Old Wizard

ETF Update: Health Care Enters the Home Stretch

Keeperofthefaith.wordp...

ETF Update: Health Care Enters the Home Stretch

I'm sorry, I truncated my blog address . It is Keeperofthefaith.wordp...

ETF Update: Health Care Enters the Home Stretch

The idea that we need reform in our health care system is not as controversial as the proposed health care meassures that are before congress. I am on medicare and buy a supplemental insurance policy. My medicare payments for my wife and myself last year were $8400 and this year they are estimated to be more. The supplemental was over 6k and these costs did not count deductables, co-pays and the amount charged by doctors. Additioally, 85% of my medicare payments were taxed and since our income was over125k, the tax amounted to about 30% for a whopping gov. payment of close to 11k. The reform package that is so called revenue neutral woud add somewhere between 20 and 30million people to the public option. Let's grant that revenue neutrality is a fact for the moment and also agree that medicare is going bankrupt in 8 years, what prevents medicare from going bankrupt. In elementary school all of us learned that adding 0 to a term which is going negative won't change the result. A true reform could be written in 100 pages or less and would include the following: a] A clinic system for the poor[25kyr or less income] to which they would pay $100/yr. The Gov. would initialize this system with $10b.
b] A risk pool for catastrophic illness to which all could belong for $250/yr/family and to which insurance companies would contribute .5 % of gross profit/ yr. The government would budget $5b/ yr to this pool and it would be independently held by a coop. that woud make investments that were risk constrained, but not gov. bonds.
c] Bussinesses would unerwrite tax free amounts up to $ 6k/ yr to each employee for health insurance which would be a business expense. Any amount above this would be taxable both to the employee and the company.
d] The small business association would be allowed to purchase insurance across state lines similar to AARP..
e] Mal- practise awards would be limited to $250k plus medical expenses. Any doctor found to be guilty of mal-practise 2x in 3 years would have to go back to school for a year and be recertified before continuing to practise. Lawyers' fees bringing such suites would be limited to 20% of award and if the suite was judged to be frivilous would have to pay the legal fees and court costs for both parties. These suites would be ejudicated by a three person panel consisting of a judge, a lawyer appointed by the ABA and a doctor appointed by the AMA or the association to which the doctor being sued belongs. All decisions would be final.
There are several other tenets of real refom should that I have included on my blog, Keeperofthefaith.wordp... My plan has 9 bullets, costs the Gov.$60b over ten years. If the fraud and abuse savings the congress and the president claim possible in medicare in the revenue neutral assertion really materialize, then the cost curve will truly bend by $340b over ten years. If not, then by definition the costs will be known and can at least be budgeted. This plan in the end would address most of that which concerns us, makes the reform understandable to our citizens and removes it from the political agenda that furthers either party's power. Approaching this proplem with a real desire to solve it rather than both logic that doesn't compute and legislation that even the most diligent among us either can't or won't understand should be an absolute requirement of our elected officials. If it turns out not to be, I say we should replace them all regardless of party, the training they had before they got elected.,sex,race, religion or sexual orientation.

A Crude 10 Year Perspective: The DJIA, Oil and Gold

Freya, I believe the reason the fed was and is buying treasuries is because banks were buying them rather than lending the money to home buyers and businesses. You need to research this yourself. A reference can be found by googling"federal reserves buying treasuries and then clicking on "economic essays Why the Federal Reserve Is Buying Treasuries" The buy was 300b! On the China Control, I was using another SA article as the source and you are probably right that China doesn't control 95% of the supply. I think that article may have used the rare earth supply as important to the battery manufacture of high powered electric cars, but since I can't find the article I'll concede the error. That said I still believe that China will dominate the market and the long term effect will be to keep us dependent on not necessarily friendly countries for our transportation energy and keep our country's current account significantly negative.

