-rule-out-new-taxes-for-middle-class.html

I hope you're not surprised. A profound rock band once sang a dittie called "every road has its thorn." America's stepping into bushes we've never stepped in before, at least not during peace time. So eventually you're going to get pricked by one. Every cowboy's going to be singing a sad, sad song after the Obama experiment.

In the Long Term, We're All Dead

2009-08-01T16:55:00.000-07:00

The economy (in terms of GDP specifically) is actually likely to grow modestly in the 3rd quarter and into the 4th quarter. This also depends on the housing market and whether or not the housing market dries up and foreclosures rise due to increasing unemployment. So it's not a sure thing.

The reason is that any improvement over a dramatic decline will result in relatively higher growth rates. The primary item that will drive modest short-term growth will be business purchases. The businesses that are still surviving did not buy new products and buffer up their inventories during the dramatic decline late last year into early this year. Businesses essentially ran down what they had on the shelves and it's about ordering time.

However, after that runs its course the sugar high due to all the government borrowing, monetary policies such as zero interest rates and money printing because the Federal Reserve is buying treasuries (which floods the economy with cash to those from whom it buys them), and Obama policies being enacted will bring us back to a day of reckoning starting later this year and into next year. A portion of the short-term porkulus money will also create some jobs for some such as my iron-worker friend.

But all in all, my predictions, which I made for the end of 2010, still hold. I see nothing yet to change my opinion of the course of events. We will float through this year with the major economic indicators topping out and leveling off. During the next few years the bill for the credit card borrowing will start to come due. Eventually, we have to pay off a few trillion that we've borrowed. Unless the economy dramatically reacts to it and pulls off some major growth, we're in some real long-term trouble with that. We will have social security, medicare, and the unveiling of yet a third major entitlement to fund - a growing national health care program. Long term it's not a pretty picture.

I'm reminded of what John Maynard Keynes said "in the long term, we're all dead". That seems to be the view of the president. Live for today and let somebody else worry about tomorrow.

Welcome to the Idiocracy

2009-08-01T04:39:00.000-07:00

News that GDP fell by 1% instead of the 1.5% that economists expected has been taken as a sign that happy days are here again. Maybe they are.

The unemployment numbers will come out next Friday. I guess the best approach to take is to say that we expect them to go from 9.5% to 12%. When they come in at only 9.7% because only another 400,000 people lost their jobs we can all celebrate the good news.

This latest news is being touted, by Obama and his essentially state-run media mouthpiece, as a sign that Obama's combination of tax cuts and government stimulus are working. The two main drivers of growth were government and net exports, not consumption and investment (from the classic Y=C+I+G+nX macroeconomic model). The third quarter is going to be gangbusters and from here on out we should be cautious but assured that the steps our president has taken have enabled us to move forward. Thank you leader. For it was your noble actions of borrowing and ramping up the debt that has led has out of this morass.

Cash for clunkers may add huge numbers to economc growth over the next quarter by having government borrowing prop up car consumers and dealers. Hey, what's a few billion in taxpayer money to subsidize it? I like having a portion of the taxes I pay go towards giving my neighbor a $3,500 to $4,500 discount on his new car. Once the guvmint "freebie" ends it is likely car sales will go back down. What does it matter? We're happy now, GDP will probably grow because of it in the 3rd quarter, and progress is being made so shut your cakehole!

At this point, any good news is welcome. The fact that things aren't as bad as they could be or were is encouraging. This is truly a lesson that if you have low expectations, you will be rewarded if you make any progress. My goal for today is not to hurt my back and to get enough oxygen so I can breathe. Also, maybe I'll take out the trash and walk around a little. If I can do all these things I will declare it a good day.

