More GOP Distortion of the Truth About ObamaCare

Link to Whole Story


And here is a good portion copied.

The centerpiece of the Republican party's attack on the Affordable Care Act following President Obama's State of the Union address this week was the story of "Bette."

Bette was an otherwise unidentified Washington state resident featured in the official GOP response to the Obama speech delivered by Rep. Cathy McMorris Rodgers (R-Wash.). According to Rodgers, Bette had written her a letter stating that she had "hoped the president’s healthcare law would save her money – but found out instead that her premiums were going up nearly $700 a month." The lesson, according to Rodgers: "This law is not working."

Bette has now been tracked down by her hometown Spokane Spokesman-Review. She's Bette Grenier, who owns a small business with her husband. Unsurprisingly, her story is much different from the sketchy description provided by Rodgers. That description perplexed experts, including Washington State  Insurance Commissioner Mike Kreidler, who couldn't understand how a state resident "would have no choice but to pay $700 per month more for a policy that meets the Affordable Care Act’s coverage requirements," the newspaper reported.

Grenier told the newspaper that she wrote Rodgers after her insurance company informed her that her $552-a-month catastrophic health plan would not be offered in 2014. It offered her an alternative plan complying with the ACA at $1,052 a month.

But that sounds like her insurer trying to steer her to an overpriced option. A compliant plan meeting the Affordable Care Act's coverage mandates actually is available from Washington's insurance exchange for much less -- and with a deductible far lower than the $10,000 she was paying under the old plan and broader coverage, though lacking a provision for four free doctor visits a year provided by her old plan.

Grenier said she had flatly refused to even investigate her options on the exchange. "I wouldn’t go on that Obama website at all,” she said. “We liked our old plan. It worked for us, but they can’t offer it anymore.”

Instead, she and her husband "have decided to go without coverage," the newspaper reported.

Does this make sense? Grenier deliberately decided to forgo the options available to her and her family from the Affordable Care Act, despite the knowledge that they might be more suitable for her than her old insurance or the plan being hawked by her insurer -- she says a friend of hers found a plan for a mere $129 a month.

But her plight has nothing to do with Obamacare. It's a product of her own apparently flawed decision to refuse even to look into the benefits the healthcare law might provide. And it's another sign of how threadbare the GOP criticism of the Affordable Care Act has become. If this is the best they can conjure up for what might be one of the best-watched TV appearances a back-bench Republican congresswoman gets to deliver, shouldn't they give up already?

http://www.latimes.com/business/hiltzik/la-fi-mh-bette-20140130,0,1703947.story#ixzz2s1EG0leQ

At work and bored

So what else is there to do but bring forth the best news of the day to my loyal readers.

Paul Krugman correctly points out that the U.S. and E.U. debt crisis have resulted in stagnation and nothing disrupts markets more than stagnation as inevitably some country is too far out over their skis in one way or another and has a crisis.  So Turkey is the poster child for bad economic policy when you have no energy resources.  Not sure why the U.S. is selling off because Turkey is bordering on crisis (Vennie, Argie and the Ukraine are in real crisis and each deserve to be so as I have previously written), but the liquid markets always get hit because they are liquid and eventually things come back. This is why I am leaving the markets to focus on something else.

Krugman discusses the Economy



Tim Egan pointed out that GOP Representative Cathy McMorris Rogers response to the State of the Union not only came up short as a political counterpoint but also illustrates how the GOP policies do not represent the best interests of her constituents.  In fact, he shows the inconsistency and self-interest of her policy mix which is fairly well representative of how in general GOP policies are inconsistent and in general class warfare.

Link to Tim Egan


The President supports fast track, apparently some in the GOP support fact track, and apparently some Democrats support fast track.  But Senate Democratic leadership does not.  Fast Track deserves a vote and the President should pull out all stops to make sure each part of Congress votes on it.  Fast Track allows the President to negotiate Free Trade Agreements without the risk of Congress killing the Free Trade Agreement.  The world needs more Free Trade.  That will help employment everywhere.


Lake Mead is trying up as the water shed that feeds it is in a 14 year drought.  Lake Mead supplies water to 20 million people in the Southwest U.S.A.  You would think people living in a 14 year drought would start to think about moving to somewhere with more reliable water supplies.  If they end up using bottled water for everything, they cannot say they weren't warned.  Iran also has a water shortage, but they have oil (which they can sell if they give up their nuclear ambitions).

