“The price of apathy towards public affairs is to be ruled by evil men.” Plato

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    “You’ve got this crazy system [Obamacare] where all of a sudden, 25 million more people have health care and then the people that are out there busting it – sometimes 60 hours a week – wind up with their premiums doubled and their coverage cut in half.”

    Bill Clinton

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Obamacare May Implode

Posted by Steve Markowitz on October 19, 2016

The news media and Americans are focused on the upcoming presidential election.  Given the important role the president plays in the United States this is natural.  However, the focus on the election has been on the questionable personal traits of Donald Trump and Hillary Clinton.  This myopic focus masks serious issues that face the Country and the next president, irrespective of who is elected.

The significant challenges the Country faces include international relations, as well as economic issues.  The Middle East is devolving into chaos that will eliminate the artificial borders and countries created after World War I.  Russia is again adversarial and imperialistic.  Economic growth in the United States is tepid with the total debt soon to exceed $20 trillion.  Irrespective of whether Clinton or Trump become president, these issues will prove intractable.

Within the broader subject of economic challenges is the out of control medical costs.  This problem had its roots long before Barack Obama became president.  However, the President’s signature program, Obamacare, exasperated the problems and is showing signs of heading into a death spiral.

The President is aware of Obamacare failings writing in The Journal of the American Medical Association: “Too many Americans still strain to pay for their physician visits and prescriptions, cover their deductibles or pay their monthly insurance bills; struggle to navigate a complex, sometimes bewildering system; and remain uninsured.”  This is a far cry from the President’s promises to the American people that healthcare costs would decrease.  Obamacare not only added expensive mandates to the cost of medical insurance, but covered some 20 million people who previously did not have insurance.  For the President to have made this cost cutting promise indicates incompetence or dishonesty, there is no third option.

A more honest representation of the realities of Obamacare was made earlier this month by former President Bill Clinton who said:

bill-clinton“You’ve got this crazy system where all of a sudden, 25 million more people have health care and then the people that are out there busting it – sometimes 60 hours a week – wind up with their premiums doubled and their coverage cut in half.”

Leave it to Bill Clinton to take a complex issue and break it down to its most basic problem; the middle class and healthy younger Americans are being forced to pay for the health costs of others.  Insurance is a system whereby risk is spread amongst a population of people with an example being auto insurance.  Some drivers will have accidents while others will not.  In the case of so-called health insurance, all beneficiaries will require significant benefits.  Therefore what we call health insurance is an entitlement and cannot be financed as if it was insurance.

In early October Minnesota Gov. Mark Dayton said: “The reality is the Affordable Care Act is no longer affordable”.  This is no partisan attack coming from a Democrat governor of a state that is projected to have increases in the Affordable Care Act medical exchanges in excess of 50%. (Source)  Other states are facing similar problems.

In business or economics matters, prior to resolving a problem the issue and goals need to be clearly vetted and defined.  This was not done with healthcare reform.  Instead, proponents of Obamacare promoted problems to elicit emotional responses.  This included Americans without medical insurance and the increasing costs of medical care.  Ignored were the basic laws of supply and demand that have impacted these issues and will play a role in any propose resolution.  The upcoming implosion of Obamacare is the result of this gross failure.

After the presidential election the winning party will throw celebrations for the power they gained or maintained in Washington.  Beginning in January a new president who will be forced to address the problems left behind by Barack Obama.  A major issue will be the growing problem of the increasing cost of healthcare.  Democrats will promote a single-payer system; i.e., government run healthcare.  This should concern Americans given the government’s poor track record managing the health care of veterans through the VA Administration.

Republicans will promote market oriented solutions for health care reform.  However, continue calling a solution “insurance” improperly defines the problem and will not lead to productive results that are politically or economically palatable.

When discussing the problems of increasing healthcare costs, rarely will politicians discuss economic realities including supply and demand.  Instead, many scapegoat insurance companies, pharmaceutical companies, and/or doctors.  While these factors play some role, it is minor compared to demographic changes.  For example, the Country is rapidly aging.  In 2000 there were 35 million Americans over 65 years of age.  In less than two decades this has increased to 47 million.  In addition we have become more obese.  Both factors increase the demand for healthcare and therefore cost.  Not including these issues in the broader discussion of healthcare reform dooms any program to failure.

