80% of Americans say Social Security is broken.
73% of Americans say they support offshore drilling for oil.
71% of Americans say they support a single tax rate of 17% with an exemption for each person in the family.
65% of Americans say they support building more nuclear power plants.
If the majority of Americans agree then...
Why hasn’t Congress fixed social security? They’ve voted themselves a nice retirement program.
Why hasn’t Congress approved offshore drilling? All it takes is a vote.
Why hasn’t Congress fixed our 54,000 pages of income tax rules? There are several great proposals. Fairtax anyone?
http://www.cato.org/pub_display.php?pub_id=3063
http://www.fairtax.org/site/PageServer
Let list goes on and on and on...
The answer is our Congress is stalemated. They no longer represent their constituents, they represent their own interests and the interests of their party.
Our political process is also broken in the way we elect our leaders.
For example, how are we better prepared to cast our votes now that televangelist Pastor Rick has interviewed our candidates. I thought we had a separation between church & state. I wonder what our founding fathers would have thought of that spectacle. Thomas Jefferson wrote in 1781, “It does me no injury for my neighbor to say there are twenty gods, or no God. It neither picks my pocket or nor breaks my leg.” Could he get elected today? Unfortunately the answer is probably not.
Just because a candidate says they want to reform the political process doesn’t make it so. Both parties’ political conventions are primarily financed by unions and corporations. Why? So their lobbyists can get easy access to the political parties. This year more than $112 million is expected from private donors to support the conventions. That is 14 times more than in 1992 according to a study by the Campaign Finance Institute and the Center for Responsive Politics. According to the study the donors to the conventions have spent over $1.5 billion on lobbying and political contributions since the last election. That’s billion with a B.
Just because a candidate promises post-partisanship doesn’t make it so. In 2006 McCain put together bipartisan legislation, which included Obama’s support, on ethics and lobbying reform after the Abramoff scandal. After democrats put together a competing bill Obama aligned himself with the Democrats which prompted ‘the letter’ from McCain. Here’s an excerpt from that letter.
“I would like to apologize to you for assuming that your private assurances to me regarding your desire to cooperate in our efforts to negotiate bipartisan lobbying reform legislations were sincere... I’m embarrassed to admit that after all these years in politics, I failed to interpret your previous assurances as typical rhetorical gloss routinely used in politics to make self-interested partisan posturing appear more noble.”
Perhaps once could be a mistake but it occurred again in 2007 – there’s a trend here. Obama was part of a bipartisan group (led by Ted Kennedy with John McCain) on immigration reform. Kennedy said, “we had to take tough votes, sometimes against the majority of our own party, in order to preserve the coalition.” Unforunately, “Obama went out and voted with the unions,” according to McCain. McCain & Kennedy lost by one vote.
So what’s the solution?
First, do away with the political parties. We don’t need them. In today’s information age they are an anachronism. Without political parties all politicians would run as independents, representing their constituents. How can you have post-partisanship when you still have political parties?
Second, initiate term limits. When politicians get entrenched in Washington they owe their job to the lobbyists who have paid the $1.5 billion in bribes over the last 4 years.
Third, line item veto. That will help take the earmarks out of spending.
Friday, September 5, 2008
Thursday, August 28, 2008
Topics for 8-29-08 Radio Show on WCOM
The topic for this week is economic expectations.
As I watched the Democratic National Convention I couldn’t help but notice how many politicians promised a return to prosperity under an Obama administration.
According to a recent Pew Research Center Report more than half of Americans believe they either have not moved ahead in the past five years (25 percent) or have fallen behind (31 percent).
But the facts don’t match the sentiments. American’s are 40% wealthier than they were at the end of the last recession in 2001. The total net worth of U.S. Households is now $56 trillion, up 40% from $40 trillion in 2001. Even the horrible housing market isn’t as bad as many think. Nationwide, only Detroit and Ann Arbor have seen home values drop below 2001 levels according to Zillow.
I think people’s expectations are out of whack. When I was growing up we didn’t have HD TV’s, Cable TV, Tivo, DVD, Computers, DSL, ipod, Cell Phones, Playstation, Gameboy etc. All this stuff costs big bucks. And speaking of big bucks, how about the cost of Starbucks. If you get 1 cup of coffee every work day you’ll spend over $1,000 on coffee in year. Can most Starbucks patrons really afford to spend $1,000 per year on coffee? How did hyper-consumerism become the norm? Why do recent college graduates expect to wear designer fashions?
The National Association of Credit Unions did a financial literacy survey that showed 60% of teens don’t know the difference between cash, credit cards and checks. The US Treasury Department tested 46,000 high school students with a 35-question financial literacy test. The average score was 56%. The JumpStart Coalition for Personal Financial Literacy did a survey of high school and college seniors. High school seniors correctly answered only 48% of the basic questions about earning, spending, saving and investing. College senior didn’t do much better at 65% correct. That’s scary when you consider some of those college seniors were in the School of Business and will be future CPAs.
We have done a miserable job educating our citizens on financial literacy and fiscal responsibility.
As I watched the Democratic National Convention I couldn’t help but notice how many politicians promised a return to prosperity under an Obama administration.
According to a recent Pew Research Center Report more than half of Americans believe they either have not moved ahead in the past five years (25 percent) or have fallen behind (31 percent).
But the facts don’t match the sentiments. American’s are 40% wealthier than they were at the end of the last recession in 2001. The total net worth of U.S. Households is now $56 trillion, up 40% from $40 trillion in 2001. Even the horrible housing market isn’t as bad as many think. Nationwide, only Detroit and Ann Arbor have seen home values drop below 2001 levels according to Zillow.
I think people’s expectations are out of whack. When I was growing up we didn’t have HD TV’s, Cable TV, Tivo, DVD, Computers, DSL, ipod, Cell Phones, Playstation, Gameboy etc. All this stuff costs big bucks. And speaking of big bucks, how about the cost of Starbucks. If you get 1 cup of coffee every work day you’ll spend over $1,000 on coffee in year. Can most Starbucks patrons really afford to spend $1,000 per year on coffee? How did hyper-consumerism become the norm? Why do recent college graduates expect to wear designer fashions?
The National Association of Credit Unions did a financial literacy survey that showed 60% of teens don’t know the difference between cash, credit cards and checks. The US Treasury Department tested 46,000 high school students with a 35-question financial literacy test. The average score was 56%. The JumpStart Coalition for Personal Financial Literacy did a survey of high school and college seniors. High school seniors correctly answered only 48% of the basic questions about earning, spending, saving and investing. College senior didn’t do much better at 65% correct. That’s scary when you consider some of those college seniors were in the School of Business and will be future CPAs.
