Wednesday, 2 October 2013

Random snippets

1. Reader's Letter Of The Day from The Metro (page 14):

If the unemployed are made to pick up rubbish, what will happen to those already employed as street cleaners?

Or are they also destined for the dole queue?

Trevor Beake, Kent.


2. The Homey-In-Chief Emeritus on top form:

IT is time for Americans to decide: do they want to be a social democracy, Eurozone style, with high levels of tax and public spending, or do they want to be a small state society, with low taxes and low levels of public spending?

That's the point.

"The Americans" have decided, and they decided long ago. By and large, taking federal, state and local government, US tax and spend levels are not wildly different from European levels.

Obama was re-elected recently and Obamacare (for all its faults) has been duly authorised, despite the desperate attempts of the US medical-industrial bloc to prevent it.

If you judge a policy by its detractors, then Obamacare looks like a good thing to me (although trying to make employers pay for it is stupid, they ought to pay for it out of general taxation or taxes on land values, or the government could just set up its own hospitals and provide free treatment).

And as Obama explained patiently yesterday (the first speech he ever gave which was intelligent and incredibly funny), the expenditure has already been authorised and tax levels have been agreed, so approving the "debt ceiling" is largely a formality (spending minus tax receipts = deficit, end of):

"Think about that. If you buy a car and you've got a car note, you do not save money by not paying your car note. You're just a deadbeat.

"If you buy a house, you don't save money by not authorizing yourself to pay the mortgage. You're just going to be foreclosed on your home. That's what this is about."


3. From the FT:

Some of Britain's leading mortgage lenders have expressed misgivings about the government's latest "Help to Buy" initiative, leaving the state-backed banks Royal Bank of Scotland and Lloyds as the only pair to have endorsed the scheme.(1)

Help to Buy, launched in April, was originally designed as a government loan scheme to support buyers of new-build houses. But the second phase of the scheme, fast-forwarded to this week from its original launch date of next year,(2) offers a government guarantee for higher-risk mortgages on any kind of home.

Many bankers are wary of the uncertain capital treatment that will be applied to the mortgages and the risks that will be created by low deposits and high loan-to-value ratios.(3)


1) Is it a coincidence that only the two banks directly controlled by the UK government* are joining in the fun?

* As opposed to the UK government, which is indirectly controlled by the banks.

2) They are starting to panic, this must be a good sign. But going by the success of all the fancy schemes which both Labour and Lib-Con governments introduced over the last five years, it won't be.

3) If only they'd thought like this ten or fifteen years ago, when the bubble was just starting. Query whether they actually think like this now, or whether this is just a plea for more generous handouts?

14 comments:

Lola said...

"Many bankers are wary of the uncertain capital treatment that will be applied to the mortgages and the risks that will be created by low deposits and high loan-to-value ratios.(3) Ten or fifteen years ago they were too stupid and greedy (most, but not all of them) to realise that they were being set up as patsies. This time more of them are aware of that.

Kj said...

"The Americans" have decided, and they decided long ago. By and large, taking federal, state and local government, US tax and spend levels are not wildly different from European levels.

Obama was re-elected recently and Obamacare (for all its faults) has been duly authorised, despite the desperate attempts of the US medical-industrial bloc to prevent it.


Sure, the thrust behind ACA is probably rooted in democratic opinion, and good in principle. But in practice, it´s the most botched up piece of political handicraft that has ever come to light. It manages to maintain the system of separate systems for the old and poor, employer tax incentives etc. It just adds even more crap, such as mandated coverage for some workers but all and ensuring that people´s hours will be cut, banning pre-existing condition-clauses and then not actually mandating people to have insurance, but fining them a petty sum, and then subsidise the inevitably growing premiums from the taxpayer´s pocket. The only innovation is a website and a callcenter. It´s not going to cut any costs, and is not going to ensure "universal" coverage. It´s so crap that just ending federal involvement in healthcare at all would probably be better for all. And this is coming from someone who is relatively pro public healthcare.

Kj said...

FFS, they spend over 2500 USD per capita on medicare and medicaid. They should just hand out that sum to each and everyone, say "buy insurance", and if people won´t, hand it over to their local county hospital.

Mark Wadsworth said...

L, let's hope so.

Kj, agreed,as depressing as it is.

From World Bank, most civilised countries spend 8% - 11% of GDP on healthcare (8% is quite enough, the rest is waste and crap pretending to be healthcare), the USA spends 18% for a shitter outcome.

Kj said...

MW: To be fair, outcomes are very good if you correct for their tendency to shoot each other, and that the illegal immigrant population generally have the same health stats as if in their home countries. But it´s not twice as good, no.

Dinero said...

The two "dead beat" analogies are not quite correct. In the analogies the debt has allready been taken on.

Mark Wadsworth said...

Kj, maybe.

Din, for once he was spot on.

As I explained:

"the expenditure has already been authorised and tax levels have been agreed, so approving the "debt ceiling" is largely a formality (spending minus tax receipts = deficit, end of)"

Dinero said...
This comment has been removed by the author.
Dinero said...

(spending minus tax receipts = deficit,) -

well that is true


in the analogies the spending on the car and house have allready been made

but in this case the spending has not been carried out yet, the spending is what they are arguing about

Lola said...

Apropos the 18% of GDP cost for US healthcare, I was speaking to someone in the medneg insurance business who reckons that owing the US litiginous culture 50% of those costs is medneg insurance. I've had this separately confirmed re their version of GP's.

That'd make the real cost of US healthcare 9% of GDP?

Kj said...

Lola: i think that's a huge overestimation. I'm sure it's huge, but not that much.

Mark Wadsworth said...

D, the cash spending has not happened but the programmes have been approved. That is a binding commitment, for the time being.

Kj, L's overall estimate is probably correct.

It's probably fair to say that the UK spends 9% on healthcare and 2% on related crap (quangos, inflated salaries, advertising on the TV telling you to eat more vegetables etc), total officially 11%.

Just because the NHS spends it does not mean it is spening on "healthcare".

And the USA spends 9% on healthcare and another 9% on crap (they pay twice as much for drugs, a fortune in legal fees, private insurers make huge profits, doctors' salaries are through the roof etc).

Lola said...

Also as MW has pointed pointed out, US health system is massively cronyistic and protectionists, and protectionist within the US. That is a Washington Heath Insurer may not be able to sell to a Californian. It seems to be a league between doctors unions and insurance companies.

Kj said...

MW/L. I´ve read some accounts of the reason why "costs" are so high. First of all, there´s supply management, you can´t build a hospital unless there´s a "need" for it, so there´s no dynamic supply, just little monopolies in every city. The hospitals then operate with huge headline prices. Ridiculous stuff like 10K for ingrown toenails or whatever. Most insurance companies pay a fraction of this, and they are not connected to any real costs. They do this because:
- a few actually pay this (self pay patients, self-insured companies, out of network insurers etc.)
- when they have "uncompensated care", they write off the full headline prices against tax liabilities.
- their crony buddies in the insurance business, will often take on "negotiating" down the headline prices for self-insured companies, and takes a cut between the fairy-tale price and the something closer to reality price.
The list goes on. All in all it´s probably one of the biggest scams in history in real monetary values.