Monday, March 26, 2012

Barker's Newsbites: Monday, March 26, 2012


Happy Monday, folks!

Let's start the week with a song...
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5 comments:

William R. Barker said...

http://www.weeklystandard.com/blogs/obama-russia-after-my-election-i-have-more-flexibility_634473.html

President Obama got caught in private conversation with a hot mic today in Seoul, South Korea, telling outgoing Russian president Dmitry Medvedev that Vladimir Putin should give him more "space" and that "after my election I have more flexibility."

Jake Tapper [of ABC News] has the exchange:

President Obama: "On all these issues, but particularly missile defense, this, this can be solved but it’s important for him to give me space."

President Medvedev: "Yeah, I understand. I understand your message about space. Space for you…"

President Obama: "This is my last election. After my election I have more flexibility."

President Medvedev: "I understand. I will transmit this information to Vladimir, and I stand with you."

Video: http://www.youtube.com/watch?v=uI0DYcHtTlI&feature=player_embedded

March 26, 2012 at 11:25 AM
William R. Barker said...

http://www.telegraph.co.uk/news/uknews/defence/9167383/British-soldiers-shot-dead-by-rogue-Afghan-army-officer.html

Two British soldiers have been shot dead [another was critically wounded] by an Afghan army officer after an argument at the British headquarters in Helmand province.

The deaths are the latest in a spate of “green on blue” killings where Afghan forces have turned their weapons on their NATO allies.

The incidents have increased in recent months. Six American soldiers were shot dead by Afghan personnel last month alone...

A total of 15 NATO troops have been shot dead by their Afghan allies in the first three months of 2012 – one in six of all coalition dead.

March 26, 2012 at 11:30 AM
William R. Barker said...

http://paul.house.gov/index.php?option=com_content&view=article&id=1957:a-fistful-of-euros&catid=62:texas-straight-talk&Itemid=69

This week, my congressional committee will hold a hearing to examine how the Federal Reserve bails out European banks, propping up spendthrift European governments in the process. [T]his bailout comes at the expense of American citizens, in the form of higher prices and diminished savings down the road.

A good analysis of the Fed’s “swap” scheme first appeared in the Wall Street Journal back in December, in an article by Gerald O’Driscoll entitled, “The Federal Reserve’s Covert Bailout of Europe.”

Essentially, beginning late last year the Fed provided U.S. dollars to the European Central Bank in exchange for Euros - sometimes as much as $100 billion at a time.

The ECB then funneled those dollars to European banks to provide liquidity and prevent crises from bank insolvencies.

Since the currency swap was not technically a loan, the Fed did not have to embarrass itself by openly showing foreign bank debt on its balance sheet. The ECB meanwhile did not have to print new Euros and expose the true fragility of big European banks.

The entire purpose of this unholy arrangement was to obscure the truth: namely that the Fed was bailing out Europe with U.S. dollars.

But why is it the business of the Federal Reserve to bail out European banks that find themselves short of dollars to pay their dollar-denominated contracts? After all, those contracts often were hedges taken to protect banks against weakness of the Euro. Hedges are supposed to reduce risk, but banks that miscalculate should suffer their own losses accordingly. It’s not our business if the ECB chooses to create moral hazards by providing liquidity to European banks, why should the Fed prop up Europe’s bad decisions?!

The Fed has promised to provide unlimited amounts of dollars to the ECB, should circumstances require it. It boggles the mind. Of course when Fed officials first entered into these swap agreements with the ECB last September, they did so quietly. The American public only found out via websites of the ECB, the Bank of England, or the Swiss Central Bank.

The Fed already has pumped trillions of dollars into the economy since 2008, and U.S. banks currently hold $1.5 trillion of excess reserves. So why don't American banks lend those excess trillions to European banks if they really need dollars? If U.S. banks could earn 1% or 2% on those loans, they might just be interested. But they can't compete with the 0.5% interest rate charged by the Fed to the ECB. That's one glaring example of the harm caused by the Fed's ability to create money and loan it at below-market interest rates.

The Fed argues that these loans will be temporary, merely providing a little boost to get Europe over the hump. But that's what they thought a few years ago when such lines of credit to the ECB were set to expire, only to see the Fed reauthorize them. What happens if the European financial system collapses? Will the Fed be left holding a bunch of worthless Euros? Will the ECB simply shrug and turn over the collateral it received from European banks, maybe in the form of bonds from Ireland, Italy, or Greece? Have the 17 individual central banks backing the ECB pledged their gold holdings as collateral?

