Category Archives: Politics

The Madness of Student Loans

I read an amazing article in today’s US print edition of the Wall Street Journal. The article was titled, ‘Parents are Drowning in College-Loan Debt‘. The front page article explored data that suggests new record levels of delinquency on college-loan debts associated with a government-managed program called Parent Plus. 

Apparently this program allows parents to borrow money to support educational costs over and above the maximum a child can obtain from federal aid. The article suggests that there is no limit to what can be borrowed via Parent Plus (created by Congress in 1980 when Jimmy Carter was president); and that the most information needed to qualify is a social security ID. Apparently there is no credit check or any other required qualification.

Excuse me? I had to read that part again. What idiot approved this policy? Talk about idiot. This is just the kind of lunatic policy that contributes to unsustainable price increases in secondary education that the droves demand for more subsidies, loans and debts. This is as close to nuts as the same socialist and left-leaning policies that suggested expanding home ownership for those that cannot afford it was a good thing. This is madness.

Not every child needs to go to college. But every child should have the opportunity. There is a distinction between those two points; and the result should not lead to governments controlling access by funneling loans to those that cannot afford it. Attendance should be based on merit. Thus fewer would attend and so prices would not rise as fast and so fewer loans would be needed. But socialism informs uneducated parents that they have a right to a college education and so Uncle Sam has to bend over and make crap up and print more money and screw everyone as a result. Nice.

Now we are again in another financial pickle. But I can’t stop and write about how to fix it. I am going to rush off to go apply for my free Parent Plus loan.

The EU – Creaking at 60

The title of this blog is the title of the Economist Special Report last week. The title refers, of course, to the 60th anniversary of the Treaty of Rome, the founding of the EU at its source, being celebrated by EU members, less the U.K., last week. Oddly the U.K. is still a member but since she wants out, political correctness prevents Albion from upstaging proceedings.

The Economist special report is really good. It is well balanced and actually concludes that Europe needs a multi-speed system to respect all the differing political and economic challenges across the EU. What is irksome though is that while a two-speed or multi-speed approach has been proposed before, why is it now that the Economist has finally woken up to reporting it and making it the basis of its views regarding the success of the EU?

It is as if the Economist has woken up just in time to see the final deck chair arrangement on the titanic. Correctly the special report calls out the weakness and fallacy of the EU’s monetary policies for all members and now current monetary union is flawed. We all knew this a while ago. If this had been addressed perhaps the U.K. vote for Brexit might never have happened!

But ignoring my cryptic criticism, the article is very up to date and very down to earth. It’s just a shame that it took Brexit and the near break up of the EU, and continuing mess in Greece and Italy to come to the conclusion we needed four years ago.

Trump One Step Closer to Quitting

Reference:

I believe Donald Trump will quit the Presidency of the United States. I forecasted Trump would win (see April 2016: Trump Will Eat Clinton Alive), and in that article last Spring I suggested that he would quit. He will quit due to the inability for politicians in Washington to be rational and negotiate. He will quit with acrimony and bolshiness. About the only thing that will prevent this situation from taking place is tax reform.

Let me first state that I think that Obamacare was the wrong tool for the job. It was a rushed, Ill-focused, partisan and socialist effort to undermine the best parts of America. Its namesake and his supporters suggested that the Affordible Care Act (ACA) it helps those that need most help (the uninsured), and it does (in some way) but at a system-wide cost that is unacceptable and unaffordable.

The free market is anything but that; regulation is like a strangling vine; prices remain untouched and high; big pharmaceutical remains unfettered; patient outcomes remain anathema to healthcare. This country continues to spend ever more on healthcare, more than any other developed nation per capita, and yet our outcomes and their improvement reman poor and lacking, even on a good day. Obamacare was the wrong tool for the job.

The bad news is the Republican approach to Obamacare has split its own party. Worse, the repeal and replacement was in their reach. Yet last week the chance for correction was thrown out.  

There were even votes against the Republican policy from folks like Ron Paul who didn’t want the ‘Obamacare Lite’ but who wanted a full repeal. So he withheld his support. The Freedom Caucus, apparent fiscal hawks, had a chance to budget-fence Medicaid, yet they withdrew support in the mad hope of a perfect policy sometime in the future.  

This is madness. This is political suicide. The Democrats have been handed a free ticket and Trump must be mad. This is Washington at its worst. There will likely never be a perfect policy or time enough to develop it.

Now the movement shifts to tax reform. If an overhaul is not executed Trump will feel like quitting and he may yet do so. The Republicans need to realize that they have a rare opportunity but only if they unite. If they play party politics and splinter again, change will not be forthcoming. The Democrats, not in power of any sort, will be in power in all but name.

