Showing posts from July, 2012

Folly in Massachusetts

Health care costs have gone through the roof since Massachusetts adopted its own version of Obamacare during the reign of Governor Mitt Romney.  The original legislation was bi-partisan.  Now, a bi-partisan majority of the Massachusetts legislature is poised to 'fix' the cost problem.  Pay heed, because this is where the national Obamacare is headed.

The legislature will vote today to remove $ 200 billion in costs over the next 15 years.  How will they do this?  By simply telling hospital and doctors that they are now going to pay less for health care services.  Seems so simple doesn't it.  Why don't we do that with everything?  Heck why not just make health care free in Massachusetts by telling hospitals and doctors that we just won't pay anything at all.  That way, Massachusetts' version of Obamacare won't cost anyone anything.

ECB May Be Preparing to Cross the Rubicon

This week, the European Central Bank (ECB) is going to announce policy measures to bolster the Euro and the bond markets in Spain and Italy (among others).  All of the available measures "Europeanize" the problems of Spain and Italy.  The real significance of this will be a disaster for Germany.  This won't be apparent in the immediate aftermath of the ECB policy announcements.  The instant reaction will be joy in Euroland and rallies in world markets. 

That happiness will gradually give way to the realization that nothing has changed in Europe.  The problems in Greece, Spain, Italy, and Portugal will continue to get worse, though, briefly, yields on their sovereign debt will be lower.   The idea that simply bringing in one more guarantor will solve the problems of Europe is almost laughable.  The media and the world's economists should be ashamed of themselves for believing that there is anything that ECB can do by itself to solve Europe's problems.  This is the …

Doctor Shortage -- Wonder Why?

The NY Times has an article by Annie Lowrey and Robert Pear today on the growing shortage of doctors in the United States.  Now, logically, if you had a shortage of something what would you think is causing it?  This article seems to have no clue.

Let me offer some suggestions.  Try medicare and medicaid for starters.  Whenever the government gets involved, people tend to head for the exit.  Basically medicare and medicaid funding is based upon the premise that doctors would prefer to lower their own standard of living in the future and take on more patients.  These programs assume that doctors would much prefer to deal with patients who cannot afford to pay them and have little or no incentive to take preventative health care seriously.

Why is there less interest in becoming a doctor?  The combination of a future dealing with folks that cannot and will not pay, a government that is supposed to pay but is broke, a job that is overburdened with government red tape and a lifetime of defen…

Sandy Weill is Wrong

Sandy Weill is wrong.  Separating commercial from investment banking is not a good idea.  Glass-Steagall was always foolish and the 1999 law that overturned it was an intelligent move.  The financial crisis was not related to the abolition of Glass-Steagall.

I agree that taxpayers should not backstop proprietary trading.  I agree 100 percent with that and yet I think the Volcker Rule is ridiculous.  How do you reconcile those views?  Simple, get the taxpayer out of the way.  It is one thing to guarantee $ 10,000 checking accounts, but the Fed guarantees, effectively, all the creditors of our banking system.  No creditor, including unsecured bond holders, has ever lost a penny when an FDIC guaranteed bank failed.  They bail out everyone, even though there is absolutely nothing in the law governing the FDIC guarantees that sanctions such activity.  The FDIC puts the taxpayer at risk -- after the fact -- with no legal authority whatsoever.  That's what Sheila Bair's FDIC does, in …

The Fed and The ECB

It's amazing what people will believe.

With the US economy sledgehammered by an unfriendly legal, tax and regulatory environment, the Fed is going to be able to do something about it?  What?  Lower interest rates?  Buy bonds and expand the nation's indebtedness?  Are our debts too low that they need expanding by the Fed?  How do you convince a businessman to hire someone in this environment?  Have the Fed buy Treasury bonds?  Is this a serious discussion?

How about Europe?  Mario Draghi announces that the ECB will do everything in its power to keep the Euro from falling apart.  Really?  By lending countries more money?  Is that the ticket?

No macroeconomic solutions will solve the problems in the western economies.  The microeconomic situation is not favorable for hiring.  Employees are, relatively, far too expensive compared to other factors of production and compared to countries in Asia where labor is not loaded up with government goodies that makes them toxic to employers.  S…

Mandated Loan Forgiveness

The Obama Administration policy of forcing loan foregiveness on private market lenders began in the mortgage market and is now being extended into the student loan market. Such loan foregivess essentially rips up legitimate contracts and replaces them with the arbitrary whims of government, deciding who should pay up and who needn't bother.

