Government Health Care Flow Chart (from Congress)

This chart is from Congress and illustrates how simple our new government health care will be. I'm not making this up, this is not a joke, although I can see where you would get that.

http://www.newmajority.com/wp-content/uploads/2009/07/dems_health_plan_organizational_chart.jpg

I beg to differ Mr. President

President Obama,

You were asked last night about a black Harvard Professor who was arrested for disorderly conduct after breaking into his own home. The police responded to a call of two men breaking in to the home, asked to see his ID, and he defiantly refused and accused the officers of racism. Eventually he shows proof of ownership, but continues to be agitated. You said that "I think it's fair to say, No. 1, any of us would be pretty angry,"

Apparently you and I are different. I would not be upset to see the police showing to prevent what looked like a burglary of my property. I would be grateful and happily show them my ID. I would be left thinking I live in a safe neighborhood with a good neighborhood watch. Hopefully I would know my neighbors so they would have recognized me in the first place, but that's beside the point.

And then you had the boldness to say "No. 2, that the Cambridge police acted stupidly in arresting somebody when there was already proof that they were in their own home." I still can't believe called the police officers stupid for doing their job and responding to a robbery. Sure, now you are claiming that you were calling the incident stupid. But clearly you said the police acted stupidly, which implies you called the police officers stupid. The professor was not arrested at that point for breaking into his home, he was arrested for disorderly conduct.

You then said "And No. 3 — what I think we know separate and apart from this incident — is that there is a long history in this country of African-Americans and Latinos being stopped by law enforcement disproportionally and that’s just a fact." Whether or not you not you said it was apart from this incident, your words in fact imply you are calling the officers racists. I think its obvious this wasn't a case of racism. Perhaps the man shouldn't have been arrested, but if you're being yelled at and called a racist for doing your job you aren't going to be sympathetic. There was a black officer present. Additionally, the arresting officer has taught a diversity class to other officers for the past five years. I don't think a racist would do that. The police officer shouldn't be apologizing, you and the professor you should be apologizing for calling him racist.

It wouldn't surprise me if your friend Professor Gates wanted to be arrested. I'm not saying he came thinking he would get arrested. But now that he was arrested he is on cable news. Next thing you know he will be announcing his book deal.

Sincerely,

Greg

Health Care - Worth Taking the Time to Fix

Yesterday, thankfully, it was announced that the health care bill will not be voted on before the August recess despite President Obama's time table to do so. (You can't blame the Republicans anymore, the Democrats have a filibuster-proof majority in the Senate so all the delays are from their disagreements) This is only a good thing, in my opinion, no matter what side you stand on.

If health care is as important an issue as it is claimed, then we the American people deserve for any bill promising reform to have had the time devoted to it to try and ensure it is well thought out. There are many issues yet to have been addressed, including how much exactly this will cost, how we will pay for it, who and how covered procedures and medicines will be determined, what sacrifices we will have to make, (and there will be, despite vague answers) and more. This are not easy and light issues. As of yet, I have not heard satisfactory answers to these questions. His news conference Wednesday certainly failed to offer them. To try and push such a bill through without these questions having been addressed and explained to the American people, who should have a chance to respond, was ludicrous on the part of the President.

The problems of our nations health care have been around and developing for years. How then can you argue that a bill must be passed so quickly, that a couple more months cannot be given to try and ensure the bill is good? Many point to President Bush as having used the politics of fear to push through legislation in the wake of 9/11. I point to President Obama as using the politics of fear to push through health care and other legislation that dramatically changes the nature and role of our government. Obama is afraid if he doesn't get his bill passed soon, Americans will begin to realize that it isn't the silver bullet he promised. The economic crisis that burst forth open last October was not related to health care. (it was caused by over-borrowing, and is being fixed by over-borrowing) And yet, the President seems to connect the two and use the financial crisis as a pretext for rushing through health care reform. If President Bush used fear tactics, President Obama has used them from the beginning of his presidency.

So When Did AIG Become FDIC Insured Anyways?

Our government sank another $30 billion into AIG this week, for a grand total of some $170 billion since the beginning of this crisis. We've been told AIG is "too big to fail." It's becoming we've lost too much money for it to fail. Any hope that we would make money off this "investment" (remember the good ole days of October 2008) has in my opinion has died.