Obama won on the promise of change and socialists alike all rammed through their left-leaning, redistributive, anti-business and anti-free market policies. We are slowly bleeding to death now under the weight of ignorance and self feeling. Our polices cannot be paid for without printing money since we are all too happy to free-ride the masses and garrote the rest. The rest who are free and employed folks who work for a living, who want to improve their lot with their own blood, sweat and tears, not from hand-outs from Uncle Sam.

Trump also won on an argument for change. Alas the Republicans have forgotten how to govern.    

Obamacare – The Gift that Keeps on Taking

I thought it was interesting the angle taken by two Opinion pieces in the Wall Street Journal on Matvh 17th and 15th.  Both pieces highlighted what for me is not well known or reported in the wider press.  The point being that the regulation that comprises the Affodible Care Act (ACA) was going to continue to drive a greater wedge into public finances long into the future.  According to the two articles, increased taxed and transfer payments from the federal governance were baked into the regulation or required as a result of how the regulation was to be sustained.  In other words, ACA did way more than “tackle” the problem of offering healthcare to those that did not have it; it really did tinker with the entire system on which it relies nourishment.

The perspective offered by the Wall Street Journal goes some way to explain the Republical delight in how repealing and replacing Obamacare will in fact eliminate or significantly reduce this socialist wedge that woudl have other driven our Governmetn on to ever larger formats.  We really do need to figure out how balance increasesing demands of an aging population with the need to fund a smaller government.  If the government were a business, it would long have gone out of business.  And it does not help to hear others say, “the governmetn is not a business” since, at the end of the day, it has to be funded.  We cannot just borrow forever and print money when we feel like it.  Every nation on earth that has gone this route has ended up in revolution or disaster.  We all beleive the US is different.  Let’s hope so.

 – March 17th, How to Repair Obamacare’s Fiscal Damage

 – March 15th, The Health Bill’s Fiscal Bonus

Better the Trump We Think We Know

These last weeks have been exasperating. In my attempts to keep abreast of what’s is going on, I have virtually lost faith in TV and radio channels. The constant flow of information from the President, often via Twitter, is at a speed and of a form that we can hardly keep up with.   See The First Digital President.  Pundits are mostly out of date and irrelevant. Universally they suggest that President Trump’s style is outrageous and not presidential. The use of Twitter is new, but is Trumps’ combative style really that new?

I found an Opinion piece in this weekend’s US print edition of the Wall Street Journal that seems spot-on in capturing the current dynamic. The article, The Method in Trump’s Tumult, by Christopher DeMuth, a distinguished fellow at the Hudson Institute, suggests that Trump’s methods might look odd and different to those of us used to the monotonous dogma of political rhetoric subscribed to by politicians in recent years.  But really his methods are not new at all.  They are provan and well trod by previous Presidents.

“President Trump may be rediscovering a venerable method of leadership that has been forgotten in our era of ideological messaging. Rather than viewing disagreements as a problem, previous American leaders wielded it as a tool. The surrounded themselves with highly accomplished, strong minded advisers, and used vigorous debate among them to generate fully considered options for confronting the intractable problems of the day.”

Given that his political enemies suggest his methods create disarray, Mr. DeMuth’s ideas make a lot of sense since this disarray might be a means to an end – not the end itself.  His article explores multiple examples of past President’s (including Washington) and how they surrounded themselves with folks who often spoke out and at odds with each other. After reading the article one is left with the feeling that Trump’s lack of political experience and rich management flora, resulting in this behavior, is refreshing. It is, but it seems to be misunderstood and at odds with his detractors. Maybe the left-leaning press will grasp this eventually and start to analyze policy, rather than pick and snipe at Tweets.

The First Digital President: Trump and his Tweets

This article will not discuss the pros or cons of any of President Trump’s policies.

This blog will discuss the fascinating impact of a President that tweets his feelings, inclinations and possibly inferences to his policy preferences. In a nutshell we are not ready, we are not even able, to cope with the speed with which information is coming from the presidents Twitter account.

Several times a day a new Tweet is posted and literally the world is turned-over again. Before Trump came to office we would all have to wait for the press briefing. We would wait to browse the headlines of our favorite news site. We might wait for the 6 o’clock news. We might even browse the newspapers.  

But now, three or more times day, everything turns upside down. You could even subscribe to the presidents Twitter feed and join in the turmoil. Media outlets, political junkies, other nations are all on edge as every nuance and implication is explored with outdated tools and perspectives as one tweet follows another. The use of big data, reportedly a key to Obama’s first victory was a digital innovation. Trump and his Tweets is another.

We should factor in the nature of which such digital communication is being used. It would seem that the tweets themselves are not carefully, developed and totally thought through messages. Equally they are not random thoughts of a madman. Whatever they are (and some of you will assume they are rants of a mad man or deeply held beliefs and policy guidelines), the speed with which such communications protrude from the White House are breathtaking.

