Monday, August 31, 2009

The Rationing of Health Care

I was reading "Confessions of a Health Care Rationer" by Dr. Eric Chevlen, and it occurred to me our entire health care debate is ignoring the inevitable question of health care rationing:
...I have always been opposed to healthcare rationing. But, then, I have always been opposed to aging, too. I have come to recognize the fundamental similarity between the two. They are simply unavoidable evils...The best we can do is to manage them with wisdom and compassion.

It’s a mistake to think of health care as a right. It is not a right; it is a good. Freedom of speech, by contrast, is a right, as is freedom of religious belief. They are privileges that inure to individuals as a consequence of the primordial right, free will. That is why we see them as inalienable. The exercise of these rights does not depend on any action of government, but rather on its inaction. Government may not legitimately interfere with their exercise, but nothing mandates that the government provide us with printing press or chapel.

Health care is different. It is more akin to the other goods which sustain life: food, clothing, and shelter. A well-ordered society exists to protect its members from the unlawful taking of life, and is structured to facilitate its members’ acquisition of these goods.

But health care differs from these other goods: First, health care is not absolutely essential for all people on a daily basis; second, there is an insufficient supply in this world to meet the demand of those who would have it. There is enough food in the world to feed everyone. Hunger and famine are the result of its inadequate distribution, not its absolute dearth. There are enough garments in the world to clothe everyone, and enough roofs to protect all from the rain. Health care, in contrast, is a far scarcer resource. Descartes once remarked that common sense is the most equitably distributed attribute in the world, because we never see anybody who feels he doesn’t have enough. Health care is not like common sense. We often see people who feel they don’t have enough, or at least can’t get enough at a price they’re willing or able to pay.

Until modern times, health care in the United States was distributed as most goods of life are distributed—according to personal wealth. The rich could afford it, and the poor couldn’t. Most economists would exclude this sort of market allocation as a form of rationing by definition. Nonetheless, market allocation is a form of distributing goods within a society, and when there are not enough of those goods to go around, the end-result in the short term is much the same.

Limiting health care’s availability by the criterion of personal wealth rightly offends our sense of the dignity of the individual. Are the lives of the poor not of the same intrinsic value of those of the wealthy? To be fair, it is rare in the United States that poverty alone prevents the uninsured poor from receiving lifesaving intervention in a healthcare crisis. A poor man having a heart attack is not turned away from the emergency room, nor is the poor woman in labor sent away to have her baby at home. (I am not arguing that such enormities never occur, but the fact that such occurrences remain scandalous and newsworthy is a testament to their rarity.) Yet it is equally undeniable that the poor get a lesser share of the preventive care that can maintain health or of the quotidian care for the less dramatic challenges to their health.

First, in answer to his question, "Are the lives of the poor not of the same intrinsic value of those of the wealthy?", my answer is no. Wealth is the mechanism our society uses to determine one's value. Wealth is acquired in accordance with perceived value: Those who offer the most productivity or useful ideas/items tend to have an easier time accumulating wealth than those with little or nothing to offer. We can sit here and point out how our society has some screwed up values when teachers make far less than NFL quarterbacks, but a teacher will only influence a few thousand lives during the course of his/her entire teaching career, whereas a good NFL quarterback may be watched by millions during just one day of his work. Like it or not, a good entertainer DOES have value; however, that is not the source of the problem: The economic reality is we have too many dollars chasing too little value, hence the ever increasing disparity between the wealthy and the poor. But thanks to the recent government bailouts, the politically-connected wealthy have managed to maintain this disparity, instead of facing the deflation which would have brought their wealth down to more reasonable levels. Look at it this way: With deflation, when you have little money like the poor do, the effect on you is actually positive (as prices drop), whereas the wealthy will take a huge hit under deflation as their investments sour and they make less than they did before (assuming their investments don't lose value completely).

Other than that one somewhat misguided assumption by Dr. Chevlen, his article is a must-read. Rationing is inevitable under any third party payer system, as we have seen under our current system as well as other countries where universal health care is present. As Dr. Chevlen goes on to explain:
Rationing must occur, but it need not be admitted. Denying the truth of rationing is more common in government-run health care schemes than private ones, because the government is reluctant to have the people know this ugly fact. Government-run programs, therefore, are more likely to disguise the rationing. This plausibly deniable form of limiting health care is called implicit healthcare rationing, and it assumes many forms. Rationing by termination occurs when patients are discharged from the hospital earlier than is medically optimal. Rationing by dilution occurs when second-best rather than first-best treatment is provided. Rationing by rejection or redirection involves healthcare providers turning away patients whose care will be inadequately reimbursed. This is commonly seen now in the Medicare and Medicaid programs, because those programs reimburse providers at a rate substantially lower than private insurance plans. Perhaps more common than those forms of rationing is rationing by delay, as exemplified by the outrageous amount of time patients in Canada must wait for hip replacement surgery or colonoscopy. The unifying theme in all these forms of implicit rationing is that, without admitting it, they force some patients to forego medical care that they want and are ostensibly entitled to receive.

Private insurance plans sometimes include an element of implicit rationing, but because they are, at heart, contractual agreements between the insurance company and the insured are more likely to ration health care explicitly. The many pages of the healthcare plan describe what is a covered service, which providers will be reimbursed for services, the duration of coverage, the dollar limit, and so on. The advantage of explicit over implicit rationing is obvious: It gives potential customers of the insurance plan information to use when deciding which insurance plan to buy, and gives them clear expectations of services to be delivered. Implicit rationing, by contrast, may have the sweetness of a promise, but is usually succeeded by the bitterness of a promise broken.