Let's recall what AIG did to get in such trouble. It wasn't health insurance or providing your grandmother with an annuity, nor their aircraft leasing business. It was their Credit Default Swaps (CDS), basically insurance on an investment, such as a corporate bond or mortgage-backed security. Say you bought some debt of GM (because you wouldn't want to buy one of their cars), thus lendig them money to use (they really need it), but you were afraid they would default. You could get a Credit Default Swap, a contract where you the buyer would pay a small fee to cover that bond to the seller (like AIG), and if the company defaulted paying back the bond you receive a payment. Basically insurance on the bond, but the key being its not regulated. There were no rules over how much money a seller of CDS had to have on hand to cover losses, as there are in regulated insurance. Indeed, there were no rules that you even had to actually own a bond of the company you were buying, if you thought a company would fail you could bet against it. So, there were more CDS than the underlying assets they were insuring.

As I mentioned, CDS's were not regulated. Your normal commercial bank where you have a checking and savings account, is regulated (I would say well-regulated but if you've watched the news...) and FDIC-insured. (Federal Deposit Insurance Company) So, should the bank fail, your money in your accounts would be safe, up to $100,000 at a bank before the crisis, now $200,000 or so. But these credit default swaps that AIG and other banks were making were not regulated like insurance companies, or banks, and not FDIC insured. Like buying stock, there's a risk the CDS will fail. But somehow, we (or at least the government) has got this mentality that we can't let AIG fail because all these credit default swaps would fail. So what? That would be horrible if people lost money on their bad investments. Investors should have been aware they were buying unregulated insurance and could lose. The problem in my opinion is not that AIG is too big too fail but that their product (CDS) has now become too important to fail and is being treated like an FDIC insured bank account where the government will back it, despite AIG and the investors never having paid anything to cover them when they were profiting. If only they had bought credit default swaps on their credit default swaps. Will we the taxpayers keep sinking money into AIG to cover ever investor's loss covered by a credit default swap? Probably.

This raises another question, which could be a post in itself. These large banks (I won't name them) that keep getting bailout money, why doesn't the normal FDIC process apply here? The accounts are FDIC-insured, so although they can fail the account holders would be protected. If a bank is good it shouldn't need money, and if its bad it would reach a point where its about to not be able to cover its accounts, in which case the Feds would step in, wipe out the shareholders, prop the bank up, and reorganize it and eventually re-privatize it. Fair and simple. The way the media portrays it if the banks failed the account holders would lose, which is not true. And yet, there has not been much talk about the FDIC since October.

Obama's Charity Tax: The War On Charity

Obama announced today his $4 trillion budget. To help pay for this, one of the tax increases will be on charitable donations of the rich. (as well as mortgage-interest deductions since houses are selling too fast as it is and taxes on energy) Obama is planning on reducing the tax deduction of those in the top tax bracket, 35%, from the 35% they are paying for each dollar donated to 27%. That's effectively an 8% tax on charitable donations.

Clearly, this charity tax is going to drive down donations to charities, but is that a bad thing? Let us start this war on charity, because charities have too much money as it is. It's about time they suffered like the rest of America. They overpay their employees who enjoy plush jobs that they don't have to work at unlike our dedicated, government servants who work for too little in jobs that could be eliminated at any moment. They have such a demand for their services these days that they shouldn't have a problem making ends meet; after all, any business would die (some are) to get that much demand for their products now.

How is it fair that a rich person who donates say $1000 gets back the $350 in taxes they paid on that money, when those in the next lowest tax bracket pays $270 in taxes on that same $1000 and only gets back a measly, $270 and not $350? That rich person who worked to get that $1000 could have taken time off from work and donated their time and not made that $1000 that they donated thus getting back $350 they owed on it, but since they did work and donate they should only get back $270 after paying $350 in taxes on money they didn't keep. But what about the poor who make donations? They get back even less than $270 on $1000 they donate, how is that fair? If you don't pay taxes, you won't get any money back on your taxes for making a donation. (the really poor and Treasury Secretary Geithner) Clearly, the only fair thing to do is to get rid of charitable deductions.

And shame on that rich person, who having likely managed their money well by keeping a budget, should consider donating less because the taxes on that money they would donate would consume more of their budget. Not only should they donate the same irregardless of taxes, they should donate more so to offset the increased tax on giving, so that the government gets not a penny more than before, thus showing they don't just give to reduce their tax burden, but to spite the government.