The entire political and press establishment are running at a hundred miles a hour 24×7. And I mean 24×7 since Trump might tweet at 2am. I actually love his energy and enthusiasm. But can our systems survive this onslaught?

I find now that watching the TV in the evening a waste of time. Channels that lean left or right are out of date. They try to analyze (if we are lucky) the day’s news yet a new tweet reverses everything. The radio channels are as out of date and as unable to keep up. Newspapers are getting to be very boring. 

The torrent and speed of new information is not yet displacing channels and reporters from the past era. But perhaps we need to rethink the system. Even the briefing room of the White House seems to be a circus. They spend their time trying to understand a tweet and are missing the real news. It really is a major challenge.

Maybe we need a new digital news system that leaves televisions and traditional media sources behind. Maybe we need a purely digital platform that can parse tweets and merge them into the panoply of policy and White House edicts. We need news reporters to report the news with a big (data) lens.  

As it stands few are able to understand let alone put a tweet into perspective. The result is the left and right spend their time arguing over trifles and nothing is actually analyzed or concluded before the next tweet arrives and the dance starts anew. It’s breathtaking, and getting boring. The problem is not with the tweets: it is just a medium. The problem is with our news reporting system of press briefings, television and media pundits: they and it are out of date and not able cope with the new medium.

Whatever your feelings concerning President Trump, you have to acknowledge he is effecting change on many levels.

US Government Sets Up Next Financial Crisis & Brexit Not the Risk at All

Two articles came accross my desk this week – one caused consternation on my part and the other seemed to offer a sanity check.  The former concerned the US economy and specifically how there are signs that consumers, and lenders, are returning to the same behavior that led to the financial crisis at the source or our current economic challenges.  The latter concerned the hype and over blown concern with Brexit and its impact on Britain’s economy.

In the US print editions of the Wall Stree Journal (Wednesday January 11th) there was an article titled, “New Loans, Same Old Dangers“.  This front page article described a government-led initiative (Property Assessed Clean Energy) that provides subsidies loans to encourage homeowners to buy energy saving devices.  The article gives an example of a homeowner who is not able to afford the loan is still encouraged to take it out.  As is common practice this loan is then sliced up with other loans and sold on as a bond – what is called securitization in the financial industry.  This is analogous to the risky mortgage loans offered, and taken up by people who should have known better, and sold on to governments in Iceland as “AAA” opportunities.

The market is very small – the article suggests around $3.4bn of loans have been made so far – but the model is just damning.  FIrst you have big government trying to force its policies on a free market.  With the housing issues that triggered the financial crisis this was Government demanding ever greater home ownership among poor people and those that could not afford it.  Second you have the lowering of standard for the setting up of loans.  This is identical to what happened with dubious sales efforts of mortgage brokers during the 1990’s and early 2000s.  Finally you have the build up of risky loans and owners of the loans not knowing where the real risk is.

The popular uprising that has brought Trump to the White House would do well to heed these stories.  After all people will be people and when offered a bad apple that looks and smells sweet, many will take it.  Perhaps we should not fault those that do – or should we expect a stronger moral aptitude?  Either way we need to get big government out of the way.  It should not seek to foist its social or political wants on you and me – we should be free to do what we want, how we want, when we want, as long as it does not harm our fellow citizen.  Innovation and opportunity will drive improvement in the energy sector.  And perhaps tax credits would be a safer way to encourage small changes in behavior that do not create risky loans.  

The other article, a commentary piece in the US print edition of the Financial Times (Thursday Janary 12th) was titled, “The City has nothing to fear from Brexit“.  It was penned by Stanislas Yassukovich who is a former chief executive officer of European Banking Group.  The article is a breath of fresh air since it refutes many of the risks and issues that most other “specialists” report in the press.  For example we have heard a lot about “passporting” – the idea that a financial institution authorized to trade in one country of the EU can freely trade in another country.  It turns out that non-member states can use this capability quite easily – so it’s not even needed as a negotiation.  The article goes further.

Passporting was a means to try to level set the complexities of rules across what was meant to be a single market.  It turns out that even with passporting there remains complex and different rules that still need to accommodated when trading across the member-states.  As such, “core retail financial activities – residential mortgages, deposit and savings products and so on – remain almost entirely national, and highly protected.”   This whole think stinks to me.  

The recent news that PM Thresa May fired her senior most civil servant who worke with the EU was greeted in the press as bad news.  It seems he kept repeating to the PM that it was not going to be possible to complete all negotiations in time before the two year window closed for leaving the EU.  Why is this?  He may have had a practical view on things but he certainly did not have a positive view on what is possible.  I think we need clean out the cupboard and get a fresh new look at everything.  Good for PM May to do so.  If the author of this article is right, there is little we should fear from Brexit.