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Business • Would you accept 2-3% on an investment with a 50% downside
Would you accept 2-3% on an investment with a 50% downside selling at an all-time high?
Posted on 08 May 2013
Would anybody in their right minds accept a two to three per cent annual return on an investment selling at an all-time high with a potential to lose half its value and perhaps as much as 10-15 per cent in a single day?
Step forward anybody with their money in US stocks today. The risk-to-reward ratio is so heavily skewed against you that staying invested is far more risky than moving to the sidelines and parking your wealth in a bank.
Small upside
What is the upside? Seven to 13 per cent by the end of the year if you take the advice of perma bull Jeremy Siegel. However, any technical chartist will point out that the downside risk is up to 50 per cent. All it would take is a shift in confidence that lowered the market’s price-to-earnings ratio to a level consistent with an economic recession and not a recovery.
How much poor economic data does it take to do that? How long will investors believe the sham data from China that is completely divergent from that of its trading partners? Is the US economy really improving except for owners of inflated stocks and real estate? Has the eurozone not just downgraded its economic outlook yet again?
Most stock traders accept all this but put their trust in the Federal Reserve to pump more and more money into the economy. That will work until it doesn’t. Do people not remember how house prices were supposed to never fall because the Fed was going to always lower interest rates to keep them up?
We are in the wrong place on the risk-reward curve in the US stock market and the end is nigh!
http://www.arabianmoney.net/us-stocks/2 … time-high/
Statistics: Posted by yoda — Wed May 08, 2013 12:22 am
View full post on opinions.caduceusx.com
What Would War Between Israel And Syria Do To The Already Fragile Global Economy?
War is a horrible thing. Just ask anyone that has ever been in the middle of it. And in this day and age governments around the world possess weapons of such incalculable power that war should be unthinkable. In future wars, we could literally see millions of people killed on a single day. Nobody should want that or look forward to that. Unfortunately, the next major regional war in the Middle East appears to be closer than ever. But nobody should want it to actually happen. During the next major regional war in the Middle East we will likely see death on a scale that is unprecedented. It won’t be like the wars of 1967 or 1973. It will likely be a fight to the death where nothing is held back. You see, the truth is that most Americans have no idea what is really going on in the Middle East. There are ancient grudges and ancient hatreds that go back for thousands of years. There is no “peace plan” that is going to suddenly make everything okay. The Middle East is a simmering volcano of hate and resentment that could erupt at any moment. That is why what is happening in Syria right now is so important. An Israeli airstrike in Damascus that reportedly was attempting to destroy a shipment of Fateh-110 missiles that Iran was sending to Hezbollah has brought Israel and Syria to the brink of war. In fact, Syria is calling the airstrike a “declaration of war” and is vowing retaliation. The Syrian government is saying that “Israeli aggression opens the door to all possibilities“, but they have not provided any specifics about what they plan to do. Meanwhile, Israel has made it very clear that they will do whatever is necessary to keep Fateh-110 missiles from getting into the hands of Hezbollah. With those missiles, Iranian-backed Hezbollah would have the capability of striking the heart of Tel Aviv with a very high degree of accuracy. So it is definitely understandable why Israel would not want Hezbollah to have those missiles. Just think about it – would you want Russia or China to deploy highly advanced missile systems in northern Mexico which could rain down hell on Los Angeles and Dallas in less than five minutes? Unfortunately, this gives Iran the perfect way to provoke a war between Israel and Syria. All they have to do is keep rolling trucks loaded with Fateh-110 missiles through war-torn Syria toward Hezbollah bases in Lebanon. Israel will feel forced to intervene, and the rest of the Islamic world will get angrier and angrier.
The explosions that rocked northern Damascus on Sunday were absolutely massive. It is being reported that they registered about two or three on the Richter scale, and enormous balls of fire that lit up the sky could be seen from all over Damascus.
The following is how the Washington Post described the attack…
Israeli warplanes bombed the outskirts of Damascus early Sunday for the second time in recent days, according to Syrian state media and reports from activists, signaling a sharp escalation in tensions between the neighboring countries that had already been exacerbated by the conflict raging in Syria.
Videos posted on the Internet by activists showed a huge fireball erupting on Mount Qassioun, a landmark hill overlooking the capital on which the Syrian government has deployed much of the firepower it is using against rebel-controlled areas surrounding the city.