...Come, let us speak of unpleasant things. How is health care to be rationed? Who gets the short end of the stick?
While I consider that a classic line, I doubt we will ever have that discussion in any political arena.

Thursday, August 27, 2009

Democratic Rush to Judgment Proves Correct

From the Democratic Congressional Campaign Committee's website in March:
Today Rush Limbaugh yet again crossed the line saying: by the time the debate on President Obama's health care plan is over, "it'll be called the Ted Kennedy Memorial Health Care bill.” It is outrageous to demonize a patriotic Senator who has spent his life fighting so that every person has the opportunity to live the American dream.

Tell Republican Party Chairman Michael Steele to denounce Rush Limbaugh once and for all.
Now, from Senator Robert Byrd (quote from Ben Smith at the Politico):
I had hoped and prayed that this day would never come. My heart and soul weeps at the lost of my best friend in the Senate, my beloved friend, Ted Kennedy.

...In his honor and as a tribute to his commitment to his ideals, let us stop the shouting and name calling and have a civilized debate on health care reform which I hope, when legislation has been signed into law, will bear his name for his commitment to insuring the health of every American.
Shame on Senator Byrd! How dare he "demonize a patriotic Senator"!

Tell Democratic Party Chairman Howard Dean to denounce Senator Robert Byrd once and for all.

Heal as I say, not as I heal

Simple solution for the whole health care debate: Whatever health care plan the politicians decide "We the People" need, they have to use too. No exceptions, no special treatment for politicians. Anything we aren't covered for, neither are they. The same goes for all government employees.

To President Obama: If you want single payer so bad, be ready to live with it too. You want a health care system that is "fair" for all Americans, why should you be excluded?

Defining Health Care's Problems

Let's step back from the health care debate for a moment, and define exactly what the problems are (in no particular order):

1. PATIENT COSTS: Even for the middle class, the costs are exorbitant. Between health insurance and deductibles, health care is becoming a burden on Americans of every class. CAUSES: The main cause is the tax deduction for health insurance, which has increased employees covered by health insurance by giving employers a reason to provide it. In turn, it has created a vast third party payer system whereby those covered under health insurance see little expense in utilizing our health care system. However, employees also see their own health insurance costs rising as employers cannot afford to cover their employees health insurance 100%.

2. DOCTOR COSTS: Doctors and hospitals have found their own costs going up. While they can pass along some of these costs to their patients, it is still a burden on our health care system any way you look at it. CAUSES: Medical malpractice has become a gold mine for the legal system (just ask John Edwards who got wealthy from it). Juries are more than delighted to decide for plaintiffs, since the only ones who they see being hurt are the doctors and the insurance companies. Unfortunately, this view is short-sighted, since insurance companies just pass along their costs to ALL doctors, who further pass it along to patients. There is some disagreement about how much of a burden this is on the health care system, but there is no doubt that these costs get passed along.

In addition, because of the hurdles both insurance companies and government programs put in the way of doctors and hospitals receiving payments, staff must be maintained just to deal with third party payers. These staffing costs also get passed along.

3. TREATMENT/DRUG COSTS: Recent years have seen vast improvements in both treatments and drugs, but also a corollary increase in the prices for these. CAUSES: Medical research doesn't grow on trees. For every advance, there are billions of dollars worth of failures. The only way to recoup these losses is to add their cost onto the successes. In addition, FDA requirements add onto the research costs, without necessarily guaranteeing safety. No matter how much research you do, some problems won't become apparent until a drug or treatment is in widespread use. Regardless, the health care consumer is the one who must bear the burden for these advances.

4. THE UNINSURED: This is a gray area. The number frequently quoted is 47 million uninsured, which is true. The problem is who is included in this figure: low income people, illegal immigrants, people between jobs, wealthy people who can afford their own medical costs, young people who could buy health insurance but don't think they need it, people with pre-existing conditions who cannot get health insurance, and poor people who don't realize they are eligible for Medicaid. The only ones here which should be a concern are the low income people, people between jobs, and people with pre-existing conditions who cannot get insurance. The rest either don't want it, shouldn't have it, or are just plain too stupid to live. CAUSES: The only reason this is a problem at all is because of the overall costs of health care. Would anyone worry about the uninsured if health care was available at Wal-mart prices? In addition, the main reason we have uninsured is because the first three items above are causing the health insurance rates to increase.

5. THIRD PARTY PAYER COSTS: Any costs incurred by third party payers, whether they are private insurance or government bureaucrats, will be passed along to the insureds in premium increases. In the case of government bureaucracies, some of these costs can be passed along to taxpayers. CAUSES: In the case of private insurance, their costs are varied, including everything from mail room staff to stock market losses. In the case of government, their costs are relatively fixed, but you still end up paying for government bureaucracies which have no incentive to perform efficiently. Regardless of whether you are covered by private insurance or Medicare, you are paying for an army of people who perform absolutely no function in health care, other than to pay your bill.

Feel free to add any health care problem which I have not covered above.

Wednesday, August 26, 2009

Overlooking the Doctors

Within the health care debate, the people most affected are also the people rarely discussed: doctors.

We talk about poor people who cannot afford health care, while ignoring that Medicaid doesn't fully cover the doctor's expenses of providing that health care.

We talk about "greedy" insurance companies, while ignoring the full staff which every doctor needs to get payment from those insurance companies, because patients don't want to have to deal with their own insurance company. That staff also has to fight government bureaucrats over Medicare claims.

