Americans are now facing the staggering first glimpses of sticker shock associated with Obamacare. Insurance companies are ratcheting up fees to meet the new burdens of Obamacare and hospitals are doing the same. There is really no limit to where these costs are headed. Even absent Obamacare, health insurance costs would be rising, but, with Obamacare, they are escalating out of sight. Meanwhile more and more doctors and hospitals are backing away from servicing medicare and medicaid patients, which replaces expensive health care with no health care. These are the fruits of Obama's ambitious health care vision and we are just at the beginning of this nightmare.
What is wrong with this picture?
First and foremost, health care should be expensive if it is important. Consumers of the service should pay a lot to get it. That principle underlies any reasonable allocation of a scarce resource. You can't promise inexpensive luxuries on a grand scale. The numbers will never add up. So, even if you are unlucky and your genes lead to an expensive-to-treat disease, you should not have a free ride financially.
Second, it is important to recognize the role of incentives in the provision of health care. Any system of provision of health services that does not require patients to pay for the bulk of their own health care means that patients will be less likely to take steps necessary to prevent future health problems. Why are older Americans among the most obese humans on the planet? The reason is that Americans see no connection between their own financial situation and how obese they are. They assume that other people (the government) will finance their future health care woes, so why worry? Why do low income Americans smoke in such large numbers? Because they assume that they will not be paying for the resultant health care problems (and they are right)! By taking away the financial burden of future health care costs (or convincing the public that you are taking away the financial burden of future health care costs), you are eliminating the incentives for individuals to take actions that improve their future health care. Some folks may do the right thing anyway, absent any financial incentives, but it very obvious that most do not.
Third, by setting up a system that will eventually require cost controls on hospitals, doctors and other health care providers, you guarantee a reduction in the supply in the quantity and quality of these services. If you want good health care, those who work in the industry must have financial incentives. These incentives are broadly under attack with current belt tightening in medicare and medicaid and the clear direction of Obamacare.
Only the free market supplemented with charity and a public safety net of modest proportions for the indigent can supply a truly efficient and quality health care system. The systems in Europe and other developed countries are notorious for inefficiencies and rationed care. The best health care in the world is to be found in the USA for those that can afford it. Medicare, medicaid and Obamacare will guarantee that fewer and fewer Americans will be able to afford good health care. Only a free market in health care and a free market in health care insurance can produce top quality, affordable health care for all Americans.
Saturday, March 5, 2011
Friday, March 4, 2011
The New Normal on Unemployment
The pundits cheered today's unemployment rate, which was reported to be 8.9 percent. After adjustments for January, net job creation was an anemic 180,000 -- a pitiful number for this stage of an economic recovery. The fact that a number this bad was greeted with applause says a lot about how low expectations for the economy have become since the Obama presidency began. Obama was quick to note that 1.5 million jobs have been added since last year -- an abysmal record for the second year of a recovery by any standard. If Obama is proud of this number, he must have given up hope for any kind of serious growth in employment levels or economic recovery.
To create jobs, it is crucial to make labor affordable. Everything the Obama Administration and its Congressional allies have done so far has made labor much more expensive. That's the failed European strategy, an area of the world that thinks that double digit unemployment is perfectly acceptable. Young folks in Europe have no real future -- the rich get richer and the young have lost hope. Most European children stay in their families' homes until they reach mid 30s. The wealthiest families in Europe are the same families that dominated European wealth 50 years ago. There is no economic mobility in Europe. Is that where we are headed?
Don't forget that in the "bad old days," that Obama doesn't want to see returned, unemployment dipped below 4 percent at times and was typically below 6 percent during the preceding 25 years. Gee, we certainly don't want to return to that, do we?
Booms and busts are part of life. Trying to eliminate busts by the heavy hand of government with bailouts, excessive regulations and payoffs to public employee supporters is absurd policy. But, it is the Obama way. What Obama means by "investments" is to spend money to reward his supporters. That's basically what the stimulus package was all about. Obama's proposed budget proposes more of the same.
Lets go back to booms and busts. They were certainly a lot better than this. The opportunities that were abundant in the 1980s and 1990s have vanished with the new normal of the Obama era. We need to go back to the bad old days.
To create jobs, it is crucial to make labor affordable. Everything the Obama Administration and its Congressional allies have done so far has made labor much more expensive. That's the failed European strategy, an area of the world that thinks that double digit unemployment is perfectly acceptable. Young folks in Europe have no real future -- the rich get richer and the young have lost hope. Most European children stay in their families' homes until they reach mid 30s. The wealthiest families in Europe are the same families that dominated European wealth 50 years ago. There is no economic mobility in Europe. Is that where we are headed?
Don't forget that in the "bad old days," that Obama doesn't want to see returned, unemployment dipped below 4 percent at times and was typically below 6 percent during the preceding 25 years. Gee, we certainly don't want to return to that, do we?