So why did Israel do this?
Despite what the anti-Israel crowd is suggesting, Israel did not do this just to be mean. As Reuters is reporting, Israel was specifically targeting Fateh-110 missiles that were on their way to Hezbollah…
Israel does not confirm such missions explicitly – a policy it says is intended to avoid provoking reprisals. But an Israeli official told Reuters on condition of anonymity that the strikes were carried out by its forces, as was a raid early on Friday that U.S. President Barack Obama said had been justified.
A Western intelligence source told Reuters: “In last night’s attack, as in the previous one, what was attacked were stores of Fateh-110 missiles that were in transit from Iran to Hezbollah.”
These missiles would significantly change the balance of power if they got into the hands of Hezbollah. According to the Times of Israel, Fateh-110 missiles would be a very serious threat not only to Tel Aviv – these missiles would also threaten cities all the way down to Beersheba…
Uzi Rubin, a missile expert and former Defense Ministry official, told the Associated Press that if the target was a consignment of Fatah-110 missiles, then such weaponry did constitute a “game-changer”: Fired from Syria or south Lebanon, these missiles, he said, could reach almost anywhere in Israel with high accuracy.
Rubin emphasized that he was speaking as a rocket expert and had no details about the reported strikes.
“If fired from southern Lebanon, they can reach Tel Aviv and even [the southern city of] Beersheba,” Rubin said. He said the rockets are much five times more accurate than the Scud missiles that Hezbollah has fired in the past. “It is a game-changer because they are a threat to Israel’s infrastructure and military installations,” he said.
So that is why Israel carried out these airstrikes. They feel like they simply cannot allow Hezbollah to have these weapons. And with Hezbollah’s track record, that is very understandable.
Unfortunately, these airstrikes have also brought the Middle East much closer to the next war.
According to the Jerusalem Post, Syria is positioning units for a potential conflict with Israel…
Syria has stationed missile batteries aimed at Israel in the aftermath of alleged Israeli air strikes in the country, the website of Lebanon’s Al Mayadeen TV, considered close to the regime of President Bashar Assad, quoted a top Syrian official as saying on Sunday.
In response, Israel has deployed two Iron Dome batteries to northern Israel, they have closed off airspace in northern Israel to commercial traffic, and Israeli embassies around the world have been put on high alert.
But Syria may choose not to retaliate against Israel directly. According to WND, Syria may decide to allow jihadist groups to carry out their vengeance for them…
The Syrian government will soon declare it is opening its borders with Israel for Palestinian and other jihad groups to carry out attacks against the Jewish state, a senior Syrian official told WND.
Separately, informed Middle Eastern security officials said the Syrian army held a meeting Sunday afternoon with the leaders of the military wing of the Iranian-backed Islamic Jihad terrorist group to discuss retaliation against Israel for the recent air strikes near Damascus.
According to those officials, Islamic Jihad and the Iranian-backed Hezbollah are coordinating a possible reaction to Israel’s reported strikes.
In any event, things are definitely becoming more unstable over in the Middle East.
So what would a war between Israel and Syria do to the already fragile global economy?
Well, a war between Israel and Syria would likely paralyze the entire region. Hezbollah and Hamas would almost certainly jump into the war on the side of Syria, and there is the potential that nations such as Iran, Egypt and even Jordan could get involved as well.
In such a scenario, the flow of oil from the Middle East could become interrupted for an extended period of time, and that would have serious consequences for the global economy.
But the bigger threat to the global economy would be the fear that a regional war in the Middle East would create. Global financial markets respond very badly to fear, and right now the world economy is already teetering on the brink of disaster. Much of Europe has already descended into a full-blown economic depression, and there are signs that the greatest debt bubble in the history of the planet is starting to burst.
The next major wave of the economic collapse is rapidly approaching, and a major regional war in the Middle East would greatly accelerate our economic problems.
Unfortunately, it appears that such a conflict is inevitable.
I don’t believe that it will happen yet though. For the moment, I believe that cooler headers will prevail.
But as tensions continue to rise, I believe that we will see tempers boil over and the Middle East will descend into full-blown warfare at some point within the next several years.