The Kaiser family Foundation reported that in the last six years, health insurance premiums rose about 19%, three times greater than inflation.  At the same time, peoples’ salaries rose only 11%.  This increasing cost of healthcare as a percentage of total income is one reason the recovery has been sluggish.  Consumer spending on other goods and services has been decreased as a result.  Unless healthcare costs are brought under control, this negative impact on the economy will grow.  May the force be with the next president!

Posted in Healthcare, healthcare costs | Tagged: , , , , , , , , | 2 Comments »

Sen. Warren Accuses Wells Fargo Chief of “Gutless Leadership”

Posted by Steve Markowitz on September 22, 2016

Earlier this month Wells Fargo admitted that its employees created thousands of bogus credit card accounts to meet sales goals.  This led to bonuses for many employees including high level ones.  Wells Fargo fired over 5,000 employees for their involvement in the scandal.

The Wells Fargo scandal is inexcusable and heads should roll at the bank’s highest levels.  At the same time it is amusing to read Elizabeth Warren’s scolding of Wells Fargo’s CEO John Stumpf’s “gutless leadership” for his pushing responsibility for the scandal onto lower-level employees.  As an associate said of Warren’s double standard:

“I’m not defending this guy by any means, but I wonder if Elizabeth Warren told Hillary she is a gutless leader when she blamed her email issues and subsequent attempts at cover-up on her low-level employees.  Something tells me I already know the answer…. “

Wells Fargo Chief Accused of ‘Gutless Leadership’
The chief of Wells Fargo, John G. Stumpf, appeared before the Senate Banking Committee. He apologized. He expressed regret. He vowed to make amends.
But the senators were not having any of it. And the more he tried to explain, the more skeptical they became.
Senator Elizabeth Warren even suggested he resign, saying that his pushing responsibility onto low-level employees showed a “gutless leadership.” On the issue of clawing back pay, Mr. Stumpf said it was a process that he could not get involved in.
And this is not the end of it — Wells Fargo is under fire from multiple directions:
• Mr. Stumpf has been invited to testify before the House Financial Services Committee, which is also investigating Wells Fargo.
• Prosecutors are examining the scandal.
• The Securities and Exchange Commission has been invited to join the fray by Senator Jeff Merkley, Democrat of Oregon.

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Audience Laughs When Congressman Charlie Crist Calls Hillary Honest

Posted by Steve Markowitz on September 21, 2016

Earlier this week Florida held a debate between current Democratic Congressman Charlie Crist and Republican challenger David Jolly.  When asked about Democratic presidential candidate Hillary Clinton, Chris responded:

“I am proud of Hillary Clinton.  I think she’s been a very good secretary of state, a very good senator from the state of New York.  The thing I like most about her is I believe she is steady.  I believe that she is strong.  I believe that she is honest.  And I look forward to voting for her.”

Hillary Clinton may be may be connected to many adjectives.  However, calling her “honest” is just plain ludicrous.  As indicated in the video below, Crist’s comment drew laughter from the audience.  It is statements such as this one made by Crist that has turned so many Americans against the political elites.  It is a major reason why Donald Trump with all of his weaknesses has a reasonable chance of becoming America’s next president.  Should he be elected, the political elites and those that back them need look in a mirror to see Trump’s greatest asset.

Posted in Politics | Tagged: , , , , , , , | 1 Comment »

The Tyranny of Governmental Bureaucracies

Posted by Steve Markowitz on September 16, 2016

Irrespective of good intentions, once started, government agencies and bureaucracies take on a life of their own in never-ending attempts to gain power, influence, and money.  A poster child for this is the US Department of Energy formed in 1977 during the presidency of Jimmy Carter.  Its primary mission was in response to the oil crises of the 1970s and America’s need to become less dependent on imported oil.

oil-importsAs indicated in the chart, at best the DOE could claim some early success in its primary mission. However, between 1985 and 2005 net imports of oil surged.  That did not stop the DOE’s employment from increasing from its initial 20,000 to today being over 100,000, when contract employees are included.