A Crude 10 Year Perspective: The DJIA, Oil and Gold

Freya, Is it your position that the larger banking world which now includes integrated financial institutions are not buying any treasuries? I said controlled by, not existing reserves ,for a reason. China and Chile are producers, while Bolivia has reserves but its ability to produce large amounts is still in development. Since China has made resource agreements with some of the other countries which are producing , have have large reserves of their own and relatively no environmental restrictions they are in a strong position. Further, they are a big lithium battery supplier now and are entering the electric car market. Compare that with the US's position. Our mine are shut, we have relatively small reserves, have adopted electric plug-in vehicles as a cog of our future transportation, energy and environmental strategy and will have to import much of the lithium to support the national policy we have adopted. Meanwhile we are borrowing large amounts of money from China, while we try to juice up a domestic battery industry. The 2.5b set of grants announced to facilitate this, was sent to a host of companies, but if one looks at where more than 50% of the money really goes one finds that it went to S. Korean, Chinese and Japanese companies.
The spread between savings account interest and treasuries interest, home mortgages interest to qualified buyers and the more risky loans represents a bonanza for the banks.This bonanza winds up being paid for in part by those folks who put their money in savings accounts and CDs, if th real inflation rate plus the decreasing value of the dollar is more than the 1% the savings accounts are yielding. BTW I don't think my comment stated that lithium was a rare earth element.

A Crude 10 Year Perspective: The DJIA, Oil and Gold

Fitz, The value of the dollar is an interesting issue. No one in the current administration wants a strong dollar. Let's look at what is the real policy. Our monetary policy is to keep the fed rate at 0, ostensibly to spur economic development, lower interest rates and create jobs. We also are insisting that stimulus is necessary and are borrowing record amounts from anyone who will lend it to us. At the same time, the treasury secretary and others are urging the public to save more. Let's look at the real policy. Banks are giving their depositors around 1% for their savings, while buying treasuries at 3.5 to 4 % and lending it to qualified home buyers at 5 to 6% and to others at higher rates. Meanwhile the Gov. piublishes reports that the underlying inflation rate is near zero or even negative. Of course this figure excludes food and energy, both of which everyone must use to live. When we look at the cost of living, which includes food,energy, increased local sales taxes and hidden taxes like tolls, etc., the real inflation rate to those who save money is 3% or more. The net result is that the savers are paying for getting the banks well and in large part for the Government's spending spree. Meanwhile, our government invests much of this borrowed money in lithium battery technology in the far east, in petrobras[through thr ex-im bank] for oil-drilling off the brazillian coast while limiting investment for new oil drilling off our coasts and keeping our lithium mines closed for environmental reasons. Given that 95% of the supply of lithium for electric car batteries is currently controlled by China our forced march to electric cars is destined to trade dependency on the mid-east to dependency on China for our transportation energy. Allowing our dollar to decrease in value further hurts the savers because their purchasing power decreases and of course allows debts incurred now to be paid back with cheaper dollars. No wonder the smart financial opportuistic people are so quick to take highly leveraged risks, especially with other people's money. For the income redistribution crowd our policy is also consistant, take real money from the savers and give it to those who either can't or won't.save. A real problem-solving energy solution which is in the economic and strategic interests of our citizens is not and, I have come to believe, never was the intent of this administration.

Cash for Clunkers May Cost Up to $45,354 Per Vehicle

I think there still quantitative questions to ask: 1] What are differences in costs due to destroying the cluncker engine rather than salvaging them for parts and are there any differences in the transportation or disposal costs for the mandated progra/, 2] how much less work will mechanics have if any as a result of this progra?, 3] do we believe that Citi group which has been hired to administer the program has a good track regard in managing its own business?4]n any of the previous calculations, where was the administrative cost of the program accounted for/ 5] What percentage of the new cars bought were made in america by american car companies? Until this data is on the table any evaluation is more anecdotal, salesmanship and propoganda. The effect on the environment is relatively insignificant and quantifying it objectively is hopeless

