Health care costs have gone through the roof since Massachusetts adopted its own version of Obamacare during the reign of Governor Mitt Romney. The original legislation was bi-partisan. Now, a bi-partisan majority of the Massachusetts legislature is poised to 'fix' the cost problem. Pay heed, because this is where the national Obamacare is headed.
The legislature will vote today to remove $ 200 billion in costs over the next 15 years. How will they do this? By simply telling hospital and doctors that they are now going to pay less for health care services. Seems so simple doesn't it. Why don't we do that with everything? Heck why not just make health care free in Massachusetts by telling hospitals and doctors that we just won't pay anything at all. That way, Massachusetts' version of Obamacare won't cost anyone anything.
Tuesday, 31 July 2012
Monday, 30 July 2012
ECB May Be Preparing to Cross the Rubicon
This week, the European Central Bank (ECB) is going to announce policy measures to bolster the Euro and the bond markets in Spain and Italy (among others). All of the available measures "Europeanize" the problems of Spain and Italy. The real significance of this will be a disaster for Germany. This won't be apparent in the immediate aftermath of the ECB policy announcements. The instant reaction will be joy in Euroland and rallies in world markets.
That happiness will gradually give way to the realization that nothing has changed in Europe. The problems in Greece, Spain, Italy, and Portugal will continue to get worse, though, briefly, yields on their sovereign debt will be lower. The idea that simply bringing in one more guarantor will solve the problems of Europe is almost laughable. The media and the world's economists should be ashamed of themselves for believing that there is anything that ECB can do by itself to solve Europe's problems. This is the same absurdity as believing that the Fed can offset the damage to the US economy being done daily by the Obama Administration.
Europe's problems stem from overwhelming levels of sovereign debt, absurd entitlement programs, and stultifying regulation of business and employment. Nothing the ECB is mulling have anything to do with these problems. All Draghi and the ECB are proposing is a temporary liquidity fix that effectively takes reform off the table. This has been the strategy from the beginning -- find a way to increase the amount of sovereign debt without addressing the root cause of the problems of the Eurozone. The ECB is leading Europe down the road to economic and political disaster. One has to wonder if the US will take the same path.
That happiness will gradually give way to the realization that nothing has changed in Europe. The problems in Greece, Spain, Italy, and Portugal will continue to get worse, though, briefly, yields on their sovereign debt will be lower. The idea that simply bringing in one more guarantor will solve the problems of Europe is almost laughable. The media and the world's economists should be ashamed of themselves for believing that there is anything that ECB can do by itself to solve Europe's problems. This is the same absurdity as believing that the Fed can offset the damage to the US economy being done daily by the Obama Administration.
Europe's problems stem from overwhelming levels of sovereign debt, absurd entitlement programs, and stultifying regulation of business and employment. Nothing the ECB is mulling have anything to do with these problems. All Draghi and the ECB are proposing is a temporary liquidity fix that effectively takes reform off the table. This has been the strategy from the beginning -- find a way to increase the amount of sovereign debt without addressing the root cause of the problems of the Eurozone. The ECB is leading Europe down the road to economic and political disaster. One has to wonder if the US will take the same path.
Sunday, 29 July 2012
Doctor Shortage -- Wonder Why?
The NY Times has an article by Annie Lowrey and Robert Pear today on the growing shortage of doctors in the United States. Now, logically, if you had a shortage of something what would you think is causing it? This article seems to have no clue.
Let me offer some suggestions. Try medicare and medicaid for starters. Whenever the government gets involved, people tend to head for the exit. Basically medicare and medicaid funding is based upon the premise that doctors would prefer to lower their own standard of living in the future and take on more patients. These programs assume that doctors would much prefer to deal with patients who cannot afford to pay them and have little or no incentive to take preventative health care seriously.
Why is there less interest in becoming a doctor? The combination of a future dealing with folks that cannot and will not pay, a government that is supposed to pay but is broke, a job that is overburdened with government red tape and a lifetime of defending yourself in court against frivolous lawsuits, is enough to convince smart and talented people to opt into some other profession.
