Wednesday, March 31, 2010

Yield Curve

An excellent post on Zero Hedge discussing yesterday's auction and the yield curve. Rarely are important issues such as this discussed on CNBC, as Jim Cramer and the like are too busy covering issues such as Apple earnings.

Tuesday, March 30, 2010

Wednesday, March 24, 2010


For some reason, the Federal Reserve Bank now has to focus on restricting fees and expiration dates on gift cards. Apparently fees on gift cards is far too complex for the American consumer to figure out, and the issue of U.S. treasuries become a riskier asset class is not as important.

5 Year Treasury Auction shows less demand

Thursday, March 18, 2010

The Cost of Health Care

Who is to blame for the high cost of health care? The answer may surprise you. In order to understand why health care is so expensive, one must first watch this John Stossel video about the health insurance market. Also helpful would be reading an analysis provided by Dr. Francois Melese: Privatizing Public Hospitals. Further insight as to the reason why employers provide health care insurance has been documented by David Boaz:

"Why don't consumers pay for their own health care? The answer leads us to a great example of the vicious circle of government intervention, one regulation creating problems that lead to another regulation and then another. During World War II the federal government imposed wage-and-price controls to conceal massive inflation that it was creating by printing money. Wage controls made it hard to hold good employees or to attract new ones. Companies came up with the idea of offering health insurance as an employee benefit not banned by the wage controls. After the war the benefit was so well established that Congress decided not to count health insurance as part of an employee's taxable income, which meant that other companies began to offer it because it was cheaper for both employee and employer to pay for medical insurance with pretax dollars.

Because the employer was paying for health insurance and the insurance was paying for medical costs, patients became indifferent to costs."

Libertarianism: A Primer, by David Boaz (pages 224 and 225)

In summary, if one is not paying for the care they receive; one has no reason to reject a particular test or procedure that may not be needed. If insured, one is incentivized to take more risks that they might avoid otherwise (moral hazard).

Sunday, March 14, 2010

Federal National Mortgage Accommodation

The Federal National Mortgage Association (FNMA), also known as Fannie Mae, has recently sold $6 billion worth of debt.

Luckily there plenty of buyers of this debt that are willing to lend to this troubled institution, and the administration is willing to provide transparency to this operation that is completely under the control of the federal government.

Wednesday, March 10, 2010

Hope and Change

The verbal attacks on insurance companies persist, as this seems to be the only "hope" this administration has to taking over the health care industry. We can all continue to hope that this "change" does take effect, and that we all benefit from the bipartisan cooperation that includes constructive debate of both government and free market solutions.

Saturday, March 6, 2010

New York State Budget Deficit

New York State, not wanting to be outdone by Greece and California, is now expecting budget deficits to exceed 8 Billion Dollars.

The NY State Thruway meanwhile will be issuing new debt to fund its operations, as apparently the ever increasing tolls do not provide enough revenue.

Monday, March 1, 2010

Fiscal Irresponsibility

Luckily for us, the National Commission on Fiscal Irresponsibility and Preservation is being assembled with those experienced in spending.

The administration could have saved money and scrapped the oxymoronic "debt commission" (which will in and of itself cost taxpayers considerably) and referenced groups such as Citizens Against Government Waste and the Cato Institute for real solutions.