We have done a miserable job educating our citizens on financial literacy and fiscal responsibility.
Wednesday, August 20, 2008
Radio Show Topics - Friday 8-22-08 @ 11am on WCOM
Congress has finally gotten religion and agreed to discuss allowing oil exploration off our coasts and in ANWR. I’m guessing the polls and that 1 million signature petition caught their attention.
That’s good news since prior to their flip-flops Nancy Pelosi said drilling was “a hoax on the American people” and Barack Obama called it “another Washington gimmick.” I wonder what their rationale was for making those statements. Certainly the laws of supply and demand indicate that more domestic crude would reduce the price of gas and improve our balance of trade.
Not all politicians are flip-flopping. Bill Richardson, Governor of New Mexico and former US Energy Secretary still opposes drilling. He says it will take 30 years for new drilling to have a positive impact on gas prices. What would make him say such an outrageous thing? Experts agree if we start drilling today we’ll be pumping oil in 3 to 7 years. Good thing he doesn’t have a seat in Congress.
Speaking of flip-flopping positions I was amazed at the political gymnastics of House Democrat Mark Udall who is now running for Colorado’s open Senate seat. He helped kill the pilot program to extract oil from shale. Our shale oil reserves are estimated at 7 times larger than Saudi Arabia’s crude oil reserves. We need to do a pilot program so we can improve our ability to extract oil from shale and determine the environmental impact. A pilot program is a good solution. Unfortunately the enemy of the good is the great and there are no great solutions, so Rep Udall killed it. Now that he’s behind in the polls he’s changed his position. In his new TV spot he says, “We’ve got to produce our own oil and gas here in our country.” It is an obvious political maneuver. It makes me wonder if he truly believes it or if he’s just saying it to get elected.
Anyway the good news is they have reversed their positions and are now open to drilling for oil.
The bad news is that Congress could be pulling the wool over eyes. The proposal in the Senate is to allow offshore drilling, only where there isn’t very much oil – Virginia, Georgia, North Carolina and South Carolina. Congress wants oil companies to explore the leases they already have. Oil companies have something like 65 million acres under lease for oil exploration in the US. Oil companies are in business to make money. If there was oil in those 65 million acres, they’d be drilling.
Meanwhile, Vladimir Putin sent his deputy Prime Minister, Igor Sechin, to Cuba to discuss oil exploration in the Carribean. Russia may provide a joint Cuban-Russian-Venezuelan development of the crude oil reserves and could include an overhaul of Cuba’s existing oil infrastructure. While we debate the environmental impact Russia, Cuba & Venezuela are harvesting the crude oil wealth of the Carribean. On August 4th Vladimir said, “We must restore our position in Cuba and other countries.”
If oil is going to be extracted from the Carribean wouldn’t we rather have control of the project? I’m sure that we’d do a better job of managing the environmental impact, not to mention the increased supply of domestic crude.
The behavior of our politicians makes me wonder about their true motives.
That’s good news since prior to their flip-flops Nancy Pelosi said drilling was “a hoax on the American people” and Barack Obama called it “another Washington gimmick.” I wonder what their rationale was for making those statements. Certainly the laws of supply and demand indicate that more domestic crude would reduce the price of gas and improve our balance of trade.
Not all politicians are flip-flopping. Bill Richardson, Governor of New Mexico and former US Energy Secretary still opposes drilling. He says it will take 30 years for new drilling to have a positive impact on gas prices. What would make him say such an outrageous thing? Experts agree if we start drilling today we’ll be pumping oil in 3 to 7 years. Good thing he doesn’t have a seat in Congress.
Speaking of flip-flopping positions I was amazed at the political gymnastics of House Democrat Mark Udall who is now running for Colorado’s open Senate seat. He helped kill the pilot program to extract oil from shale. Our shale oil reserves are estimated at 7 times larger than Saudi Arabia’s crude oil reserves. We need to do a pilot program so we can improve our ability to extract oil from shale and determine the environmental impact. A pilot program is a good solution. Unfortunately the enemy of the good is the great and there are no great solutions, so Rep Udall killed it. Now that he’s behind in the polls he’s changed his position. In his new TV spot he says, “We’ve got to produce our own oil and gas here in our country.” It is an obvious political maneuver. It makes me wonder if he truly believes it or if he’s just saying it to get elected.
Anyway the good news is they have reversed their positions and are now open to drilling for oil.
The bad news is that Congress could be pulling the wool over eyes. The proposal in the Senate is to allow offshore drilling, only where there isn’t very much oil – Virginia, Georgia, North Carolina and South Carolina. Congress wants oil companies to explore the leases they already have. Oil companies have something like 65 million acres under lease for oil exploration in the US. Oil companies are in business to make money. If there was oil in those 65 million acres, they’d be drilling.
Meanwhile, Vladimir Putin sent his deputy Prime Minister, Igor Sechin, to Cuba to discuss oil exploration in the Carribean. Russia may provide a joint Cuban-Russian-Venezuelan development of the crude oil reserves and could include an overhaul of Cuba’s existing oil infrastructure. While we debate the environmental impact Russia, Cuba & Venezuela are harvesting the crude oil wealth of the Carribean. On August 4th Vladimir said, “We must restore our position in Cuba and other countries.”
If oil is going to be extracted from the Carribean wouldn’t we rather have control of the project? I’m sure that we’d do a better job of managing the environmental impact, not to mention the increased supply of domestic crude.
The behavior of our politicians makes me wonder about their true motives.
Thursday, August 14, 2008
Radio Show Topics - Friday 8-15-08 @ 11am on WCOM
The topic for this week’s radio show is war. It would be wonderful if the world could live in peace, but as long as we have dictators and totalitarian regimes we will always have people struggling to be free.
From all appearances it looks like Mr. Putin is trying to reconstitute the old USSR. He has correctly read the tea leaves regarding the world’s response to his attack on the democratic Republic of Georgia - “We urge restraint on all sides — that violence would be curtailed and that direct dialogue could ensue in order to help resolve their differences.”. Russia has been hostile toward Georgia for some time now. In 2005 Russia implemented economic sanctions against Georgia that didn’t worked and only infuriated Russia. Russia has been violating Georgia airspace and shelling Georgian villages for years. While meeting with President Bush earlier this year Mr. Putin referred to Ukraine as “not a real nation” (WSJ Page A21 8/12/08). Today Georgia, tomorrow Ukraine.
