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Friday, October 30, 2009

Sugar High Recovery

My favorite radio guy, Charlie Sykes has often called the economic numbers driven by Cash for Clunkers and the housing tax credit a "sugar high" for the economy.

Yesteday everyone on the left side of the aisle in DC was touting the economic numbers that showed the recession had ended, based on the last quarter GDP numbers. Wall St., never folks to pass on good news, added well over 100 points to the Dow.

Ah but the sugar high. Today numbers came out that showed consumer spending growth, even with Cash for Clunkers, was only up for one month, and down for the next, wages are stagnant, and employment numbers aren't great.

Consumer sentiment dropped, and the outlook for the quarter, with holiday spending is for spending growth to be about 1%. That's not the stuff lasting recoveries are made of.

The Dow dropped 249 points on todays news, it's biggest one day drop since July. Wall St. isn't, evidently buying into the idea of a full blown recovery.

I actually have another thing that made me realize this is a sugar high. My 401(k) statement came in the mail a few days ago. Generally things looked pretty good, the market has moved mostly up the last quarter, which made my stock based funds perform pretty well. But even with the market moving up, my bond fund outperformed the stock funds. That's very unusual, and almost never happens.

Why are they going up so quick? Investors don't buy the recovery, and would like to put money into the standard 'safe haven' instrument of choice. However, since so much is being borrowed, they also doubt the ability to repay them; bonds are loans you know; and are demanding a better return on investment.

Basically, the investor class has put the government bond market into a 'sub prime' category in all but name.

The crash from that sugar high is going to be much worse than anything we've seen before, unless somehow fiscal discipline returns to Washington.

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Thursday, October 29, 2009

Health Care Reform Act

Rep. Paul Ryan of Wisconsin has made the house version of "health care reform" available for reading and download (pdf format). I hope you have a lot of time, as it is 1,990 pages long, since your legislators want to vote on it next week, I'm pretty sure most of them won't have time to read it.

If you think 1,990 pages of legislation is incomprehensible, and and it's contents unknow even to those who claim to be the authors, you are probably right. Just perusing through it the bill is a mish-mash of amendments and revisions to existing codes. My guess is that if it were to be gone through completely it probably contains dozens, if not hundreds, of entaglement problems, where one section orders one thing, another section the opposite, or something substantially different.

Considering Dingell, Rangel, George Miller and Henry Waxman are the principle authors, you can rest assured that they have included plenty of pay-offs to their favored groups. I doubt any of them have passed legislation that didn't.

Have a good read.

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Tuesday, October 27, 2009

Take His Time?

So, my laugh of the day started yesterday, when I heard a newscaster say that President Obama planned to "take his time" in making a decision on if or when to send more troops to Afghanistan.

Really? Hasn't he already been doing that? A month ago we all heard that McChrystal had asked for more troops, and shortly after that we found out that the original assessment/request was sent in a month before that.

Two months, and now we hear that they are going to take their time? They have been taking their time already. My guess is whenever the commander in chief decides he has to decide, Congress will then want hearings to second guess whatever that decision is, delaying things even longer.

Here's where the real problem is for Obama. He can't ignore McChrystal, he spent his short time in the Senate telling GWB that he was an idiot for not listening to the commanders on the ground. )Well, until the commanders said they needed more troops, then he said Bush was an idiot for listening to them). The he complained he was wasting time in Iraq and not concentrating on Afghanistan.

Now he's in the drivers seat, and it's time to concentrate harder on Afghanistan, and those damn folks over there refuse to realize he is The One© and just lay down arms and sing Kumbaya. So the apparent strategy is just ignore everything, and hope everyone forgets to fight over there.

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Sunday, October 25, 2009

Fact Checking Congress

The AP has a lot of faults. However, I give them credit for their FACTCHECK series of articles that they've been running. They've been pretty balanced, and gone against the grain of the MSM of late and been critical of President Obama and Congress.

The latest, a fact check on insurance profits shows something that Nance Pelosi, Harry Reid, and "The One"© don't want you to know, insurance company profits aren't that high.

WHAT!!! Wait, I was told they are making scads of money, and dead people are piling up so they can do it, how does that work?

It's actually pretty easy. If you only talk in dollars, and not percentages, it sounds like huge profits. When you actually look at the returns on investment and growth rates, the insurance industry is pretty far down on the list.

In fact, if you were writing a portfolio, most insurance companies would be in the sustainable growth category, an area you park money to keep up with inflation and mitigate risk, not to make a big profit.

Right now it might not even get into that category, with profits equalling only two percent of revenue. If you listen to the folks trying to demonize the industry, you'd think expenditures are only two percent of revenue, the rest going into some fat cat's pocket.

The other way the numbers are getting skewed is when someone wants to paint an insurance company as greedy they lump all profits, not just health insurance, into the equation. Companies that provide homeowners, health, life and auto insurance do have higher profit margins. Most of those profits come from the other products though. In fact, if you want to get mad, start looking up the profit to revenue margin on auto and life insurance, and ask why Congress isn't concerned about those.