America For Sale

Yesterday, it was announced that Anheuser-Busch, maker of Budweiser beer, was being sold to the Belgian brewer InBev for $52 billion. This could mean major trouble for Americans who love their cheap, flavorless beer. Just think, a Budlight is now going to be considered an import, with import prices. And it will be more patriotic to drink microbrews than Budweiser. Superbowl ads in Belgish? (We're being bought by a country that isn't even large enough to have its own language.) What is the world coming to? We must retaliate against the Belgians by calling Belgium Waffles (can you guess it?) Freedom Waffles. Then again, maybe that's our problem, everything being free. After all, $52 billion isn't what it once was. It's just a measling 33 billion euros, practically free. America is on sale for bargain basement prices.

The selling of the America's "King of Beers" is symbolic of foreign capital coming in and buying American companies. Last week the Chrysler building in New York was sold to Abu Dhabi. Of course earlier this year Citigroup was bailed out by Middle Eastern investors. This raises the question should this trend be a concern to Americans?

First off, can we complain about foreign capital coming into America when Americans have long been and are investing in foreign countries? Is there anyway for us in the age our modern financial system to stop this? To do that would require we ban foreigners from buying stock in American companies, which even if it could be done would end up causing other countries to do the same to Americans. We would have to become xenophobes, recluses hiding out across the oceans.

Its important to keep in mind that these foreign countries are out to make money. They aren't going to buy up America, so that one day we'll wake up to see our city skylines destroyed not by bombs, but demolished by foreign owners. They aren't going to by companies and then dissolve them. They want to make money, just like America wants to make money, and that is to our advantage. We have a large national debt, too large in my opinion, held largely by foreign countries like China. Countries that are holding are debt aren't going to do anything that would cause us to default on our loans. If they did, they wouldn't get their money back that they loaned us. The whole world economy would come tumbling down after America.

Perhaps to get our economy out of the gutter we could, as a nation, pull an Enron. We'll just fudge the numbers a bit. All we have to do is print more money than we say we printed. Nations have tried to print their way out of poverty, which has only resulted in rampant inflation. But that's because people knew they were printing the money. If the rest of the world doesn't know we're printing more money that we then use to pay down our debt, buy back stakes in American companies, and maybe buy stakes in foreign companies, (we'll throw in some foreign aid to developing countries) no harm done. It would also be very unifying for the country. Committing fraud is very unifying, your team has to be on the same page, committed to secrecy. If one person gets a conscience, it's all over, and everyone hangs together. "United we stand, divided we fall." This could really bring red and blue America together. Just think of it as a loan off our future prosperity that will be achieved. After all, the American dollar is weak because its seen as weak, but if America is able to do all this the dollar will appear strong and thus be strong, allowing us to do all that we would have just did. It's like the give a penny take, take a penny tray at cash registers. We're just taking billions of weak pennies now because we're a little short, and giving them back as strong pennies. To put it another way, its a sub-prime loan helping poor America who can't afford its own home to get one. I'm going to put it out there to all you pessimists who think the government isn't doing enough that maybe they are already doing this plan and the economy is going to improve, they just couldn't tell you because you would spill the beans on your blog to the whole world. Keep that in mind when you go to vote for president. If this plan is in place, McCain knows about it, Obama doesn't. You don't want to risk ruining that, do you? If Obama can be a secret Muslim, then McCain can have a secret plan for fixing the economy.

So you have a conscience and don't want to go through with the secret plan. There's an upside to the declining dollar. Our $9.5 billion national debt becomes a mere 6 billion euro national debt. Now is the time to pay off our national debt. Obviously, we can't use our tax money to pay this off since that tax is collected in dollars, which would defeat the point. Solution eBay. If we start selling items in Europe on eBay we will have a source of Euros. But we must act now, before the dollar becomes strong again and is coronated the King of Currencies once again, ushering in a reign of prosperity, another golden age for America.

DISASTER STRIKES!

If you live here in Louisville or the Midwest, you may have been woken up this morning by an earthquake. Now that your mind is on natural disasters, let's take a look at disaster preparedness. (If you're a long time reader of this blog, the following has been said before in response to Hurricane Katrina, but if its quite relevant now that we're thinking about the "big one." You might say I don't just blog on the news, I blog before the news even occurs.)