I’m reading the book, “Moment of Truth in Iraq “. It’s a first hand account from a journalist who traveled with the military. The surge has worked. For the most part the major hostilities are over. Our primary mission at this point is to eliminate the remaining terrorists and maintain the peace. The Iraqi army and police forces are doing an reasonably good job of providing security for the 25 million Iraqis but they still need America’s help. The political promises for a complete withdrawal demanded by many politicians last year while the outcome of the war was in question may have made sense, but if American troops withdrawal too soon it would open the door for Iran and al Qaeda to once again establish a base for terrorists in Iraq. Our military experts say we need to be there for another 18 months. Instead of examining the past and discussing how we got into Iraq we should be looking forward to a stable and democratic Iraq and discussing how we can help maintain a democracy in the Middle East.
The war in the Darfur region of Sudan is a tragedy that fades in and out of the news. More than 250,000 people have been killed and millions people have been forced into refugee camps and are slowly starving to death. A year ago the UN approved a peacekeeping force of 26,000 police & soldiers. Unfortunately they haven’t been deployed. China is a villain in this conflict by obstructing efforts of the UN Security Council to impose tougher sanctions.
Should the U.S. be the police force for the world? We are great at short wars. We can topple a government and their military faster than any country on earth. The American people don’t have the patience to help build nations as we did in Iraq. As much as the people in Georgia and Darfur need our help do we really want to get involved in another military conflict?
From all appearances it looks like Mr. Putin is trying to reconstitute the old USSR. He has correctly read the tea leaves regarding the world’s response to his attack on the democratic Republic of Georgia - “We urge restraint on all sides — that violence would be curtailed and that direct dialogue could ensue in order to help resolve their differences.”. Russia has been hostile toward Georgia for some time now. In 2005 Russia implemented economic sanctions against Georgia that didn’t worked and only infuriated Russia. Russia has been violating Georgia airspace and shelling Georgian villages for years. While meeting with President Bush earlier this year Mr. Putin referred to Ukraine as “not a real nation” (WSJ Page A21 8/12/08). Today Georgia, tomorrow Ukraine.
I’m reading the book, “Moment of Truth in Iraq “. It’s a first hand account from a journalist who traveled with the military. The surge has worked. For the most part the major hostilities are over. Our primary mission at this point is to eliminate the remaining terrorists and maintain the peace. The Iraqi army and police forces are doing an reasonably good job of providing security for the 25 million Iraqis but they still need America’s help. The political promises for a complete withdrawal demanded by many politicians last year while the outcome of the war was in question may have made sense, but if American troops withdrawal too soon it would open the door for Iran and al Qaeda to once again establish a base for terrorists in Iraq. Our military experts say we need to be there for another 18 months. Instead of examining the past and discussing how we got into Iraq we should be looking forward to a stable and democratic Iraq and discussing how we can help maintain a democracy in the Middle East.
The war in the Darfur region of Sudan is a tragedy that fades in and out of the news. More than 250,000 people have been killed and millions people have been forced into refugee camps and are slowly starving to death. A year ago the UN approved a peacekeeping force of 26,000 police & soldiers. Unfortunately they haven’t been deployed. China is a villain in this conflict by obstructing efforts of the UN Security Council to impose tougher sanctions.
Should the U.S. be the police force for the world? We are great at short wars. We can topple a government and their military faster than any country on earth. The American people don’t have the patience to help build nations as we did in Iraq. As much as the people in Georgia and Darfur need our help do we really want to get involved in another military conflict?
Friday, August 8, 2008
Radio Show Topics - Friday 8-8-08 @ 11am on WCOM
The topic for this week’s show is the government rescue of Fannie Mae & Freddie Mac via the recently signed housing bill.
So what's wrong with the U.S. government bailing out Fannie Mae & Freddie Mac?
Everything. The incentive is all wrong and has been for years. The incentive is to take on excessive risk because there is no downside when the federal government provides the safety net. Regardless of how many accounting scandals they have Fannie & Freddie continue to flourish because of our federal government and specifically because of Congress.
Let’s go back to 2003. Federal regulators determined CEO Franklin Raines and other Fannie senior executives perpetrated financial fraud by cooking the books to appear profitable so they could receive large financial bonuses. Franklin Raines received over $50 million in bonus during the years from 1988 to 2003. Civil charges were filed against Raines and two other former executives by the The Office of Federal Housing Enterprise Oversight (OFHEO) in which the OFHEO sought $110 million in penalties and $115 million in returned bonuses from the three accused. On April 18, 2008, the government announced a settlement with Raines together with J. Timothy Howard, Fannie's former chief financial officer, and Leanne G. Spencer, Fannie's former controller. The three executives agreed to pay fines totaling about $3 million, which will be paid by Fannie's insurance policies. Raines also agreed to donate the proceeds from the sale of $1.8 million of his Fannie stock and to give up stock options. The stock options however have no value. Raines also gave up an estimated $5.3 million of "other benefits" said to be related to his pension and foregone bonuses.
http://www.washingtonpost.com/wp-dyn/content/article/2006/05/23/AR2006052300184.html
http://www.iht.com/articles/2006/05/23/business/fannie.php
http://www.msnbc.msn.com/id/12923225/
Are they in jail? Nope. Did they have to pay back any of the money they stole? Nope. The $3 million was covered by insurance.
The company paid $400 million in fines and reported an $11 billion accounting scandal. Yes, Fannie & Freddie have been out of control for a long time.
We were supposed to have fixed the problems with Fannie & Freddie but here we are 5 years later and the problems have only gotten worse with Fannie & Freddie. Congress has done everything in their power to minimize oversight for Fannie & Freddie. Congress created the problem with Fannie and Freddie and are making you, the taxpayer, bail them out.
Why not just get rid of Fannie & Freddie? The critics say we can’t do without them. I disagree.
OK, what contribution does Fannie Mae provide regarding home ownership? Studies indicate they provide only 7 basis points to help the homeowner – a basis point is 1 hundredth of 1 percent (see 7/23/08 Wall Street Journal page A17). Not much help if you ask me. Seems most homeowners wouldn’t miss .007%
The critics say allowing Fannie & Freddie to fail would set off a worldwide financial crisis. According to the NY Times July 27, 2008:
According to its own fair-value accounts for the end of March, Freddie Mac is technically insolvent and Fannie Mae has only a small net worth. The markets already know they’re broke. Who would lose? The shareholders would lose, just like Bear Stearns. Bear Stearns didn’t set off a worldwide panic.