An Example of Stock Market Confusion

2009-07-30T07:04:00.000-07:00

Today you may notice that the market indexes are up by about 1.5% so far this morning. This, despite a poor earnings report by Exxon-Mobil and a report that new unemployment claims rose by 25K rather than "only" the 16K economists expected. I quote:

"Investors also welcomed a weekly unemployment report that showed the number of Americans continuing to collect unemployment benefits unexpectedly fell last week to 6.2 million. Economists polled by Thomson Reuters had expected that figure to rise to 6.3 million from 6.23 million last week.
"The number of new unemployment claims filed increased 25,000 to 584,000, more than expected, though the increase was mostly due to seasonal distortions. Economists were expecting a rise of 16,000."

The fall in those collecting unemplyment benefits may be due to the fact that states have limits on how long the enemployed can collect benefits, or the long lines that people are waiting in to sign up, or that for many their allowed time may be running out. Nevermind. It's all good in the stock market.

This may be a new lesson for me. I had previously thought, based on years of following it and investing in it, that the stock market followed a reasonable logic and that it wasn't almost entirely psychological. I am still not prepared to say the stock market is a complete ponzi scheme or nonsensical house of cards. But if stocks go up by, for example, 11% in a two-week period solely because of "better than expected" but still bad company earnings report, I will start saying that. If that's the case, and this continues, than Obama and the nutty liberals may have me as a sympathetic friend when they go to regulate this house of cards.

I still am not there yet.

What's Happening in the Stock Market?

2009-07-29T17:04:00.000-07:00

I just want to acknowledge that I have no clue why the stock market has risen by over 30% and is staying there since earlier in the year lows. I do understand the explanations given as I look into it. It's psychology and not logic. That only lasts so long. I understand why it went up in the first place. I just have no idea why it is persisting and has not yet come down from 9,000 for the Dow Jones. It should not be more than about 7,500 to 8,500 max within a few months. All of the indexes are clearly overvalued.

What mystifies me is that it should have came down earlier in the Summer. I still believe it will come down so that if you can get your money out of stocks and into bonds, now is the time to do so. Maybe transfer funds from stocks to fixed income funds within a 401K or something like that But, unless this market does go down, I may be terribly wrong. Only time will tell. There is no logical reason for the markets to be this high though.

Afghanistan. Turn Around. Go Home.

2009-07-28T16:20:00.001-07:00

I've said this to friends of mine very frequently. Iraq is hard, complicated, but it is potentially a democracy. Afghanistan is not.

As a person who is a supportive admirer of the U.S. military with a good idea of what they're capable of, I say, with all due respect, there is no way we can accomplish our objectives in Afghanistan. They are incredibly well trained and creative fighters with nothing to lose. The terrain is impossible to navigate for non-natives, which they use extremely effectively, since much of it is so rugged. And there is much of it since it is a huge country. Also, the customs are completely foreign comparable almost to nothing else in the world.

There are some people you just leave alone.

Iraq had a history and people who could adapt to modernity because they once were known as Babylon and had a great empire and great history. They are commercially savvy. I also believe Iran could turn around down the road. There's hope there. But Afghanistan is literally like taking a trip to a land out of Lord of the Rings.

I am not a person who is scared of adventure and risk provided there is a potential for reward and some geopolitical benefit that can be derived. But what's the point of going in to Afghanistan? What - Go git Osama? Please! Do they have oil? No. Are they in an important locale? No. Has any foreign Army ever won there? No. America needs to seriously think about what we're doing in Afghanistan.

Some Cheerful Economic Predictions

2009-07-28T09:25:00.000-07:00

It was announced that new home sales for June went up by 11%. Were it October, an 11% jump would be something. But May is a good time to do construction. Naturally, the media is excited regardless of the specifics.

My predictions, that I first made as early as January, are as follows:
1. Unemployment will reach 12% by the end of 2010. I made this prediction thinking that with a normal president a recovery would be well under way already. With Obama, we have massive debt spending and delayed fiscal lags with the slow flow of stimulus. The fact of fiscal lags and that this would happen is standard econ textbook 101. No surprise with how it's working. The only surprise was that the "Stimulus" was attempted in the first place given that we learned this long ago. With a normal president we would have seen unemployment top out about now. But this guy is going to easily cause another 3% to 4% more because of the small business taxes on all the greedy millionaires to pay for healthcare, cap and trade, and other assorted nonsense. He is creating uncertainty as well by politicizing things. Banks aren't lending, and they're smart to some extent not do so. They're now accountable not only to their shareholders but to their new TARP government masters. You can't take risks in that environment.