Of course I could always be wrong about this. We will just have to wait and see what happens.
So what do you think?
Do you believe that we will see a regional war in the Middle East soon?
Please feel free to post a comment with your thoughts below…
View full post on The Economic Collapse
Gold and Silver • Top Gold Analyst – “We Can’t Imagine What It Would Be Like
Top Gold Analyst – “We Can’t Imagine What It Would Be Like If There Was True Chaos”
The Daily Sheeple
April 14th, 2013
www.TheDailySheeple.com
In the 1930?s, when President Roosevelt seized physical gold from Americans, gold mining companies remained untouched by the draconian move. And, while stocks in the United States dropped precipitously and remained depressed for a decade, companies whose primary business was the exploration and mining of gold and silver rose to new highs. Homestake mining, a gold mining firm operating during FDR’s Presidency, was one such company that saw its shares skyrocket over 500%.
A similar effect occurred in the 1970?s, after the US dollar was taken off the gold standard. By the early 1980?s gold had once again reached new highs – highs that were not surpassed until the debt crisis of 2008 took hold, nearly thirty years later.
This crisis, like the deflationary depression of the 1930?s and the inflationary recession of the 1970?s, won’t be much different, as panicked investors hoping to protect their wealth will once again turn to the tried and true hard asset of choice during times of crisis: gold.
If you take all the gold that’s ever been mined and that’s currently being mined… you can fit that into Dallas Cowboys stadium. Just to put that in perspective.
Gold is a very rare thing because the economic deposits of gold are very rare. It is a precious metal.
…
If you invest in one of those companies that finds and proves up an economic gold deposit, you can make anywhere from ten to a hundreds time your money.
…
We always start with people. That’s the most important thing when you invest… who are the guys running this company that I am going to invest in.
One deal that Rick Rule, Doug Casey and I are very large shareholders in because we absolutely respect the management team and we believe they’re going to bring significant returns and profits for us is a company called Brazil Resources, which already has gold in the ground. They’ve got millions of ounces of gold…their exploration projects are fantastic…. but more importantly, the management is top tier.
…
In North America we’ve had such a good time that we can’t imagine what it would be like if there was true chaos. But when it happens, they’ll call the people who invested in gold and had actual physical gold, they’ll call them ‘lucky.’ But the true definition of lucky is being prepared when the opportunity arises.
Indeed, should the worst happen in America, those who prepare will be few and far between, and those who failed to foresee the coming calamity will view them as “lucky” for having spent the time, effort and sweat to position themselves appropriately.
http://www.shtfplan.com/precious-metals … s_04142013
Statistics: Posted by yoda — Sun Apr 14, 2013 2:35 pm
View full post on opinions.caduceusx.com
American • How would a US bond market crash play out for investors?
How would a US bond market crash play out for investors?
Posted on 14 April 2013
It takes no genius to see that US bonds are in a bubble and near or just off the top. The interest rates paid on US bonds are close to historic lows. As they move up, bond prices move down, that is how bond prices are set. Once this direction becomes clear there will be a rush for the exit and a bond crash.
That matters hugely to investors in bonds like the People’s Republic of China, for example, with over $3 trillion in US treasuries, or most US pension funds. Bonds are, after all, supposed to be the safest of asset classes. That is true in that the US Government has never defaulted but the value of bonds has always risen and fallen and from time-to-time there is a crash.
Deflationary shock
The first observation to make is that sudden losses of money on this scale are deflationary. They wipe out savings that can then never be spent. They ruin some investors and bankrupt some institutions. Bond crashes are very bad for stock markets, partly for these reasons but also because share prices have to fall for dividends to compete with the higher interest rates available on bonds.
Really then this is something of a systemic wipe-out with a considerable distruction of wealth. There are not many places to hide in a true bond market crash. A major recession is guaranteed. Think what Cyprus is facing at the moment and that is how it looks. No wonder the Federal Reserve will pull every trick in its cook book before letting this happen.
But there is an end of the road for printing money, and it is always a bond crash if history is any guide. Then you get a huge flight from cash into real assets like precious metals and real estate because there is a fear about the future of money.
Lots of money has been printed by the global central banks recently. The Fed’s $85 billion a month is dwarfed by the Bank of Japan’s commitment to $140 billion. Once this money is released from bank accounts and treasury bonds into the economy then hyperinflation will follow quickly on from the initial deflationary impact of a bond crash.