We talk about universal medical records, without a thought as to who will actually be entering the data required to maintain this system.

We talk about providing world class health care to everyone, without considering who will actually be providing this treatment.

Any health care debate that doesn't mention the needs and expenses of the doctors is a pointless discussion.

Consider: How would you feel if the government decided to change the way you do your job, without ever consulting you? And by the way, the government will also be deciding how much money you will earn for what you do. Plus you'll be reporting on everything you do, and if a government bureaucrat doesn't approve of your action, you won't be paid for it. Does that sound like a good plan to you?

Whatever you may think of doctors, they are still the 800 pound gorilla in this debate. If they don't like your plan, they can walk, and there isn't a thing you can do about it. Without the doctors on board, there is not a single health care plan that will work.

This is where the whole "right to health care" argument falls apart. If you assume there is a right to health care, you are also indirectly assuming a right to the labor of another human being, specifically a doctor. Claiming a right to another human being's labor is slavery.

Are you willing to bring back slavery to assure your "right to health care"? Good luck selling the medical community on that one.

UPDATE: After writing this post, I came across a better version of it at, written by Dr. Maria Martins. A teaser for your consideration:
Medical care is not a right. Medical care is a service provided by doctors and others to individuals who want to purchase it. A patient presents to the doctor with a request for care. The fact that the patient has a serious condition — even a life threatening one — does not entitle him, as his right, to the services of the doctor. To claim that he does means that doctors and others who provide these services have no rights, or that society can deliberately ignore these rights for the "greater good."

...What is a right? The concept of a right defines freedom to act within the boundaries of the rights of others. It is contradictory to claim that a person has a right to a good or service that requires, for its fulfillment, the violation of someone else's rights. If the exercise of a patient's so-called "right" to healthcare imposes obligations on taxpayers to pay for it and healthcare practitioners to provide it, then it is not a right, but an attempt to enslave one part of the population for the benefit of another part.
Please read the whole article (link here).

Tuesday, August 25, 2009

Ben there, done that

Now that President Obama has announced the renewal of Ben Bernanke's Federal Reserve Chairmanship, I have to ask, WHY?

I don't approve of the Keynesian methods Bernanke uses to run the economy, which were a major factor in our current economic problems. But even IF you buy into his methods, there is one undeniable fact: Bernanke is a criminal.

Bernanke, along with Treasury Secretary Henry Paulson, used their authority to blackmail Bank of America CEO Ken Lewis into buying Merrill Lynch. There is no law or government regulation that justifies government officials threatening to fire CEO's if they don't buy companies, yet we happily overlook the crime because Bernanke supposedly did a good job running the economy during this crisis. What crime did Bernanke have to commit before we would sit up and take notice? Since when did the Federal Reserve Chairman become immune to criminal prosecution?

Bernanke should be sitting in a jail cell instead of running the Federal Reserve. But under our current "Chicago way" government, misuse of your authority is perfectly acceptable.

In addition to the simple corruption, there is also the stupidity factor. With so many "too big to fail" companies receiving government bailouts, why would we want the country's largest bank to become even BIGGER? So not only is Bernanke corrupt, he is a moron. And we WANT him running the Federal Reserve?

Still don't believe me? Then feel free to explain why a labor leader is qualified to run New York's Federal Reserve? From the Wall Street Journal:
The Federal Reserve chose a labor leader to succeed a former Goldman Sachs executive as the chairman of the Federal Reserve Board of New York's private-sector board of directors.

Denis Hughes, president of the New York state branch of the AFL-CIO, had been serving as acting chairman of the New York Fed board since May, when Stephen Friedman stepped down from the position.

If you look at the New York Federal Reserve's website, there is NOTHING in Denis Hughes's biography that makes him qualified to run a bank, let alone help make economic decisions for this country.

But a labor leader makes perfect sense for any powerful position under the "Chicago way" rules. Just as a thug like Ben Bernanke makes perfect sense for an Obama administration that is intent on expanding the power and reach of government. Even if they have to twist a few arms to do it.

Monday, August 24, 2009

Social Insecurity

We knew this day was coming, but it is surprising how fast it got here. From
Millions of older people face shrinking Social Security checks next year, the first time in a generation that payments would not rise.

The trustees who oversee Social Security are projecting there won't be a cost of living adjustment (COLA) for the next two years. That hasn't happened since automatic increases were adopted in 1975.

By law, Social Security benefits cannot go down. Nevertheless, monthly payments would drop for millions of people in the Medicare prescription drug program because the premiums, which often are deducted from Social Security payments, are scheduled to go up slightly.

Let's get this straight: A government, which cannot live up to it's Social Security expenses, now wants to take over our health care?

A government, which created our current health care mess by providing tax deductions for health insurance, wants to take an even bigger role in health care?

A government, which cannot take care of our elderly, now wants to take on responsibility for all of our lives?

Aside from the inherent stupidity of even considering more government involvement in health care, why are we even having this discussion during an economic recession?

Thursday, August 20, 2009

The Brazilian Connection

When a payment of $2 billion is received for a political favor, it is generally considered a bribe. When the United States government hands out a $2 billion loan as a political favor, it is business as usual. But it is no less corrupt. Witness a little transaction I shall refer to as "The Brazilian Connection".

The first player in the Brazilian Connection is The Export-Import Bank of the United States (better known as the Ex-Im Bank).