The Fed has placed a hundred-billion dollar bet on the future of the Euro, with the strength of the dollar on the line. This is absolutely irresponsible, and directly contrary to market discipline.

Let private banks, European or otherwise, take their own risks.

Let foreign central banks inflate their own currencies and suffer the consequences.

In other words, it’s time to apply market principles to banks and money.

March 26, 2012 at 2:01 PM
William R. Barker said...

* TWO-PARTER... (Part 1 of 2)

http://www.manhattan-institute.org/html/ir_7.htm

President Barack Obama’s signature health-care legislation, the Patient Protection and Affordable Care Act (PPACA), was sold to the public with the explicit promise that “if you like your health plan, you can keep your health plan.”

Despite the president’s promise that “you can keep your own insurance,” key PPACA provisions are calculated to undermine the long-term viability of the private insurance market by making existing coverage unaffordable or unavailable at any price.

Indeed, while individuals may technically be allowed to keep "their" plans, that protection exists in name only. Plan serial numbers may temporarily remain the same, but the PPACA’s combination of high taxes, large subsidies, and extensive mandatory contractual terms seems likely to eventually drive most private insurance plans out of business.

The methodical hollowing out of the president’s promise is proceeding in three sequential stages.

The first stage was completed with the enactment of the PPACA, which claimed to grandfather existing coverage but did not really do so.

The second stage is currently taking place, during the long transition between the passage of the PPACA and the time that its major regulation of the private marketplace — most notably, the individual mandate and the exchanges —takes effect in 2014. Assuming that the Supreme Court upholds the constitutionality of the PPACA and that President Obama is reelected, the PPACA will be implemented more or less as written.

Then, the third stage, necessarily more speculative than the first two, involves the likely effects once the PPACA is fully phased in, beginning in 2014.

If President Obama had wanted to limit the impact of the PPACA on existing coverage arrangements, the starting point should have been a comprehensive and durable grandfathering of all existing plans.

* BUT HE DIDN'T.

[Instead,] the PPACA left the door open for private plans to lose their grandfathered status, depending on regulations that the secretary of Health and Human Services (HHS) was directed to issue at some later date. Thus, the explicit statutory language of the PPACA is largely inconsistent with the promise made by President Obama, even before one considers how the legislation has been implemented to date.

* TO BE CONTINUED...

March 26, 2012 at 7:18 PM
William R. Barker said...

* CONCLUDING... (Part 2 of 2)

The CBO and Joint Committee on Taxation recently tried to estimate the impact of the PPACA on employment-based coverage. Their baseline estimate is that “about 11 million people who would have had an offer of employment-based coverage under prior law will not have an offer under the PPACA.” Other plausible assumptions resulted in substantially higher estimates.

(So much for “if you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what.”)

[E]xisting coverage programs have not survived the passage of the PPACA intact. More ominously, we believe that no form of private insurance is likely to survive long under the decision to use the PPACA to impose substantial coverage mandates and price controls, while eliminating the underwriting discretion needed to control adverse selection by employers and employees. Even if employers prefer to keep offering coverage in this hostile environment, only a hardy few sellers of health plans will have the grit and the skill, in the long run, to navigate the extensive administrative guidelines already issuing from a multitude of government agencies.

These harsh conditions will undermine the stability of private plans. The presidential promise that you will not be forced to change your coverage turns out to mean only that the federal government will not flatly ban private coverage going forward. Even viewed in the most favorable light, the government’s supposed guarantee of plan stability to employers, insurers, or health-care providers is an empty promise. It is more accurate to say that the PPACA deliberately undermines these private plans by disrupting both the demand and supply sides of the market.

In time, high taxes, large subsidies, and extensive mandatory contractual terms in tandem could well drive most private plans out of business. That outcome is a virtual certainty if a public option is added to the mix. The imposition of rate, standards, and reporting regulations will help finish off the job. Where and when the tipping point comes, no one can say in advance, and perhaps some tenacious and well-run private plans may ultimately survive. But in the end, our gloomy prediction is that in the absence of a major change in course, a regulatory cascade will first force some plans to fail, after which other private plans will topple like tenpins.

These multiple machinations seem likely to set the stage for a single-payer system to emerge from the wreckage. It will be no tribute to the democratic process if the single-payer system that could not have been adopted on a straight-up vote becomes the law of the land, without the blessing of reasoned debate, or an actual vote on that outcome.

March 26, 2012 at 7:18 PM

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