And there is a move afoot in Congress to delay sensible Flood Insurance pricing so that the rest of us don't have subsidize idiots who decide to invest thousands of dollars in home that can flood.  Previously, and where the Congress would return us, the Federal Government underpriced the cost of flood insurance so the taxpayer's subsidize claims when floods occur.  The reason the Congress does this is because the idiots who want this insurance vote for both political parties and are numerous enough to control elections even though they are a minority.  This is similar to the NRA and potentially Single Women.

Please snow gods make it snow in New England.

Tired of Old Issues, Nice Summations on Possibilities for Progress

Bill Keller nails the state of politics in the United States.

"To help appreciate President Obama’s fifth State of the Union address, with its to-do list of executive actions and its implicit fatalism about working with Congress, I suggest a preliminary visit to that citadel of reason, the Republican Party. There, the great minds and loud voices of the right are debating whether to adhere to the strategy of confrontation and sabotage that appeases the radicals in the conservative base, or to introduce a measure of pragmatism that might broaden the party’s appeal."

Link to the complete column

And Tom Egan describes the State of the Congress.

"For some time now, the Republican House has made it clear that they have no intention of governing. They shut down the government for 16 days, in case you didn’t get the point. And on Tuesday, they seemed more interested in having their pictures taken with the “Duck Dynasty” guy than finding middle ground with the American majority."

Tom Egan sums up the State of the Union 

And Thomas Friedman sums up where we are on the path with the Israeli's and Palestinians.  

Link to Friedman

There, but for the grace of good decisions

I hold no German not found accountable at Nuremberg specifically responsible for the holocaust.   I recently read a Danish book about how the Danish Jews were for the most part saved, while I was reading Ron Chernow's biography of the Warburgs.  Decency, good and bad fortune and evil were all present at the same time in Germany and the occupied countries.  Just in varied amounts and evil was  dominant in most places.

This causes me to think what would have happened to me if my great grandparents and grandparents had not made the decisions they did to leave Central Europe and Scandinavia to come to the U.S.  And every so often I read a story, usually an Obituary, that reminds me just how lucky my family is that people made that difficult decision to come to America.  Of course, things were not so good where they were or they would not have been motivated to come when it was "easy" to come.

Link to Jewish Warsaw survivor of Nazi Occupation Obituary.

Having recently read the two books about the Germany, I know it is outrageous to compare the Tea Party to the Nazi's, but there are certain similarities between the tactics the Nazi's used and how the Tea Party views compromise.  Witness the Arizona Republicans citing John McCain for not being conservative often enough to be considered a conservative.  John McCain has a 91 ranking from the Conservative scorers and what the Arizona Republicans did not consider sufficiently conservative was McCain's votes to compromise and keep the government operating rather than shutting it down.

I have no idea how this partisanship gridlock will end, but I do understand that both the Democrat's and Republicans have to tone it down.  While I believe the GOP started it, I am sure the GOP can come up with examples that the Democrats started it. So how does it end?

Andrew Cuomo threw his match on the fire Friday saying "extremist conservatives have no place in New York."  Now here is where word selection is so important.  What he meant to say is "extremist conservatives cannot win a state wide election in New York."  But would that have sufficed his goal?  Probably not.

Cuomo needs to motivate the Democratic base to come out and vote in Congressional elections upstate where there are GOP congressman.  He also needs to fire up the ultra-conservatives in New York to run in Primaries and hopefully win the Primary only to lose in the general election.  Why, because the only Republican to win a state wide election since 1973 in New York was George Pataki; who was pro-choice, supported gay rights and signed a law banning assault weapons that his administration designed for the legislature.  That's 40 years of state wide support for policies the current GOP absolutely opposes.

RedStateVT many think Vermont is the most liberal state in the union, but they have elected more Republicans since 1973 than New York has.

People who have ultra-conservative views came out with harsh reactions to Cuomo's words, but they were really no different than the pandering that Carl Paladino and Rick Lazio did bashing a planned Mosque in Manhattan (no Muslim-Americans allowed in Manhattan) or those of a GOP assemblyman saying Cuomo's support for a gun control bill was something "Hitler and Mussolini would be proud of."

The war of words raising the fervor of partisanship now has descended from Congress into state politics.  So, I guess there is little hope for compromise this year or going forward for at least a decade or two in my opinion and no implementation of any platform policies unless one party or the other gets control of all 3 parts of the Federal Government.  And I do not see that happening either.  Gridlock will continue until problems reach the point where responsible people see they must compromise.  Of course, the Tea Party does not believe in compromise no matter what the situation is.