Wealth divide
Perhaps this is just as well because it will help to offset a recession but it is very tough on those who don’t own these assets and creates a polarization in wealth. The gap between the haves and have nots will grow wider. It’s been happening anyhow, the number of US citizens claiming food stamps has doubled to 47 million in the past five years.
Speculators are the people who fare best. You would need to short US stocks or bonds at the right time and then switch into hard assets early on. At some point financial assets would bottom and real assets top out and then you would want to reverse back again.
But this is not a happy game for the average person with little in the way of savings and a relatively fixed income. They just get very poor.
http://www.arabianmoney.net/us-dollar/2 … investors/
Statistics: Posted by yoda — Sun Apr 14, 2013 12:04 am
View full post on opinions.caduceusx.com
Here’s Your Free Health Care. Would You Care to Vote?
Michael F. Cannon
The Washington Examiner’s Paul Bedard writes:
The 61-page online Obamacare draft application for health care includes asking if the applicant wants to register to vote, raising the specter that pro-Obama groups being tapped to help Americans sign up for the program will also steer them to register with the Democratic Party.
That may strike some as unseemly. After all, people go to jail for buying votes. But the real problem here is that ObamaCare is paying too much.
According to the Congressional Budget Office, the average subsidy ObamaCare offers for private health insurance will rise from $5,500 next year to more than $8,000 in 2023. But according to the Washington Post:
The price of one bona fide, registered American vote varies from place to place. But it is rarely more than a tank of gas.
Indeed, as a rising furor over voter fraud has prodded some states to mount extensive efforts against illegal voters, election-fraud cases more often involve citizens who sell their votes, usually remarkably cheaply. In West Virginia over the past decade, the cost was as low as $10. Last year in West Memphis, Ark., a statehouse candidate used $2 half-pints of vodka.
At the high end, corrupt candidates in Clay County, Ky., once paid $100. But that was probably too much: It attracted one woman who already had sold her vote. The man who bought it first was outraged, and he beat up the man who bought it second.
ObamaCare overpays for everything.
View full post on Cato @ Liberty
Oil And Gas • Obama: Only Canada would profit from Keystone XL
Obama: Only Canada would profit from Keystone XL
March 14, 2013 | 9:43 am | Modified: March 14, 2013 at 10:00 am
President Obama told a group of House Republicans at a closed-door meeting on Wednesday that the long-delayed Keystone XL pipeline won’t profit anyone but Canada.
Rep. Lee Terry, R-Neb., told the Associated Press that Obama said the benefits of the project have been overstated because many of the jobs created would be temporary, and much of the oil produced from the pipeline would be exported.
“He said there were no permanent jobs, and that the oil will be put on ships and exported and that the only ones who are going to get wealthy are the Canadians,” Terry said.
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Rep. Steve Scalise, R-La, told AP Obama told the group the pipeline “is not going to create as many jobs as you (Republicans) hope.”
But the president also said he doesn’t believe all the negative climate consequences environmentalists have predicted, either.
The White House has not decided whether to approve the pipeline, AP reported.
The Keystone pipeline would carry oil from Canada to refineries in Texas. Estimates of the jobs it would create vary widely — the State Department estimates about 6,000 jobs; Trans Canada, which proposed Keystone, has said it would create as many as 20,000 jobs; and some pipeline supporters say it would create as many as 100,000 direct and indirect jobs.
http://washingtonexaminer.com/obama-onl … le/2524294
Statistics: Posted by yoda — Thu Mar 14, 2013 9:46 am
View full post on opinions.caduceusx.com
Who Cares If Pre-K Would Work?
Neal McCluskey
The following is cross-posted from the National Journal’s Education Experts blog:
This week’s introduction says that, when it comes to President Obama’s preschool proposal, “the only problem, as always, is that these investments cost money.” These proposals certainly would cost money – dollars Washington doesn’t have – but even discussing cost is seriously jumping the gun. The fact is that right now, regardless of cost, there is almost no meaningful evidence to support massive expansion of federal pre-school efforts. Indeed, the evidence calls much more loudly for the opposite.
