Category: Finance

Health Care vs. Health Insurance

Being clear about the terms Care and Insurance when it comes to US health.

The issue for the day is the distinction between health CARE and health INSURANCE.

As we all know, they are not the same thing.  But, as we all have noticed, the two are often confused and the distinctions ignored by many, if not most, in the media, Congress, and the White House.

Health Care and Health Insurance are certainly interdependent. But it helps first to separate the two and take each in turn.

Let’s start with health insurance.  And let’s think of it first as just any “insurance,” like a policy on your house or car.

What is insurance?  It’s a contract that you buy to limit your losses if a bad event happens, even though the likelihood of the bad event occurring is usually very low.

Read more about this important issue

“What does economics mean?” by an economist

Keynes, macro economics and other terms need to be more widely understood.

Macroeconomics as a field is not very impressive, frankly.

In my view, it is more glorified accounting and policy than anything remotely related to testable economic theory!

Keynesian economics — the stuff that most macro courses are made of — smacks of a model created to justify a pre-conceived belief that government can run businesses better than private industry can.  Keynes spoke strictly of demand-side policies, namely fiscal and monetary policies, which create a large role for government intervention, as opposed to supply side policies, which basically get government out of the way by lowering taxes, fees, paperwork, and restrictions, and allow private industry to take risks and create value and manifest economic freedom.

Read more about economics

Starting a business

Looks like a nice series from USA Today newspaper.

Just happened to be staying in a hotel last week that offered free copies of USA Today.  Too mean to buy my own copies!

Anyway, that Monday was the start of a small business entrepreneur’s series running for 6 weeks.

Don’t worry if you missed the paper version, all available online.  Week One is here, Week Two here.  Bookmark it if you want to follow all 6 weeks – seems well thought out and mostly relevant to both sides of the Pond.

By Paul Handover

Sunday smile … and passion in business

First impressions, reliable or not?

This joke that I received recently might amuse you:

Light travels faster than sound. This is why some people appear bright until you hear them speak.

That happens! In some cases, you might have preferred to retain the first impression and wish that they had never spoken!

But sometimes, this “don’t judge a book by its cover” effect can work in the opposite direction; as a result, I nearly missed out on enjoying a passionate presentation.
Read more about passion!

Unfamiliar territory for stockmarkets

Stockmarkets in very foreign territory

On August 6th, a Post was published on this Blog with the title of This is going to end in tears!

It was prompted by an article by Karl Denninger and a footnote piece from Dave Rosenberg of Gluskin Sheff.

Also included were the US and UK prices for 4th August (about 7am MT) more for my own curiosity than anything else.  They were:

Dow Jones 9295, S&P 500 1,001, NASDAQ 2002, FTSE 100 (now closed) 4671.

By comparison, here are the figures for these markets (all closed at time of writing) for the 18th September.

Dow Jones 9820, S&P 500 1,068, NASDAQ 2133, FTSE 100 5173.

Well another fascinating muse from Mr Rosenberg was in this morning’s inbox and important extracts are below:

Read Rosenberg’s comments

Naked Capitalism – can you help?

Anybody out there who can offer some support?

Yves Smith is responsible for the Blog, Naked Capitalism.  It’s a great Blog and it must take a huge amount of effort to publish the volume of information that Yves does.

Yves has a problem, read here, an extract from his Post below:

Dear patient readers, this is a bit of sentence first, verdict afterwards, but it is 6:00 AM and I have spent all day and all night dealing with copy edits and am still behind the eight ball and need to sleep too, or my productivity will go from poor to non-existent.

So you get an antidote now, and if you check back later, I will fill in some links for your delectation, and hopefully at least a wee post too.

Sorry about this, I feel bad about neglecting the blog, particularly after the technical difficulties of last week, but the WordPress problems put me further behind schedule. And to be honest, they weren’t just WP.

If you can help or know someone who could, then contact details are here.

By Paul Handover

The sub-prime crisis

British humour

One aspect of British culture is their dry sense of humour.  In terms of satire, for over a decade three people have held pole positions: Rory Bremner, John Bird and John Fortune.  WikiPedia has a very good summary.

Bird and Fortune have also recorded a series of ‘interviews’ focusing on some of the idiocies of life.

Here’s a classic about the sub-prime crisis.  Slightly dated but no less funny for that.

More from these incredibly, clever guys from time to time.

By Paul Handover

The lessons in Chrysler?

Chrysler, investing, entrepreneurism and common sense.

Many, many years ago I went on a course on starting your own business.  It was held in London and caught my eye because just a few months previously I had resigned my sales job with IBM UK Ltd and commenced a journey of being self-employed, in the sense of being responsible for my own income. A 31-year journey that has provided so many riches in a non-financial sense.

Since we are talking about an event so long ago, it is not surprising that few memories are intact about that single day in a smart hotel in the centre of London.

BUT, one thing has stayed with me, and served me well.

Never get involved in a business where you don’t really know the marketplace.

So a recent article in the New York Times (Saturday, 8th August) about Cerebus, the private capital investment company that purchased Chrysler two years ago wasn’t short on lessons for us more down-to-earth guys.  Here’s a extract from the interview that Louise Story with the NYT (cool surname, by the way, for a journalist!) did with Steve Feinberg, co-founder of Cerebus, in his smart office on Park Avenue.

Continue reading “The lessons in Chrysler?” →

California – not so free anymore!

It now costs more to insure California’s debt than Russia’s

There’s a rather technical piece published recently on Bloomberg.com about the cost of insuring debt in a number of countries.

Eleven years after Russia defaulted, investors want less to insure its debt than California’s. “This would have been impossible to imagine a year ago,” said Dimitry Sentchoukov, an emerging-market credit strategist at Dresdner Kleinwort in London.

Will the last person leaving the sunshine State, please close the door!

By Paul Handover

This is surely going to end in tears!

US and UK Stock markets continue to defy gravity and common sense.

Those of you regularly reading the Blog (and Thank You!) will notice that Karl Denninger of Market Ticker is frequently referred to by this author.

My own view is that the fundamentals do not support what is happening but that’s amateur talk compared to the research and detail that Denninger puts into his Blog.

So here’s another very rational view of why small investors could be heading for burnt fingers, yet again.  Private investors: always the last in and the last ones out!

UPDATE: And yet another convincing piece of information from Dave Rosenberg of Gluskin Sheff.

August 6, 2009

Some bad news for the long-range housing outlook
The home ownership rate surged to nearly 70% during the bubble and has since fallen back to 67.4%, but still well above pre-bubble norms. A just-released study by the University of Utah shows that the rate of home ownership in the U.S.A. is poised to decline to 63.5% by 2020 (where it was in 1985). At a time when there are still some 800,000 units in excess that are vacant AND for sale, this secular decline in demand spells one thing and one thing only, a secular deflation in residential real estate. The periodic months of “green shoot” stability will very likely prove to be little more than noise along a fundamental down-trend in pricing.

By Paul Handover

(Written on the 4th for publication at 9.00 am MT on the 6th.  Markets at the time of writing are: Dow Jones 9295, S&P 500 1,001, NASDAQ 2002, FTSE 100 (now closed) 4671.)

Disclosure:  No market investments, neither long or short on the indexes, heavily invested in US Treasuries.