The future of American medical care can be seen in modern Greece. Hospitals are corroding, patients cannot get care of any kind at any price, and basic medicines are sold mainly on the black market. That's where government health care takes you.
Obama said during the election: "Why is America the only county in the developed world who cannot afford health care for all of its citizens?" Interesting question. The answer: UK, Canada, France, Germany, Italy, Spain, Greece, among others can't afford health care for all of its citizens either, unless there are enough bondholders out there to provide the funding. But that only works until bondholders wise up, as they are now doing in Europe.
European countries cannot afford government health care. No one can.
Only free markets can deliver quality health care. Everything else is simply fraud and will in time produce the result that we see playing out today in modern Greece.
Let me offer some suggestions. Try medicare and medicaid for starters. Whenever the government gets involved, people tend to head for the exit. Basically medicare and medicaid funding is based upon the premise that doctors would prefer to lower their own standard of living in the future and take on more patients. These programs assume that doctors would much prefer to deal with patients who cannot afford to pay them and have little or no incentive to take preventative health care seriously.
Why is there less interest in becoming a doctor? The combination of a future dealing with folks that cannot and will not pay, a government that is supposed to pay but is broke, a job that is overburdened with government red tape and a lifetime of defending yourself in court against frivolous lawsuits, is enough to convince smart and talented people to opt into some other profession.
The future of American medical care can be seen in modern Greece. Hospitals are corroding, patients cannot get care of any kind at any price, and basic medicines are sold mainly on the black market. That's where government health care takes you.
Obama said during the election: "Why is America the only county in the developed world who cannot afford health care for all of its citizens?" Interesting question. The answer: UK, Canada, France, Germany, Italy, Spain, Greece, among others can't afford health care for all of its citizens either, unless there are enough bondholders out there to provide the funding. But that only works until bondholders wise up, as they are now doing in Europe.
European countries cannot afford government health care. No one can.
Only free markets can deliver quality health care. Everything else is simply fraud and will in time produce the result that we see playing out today in modern Greece.
Friday, 27 July 2012
Sandy Weill is Wrong
Sandy Weill is wrong. Separating commercial from investment banking is not a good idea. Glass-Steagall was always foolish and the 1999 law that overturned it was an intelligent move. The financial crisis was not related to the abolition of Glass-Steagall.
I agree that taxpayers should not backstop proprietary trading. I agree 100 percent with that and yet I think the Volcker Rule is ridiculous. How do you reconcile those views? Simple, get the taxpayer out of the way. It is one thing to guarantee $ 10,000 checking accounts, but the Fed guarantees, effectively, all the creditors of our banking system. No creditor, including unsecured bond holders, has ever lost a penny when an FDIC guaranteed bank failed. They bail out everyone, even though there is absolutely nothing in the law governing the FDIC guarantees that sanctions such activity. The FDIC puts the taxpayer at risk -- after the fact -- with no legal authority whatsoever. That's what Sheila Bair's FDIC does, in reality. They extend the law to give themselves powers that the law never granted them.
What should be done is to roll back the FDIC guarantees to $ 10,000 per individual (not per account) and get the taxpayer out of the way. Secondly, let investment banks, like JP Morgan, Citi, Goldman Sachs, whatever, fail when they can't make it. Get the taxpayer out of the way. Nothing justified the foolish TARP bailout. It was bad policy then and would be bad policy now. (Whether or not it made money or not is irrelevant. It created a moral hazard problem that will not go away easily).
By providing all these taxpayer guarantees, you rationalize the absurd regulatory regime that Dodd-Frank is ushering in. It might be simpler to just pass a law that says average Americans can no longer borrow money legally and if the average American wants a credit card, forget it. That would be a lot cheaper and accomplish pretty much the same thing as Dodd-Frank.
