Obama's Pending Financial Crisis

The president wants us to believe that unless we enact his policies on financial reform that we will endure another financial crisis. Fresh off nationalizing 16% of the American economy, he off to take another huge bite out of freedom. The president claims the same same loopholes of the system still exist and therefore the large financial institutions will just head down the same path. Really? What the president is really saying is that business does not learn from their mistakes but rather needs the heavy hand of the U.S. government to control them in order to prevent them from repeating their own misery. I doubt it would happen that way. Will they make mistakes? Yes. Will we see another recession? Yes. While a recession is painful, it is a necessary evil in a free market economy. We need the system to flush out the poorly managed and inefficiently run operations. In short, we need bad companies to fail so that they can be replaced by more efficient ones to ensure that we as a nation can compete in the global economy. We have controls for those who truly abuse the system. It's called criminal law. We don't need the government controlling the financial sector to the point of preventing the next great expansion which might last 20 or 30 years just so we can prevent the needed cleansing of a recession that would last two years. The president wants you to believe that we need much more reform of the financial system than is actually necessary. He wants you to believe that the bankers cannot be trusted to learn a lesson on their own. He wants you to believe that a nationalized financial system is necessary to protect you. Do not believe him. If we are going to reform something let's reform mortgage lending. We hear everyday about the thousands more who are losing their homes. What we don't hear is that each and every one of them signed an mortgage agreement. the vast majority of those who are now in foreclosure are there because they made poor choices and bought more home than they could actually afford. They took a gamble on the real estate market and lost. What message are we sending to the masses when we fail to hold them accountable for their own actions. Why should you or anybody else not do the same thing the next time knowing that if you are wrong you don't have to suffer the consequences of your decision but rather will be bailed out by the government and the expense of future generations?

Those Greedy Bastards

How did we get to the point where the people who want to keep what they have earned are considered "greedy" and those who want what others have earned have somehow acquired the "right" to the earnings of others? I think that's backwards.

An Interesting Read - de blog

I'd like to give a quick shout out to a friend who has just launched her blog. She's a terrific writer and will really make you think. Give it a try; I am sure you will find her writing some of the best you've read. If you're a guy, don't be scared off by the fact that she claims it's writing for women. There'll be plenty there for you too. Here's the link. http://www.deblogsite.com/

Demand Side Economics

The supply economics of the Reagan era has taken quite a beating. Today we are about 1 year into the biggest demand side economic experiment ever attempted. We are going to see that it simply does not work particularly when the demand is created by giving people who don't pay taxes the money to create the demand. The government can't create a sustainable demand with this policy because it would be akin to having a $787 billion stimulus package every year. On the other side of the coin, encouraging people to invest will provide the impetus to get the credit markets moving again. Setting the capital gains tax at a permanent 15% would net the US government $15 on every $100 in profits generated. That could go a long way to closing the federal deficit gap. The other option, demand side, is to tax the American people until there is no more income to tax. One year into the demand side economic experiment we don't have anything to show for the money we spent except for higher unemployment. The Treasury Secretary who 1 year ago was telling us the jobs would be coming in 2009 is now saying they should start to pick up in the spring of 2010. When it doesn't happen again, and it won't, perhaps some people will start to pay attention. I doubt it though. Too many are still mesmerized by the orator despite the realities his policies bring.

Health Care Update

Last week the president told Republicans to stop using scare tactics in opposing the health care reform. Yesterday he laid out a line of scare arguments himself including saying the federal government would go bankrupt. Now there's no doubt that health care costs are going to continue to rise and something should be done but blaming the bankrupting of the federal government on a failure of the health care reform bill is a bit of a stretch. I guess we are just supposed to ignore the $700B stimulus and all the other money this administration has spent. But let's stick to the health care arena. I have a few recommendations that could significantly reduce medical costs in this country.
1. Tort reform for malpractice. The amount of money spent on malpractice itself is fairly small, less than 1% of health care spending. However, the amount of money spent of unneeded testing which doctors order to prevent getting sued is a significant portion of the health care expenditures coming in at about 9%. Tort reform could reduce this.
2. Allow Medicare and Medicaid to shop for the best drug prices. This is currently against the law. The elderly use more medications than any other demographic and more than many other age demographics combined. With our baby boomer bubble moving into their elderly years the demand for drugs paid for by Medicare and Medicaid is going to increase significantly. Let's allow them to purchase at a better price and save the difference.
3. Ease the government mandated administrative requirements in health care. Some studies estimate that administrative costs eat up 17 of every $100 in medical expenditures. There is a lot of opportunity for savings there.
The House bill which passed and the Senate bill which is floundering don't have any cost reductions in them. The House bill is supposed to save about $160 billion over 10 years but that savings is predicated on future reductions in Medicare/Medicaid spending of $420 billion over same period. No congress has ever reduced Medicare/Medicaid spending and I don't think any future one will either. We don't need the federal government to reform the health care in this country, we need the federal government to stop putting expensive requirements and restrictions on the health care system.

Tiger, Tiger, Tiger.

So long Tiger, it was nice knowing you. Sorry you didn't turn out to be the man we thought you were.

Health Care: Quick and Dirty Update

Today the President sent the Vice President out to make some comments on health care reform. Vice President Biden spoke in an attempt to counter the arguments from Republicans that the current health care bill would reduce Medicare/Medicaid benefits to the elderly. He characterized those arguments as "scare tactics." What he didn't say, and probably never will, is that for the health care reform bill now making its way through congress to meet the goal of not increasing the federal deficit, Medicare and Medicaid expenditures must be reduced by about $420 billion over the next ten years. Do I believe that will happen? Not in a million years. No congress has ever reduced the expenditures associated with Medicare/Medicaid and I doubt this one will either. That said, they are talking out of both sides of their mouths. One side says the health care reform will not increase the federal deficit based on reductions in Medicare/Medicaid while the other side says we won't cut Medicare/Medicaid.