Start with the biggest federal pre-K initiative, Head Start. It costs about $8 billion per year, and what are its lasting effects? According to the latest random-assignment, federal assessments, there essentially aren’t any. The program has demonstrated no meaningful, lasting benefits, and is therefore a failure.
How about Early Head Start, which involves children ages 0 to 3? It is a much newer program than its big brother, but it, too, provides no evidence of overall, lasting benefits. As a 2010 random-assignment, federal study concludes:
The impact analyses show that for the overall sample, the positive effects of Early Head Start for children and parents did not continue when children were in fifth grade…. It appears that the modest impacts across multiple domains that were observed in earlier waves of follow-up did not persist by the time children were in fifth grade.
There were, to be fair, some lasting positive effects found for some subgroups, but there were also negative effects. And for the “highest-risk” children – the ones the program is most supposed to help – the outcomes were awful:
Finally, for children in the highest-risk group, six impacts were statistically significant, all of which were at the child level and all of which favored the control group. Children in the program group scored significantly lower than children in the control group on the PPVT-III (ES = ?0.21, p < .10) and the mathematics test (ES = ?0.33, p < .05) and had lower scores on the academic success index (ES = ?0.29, p< .05). Parents reports indicated that chronic absenteeism was higher in the program group than the control group (ES = 0.37, p < .10). Children in the program group also scored higher on the cumulative risk index (ES = 0.35, p < .10) and lower on the cumulative success index (ES = ?0.31, p < .05) than children in the control group. There were no significant impacts on parenting and family-level outcomes in the highest-risk group.
The federal government, quite simply, has demonstrated no ability to scale-up pre-k programs and achieve positive, lasting effects. Knowing that, it is impossible to convincingly argue that the current efforts should even be maintained, much less greatly expanded.
What about state programs? The evidence is hardly conclusive that even highly-touted programs such as those in Oklahoma or New Jersey are effective. The quality of the research – which is rarely random-assignment – isn’t what it needs to be to confidently conclude that the programs work. Indeed, pre-K advocate James Heckman said that in a Washington Post interview:
Dylan Matthews: The Abecedarian and Perry experiments provide pretty definitive evidence that individual preschool programs have strong effects, but Obama’s been touting certain statewide programs like Oklahoma’s. What’s the evidence for those like?
James Heckman: I would be cautious. I’m instinctively cautious because I’m an academic. The Perry and ABC (Abecedarian) and some others, the nurse-family partnership, have not only had randomized trials, but have also followed people up for decades. The Perry people are now 50 years old. The ABC people, now they’re close to 40. We actually can follow them in a way that the other programs don’t follow their participants. The state programs have relatively short-term evaluation plans. And I think, you’re right, they’re not randomized controlled trials, so I’m a little cautious. I don’t find them as convincing. As far as I know they’re not of the same quality. I have not personally relied on them. That’s not to say they’re bad programs, they just haven’t been evaluated as thoroughly.
So state programs haven’t been adequately evaluated to demonstrate their effectiveness, yet some act like it is obvious that the federal government – which has demonstrated an inability to run effective pre-K programs – should scale all this up. Illogical. What they should be insisting is that Washington follow the Constitution and stay out of this, letting states experiment to see what works and what doesn’t, and replicate programs on their own – or do nothing – if they think the evidence justifies it.
When you get down to it, there are only two or three pre-K programs that have solid enough research bases that advocates can confidently say they had lasting, positive effects. As Dylan Matthews’ question makes clear, the two most prominent are the Abecedarian and Perry Preschool programs. But here’s what you need to know: Both were hyper-intensive programs with very dedicated staff. Indeed, Abecedarian treated just 57 children at a price of about $17,700 per child, and Perry worked with 58 kids at roughly $12,500 per child. For all intents and purposes there is no way any government is going to scale those up and get the same effects, much less the bloated, ineffectual federal government.
It is much too early to say the only reason not to expand federal per-K is the lack of funds. Before anyone gets even close to that, they need to address the huge dearth of evidence that big pre-K – especially federal – would be anything other than a failure.
View full post on Cato @ Liberty
New Constitutional Amendment Would Abolish Obamacare’s “Mandate Tax”
Ilya Shapiro
I’ve been known to say that Chief Justice Roberts’s transmogrification of Obamacare’s individual mandate created a “unicorn tax” – a creature of no known constitutional provenance that’ll never be seen again. Well, here to ensure that more than congressional discretion prevents any future tax on non-purchases is a constitutional amendment that was recently floated by Congressman Steven Palazzo (R-MS).
