Social Security Parties on Tax Payers Dime

by Brian Johnson on July 22, 2009

social-security-partyThe Social Security Administration (SSA), in an effort to deal with the stress of their jobs, held a conference a couple of weeks ago in Phoenix Arizona during which 700 SSA directors relaxed to the bill of $700,000 worth of tax payers’ money.  They had dance troops.  They stayed at a nice hotel.  They even had an excursion to a local casino.

Three things:

AIG Acts as Conduit. Taxpayers Get Nothing.

by Odysseas Papadimitriou on July 17, 2009

AIG BankruptMy point, in the past, has been that if America had allowed AIG to go into prepackaged bankruptcy, as we are doing with Chrysler and GM, we would have been in a better position to deal with the money AIG owes through Credit Default Swaps (CDS) because we could have negotiated payback for those positioned to collect on AIG’s obligations.  AIG owed money, we bailed them out to save the economy, and the result is that AIG paid off a lot of its obligations, and we, as taxpayers, now own billions of dollars of nearly worthless AIG stock. 

For the ones that are still not convinced, let us look at Goldman Sachs and its position concerning AIG.  AIG  paid out $13 billion bailout money to cover its CDS obligations to Goldman Sachs.  Actually, taxpayers paid Goldman Sachs, AIG just acted as a conduit.  The $13 billion was incredibly good for Goldman Sachs whose stock has since risen, but not nearly as good for AIG whose stock is perpetually on the verge of tanking.  However, the major problem here is that taxpayers paid AIG to pay off Goldman Sachs.  The result is that taxpayers own AIG stock (on the verge of collapse), and own no stock in Goldman Sachs (which is on the road to recovery).  Moreover, because CDSs are still unregulated, Goldman Sachs stands to make about $30 billion if AIG does, eventually, go bankrupt because of the CDSs they’ve taken out on that eventuality.  It is possible that other companies have similar CDSs bought against AIG, but since, remarkably, there still is no system of market regulation set up for CDSs, we can’t know for sure.

FTC to Regulate Blog Endorsements

by Brian Johnson on July 14, 2009

ftc-blogsThe Federal Trade Commission (FTC) has recently begun plans to regulate blogger endorsements on the internet, a forum where one can find opinions and endorsements in abundance.  In particular, the FTC wants to regulate bloggers who offer endorsements of products but who do not reveal that they are receiving compensation for their opinions.  Basically, bloggers who get paid to review a product (or to flat out endorse it) will have to say so up front.

It’s clear that the FTC is attempting to institute rules that will regulate the practices of the mostly untamed blogosphere (the internet environment made up of casual and professional bloggers) and it is being met with mixed reactions.  Some bloggers scoff at the idea that if they mention a product they have used and liked that they will suddenly come under a federal investigation.  Other bloggers (like Wallet Blog), however, see the FTC’s plan as a reasonable and necessary step towards introducing accountability in what has, thus far, proven a fairly frivolous media. 

Abolishing the American Rule Needs To Be Part Of Healthcare Reform

by Odysseas Papadimitriou on July 9, 2009

American RuleAs the nation’s lawmakers make decisions about healthcare reform, we ought to keep in mind the danger of fixing a system without understanding how it  became broken in the first place.  Among nations with comparable average lifespans, Americans pay more for healthcare than does anyone else in the world.   The system is grossly overpriced, because it has structural problems which need to be acknowledged before they can be fixed.  One such problem is the American Rule in lawsuits.

The American Rule  requires that, even if someone wins a lawsuit, they remain responsible for their legal fees.  This means that if someone brings a lawsuit against you, though you may have done nothing wrong, you still have to pay for your defense.  In general, the American Rule encourages a kind of legalized bullying since the system does not provide incentive to avoid starting a lawsuit, and actually encourages frivolous legal action.

Allow Patients not Government to Reign in Healthcare Costs

by Odysseas Papadimitriou on July 7, 2009

Healthcare CostsThere has been a lot of talk about healthcare in the news recently, especially in regards to its reform.  For the most part, these discussions center around coverage: who pays for it, who will get it and what that means for those who do?  What seems to be missing from the discussion is an acknowledgment that a system that doesn’t hold the recipient at least partially responsible for the financial burden of their medical expenses is likely to fail. 

The problem with America’s current system is evident with one look at its global performance.  Though life expectancy is about the same in France, Sweden, the United Kingdom and the United States, the price of healthcare (as a percentage of Gross Domestic Products) varies greatly.   According to the World Health Organization’s 2009 report, the U.S. pays over 15%, whereas France pays 11.2%, Sweden 9.2% and the United Kingdom 8.2%.  We are paying more for what is essentially the same level of healthcare because our system encourages inflated costs.

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