Cash for Clunkers May Cost Up to $45,354 Per Vehicle

What a discussion! Thought I'd add some facts to the discussion before editorializing. 1] Administrative costs so far for the program are about $50M, 2] There are approximately 130M passenger cars on the road and this figure doesn't include trucks, buses and other motor vehicles, 3] The costs of clunker disposal to the public and dealers has not been estimated but since the program mandates not only that they be destroyed but also how the motor is disabled, it is an exercise still to be calculated. 4] The environmental impact of this disposal is not known, but the mandated destruction process makes items 3 and 4 bigger than normal, 5] It doesn't follow that the new car is safer than the one traded in.6] a vehicle that gets less than18m/gallon doesn't necessarily have a trade-in value of less than $1k; e.g.what if the car to be traded was a 1999 mercedes or 2004 lincoln or a corvette or any number of suv's. The benefit to the carbuyer is the 4500 less the real trade-in value of the the so called clunker. A family member just sold his old chevy with more than 95k miles on it for more than 4500 dollars. Now the editorial comment: The program is being sold as a job creator and another big step to clean up the environment, but no real quantitaive analysis has been done, as with most of the programs coming out of washington. It sounds good and it may ultimately be a net benefit, but the simple fact that people are jumping at the deal is not the ultimate measure of performance. The fact that the computer facility set up to handle inquires and the administration of the program has already crashed twice and is leading to a processing bottleneck is evidence of the lack of detailed planning that accompanies the" the stimulus actions" emanating from Washington. A program that would drive car sales and let people keep the cars they have like conversion to natural gas fuel would also help solve our negative current account problem, have a known and calcubale impact on the environment and create instant business for our domestic car companies, jobs for mechanics and parts suppliers that come from converting millions of cars per year. The postage stamp, let's try this gimmick approach to solving our fundamental problems is troubesome and increasingly disjointed and if it replaces substantive and well-planned programs, wastes time and diverts resources from real solutions to the country's economic and strategic problems, dangerous. Both time and resources are not commodities we should squander.

Will the Geithner Plan Work? Let's Hope Not!

Why won't the insiders play the invest in the buy in "toxic assets'" game. They put up 7cents on the dollar, the people put up 93 cents. The assets are probably yielding close to 7% a year. After a year, if these assets are worth even 10 cents on the dollar, it's a windfall profit. What a deal. If it turns out that the toxic assets are worth zero after a year the investor is close to even, the people lost their shirt[again].

Bernanke Fires a Shot Across Summers' Bow

Finally, we are discussing the right issue. The fact is we are in the midst of making the same mistake. We are about to borrow trillions and not really invest it in rectifying the current account negative balance. The buckshot approach embodied in the stimulus plan and the raising of the corporate tax rate shows no understanding of the problem. Not fixing the importation of energy, the trade imbalance with China and leveling the corporate tax rate for american corporations ignores the three biggest components of the ever increasing negative current account balance.It is not whether or not there should be a stimulus,but whether the stimulus is focused with a sense of urgency. For example, we should set a goal of importing 5 million barrels of oil less/day in five years and 10million less/day in ten years. With this as a goal, we would be forced to turn to natural gas fueled vehicles and the infra-structure to supprt them, mass transportation spiders in our large suburban metroplexes and define large, meaningful projects in wind and solar energy production with the infra-structure to support them. Had we done this with half of the stimulus package, we would indeed foster real solutions to lasting job creation, new product development that we could make here and sell abroad,reduce carbon emissions and significantly reduce the negative curent account balance. If we combined the above with some restrictions on where key elements could be manufactured and a visionary corporate tax policy we would not waste the trillions we are borrowing. The country has a golden opportunity to set itself on the right path;I fear that Washington hasn't the vision, competance or political will to do the right thing and we are in for a long winter of our discontent.

Why Wall Street Razzed Obama

This article can't be serious. I agree that the Federal gov should spend money that it doesn't have because it's the lesser of two evils. this is a golden opportunity, however, to invest wisely in America's future. The two headed threat to our future is the burgeoning negative operating cash flow of the country as measured by the current account and our dependence on foreign hostile regimes for much of our energy supply. Luckily both of these problems can and should be addressed by focused and timely[like now] investments. By establishing near and far term measureable goals for oil import reduction and implementing a plan that achieves these goals will require an investment on the order of 300 to 500b.. The plan should include large scale pilot projects for three wind farms, 2 to 3 solar farms ,the infra-structure modifications to deliver and store the energy and the purchase of right aways. The plan should also include the building of at least two monorail spider networks for two suburban/city metroplexes using existing highways and roads as rightaways. Also in the near term the plan should include the conversion and /or purchase of all scool buses, state and municiple vehicles to natural gas and the provision of natural gas to their garages, off-shore drilling in known reserves and in the longer term twenty to thirty new nuclear plants, Clean coal and hydrgen cell car investment in research and reduction to practise investment shoul also be increased. These kinds of investments will surely create jobs that have staying power, go a long way to solving our cash flow problem and reduce our dependency on foreign oil and ,oh by the way, reduce greenhouse emissions. The idea that we should build new roads and spend the money on things mostly manufactured elseware without addressing our most pressing problems bodes badly for our future and shows that our politicians are unable to solve our problems even when they are spending over a trillion dollars of money they don't have