It was founded by FDR back in 1934, and has been changed over the years. From Wikipedia:
It was established in 1934 by an executive order, and made an independent agency in the Executive branch by Congress in 1945, for the purposes of financing and insuring foreign purchases of United States goods for customers unable or unwilling to accept credit risk. The mission of the Bank is to create and sustain U.S. jobs by financing sales of U.S. exports to international buyers. The Bank is chartered as a government corporation by the Congress of the United States; it was last chartered for a five year term in 2006.

The Ex-Im Bank's current stated mission, from the Ex-Im Bank's website:
The Export-Import Bank of the United States (Ex-Im Bank) is the official export credit agency of the United States. Ex-Im Bank's mission is to assist in financing the export of U.S. goods and services to international markets.

Ex-Im Bank enables U.S. companies — large and small — to turn export opportunities into real sales that help to maintain and create U.S. jobs and contribute to a stronger national economy.

But who owns the Ex-Im Bank? The second player in the Brazilian Connection: President Barack Obama. From Section 4 of the bank's charter:
The Export-Import Bank of the United States shall have a capital stock of $1,000,000,000 subscribed by the United States. Certificates evidencing stock ownership of the United States shall be issued by the Bank to the President of the United States, or to such other person or persons as the President may designate from time to time, to the extent of payments made for the capital stock of the Bank.

In case you doubt that Barack Obama is running the show at Ex-Im, consider that Fred Hochberg is currently the Chairman and President of the Ex-Im Bank. Mr. Hochberg was also a member of Obama's transition team. Mr. Hochberg gained his position at Ex-IM Bank in January 2009. Mr. Hochberg is also the third player in the Brazilian Connection.

This leads to the fourth player: Petrobras, a Brazilian oil company. From an Ex-Im Bank press release:
In May [of 2009], Ex-Im Bank approved a $2 billion preliminary commitment to encourage purchases of U.S. goods and services by Petroleo Brasileiro S.A. (Petrobras), Brazil's national oil company. The amount of a final commitment may be increased above the $2 billion preliminary amount. Petrobras anticipates that it will invest $174 billion in development over the next five years.

Who stands to benefit from that investment in Petrobras? Anyone invested in Petrobras will. I personally hold 100 shares in my retirement portfolio. But that is nothing compared to what George Soros, our fifth player, holds (from from August 15, 2008):
Billionaire investor George Soros bought an $811 million stake in Petroleo Brasileiro SA in the second quarter, making the Brazilian state-controlled oil company his investment fund's largest holding.

As of June 30, the stake in Petrobras, as the Rio de Janeiro-based oil producer is known, made up 22 percent of the $3.68 billion of stocks and American depositary receipts held by Soros Fund Management LLC, according to a filing with the U.S. Securities and Exchange Commission.

Soros still holds that stock.

It is also common knowledge that Soros has personally contributed to Barack Obama's presidential campaign, as well as supporting Obama via third party groups such as

According to the Petrobras Form 6-K, filed with the SEC for the month of May 2009, the Ex-Im Bank's financing was approved on April 29, 2009.

First unanswered question: When did Ex-Im Bank begin negotiations with Petrobras for the financing? If the negotiations began this year, then it is probable that Hochberg MIGHT have initiated them at Obama's direction.

The final unanswered questions: Did Soros and Obama, either directly or through intermediaries, ever discuss the Petrobras deal with Ex-Im Bank? If not, then this is an amazing coincidence. If so, when? The answer to this question is the difference between insider trading and political favoritism, of which one is illegal and the other is despicable.

Wednesday, August 19, 2009

My retirement fund - updated

Back in June, I did a post on how my retirement fund is invested. Here were the 9 investments at the time, in order of dollars within my portfolio:

1. Vanguard Precious Metals & Mining Fund (VGPMX)
2. Exxon Mobil Corp. (XOM)
3. Ford Motor Co. (F)
4. Eni SpA (E)
5. Wal-Mart Stores Inc. (WMT)
6. Petroleo Brasileiro SA (PBR)
7. CNOOC Ltd (CEO)
8. Honda Motor Co Ltd (HMC)
9. WisdomTree Dreyfus Brazilian Real Fund (BZF)

I sold the Ford stock after making a nice little profit on it. I also sold the Honda at a small profit.

Eni Spa, Wal-Mart, and CNOOC were all sold around where I bought them. They were not going anywhere anytime soon. Also, I felt I had too much exposure in oil with Exxon and Petrobras, and Eni Spa and CNOOC were not the best oil plays.

I also moved about $4,000 out of the Vanguard Precious Metals fund in a rebalancing of my portfolio.

Here is how my portfolio looks today:

1. Vanguard Precious Metals & Mining Fund (VGPMX): After reading Warren Buffett's inflation prediction in the New York Times today, I feel even better about this investment. So far, this one has returned over 9%. As long as Obama and Company want to inflate the dollar with their hare-brained schemes, precious metals will continue gaining value.

2. China Digital Communication Group (CMTP): I bought this stock back when it's symbol was "CHID" and it sold for 7 cents per share. I sold it for 11 cents per share.

Since then, it has had a 10/1 reverse stock split, and it is selling around $2.60/share. It has also reported much better earnings, with improved earnings forecasts for the future, plus a plan to list on NASDAQ. It has low debt/equity, and a disgustingly low price/earnings.

Did I mention they sell lithium batteries (the kind used in cell phones) in China? Can you say "large marketing opportunity"?

3. WisdomTree Dreyfus Brazilian Real Fund (BZF): I have increased my original stake in this fund because it has been a steady performer for me. Brazil's central bank is still tight with money, and they still have some of the highest money market rates in the world. A nice safe currency play.