Progressives, who never find a government program they don’t like, would point to the significant drop in net oil imports since 2005.  That decrease, however, was the result of private industry ingenuity, specifically fracking technologies.  Since the election of Barack Obama, the federal government has done all it can in efforts to actually increase America’s dependence on imported oil, putting coal out of business, increasing drilling regulations, stopping pipelines, etc.

Steve Forbes published an op-ed in Forbes titled The Latest in the Never-Ending Assaults on Our Freedoms.  One of These Is Lethal that appropriately attacks the tyranny of government.  Forbes states that: “Even in democracies the natural tendency of government, unless stopped, is to expand its powers and extend its tentacles into every facet of its citizens’ lives–always in the name of helping them”.

Forbes uses the tobacco industry as an example of governmental overreach.  This includes:

  • The FDA’s (US Food and Drug Administration) has implemented regulations that will ultimately put out of business small manufacturers of premium cigars and makers of e-cigarette.
  • E-cigarettes, which are a safer alternative to cigarettes, will now be less safe by the new regulations that subjects all devices designed after February 15, 2007 to FDA approval. Prior to 2007, e-cigarette’s were crude and inferior, both in convenience and safety, to those produced today.  As a result, these regulations will limit consumer choices for safer and superior devices.
  • The smaller, boutique cigar manufacturers are been basically run out of business with the new regulations. The requirement of 5,000 hours of testing takes several years to complete, an expense the smaller companies cannot afford.
  • Pipe smokers are not immune to from the FDA’s lunacy. Tobacconists who mix special blends of pipe tobacco will have to go through an FDA registration process as if they were a tobacco manufacturer.  This added expense will put many of the blunders out of business.

It is not coincidental that the FDA’s tobacco regulations hurt small and newer producers of products and benefit the larger suppliers.  This is but another example of crony capitalism that inflicts our economy.  The incumbent suppliers have the mass in the political clout to push through laws that hinder potential competition.  Politicians benefit from this incestuous relationship through political contributions.  The bureaucracy and their governmental agencies profit through increased control, larger employee counts, and funding.  This is not a new phenomenon, but one that has been repeated throughout history in many countries and governments.  Following the money ultimately leads to the actual motivations behind governmental interventions in society and the economy.

Posted in Government Ineptness, Governmental Intervention | Tagged: , , , , , , | Leave a Comment »

Incestuous Relationship Between Banks and Government

Posted by Steve Markowitz on September 9, 2016

The greatest economic calamity of contemporary time occurred in 2008.  While there were complex issues behind the economic meltdown, main culprit was an overvalued housing market that became a bubble.  When housing valuations began to fall, the bubble popped, the catalyst for the overall economic meltdown.

The housing bubble did not occur by chance or natural economic activity.  The fuel that fed this fire included:

  • Irresponsible Federal Reserve monetary policy that left interest rates too low for too long. This not only helped promote cheaper mortgages, but also cajoled investors into investing in mortgage-backed securities, seeking yield in very products.
  • Inappropriate lending practices were forced on commercial banks by the government in its pursuit of a social agenda, which included the Community Reinvestment Act of 1977. Through Fannie Mae and Freddie Mac, the government forced banks to lower lending standards so that individuals who could not afford mortgages received them.
  • The government also has an in incestuous relationship with banks. For example, it created legislation enabling commercial banks to become involved with very risky financial products that risked systemic damage to the economy; i.e. repeal of the Glass-Steagall Act late in the Clinton administration,  In addition, the Commodity Futures Modernization Act of 2000 allowed banks to become involved in the ultra-high-risk derivatives market.

Most economists agree that actions of the Fed, government legislation and banker greed were responsible for creating the housing bubble and subsequent banking crisis.  Significant lip-service was offered by politicians for corrective action, including the massive Dodd-Frank legislation of 2010.  However, this legislation is causing more problems in the banking system.  The crisis was caused by banks supposedly being too big to fail.  With Dodd-Frank, the largest banks have gotten bigger.

