“The Public Option is not your Enemy”
Posted: June 16, 2009 Filed under: Health care reform, Human Rights, Team Obama, Uncategorized | Tags: Affordable health Choices Act, American Medical Association, Congressional Budget Office, Dodd, Kennedy Comments Off on “The Public Option is not your Enemy”
Finally, if we are to win the battle that is now going on around the world between freedom and tyranny, the dramatic achievements in space which occurred in recent weeks should have made clear to us all, as did the Sputnik in 1957, the impact of this adventure on the minds of men everywhere, who are attempting to make a determination of which road they should take. Since early in my term,our efforts in space have been under review. With the advice of the Vice President, who is Chairman of the National Space Council, we have examined where we are strong and where we are not, where we may succeed and where we may not. Now it is time to take longer strides-time for a great new American enterprise-time for this nation to take a clearly leading role in space achievement, which in many ways may hold the key to our future on earth.
President John F. Kennedy, May 25, 1961
Why can’t we put the same determination that put a man on the moon into finding a solution for affordable health care for all? What are the sticking points?
Some of the first efforts toward that goal were put into play yesterday. We had the usual Presidential teleprompter read before the American Medical Association yesterday. It was characterized this way by Sam Stein.
“The public option is not your enemy, it is your friend,” Obama declared at one point.
His prepared remarks were a bit more detailed:
If you don’t like your health coverage or don’t have any insurance, you will have a chance to take part in what we’re calling a Health Insurance Exchange…. You will have your choice of a number of plans that offer a few different packages, but every plan would offer an affordable, basic package. And one of these options needs to be a public option that will give people a broader range of choices and inject competition into the health care market so that force waste out of the system and keep the insurance companies honest.
Back in the world of where the rubber hits the road, the Congressional Budget Office (CBO) returned an estimate of the Affordable Health Choices Act that was proposed by Dodd and Kennedy. Ezra Klein of WaPo used the adjective “devastating”.
According to the agency, the bill would cost a hefty trillion dollars over 10 years and extend insurance to a mere 16 million people. That’s a lot of money to spend if you’re only going to achieve a third of your goal. Frankly, I was pretty surprised by the results.
And so, it turns out, were the people writing the bill.
A couple of months ago, the Health, Education, Labor, and Pensions Committee sent the CBO a sketch of a draft of its legislation. And the CBO sent the members back a stab at an outline of an estimate. It was all very early, and very rough. But CBO’s response was encouraging. The total cost was a bit higher, but the number covered was much higher. More like what you’d expect. More like what health reform is trying to achieve.
The draft the CBO examined last week, however, was in certain respects even less complete than the outline they were given months ago. In an effort to buy some extra time to negotiate with Republicans on the committee, the Democrats on HELP left out some of the more controversial policies in the hopes of reaching a bipartisan agreement sometime this week. The public plan, the employer mandate and the individual mandate were all absent from the proposal the CBO examined. The employer and individual mandates — the first of which pushes employers to offer coverage and the second of which force individuals to purchase coverage — are particularly key to increasing the number of Americans with health insurance.
You might ask what the HELP Committee was thinking, sending Swiss cheese legislation to CBO. Well, the HELP Committee’s expectation was that the CBO, in crafting its preliminary score, would assume something similar to the outline it had seen months before. The CBO didn’t. In fact, it did the opposite. CBO ran its estimates with no employer mandate and an individual mandate with a laughably small penalty.
“Swiss cheese legislation”, is this what the American people deserve?
Please! No More Kabuki Finance Reform!
Posted: June 15, 2009 Filed under: Bailout Blues, Equity Markets, Global Financial Crisis, Team Obama, U.S. Economy | Tags: banking regulation, Biden, Credit Default swaps, Dodd, Frank, Lawrence Summers, regulation of securities, Timothy Geithner, Vice President MBNA 2 CommentsToday’s Wall Street Journal highlights the Details Set for Remake Of Financial Regulations. The question on every one’s 
mind is will it be real this time instead of some show that shuts down the minute the press leaves the room. (You know when Barny Frank and Chris Dodd trot out the single malt and the Cuban Cigars and party down to Chain, Chain, Chain … chain of Fools.
President Barack Obama is expected Wednesday to propose the most sweeping reorganization of financial-market supervision since the 1930s, a revamp that would touch almost every corner of banking from how mortgages are underwritten to the way exotic financial instruments are traded.
We shall see, we shall see. In today’s WAPO, Timothy Geithner and Lawrence Summers are inkling their strategy in A New Financial Foundation. They identify five key problems in the article they see with the current regulation regime.
First, existing regulation focuses on the safety and soundness of individual institutions but not the stability of the system as a whole. As a result, institutions were not required to maintain sufficient capital or liquidity to keep them safe in times of system-wide stress. In a world in which the troubles of a few large firms can put the entire system at risk, that approach is insufficient.