There has already been a test case for how the mortgage market would function without Fannie & Freddie. After the 2003-4 accounting scandal, regulators severely constrained their activities. In 2005, the nation’s total residential mortgage debt outstanding rose by $1.176 trillion in that year, even though Fannie’s and Freddie’s stakes rose by on $169 billion, just 14.4 percent of the total. In essence, the market barely noticed that the two agencies’ private competitors were providing 85 percent of the increase in mortgage debt in 2005.
The issue isn’t that Fannie & Freddie are too big to fail, it’s that they’re too big to liquidate immediately. So liquidate slowly, over say 5 or 10 years. No panic, no problem.
If you still think they’re too big to fail then break them up and then let them fail. They are poorly run and poorly managed. They need to fail and they will fail, but break them up slowly.
How could we let Fannie & Freddie mess up again and again and again? The answer is Congress. Chris Dodd, Senate Banking Chairman (Democrat from Connecticut), derided critics at a February hearing who he said were, “repeatedly raising alarm bells about the risks Fannie & Freddie pose to the financial system.” Senator Dodd got a sweetheart mortgage from Countrywide CEO Mozilo who was thick as thieves with Fannie Mae. (7/24 Wall Street Journal page A14).
One of the few representatives who did want to reign in Fannie and Freddie, Cliff Stearns from Florida, had oversight for Fannie & Freddie stripped from his subcommittee responsibilities when he began his hearings in 2004. Congress just doesn’t want to reign in Fannie & Freddie.
If you want to place the blame for Fannie & Freddie being out of control look no further than Congress.
When Fannie & Freddie make profits their executives get huge bonuses, but when they lose money the government bails them out. This is an abomination. If you take the profit then you must also accept the losses, but apparently not when Fannie & Freddie provide sweetheart deals for those in Congress.
How much will the housing bill cost us? The experts can’t predict exactly. They set aside $300 billion in to provide troubled homeowners with new loans, $3.9 billion to fix up foreclosed properties, $15 billion in tax cuts and other misc. amounts for various projects but the telling number is the $800 billion increase in the limit on the national debt to $10.6 trillion.
Let’s put $800 billion in perspective. That is more than $2,500 for every man, woman and child in America. For my family of 5 that’s a bill of $12,500. How’s that for a nice present from Congress?
For more information on mortgage crisis check out my latest book ‘Subprime Meltdown’ http://www.amazon.com/Subprime-Meltdown-Liquidity-Crisis-Recession/dp/1438236611/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1218158203&sr=8-1
Footnote:
So who is Franklin Raines? Here’s the answer from wikipedia...
Franklin Delano Raines (born January 14, 1949 in Seattle, Washington) is the former chairman and chief executive officer of Fannie Mae who served as White House budget director under President Bill Clinton.
He served in the Carter Administration as associate director for economics and government in the Office of Management and Budget and assistant director of the White House Domestic Policy Staff from 1977 to 1979.
On December 21, 2004 Raines accepted what he called "early retirement" [3] from his position as CEO while U.S. Securities and Exchange Commission investigators continued to investigate alleged accounting irregularities. He is accused by The Office of Federal Housing Enterprise Oversight (OFHEO), the regulating body of Fannie Mae, of abetting widespread accounting errors, which included the shifting of losses so senior executives, such as himself, could earn large bonuses [4].
In 2006, the OFHEO announced a suit against Raines in order to recover some or all of the $50 million in payments made to Raines based on the overstated earnings [5] initially estimated to be $9 billion but have been announced as 6.3 billion.[2].
An editorial in The Wall Street Journal called it a "paltry settlement" which allowed Raines and the other two executives to "keep the bulk of their riches." [8] In 2003 alone, Raines's compensation was over $20 million.[3]
A statement issued by Raines said of the consent order, "is consistent with my acceptance of accountability as the leader of Fannie Mae and with my strong denial of the allegations made against me by OFHEO."[4]
In a settlement with OFHEO and the Securities and Exchange Commission, Fannie paid a record $400 million civil fine. Fannie, which is the largest American financier and guarantor of home mortgages, also agreed to make changes in its corporate culture and accounting procedures and ways of managing risk. [9]
In June 2008 Wall Street Journal reported that Franklin Raines was one of several politicians who received below market rates loans at Countrywide Financial because the corporation considered the officeholders "FOA's"--"Friends of Angelo" (Countrywide Chief Executive Angelo Mozilo). He received loans for over $3 million while CEO of Fannie Mae. [5]
So what's wrong with the U.S. government bailing out Fannie Mae & Freddie Mac?
Everything. The incentive is all wrong and has been for years. The incentive is to take on excessive risk because there is no downside when the federal government provides the safety net. Regardless of how many accounting scandals they have Fannie & Freddie continue to flourish because of our federal government and specifically because of Congress.
Let’s go back to 2003. Federal regulators determined CEO Franklin Raines and other Fannie senior executives perpetrated financial fraud by cooking the books to appear profitable so they could receive large financial bonuses. Franklin Raines received over $50 million in bonus during the years from 1988 to 2003. Civil charges were filed against Raines and two other former executives by the The Office of Federal Housing Enterprise Oversight (OFHEO) in which the OFHEO sought $110 million in penalties and $115 million in returned bonuses from the three accused. On April 18, 2008, the government announced a settlement with Raines together with J. Timothy Howard, Fannie's former chief financial officer, and Leanne G. Spencer, Fannie's former controller. The three executives agreed to pay fines totaling about $3 million, which will be paid by Fannie's insurance policies. Raines also agreed to donate the proceeds from the sale of $1.8 million of his Fannie stock and to give up stock options. The stock options however have no value. Raines also gave up an estimated $5.3 million of "other benefits" said to be related to his pension and foregone bonuses.
http://www.washingtonpost.com/wp-dyn/content/article/2006/05/23/AR2006052300184.html
http://www.iht.com/articles/2006/05/23/business/fannie.php
http://www.msnbc.msn.com/id/12923225/
Are they in jail? Nope. Did they have to pay back any of the money they stole? Nope. The $3 million was covered by insurance.
The company paid $400 million in fines and reported an $11 billion accounting scandal. Yes, Fannie & Freddie have been out of control for a long time.