So who makes more than insurance companies? Railroads, the folks who give you Tupperware, network and communications equipment makers (1ox insurance company profits), Coors brewing, Yahoo and others.

How come they aren't being demonized?

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Executive Pay Mess

As I was reading through my Wall Street Journal opinion pages yesterday, I came across a great article that explains the executive pay mess that Wall Street, and others are facing. "Washington's Plans May Result in Even Higher Executive Pay " explains how a Congress, in 1992 decided that cash payments to executives were wrong, and didn't tie their compensation to actual company performance. They also thought that boards of directors weren't doing enough to increase shareholder value, and that by tying their compensation to performance it would create an environment that would make us (shareholders) more money, and keep executives from being overpaid for under performing.

Now of course, Congress is ticked off that executives get big stock option bonuses, based on performance guidelines they codified 17 years ago, and want to change the system, because evidently it's unfair again.

There are a few outcomes that are nearly sure anytime congress does anything. One is they won't accurately predict the results. In 1992 it was thought that executive pay would stay fairly stable, while shareholder value went up. But since they wrote a bad law, only one of the two did happen, shareholder value did go up. But executive pay skyrocketed based on the criteria congress laid out.

Now, we are seeing the other end of the spectrum. While the President complains banks won't lend enough, he signs bills that punish the banks, and specifically the boards, for taking risks.

Look over the financials and you see that AAA corporate lending is back to a pretty steady track, where it was in the 2006 and 2007. Small business, venture, and personal lending, the riskiest types are languishing far behind.

This is rightfully so based on the way the TARP program has worked. Now the rules are take out too much risk, and the boys from the Fed will show up with a check you can't refuse, and take control of your bank, either explicitly or implicitly through congressional action.

The worst is yet to come, though. The new pay schemes, if they work at limiting executive pay won't just slash pay, they'll slash talent. The folks at the top of the banking industry aren't rubes, they can work in nearly any industry and be successful. So when the government decides what's "fair" compensation for anyone who took bailout funds, they'll just bail out of the industry.

What we'll be left with is an industry that's full of newly promoted former middle managers, who didn't leave because they were afraid they couldn't succeed elsewhere. The result is going to be less money for anyone to borrow, with you and me still at the bottom of the list to get that money.

And of course, Congress will wonder why this happened.

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Friday, October 23, 2009

Your Assignment for Today

Go here today , watch the scroll, and remember why we fight radical terrorists.

My thoughts and prayers are still with them, after all of these yearrs.

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Tuesday, October 20, 2009

Too Much Driving

I don't mind driving. I can't, my job requires it, to the tune of about 45,000 miles per year. However, at times it does get to be a few too many miles.

Yesterday I drove 570 miles, not to get to a job, but to get within four hours of it so I could finish driving (211 miles) there today. Of course all of this morning miles were in a fog with about 50 yards visibility. Then, after about three hours of work and a stop at the gas station, back on the road. 268 more miles to the hotel for tonight.

Tomorrow isn't bad, the job is close, and the hotel for tomorrow night is only about 80 miles from it. Then Thursday it's a half day of work, then start making my way home.

So, by the end of the week I should be right around 1750 miles, plus 3 jobs. I'm pretty when I get home I'll just hit the bed and die (or at least pass out).


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Sunday, October 18, 2009

Twitter Ate My Blog

Well, okay, it didn't eat it, but it did block access to it. Evidently Twitter is down, and it's widget locked up loading of my blog. One of the cool things about twitter is it's easier to post a quick thought than it is here. The down side is that it crashes on a regular basis. At least twice a day I get the "Over Capacity" error, or it just doesn't load.

So, I fixed (read, blocked) the widget, and now the blog loads again.

Update *** It's noon, and Twitter is still dead **** I dont' think my life will change.

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Saturday, October 17, 2009

But Did They Card Him?

Okay, this is too funny. And not a joke....

Q: So why did the bear go into the liquor store?
A: To nap in the beer cooler.

A genuine "No Shitter" story from Hayward, Wisconsin. Figures, only in Wisconsin would bears walk straight to the beer.

The only question is did anyone think to card him?

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Higher Insurance Rates, Coming Soon!

The Wall Street Journal once again points out the failure of a state (New York) to insure more people, give great choice in policies, and cut insurance costs through mandates and controls.

The insurance companies released their report saying that prices will go up about 20% if the Baucus Bill passes. But the WSJ article points out that New York's rates have doubled since the state decided that they should mandate coverage types, rates, etc.

So, since it's failed in New York the obvious thing to do is have the whole country try it, right?

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Thursday, October 15, 2009

Advice to Insurance Companies

So I'm reading the news, and see Nancy Pelosi is pissed that insurance companies are telling the truth about the Senate health care reform bill. That truth, your premiums are going to go up, considerably.

