Wednesday, November 25, 2015

Kanosian policy screws up an other economy

Sweden.  What did Krugman ask for?  He wanted and got, a sky high housing bubble. So now the Swedish Central bank tells us:

"Valuations on both the asset markets and the housing market in particular are unusually high at present [and] this means that the probability of a fall in prices is elevated," the bank says, adding that "together with increasing indebtedness in the household sector, this has made households, the financial institutions and the financial system as a whole more vulnerable."

In other words, centeral banking built upong the MIT Basket Weaver fraud is just that, a fraud.  Noe Sweden is frigged thanks to all the bozos at MIT that the defense department funded in the 70s.  Thease idiots think the world is filled with invisi le Euler police who have the perfect pricing menu for every living thing.

Monday, November 23, 2015

LA public sector now bankrupt

LA Times The Los Angeles Unified School District is facing a looming, long-term deficit that could force the system into bankruptcy, a panel of experts has concluded in a new report obtained by The Times.
The group, which met in private over the last several months, concluded that L.A. Unified will face a budget deficit of $333 million in the 2017-18 school year, an additional $450 million the following year and $600 million more the year after that.
This year’s general fund totals about $7.1 billion.

Sunday, November 22, 2015

California begins the public sector spiral

LA Times: The board of California's largest public pension fund approved a plan Wednesday to lower its estimate of future investment returns — a move that will require taxpayers to pay billions of dollars more than expected over the next decades.

For years, the California Public Employees' Retirement System has estimated it will earn an average of 7.5% or more a year from its investments. Under the new plan, the pension fund will slowly reduce that rate to 6.5%.

The board voted 7 to 3 on Wednesday to approve the plan that will reduce the rate in small increments over the next 20 years.

With investment income contributing less to the cost of government worker pensions, taxpayers must pay more.
Those boosts are in addition to recently announced increases of 50% to the rates that CalPERS charges cities, the state and other government agencies. Fast-rising pension costs have already forced many cities to cut library hours, street repairs and other services. Three California cities — San Bernardino, Stockton and Vallejo — filed for bankruptcy protection in recent years at least in part because of rising payments to CalPERS.
This is just the opening shot.  Public sector hiring will take a hit, more taxes will lower growth, and the mandatory spending eats away at local government budgets.  

Saturday, November 21, 2015

What is the cause of the liquidity trap?

Inflation, the red line, always precedes the recessions, grey bars.  And we can see the ten year rate drop after each recession until the rate has reached a limit, the transaction cost of paper money.

So, whatever nut who thinks inflation cures the liquidity trap has it backwards. Inflation precedes the recessions, and is generally caused my badly coordinated spending in DC.  The proof is in the phase of the recessions, mostly occurring at the transition points between presidents.

There is no avoiding the evidence, DC is the likely cause of the sec stags.

The dollar bill will be replaced by a fermion-boson statistics.

 FBR San Francisco: The substrate for our currency is a cotton-linen blend that gives it extra durability to withstand the banknote printing process in which ink is pressed into the paper. The extra durability of the cotton substrate also means extra durability in circulation. While the low-denomination notes of most nations that use a paper substrate last only a couple of years before they are removed from circulation owing to wear and tear, the U.S. one-dollar note, with its long cotton fibers and linen,lasts nearly six years in circulation. Some countries with a less durable cotton substrate or a harsh climate or circulating conditions have switched to a more durable but costlier polymer substrate. Meanwhile, other countries have replaced their low-denomination paper notes with a high-denomination coin. But because of the longer life of U.S. notes, there’s little reason to switch to a polymer substrate or to replace the one-dollar note with a one-dollar coin. But that’s our view. Tell us what you think.
The federal reserve at San Francisco musing about the future of counting digits.  What does it take to secure an arrangement of electrons and call it a dollar?  I mean, put the chip in my plastic card. Tell the chip it holds a dollar, and make the chip promise no cheating.  Techies do that stuff all the time.  Pure cash, no clearing house needed.

Friday, November 20, 2015

Big banks adopting Banker Bot

NEW YORK (Reuters) - Fidelity Investments is building an automated portfolio-management service for individual investors, joining a growing group of money and brokers that have bought or designed such "robo-advisers," a spokesman for the firm said Friday.
The platform, called Fidelity Go, is being piloted internally now and will be made available next year for a small group of clients to test, according to Fidelity spokesman Robert Beauregard.
Some investors "don't have the skill, will or time to manage their money, and so they turn to a partner," said Beauregard.
Fidelity's platform will make use of the company's own products, which include mutual funds. But the firm will also use funds managed by BlackRock, the largest manager of exchange-traded funds under its iShares brand and a business partner of Fidelity's.

