Category Archives: markets

Health Insurance and Regulation

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Faith-based organizations that share the costs of health care among their members are a tiny part of the health care coverage industry. They’re also not regulated by government.

[Faith-based] ministry officials say they aren’t offering insurance, don’t guarantee claims will be paid, and don’t need to be regulated.

Naturally, regulators object.

But now, some insurance commissioners are concerned that the ministries could put consumers at risk if bills aren’t paid.

This is the consumer’s choice to risk, though, not government’s authority to command not to. At least in a free society.

And more tellingly:

State regulators also say health ministries disrupt the insurance market because they tend to attract healthier consumers, siphoning them from commercial plans that can be left with sicker or older customers.

What these government regulators carefully omit to mention, though, is that the only “market” liable to disruption is their precious regulated “market.” In a free market economy, such competition is healthy, if disruptive, leading as it does to improving products and lowering costs.

Unfortunately, the number of faith-based health cost sharing entities that are exempt from Obamacare is carefully and deliberately circumscribed by Obamacare. That needs to change.

This is…Foolish

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More on the question of rebuilding Ramadi.

The US government and some of its allies said last week they had contributed $50 million toward a United Nations “stabilization fund” meant to rebuild the country—months after a similar $8.3 million pledge from the United States Agency for International Development.

Even if the UN (and the USAID) were honest thieves, this is just too much middle-man-ery, with too many intervening steps in which to siphon off the money. The funds—and future funds—are better given as loans directly to the Iraqi government, hard-coded for the Ramadi rebuild. Of course, that also assumes the Iraqi government under Prime Minister Haider al-Abadi can be trusted not to siphon, also.

Even better, there are a number of NGOs who would do better at handling directly the task of rebuilding Ramadi, and other Daesh-shattered cities (the current list includes Sinjar, Beiji, and Tikrit; there are some 15 smaller ones, too) when those times come. The shorter the chain, even with honest and well-meaning entities, the more the originally donated or loaned funds make it to the originally intended end users.

Rebuilding Ramadi

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When Iraq’s prime minister holds a meeting on Monday to discuss the monumental task of rebuilding the recently liberated city of Ramadi, officials will encounter a grim pattern: each time Islamic State is uprooted, the battles and the group’s tactics leave behind a legacy of destruction that will linger for years.

They would do well to learn from Germany and Japan about how to rebuild, not only shattered cities, but shattered nations and economies. Both of those were prospering nations just a few short years after World War II.

Of course, being willing to learn and being equally willing to act on those lessons will require a serious corporate, if not national, shift in culture. And it will require an actual national foundation on which to rebuild.

Government as Guarantor of Last Resort

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Fannie Mae and Freddie Mac are now preparing to sell bonds that supposedly indemnify us taxpayers from the results of another mortgage market melt-down.

Called Connecticut Avenue Securities by Fannie Mae and Structured Agency Credit Risk by Freddie Mac, the securities are essentially bonds whose performance is tied to that of a pool of mortgages. If the mortgages default, investors in the bonds could lose some or all of their principal.

That’s the claim. There are a number of fallacies to this. One is that Fannie and Freddie still are government controlled. Another is that the government, through the Fannie-Freddie regulator, the Federal Housing Finance Agency, has already demonstrated that it will manipulate regulations and pass along actual money to “protect” these agencies from failure.

The largest fallacy, though, is exposed by Lewis Ranieri, who co-invented mortgage-backed securities in his own assessment of this nascent Federal scam:

There’s still a question of whether [the securities sales] can be expanded to really provide the goal of making the government the guarantor of last resort.

Government as guarantor of last resort means us taxpayers aren’t protected from anything that Fannie or Freddie might take a notion to try our luck at.

In the end, though, why should government—which is to say, you and I—be the guarantor of anything in a free market other than that it is, in fact, free, with all transactions freely entered into and with each of the participants in any exchange—and no one else—owning every bit of their part of that exchange?