 Lenders aren't stupid and they have memories. It is incredibly difficult now for middle America to get mortgages thanks to Obama Administration loan foregiveness policies. Why? Because lenders know that politicians can, at their pleasure, rip up the contracts and deny the lenders the payments they are entitled to.

So, why lend to the class of Americans that the Obama Administration seems to want to provide loan foregiveness for? No reason I can think of. The next group that will find themselves out of luck when seeking loans will be students, especially the demographic now escaping their obligations thanks to the President.

How to calculate EPF investment withdrawal amount?

Although EPF members investment scheme was launched years ago, yet many Malaysians still do not know the existence of it. Follow by next question: "How to calculate the withdrawal amount?". Hope this post can give all of you an insight on this matter.

First, we must know that EPF members investment scheme only allows eligible members to withdraw eligible amount to EPF-approved investment schemes. The schemes was being monitor closely by EPF authorities, by reviewing it every year, in order to protect the interest of EPF members.
Am I eligible? Members can withdraw up to 20% of access amount from the minimum required Basic Saving in Account ONE. The minimum amount for each withdrawal is RM1,000. Sounds confusing, right? Let's explore it step-by-step.

Step 1: Determine the age (what is your celebrated last birthday?)
Step 2: Determine the required Basic Saving in Account 1.

Step 3: Determine your Current Saving in Account 1.
Step 4: Applying the formula : (Account 1 - Basic Saving) x…

The Stock Market -- Where Now?

There is an old saying: "Don't fight the tape!"  -- meaning, of course, sometimes the stock market just wants to go up regardless.  That seems to be what we have been witnessing the past few weeks as the stock market has almost regained its high for the year.

Why and where next?  First, the economy.  The economy has weakened over the past few months and seems to have stalled.  GDP growth may be zero at this point.  There are some bright spots:  the energy sector is the brightest, housing has started to look better in most sections of the country. But, the trends are down everywhere else.   A slide into negative growth territory is probably ahead in the second half of the year.

What about Europe?  The steady slide into economic and political chaos continues across the Eurozone.  The only thing new is the strong possibility that Germany may join its sister states into the slide into disaster.  None of this has much to do with the Euro at this point.  The real issue is that d…

Tax What You Wish to Discourage

Taxing activities means you wish to discourage or perhaps even eliminate them.  Cigarette and liquor taxes are a good examples.  Is their purpose revenue or to discourage undesirable activity?  So, why does Obama want higher taxes on the rich?  To discourage?  To eliminate?

One clear reason not to tax the rich is that you want the economy to improve or you want to lower the national debt.  Taxing the rich will actually have the exact opposite effect.

So, the Obama argument is that we should extend the Bush tax cuts for the middle class only if we can guarantee a weaker economy than we have now and offset the middle class tax cuts with lower revenues (though higher rates) from the rich that will increase the national debt.

And half of the nation wants to vote for this.

How to Prolong Economic Stagnation

The coming 'fiscal cliff,' by itself,  is enough to bring the American economy to its knees.  There is considerable evidence that the process is underway.  The American economy shows virtually no economic growth at all and employment gains are miniscule.

 "If you've got a business, you didn't build that...somebody else made that happen."  Now who would you think would say that?  Try the President of the United States!  Obama made that statement yesterday.  That pretty much sums up his attitude and understanding of free enterprise and explains the underlying rationale for his economic policies.

Obama's hatred of capitalism and free enterprise is apparently boundless.  His policies, his rhetoric, and his body language exhibit this hatred every day.

Meanwhile the media is focused on non-issues that underscore the media's contempt for capitalism.  The "libor scandal" is a joke, based upon a confusion.  Unfortunately, the joke is on the economy as b…

France in Denial

Francois Hollande, the new Socialist leader of France, is the new Obama of Europe.  Peugeot announced last week that they were laying off 10,000 employees in order to "return to profitability."  Naturally, Hollande responded with a government inquiry and statements that implied that the government would never permit the layoffs, by this private company, to take place.  And you wonder why no one wants to hire anyone in France?

If that isn't enough, Hollande responded that labor costs in France, now averaging 34.20 Euros per hour were not all that high.  Do the numbers.  34.20 times a 35 hour work week (mandated by French law) means 1,197 euros per week.  With four weeks off per year, (also mandated by French law), that means hiring someone in France cost 57,456 euros per year, or approximately $ 69,000 per year.  Gee, at that price, why not load up?

