Monthly Archives: February 2018

Don’t Pay It

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The Federal National Mortgage Association, Fannie Mae, the government-run (never mind that it’s supposedly only government-sponsored, it began life as a government agency, it was set out on its own and failed, and now it’s under Federal Housing Finance Agency management regulation) mortgage securitizor, is failing again.  And now this agency wants a taxpayer bailout.

Fannie said Wednesday its regulator, the Federal Housing Finance Agency, would seek a fresh taxpayer infusion of $3.7 billion from the Treasury Department as a result of the loss [of $6.5 billion in the last quarter alone]….

It also would be, if this taxpayer bailout goes through, the second one for this agency just since the Panic of 2008.

The thing has, in fact, been paying dividends to the Treasury, but it’s time to stop feeding it.  It isn’t necessary; if the free market wants securitized mortgages to facilitate mortgage lending, private enterprise securitizers will appear—just look at all the securitizers of other kinds of loans and other methods of securitization that have already appeared.  Treasury will more than make up for the lack of Fannie Mae dividends from the tax revenue accruing from a more dynamic free market.

Fannie Mae and its brother, Federal Home Loan Mortgage Corporation (Freddie Mac), just distort the lending market.

The agency needs the infusion?  No, it doesn’t.  It needs to go away.  Along with Freddie Mac.

A New Insurance Plan

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Idaho has one.  Blue Cross of Idaho says it’s going to take advantage of newly issued State regulations to start marketing a plan that won’t meet Obamacare requirements, and they’re going to sell the plan alongside its existing Obamacare-compliant plans.

The Idaho Department of Insurance last month became the first state regulator to say it would let insurers begin offering “state-based plans” for consumers that involved practices generally banned for individual insurance under the ACA, including tying premium rates to enrollees’ pre-existing health conditions.

In particular,

The new Blue Cross state plans’ premiums would vary based on an enrollee’s health status—for instance, for one of its new plans, the insurer suggested that the best rate for a healthy 45-year-old could be around $194.67 a month, while a person of the same age with worse health could pay as much as $525.69. For one of its “bronze”-level ACA plans, the premium for a 45-year-old, regardless of health history, would typically be around $343.09, the insurer said.

Risk-based premiums.  What a concept.  And lower risk brings a premium roughly half the Obamacare risk-be-damned charge.

Infrastructure Funding

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Much has been made about the deteriorating state of our nation’s infrastructure, from past todos that worked out to be just political chit-chat with nothing done to today’s efforts and commentary.

The commentary, as far as it goes, isn’t far wrong: our infrastructure, our roads, bridges, railroads, airports, even our communications infrastructure are in terrible shape.  But the commentary continues to be largely chit-chat, and the NLMSM isn’t helping.

Take this opening from a piece on President Donald Trump’s latest budget proposal from Fox News, for instance.

President Trump is calling to pump $1.5 trillion into fixing America’s infrastructure while streamlining the often-cumbersome permitting process, as part of a $4 trillion-plus budget plan unveiled Monday.

We’re going to spend 3/8 of our 2019 Federal budget on infrastructure, are we?  That’s the impression the author of this piece has chosen to give.

The truth of the matter, though, is buried deeper into the piece.

The infrastructure component, however, would not necessarily be a huge driver of Washington’s red ink.

Well, NSS.  It turns out the infrastructure spending component of Trump’s budget proposal is just $200 billion—just about 1/8 of those $1.5 trillion.  The Federal part of that spending is just seed money, with the States and local jurisdictions, and importantly, private enterprise, putting up the rest.

And that’s entirely appropriate.  While our national infrastructure benefits our nation as a whole—is critical to it, in fact—the vast majority of use and of benefit is local: it’s the States and local regions that get the first and the most of the benefit of a functioning and sound set of bridges, roads, airports, and so on.  Of course, then, it’s the States and locals who should front most of the money for infrastructure rehab.  After all, why should Illinois or Missouri, with their citizens’ tax dollars, contribute a whole lot to improving Iowa’s lousy highway system?  A bit, yes; some interstate commerce traffic into and out of Illinois and Missouri uses Iowa roads.  But far and away the bulk of Iowa highway traffic is intrastate.  It’s Iowans who are the largest users of Iowa roads.

There’s another reason to put the cost of improvement on the State and locals.  They’re the ones closest to the problem, and so they’re the ones with the most impact from regulations and permitting and other red tape; they’re the ones who can have the most impact on these impediments to improvements.  Private enterprises best know the surrounding regulatory and permit environment, and it’s private enterprise that will employ local workers.

Private Moves and Regulations

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The Trump administration’s Bureau of Land Management is moving to rescind and replace an Obama administration regulation that would drastically limit methane gas emissions by companies drilling for hydrocarbons on Federal land.

While the move is salutary—the Obama regulation would have imposed too much cost, would have stunted energy innovation, and would have limited energy supply with resulting higher prices to us consumers—there’s one tidbit in the Wall Street Journal article carrying that news that needs emphasis.

Environmentalists rejected that claim [of impeding energy development] and decried the decision, pointing out that several companies had already moved on their own to start cutting methane emissions.

Because some in private industry think a move is a good idea, Government, says the Left, must get involved and require everyone to do the same thing.

And

Many oil-and-gas companies—including some of the world’s biggest—have been anticipating further rules to slow climate change and have decided to invest in better methane-capturing technology. They can recoup some of the investment and potentially add to profits by capturing more stray gas and selling it with the rest of their output.

Of course, they still will be able to with the new regulation in place.  Methane gas produced as a side effect of oil drilling or fracking still will be a marketable product, still will be competitive with coal, still will produce profit for the drillers and frackers.  This is innovation in a free market, something the Left and their environmentalists.

Diplomacy and Northern Korea

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The Wall Street Journal‘s Gerald Seib had a piece extolling the virtues of the Republic of Korea’s willingness to engage in formal, summit-level diplomacy with northern Korea coupled with President Donald Trump’s sub rosa willingness to talk.

There were, though, some serious misunderstandings in the article.  Here are a couple:

[T]here is no way to know for sure what the North Koreans are willing to give up without testing their intentions.

Apparently Seib has been doing a Rip van Winkle impression. For the last 25 years, the northern Korean government has said they’ll never give up their nuclear weapons goals.  We know for sure that what northern Korea is willing to give up is nothing.

If the North Koreans are talking rather than testing, that alone would be a positive development.

It would be, but this is incredibly naive. The northern Koreans are fully capable of talking and testing at the same time, and there’s no reason to believe they’d not continue that easy multitasking now, just as they’ve already been doing for those 25 years.

Talk, certainly. But do it in clear recognition of the fact that northern Korea will continue to test and that talking will not slow, much less halt or reverse, its drive to accumulate deliverable (and marketable) nuclear warheads.

We should keep the economic and military pressure on and increasing.  We can multitask, too.