The Sunshine Report

Veritas Financial Partners
Information about finance, the economy and business. Entertaining and informative. Seeking Alpha Certified Mark Sunshine Chairman & CEO

Archive: May 2011

  1. Who’s Gonna Bail Out The Fed?

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    The Fed­eral Reserve is putting its future at risk by ignor­ing its own likely finan­cial results when it raises inter­est rates. Sim­ply put, ris­ing inter­est rates will hurt the Fed by mak­ing inter­est costs higher and asset val­ues lower.

    While the Fed isn’t like any other bank in Amer­ica, it is still sub­ject to the immutable rules of math and inter­est rate risk. If the Fed starts to earn less on its invest­ments than it pays in inter­est on its deposits, it will lose money.

    That is exactly what the Fed is fac­ing when inter­est rates rise — that it will pay more for deposits than it earns on its investments.

    Taken in iso­la­tion the Fed’s bal­ance sheet looks more like an over­lever­aged hedge fund than a shin­ing exam­ple of pru­dent risk man­age­ment. The Fed has almost no cap­i­tal to back up its big macro bet on inter­est rates and the shape of the yield curve. Higher inter­est rates or an inverted yield curve where long-term assets yield less than short-term assets will cause prob­lems. [read full story]

    Posted in: economy, Federal Reserve, Finance, Monetary Policy, Politics, Public Policy, UNITED STATES

  2. Congressman Ryan, Should Predatory Pricing Cartels Really Run Health Care?

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    The med­ical insur­ance game is rigged. Med­ical insur­ance com­pa­nies have spe­cial legal pro­tec­tions that pro­mote anti-competitive behav­ior. Since 1944 they have been exempt from vir­tu­ally all the anti-trust laws that apply to other indus­tries and under­pin the foun­da­tion of our national economy.

    Under the terms of the insur­ance exemp­tion, health insur­ance com­pa­nies can col­lude with one another, fix prices, rig bids and form car­tels. Preda­tory pric­ing by health insur­ance com­pa­nies is OK. These prac­tices — nor­mally ille­gal under fed­eral anti-trust reg­u­la­tion— are pro­tected by law.

    Even worse, health insur­ance com­pa­nies don’t have to worry about being sued if they hurt some­one — they aren’t sub­ject to tort lia­bil­ity and as a prac­ti­cal mat­ter can’t be sued for mess­ing up a claim or deny­ing cov­er­age. [read full story]

    Posted in: economy, Finance, Fiscal Policy, Forbes, Medicare, Paul Ryan, Public Policy, REGULATION

  3. Fed Has Power To Pop Commodity Bubble

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    I don’t know about you, but I’m fed up with being a vic­tim of Wall Street spec­u­la­tors who are dri­ving food and fuel prices up through the roof. The recent plunge in com­modi­ties prices con­firms what every­one knew all the time — infla­tion is being dri­ven by com­modi­ties spec­u­la­tors who are prof­it­ing from every­one else’s col­lec­tive mis­ery. [read full story]

    Posted in: commodities, economy, Finance, Inflation, Public Policy, REGULATION