We were supposed to have fixed the problems with Fannie & Freddie but here we are 5 years later and the problems have only gotten worse with Fannie & Freddie. Congress has done everything in their power to minimize oversight for Fannie & Freddie. Congress created the problem with Fannie and Freddie and are making you, the taxpayer, bail them out.
Why not just get rid of Fannie & Freddie? The critics say we can’t do without them. I disagree.
OK, what contribution does Fannie Mae provide regarding home ownership? Studies indicate they provide only 7 basis points to help the homeowner – a basis point is 1 hundredth of 1 percent (see 7/23/08 Wall Street Journal page A17). Not much help if you ask me. Seems most homeowners wouldn’t miss .007%
The critics say allowing Fannie & Freddie to fail would set off a worldwide financial crisis. According to the NY Times July 27, 2008:
According to its own fair-value accounts for the end of March, Freddie Mac is technically insolvent and Fannie Mae has only a small net worth. The markets already know they’re broke. Who would lose? The shareholders would lose, just like Bear Stearns. Bear Stearns didn’t set off a worldwide panic.
There has already been a test case for how the mortgage market would function without Fannie & Freddie. After the 2003-4 accounting scandal, regulators severely constrained their activities. In 2005, the nation’s total residential mortgage debt outstanding rose by $1.176 trillion in that year, even though Fannie’s and Freddie’s stakes rose by on $169 billion, just 14.4 percent of the total. In essence, the market barely noticed that the two agencies’ private competitors were providing 85 percent of the increase in mortgage debt in 2005.
The issue isn’t that Fannie & Freddie are too big to fail, it’s that they’re too big to liquidate immediately. So liquidate slowly, over say 5 or 10 years. No panic, no problem.
If you still think they’re too big to fail then break them up and then let them fail. They are poorly run and poorly managed. They need to fail and they will fail, but break them up slowly.
How could we let Fannie & Freddie mess up again and again and again? The answer is Congress. Chris Dodd, Senate Banking Chairman (Democrat from Connecticut), derided critics at a February hearing who he said were, “repeatedly raising alarm bells about the risks Fannie & Freddie pose to the financial system.” Senator Dodd got a sweetheart mortgage from Countrywide CEO Mozilo who was thick as thieves with Fannie Mae. (7/24 Wall Street Journal page A14).
One of the few representatives who did want to reign in Fannie and Freddie, Cliff Stearns from Florida, had oversight for Fannie & Freddie stripped from his subcommittee responsibilities when he began his hearings in 2004. Congress just doesn’t want to reign in Fannie & Freddie.
If you want to place the blame for Fannie & Freddie being out of control look no further than Congress.
When Fannie & Freddie make profits their executives get huge bonuses, but when they lose money the government bails them out. This is an abomination. If you take the profit then you must also accept the losses, but apparently not when Fannie & Freddie provide sweetheart deals for those in Congress.
How much will the housing bill cost us? The experts can’t predict exactly. They set aside $300 billion in to provide troubled homeowners with new loans, $3.9 billion to fix up foreclosed properties, $15 billion in tax cuts and other misc. amounts for various projects but the telling number is the $800 billion increase in the limit on the national debt to $10.6 trillion.
Let’s put $800 billion in perspective. That is more than $2,500 for every man, woman and child in America. For my family of 5 that’s a bill of $12,500. How’s that for a nice present from Congress?
For more information on mortgage crisis check out my latest book ‘Subprime Meltdown’ http://www.amazon.com/Subprime-Meltdown-Liquidity-Crisis-Recession/dp/1438236611/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1218158203&sr=8-1
Footnote:
So who is Franklin Raines? Here’s the answer from wikipedia...
Franklin Delano Raines (born January 14, 1949 in Seattle, Washington) is the former chairman and chief executive officer of Fannie Mae who served as White House budget director under President Bill Clinton.
He served in the Carter Administration as associate director for economics and government in the Office of Management and Budget and assistant director of the White House Domestic Policy Staff from 1977 to 1979.
On December 21, 2004 Raines accepted what he called "early retirement" [3] from his position as CEO while U.S. Securities and Exchange Commission investigators continued to investigate alleged accounting irregularities. He is accused by The Office of Federal Housing Enterprise Oversight (OFHEO), the regulating body of Fannie Mae, of abetting widespread accounting errors, which included the shifting of losses so senior executives, such as himself, could earn large bonuses [4].
In 2006, the OFHEO announced a suit against Raines in order to recover some or all of the $50 million in payments made to Raines based on the overstated earnings [5] initially estimated to be $9 billion but have been announced as 6.3 billion.[2].
An editorial in The Wall Street Journal called it a "paltry settlement" which allowed Raines and the other two executives to "keep the bulk of their riches." [8] In 2003 alone, Raines's compensation was over $20 million.[3]
A statement issued by Raines said of the consent order, "is consistent with my acceptance of accountability as the leader of Fannie Mae and with my strong denial of the allegations made against me by OFHEO."[4]
In a settlement with OFHEO and the Securities and Exchange Commission, Fannie paid a record $400 million civil fine. Fannie, which is the largest American financier and guarantor of home mortgages, also agreed to make changes in its corporate culture and accounting procedures and ways of managing risk. [9]
In June 2008 Wall Street Journal reported that Franklin Raines was one of several politicians who received below market rates loans at Countrywide Financial because the corporation considered the officeholders "FOA's"--"Friends of Angelo" (Countrywide Chief Executive Angelo Mozilo). He received loans for over $3 million while CEO of Fannie Mae. [5]
Thursday, July 24, 2008
Topics for 7-25-08 Radio Show on WCOM
So what’s the real story with Iran’s pursuit of nuclear weapons? The Iranian President, Mahmoud Ahmadinejad, recently said, “By the grace of Allah, we (will be) a nuclear power." Somehow, I doubt he was talking about nuclear power for electrical generation.
A couple of weeks ago Iran demonstrated their ballistic missiles. Seems like they should be demonstrating air conditioning in airports or light bulbs in libraries rather than missiles if they are truly pursuing nuclear technology solely for the production of electricity.
In Dec ‘07 the USAToday published an article about a recent National Intelligence Estimate (the NIE is a summary of the 16 US intelligence agencies) that said Iran had halted its pursuit of nuclear weapons in 2003. You’ll recall the NIE was the source of weapons of mass destruction in Iraq. Hmmm... The NIE went on to say that Iran could restart their weapons program at any time and worst case they are about 18 months from a bomb. Since the world hasn’t been able to inspect Iran’s nuclear labs whose to say that they didn’t restart their program 18 months ago?