The bot will end up in  our  Smart Cards, but for now Fidelity keeps the bot internal.

Who is bailing out Obamacare insurers?

WA Examiner: The Department of Health and Human Services attempted to reassure private insurers on Thursday that they'll be able to recover losses from participating in Obamacare by claiming it was an "obligation" of the U.S. government to bail them out.
At issue is a provision within the law known as the risk corridors program. Under the program, which runs from 2014 through 2016, the federal government is to collect money from health insurers doing better than expected and use those funds to provide a federal backstop to other insurers who incur larger than expected losses from rising medical claims. The idea was to provide training wheels to insurers in the first years of Obamacare's implementation, and to take away any incentive for insurers to cherry pick only the healthiest customers.
Republicans, fearing that this could turn into an open-ended government bailout in the event of industry-wide losses, included a provision in last year's spending bill that limited the program, requiring HHS to pay out only from the pool of money collected, rather than supplementing it with other sources of government funding. President Obama signed that bill.
Now that insurers have been able to look at medical claims, what they've found is that enrollees in Obamacare are disproportionately sicker, and losses are piling up. For the 2014 benefit year, insurers losing more than expected asked for $2.87 billion in government payments through the risk corridors program, but HHS only collected $362 million from insurers performing better than expected. Thus, the funds available to the federal government only amounts to 12.6 percent of what insurers argue that they're owed.

Well, either Texas agrees to bail out California or Republicans have to go deficit spending once more.

Obamacare becoming unpopular again

The poll from Gallup shows Obamacare disliked 52 to 44.  The article sums up most of the problems.

Krugman's worthless graph on austerity

He attempts to show a linear relationship between 'fiscal tightness' and GDP growth in Europe. But he has Portugal, Ireland andGfeece as the only economies proving the linear relationship.  All the important economies are bunched up and showno effect.

The problem is that once Krugman put's up crappy stats, all the uneducated commenters do not look carefully, and they just take Paul's word without checking the data.

Thursday, November 19, 2015

Obamacare is bankrupt. Insurers may exit soon.

Bloomberg: Many people shopping for health coverage this weekend on the websites created by Obamacare are going to see double-digit percentage increases in their premiums. That’s still not enough for some insurers.
Anthem Inc. says there remain competitors in the government-run marketplace offering premiums that aren’t enough to profitably provide the coverage patients will require. Prices in some areas probably will have to climb in 2017 and even 2018 to reach levels that make sense, according to Chief Financial Officer Wayne Deveydt. Meantime, Anthem will sacrifice market share to keep its plans profitable, he said.
“When you have fewer national enrollees and you have price points that we don’t believe are sustainable, we’ve just made a conscious decision we’re not going to chase it,” Deveydt told analysts on a conference call on Wednesday. “We are going to need to be patient until this works itself out.”
Deveydt’s remarks spotlight a problem for the Patient Protection and Affordable Care Act’s marketplaces as the third annual sign-up period begins Sunday. Set prices too low to lure customers, and losses can mount. Some smaller firms already have closed, and some bigger insurers have withdrawn from markets -- such as Aetna Inc., which will offer coverage in two fewer states this year.
The conundrum has led to this year’s price increases, which have been higher, on average, than last year’s hikes. But the danger is that premiums are now too expensive for some families to afford coverage, especially the uninsured people the Obama administration is trying to persuade to shop on the exchanges for the first time.
“Exchanges have had their challenges,” said Ana Gupte, an analyst at Leerink Partners who follows health-care companies. “The growth has been reasonable, depending on where you priced, but the margins have been a little less compelling.”
Insurers have benefited in many ways since the Affordable Care Act was signed into law in 2010. About 17.6 million people have gained insurance coverage, mainly through the health-insurance marketplaces and an expansion of Medicaid, the U.S.’s program with states to cover low-income people. The insurance companies administer coverage for much of that population, and their stocks have soared in the past few years on the growth in their rolls.
But the remaining uninsured are poorer and younger than those who’ve already signed up, and they’re more difficult to reach, Health and Human Services Secretary Sylvia Mathews Burwell has said. That may mean slower growth for the insurers.

Faster Than Inflation

Prices on the Affordable Care Act’s marketplaces are going up faster than inflation or wages. By one measure, premiums for mid-level plans are climbing at least 7.5 percentin 37 states where consumers use the U.S.-run website to buy coverage.
Charles Gaba, who tracks the health law on, estimates that the rate increases across the U.S. will average about 12 percent to 13 percent, based on a weighted average of current enrollment. That means there are lots of consumers who are seeing higher rates and could benefit from re-examining their options as the sign-up period starts.