4. Exxon Mobil Corp. (XOM): I haven't even changed the number of shares I hold in Exxon, and it has dropped from #2 to #4. This is just a long-term play on the price of oil.

5. Petroleo Brasileiro SA (PBR): You have to love an oil company supported by a corrupt government. Even more, you have to love it when that oil company makes a huge oil discovery, and the corrupt government practically gives the oil to the company. (see story)

6. Microsoft Corporation (MSFT): Not my favorite holding, but I expect the next operating system coming out in the Fall will be far better than Vista. They should see sales pickup by the end of the year.

7. New Zealand Dollar Fund (BNZ): A similar play to the Brazilian Real Fund above.

8. ShengdaTech Inc (SDTH): A Chinese manufacturer of concrete filler. With China growing, this is a strong little Chinese stock with lots of growth potential and little debt/equity. One thing you will notice about all my investments is little debt/equity.

9. China Mass Media International Advertising Corp (CMM): A Chinese advertising agency. One of the things I like about this company is low overhead. Another plus is government PSA work.

10. China Information Security Technology Inc (CPBY): Chinese software company. Low P/E and low debt/equity.

11. American Oriental Bioengineering Inc (AOB): This one is probably mislabeled as a "biotech" company. Think more along the lines of repackaging traditional Chinese herbal remedies. And they are Chinese in spite of the name. Again, they have all the qualities I like: low P/E, low debt/equity, and low price.

With the lone exception of Microsoft, you will see the trends in my portfolio: gold/precious metals, oil, foreign currencies from countries with tight central banks and decent or great money market rates, Brazil and China (the two top emerging nations in my opinion). Underlying all this is the weakness in the U.S. dollar, caused by the Federal Reserve's insanely loose money policy.

Tuesday, August 18, 2009

RIP Robert Novak

Always love your country — but never trust your government!

That should not be misunderstood. I certainly am not advocating civil disobedience, [much] less insurrection or rebellion. What I am advocating is to not expect too much from government and be wary of [it's] power, even the power of a democratic government in a free country.

Ours is one of the mildest, most benevolent governments in the world. But it too has the power to take your wealth and forfeit your life. ... A government that can give you everything can take everything away.
” - Robert Novak (1931-2009)

(Hat tip to the for the quote)

Monday, August 17, 2009

Europe beats Krugman

Remember the good old days, when liberals/socialists/Democrats used to use Europe as the example of what we should or should not do?

Recently, as Europe has been moving to the right economically, prominent leftist economists have been moving away from their unbridled adulation of Europe.

In today's Wall Street Journal, columnist James Taranto basically feeds some crow to Nobel Prize-winning economist Paul Krugman (I never get tired of pointing out how great the Left thinks he is), using nothing more than Krugman's own writing in the New York Times, combined with one of their own stories:
-"There's a problem: conservative politicians, clinging to an out-of-date ideology--and, perhaps, betting (wrongly) that their constituents are relatively well positioned to ride out the storm--are standing in the way of action. No, I'm not talking about Bob Corker, the Senator from Nissan--I mean Tennessee--and his fellow Republicans. . . . I am, instead, talking about Angela Merkel, the German chancellor, and her economic officials, who have become the biggest obstacles to a much-needed European rescue plan."--former Enron adviser Paul Krugman, New York Times, Dec. 15, 2008
-"Why is Europe falling short? Poor leadership is part of the story. European banking officials, who completely missed the depth of the crisis, still seem weirdly complacent. And to hear anything in America comparable to the know-nothing diatribes of Germany's finance minister you have to listen to, well, Republicans."--Krugman, New York Times, March 16, 2009
-"The European economy bounced back with unexpected strength in the second quarter, buoying hopes that a worldwide recession was drawing to a close. The sharp improvement from the first quarter underscored just how far Europe and indeed the global economy had come since a harrowing free fall in late 2008. Underlying the strong reading were solid performances in France and Germany, each of whose economies grew slightly in the second quarter, according to government data released Thursday."--news story, New York Times, Aug. 14, 2009

Of course, this is not the first time Krugman has made a bad economic analysis, or said something incredibly stupid.

Friday, August 14, 2009

Eagles get big Vick-tory

Dog lovers among NFL fans have probably become Philadelphia Eagle haters with the news of the Eagles' signing of convicted dog-fighter Mike Vick. But from my experience growing up in the Philly area, I suspect most Eagle fans would happily shoot their own dog if Vick turns out to be a good player for them.

That is the primary reason Vick-to-Philly is a good move. Playing Vick on a part-time basis should actually be good for both the Eagles and Vick, because it forces opposing defenses to prepare for Vick in addition to the rest of the Eagles' offense. Frankly, I don't envy opposing defensive coordinators trying to prepare for the Eagles this year.

Having watched Vick for many years in Atlanta, I can tell the Philly fans: Vick can make your day or break your heart with his performances. However, if the Eagles play him on a limited basis, he should be much more effective. In addition, the rest of the offense should benefit from his presence, especially Donovan McNabb. Just don't get the idea that Vick can replace McNabb, because it ain't happening.

As for Vick himself, landing anywhere would have been good, but landing in Philadelphia has the most upside. Philly fans would love a Nazi-sympathizing mass murderer if he could play a great game of football. If Vick brings them a Super Bowl win, the city of Philadelphia might legalize dogfighting in his honor. You could say the Philly fans are just that rabid.