Rep. Palazzo has introduced H.J. Res. 28, which would overturn last summer’s Supreme Court decision that, for the first time ever, under certain limited conditions, granted Congress the power to tax inaction. The amendment reads, in its entirety, as follows: “Congress shall make no law that imposes a tax on a failure to purchase goods or services.”
Short and sweet and, with the mandate-tax set to take effect this next January, now is the time to act to prevent about 11 million mostly middle-class Americans from getting hit. Indeed, the CBO estimates that 70 percent of those currently without insurance and earning less than $94,000 a year will get slapped with the mandate-tax that goes into effect in 2014. That doesn’t sound like a good, let alone fair, way of either “protecting patients” or ensuring “affordable care,” but hey, I’m just a constitutional lawyer.
Oh, and of course this amendment would prevent all other possible mandate-taxes as well, not just in the field of health care.
It’s sad that we’ve come to this – the Constitution already prohibits taxes on inactivity – but of course there are many things that the government does (and which courts have allowed it to do) that are plainly unconstitutional. H.J. Res. 28 is an excellent start.
For examples of more great ideas on how to rein in our out-of-control government, see Randy Barnett’s “Bill of Federalism” and the Compact for America.
View full post on Cato @ Liberty
The Sequester May Not Be ‘Fair,’ but It’s Real and It Would Slow the Growth of Government
Daniel J. Mitchell
Much to the horror of various interest groups, it appears that there will be a “sequester” on March 1.
This means an automatic reduction in spending authority for selected programs (interest payments are exempt, as are most entitlement outlays).
Just about everybody in Washington is frantic about the sequester, which supposedly will mean “savage” and “draconian” budget cuts.
If only. That would be like porn for libertarians.
In reality, the sequester merely means a reduction in the growth of federal spending. Even if we have the sequester, the burden of government spending will still be about $2 trillion higher in 10 years.
The other common argument against the sequester is that it represents an unthinking “meat-ax” approach to the federal budget.
But a former congressional staffer and White House appointee says this is much better than doing nothing.
Here’s some of what Professor Jeff Bergner wrote for today’s Wall Street Journal:
You know the cliché: America’s fiscal condition might be grim, but lawmakers should avoid the “meat ax” of across-the-board spending cuts and instead use the “scalpel” of targeted reductions. …Targeted reductions would be welcome, but the current federal budget didn’t drop from the sky. Every program in the budget—from defense to food stamps, agriculture, Medicare and beyond—is in place for a reason: It has advocates in Congress and a constituency in the country. These advocates won’t sit idly by while their programs are targeted, whether by a scalpel or any other instrument. That is why targeted spending cuts have historically been both rare and small.
Bergner explains that small across-the-board cuts are very reasonable:
The most likely way to achieve significant reductions in spending is by across-the-board cuts. Each reduction of 1% in the $3.6 trillion federal budget would yield roughly $36 billion the first year and would reduce the budget baseline in future years. Even with modest reductions, this is real money. …let’s give up the politically pointless effort to pick and choose among programs, accept the political reality of current allocations, and reduce everything proportionately. No one program would be very much disadvantaged. In many cases, a 1% or 3% reduction would scarcely be noticed. Are we really to believe that a government that spent $2.7 trillion five years ago couldn’t survive a 3% cut that would bring spending to “only” $3.5 trillion today? Every household, company and nonprofit organization across America can do this, as can state and local governments. So could Washington.
And he turns the fairness argument back on critics, explaining that it is a virtue to treat all programs similarly:
Across-the-board federal cuts would have to include all programs—no last-minute reprieves for alternative-energy programs, filmmakers or any other cause. All parties would know that they are being treated equally. Defense programs, food-stamp recipients, retired federal employees, the judiciary, Social-Security recipients, veterans and members of Congress—each would join to make a minor sacrifice. It would be a narrative of civic virtue.
It’s worth noting, however, that the sequester would not treat all programs equally. Defense spending is only about 20 percent of the budget, for instance, yet the Pentagon will absorb 50 percent of the savings (though defense spending still increases over the next 10 years).