Booms and busts are part of life. Trying to eliminate busts by the heavy hand of government with bailouts, excessive regulations and payoffs to public employee supporters is absurd policy. But, it is the Obama way. What Obama means by "investments" is to spend money to reward his supporters. That's basically what the stimulus package was all about. Obama's proposed budget proposes more of the same.
Lets go back to booms and busts. They were certainly a lot better than this. The opportunities that were abundant in the 1980s and 1990s have vanished with the new normal of the Obama era. We need to go back to the bad old days.
Friday, February 25, 2011
Can't Pretend Much Longer -- Inflation is Here
Noticed food prices lately? Or perhaps the price of gas at the pump has caught your attention. You probably didn't know that raw cotton is up 180 percent since a year ago. Guess where that will take clothing prices. Think deflation is our problem, think again. Inflation is here.
US monetary policy and US debt policy hinge on the assumption of deflation. So much for those policies. Be prepared for major increases in treasury rates which means a dramatic and unanticipated increased in annual federal fiscal deficits. Things are going to get a lot worse quickly.
Bernanke and Obama are going to reap the results that their policies have sowed. A return to the Carter days -- stagflation is back. The stock and bond markets will struggle from here.
US monetary policy and US debt policy hinge on the assumption of deflation. So much for those policies. Be prepared for major increases in treasury rates which means a dramatic and unanticipated increased in annual federal fiscal deficits. Things are going to get a lot worse quickly.
Bernanke and Obama are going to reap the results that their policies have sowed. A return to the Carter days -- stagflation is back. The stock and bond markets will struggle from here.
What makes a great trader? Managing risk
Found these excellent comments (one, two) on trading from Fullcarry and had to favorite and share these tweets.
Amazing how quickly these pearls of wisdom can dissipate in the real-time information ocean of Twitter if you don't happen to spot them at the right time.
Incidentally, this is why I try to favorite (Twitter's bookmark function) tweets and check up on my favorite Twitter lists. You never know what you'll find, or what you might have missed if you didn't happen to catch it in your stream. Wish Twitter would improve its archived search features so users could easily uncover more great information like this, but that's a topic for another day.
Back to Fullcarry's notes: what's amazing about this particular insight on trading is that it goes against the grain of conventional thinking on successful trading and investing.
So many outsiders, and many trading books and programs aimed at a mass audience, operate on the assumption that you need to aim for a high percentage of winning trades ("high probability outcomes") or that you must be right most of the time to make it as a trader.
As Fullcarry tells it, just the opposite may be true. You don't have to be right on all your calls (or even half of them) to be a profitable trader. You do have to know how to manage your trades and your risk.
After I had saved these tweets last week, I happened to notice a great post by Darvas Trader that ties right in with Fullcarry's message on managing trades and risk. It's called, "The Dirty Little Secret of Successful Trading" and it makes a similar point about relying on winning percentage vs. managing risk.
Quoting Darvas Trader:
"Risk management is the single biggest determining factor in the long-term success of a trader."
Great study material for traders and investors who are learning to apply some form of risk management to their trading or investing method of choice.
Of course, you could always go the big-shot fund manager route and tank your investors' returns (by refusing to take losses and managing risk) after a big winning streak, but maybe the disciplined approach is more useful for those of us who aren't in the media spotlight.
If you're enjoying these posts and would like to see more, please subscribe to our free RSS updates and follow Finance Trends in real-time on Twitter and StockTwits.
One of the best traders I ever met was never right.
Ed Bradford
Fullcarry
Ed BradfordFullcarry
It was one of the few woman traders I ever worked with. She just new how to trade and manage positions, but was terrible at calling things.Ed Bradford
Fullcarry
Ed BradfordFullcarry
Amazing how quickly these pearls of wisdom can dissipate in the real-time information ocean of Twitter if you don't happen to spot them at the right time.
Incidentally, this is why I try to favorite (Twitter's bookmark function) tweets and check up on my favorite Twitter lists. You never know what you'll find, or what you might have missed if you didn't happen to catch it in your stream. Wish Twitter would improve its archived search features so users could easily uncover more great information like this, but that's a topic for another day.
Back to Fullcarry's notes: what's amazing about this particular insight on trading is that it goes against the grain of conventional thinking on successful trading and investing.
So many outsiders, and many trading books and programs aimed at a mass audience, operate on the assumption that you need to aim for a high percentage of winning trades ("high probability outcomes") or that you must be right most of the time to make it as a trader.
As Fullcarry tells it, just the opposite may be true. You don't have to be right on all your calls (or even half of them) to be a profitable trader. You do have to know how to manage your trades and your risk.
After I had saved these tweets last week, I happened to notice a great post by Darvas Trader that ties right in with Fullcarry's message on managing trades and risk. It's called, "The Dirty Little Secret of Successful Trading" and it makes a similar point about relying on winning percentage vs. managing risk.
Quoting Darvas Trader:
"Risk management is the single biggest determining factor in the long-term success of a trader."
Great study material for traders and investors who are learning to apply some form of risk management to their trading or investing method of choice.