Capital requirements are always nice in a fractional reserve system. After all, banks only make money by lending out the funds they hold at a higher rate, but this needs to be closely examined; especially with capital from government sources at the risk or implied government guarantee of assets. I talked before about Stiglitz’s concept of Banks Too Big to be Restructured. Many of us feel that these banks don’t need to be better regulatedbut completely busted up. The joint statement appears to say that the Obama Adminstration is prepared to let them dither in Zombie land while making them come up with more capital. (The only thing I can say is how long and with whose money?) I call this passage a stinker, but I’ll wait to see the details in the bill itself. If they regulate it the way they regulated Fannie and Freddie, hide your savings under your nearest mattress and try to get all your income in Eurodollars.
The administration’s proposal will address that problem by raising capital and liquidity requirements for all institutions, with more stringent requirements for the largest and most interconnected firms. In addition, all large, interconnected firms whose failure could threaten the stability of the system will be subject to consolidated supervision by the Federal Reserve, and we will establish a council of regulators with broader coordinating responsibility across the financial system.
Shorting Bermuda
Posted: June 13, 2009 Filed under: Diplomacy Nightmares, Team Obama | Tags: Bermuda, Guantanamo deal, Uighers 1 Comment
I admit to being an over-the-top anglophile, so I’ll just announce that bias right now. From the moment I read my first Shakespeare play and met my grandfather’s British cousins, I swooned. I have two majors as an undergrad, one of them is history, and it was English History. I started hooking into rock and roll as a tot right at the time of the Beatles and the British invasion. My first big film crush was James Bond and Scotsman Sean Connery. I think I’ve mentioned here before, that as a kid, I wanted to be Emma Peel. My dad still tells me of his time in the US Army Air Force when he was located in Ipswich and he and his flight crew would hit London for a much needed break from bombing Germany and I still get goosebumps to this day.
Yanks and Brits have this special relationship that has been forged in blood, family feuds, language and law. We are kidding ourselves if we don’t think that a major portion of every thing we’ve ever done is a direct product of the English enlightenment and the Magna Carta. We are their hippy offspring and while we don’t have to agree with everything that say and do, we at least should show some respect. (Respect, to me, does not include leaving someone out of the loop to protect them. That is the very definition of arrogant patronization to me.)
In less than 4 months, we have not only snubbed the UK four times in some fashion, we have now left them completely out of a negotiation that directly impacts them can only be characterized as steps in a remake of our special relation. This is especially true in light of the recent protocol gaffes. I was really appalled by the shabby treatment by POTUS and the administration shown to PM Gordan Brown and his family on their visit to the White House. The gifts were tacky and the lack of a formal news conference was embarrassing. It got passed off as a young, inexperienced administration blunder and I tried to give every one the benefit of the doubt. Upon, a visit by POTUS to London for the G-20, we had a second round of tacky gifts and some complete disregard for protocol surrounding royalty. (At least the British royalty, the Saudi royalty got more than any one anticipated).Then, we had the misunderstanding surrounding the disenfranchisement of Her Royal Highness, the only surviving head of state to have been an active member of an Allied Service during World War 2 that was said to be a combined misunderstanding between Brown (who is a bit of a bumbler), Sarkozy (French, nothing else to add there), and Obama (wtf? Isn’t he briefed on these things?).
Now, the BBC reports that the US ‘kept Guantanamo deal from UK’. We have now gone from a series of protocol and diplomatic blunders and missteps to something that, I’m sure, will be seen by many in Parliament as a re-working of the Anglo-American Alliance.
A senior US official has told the BBC Washington decided not to tell London ahead of time about a deal to resettle four Guantanamo detainees in Bermuda.
A diplomatic row blew up over Bermuda’s decision to accept the four Chinese Muslim Uighurs on a US request.
Bermuda is a British overseas territory but the US official said Washington had acted secretly to ensure success.
Meanwhile the US said on Friday three Saudis at Guantanamo Bay had been transferred back to Saudi Arabia.
The transfers are part of US President Barack Obama’s strategy to close down the Guantanamo detention centre before next January.
Hostility
The unnamed senior official also told the BBC that Washington was attempting to shield the UK from Chinese anger.
Beijing has demanded the return to China of all 17 Uighurs held by US forces but Washington says they could face persecution in China.
Hiding things that could potentially create a rift between huge, powerful countries is just about as arrogant of a policy of anything I’ve heard coming down the pipe. Exactly what is every the UK, China, and the Bermuda parliament supposed to do now? I’m not saying placing the Uighurs in a less prison-like atmosphere and protecting them from prosecution in China isn’t a laudable idea. I’m saying doing a run around diplomacy is a chicken shit move I would expect from a Cheney administration. I thought per campaign pledges we were supposed to diplomacy differently now?
At WHAT point does HE own it?
Posted: June 12, 2009 Filed under: Bailout Blues, Diplomacy Nightmares, Global Financial Crisis, Hillary Clinton: Her Campaign for All of Us, president teleprompter jesus, Surreality, Team Obama, Voter Ignorance | Tags: broken campaign promises 3 CommentsThe Political Memo in today’s NYT minces few words in Blaming the Guy Who Came Before Doesn’t Work Long and I’d like to just tag right along with that. Its thesis is clear. The Obama administration wastes no opportunity to turn the phrase “we inherited a lot of problems”.
As President Obama struggles to turn around the moribund economy and confront multiple international issues, he wastes few opportunities to remind the country that the problems are not of his making.