The 2008 economic meltdown brought on a liquidity crisis that threatened the world’s banking system.  Central banks and governments used massive interventions and stimulative policies to offset the crisis.  These policies may initially have been successful in staving calamity, but have since lost effectiveness.  Eight years later while central bank interest rates remain near zero, economic growth is anemic.  This prolonged economic stagnation i a major reason behind growing social disorder in many countries.

Given the scope of the economic damage, it is telling that not one banker has been indicted or imprisoned for unethical behavior.  In addition, bank executives who were enriched during the bubble years have not had to make any restitution.  The incestuous relationship between bankers, governments and central banks make such punishment unlikely.

To appease the masses, politicians have created the illusion of corrective action.  This includes the above-mentioned Dodd-Frank Act.  In addition, the Justice Department creates an illusion of bank retribution by levying massive fines on large bank.  According to an Andy Koenig’s Wall Street Journal op-ed titled Look Who’s Getting That Bank Settlement Cash, these payments include:

  • $5.1 billion settlement with Goldman Sachs
  • $3.2 billion settlement with Morgan Stanley
  • $7 billion with Citigroup
  • $13 billion with J.P. Morgan Chase
  • $16.65 billion Bank of America

business-relationshipWhile the settlements might make it seem like the greed and poor business practices have been addressed, reality is different.  First, the banks involved were bailed out by the US government through the TARP program.  One could make the argument that the penalties were actually inflicted on the US taxpayers who funded TARP.  In addition, the penalties on the banks affected earnings and shareholders long after the perpetrators of the actions received large bonuses, none of which was returned.

Koenig points to another troubling aspect of the government’s bank “retribution” program.  None of the collected funds have gone to those damaged by the bank’s behavior.  Instead, the Justice Department forces the banks to give the funds to nonprofit organizations drawn from a federal government approved list.  This includes some such as Catholic Charities that are typically nonpolitical.  However, it also includes La Raza, the National Urban League, and the National Community Reinvestment Coalition who are known to have Progressive political agendas that include voter registration programs, community organizing and significant lobbying efforts.  This is but a political shakedown, an abuse of power that does not offer redress to or appropriate punishment to those responsible for the problems.

Those on the Left of the political aisle seem satisfied with the federal government’s role in distributing fines from banks, as a majority back causes they agree with.  However, this is a slippery slope that one day will benefit the opposite political causes.

Conservatives have also been acquiescent to the government’s movement of money from banks to political and social causes.  This demonstrates that the political elites are more concerned with consolidating power in Washington than following the rule of law or the Constitution.

The more power collected in Washington the greater will be the abuse of power.

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Politicians Enriched by the System

Posted by Steve Markowitz on September 2, 2016

Partisans on both sides of the aisle spout talking-points that are the mainstays of their party’s platform.  For Democrats, this includes social justice and wealth distribution.  Republicans promote the benefits of capitalism and strong national defense.  History indicates disconnect between these propositions and reality.

Democratic policies have not led to social gains by many within their party, nor to “fair” wealth distribution.  The ongoing unrest in many American cities indicates the high-level of discontent.  The fact that during the past five decades most of these cities have been run by Democrats is telling.  As for wealth distribution, during the Obama administration this has significantly skewed towards wealthy Americans.  For example, a University of California, Berkeley study found that 95% of the income gains from 2009 to 2012 went to the top 1% earners in the United States.  Whether this result is from bad policies or bad intent is irrelevant to those impacted by the disparity.

Republicans preach the benefits of capitalism and a strong national defense.  However, Republican politicians often support crony-capitalism to the benefit of large corporations.  In the early 1960s President Dwight Eisenhower warned of the dangers presented by the “military industrial complex”, however, this warning was ignored.  Also, American interventions in the name of freedom have not fared well with no better example than Bush’s invasion of Iraq.  The consequences of the interventions have not made America safer.

There is often a blurring of what the parties preach and their actions.  For example, Democrat President Lyndon Johnson took America into the Vietnam cauldron.  Barack Obama intervened in Libya.  Crony-capitalism has morphed from the military industry to the green energy, social services, and education industries.  The corrupting results are the same whether policies are promoted Harry Trumanby Republicans or Democrats.

