Single payer or individual buyers?

So everyone else has a health insurance plan. And while I think that a single payer system is unlikely to actually occur, there are some potential improvements that would be useful for Congress to focus on.

· If people are going to be forced to buy health insurance ala Massachusetts, then let people buy across state lines-a national market encourages pricing efficiencies and restricts the amount of political influence that can get bought at the state level. Illinois, we’re looking at you here.
· Give poor and working class people tax credits (vouchers) to buy insurance.
· De-couple health insurance from employers-the associated corporate savings would have a salutary effect on the unemployment rate.
· Greater access to pre-existing health savings accounts for use on less immediately necessary procedures-cosmetic dentistry and the like.

So that’s what I think-in general, I think incremental change is lot more likely to not produce dislocation among people who can least afford it-Medicare recipients, the mentally ill, and folks unfortunate enough to have rare yet serious illnesses.

Next time, we’ll talk about how the single purchaser system is going to stifle innovation and the knock-on effects around the world.

We interrupt this program,,,,,

A brief marketing message, before I go back to building AnotherNail and spending 16 hours a day on the laptop.

My mom has published her latest book, Science Wizardry for Kids. It’s a very attractively illustrated book of science experiments for kids & is receiving rave reviews. An excellent gift for science minded children-given how much velocity self-esteem based education seems to have, Mom’s book may be all the science education many kids receive anymore. Check it out at http://tinyurl.com/p6v9n6

A fascinating, in-depth look at the finanical crisis in Iceland from Michael Lewis: http://www.vanityfair.com/politics/features/2009/04/iceland200904

AIG bonus bill

Think the economy's bad now? Wait till the world gets the message that American business is subject to retrospective bills of attainder.

AIG

There's a lot of outrage in the press about the bonuses being paid out to AIG employees. I think this focus on the bonuses is to miss the larger picture.

At this point, AIG is 80% owned by the federal government, the common equity is long since destroyed, and whatever one thinks about the process, this is by no means a liquidation or ordinary bankruptcy proceeding.

AIG has received billions from the feds, which then go right back out to pay creditors. Had AIG defaulted on its obligations in an ordinary bankruptcy proceeding, it's entirely likely that their creditors would have had to apply for bailout money of their own.

From this perspective, it's probably smart to think of AIG as a pipeline for the feds to distribute money without taking official ownership stakes in the subject institutions. This point becomes particularly important when one considers the tens of billions of dollars paid out by AIG to non-US banks.

So given that AIG is essentially a shell through which the US government is moving funds around the world to preserve order in the financial system, the tempest over the bonuses is a search for a scapegoat.

We have a choice with the AIG people, many of whom are absolutely crucial to winding down their trades. We can refuse to pay them what they are legally entitled to by act of Congress. Or we can treat them badly. Do both, and they will quit. And their insider knowledge of these trades will be gone. Who replaces them then and unwinds the trades? The SEC? The government?

In short, when you buy a white elephant like AIG, there's a lot of manure that comes with it.

Hello again

Hello everyone. Well, ok, Mom. And maybe a couple of folks who surfed in from Twitter. I've taken some time off from the blog and likely killed any momentum I had going, but I'm back and blogging away.

I've been on the road for a while, am currently working on a startup venture that I'm really excited about, and have been dealing with some serious health issues that are hopefully in the rearview.

So stand by for further posts on economics, news, my startup adventures, and maybe even something about marketing here and there. Lastly, if you happen to be or know of a Drupal designer looking for work on an interesting 2.0 startup, please do get in touch.

An aside on bailouts

There are a lot of good arguments for and against the Detroit bailout. This post will not contain any of them.

If I were either the incoming or outgoing president, I'd give long and careful consideration to raising WIC and food stamp benefits to address the costs associated with food price inflation over the last few years.

The advisability or morality of corporate bailouts aside, one is left to wonder what purpose Western-style representative government serves if not to protect and assist poor children.

Tax collection?

Diamonds produced from Tequila

Pure genius or a brand extension too far?

"A method of producing synthetic diamonds using tequila - Mexico's favourite alcoholic drink - has been discovered, scientists there say."

Linked from: http://news.bbc.co.uk/2/hi/americas/7725815.stm

Watching for Signs of Progress

Calculated Risk compiles some excellent indicators for the road ahead:

http://calculatedrisk.blogspot.com/2008/10/credit-crisis-watching-for-signs-of.html

Bailout, round 4

Another component of the problem:

Junk mortgage originators, not necessarily fraudulent, pool loans that have either zero or very minimal down payments.

The loans are carved into tranches and compliant rating agencies rate the tranches at AA or higher. These tranches are more attractive to banks and produce more paper income than the bank originating a safer mortgage by itself.

The credit agencies profit from higher fees, the banks have to keep less capital on hand to offset what should have been lower graded securities, and everyone profits from regulatory arbitrage. Certainly not the only reason for the continuing credit issues, but a useful example of how poorly crafted regulations and spotty enforcement lead to actual problems.