At the risk of oversimplifying, the sequester basically applies to so-called discretionary spending. So-called mandatory spending accounts for a majority of federal spending, but it is largely exempt, so entitlement reform will still be necessary if we want to address the nation’s long-run fiscal challenges.
To close, Bergner notes that “meat-ax” isn’t the right term to describe very small across-the-board cuts:
Talk of axes versus scalpels is designed to deflect reform. Whatever carefully targeted budget cuts might animate our dreams, the actual world of divided government suggests only one realistic way to achieve real spending reductions. It is not a meat ax. A scalpel that shaves a bit off all programs equally would work just fine.
In other words, the sequester is simply a very modest step in the right direction.
And while we should be radically downsizing the federal government, it’s worth reiterating that modest steps are capable of yielding big results.
Simply restraining the budget so that it grows 2.5 percent annually, for instance, is all that would be needed to balance the budget in 10 years. Not big budget cuts. Not small budget cuts. Just a bit of measly fiscal restraint.
Yet President Obama thinks that’s asking too much and instead wants ever-higher taxes to support an ever-growing government.
View full post on Cato @ Liberty
Goldwater Attorney: ObamaCare-Compliant Exchange Would Violate Idaho’s Health Care Freedom Act
Michael F. Cannon
Idaho Gov. Butch Otter (R), who added Idaho to the multi-state challenge that sought to overturn ObamaCare as unconstitutional, now supports helping the Obama administration implement the law by establishing and funding a health insurance “exchange.” Exchanges are new government bureaucracies that enforce ObamaCare’s many regulations, channel billions in deficit-financed government subsidies to private health insurance companies, and help the IRS penalize individuals and employers who fail to purchase government-approved insurance. So far, some 32 states have refused to establish an Exchange themselves. If Idaho’s legislature authorizes an Exchange, they will make Idaho the only state where a Republican legislature and governor acted together to implement this essential piece of ObamaCare.
One could argue this is a debate Idaho shouldn’t even be having. Establishing an ObamaCare compliant Exchange would violate Idaho state law.
In a letter sent to Idaho legislators today, Goldwater Institute attorney Christina Sandefur explains, “establishing a PPACA state health insurance exchange in Idaho would conflict with the state’s Health Care Freedom Act.” Idaho’s Health Care Freedom Act protects the “right of all persons residing in the state of Idaho in choosing the mode of securing heatlh care services free from the imposition of penalties” including “any civil or criminal fine, tax, salary or wage withholding, surcharge, fee or any other imposed consequence.” Sandefur explains (as I have explained elsewhere), “State exchanges that conform to PPACA are inconsistent with this safeguard because they are the key vehicles for implementing the individual mandate tax,” as well as the penalties ObamaCare levies on employers under the employer mandate. Idaho’s Health Care Freedom Act forbids state officials or state-created non-profits from doing anything that helps to enforce such penalties: “No public official, employee, or agent of the state of Idaho or any of its political subdivisions, shall act to impose, collect, enforce, or effectuate any penalty in the state of Idaho that violates the public policy set forth in [this Act].” As a result, Sandefur writes, “Idaho public officials who operate exchanges would be violating state law,” and “the Attorney General is charged with taking legal action against those who do so.”
Otter himself signed the Health Care Freedom Act into law in 2010, and was the first governor in the nation to do so. The purpose of that Act was to prevent state officials from doing what Otter is now trying to do. “What the Idaho Health Freedom Act says,” Otter boasted at the time, “is that the citizens of our state won’t be subject to another federal mandate or turn over another part of their life to government control.” Yet he is now trying to subject Idaho residents to those mandates, and violating his own law to help the federal government implement ObamaCare. The best spin I can put on this is that Otter is getting some very, very bad advice about the Health Care Freedom Act and ObamaCare’s Exchanges.
The situation in Idaho is a replay of Arizona, which enshrined a similar Health Care Freedom Act in its Constitution. As Arizona officials were wrestling with whether to establish an Exchange, Sandefur and her Goldwater Institute colleagues threatened legal action if Arizona did so. That threat was likely a major factor in Gov. Jan Brewer’s (R) decision to oppose an Exchange.
View full post on Cato @ Liberty