2. Interest rates will probably rise modestly but not dramatically. This is actually a pretty good outcome of a situation where nobody consumes all the liquidity the Fed has pumped into the economy. The scale of the money they've pumped in has been dramatic and yet still no effect. That itself is remarkable given the sheer scale of what they've done to essentially print money and give banks the opportunity to borrow at 0% from the Fed and at 1 to 2% to their depositors. And yet they're still not lending. Again, you can't take risks with the kids in control.

3. Inflation. Similar to interest rates. It will probably stay tame. That's my bet for the same basic reasons I mentioned before.

I think the stock market will start to tank. I have no explanation for why the Dow average is at 9,000. I am mystified by it. If it stays even above 8,000 by the end of this year, I will be shocked. I will confess to being way off if that happens. But the current stock market level makes no sense. Will wait and see.

I think Obama's healthcare is not going to pass in its current form. He needed to get it done because his poll numbers are tanking as more people realize how his policies are ridonkulous and cartoonish. "Go into debt to prop up the economy" is, with all due respect to Keynes and Paul Krugman (who I don't really respect), not really an answer. Once the August and September unemployment number come out and we see another million jobs lost and the rate goes up to around 10%, his poll numbers will go further south and it will be that much harder to pass this nonsense.

We will see what happens. I think most of my cheerful predictions are on target. I don't want them to be. But I didn't vote for Obama. If you did, be happy because this is what you voted for. I hope your job isn't the one that's lost because your rich boss has to layoff people. View it as an opportunity to learn something.

National Health Care Saves Money - Huh?

2009-07-24T04:52:00.000-07:00

Let's get this straight. If national healthcare passes we will actually cut down on government spending and the overall costs of providing healthcare will decline.

If this makes sense to you, you're probably not reading this blog. If this makes sense to you, you may be unable to read.

There may be a social welfare argument regarding giving the uninsured insurance and incurring higher costs to do so. That's a legitimate argument. I don't believe a government plan is the best alternative available to acheive that goal. But it's an argument. Where the president goes astray is when he argues that the costs will actually go down. This is a child's argument, suggesting that hard choices don't have to be made, that this works best from every angle. It doesn't. If you want to insure more people it will cost more. Is the social welfare benefit greater than the economic cost? You can argue for one or the other. But you can't suggest we can have it all. This is the immaturity that is so dangerous.

The idea that a massive government expansion into healthcare would actually result in smaller government and less costs in the aggregate is so offensive to one's intelligence that I fear this may indeed be the beginning of the end of this interesting Obama as president experiment. Cool only gets you so far. At some point you have to respect the people you represent as a leader and lay out the facts.

The basic argument is that this approach will achieve savings out of the wasteful spending in the current system and will increase "competition". These arguments are so obviously flawed that I find it sad that anybody could actually advocate these two things in public.

First, Government-run anything doesn't operate efficiently. The President gave an example of pediatricians ordering tonsilectomies for children, not because the children needed it, but because they could earn a fee for doing it was truly condescending. Yet, he still has the support of the AMA and doctors. I guess he can pee on them and they'd still think he was great. He's going to cut their salaries and now he accuses them of ordering tests to get some extra fees.

Second, there are about 1,700 different private health insurance plans in America ranging from large corporate insurers to self-employed to personal insurance companies. I guess now that we have 1,701 thanks to the addition of the government public option, we'll really have competition!

But who knows, this may still pass. Both the Senate and the House have huge majorities. Maybe we can have it all. Or maybe this will indeed be President Obama's Waterloo.

