Unconventional Wisdom

The Economist:

FIGURES released by America’s Commerce Department on Friday July 31st confirmed what most had expected: America’s economy suffered yet another quarter of falling output in the three months to the end of June. The world’s largest economy shrank at an annual rate of 1% in the second quarter. At least as of June 30th, America’s economy was still contracting, thus the country’s deepest post-war recession was not over.

But the news has been greeted with something approaching relief. For one thing, the decline was smaller than many economists had predicted, and a lot less than the dramatic 6.4% annual rate of contraction of the previous three-month period. For another, there are reasons to hope that conditions improved in July. And some newly released data about earlier months give reasons to cheer too.

These suggest that the decline in economic activity may have bottomed out at last. The S&P/Case-Shiller index of house prices in America’s 20 largest cities rose for the first time since July 2006 in May, by 0.5%. Americans also bought more houses in June than they did in May: sales of new single-family homes rose by 11%. All of this suggests things are getting brighter in the troubled housing market.

Oh does he ever. The past month seems to have been a rough one!

The House is scheduled to start its summer recess at the end of next week. The week after that, the Senate leaves, and then President Barack Obama heads to Martha’s Vineyard with his family for a two-week vacation that ought to dampen the noise coming out of Washington. Can everybody say “Amen”? We all need the break, but the president, maybe, most of all.

By all accounts, Obama suffered a bad week. It involved everything from Birthers to Blue Dogs, Glenn Beck to beer. While the White House does not seem to be facing any imminent threat of failure — though, you have to wonder about health care at this point — the president just seems a little off his game. His appearances have been a little forced, and he hasn’t presented the usually unflappable Obama, the one we have come to expect especially in times of trouble.

The true Obama give has been his ability to rise above the fray at exactly the right moment. He will say something so obviously true that he not only convinces you that he’s right but wins your confidence. Lately, that pitch hasn’t been working for the president, and some of his detractors are having a little more fun with him than usual.

I’ll finish reading this one. I hope you enjoy as well!

Paul Krugman of the New York Times is one of the most mendacious commentators on health care in the main stream media. See my essay “The Health Care Lies of Paul Krugman” at http://www.onthefencefilms.com/commentary/stuart/krugman.html

A recurring theme apparently except John Conyers actually admitted that he didn’t read this bill with a reason!

Yahoo! Finance:

A close reading of the two main bills, one backed by Democrats in the House and the other issued by Sen. Edward Kennedy’s Health committee, contradict the President’s assurances. To be sure, it isn’t easy to comb through their 2,000 pages of tortured legal language. But page by page, the bills reveal a web of restrictions, fines, and mandates that would radically change your health-care coverage.

If you prize choosing your own cardiologist or urologist under your company’s Preferred Provider Organization plan (PPO), if your employer rewards your non-smoking, healthy lifestyle with reduced premiums, if you love the bargain Health Savings Account (HSA) that insures you just for the essentials, or if you simply take comfort in the freedom to spend your own money for a policy that covers the newest drugs and diagnostic tests — you may be shocked to learn that you could lose all of those good things under the rules proposed in the two bills that herald a health-care revolution.

In short, the Obama platform would mandate extremely full, expensive, and highly subsidized coverage — including a lot of benefits people would never pay for with their own money — but deliver it through a highly restrictive, HMO-style plan that will determine what care and tests you can and can’t have. It’s a revolution, all right, but in the wrong direction.

Will we pay the price for being more like Canada?

Reuters:

Take the idea of a health insurance exchange, a feature found in all the Democratic congressional plans. Obama described it as a “marketplace that promotes choice and competition,” as if it were a healthcare version of eBay. Actually, the exchanges would be a government regulatory mechanism that could severely limit consumer choice. Or maybe not. In any case, there are few outside of Washington think tanks who have any idea this idea would work in practice across the country.

Nor was the president clear about the exact role of the government in a changed healthcare delivery system. Although Obama said any bill he signs would “keep government out of health care decisions,” the whole point of Obamacare is to use government to transform how doctor’s provide service by altering incentives.

Now maybe it would be a nudge — to use the language of behavioral economists — from Washington rather than a shove, but few non-experts have any sense of how a typical doctor visit might change. Sure, having a physician prescribe a cheaper blue pill rather than a pricier red pill if they both work the same is a no brainer. But what if the red pill is pricier, no more effective but has fewer nasty side effects like nausea? Or what if the red pill is 40 percent more effective but costs 80 percent more? Who is going to make the red pill-blue pill decision?

But Obama really wasn’t giving a closing argument as to why his plan would be the right solution to America’s healthcare problems. Instead, lackluster public interest in the issue — at least as compared with the recession and rising unemployment — led him to spend considerable time explaining yet again why reform is needed and needed now.  Ideally, as the White House sees things, the public would have already accepted its narrative that a) Team Obama stabilized the bad economy it inherited, b) although economy is slowly mending it will take time for the jobs to appear, and c) so while we’re waiting, let’s fix healthcare. But Obama probably didn’t help himself by burying his most powerful argument for middle-class voters with health insurance — that rising healthcare costs prevent bigger wage increases.

Via Instapundit!

Kiplinger:

Banks are starting to chafe on a federal regulatory leash that is getting even shorter. As the Federal Deposit Insurance Corporation (FDIC) takes a less sanguine view of lending previously seen as safe, even healthy banks are being ordered by their primary regulator to slash credit and raise reserves.

Regulators were too lenient for far too long, argues Gary Findley, a California banking attorney who heads The Findley Group, a banking consultancy. “I think the regulators are saying, ‘I’m going to show you,’ ” says Findley. “Now, the spigot is wide open.”

For example, federal watchdogs are no longer turning a blind eye to brokered deposits, in which out of state brokers delivered bulk deposits to a bank in exchange for higher than usual interest rate returns. These deposits were moved quickly in and out of banks in many instances and have been blamed for bank failures, such as in Georgia.

It’s “a business practice that gives regulators some concern,” says Kathleen Khirallah, lead retail banking analyst at the TowerGroup research firm. These days, even working capital loans are considered riskier. The same goes for land development and commercial real estate loans, which are being threatened by eroding property values.

Via Newsalert!