Farewell Emerging Markets Investing (IV) Latin America

Latin America illustrates both the best and the worst of sovereign economic management.  Since I started working 36 years ago, I have seen an Argentine co-worker come back with suitcases of cash to deposit in the U.S. and I suspect his family still has cash in the U.S. as Argentina remains an economic political pariah.  I also suspect my Peruvian college roommate (who had US citizenship from his parents who moved to Peru after WWII and did very well there) still has money in the U.S. despite Peru being an example of a country that has learned well.  I have also seen a Brazilian co-worker (both the Argentine and Brazilian were doing this in the early 1980's) bring suitcases of cash back to the U.S. and it remains to be seen if continuing that is prudent or not.

When I came back into EM in 1992, my job was risk assessment.  I was aware that Mexico in 1994 was vulnerable and I learned just how hard it is to call a market turn and the need for every country to manage with a plan for market volatility.  Of course, in 1997 Asia learned this lesson the hard way and in 1998, Russia did to.

Enough ancient memories.

Today, the many Latin American countries are constantly working on their plan for market volatility.  Floating FX rates and flexible interest rate policies help maintain stability.  The key to smoothly functioning stable democracy and economic activity is a high domestic savings rate.  Thus, Chile, Mexico and Peru which have created pension systems and increased their savings rate are the most stable countries in Latin America.  Each still has challenges and Mexico in particular has made tremendous progress on reforms in the last 12 months.

Colombia belongs in the good camp but has more challenges than the other good countries.

Costa Rica, El Salvador and Panama used to be good countries but each has allowed politics and easy access to money to take themselves out of the clearly good category but each still has time to rescue themselves if they have the political will.

Then, comes the big behemoth;  Brazil.  Where 10+ years ago, President Lula surprised everybody and set the country clearly down a path toward stability.  His successor today has run a populist policy that has started to harm the various state owned companies, is threatening to destabilize the economy (it hasn't yet though) as inflation rises, and the fiscal budget is still full of political favors that need to be eliminated.  There is an election this year and there is time to change this poor set of policies.  Time will tell which way Brazil goes:  Back to the good category or back to the basketcase category.

Then there is Venezuela and Argentina.  The citizens of both these countries continually buy into populist policies that elected officials run on and implement.  Then these populist policies generate inflation, create shortages of goods, capital flight and weak exchange rates.  Both of these countries are running out of FX reserves and are using devaluations to try and stem off default.  Neither country has been able to access new money for a long time, so any default will be a re-default on old debt.  Neither country shows an inkling of changing its political economic policies, so I think both will be a source of market turmoil latter in 2014.  They are already contributing to general angst about Emerging Markets overall.

In the case of Argentina, this is really too bad.  It is a wonderful place to visit when the economy is stable.

So that is it.  18 years on the buy side, 11 years on the sell side and 8 years in corporate America.  After this week, it will be off into the world of entrepreneurship with study to become a Certified Financial Planner and looking into being a managerial mentor.  We shall see what happens, but thanks to ObamaCare, I can afford to take this plunge.  I will be quiet on the blogging front for a few weeks as I empty my office and go skiing in Northern New England.

Sunday 1/26/14 Musings or My Brain Hurts

I was going to use the "it's complicated" Headline, but by the time I read the Sunday paper, my brain was hurting from the complicated world we live in and try to prosper within while having the government and economy we desire.

In no particular order:

A study of ethnic group economic and cultural success focuses on how the group's sense of superiority combined with a sense of inferiority and a familial passing on of personal discipline from generation to generation leads to relative success in life.  Not for everyone in the ethnic group, but for most members overall.  So when we are discussing income inequality, school performance and any other number changes to government policy, a key thought should be:  What will be the guiding impact on parenting and a child's sense of the achievable.

What Drives Success? Parenting apparently

In the sports section there was a nice piece on Richard Sherman of the Seattle Seahawks.  His parents made a difference to him and his sense of the achievable derived directly from that.

Link to Richard Sherman article


Ross Douthat wrote a very nice piece on what he believes conservatives need to acknowledge about family issues and what liberals need to acknowledge about family issues.  The policy fall out from he identifies is very complicated going to the heart of the capitalistic model with globalization a reality.  And very frankly, his desired path for limiting divorce and abortion rights smacks of a desire to have the government perform a big brother role in peoples private lives which runs head on into Republican's desire to not have the government doing just that in health care.  I would postulate that if it is good in the former, it is certainly good in the latter.

He also pushes a view that my friend RedStateVT frequently pushes that pop culture is the cause of much of what is wrong with American Society.  Since almost everything in pop culture is rooted in the 1st Amendment (Freedom of Speech for my foreign readers), I don't know what government can do to limit what I freely admit assaults my sense of sensibility on occasion.