Thursday, August 13, 2009

Your health care is in the mail

"People say, well, how can a private company compete against the government? If you think about it, UPS and FedEx are doing just fine. Right? No, they are. I mean, it's the post office that's always having problems." - President Barack Obama
Ironically, when President Obama made the above statement to defend how a public option for health care would not put private health insurance out of business, he actually made the argument against having a public option at all.

But let's take his comparison a step further. Think about the mailings for which you use the post office, versus the mailings for which you use UPS or Fedex. A simple greeting card? The post office is good enough, because if it doesn't get there, it doesn't matter (you can always tell grandma that you sent it). A business package which could cost you a deal? Fedex it.

Health care should work similarly: If you have important health problems, you will probably use the private option. If you are healthy, you will probably use the public option. Unfortunately, like in mailings, this will cause the price disparity to grow between the two options. As more unhealthy people choose the private health insurance, it will become prohibitively expensive, sending more people who cannot afford the private option into the public option. In turn, this will cause them to receive "post office"-quality health care, when they really need it "Fedex".

This begs the question of what the government response will be when the public option becomes more expensive than they expect? If it is anything like their handling of the post office, you can expect funding cutbacks. In health care, that means lower quality, or fewer available treatments.

In other words, the poor people who cannot afford the private option will STILL not be getting equal health care. But what if the government were to force the private insurers to charge the same thing as the public option?

Just consider what would happen to UPS and Fedex if the government forced them to charge what the post office does. Simply put, they would either go out of business, or provide approximately the same quality service you get at the post office.

Translate that possibility to health care, and the results are scary.

On the bright side, Obama's original quote above might be a nail in the coffin of this health care fiasco. At the very least, it should have the opposite effect of what he hoped to accomplish, and effectively kill the public option. If we don't need the post office to mail packages, why would we need a public option in health insurance?

Wednesday, August 12, 2009


I broke down (granted, it wasn't hard) and traded in my old '97 Ford F-150 for a new Kia Forte EX in a "cash for clunkers" deal. (see the Forte here)

For about the price of a fully loaded Honda Fit, or a completely stripped Honda Civic, I got a fully loaded Kia Forte. The engine has plenty of oomph, it maneuvers well, and it has plenty of bells and whistles (i.e. hands-free bluetooth, nice stereo system with audio controls on the steering wheel, cruise control, A/C, USB and iPod ports, and a 3 month subscription to Sirius). Finally, the gas mileage blows away my old fuel hog: 25 mpg city/34 mpg highway.

There is a more expensive version of the Forte, the SX, which has a bigger engine and foglights. But I couldn't see paying over $1000 more for that, and the engine really didn't give it that much more power. Also, I thought the SX engine ran just a touch rough.

Anyone who knows me will ask this question: How does someone like me, who is against all manner of government giveaways, justify taking advantage of my fellow voters and taxpayers this way?

I will admit to a crisis of conscience on this issue. But it occurred to me that I will be paying back my federal, state, and local governments for much of the cost of this car. Consider:

1. Georgia's ad valorem tax. I will probably end up paying the state of Georgia at least $1,000 over the life of the car.

2. Gas taxes. Assuming I own the car at least 5 years (and I plan to own it much longer), and based on my current driving habits and the current price of gas, I will end up paying over $4,000 in gas taxes to all levels of government.

3. Corporate taxes on the profits of Kia and my finance company. Arguably not a significant amount from the car's purchase and fiancing, but it still needs to be considered.

All in all, government will get back from the car more than they put into it.

But more importantly, my fellow voters told me, via their elected representatives, that they wanted me to get a vehicle with better gas mileage, and that they were willing to chip in their own hard-earned money to help me with the purchase. I grudgingly accepted their kind offer.

Also, Kia has a manufacturing plant in Georgia (although the Forte is built in South Korea), so I felt like I was helping, albeit indirectly, to support a local manufacturer.

Finally, I was planning to get a more gas efficient vehicle anyway, in order to help reduce domestic demand for gas, which in turn will reduce the need for the U.S. to import gas from terrorist nations. Even the most conservative voter can appreciate this motive.

So I would like to take this moment to thank my fellow Americans for supporting my purchase of a new car. I especially want to thank my children for paying for it.

Tuesday, August 11, 2009

Sinking Mae-flower

Want to know where the next busting asset bubble will be? In the same place as the last one, according to the Wall Street Journal:
Much to their dismay, Americans learned last year that they “owned” Fannie Mae and Freddie Mac. Well, meet their cousin, Ginnie Mae or the Government National Mortgage Association, which will soon join them as a trillion-dollar packager of subprime mortgages. Taxpayers own Ginnie too.

Only last week, Ginnie announced that it issued a monthly record of $43 billion in mortgage-backed securities in June. Ginnie Mae President Joseph Murin sounded almost giddy as he cheered this “phenomenal growth.” Ginnie Mae’s mortgage exposure is expected to top $1 trillion by the end of next year—or far more than double the dollar amount of 2007...Earlier this summer, Reuters quoted Anthony Medici of the Housing Department’s Inspector General’s office as saying, “Who would have predicted that Ginnie Mae and Fannie Mae would have swapped positions” in loan volume?

Ginnie’s mission is to bundle, guarantee and then sell mortgages insured by the Federal Housing Administration, which is Uncle Sam’s home mortgage shop. Ginnie’s growth is a by-product of the FHA’s spectacular growth. The FHA now insures $560 billion of mortgages—quadruple the amount in 2006. Among the FHA, Ginnie, Fannie and Freddie, nearly nine of every 10 new mortgages in America now carry a federal taxpayer guarantee.