U.S. Records Huge Trade Deficit

At Last someone is addressing the root of our basic problem, operating cash flow. Our current account has been negative since 1991 and getting increasingly so. But for the drop in oil , it was approaching a trillion dollars in 2008 and has been above 500 billion for a long time. My solution to the problem starts with my 5 and 10 plan. This plan startts with establishing a goal of the reduction of 5m barrels ofimported oil/day in 5 years and 10 million barrels/day less in ten years. To accomplish this, the gov should use at least half of the bailout money to jump start the production of alternative domestic energy. I have suggested in past comments that these should include 3 large scale wind farms and at least 2 large scale solar farms with the infra-structure improvements to accomodate them. There should also be 2 or three mass transportation projects for 3 selected suburban/city metroplexes. These mass transportation projects should be electric monorail spiders using for the most part existing hyways and roads as rights of way. The near term goals can be met with some increased off-shore drilling in known oil fields,conversion of all city,school and municiple vehicles to natural gas, the installation of the filling capacity at the appropriate garages and the pilot projects above. The long term goals can be met by more solar, wind and mass transportation and the building of 20 to thirty nuclear plants and the large modification to the infra-structure necessary. Spending over a trillion dollars of our money as the great political minds are leaning makes absolutely no sense,if we are to correct the increasingly negative operating cash flow our country faces. The above approach will not only contribute to a solution but will create real jobs that have some staying power, new products and services that the US can sell to the world, a decreased reliance on hostile providers of energy, and, oh by the way, less green house gases, if that is important. The idea that 15 or 25 billion a year will get us there is rediculous and naive or that we can wait until 2030 to be independent of hostile energy suppliers neglects the strategic issue that is both economic and geopolitical. The soaring rhetoric of change that accompanied the last election appears to be concentating on the wrong sylAble, by talking about tax credits for hiring workers, building more roads,schools, carbon credits,limiting emissions and a host of other bandaids. So far the bold steps that have been advertised appear to be the same old same old. If clean coal or if hydrogen cell- driven, or electric cars can contribute significantly to the goal of the 5 and 10 plan then we should jump start them as well,but solving the energy delivery problems and new mass transportation systems requires gov. action to reduce risks like interminable legal barriers, minority and self-interest pressure groups and uninformed media scare tactics and incompetance to analyze anything complex. The above would be bold indeed, but would show real leadership. I'm afraid that political expediency will result in the application of many bandaids applied to the surface while the patient bleeds to death internally.

Why Are Investors Returning to the Dollar?

Might money be coming home because the USA has the biggest stick to protect itself and its domestic assets which many of the overseas benefiter's of our negative current account balance now own?

Don't Be Fooled - Short Selling Restrictions Do Work

Is it always true that stock prices are only affected in a one to one relationship buy to sell or can a stock price be forced lower by suddenly having more sell offers than buy offers? If the latter, can a big short sale offer alone result in the significant lowering of the stock price? If the answer is yes, then given the leverage the big funds have, manipulation could easily take place. I generally think that a marked decrease in all leverage vehicles especially in commodities should be in place and believe for oil in particular the margin requirements should be increased to 80 cents on the dollar.

What If What Economists Taught Us Is Wrong?

All the talk about models gives me a headache. The problem that we have is that we can't seem to learn the lessons of history. In 1929 one could buy stock for 10cents on the dollar, then there was the ponsi scheme electronic acquireres who bought companies with paper and debt and made financial commitments they carried off the balance sheet. We've now followed that with highly leveraged mortgages and real estate speculation where one could buy homes with less than 5 cents on the dollar and compounded this by having lenders create a ponsi scheme of derivatives based on very little assets which were carried on balance sheets at overblown valuations. Now we are allowing energy commodities to be bought at 5 cents on the dollar. The get-rich quick mentality is the common denominater. All of the schemes may seem different, but the highly- leveraged, make a killing mentality that underlies each excess comes apart when something causes a default,the hedge fund sells short, enough people get overextended, or rumors create fear and panic. The solution might be that if you buy something, you should have more than 5 or 10 cents of your own money or real assets committed to the purchase and an asset once committed cannot be used to buy anything else. As a result of 1929, what are the margin requirements on common stocks, today?