Market Bets that ObamaCare Won’t Cut Costs

According to Don Johnson of The Health Care Blog:

Speculators seem to be betting that a watered down health insurance reform bill won’t hurt health insurers, hospitals, drug makers or medical device and supply manufacturers.

Stocks for almost all of these health sectors and for exchange trade funds that track health stock indexes turned higher last week.

In other words, those with real money at stake don’t believe that health reform will hurt the firms that make a living off of America’s highly inefficient health sector – President Obama’s assurances notwithstanding.

Johnson provides seven possible explanations for this development, including:

3. If the very liberal Coastal Democrats who lead Congress and most of the five committees drafting health insurance legislation want to get the support of Democrats from Western, Midwestern and Southern states, they’ll have to up Medicare payments to providers in those states. This is bullish for hospital chains, which operate mostly in the fly-over states…

6. Proposals to tax millionaires to pay for covering the uninsured and increasing benefits for others are in trouble, if not dead on arrival.  The economy’s in no shape to be stalled by tax hikes, and there appear to be enough Democrats opposed to the tax to stop it.

7. While the so-called Blue Dog Democrats are stalling health insurance reform for economic and ideological reasons, the Congressional Black Caucus has made it clear that it won’t support a bill that the Blue Dogs will support. Throw in the opposition by anti-abortionists who don’t want the legislation to use taxpayers money to pay for abortions, and you have a pretty complex political problem for President Obama, Sen. Majority Leader Harry Reid (D-NV) and Speaker Nancy Pelosi (D-CA). While the Speaker claimed Sunday that she has the votes to pass health insurance reform, few believe her.

Gallup Poll: Federal Reserve Makes the IRS Look Good

A recent Gallup Poll surveyed the public’s impression of how various federal agencies were doing their job.  Of the agencies evaluated, on the bottom was the Federal Reserve Board.  Only 30 percent of the respondents rated the Fed’s performance as either excellent or good.  I can understand now why Chairman Bernanke felt the need to take his act on the road.  Even the IRS managed to get 40 percent of respondents to see its job performance as excellent or good. A majority of the public, 57 percent, sees the Fed’s current performance as either poor or fair.

The result is not just driven by a general public disdain for federal agencies; over a majority of respondents thought such agencies as the Center for Disease Control, NASA and the FBI were doing an excellent or good job.

Nor is the result driven by public ignorance or indifference to the Fed; only a few years ago, back in 2003, 53 percent of Americans said the Federal Reserve was doing an excellent or good job and only 5% called its job performance poor.  But then, the Fed was also giving us negative real interest rates at that time as well.  Perhaps there’s a good reason to insulate the Fed from short-term public and political pressures.  Let’s hope Chairman Bernanke does not read these results as an excuse for repeating the Fed’s 2003 monetary policies.

Does the Left Know We Had a Housing Bubble?

Over the last week, speaking at a variety of events, I heard three different representatives of the Left; first a Democrat US Senator, then a senior member of the Obama Administration, and finally a “consumer” advocate, all repeat the same narrative:  all was fine in the housing market until predatory lenders forced hard-working honest families into foreclosure, which reduced house prices, bringing the economy to a crash.  That’s correct, apparently the Left believes we all would still be seeing double-digit home price appreciation if it wasn’t for those evil lenders.

Undoubtedly foreclosures, especially those that result in houses that remain vacant for a considerable amount of time, have an adverse impact on surrounding property values.  Many constitute a serious eye-sore and provide a haven for criminal activity.  But did foreclosures really drive down prices, or were foreclosures first driven by price declines resulting from a bursting housing bubble?  While causality is always difficult to establish with certainty, we do know that the rate of house price appreciation peaked and started declining about 18 months before the dramatic up-turn in mortgage delinquencies.  If one prefers a more rigorous test, economists at the Boston Fed have directly tested if prices first drove foreclosures or whether foreclosures drove prices.  Their results conclude that its was declining prices that matter, and that the price effect of foreclosures is minimal.

Why does any of this ultimately matter?  Because if we craft policies to avoid the adverse impacts of the next property bubble based upon a narrative of “consumer protection” – as is being pushed by the Obama Administration, we will do little to avoid the creation of the next housing bubble and its damaging aftermath.  Instead we should be focusing attention on those policies that contributed to the creation of the housing bubble: expansionary monetary policy and the Federal government’s blind pursuit of ever-expanding home-ownership rates at any cost.

French Folly

Following the dubious example set recently by U.S. legislators, French politicians have informally proposed slapping punitive tariffs on goods from countries who refuse to curb greenhouse gas emissions. The German State Secretary for the Environment has, quite rightly, called foul:

There are two problems – the WTO (World Trade Organization), and the signal would be that this is a new form of eco-imperialism,” Machnig said.

 ”We are closing our markets for their products, and I don’t think this is a very helpful signal for the international negotiations.”

I have a paper forthcoming on the carbon tariff issue, but in the meantime here’s a recent op-ed (written jointly with Pat Michaels) on climate change policy mis-steps.

Remembering Government at Its Worst

The 20th Century featured many examples of genocide, mass murder, brutality, and other forms of human horror at the hands of totalitarian governments.  Perhaps none was worse – at least in terms of the proportion of the population slaughtered and resulting impact on the survivors – than Cambodia.

The commandant of the notorious S-21, or Tuol Sleng, is currently on trial.  The proceedings offer a stark reminder of what monstrosities cruel social engineers with guns can wreak.  Reports Reuters:

A senior Khmer Rouge prison guard on Thursday told a war crimes tribunal he was forced to send thousands of detainees to an execution site, where they were brutally killed and their bodies thrown into mass graves.

Him Huy, 54, a guard at Phnom Penh’s notorious S-21 prison, said he was ordered by Pol Pot’s chief jailor to transport prisoners to a rice field where they were stripped naked and beaten with clubs as they bled to death.

“All prisoners were blindfolded so they did not know where they were taken and their hands were tied up to prevent them from contesting us,” Huy told the joint United Nations-Cambodian tribunal.

“They were asked to sit on the edge of the pits and they were struck with stick on their necks,” he said, his voice breaking as he gave his harrowing account of the Choeung Ek executions.

“Their throats were slashed before we removed their handcuffs and clothes, and they were thrown into the pits.”

Huy was testifying against S-21 chief Duch, whose real name is Kaing Guek Eav, the first of the five indicted former Khmer Rouge cadres to face trial.

I’ve visited both Tuol Sleng and the so-called Killing Fields.  The experience is incredibly depressing and moving.  These sites should be mandatory viewing for anyone tempted to surrender his or her liberty, even to the most supposedly well-meaning politicians, bureaucrats, and activists.

(H/t to Paul Chesser, who has been blogging regularly on the trial.)