Iran isn’t exactly an innocent bystander in the Middle East. They are an active supporter of anti-American and anti-Iraqi militias and suicide bombers in Iraq.
Here are some of the Iranian President’s comments about suicide bombers.
He praised his country's ability to recruit "hundreds of suicide bombers a day," saying "suicide is an invincible weapon. Suicide bombers in this land showed us the way, and they enlighten our future.
Amadinejad said the will to commit suicide was "one of the best ways of life."
"Is there a craft more beautiful, more sublime, more divine, than the craft of giving yourself to martyrdom and becoming holy? Do not doubt, Allah will prevail, and Islam will conquer mountain tops of the entire world."
"What is important is that they have shown the way to martyrdom which we must follow.'' 6 [President Ahmadinejad's comments on an aircraft crash in Tehran that killed 108 people in December 2005].
The Iranian President is also a big supporter of the terrorist organizations Hamas and Hezbollah.
Hamas http://www.usatoday.com/news/world/2006-02-01-speech-overseas_x.htm
Hezbollah http://www.cbsnews.com/stories/2006/08/09/60minutes/main1879867.shtml
Amadinejad continues to threaten Israel on a daily basis. Here are some recent quotes from speeches.
"This regime (Israel) will one day disappear."
"The Zionist regime is a rotten, dried tree that will be eliminated by one storm.
Israel is "a disgraceful stain on the Islamic world"
Israel is doomed to be "wiped from the map" in "a war of destiny."
Ahmadinejad said that "the countdown for the destruction of Israel" has begun.
Zionists are "the personification of Satan."
"In the case of any unwise move by the fake regime of Israel, Iran's response will be so destructive and quick that this regime will regret its move for ever."
So we come to a point in time when there are basically 3 choices.
Do nothing. Allow Iran to acquire a nuclear bomb which they will surely give to terrorist organizations and try to wipe Israel off the face of the earth and perhaps the rest of the infidels on earth.
Continue to negotiate and apply sanctions hoping that Iran doesn’t pursue nuclear weapons.
A pre-emptive strike, whether by the U.S. or Israel. No doubt Iran will retaliate with some combination of conventional, biological and chemical weapons. No doubt, Iran will ask Hamas and Hezbollah to join the fight. The fight may escalate out of control with Israel using a nuclear option of their own.
Ahmadinejad fired off a fresh barrage of warnings to the United Nations, saying Iran did "not give a damn about resolutions" about demands to freeze sensitive nuclear work.
"The Islamic republic of Iran has the capacity to quickly become a world superpower. If we believe in ourselves... no other power can be compared to us."
"Iran's enemies know your courage, faith and commitment to Islam and the land of Iran has created a powerful army that can powerfully defend the political borders and the integrity of the Iranian nation and cut off the hand of any aggressor and place the sign of disgrace on their forehead."
"Our enemies should know that they are unable to even slightly hurt our nation and they cannot create the tiniest obstacle on its glorious and progressive way."
"We don't shy away from declaring that Islam is ready to rule the world."
August 18, 2007
"The Zionist regime is the flag bearer of violation and occupation and this regime is the flag of Satan.”
(Address to an international religious conference in Tehran)
June 3, 2007
"With God's help, the countdown button for the destruction of the Zionist regime has been pushed by the hands of the children of Lebanon and Palestine . . . By God's will, we will witness the destruction of this regime in the near future."
(Speech, as quoted by the Fars News Agency)
November 13, 2006
"Israel is destined for destruction and will soon disappear"
August 4, 2006
"A new Middle East will prevail without the existence of Israel."
(as quoted by Malaysian news agency Bernama website)
May 11, 2006
Israel is "a regime based on evil that cannot continue and one day will vanish."
(to a student rally in Jakarta, Indonesia)
April 14, 2006
"The Zionist regime is an injustice and by its very nature a permanent threat. Whether you like it or not, the Zionist regime is heading toward annihilation. The Zionist regime is a rotten, dried tree that will be eliminated by one storm."
(In a speech at the opening of the "Support for the Palestinian Intifada" conference on April 14-16 hosted in Tehran)
October 26, 2005
"Israel must be wiped off the map ? The establishment of a Zionist regime was a move by the world oppressor against the Islamic world . . . The skirmishes in the occupied land are part of the war of destiny. The outcome of hundreds of years of war will be defined in Palestinian land."
(In an address to 4,000 students at a program titled, 'The World Without Zionism')
A couple of weeks ago Iran demonstrated their ballistic missiles. Seems like they should be demonstrating air conditioning in airports or light bulbs in libraries rather than missiles if they are truly pursuing nuclear technology solely for the production of electricity.
In Dec ‘07 the USAToday published an article about a recent National Intelligence Estimate (the NIE is a summary of the 16 US intelligence agencies) that said Iran had halted its pursuit of nuclear weapons in 2003. You’ll recall the NIE was the source of weapons of mass destruction in Iraq. Hmmm... The NIE went on to say that Iran could restart their weapons program at any time and worst case they are about 18 months from a bomb. Since the world hasn’t been able to inspect Iran’s nuclear labs whose to say that they didn’t restart their program 18 months ago?
Iran isn’t exactly an innocent bystander in the Middle East. They are an active supporter of anti-American and anti-Iraqi militias and suicide bombers in Iraq.
Here are some of the Iranian President’s comments about suicide bombers.
He praised his country's ability to recruit "hundreds of suicide bombers a day," saying "suicide is an invincible weapon. Suicide bombers in this land showed us the way, and they enlighten our future.
Amadinejad said the will to commit suicide was "one of the best ways of life."
"Is there a craft more beautiful, more sublime, more divine, than the craft of giving yourself to martyrdom and becoming holy? Do not doubt, Allah will prevail, and Islam will conquer mountain tops of the entire world."
"What is important is that they have shown the way to martyrdom which we must follow.'' 6 [President Ahmadinejad's comments on an aircraft crash in Tehran that killed 108 people in December 2005].
The Iranian President is also a big supporter of the terrorist organizations Hamas and Hezbollah.
Hamas http://www.usatoday.com/news/world/2006-02-01-speech-overseas_x.htm
Hezbollah http://www.cbsnews.com/stories/2006/08/09/60minutes/main1879867.shtml
Amadinejad continues to threaten Israel on a daily basis. Here are some recent quotes from speeches.