Harry Truman once said: “You can’t get rich in politics and less you’re a crook.”  History has proven that the blunt-speaking Truman has often been correct.  It brings into question the wealth made by the Clinton’s since leaving the White House.  It also questions why Congressmen and Congresswoman have fared so much better than the American people in the past decade.

Frustration with political elites by the American people is growing.  This has been manifested by the popularity of Bernie Sanders and Donald Trump.  It is being duplicated worldwide with examples including England’s vote to leave the EU and the recent impeachment in Brazil of its president.  Similar discontent by the people has been the historical norm.  Politicians, whether democratically elected or not, typically enter politics with good intent.  The power of the office then corrupts and personal gain becomes a primary goal.

The indications are that people worldwide have had enough, once again.  Historically this has led to radical change in political structures and significant change to the ruling class.  They are always “interesting” periods of time.

Hillary-Clinton-net-worth-over-timeCongress Net Worth

Posted in Politics | Tagged: , , , , , | 4 Comments »

Education and Student Debt

Posted by Steve Markowitz on August 26, 2016

Marshall McLuhan“The reason universities are so full of knowledge is that the students come in with so much and leave with so little.”  Marshall McLuhan


Republicans and Democrats attempt to differentiate themselves via their views of the government’s role in the economy.  With close examination, it is hard to find real differences between them.

Those on the Right promote the benefits of “true” capitalism that allows markets to set prices via supply and demand.  Those on the Left share the view that capitalism is too harsh and that the government needs to step in and smooth out inequities created by markets.  At the extreme Left, socialism is promoted, irrespective of its history of failure.

At the macro-economic level there is little difference between Republicans and Democrats.  Crony capitalism is rampant within both parties.  Republicans typically support large industries and those in the military industrial complex.  Democrats promote social programs that benefit industries including education, social services, medical services, and trial lawyers.  The result of crony capitalism has been a significant increase in governmental spending and a surging United States’ debt over the past 50 years.  This debt is in part responsible for the economic malaise that has been inflicted on the country over the past decade.

An example of crony capitalism and the damage it has done is the educational industry.  Through the US Department of Education, as well as at the state and municipal levels, the funds spent on primary education have been skyrocketing as indicated by the charts below.

Total Educational Spending

Spending Per StudentSat Scores





However, the increased spending has not resulted in improved education.  The chart shows how poorly our students are doing in basic reading comprehension.

Student DebtThe problem is more significant at the college level.  The educational industry, with support of the US government and its loan programs, has created the false narrative that all Americans require and deserve a college education, irrespective of whether or not it improves their economic well-being.  As a result, the amount of student debt now exceeds $1 trillion and a significant portion of college graduates cannot make an income level that would allow them to pay off the debt in a reasonable period of time.  Many have been forced to move back into their parents’ houses.

While a market-based economy can be a cruel arbitrator of scarce resources, crony capitalism has proven to be catastrophic to those who have been cajoled into inappropriate economic decisions based on government programs.  It is a major cause of the growing wealth disparity between the ultra-rich and average Americans.

Yes, both Hillary Clinton and Donald Trump have prospered under crony capitalism.  The same cannot be said for most Americans.

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Obama’s View of Hillary in 2008 Versus 2016

Posted by Steve Markowitz on August 15, 2016

Barack Obama once said words matter.  His words, however, don’t seem to matter all that much.  Below is a rather hilarious video put together showing Obama’s view of Hillary when she was an opponent in 2008, versus today when she is the candidate for the presidency for his party.  If words truly matter, either Obama was disingenuous in 2008 or he is being disingenuous in today.

Posted in Politics, President Obama | Tagged: , , , , | Leave a Comment »

Obama’s Legacy: Increased Executive Branch Power

Posted by Steve Markowitz on August 14, 2016

When asked about Barack Obama’s legacies, supporters will universally list Obamacare as number one.  As for the problems the country faces, Obama has had a Teflon coat with supporters either ignoring the issues or blaming them on his predecessors.  Problems include the growth of international terrorism, the Middle East in flames, and significantly increased racial tensions in the Country.  Under the radar is perhaps one of the most dangerous Obama legacy; significantly increased power within the presidency and executive branch of government.