The Insidious Reasons for Hospitals Making a Deal

2009-07-21T16:10:00.000-07:00

An article makes a compelling case for why hospitals agreed to a staggering ct of $155B over 10 years. http://www.economist.com/businessfinance/displaystory.cfm?story_id=14031432

I posted earlier on this. It seems absurd that the 5700 hospitals would agree to cut revenue of about $3M annually to make a deal for the national healthcare. It is still absurd. But they have some reasons to do so. Not all of them are so noble...

Famous Last Words (For Posterity)

2009-07-17T15:27:00.000-07:00

"President Barack Obama's top economic adviser said the signs of improvement displayed by the banks would not have been possible without government infusions, guarantees and other programs provided by the government.
"There is no financial institution that would be reporting the kind of positive results that we have seen in the last quarter but for the extraordinary public support provided by the government," said Lawrence Summers, the director of the White House's National Economic Council."

Banks are currently borrowing from the Fed at 0% and from their savings and CD depositors at 1% to 2%. They lend at higher rates for mortgage, auto, and personal loans. It's a good environment for short term profits. But their borrowing costs won't stay that low forever.

Eventually when the government spigot turns off, we may learn (the hard way), that they were the market. As unemployment increases they may learn that you still have to do business the old fashion way. http://online.wsj.com/article/SB124762005061042587.html#mod=todays_us_opinion

Happy Days Are Ahead!

2009-07-17T04:57:00.000-07:00

I woke up in a happy mood today. Why? Because I thought that President Obama's policies are so disastrous they will put a final nail in the coffin of socialism. In the short term the pain will be excruciating. People will continue to lose jobs, homes, and struggle with the human emotions associated with such real pain.

Earlier this year I predicted a 12% unemployment rate by the end of 2010. I am beginning to think it could get even higher because of the President's cap and trade, healthcare, deficits, and taxes on job creators policies. If you pay attention to what economists say, you'll notice they keep pushing back their recovery predictions. Some said back in April and May that we'd be recovering about now. We're not. Now they say it will come in the Fall. Soon it will be next year. The point is that there is no reason to believe in an economic recovery given this toxic environment. The general public doesn't seem to realize that economic predictions beyond 3 to 6 months are worthless. You learn that in econometrics and forecasting classes. I'm not clear why they even offer up a prediction about 2010?

In the long term, these policies that we're seeing today will be used as part of the teaching in economics, political science, and other fields as an example of how not to conduct public policy. One of the reasons I am so shocked by the current policies is that I remember having the 1970's (and to a lesser extent the 1930's) used as an example of how badly things can go wrong if misguided policies, like the ones we're following now, are adopted. I thought we learned these lessons? Didn't we? We know what happens with these types of policies similar ones have been tried before and yielded conclusive evidence that they don't work. I believe that before it's all said and done, these policies will dwarf the 1970's in terms of catastrophe. If what doesn't work isn't already clear, it will be.

History takes time to work ideas out. People and old ideas about utopia die hard. There are still people who actually call themselves Communists, even now after all that we now know about how intellectually bankrupt it is. I still believe that people retain a bit of common sense. There's always a balance between philosophical and moral vision and pragmatism. When a vision is bad it eventually makes that clear as it plays out in real time. We are seeing one playing right now. I wouldn't prefer to have to demonstrate the stupidity of current political liberalism. But at least future generations will learn what not to do. All is not lost.

Healthcare Rationing or Pay for Service

2009-07-16T20:26:00.000-07:00

There is an interesting article by the infamous "ethicist" Peter Singer about the need for rationing. http://www.nytimes.com/2009/07/19/magazine/19healthcare-t.html?_r=2&em

From what I've read from Mr. Singer, he tends to state a problem narrowly with a kind of conundrum and proceeds to argue that we really have no option but to follow the logic he puts forth. It's just that obvious!