"This regime (Israel) will one day disappear."
"The Zionist regime is a rotten, dried tree that will be eliminated by one storm.
Israel is "a disgraceful stain on the Islamic world"
Israel is doomed to be "wiped from the map" in "a war of destiny."
Ahmadinejad said that "the countdown for the destruction of Israel" has begun.
Zionists are "the personification of Satan."
"In the case of any unwise move by the fake regime of Israel, Iran's response will be so destructive and quick that this regime will regret its move for ever."
So we come to a point in time when there are basically 3 choices.
Do nothing. Allow Iran to acquire a nuclear bomb which they will surely give to terrorist organizations and try to wipe Israel off the face of the earth and perhaps the rest of the infidels on earth.
Continue to negotiate and apply sanctions hoping that Iran doesn’t pursue nuclear weapons.
A pre-emptive strike, whether by the U.S. or Israel. No doubt Iran will retaliate with some combination of conventional, biological and chemical weapons. No doubt, Iran will ask Hamas and Hezbollah to join the fight. The fight may escalate out of control with Israel using a nuclear option of their own.
Ahmadinejad fired off a fresh barrage of warnings to the United Nations, saying Iran did "not give a damn about resolutions" about demands to freeze sensitive nuclear work.
"The Islamic republic of Iran has the capacity to quickly become a world superpower. If we believe in ourselves... no other power can be compared to us."
"Iran's enemies know your courage, faith and commitment to Islam and the land of Iran has created a powerful army that can powerfully defend the political borders and the integrity of the Iranian nation and cut off the hand of any aggressor and place the sign of disgrace on their forehead."
"Our enemies should know that they are unable to even slightly hurt our nation and they cannot create the tiniest obstacle on its glorious and progressive way."
"We don't shy away from declaring that Islam is ready to rule the world."
August 18, 2007
"The Zionist regime is the flag bearer of violation and occupation and this regime is the flag of Satan.”
(Address to an international religious conference in Tehran)
June 3, 2007
"With God's help, the countdown button for the destruction of the Zionist regime has been pushed by the hands of the children of Lebanon and Palestine . . . By God's will, we will witness the destruction of this regime in the near future."
(Speech, as quoted by the Fars News Agency)
November 13, 2006
"Israel is destined for destruction and will soon disappear"
August 4, 2006
"A new Middle East will prevail without the existence of Israel."
(as quoted by Malaysian news agency Bernama website)
May 11, 2006
Israel is "a regime based on evil that cannot continue and one day will vanish."
(to a student rally in Jakarta, Indonesia)
April 14, 2006
"The Zionist regime is an injustice and by its very nature a permanent threat. Whether you like it or not, the Zionist regime is heading toward annihilation. The Zionist regime is a rotten, dried tree that will be eliminated by one storm."
(In a speech at the opening of the "Support for the Palestinian Intifada" conference on April 14-16 hosted in Tehran)
October 26, 2005
"Israel must be wiped off the map ? The establishment of a Zionist regime was a move by the world oppressor against the Islamic world . . . The skirmishes in the occupied land are part of the war of destiny. The outcome of hundreds of years of war will be defined in Palestinian land."
(In an address to 4,000 students at a program titled, 'The World Without Zionism')
Topics for 7-18-08 Radio Show on WCOM
This week’s show features feedback from listeners. This email would be way too long if I included all of the feedback from the show so
I’ve included just one representative email for each topic..
The first email is regarding last week’s show on the disconnect between the way we are and the way we feel. You’ll recall from the last show that recent survey’s of American’s indicate pessimism is the worst it has been in 30 years.
The email...
I grew up in a household with 5 kids. We didn’t have air conditioning. We had a black and white TV with rabbit ears. My mother walked to the grocery
story and bought fresh produce and meats for our meals. We ate Mac and cheese (home made) every Friday and thought it was great. We didn’t have ice cream in the freezer, but, every other Friday – pay day – my father brought home a half gallon of Neopolitan ice cream and we ate it that night. We didn’t go to movies – we would pile in the car and go to the drive-in every few weeks – a big treat. We had one car. It was bought used. My father worked 7 days a week and went to Canada to fish one week each summer. We didn’t go to Disneyland. The family went to Lake Erie and stayed in a “motel”. I wasn’t on an airplane until I was in college, and, my parents weren’t on an airplane until I bought them tickets to visit me in 1982.
And you know what – we thought life was pretty good. We had life better than most of the people on our block. If a family today lives in the
standard in which I grew up, they consider themselves deserving of more and the lesser class of America. They believe “the government” should be doing more them.
----------------------------
The second email is regarding the May 16th show on immigration. It would appear that as U.S. citizens we are of two minds regarding illegal immigration. On the one hand we embrace the idea of immigration. What we don’t embrace is the idea of illegal immigration. Even so, we are willing
to provide a path to citizenship provided the immigrants meet certain criteria. What the majority of American’s apparently don’t like are the
things that promote multiculturalism or not assimilating to the American culture. So long as immigrants are willing to assimilate to the American
culture, learn our language and obey our laws we welcome them with open arms.
The email...
These are the immigration laws of Mexico (translated from Spanish).
1. There will be no special bilingual programs in the schools.
2. All ballots will be in this nation's language.
3. All government business will be conducted in our language.
4. Non-residents will NOT have the right to vote no matter how long they are here.
5. Non-citizens will NEVER be able to hold political office.
6 Foreigners will not be a burden to the taxpayers. No welfare, no food stamps, no health care, or other government assistance programs. Any burden will be deported.
7. Foreigners can invest in this country, but it must be an amount at least equal to 40,000 times the daily minimum wage.
8. If foreigners come here and buy land... options will be restricted. Certain parcels including waterfront property are reserved for citizens
naturally born into this country.
9. Foreigners may have no protests; no demonstrations, no waving of a foreign flag, no political organizing, no bad-mouthing our president or his policies. These will lead to deportation.
10. If you do come to this country illegally, you will be actively hunted &, when caught, sent to jail until your deportation can be arranged. All assets will be taken from you.