Link to Douthat

My biggest takeaway from the Douthat column is that the thoughts are reasonable ones that people should be discussing when trying to come up with changes to our policies and that the current partisanship in national politics prevents such discussions from happening.  I can see a Democrat saying, yes I might want to limit 2nd trimester abortion more, but how can I do that when so many of the other side want to eliminate abortion rights completely.  How will that look in my next campaign?

The level of hatred between the political partisans at the local levels has permeated the Congress and eliminated any reasonable discussions of bridges between the points of view that could mean progress.

And finally, Thomas Friedman's column today puts another dagger in the heart of the neo-conservative's view that US military action can create a democracy in the Middle East.  He discusses the progress in Tunisia, the necessary societal factors for creation of a democracy, the shortage of those factors in many other Middle Eastern countries and by inference, the fact that without those factors, no military action by an outsider can create a democracy.

Link to Friedman

And for what it is worth, a fascinating and outrageous exercise of police over reach and hospitals taking advantage to use the police over reach when it presents itself to enrich themselves from the medical insurance system.

A $6,000 hospital bill for being in police custody

Farewell Emerging Markets Investing (III) Russia, China, Ukraine, Turkey

While I was skiing yesterday, EM bonds and stocks got the sh*t kicked out of them, along with equities everywhere else.  As a hedge fund, we are supposed to be quick and nimble and have the foresight to see the turns in the market.  I don't have that foresight being an analyst rather than a nimble trader and that is why I leaving EM investing behind in one week.  I have 3 things for a possible reinvention that I will start working on after a ski vacation in Northern Vermont and Maine.

Russia and China took different paths and each offers a level of stability to investors that is not available in parts of Latin America and Africa.  We own assets in each and for the most part, long/shorts are a matter of valuation rather than political risk.  But each presents a long term political risk to investors and one must choose assets with an eye on those risks.

Russia (25% of my ancestral home, the rest is 50% Finland and 25% somewhere in the Habsburg empire) chose privatization with the Oligarch's and a form of democracy with Yeltsin who in turn promoted the Oligarch's and further elections.  Putin uses those elections to control things like an autocratic leader, but he can only do that so long as he wins elections.  And he keeps winning elections.  So clearly the people are happy with him.  Yet, small business seems to have a problem forming in Russia and capital formation seems limited to companies that can feed off the old state economy. Also, the rule of law for foreigner investment seems to be enforced unfairly.  This is not healthy and you need look no further than what is going on in the Ukraine where there is a small war on-going in the streets around Parliament in Kiev to see the danger for investors than can happen when the population is divided around rigid desires and an autocratic leader says my way or the highway.  (This is also happening in Turkey, which is another place to avoid for the time being).

So we do not invest in Turkey or the Ukraine because of autocratic tendencies in leadership and unhappy citizens.  While I worry about Russia, they have a current account surplus and they export a lot of energy from companies that are tight with Putin.  So that is where we invest.  Stay very close to the center of power which has indicated they believe in repaying debt.

China, on the other hand, started its liberalization by encouraging farmers to become entrepreneurs and then letting people become factory workers, business creators, office workers etc.  They had 1.3 billion people to turn into economic entities and they have accomplished that.  China is a very capitalistic economy below the government.  It is not necessarily kind to foreigners as the rule of law is opaque.  So we invest there very carefully.  We don't want a bankruptcy and generally want Chinese management which works well within in the system.   China is a fascinating country, with parents who care about education and kids who want to achieve.  Also, the savings rate is through the roof.

So, what is there to be concerned about.  Well, mostly it is a question of valuation, but it is also a question of transparency, a lack of regulation, and what will political transition look like and when it will start.  Transparency issues dog the financial system (not unlike the U.S. Japan and E.U.) and the lack of awareness on the need for environmental regulation has made the air unbreathable much of the time in an extraordinary number of places.  Water quality is also an issue.  The people will put up with a lack of democracy if their environment, personal safety and economic opportunity are acceptable.  But the environment is not acceptable and I believe that will lead to a desire for opening up the political process.

I have no idea how the tradition of Confucian society, autocratic Communism, and a ruling class that wants to maintain control will open up in a way that satisfies most of the people.  I also have no idea when the pressure for this will opening up will occur.  That means I keep my investments in China limited and small.  There is tremendous opportunity for extraordinary gains in the right companies.

I wish the best government possible for China, Russia, Ukraine and Turkey.  The people I have met from each of these countries are smart, well educated and have western values.  I hope each of these countries finds a way to become stable self-sustaining capitalistic democracies.