We were lucky with the hurricane, we knew it was coming a week in advance. Of course, the government still had a horrible response. I predict the worse natural disaster that could hit the US is an earthquake. (Besides a large asteroid striking in or near the US.) An earthquake would be bad because there's no warning, it just happens. There's no time to evacuate, to go to the store and stock up on supplies, no time for anything. There's no time for the feds to call up the national guard, or preposition supplies. Now you're probably thinking of the San Andreas fault in California. And that's certainly a possibility, but we also must consider the New Madrid fault in Arkansas, Tennessee, Missouri, and my own state of Kentucky. It should be pointed out that the largest earthquakes on record in the United States were from the New Madrid fault, and not the San Andreas fault. Three occurred in 1811 and 1812. The only reason not many people died is because it was 1811 & 1812 and so the area wasn't heavily populated. The same quakes today would cause immense damage. And indeed, there is much talk about us being due the big one.
I think the first lesson learned is you cannot expect help from the Federal government in the first few days to reach you in the disaster zone. Now with Katrina, the government new it was coming and probably should have responded better faster. But with say an earthquake, no warning will be available and so you definitely can't expect a fast response. Who knows what condition the roads will be in to allow aid to reach people. No, communities and individuals will be on there own for at least several days, if not longer.

So, perhaps each person in a vulnerable area or even the whole US should have a survival kit assembled with several days worth of nonperishable food (probably MRES - Meals Ready to Eat), water, a first aid kit, a radio for information, water filter, tarps, and other supplies. I doubt too many people are going to do this, (I myself have not and probably won't anytime soon) so the government would need to encourage this somehow, maybe by making it tax deductible. Then you have the problem that if all these buildings have collapsed, how will people reach the kits when they're buried under debris. People could build sheds to store all their emergency supplies. (Build a earthquake resistant house, call it an emergency shelter, and you'll be exempt from property taxes.)

Chances are that's not going to happen, so each community should store emergency supplies, not in one central location, but at various locations within walking distance of all residents. Each neighborhood could be responsible for their own supplies. And as the shelf life approaches, if MREs do indeed have shelf lives, the food could be given out to the homeless so it doesn't ruin and go to waste and be replaced with new food.

Each community should have disaster centers from which to manage disasters. For starters, the buildings should be especially built to survive the disasters, whether hurricane, earthquake, etc. They should have back up generators and maybe solar panels, satellite phones and satellite internet for communication in case the land lines go down, two way radios, food, water, gasoline, vehicles, etc. Communications was a problem after Katrina.
What about after the initial disaster and when aid must be distributed? After Katrina, the government was criticized both for being too slow in getting out money while being criticized for people getting away with fraud. First of all, if you want speed fraud will happen, that's the price you pay. What we need is a database of everyone including biometric information (fingerprints and retina scans), where they live, and other information. This would be a national database and backed up in several locations in case a disaster strikes any one server's location. Then, when a disaster hits an area, the government will be able to quickly verify if someone really does live in the affected area, and if they are who they say they are. and get the money to people who are suppose to have it quickly. It would also be able to make sure people don't double dip into the funds. The government might not be able to stop people from buying $100 bottles of wine, etc., but they could control who gets the money in the first place.
After Katrina, many people had trouble getting new ID since they lost their birth certificates along with it. With a database, new IDs could be quickly issued. This is important since an ID is needed to access one's bank account, etc. Who knows, maybe the government could provide each American with an allotted amount of electronic storage in this database to backup important information in case all their belongings are destroyed.

A final step step we should take is disaster mitigation to reduce the impact of disasters in the first place. This could include not building in areas prone to flooding (like under sea level), building earthquake resistant homes, clearing brush away near buildings in wooded areas, and not building on the sea coast or building hurricane proof houses. Obviously disaster mitigation costs some money, but its cheaper to mitigate a disaster than to recover from a disaster. They can actually make buildings that are designed to resist earthquakes better, and homes that survive hurricanes. Building codes should require new buildings to follow guidelines that would mitigate disaster. We also don't want to repeat the mistake of requiring casinos to be floating, resulting in casinos ending up miles inland. If you are going to have casinos, they might as well be on land, because its not going to affect how many people gamble anyways.

More disasters are likely to happen. Sooner or later an earthquake is going to strike without warning, and we need to prepare now for that worst case scenario in addition to everything else. We cannot expect the federal government to be there to help for several days, and each community and each individual needs to be prepared to survive on there own in the mean time. We should have centers to manage disasters in each community that will survive the disaster. We need a national database so that we can get new IDs to be people, and get aid to the people that need it without wasteful fraud. And finally, but still importantly, we should take steps to mitigate disasters before they happen.

(P.S. To my loyal readers out there, I apologize for the sparse postings lately, but I have been swamped at school as the semester ends. We here at the Gregarious Blog believe in excellence, and if we can't deliver it to you then we don't deliver anything, because your time is as valuable as ours.)