This bothers the left because they (desperately) want you to believe that health care reform is going to be a free lunch. They want you to believe that because the truth, as it's played out everywhere that has used community rating, guaranteed issuance and zero waiting has been the opposite.

My advice to insurance companies isn't to shut up so that they'll stop adding ideas to their already bad plan. Just the opposite. Keep getting louder, so they add more.

Why, pray tell, would I suggest that? Easy, the worse the bill gets the easier it will be for insurance companies to exit the market before it takes effect. They will be going out of business once it does, anyway. So hasten your own death, and allow the feds to pick up the entire tab for their folly.

If things work out right, they'll make being an insurance company so onerous at implementation time that no on in the public (other than the "Obama Stash" crew) will blame you... But they will blame congress.

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Friday, October 09, 2009

Nobel Prize for Possibilities

President Obama got the Nobel Peace Prize for his stands on a number of issues. Not actual accomplishments, but his 'ideas'. That's because on the issues that they mentioned, he's actually accomplished nothing, except giving out "warm fuzzies".

Nuclear Disarmament? Well he's talked about it, while pretty much allowing Iran to continue developing fuel and North Korea to keep working on improving their bombs. Putin's laughed at him about it.

Peace in the Muslim World? Still fighting in Iraq and Afghanistan, and still hasn't gotten Israel and the Palestinians to the table. But he did say that the Taliban could have a role in governing Afghanistan.

He did reaffirm the importance of the UN as a world body by allowing Iran to have the floor to deny the holocaust and threaten most of it's neighbors. That's gotta count for something.

He's worked on appeasement with Venezuela, Iran, the Taliban, and pretty much anyone else.

Yeah, he's a peace prize guy.

I can't believe the committee couldn't find a person with an actual accomplishment to their name to give the prize to.

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Thursday, October 08, 2009

Lessons from the States

Peter Suderman has a great article in the Wall St. Journal's opinions page about lessons we've learned from the states when it comes to health care reform and mandates.

The Lesson of State Health-Care Reforms points out some inconvenient truths; to borrow a phrase; about health care reform. Specifically, those things that we are being told from Washington will reduce our costs have done just the opposite in the states.

He points out numerous states, New York, Maine, Kentucky, Tennessee, Massachusetts, Vermont, and New Jersey that have tried things like community rating (rates based strictly on age, not risk) and guaranteed issuance (pre-existing conditions ignored) and mandated coverage. What they found is that each of them, in their own way, increased the cost of insurance, and didn't significantly decrease the number of uninsured.

Sounds counter intuitive that mandated coverage wouldn't decrease the number of uninsured, but, as Massachusetts has found out, if the penalty isn't big enough to be a problem, people will still ignore the mandate. They've also found out that with community rating and guaranteed issuance many people buy coverage when they find out they are sick, then drop it when the treatment ends.

Wisconsin was added to the list of failed state initiatives this week, when it's Badgercare Plus, for childless adults announced it couldn't afford to let anyone else into the program after this Friday. Like "Cash for Clunkers" it ran out of money long before anticipated, three months instead of a year.

While Wisconsin Governor Jim Doyle says that Badgercare Plus's problem shows we need national health reform, he doesn't mention that we should probably multiply the cost estimates by four to actually have enough money to pay for it. Then again, that's probably a wise thing to ignore. If folks were told we'd need 4 trillion over ten years, or even 3.4 trillion for the Senate package, everyone would be at the tea parties.

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Tuesday, October 06, 2009

Truth Stranger than Parody!

CNN, known to many conservatives as the "Communist News Network" hasn't got a lot of credibility with them. If it had any, it's now gone, after Wolf Blitzer fact checked an SNL skit mocking President Obama.

I wish I was making it up, but I doubt SNL has writers capable of coming up with a skit where a (supposed) major news network decided to fact check a parody.

Here it is for your enjoyment. H/T to Doug at Below the Beltway

BTW, I'm pretty sure George Bush would have appreciated the same treatment from Wolf.

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Don't Get Cancer, Grandma!

Don't get cancer, Grandma, 0h, and don't have a heart attack, either. Why, well medicare is slashing it's payments to cardiologists and oncologists next year, that's why. The Wall St. Journal has a nice piece on the issue today.

EKG's and stress tests will have their reimbursement rate cut by 42%, and cardiac catheterizations by 24%. Oncologists are seeing similar cuts, with radiation treatment getting a 44% whack.

This has nothing to do with health care reform legislation, this is just next years Medicare reimbursement rate. If the Senate finance version of reform passes, those specialists will see even bigger cuts in their future reimbursement rates.

Jack Lewin, head of the American College of Cardiologists figures this years cuts will drive many doctors out of business, or force seniors to the back of the line for treatment.

Considering Medicare pays about $0.83 on the dollar to doctors as is, cutting some rates by 44% means they are asking doctors to provide services for less than half the actual rate they charge private insurance patients. Good luck getting that stent, stress test, or radiation treatment.

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