Tag Archives: economics

YGTBSM

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And these guys are serious.

Recall that Cyprus is as bankrupt as Greece.  In order to bail out Cyprus (we’ve been over the legitimacy of bailouts elsewhere), the European Central Bank, European Commission, and the IMF have demanded a one-time tax on deposits: 9.9% on deposits over €100,000 ($131,000) and 6.75% on smaller deposits.

Nothing underhanded about any of this, either.  Uh, uh.  Because depositors, including many of the 3,500 British soldiers stationed in Cyprus, are complicit in the incompetence of the banks’ management.  Yeah.  That’s it.  We’ll go with that.

Finance Minister Michalis Serris already has taken steps to block depositors from taking their money out ahead of the tax:

We have taken immediate measures so that electronic transfers cannot take effect before banks reopen on Tuesday [today is a holiday in Cyprus.]

Chump change was recovered by depositors over the weekend via Cyprus’ cash machines, but the machines’ money stocks were limited and not replenished as they ran out.  Willy Sutton couldn’t have done it better.

A planned weekend vote by the Cypriot Parliament to pass this thing, however, was been postponed until today amid…concerns…that the Parliament may have more integrity than Serris and block the “agreement” with the ECB, the EC, and the IMF.

This is supposed to raise €5.8 billion ($7.6 billion).  Think about this, though.  Are the interest rates or investment rates of return that the Cypriot banks are paying on those deposits more or less than those taxes?  You get three guesses, and the first two don’t count.  For how long will those depositors leave their remaining money in those banks?  Again, three guesses, and the first two don’t count.

This is what happens when the wrong folks are left in charge of OPM.

Update: Cyprus’ legislative vote has been delayed until Tuesday afternoon.

Update again: Today (Tuesday) the Greek Parliament rejected any “tax” on private deposits by a vote of 36 “No,” 19 abstentions, and 0 “Aye.”

Obamacare…Gifts

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Welcome to ObamaWorld.  Health insurance premiums—which President Barack Obama has been promising for the last three years will be going down, courtesy of his Obamacare—are about to jump up.  High.  The AP is reporting that we can look forward to 20%-100% premium jumps beginning in just nine months—next January.  Here’s what some of those increases will look like, with my editorial comments interspersed.

  • Changes to how insurers set premiums according to age and gender could cause some premiums to rise as much as 50 percent, according to America’s Health Insurance Plans.  NOTE: this is because Obamacare drives insurers steadily away from market-oriented, risk-based premiums.  Age and gender drive differing risks for a given insured malady.  As the AP went on:
  • The law will prohibit insurers from setting different rates based on gender—something they currently do because women generally use more health care.  That means premiums for some men could rise, while they fall for women.  NOTE: this is a redistribution, and a subsidy of one group (here, women) by another.
  • Young people who currently have low-cost coverage may see some of the biggest hikes.  NOTE: or they may start out with no coverage at all, because they don’t need it.
  • In many states, insurers charge a 60-year-old customer $5 in premiums for every $1 they collect from a 24-year-old.  The logic behind that is that older people use health care more and generate more expensive claims than younger customers, so insurers need to collect more to help pay their bills.  …  But the overhaul will narrow that ratio to 3-to-1.  That alone could cause the premium for a 24-year-old who pays $1,200 annually to jump to $1,800, according to AHIP. Meanwhile, the 60-year-old who currently pays $6,000 will see a 10 percent drop in price.  NOTE: This is naked wealth redistribution and a subsidy.  Only this time, the victim has no wealth to redistribute—the 24-year-old is only just starting out.
  • Prices also may change depending on a person’s current coverage.  Many policies on the individual market (coverage not sold through employers) exclude maternity coverage, but that will be considered an essential health benefit under the overhaul.  That could mean higher prices for some.
  • Vikki Swanson, 49, of Newport Beach, CA, resents that the added benefit may lead to higher costs for her.  “I had a hysterectomy, I have no need for maternity coverage, but I have to now pay for it.  I have to pay not only my own premium but I have to subsidize everybody else[.]”  NOTE: Yeah….
  • A new tax on premiums could raise prices as much as 2.3% in 2014 and more in subsequent years, according to a study commissioned by AHIP.  Policyholders with plans that end in 2014 probably have already seen an impact from this.  NOTE: this tax on the top-line revenues of medical equipment manufacturers will suppress development and/or production of items ranging from pacemakers to suits that let paraplegics walk again.
  • Requirements that insurance plans in many cases cover more health care or pay a greater share of a patient’s bill than they do now also could add to premiums, depending on the extent of a person’s current coverage, according AHIP.  NOTE: because insurance companieswelfare agencies aren’t allowed to charge for elective items like contraceptives, they’ll have to recoup these losses from other areas.

Once again, coverage under Obamacare isn’t health insurance, it’s privately funded, Federally mandated health welfare.

Another Sequester Result

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Here’s another apocalyptic cut from the disastrous sequester:

The U.S. Department of Agriculture is considering buying 400,000 tons of sugar—enough for 142 billion Hershey’s Kisses—to stave off a wave of defaults by sugar processors that borrowed $862 million under a government price-support program.

The action aims to prop up tumbling US sugar prices, which have fallen 18% since the USDA made the nine-month operations-financing loans beginning in October.

As Defending Enterprise puts it, a bailout of a bailout.

Did I say sequester outcome?  Oh, wait….

 

h/t Spirit of Enterprise

Freedom and Morality

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Senator Jeff Sessions (R, AL) had a few words to say on this [emphasis added].

The Department of Agriculture proudly declares: “Each $5 in new [food stamp] benefits generates almost twice that amount in economic activity for the community.”  Our government is running food stamp promotions at foreign embassies.  One worker was given an award for overcoming “mountain pride” and getting more people to sign up.  Where I grew up in Alabama, all honest work, even the hardest, was honored.  And pride, self-respect, and a desire to be independent was valued, not a thing to be overcome.

And

People are being hurt every day by the Washington establishment the Democrats are determined to shield from accountability.  Government has never been bigger or more out of control.  They say there is no problem with waste, fraud, and abuse; they say the problem is you; they say you are not sending them enough money; they say they have wisely spent every penny.  So, you must just send them more.  And, if you don’t?  Well, they won’t stop spending, they’ll just borrow more.

Here is Sessions’ suggestion for an economically effective and morally sound budget outline:

Instead, we must act to create more jobs and better pay.  And we can do it without adding to the debt.  Here’s how:

  • Make welfare temporary and the welfare office an employment and job training office.

  • Unlock America’s vast energy resources to create millions of good-paying jobs.

  • Defend American workers from unfair foreign trade practices.

  • Reform the tax code to make America globally competitive, creating more jobs here.

  • Make government leaner, less wasteful so it produces greater results for the money you earned and sent here.

  • Enforce an immigration policy that protects legal US workers from unlawful competition.

  • Eliminate every burdensome federal rule or regulation that isn’t needed and that destroys jobs.

  • And, finally, we must balance the federal budget.

These are steps that reduce government, they allow Americans to regain responsibility for our own actions, regain our ability to work toward our own goals, and these steps leave more of our hard-earned money in our hands.  All of this enhances our—and our country’s—freedom and morality.

We saw with Wednesday’s Senate budget proposal the Democrats’…freedom and morality.