The New York Times published an article by Applebaum and Schear titled Once Skeptical of Executive Power, Obama Has Come to Embrace It that chronicles Obama’s power grab.  The article concludes that Obama, who prior to becoming president was publicly critical of executive power, has since embraced it stating: “Mr. Obama will leave the White House as one of the most prolific authors of major regulations in presidential history.”

The Times also states:

  • “Blocked for most of his presidency by Congress, Mr. Obama has sought to act however he could. In the process he created the kind of government neither he nor the Republicans wanted — one that depended on bureaucratic bulldozing rather than legislative transparency.”
  • “The Obama administration in its first seven years finalized 560 major regulations — those classified by the Congressional Budget Office as having particularly significant economic or social impacts. That was nearly 50 percent more than the George W. Bush administration during the comparable period, according to data kept by the regulatory studies center at George Washington University.”
  • “The Obama Era …. And it has imposed billions of dollars in new costs on businesses and consumers.”

obamaThe Times offers concern with the growth of the executive branch and regulations quoting Robert Hahn, a regulatory expert at Smith School at the University of Oxford: “The big issue that I grapple with is that the regulatory state keeps growing.  And as it keeps growing, when does it become too much?”  We have already crossed that chasm.  On the economic front the country has been in the midst of the slowest recovery since the Great Depression.  Socially, the dissatisfaction in the inner cities is at a level not seen in decades.

Since embracing increased executive authority, Barack Obama has spoken arrogantly of this power stating: “an increasingly dysfunctional Congress: … Where they won’t act, I will.”  In addition: “Whenever I can take steps without legislation to expand opportunity for more American families, that’s what I’m going to do.”  These are remarkable statements from someone supposedly expert in the Constitution.  The Constitution divides our government into three branches, equally dividing power.  Its purpose is clear, to stop any branch or individual from having their way with law, irrespective of the validity or quality of their proposed action.

While the Obama power grab and myriad of regulations are negatively impacting the country now, there is a more sinister impact to come.  Future presidents will be intoxicated by power and likely bring more authority to the Executive Branch, at the expense of individual freedom for Americans.

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Democratic Congresswoman has Problem with Hillary Clinton’s Trustworthiness

Posted by Steve Markowitz on August 7, 2016

During the past 25 years no family has dominated American politics more than the Clintons.  Bill was the most important political figure during the 1990s, serving as president for two terms.  Hillary Clinton was a powerhouse in her own right, most notably as an activist first lady.  During the next two decades she served as a United States Senator from New York, was a serious contender for the Democratic presidential nomination in 2008, and also served as Secretary of State during the Obama Administration.

The accomplishments of the Clintons have been accompanied by scandals.  Bill and Hillary have become infamous for lies with Bill being disbarred for it during the Lewinsky scandal.  Hillary’s lies have been so pervasive that the late New York Times writer William Safire called her “a congenital liar”.  That was 20 years before FBI director James Comey confirmed she lied on matters relating to the email scandal.

During a substantial portion of the past 25 years the Clintons successfully blamed a right-wing conspiracy for attacking their credibility.  That dog no longer hunts.

Polls indicate the majority of Americans find Hillary less than trustworthy.  Just a significant, politicians who support Hillary have difficulty with her trust factor.  CNN anchor Brooke Baldwin in the video below asked Democratic Congresswoman from Arizona, Ann Kirkpatrick her thoughts on Hillary’s trustworthiness.  She did not answer the question, but instead said “she is the most qualified to lead this country”.

American politics are in a sad state.  Republicans nominated Donald Trump, who not only has problems with temperament, but shares few philosophical views in common with traditional conservative politics.  The best Hillary supporters can say is that she is more qualified than Trump.

Both the Republican and Democratic parties have failed the people.  This reality demands radical intervention.  Third parties are a reasonable alternative.

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