Providing taxpayer guarantees where they are completely unnecessary and then regulating the financial service industry into morbidity simply sucks the life out of a free enterprise economy. The result is what you see today in the American economy. We have turned our banking system into a state run banking system modeled after the system that the Chinese are now trying to discard. Good for them; our bad.
I agree that taxpayers should not backstop proprietary trading. I agree 100 percent with that and yet I think the Volcker Rule is ridiculous. How do you reconcile those views? Simple, get the taxpayer out of the way. It is one thing to guarantee $ 10,000 checking accounts, but the Fed guarantees, effectively, all the creditors of our banking system. No creditor, including unsecured bond holders, has ever lost a penny when an FDIC guaranteed bank failed. They bail out everyone, even though there is absolutely nothing in the law governing the FDIC guarantees that sanctions such activity. The FDIC puts the taxpayer at risk -- after the fact -- with no legal authority whatsoever. That's what Sheila Bair's FDIC does, in reality. They extend the law to give themselves powers that the law never granted them.
What should be done is to roll back the FDIC guarantees to $ 10,000 per individual (not per account) and get the taxpayer out of the way. Secondly, let investment banks, like JP Morgan, Citi, Goldman Sachs, whatever, fail when they can't make it. Get the taxpayer out of the way. Nothing justified the foolish TARP bailout. It was bad policy then and would be bad policy now. (Whether or not it made money or not is irrelevant. It created a moral hazard problem that will not go away easily).
By providing all these taxpayer guarantees, you rationalize the absurd regulatory regime that Dodd-Frank is ushering in. It might be simpler to just pass a law that says average Americans can no longer borrow money legally and if the average American wants a credit card, forget it. That would be a lot cheaper and accomplish pretty much the same thing as Dodd-Frank.
Providing taxpayer guarantees where they are completely unnecessary and then regulating the financial service industry into morbidity simply sucks the life out of a free enterprise economy. The result is what you see today in the American economy. We have turned our banking system into a state run banking system modeled after the system that the Chinese are now trying to discard. Good for them; our bad.
Thursday, 26 July 2012
The Fed and The ECB
It's amazing what people will believe.
With the US economy sledgehammered by an unfriendly legal, tax and regulatory environment, the Fed is going to be able to do something about it? What? Lower interest rates? Buy bonds and expand the nation's indebtedness? Are our debts too low that they need expanding by the Fed? How do you convince a businessman to hire someone in this environment? Have the Fed buy Treasury bonds? Is this a serious discussion?
How about Europe? Mario Draghi announces that the ECB will do everything in its power to keep the Euro from falling apart. Really? By lending countries more money? Is that the ticket?
No macroeconomic solutions will solve the problems in the western economies. The microeconomic situation is not favorable for hiring. Employees are, relatively, far too expensive compared to other factors of production and compared to countries in Asia where labor is not loaded up with government goodies that makes them toxic to employers. So, western labor is doomed. It's that simple.
The only macro policy available is to make drastic cuts in entitlement programs, something no one is even considering doing. Absent cuts in entitlements, no western nation can survive bankruptcy. It is simply a matter of time.
So what role do these central banks play? In reality, they have about as much to do with the real economy as astrologers (who are much more entertaining). Central banks can impact the money supply and that's about it. Increases in liquidity don't help economies that are mired in sovereign debt problems, though it may buy some time until everyone figures out the total irrelevancy of the central banks.
There is nothing the ECB can do about the sovereign bankruptcies that are in Europe's future, except perhaps hasten Germany's inclusion in the list of those who will ultimately default. The real reasons for the current problems are: 1) over-regulated and over-taxed economies; 2) entitlement programs for retirement and health care. No one is discussing fixing either 1 or 2. Since those are the main drivers of the current problems, it is easy to see where this is headed and the central bank conversations are beside the point.
With the US economy sledgehammered by an unfriendly legal, tax and regulatory environment, the Fed is going to be able to do something about it? What? Lower interest rates? Buy bonds and expand the nation's indebtedness? Are our debts too low that they need expanding by the Fed? How do you convince a businessman to hire someone in this environment? Have the Fed buy Treasury bonds? Is this a serious discussion?