Good luck with that.  An 11 percent unemployment rate is just the beginning.  Look for a bull market in France in the unemploy…

The Libor Scandal -- More on Killing Recovery

The so-called libor scandal is ridiculous.  Only people who do not understand what libor is and how it is calculated see this as a scandal.  Barclays did nothing wrong or egregious.  Now, of course, public pension funds -- probably the most corrupt and poorly managed institutions on the planet -- are huddling with their lawyers to sue the major banks over "managing" libor.

Libor is not a market interest rate.  It never has been.  It is an administered rate by definition, like the prime rate of old.  It is what any bank wants it to be and it always has been.  There is nothing in law or in practice that requires a bank to submit any particular libor rate.  It is whatever each bank thinks it is, by definition.  Those concerned about 'manipulation of libor' are simply showing their ignorance.  There has always been a conflict of interest in libor rate setting as their has always been a conflict of interest in prime rate setting.  Anyone unaware of this has not been paying…

Maybank Silver Investment Account

After the successful launching of Gold Investment account, Maybank had come out with another innovative option for mass market --- Silver Investment Account. This would be part of its portfolio of precious materials being offered to consumers. Yes, Maybank was the 1st bank in Malaysia to offer a silver investment passbook account, allowing deposits and withdrawals in silver at a daily price in ringgit at any of its branches nationwide.

How about the return? Of course, it all depend on the silver price fluctuations. For ease of recording and maintenance, all the transactions would be recorded in the customer's passbook. It's simple, transparent and affordable.
More about "Silver Investment Account"

Who can apply?
Individuals aged 18 years and aboveJoint account - maximum 4 persons
Key Features of Maybank Silver Investment Account:
A great way to increase the degree of portfolio diversificationA better security against inflating economiesIt is convenient to manage y…

Misguided Debate

Today's economic malaise in the United States is a late chapter in a book that started with the housing bubble of the decade that preceded the fall of 2008.  Was this caused by one political party or another?  This is an important question, if one intends to adopt intelligent policies to deal with the bust that followed the bubble.

Admittedly, the government's pro-home-ownership policies enacted into law over the years in bi-partisan fashion helped exacerbate the home ownership boom.  But, would there have been no housing boom without Fannie and Freddie and favorable tax treatment of housing?  The boom might not have reached such extremes without government policy, but the bubble itself probably would have occurred anyway.  Bubbles are part of life.  They have happened and they will continue to happen.

When you are in a bubble, you never realize it.  Instead, it seems that you are doing something intelligent, something everyone ought to do.  Bubbles always have that 'bandwag…


There are numerous interest scheme being offered to public to participate for the past few years. It heats up when investors are looking to various instruments to grow their money after the 2008 global financial crisis. But, before we participate in those scheme, are we really fully understand what is Interest Scheme?

Interest Scheme is a way of doing business in Malaysia. Interest Scheme involves the pooling of financial contribution from the public in exchange for an interest in a particular scheme. Such interest includes the usage of the facilities and services provided under the scheme or profit or returns, depending on the nature of the scheme.
Rules and Regulations Promoter of an interest scheme must register the scheme with SSM before it can be offered to the public. The sale of interest is governed by the provision of Division 5 of Part IV of the Companies Act. The promoter of an interest scheme is also required to comply with the Policy Guidelines and Requirements issued by SSM …

RHBRI: Market Outlook & Strategy 2H2012

In our view, the equity market will likely be stuck in a range-bound trading pattern for now, but will likely trend up as global economic uncertainties clear out towards the later part of the year. Investors’ key worries include :

worsening of the euro-debt crisis that remains unresolvedfears of China’s and India’s economies crashing down into a hard landing; andthe risk of US falling off the “fiscal cliff”.
External Volatility And Impending Election 2 Key Headwinds

On the home front, the major event to watch out for is the impending general election that could also create volatility to the local bourse given the uncertain election outcome. Nevertheless, we believe the market will eventually trend higher towards end-2012, premised on:
the ECB making a more decisive move to mutualise the debts of Eurozone governments;China policymakers ease policies substantially and its economic growth re-accelerates;US Congressional leaders cobble together some deals to mitigate the impact from the “fisc…