It does bring up a point that bothers me about healthcare economics though. The fundamental problems with the current healthcare scheme is that the people who use it don't generally pay the fair value for it. Healthcare is an economic good. If you care about receiving a quality product you should be willing to pay for it. It's like that in any market. The irony of the current socialize medicine approach is that it is going to create a side market for cash paying customers. This is going to divert doctors towards serving those who can pay and away from those who can't. The level of quality care that the poor are probably going to receive is going to remain low and soon the middle class will be joining them in this. The rich, if they pay cash, will certainly be served in an environment where the government increasingly squeezes doctors to get "savings".

Since the advent of copays and HMOs, you could argue that healthcare already is run in a socialist model. The only difference is that now the government will be the arbiter of services rather than the insurance companies. You will soon be trading one master for another. And as bad as insurance may be, they do have some form of a bottom line, and some incentives for doctors who, via insurance networks, have in some form become employees of insurance companies. I can't imagine that government will do a better job. So, the horror stories about how insurance did a victim wrong on the commercials advocating for Obama's plan are only going to increase and get worse.

In the end, this debate must entirely be recast. We can offer some form of assistance in providing this service. But it is and has always been unsustainable to expect the usage of the product to be essentially separate from the payment of the service. This is the general case in the health insurance market. Until it is fixed, there is no way healthcare costs can reasonably be expected to come under control. Government will only expand it an accelarating rate. The current insurance market already demonstrates that its costs are unsustainable though less than what we will see with socialized medicine. We have to price the good accordingly and have people pay for it. This will economize on its use and abuse.

We also have to do away with trial lawyers. But that's for another day and another President to deal with later along the road who will have to clean this up and probably start over with it.

Your New Share of Taxes

2009-07-16T08:25:00.000-07:00

"We're Not Rich. We Only Make $350K"

2009-07-16T06:02:00.000-07:00

Yesterday I saw a "man on the street" interview with a guy in New York. The guy said he supports the idea of offering healthcare and that the "rich" should pay for it. But, he believes the tax flogging should be only for people making over $500K and not just $350K like he an his wife. Because - you know - after childcare, the mortgage, the cars, private school tuition, restaurants, fitness club dues, weekly house cleaners, and everything else, there's just not a lot left over. I laughed out loud at that one.

The interview illustrates how we have become a nation that feels compelled to care about problems in a politically correct way but of course we don't want to sacrifice anything for the stupid PC policies. It should be the "richer than me" who sacrifice. Maybe Americans really are stupid and in need of enlightened bureaucrats to tell them where to go and what to do. I just don't know anymore.

The Pipedream of Taxing the Rich

2009-07-15T06:50:00.000-07:00

The Democrats in Congress are ready for action on healthcare:
------------------
"House Democrats on Tuesday unveiled sweeping health-care legislation that would hit all but the smallest businesses with a penalty equal to 8% of payroll if they fail to provide health insurance to workers. The House bill, which also would impose new taxes on the wealthy estimated to bring in more than $544 billion over a decade, came as lawmakers in the Senate raced against a self-imposed deadline of this week to introduce a bill in time for action this summer."
------------------
The article doesn't mention the other proposal to charge a surtax of 5.4% on anybody making one million annually. That's in addition to their regular federal and state income tax, which at those marginal levels, are also going to rise to around 40%. So, if you're a millionaire this really sucks.

I suppose that among Democrats the easy stereotype of a millionaire is the fatcat guy on the Monopoly board game. Or maybe, Richie Rich or Gordon Gekko. Who knows? The reality is that most of your millionaires are fairly normal people. Books like "the millionaire mind" are intended to encourage others to gain wealth over their lifetime. They show that your average, stereotype millionaire is someone who earned it starting a business and has certain personal character traits such as thrift, consistency, and commitment to their business. They are generally pretty admirable traits. They are often church members. In addition, these people are not the ones wearing suits around downtown throughout the week. They are folks who have multi-employee plumbing, home repair, a retail business and many have businesses that you wouldn't have heard of or even think of because a lot of them are specialty, niche types of businesses that they did well in. These are America's sugar daddies.