How about Europe? Mario Draghi announces that the ECB will do everything in its power to keep the Euro from falling apart. Really? By lending countries more money? Is that the ticket?
No macroeconomic solutions will solve the problems in the western economies. The microeconomic situation is not favorable for hiring. Employees are, relatively, far too expensive compared to other factors of production and compared to countries in Asia where labor is not loaded up with government goodies that makes them toxic to employers. So, western labor is doomed. It's that simple.
The only macro policy available is to make drastic cuts in entitlement programs, something no one is even considering doing. Absent cuts in entitlements, no western nation can survive bankruptcy. It is simply a matter of time.
So what role do these central banks play? In reality, they have about as much to do with the real economy as astrologers (who are much more entertaining). Central banks can impact the money supply and that's about it. Increases in liquidity don't help economies that are mired in sovereign debt problems, though it may buy some time until everyone figures out the total irrelevancy of the central banks.
There is nothing the ECB can do about the sovereign bankruptcies that are in Europe's future, except perhaps hasten Germany's inclusion in the list of those who will ultimately default. The real reasons for the current problems are: 1) over-regulated and over-taxed economies; 2) entitlement programs for retirement and health care. No one is discussing fixing either 1 or 2. Since those are the main drivers of the current problems, it is easy to see where this is headed and the central bank conversations are beside the point.
Wednesday, 25 July 2012
Mandated Loan Forgiveness
The Obama Administration policy of forcing loan foregiveness on private market lenders began in the mortgage market and is now being extended into the student loan market. Such loan foregivess essentially rips up legitimate contracts and replaces them with the arbitrary whims of government, deciding who should pay up and who needn't bother.
Lenders aren't stupid and they have memories. It is incredibly difficult now for middle America to get mortgages thanks to Obama Administration loan foregiveness policies. Why? Because lenders know that politicians can, at their pleasure, rip up the contracts and deny the lenders the payments they are entitled to.
So, why lend to the class of Americans that the Obama Administration seems to want to provide loan foregiveness for? No reason I can think of. The next group that will find themselves out of luck when seeking loans will be students, especially the demographic now escaping their obligations thanks to the President.
Lenders aren't stupid and they have memories. It is incredibly difficult now for middle America to get mortgages thanks to Obama Administration loan foregiveness policies. Why? Because lenders know that politicians can, at their pleasure, rip up the contracts and deny the lenders the payments they are entitled to.
So, why lend to the class of Americans that the Obama Administration seems to want to provide loan foregiveness for? No reason I can think of. The next group that will find themselves out of luck when seeking loans will be students, especially the demographic now escaping their obligations thanks to the President.
Saturday, 21 July 2012
How to calculate EPF investment withdrawal amount?
Although EPF members investment scheme was launched years ago, yet many Malaysians still do not know the existence of it. Follow by next question: "How to calculate the withdrawal amount?". Hope this post can give all of you an insight on this matter.
First, we must know that EPF members investment scheme only allows eligible members to withdraw eligible amount to EPF-approved investment schemes. The schemes was being monitor closely by EPF authorities, by reviewing it every year, in order to protect the interest of EPF members.
Am I eligible?
Members can withdraw up to 20% of access amount from the minimum required Basic Saving in Account ONE. The minimum amount for each withdrawal is RM1,000. Sounds confusing, right? Let's explore it step-by-step.
Step 1:
Determine the age (what is your celebrated last birthday?)
Step 2:
Determine the required Basic Saving in Account 1.
Step 3:
Determine your Current Saving in Account 1.
Step 4:
Applying the formula : (Account 1 - Basic Saving) x 20%
 |
| Example of Calculation |
Still find it difficult to understand?
Easy. Just register for an EPF i-Akaun (an online EPF account), click on the "Withdrawal" button, then you can view the eligible withdrawal amount for various purposes. It's just that simple and accurate, without calculator. What's more? You can view the withdrawal status and history too.
Source: EPF website
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