Herein lies the problem. The FHA’s standard insurance program today is notoriously lax. It backs low downpayment loans, to buyers who often have below-average to poor credit ratings, and with almost no oversight to protect against fraud. Sound familiar? This is called subprime lending—the same financial roulette that busted Fannie, Freddie and large mortgage houses like Countrywide Financial.

On June 18, HUD’s Inspector General issued a scathing report on the FHA’s lax insurance practices. It found that the FHA’s default rate has grown to 7%, which is about double the level considered safe and sound for lenders, and that 13% of these loans are delinquent by more than 30 days. The FHA’s reserve fund was found to have fallen in half, to 3% from 6.4% in 2007—meaning it now has a 33 to 1 leverage ratio, which is into Bear Stearns territory. The IG says the FHA may need a “Congressional appropriation intervention to make up the shortfall.”
(Bold part added)

That is another trillion dollar exposure. Even if you assume the FHA maintains the default rate at it's current level of 7%, that is still another $70 billion down the drain.

"Those who cannot remember the past are condemned to repeat it." - George Santayana
Is this a case where everyone has quickly forgotten what started this recession? Or is this a case where no one has learned anything from it? I think the variation on Santayana's saying is more appropriate: Those who cannot learn from history are doomed to repeat it.

Sympathy for the Democrats

Dear President Obama, Speaker of the House Pelosi, Senator Reid, et al,

I want to thank all of you. I personally have been rather upset with the direction of the United States for many years now. It has not been going downhill nearly fast enough.

While the Republicans were quietly and slowly ruining the country, you are loudly and quickly bringing the country to its' inevitable end. Thanks to your gross stupidity and arrogance, this country is rocketing to disintegration.

In keeping with my support for your direction for the country, I would like to make a few suggestions:

1. Please pass universal health care! And try to be as arrogant about it as possible. Calling the opposition "un-American" was a nice touch, but you really need to do more in this regard.

Most of these people speaking out against health care are just concerned individuals, so you really need to do more to stigmatize and alienate them. Frankly, the partisan divide in this country isn't nearly big enough. If you can work this angle harder, you can really make the divide grow. Then when you pass health care, these people will be spitting mad at you.

By the way, all those years you guys spent calling Republicans "Nazis"? Brilliant! You have so stigmatized the accusation, you can get away with all the fascism you like, and no one can say anything without looking like,

Also, with universal health care in place, you can give people even more reason to hate you, with long doctor waits for treatment, as well as high costs. If you can promise the moon on health care, charge an obscene premium for it, then make people wait for months to get the health care they need, you will totally rule, because they will need you to fix the system YOU broke! The fact you will have broken it for the second time is just an added piece of delicious irony.

2. More spending! The bailouts were good, but not enough. Sure, you are looking at hyperinflation for the next few years, but if you can pile it on some, think of all the good that could come?

First, you would ruin China's economy. At least you won't have to worry about them for awhile, as all the debt they already financed becomes as worthless as Confederate dollars.

Second, the American economy will be dead! Fortunately, your buddies in the banking industry will still be running, since all the new money will go to them first, and you will need them. If you have to pay $1,000 for a tank of gas, those debit cards will come in handy.

Third, and this is the important part for you, the welfare state will be in full bloom, since few people will have, or be able to get, a job!

3. More taxing! What is taking you so long with the cap and trade tax? If you wait too long, the effects of the increased energy costs will be felt by the consumer during an election year. Then they will just vote you out and replace you with someone who will end the tax.

While you are at it, we need more income taxes! Do you realize there are still people out there spending their own hard-earned money. THIS HAS TO STOP!

Think about it: As long as people can make money from working, what incentive do they have to be slothful? Don't get me wrong, I fully appreciate the way you have used the "greed" angle to get people to support your ideas. Now use it to get their support for higher taxes.

4. Keep the wars going! More death and destruction in Iraq and Afghanistan, and the peaceniks can't complain, because they ALL voted for you! That is why pride is a sin: They hate being considered a hypocrite MORE than they hate war! People dying just so someone doesn't get called a hypocrite. Gotta love it!

Anyway, keep up the good work folks. And when the United States is gone, just know that I have a nice warm spot waiting for you at my place.


P.S. Nixon says he's jealous.

Thursday, August 06, 2009

The Money Supply Amendment

We have seen what happens when we allow our elected leaders and the Federal Reserve to spend as they wish: They pay off their friends and campaign supporters and leave the American people to pick up the tab in the form of budget deficits, higher taxes, and inflation.

What if the American people could tax the government?

We need a Constitutional Amendment which states: Whenever the U.S. money supply is increased for any reason, and by any means, the money will be evenly distributed among all the American people, and may not be directly taxed by the government.

So they think we need an extra $1 trillion in the money supply? No problem, just send all Americans a check for $3,333.

The money is not distributed through the banking system, like the Federal Reserve does now. Nor is it handed out to any special interest groups, as Congress likes to do with earmarks.

I came up with this idea when it occurred to me that we need a means for all Americans to deal with inflation whenever our government decides to increase the money supply. By creating more money and distributing it to specific groups, our government hurts the value of the dollars which "We the People" hold.

This will help to force fiscal discipline on our politicians. If they want to increase spending, they will have to increase taxes to pay for it, or else write a check to every American and wait for the money to come back through the tax system.

(On a side note, it would also encourage switching from an income tax to a consumption tax, since it takes up to a year for the income taxes to come in, whereas consumption taxes could come in continuously.)