“The financial crisis this administration inherited is still creating painful challenges for businesses and families alike,” Mr. Obama said this week as he proposed spending limits.
“We inherited a financial crisis unlike any that we’ve seen in our time,” he said last week as he thrust General Motors into bankruptcy.
His advisers and allies follow the same script. “The Obama administration inherited a situation at Guantánamo that was intolerable,” James L. Jones, the national security adviser, said of the military prison in Cuba. Secretary of State Hillary Rodham Clinton defended the Obama foreign policy in the same vein. “We inherited a lot of problems,” she said.
Mr. Obama is hardly the first president to point to his predecessor. Ronald Reagan blamed Jimmy Carter for the poor economy he inherited, just as Bill Clinton blamed the first President Bush and the younger Mr. Bush then blamed Mr. Clinton. Former Bush aides like Karl Rove argue that Mr. Obama has done it more extensively and routinely than other presidents have, although the Obama team denies that.
But at a certain point, a new president assumes ownership of the problems and finds himself answering for his own actions. For Mr. Obama, even some advisers say that moment may be coming soon.
I’d really like to extend the question of when does he own it a bit further to what good does saying you inherited all these problems do when your solution is basically a continuation of those same failed policies?
In the two major areas of concern during the election and primary–the Iraq War and the Financial Crisis–we not only seen continuation of the same dysfunctional policies, but we’ve seeing appointment of the same dysfunctional policy makers in both cases. Timothy Geithner (with Obama’s consent and support) has basically been following the same policies of his predecessor Secretary of Wall Street Bailouts Hank Paulson. I know this because oc-08I’ve been following the economic policies quite closely because of obvious reasons. I have had to rely on others for examples in other policy areas. To say there is a plethora is understatement. I am getting tired of flushing spam from seriously delusional Obama voters into byte heaven that mostly reads: “Hillary would have done the same thing” and “he’s just doing what he has to at the moment, just wait it will change, you’ll see.”
Cannonfire has run a series of threads demonstrating how closely aligned President Obama’s policies have been to his predecessor. I’ve spent a few days following the links from The Worm turns and turns. One link is to Paul Craig Roberts at Global Research and the title absolutely says everything. It’s called Watching Obama Morph Into Dick Cheney. This one especially appeals to me because of a post I took a lot of grief for back in the day that used a side-by-side Broke Back Mountain view of the boyz will be boyz.
It’s all Lemonade when it comes to Executive Pay
Posted: June 10, 2009 Filed under: Bailout Blues, Equity Markets, Global Financial Crisis, Team Obama, U.S. Economy | Tags: asymmetric information, CEO bonuses, CEO pay, executive compensation, lemons problem, moral hazard Comments Off on It’s all Lemonade when it comes to Executive PayI’ve had to read executive pay studies for some time since Corporate Finance is one of my fields. This is one of those areas where every time they think they come up with a good explanation and plan, we see a complete failure in the real
world. This is because it fits under theories of probability where human behavior is poorly quantified. Executive compensation falls under the Moral Hazard area and of course the Lemon’s problem. Believe me, I’ve worked as a corporate consultant and a corporate flunky long enough to know the high level of lemons in the CEO market. It’s one of my main motivators for going back to the halls of academia. I can only slap my forehead so many times before I get a permanent indentation.
One of the first studies on asymmetric information (the lemons problem) is from George Ackerloff (1970). His example comes from the market for with used cars. It centers around determining the reason the seller want to sell of the car. One reason is that it might be a lemon. This is considered a situation with asymmetric information. This means the buyer and the seller have different information. The seller knows if the car is a cream puff or a lemon, but the buyer has no idea. He only knows the probabilities or the the odds that the car is a lemon. So, if he’s rational (and remember the assumption is that he is rational), the buyer will demand a deep discount.
So here’s the news today for investors, board of directors, CEOS, and taxpayers who bail out too big too fail and badly managed companies. Bloomberg reports that the Obama administration is seeking SEC power over executive pay.
The Obama administration will seek new powers for the Securities and Exchange Commission to force firms to let shareholders vote on executive pay and make directors who set compensation more independent, an administration official said.
Today’s proposal, subject to congressional approval, would cover all public companies. President Barack Obama has long supported giving shareholders nonbinding votes on bonuses, salaries and severance packages. The administration also will name a “special master” to monitor compensation plans for firms receiving exceptional assistance in the financial rescue.
The changes are aimed at reducing systemic risks and quelling a political uproar over bonuses paid to executives whose companies were bailed out by the government. Treasury Secretary Timothy Geithner has repeatedly blamed pay standards tied to short-term profits for contributing to the worst financial crisis since the 1930s.
“It clearly is going to force companies to be more transparent with their disclosure” on compensation, said Irv Becker, national practice leader for Philadelphia-based Hay Group’s executive compensation practice. If the measure is implemented, it likely will take several years before shareholders begin to confront management, he predicted.
“It’ll kind of be novel the first year, maybe the first two, and then likely be a little bit more serious in future years,” said Becker, a former head of compensation and benefits at Goldman Sachs Group Inc.
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