It is estimated that in the current environment anywhere from 40% to 60% of Americans do not pay any federal income taxes at all. This is not a representative government when all people don't have some "skin in the game" and pay at least something for the bigger government services they receive. A country can't prosper when fewer and fewer of the rich pay for everybody else. Right now upper income Americans earning over $250K annually pay the vast majority of federal taxes. This is unsustainable. It makes those who don't pay taxes, yet receive disproportionate benefits, wards of the state.

Taxing these small businesses is a surefire way to kill an economic recovery. These people will respond to higher operating costs by way of a surtax and/or payroll tax by laying off workers or raising prices to end customers. Neither is a good option in a competitive market.

I really don't understand Obama's policies. It would behoove anybody with access to the man to please give him an education on how an economy works. More importantly somebody needs to whisper that we will never have a heaven on earth. History is paved with tales of dreamers whose dreams were shattered against the reality of human nature within a sinful world.

Ain't No "New Models" of Economic Growth

2009-07-14T11:22:00.000-07:00

First, President Obama proposed $12 BILLION more in spending for community colleges today. I guess I should be encouraged because in this regime $12B is chump change.

Second, he said the following:

"The president said the creation of jobs that pay good wages is the "single biggest challenge" in the recovery for the U.S. and governments worldwide. He defended his multi-pronged agenda of trying to revamp health care, energy, science innovation and infrastructure as the key to real economic growth.
"Those foundations are so critical because we've got to find new models of economic growth," Obama said."

We have hundreds of years of knowledge about what spurs economic growth. The basic thrust of what it takes is to encourage risk taking and entreneurship, defend property rights and the rule of law, provide incentives via tax policies, do not enact trade barriers, do not protect pet industries, and allow for the inherent "creative destruction" of capitalism to run its course. If by "new models" Obama means hire union labor to do public works (infrastructure), socialize medicine (healthcare), or adopt energy policies that are high cost (energy), than he will be very frustrated in his endeavors to spur real economic growth. He was somewhat on target with his recognition of the importance of science innovation if he's referring to technology adoption as a means to improve economic standards of living.

There is nothing new about what Obama is proposing unless your young and learning about this stuff for the first time. Keep learning and reading. You'll actually find that Obama's proposals mirror recycled policies that didn't work in the 1930's, 1970's and at periods in the 1800's.

Obama Says an Economic Recovery is Way Off

2009-07-10T06:15:00.000-07:00

No @#$ Sherlock!
http://news.yahoo.com/s/ap/20090710/ap_on_go_pr_wh/obama

At some point this dude has to stop blaming Bush and repeating the falsehood that he inherited disaster but its a big ship we're trying to turn around so it will take more and more time. It is July 10. When does Obama take responsibility for his own detrimental actions?

Ugh, I spend so much time writing on this blog about this stuff. These policies and these statements keep drawing me back in. I predict this man will go down as one of the worst presidents in American history. He is not a leader and he doesn't take genuine responsibility for his actions. He has Congress write major legislation he just blames Bush and makes excuses. In the article he mentions he wants a major healthcare overhaul by August! Shouldn't we think about this? I am not sure when the excuses start to stink for the rest of my countrymen. I guess they are more patient than I.

Obama won with 52% of the vote in November over an old man with no base support and after 8 years of GW Bush and in the midst of a bank crisis that could not have been better timed for him. It's a win. But it's not a mandate for radical, sweeping change where he no longer has to persuade. He is governing as though he just has to now implement the will of all the people, as though he won 65% to 70% of the vote. He is overplaying his hand.

How a $155 Billion Dollar Cut Affects Hospitals

2009-07-09T10:55:00.001-07:00

According to the American Hospital Association there are 5,708 registered hospitals in America http://www.aha.org/aha/resource-center/Statistics-and-Studies/fast-facts.html. The Census Bureau estimates there may be up to 7,500 depending on how they are counted. The president proposed to cut reimbursement to these institutions by $155 billion over 10 years to save money on his socializing medicine plan. These hospitals will see a net decrease on this amount assuming everything else stays equal.