Wednesday, August 05, 2009


Arthur Laffer has a history of brilliance (the Laffer Curve) and idiocy (predicting there wouldn't be a recession back in 2006). Today, he has an editorial in the Wall Street Journal which was brilliant.

While I don't think the government should be involved in health care at all, I have to give Laffer credit for at least coming up with what I would call a reasonable solution to the health care problem:
Rather than expanding the role of government in the health-care market, Congress should implement a patient-centered approach to health-care reform. A patient-centered approach focuses on the patient-doctor relationship and empowers the patient and the doctor to make effective and economical choices.

A patient-centered health-care reform begins with individual ownership of insurance policies and leverages Health Savings Accounts, a low-premium, high-deductible alternative to traditional insurance that includes a tax-advantaged savings account. It allows people to purchase insurance policies across state lines and reduces the number of mandated benefits insurers are required to cover. It reallocates the majority of Medicaid spending into a simple voucher for low-income individuals to purchase their own insurance. And it reduces the cost of medical procedures by reforming tort liability laws.
Depending on how LafferCare is implemented, it might work. It certainly won't be the catastrophe that ObamaCare will.

Ground Control to Major Simpson...

It is news stories like this that make me think Homer Simpson is working for Nasa now (from the Guardian. Headline in bold):
Nasa aims to move Earth
Scientists' answer to global warming: nudge the planet farther from Sun

Scientists have found an unusual way to prevent our planet overheating: move it to a cooler spot.

All you have to do is hurtle a few comets at Earth, and its orbit will be altered. Our world will then be sent spinning into a safer, colder part of the solar system.

This startling idea of improving our interplanetary neighbourhood is the brainchild of a group of Nasa engineers and American astronomers who say their plan could add another six billion years to the useful lifetime of our planet - effectively doubling its working life.

...The plan put forward by Dr Laughlin, and his colleagues Don Korycansky and Fred Adams, involves carefully directing a comet or asteroid so that it sweeps close past our planet and transfers some of its gravitational energy to Earth.

'Earth's orbital speed would increase as a result and we would move to a higher orbit away from the Sun,' Laughlin said.

Engineers would then direct their comet so that it passed close to Jupiter or Saturn, where the reverse process would occur. It would pick up energy from one of these giant planets. Later its orbit would bring it back to Earth, and the process would be repeated.

What happens if you miss, and one of those comets happens to hit the Earth?


Abortion Deck Chairs

From Fox News:
Health care legislation before Congress would allow a new government-sponsored insurance plan to cover abortions, a decision that would affect millions of women and recast federal policy on the divisive issue.

Federal funds for abortions are now restricted to cases involving rape, incest or danger to the health of the mother. Abortion opponents say those restrictions should carry over to any health insurance sold through a new marketplace envisioned under the legislation, an exchange where people would choose private coverage or the public plan.

Abortion rights supporters say that would have the effect of denying coverage for abortion to millions of women who now have it through workplace insurance and are expected to join the exchange.

Simple question: Regardless of your abortion views, will this issue determine your support of the health care bill?

To anyone who says yes, I say: You are arranging deck chairs on the Titanic.

That said, the hypocrisy on this issue is enormous. For the pro-abortion rights side, they fight for the individual's rights on one issue, abortion, and then throw them away on another issue, health care. When government makes your health care decisions for you, where is your right to decide?

For the anti-abortion side, don't come crying about your religious rights being violated as you violate women's rights to decide what to do with their own bodies.

For those who are simply against public funding of abortions, but not against abortion rights, I ask: If you are going to be fiscally responsible on this one issue, why would you support general health care funding at all? Even in the best of economic times, there are plenty of good reasons not to do this. But in the face of our current national deficit, and our current recession, and our government's reduced tax revenues, this is a fiscal nightmare.

The abortion funding issue is just another request to the band, as our ship of state sinks deeper into insolvency.

Hating on Hate Crimes

I am taking a momentary break from my normal hate-filled rhetoric against "Bugsy" Obama's health care takeover, in order to discuss something else I truly hate: Hate crimes.

Mind you, I don't hate people who commit them per se. Rather, I hate the fact we have laws which limit free expression, regardless of how stupid that expression may be.

When someone commits a crime, that is already illegal. If they are found guilty, they will go to jail. So what difference does it make what their views of their victim were?

If someone commits intentional murder, or even intentional assault, it is safe to assume they probably hate their victim. Whether they hate their victim for personal reasons or racial reasons is irrelevant.

Richard Cohen of the Washington Post makes some good points on this matter:
The penalty for murder is severe, so it's not as if the crime is not being punished. The added "late hit" of a hate crime is without any real consequence, except as a precedent for the punishment of belief or speech. Slippery slopes are supposedly all around us, I know, but this one is the real McCoy.

Let us assume that the "community" is really affected by what we call a hate crime. I am Jewish. But even with [James von Brunn's murder of the guard at the Holocaust Museum], I am more affected by a mugging in my neighborhood that might keep me from taking a walk at night than I am by a shooting at the Holocaust museum. If there's a murder in a park, I'll stay out of it for months. If there's a rape, women will stay out of the park. If there's another and another, women will know that a real hater is loose. Rape, though, is not a hate crime. Why not?

...For the most part, hate-crime legislation is just a sop for politically influential interest groups -- yet another area in which liberals, traditionally sensitive to civil liberties issues, have chosen to mollify an entire population at the expense of the individual and endorse discredited reasoning about deterrence.

The punishment of wrong thinking is a totalitarian ideal. Do we really want government prosecuting anyone based on what they think?