Here are the reference for the 14 reasons we need to deal with immigration now.
http://tinyurl.com/zob77
http://www.cis..org/articles/2004/fiscalexec.html
http://www.cis..org/articles/2004/fiscalexec.html
http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.0.html
http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.01.html
http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.01.html
http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.01.html
http://premium.cnn.com/TRANSCIPTS/0610/29/ldt.01.html
http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.01.html
http://transcripts.cnn.com/TRANSCRIPTS/0606/12/ldt.01.html
http://tinyurl.com/t9sht
http://www.nationalpolicyinstitute.org/pdf/deportation.pdf
http://www.rense.com/general75/niht.htm
http://www.drdsk.com/articleshtml
----------------------------
The third email is regarding healthcare from the May 2nd show. Can we afford universal healthcare coverage? Look at Massachusetts. They mandated coverage. They are at least $100 million over budget, some estimates go as high as $300 million. Patients have long waiting times to see a doctor. You may have to call 50 doctors before you find one that is taking new patients. Massachusetts has 4 world class teaching hospitals and a solid healthcare infrastructure. If a small state like Mass can’t make universal coverage work, what makes the candidates think they’ll be able to make it work on a national scale.
The email...
Medicare was started in the late 60s. If you will recall, the country didn't have a healthcare issue until the government became involved with Medicare and Medicaid. The cost of regulation, out of control litigation, the over use of treatment and the absence of preventive care (this is not a part of the Medicare and Medicaid model) have forced a transfer of cost to those of us that are insured. The law states that a doctor may not charge (bill) more than the price they charge Medicaid patients. This forces insurance companies to negotiate a price that is Medicaid plus pricing. While the government spends almost $500 Billion a year on Medicare there is no incentive to cut cost or to be efficient. The government also forces a hospital to treat any patient that comes to their emergency room whether they have insurance or not. This again forces the hospital to transfer the cost to the paying customers. So if I can get treatment for free why do I need to pay for insurance. This is an unintended consequence of government regulation. Anything the government gets involved with gets screwed up and is extremely inefficient!!!
I’ve included just one representative email for each topic..
The first email is regarding last week’s show on the disconnect between the way we are and the way we feel. You’ll recall from the last show that recent survey’s of American’s indicate pessimism is the worst it has been in 30 years.
The email...
I grew up in a household with 5 kids. We didn’t have air conditioning. We had a black and white TV with rabbit ears. My mother walked to the grocery
story and bought fresh produce and meats for our meals. We ate Mac and cheese (home made) every Friday and thought it was great. We didn’t have ice cream in the freezer, but, every other Friday – pay day – my father brought home a half gallon of Neopolitan ice cream and we ate it that night. We didn’t go to movies – we would pile in the car and go to the drive-in every few weeks – a big treat. We had one car. It was bought used. My father worked 7 days a week and went to Canada to fish one week each summer. We didn’t go to Disneyland. The family went to Lake Erie and stayed in a “motel”. I wasn’t on an airplane until I was in college, and, my parents weren’t on an airplane until I bought them tickets to visit me in 1982.
And you know what – we thought life was pretty good. We had life better than most of the people on our block. If a family today lives in the
standard in which I grew up, they consider themselves deserving of more and the lesser class of America. They believe “the government” should be doing more them.
----------------------------
The second email is regarding the May 16th show on immigration. It would appear that as U.S. citizens we are of two minds regarding illegal immigration. On the one hand we embrace the idea of immigration. What we don’t embrace is the idea of illegal immigration. Even so, we are willing
to provide a path to citizenship provided the immigrants meet certain criteria. What the majority of American’s apparently don’t like are the
things that promote multiculturalism or not assimilating to the American culture. So long as immigrants are willing to assimilate to the American
culture, learn our language and obey our laws we welcome them with open arms.
The email...
These are the immigration laws of Mexico (translated from Spanish).
1. There will be no special bilingual programs in the schools.
2. All ballots will be in this nation's language.
3. All government business will be conducted in our language.
4. Non-residents will NOT have the right to vote no matter how long they are here.
5. Non-citizens will NEVER be able to hold political office.
6 Foreigners will not be a burden to the taxpayers. No welfare, no food stamps, no health care, or other government assistance programs. Any burden will be deported.
7. Foreigners can invest in this country, but it must be an amount at least equal to 40,000 times the daily minimum wage.
8. If foreigners come here and buy land... options will be restricted. Certain parcels including waterfront property are reserved for citizens
naturally born into this country.
9. Foreigners may have no protests; no demonstrations, no waving of a foreign flag, no political organizing, no bad-mouthing our president or his policies. These will lead to deportation.
10. If you do come to this country illegally, you will be actively hunted &, when caught, sent to jail until your deportation can be arranged. All assets will be taken from you.
Here are the reference for the 14 reasons we need to deal with immigration now.
http://tinyurl.com/zob77
http://www.cis..org/articles/2004/fiscalexec.html
http://www.cis..org/articles/2004/fiscalexec.html
http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.0.html
http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.01.html
http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.01.html
http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.01.html
http://premium.cnn.com/TRANSCIPTS/0610/29/ldt.01.html
http://transcripts.cnn.com/TRANSCRIPTS/0604/01/ldt.01.html
http://transcripts.cnn.com/TRANSCRIPTS/0606/12/ldt.01.html
http://tinyurl.com/t9sht
http://www.nationalpolicyinstitute.org/pdf/deportation.pdf
http://www.rense.com/general75/niht.htm
http://www.drdsk.com/articleshtml
----------------------------
The third email is regarding healthcare from the May 2nd show. Can we afford universal healthcare coverage? Look at Massachusetts. They mandated coverage. They are at least $100 million over budget, some estimates go as high as $300 million. Patients have long waiting times to see a doctor. You may have to call 50 doctors before you find one that is taking new patients. Massachusetts has 4 world class teaching hospitals and a solid healthcare infrastructure. If a small state like Mass can’t make universal coverage work, what makes the candidates think they’ll be able to make it work on a national scale.
The email...
Medicare was started in the late 60s. If you will recall, the country didn't have a healthcare issue until the government became involved with Medicare and Medicaid. The cost of regulation, out of control litigation, the over use of treatment and the absence of preventive care (this is not a part of the Medicare and Medicaid model) have forced a transfer of cost to those of us that are insured. The law states that a doctor may not charge (bill) more than the price they charge Medicaid patients. This forces insurance companies to negotiate a price that is Medicaid plus pricing. While the government spends almost $500 Billion a year on Medicare there is no incentive to cut cost or to be efficient. The government also forces a hospital to treat any patient that comes to their emergency room whether they have insurance or not. This again forces the hospital to transfer the cost to the paying customers. So if I can get treatment for free why do I need to pay for insurance. This is an unintended consequence of government regulation. Anything the government gets involved with gets screwed up and is extremely inefficient!!!
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