Simple arithmetic shows that $155B divided by 5,708 hospitals results in a cut in reimbursements results in them losing $27,154,870 in revenue on average during the next 10 years. Divided by 10, holding the dollars constant, this results in an annual cut of $2.715 million per hospital. This would seem to be a fairly steep cut. To absorb it a single hospital has a few options:

1. If an average full-time nurse earns $60,000 per year, they can layoff about 45 nurses per hospital from the budget.

2. If an average doctor earns $250K per year, they can layoff about 11 doctors per hospital.

3. If an average hospital profession position employee earns $80K per year, they can layoff about 34 of them per hospital.

4. If an average admin assistant or receptionist earns $40K they can layoff about 68 of them.

5. They can deduct it from their IT budget, they can reduce the amount of equipment such as new stethoscopes, or the amount of supplies such as gauze or whatever else.

6. Rather than cut, they can increase fees for hospital parking or on other services along those lines. Maybe charge everyone who parks $10 per car to recoup the loss of $2.7M annually.

7. Perhaps offer new services that generate additional revenue. This could be anything for which a private party is willing to pay in cash. The problem with this is that these services may divert the doctors to doing activities that generate new revenue for the hospital and away from the new patients who walk in the doors. Maybe the interns can take care of the non-paying, non-revenue generating customers.

They will likely combine these items and cut in several areas. It can't really be doctors who get cut. They will actually be in short supply since there is no way the existing number of doctors can adequately provide services once the floodgate of patients come in. It will probably not be as many nurses either since there is a shortage of nurses. It will likely be administrative staff. Cutting admin staff is potentially problematic because they are the ones responsible to ensure bills get paid and there is no fraud associated with the new program.

It is unclear how hospitals can improve the quality of service by cutting staff or how much they can raise revenue by imposing new fees. In any event, how any group involved in providing healthcare services can be for these cuts is mind boggling to me. It also defies common sense as Obama urges that his policy will improve the quality of care. The funny numbers he's proposed just don't make a whole lot of sense. No surprise there.

Tax the Rich to Pay for Healthcare

2009-07-09T07:50:00.000-07:00

Looks like Robin Hood economics is back. The democrats are planning to tax the rich to pay for a cool trillion in government healthcare expansion. One representative is quoted as saying taxing the rich is better than nickling and diming everyone else who has no money to take.

At this point, I just throw my hands up!

Who is "rich"? Is it $250K or above? How much are you going to tax them? Is there concern this may lead to a relative decline in investment since they have the resources to save and invest in enterprises that may cause jobs? Are there enough rich people to tax to come up with over a trillion in ten years? Might this cause further disincentives for future recipients of government health services to economize on it since those who are receiving the care don't pay for it, they have no "skin in the game"? If you simply confiscated all the homes and all the wealth from folks in Greenwich, CT; McClean, VA; Beverly Hills, CA; Palo Alto, CA or other cities where the people have cash, would they still have enough? Are they planning, perhaps, to install prison terms for anybody with an annual income of $1 million?

Would that make liberals feel better? The way the democrats are going about addressing income inequality is to bring the rich down, not to bring the poor up. Is that really the best approach and what this country wants?

Can We Get Some Opposition Leadership Up In Here?

2009-07-08T10:41:00.000-07:00

At the end of the article in my previous post about hospitals, GOP leader John Boehner says:

House Republican Leader John Boehner of Ohio criticized the hospital deal, saying it was negotiated out of public view. "The administration and congressional Democrats are literally bullying health care groups into cutting back-room deals to fund a government takeover of health care," Boehner said in a statement.