Wall Street versus Main Street? Why not stop at the intersection of Wall Street and Main Street?

In this post I will write mainly in response to a speech Obama gave on the economy. http://www.nytimes.com/2008/03/27/us/politics/27text-obama.html?pagewanted=all

Barack Obama talks about Wall Street versus Main Street. It seems often that Wall Street and Main Street are viewed as diametrically opposed. That Wall Street prospers on the back of Americans. But does it have to be this way? I think not. Americans, no matter what they make, as long as they make something, should be investing money in the markets. Then they too can prosper when Wall Street prospers. But this requires sacrifice on the part of individuals. They have to choose to save money instead of spend it on items beyond their means. Indeed, this requires that they spend below their means, below their incomes, rather than spend more than their income. If you are in credit card debt money you earn in the market will be wiped out by your credit card interest. Of course there can be good debt, like your mortgage, or your student loans, although as has been brought to light lately that depends on your circumstances. Main Street should prosper on the backs of Wall Street.

"To renew our economy and to ensure that we are not doomed to repeat a cycle of bubble and bust again and again and again, we need to address not only the immediate crisis in the housing market, we also need to create a 21st-century regulatory framework and we need to pursue a bold opportunity agenda for the American people." Have you not studied history Obama? Have you no idea that the economy goes up and down, but in the long-term up? In the long-run, if you're diversified, you should make money. That doesn't mean each day you check your portfolio you'll have more, that doesn't even mean any given year you'll have more than you did last year. You could lose money in the short-run, you will lose money in the short-run from time to time. But if you're investing in the long-run, and diversifying your investments, you will historically make money. You say that we shouldn't put short-term gain ahead of long-term consequences, which I totally agree with, but your thinking betrays you and puts short-term gain first. If you strive to get rid of the cycle of bubble and burst, then you are encouraging short-term gain. In the long-term, the economy will improve, the markets go back up. If you're investing for the long-term you don't have that much too fear, except for politicians who will try to "fix" the economy. But if I can be guaranteed that I won't get caught in a bursting bubble, why wouldn't I invest for short-term gain, why wouldn't I put all my money in the latest investment fad? To say that the government needs to work to get rid of the bubbles and ensure stable growth is naive and just contributes to the get quick-rich mentality that got us in this financial quagmire in the first place.

I would like to know how Obama proposes to stop bubbles. The stock market by nature will create bubbles. Some area starts going up, whether it be technology stocks or mortgage-backed securities, and other people see this and say to themselves, "I should put my money in there since its doing so well." And they do, which drives up prices even more, causing even more people to do that. But eventually people stop putting money in, and prices start dropping. And then everyone thinks to themselves, "I must get my money out so I'm not stuck holding the deed to this house of cards." And so prices are driven down dramatically. Without dramatically restructuring our economy, there's no real way to stop this. The government can't come in and say the price of a stock or security or a home has gone up too much and so no one else is allowed to buy. And yet that's whats implicit behind Obama's statements. To be fair, I don't think Obama is that radical to attempt that, just too dumb to realize that what he says can't work.

One thing the housing bubble has shown is too many Americans aren't diversified financially. Most people's net worth is found in their homes, very little if any outside of them. Although home is housing, it is also an investment and like any investment one shouldn't put all their eggs in one basket. As I said earlier, Americans need to be invested in the market so that they can partake in the riches of Wall Street. Then if your home value drops, you'll be cushioned by investments in some other area. Why not have Main Street and Wall Street intersect?

What should the government do to prevent something like the subprime mortgage problem happening again in the long-term? I would argue the single greatest thing would be to educate students while they are in school about finances. This is more important than any regulation we can create. Kids shouldn't graduate without having been taught about making a useful budget, the dangers of credit cards, home loans, IRAs, 401(k)s, mutual funds, stocks, planning for retirement, planning for a house, the benefits and costs of home ownership, etc. The subprime lenders certainly share a large part of the blame for this whole mess. But if people had been educated before they graduated they would have known to avoid subprime loans. (and if they got one anyways that's their fault.) No matter how much regulation, there is bound to be failures of large companies from time to time. There is bound to be more Enrons. There is bound to be more bubbles. But if the average American, especially the workers of those companies, knew to invest for the long-term and to stay diversified, they would not feel a huge impact beyond at having to find another job. They would have known home prices wouldn't keep going up forever. They would have known not to get a mortgage they can't afford.