The Senate has only 9 days to climb off the legislative cliff and pass a bill that will help small business throughout America. No, I am not counting days until we fall off Fiscal Cliff. I am counting the days remaining for the Senate to approve the Small Business Investment Company Modernization Act of 2012, also […] [read full story]
Category Archive: Public Policy
Imagine throwing a party for your best customers and none of them show up. What would you think about your future?
Well, about a week ago at a Miami Beach asset-backed securities conference, Wall Street professionals invited their best institutional bond customers to a cool South Beach party and almost no one showed up.
Wall Street is loosing its relevance and becoming a dinosaur. Its business simply cannot exist without customers. Unless it fundamentally reforms, and quickly, an entire generation of bankers and finance professionals will find that they are no longer relevant. [read full story]
Tax cut proponents want to encourage domestic employment by subsidizing American companies who employ foreign workers in overseas plants.
Cutting corporate income tax on foreign earnings puts companies that keep their production in America at a competitive disadvantage and encourages the continued hollowing out of the American economy.
The subsidy for moving production overseas has been euphemistically called a “repatriation tax holiday” but the only people who are going to get a holiday are unemployed Americans whose jobs will move overseas. [read full story]
Washington politicians are pointing the U.S. economy straight into a liquidity trap and instead of a bright economic future, the U.S. is looking at years of high unemployment, weak GDP growth and the possibility of widespread deflation. [read full story]
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]
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]
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]
At separate news conferences Democratic and Republican leaders accused each other of political opportunism after Congress again failed to raise the debt ceiling and banks refused the President’s request to fund a government bailout.
As a result, the federal government shutdown that began in 2011 will continue for another year. [read full story]
Today I heard it again on the car radio — an advertisement claiming that since gold has topped $1,500 an ounce it’s a “must buy” for every responsible saver.
If only it were true that I could protect my family from economic Armageddon by buying gold.
Unfortunately, the hard facts are that increasingly since 2000 gold has been the opposite of an inflation hedge. Even worse, when interest rates rise in response to inflation, gold will fall in value, and maybe by a lot.
The historical relationship of gold to inflation, i.e., that it is a hedge, is no longer true. Gold has been “financialized” by Wall Street and its price is being driven by institutional speculators that buy it by borrowing money at near 0% interest. As long as interest rates remain low, the cost of betting on gold is very low and money flows into the gold market.
As gold prices soar individual investors need to beware. One day interest rates will start to rise and gold prices will plummet. Innocent victims that buy gold because of a mass market sales pitch will be sorry.
My strong advice to readers is don’t be a gold bug. It’s only a matter of time before the Fed exterminates you. [read full story]
Dear Congressman Ryan,
Please explain your Medicare plan to me and my wife. We are in our early fifties and are concerned about how your changes to Medicare will affect us. We know that Washington can seem disconnected from the real world but, for people of our age, your plan to do away with Medicare is very real.
Getting rid of Medicare feels like a free markets experiment to us and neither of us wants to be a “lab rat” for a social and economic experiment gone awry. Lab rats are usually expendable and we don’t want to be part of a discarded generation. [read full story]