As bad as Obama is, the Republicans, with comments like this, do not inspire confidence. I have a sad feeling that they prefer to speak stupidly and in generalities rather than to articulate exactly what the damage will be of this proposal. Get into the stark facts about level of service cuts, the impacts this may have on certain types of care, give human examples that people can relate to, and hammer it home that the President and his party are spending like drunken sailors on shore leave. Instead, Boehner hits the conspiracy theory theme. Oh no - backroom deals! The stupidity of these policies are so apparent the opposition arguments should essentially write themselves. But I guess that's too much to ask from current Republicans.

Hospitals Can Afford More Cuts, I Reckon

2009-07-08T10:30:00.000-07:00

In my June 15 post I noted how crazy it was that doctors would support a move towards socialized medicine. Today it's hospital presidents who are offering to sell their soul to a decreasingly popular president. http://news.yahoo.com/s/ap/20090708/ap_on_go_co/us_health_care_overhaul

Hospitals are willing to give up an estimated $150 BILLION in future payments to defer to the "crisis" in healthcare that socializing it will apparently solve. Now I know that when the standard jargon for budgets now includes the word trillion, we aren't as phased by a mere $150 billion. But how hospitals can operate by accepting that much less in revenue is truly puzzling. I presume the only way to do that is to cut operating costs. To cut operating costs, you can layoff staff or simply reduce the services. I didn't know hospitals were in such a plush position from a cash standpoint that they can take a hit of this magnitude. I've noticed that many hospitals, especially in inner cities, have closed in recent years.

I suppose the idea now if just to accept anything and figure out the details later. If I were a hospital employee or future patient (which I certainly will be at some point), I would be concerned.

Bye Michael, Hee-Hee

2009-07-07T17:25:00.001-07:00

Mike was da man during his day. It was all good from the Jackson 5 days to Off the Wall to Thriller. I thought his late 80's and 90's stuff was even better for my tastes given that I never had much groove.

But today's media coverage was ridiculous. Celebrites came out of the woodwork and who knows if they even knew the guy in some of the cases. I mean Al Sharpton speaking at the service? Dude, if that guy's the best you can get up there, I have to question how deep these friendships really ran. Tomorrow will come and the Mike story will go to the tape and housed in the storage closet. We'll move on to better stuff like Lindsay Lohan's partying or Jen Aniston's new boyfriend. It's all good.

More "Stimulus" Absurdities

2009-07-07T10:41:00.001-07:00

An economic advisor to Obama advocates a second stimulus. http://www.bloomberg.com/apps/news?pid=20601068&sid=ajQbZ.WrAVwQ

A Gallup poll shows that 60% of people earning $90K or more are planning to save their money in the days ahead and 50% of people earning $36K to $90K are also going to save. It is less for people with incomes earning under $36K but, frankly, they are not in a position to save given the relatively low income. http://www.gallup.com/poll/121418/Upper-Income-Consumers-Inclined-Trim-Debt.aspx

So what's the relationship between these two seemingly disconnected news stories? The Obama economists believe that if they can pump enough debt financed money into the economy, people will consume again. Apparently, liberals love consumerism now. Since people are saving rather than buying this is having a negative impact on businesses who respond by laying off their workers.

Increased savings is part of a normal contraction that needs to occur in this country. Americans have way too much debt. There is no magic formula in a second "stimulus" that will finally end American's new found spending habits and spur them to buy stuff. Rather, this will likely end up with little effect. From an economic perspective, it will only serve to actually decrease total national saving and increase overall debt because any private saving that will add to the capital stock will be more than offset by the negative savings occuring by government via the massive debt. This is a long-term problem economically.

This is yet another example where patience on the part of our leaders is called for. Instead we have them arguing for action and for policies that defy common sense for anybody outside of left-wing academic economists who are not the mainstream even in their own profession. I suppose president Obama has not yet decided to go through with it. Let's hope that he doesn't. You can probably guess that I am not hopeful about the man's judgment and basic leadership instincts. My guess is that when the next unemployment numbers come out in early August, he will go forward with another trillion dollar government spending pork bill.

Men who seek to change the world often do so in ways they didn't intend. Let's hope, for the good of this country, that he learns moderation and a sense of proportion at some point during his presidency.