Bailouts

The Inspector General for the Federal Housing Finance Agency (FHFA) recently reported that Fannie Mae and Freddie Mac might need more government bailouts if housing markets decline. The problem: lack of capital reserves to serve as a buffer against future losses.

That lack of capital, says Fannie Mae boss, Tim Mayopoulos,

increases the likelihood that Fannie Mae will need additional capital from Treasury at some point.

William Isaac, FTI Consulting Senior Managing Director (and former FDIC Chairman), and author of the piece at the link, has a solution: Treasury should stop sweeping Fannie’s and Freddie’s profits into the Federal government’s piggy bank. He’s right that this is illegal, but it’s the wrong solution.

All the more Reason

…to speed reform of the way in which our economy produces medical care services and in which we pay for them.

[A] 66-year-old couple retiring this year with average Social Security benefits can expect medical costs to consume 67% of the Social Security they will receive in retirement.

A 55-year-old couple who plan to retire in 10 years can expect to devote about 90% of their lifetime Social Security benefits to healthcare costs.

There’s more:

Social Security benefits typically grow by approximately 2% a year—the overall rate of inflation. But medical costs in general tend to rise by more, 5% to 7% a year[.]

There’s More To It

…than this, or so it seems.

A wave of cash is leaving the eurozone, where returns on safe assets are infinitesimal, if they are positive at all, and headed to the US and other refuges such as Denmark and Switzerland.

Europe’s common currency has fallen 22% against the dollar in less than a year, from $1.39 to $1.08. The euro touched a 12-year low of less than $1.05 this month.

Returns on safe assets are infinitesimal in the US, too, with the Fed still actively suppressing interest rates (to the detriment of those Americans dependent on fixed income assets, but that’s another story). Why, then, would money come to the US at the expense of the eurozone—at the expense of the EU?

Central Banks, Interest Rates, and Fear

The Fed is looking to start raising its benchmark interest rates “real soon now.” This is expected to inject fear into investors used for so long to being coddled and protected from uncertainty by an interventionist central bank.

Christine Lagarde, head of the IMF,

warned Tuesday that markets could be heading for a repeat of the 2013 “taper tantrum,” in which stocks fell and interest rates rose around the world as the Fed considered winding down its “quantitative easing” bond-buying program.

She went on:

ATF and Gun Control

They’re not capable of letting this go.

The Bureau of Alcohol, Tobacco, Firearms and Explosives on Thursday raised new concerns about surplus military ammo used in popular AR-15 rifles and pistols just days after pulling back on a proposal to ban the ammo because it could threaten police safety.

In a Senate Appropriations Committee hearing, ATF Director B Todd Jones said all types of the 5.56 military-style ammo used by shooters pose a threat to police as more people buy the AR-15-style pistols.

So is the ammunition for any firearm a threat. So are knives. So are hammers.

Costs of Obamacare

The Washington Health Benefit Exchange…has enrolled 160,000 paying customers in ObamaCare exchange health plans but that’s more than 50,000 short of goal, which has led to an extension of the enrollment deadline and a request that the Washington State Legislature fork over $125 million to fund the exchange.

There’s a hint there.

Republicans are angry because they were told the exchange would be self-sufficient by the end of this year.

Leading Democrats were also skeptical. They were expecting a much lower subsidy as the exchange bridges from federal seed money to being able to fund itself through premium taxes and fees paid by insurance companies and customers.

Off Ramps

That’s the cool, new buzz phrase. Congressmen John Kline (R, MN), Paul Ryan (R, WI), and Fred Upton (R, MI), Chairmen of the House Education and Workforce Committee, Ways and Means Committee, and Energy and Commerce Committee, respectively, used it Monday in The Wall Street Journal to propose alternatives to Obamacare should the Supreme Court strike down Federal subsidies related to health care coverage plans bought through ObamaMart rather than through the State exchanges that the Obamacare law requires for Federal subsidy eligibility.

In the main, their alternatives are good ones, but there are a couple points with which I wholeheartedly disagree, and it’s disappointing that three men who know better would propose them.

Non-neutrality of Net “Neutrality”

The Federal Communications Commission set aside two decades of laissez-faire policy Thursday to assert broad authority over the Internet, voting to regulate broadband providers as public utilities and overruling laws in two states that made it harder for cities to offer their own Web service.

And

The commission pledged to use a light touch….

The FCC’s “rule” violates express Congressional instruction not to do this. With the FCC’s lawlessness made manifest, how can their pledge be believed?

A Thought on Net Neutrality

…as conceived in secret by FCC Chairman Tom Wheeler.

The image below, from the AP via USA Today, is…illustrative. The outage about which the article was written was clearly the result of vandalism. Read carefully, those signs taped to the window in the image.NetNeutrality

Think about them. Think about what happens when Government controls the Internet. The concerns presently center of free speech, and those concerns are of extreme importance. But the same control gives Government control over what businesses will be allowed to operate on the Internet, and at what cost—unique, perhaps, to a company of which Government disapproves.

One More Nail

…in what should be Obamacare’s coffin. Even if repeal will take some years and a Republican President.

More than half of tax filers who received subsidies for health insurance premiums may owe hundreds of dollars because they got tax credits that were too large, complicating an already messy tax season that has seen about 800,000 incorrect tax statements sent to consumers who obtained coverage via the federal HealthCare.gov exchange.

Almost six weeks into tax filing season, 52% of people who enrolled in insurance through state or federal exchanges are finding they must pay back a portion of their tax credits, according to a report Tuesday by tax preparation firm H&R Block Inc. and based on their clients. The average amount paid back is $530….