Of course, you could always go the big-shot fund manager route and tank your investors' returns (by refusing to take losses and managing risk) after a big winning streak, but maybe the disciplined approach is more useful for those of us who aren't in the media spotlight.
If you're enjoying these posts and would like to see more, please subscribe to our free RSS updates and follow Finance Trends in real-time on Twitter and StockTwits.
Thursday, February 24, 2011
Simplify: a Lesson from the Bad News Bears
Watch coach Leak's instructions to pitcher, Carmen Ronzonni. Sometimes we make things harder than they need to be. Simplify.
Wednesday, February 23, 2011
What Happened to Robin Hood?
In Madison, thousands of high income folks are busy demonstrating in the hopes that lower and middle income taxpayers will pay higher taxes to keep these rich folks riding high. The average teacher in Wisconsin makes between two and three times the all-in compensation of the average Wisconsin taxpayer, so, by all means, lets raise taxes and make the gap even higher. To show their concern for their students, the Wisconsin teachers have taken to calling in sick while they are demonstrating in the state capital for even more money.
Meanwhile, the state faces an immediate $ 3.6 billion shortfall and will be forced to begin laying off teachers next week. Why don't the demonstrating teachers care about the pending layoffs? Because the ones demonstrating will not be the ones laid off. The ones laid off will be the most recently hired teachers with the least seniority and these teachers aren't paid as well or have as much seniority as the ones wreaking havoc in Madison. The rich teachers are protected by seniority rules.
Just imagine a couple both of whom have been school teachers in Wisconsin for twenty years and have a combined compensation exceeding $ 250,000 annually. These are the people demonstrating. These are the people that are not showing up in the classroom even though paid (handsomely) to do so.
Where is Robin Hood? He needs to ride in and support the taxpayer against these rich folks who are robbing the public treasury and not showing up for work.
Student demonstrators, as usual, are supporting the relatively affluent against the interests of the average citizen. No change there.
Meanwhile, the state faces an immediate $ 3.6 billion shortfall and will be forced to begin laying off teachers next week. Why don't the demonstrating teachers care about the pending layoffs? Because the ones demonstrating will not be the ones laid off. The ones laid off will be the most recently hired teachers with the least seniority and these teachers aren't paid as well or have as much seniority as the ones wreaking havoc in Madison. The rich teachers are protected by seniority rules.
Just imagine a couple both of whom have been school teachers in Wisconsin for twenty years and have a combined compensation exceeding $ 250,000 annually. These are the people demonstrating. These are the people that are not showing up in the classroom even though paid (handsomely) to do so.
Where is Robin Hood? He needs to ride in and support the taxpayer against these rich folks who are robbing the public treasury and not showing up for work.
Student demonstrators, as usual, are supporting the relatively affluent against the interests of the average citizen. No change there.
Tuesday, February 22, 2011
Russia Forum 2011 w/ Nassim Taleb, Marc Faber
Russia Forum 2011, which recently took place in Moscow, featured a global investing outlook panel discussion which included famed investors and commentators, Nassim Taleb, Marc Faber, and Hugh Hendry.
Also on hand at the forum were economist, Nouriel Roubini, strategist, Russell Napier, and a panoply of international investors and business leaders. You'll find Roubini and Napier adding their thoughts in the outlook panel video above.
There was also a rather interesting panel, featuring Faber and Taleb, entitled, "Is Russia the Best or Worst in BRIC?".
This conversation is worthwhile not only for the contributions from the aforementioned panel stars, but also due to the comments from other panelists and some key questions from the audience.
Pay special attention to Mario Garnero's comments on the effects of Brazil's past inflation on its middle class (this is important for those of us in QE, deficit-land US), as well as the questions on Russia's future from the native conference attendees.
If you'd like to take a look at last year's lively panel discussion and judge the panelists' comments against what took place in 2010, check out our related post links below.
Related articles and posts:
1. The Russia Forum 2011 - Russia Forum.
2. Panel discussion from Russia Forum 2010 - Finance Trends.
Also on hand at the forum were economist, Nouriel Roubini, strategist, Russell Napier, and a panoply of international investors and business leaders. You'll find Roubini and Napier adding their thoughts in the outlook panel video above.
There was also a rather interesting panel, featuring Faber and Taleb, entitled, "Is Russia the Best or Worst in BRIC?".
This conversation is worthwhile not only for the contributions from the aforementioned panel stars, but also due to the comments from other panelists and some key questions from the audience.
Pay special attention to Mario Garnero's comments on the effects of Brazil's past inflation on its middle class (this is important for those of us in QE, deficit-land US), as well as the questions on Russia's future from the native conference attendees.
If you'd like to take a look at last year's lively panel discussion and judge the panelists' comments against what took place in 2010, check out our related post links below.
Related articles and posts:
1. The Russia Forum 2011 - Russia Forum.
2. Panel discussion from Russia Forum 2010 - Finance Trends.
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