By Trace Mayer, on November 20th, 2009
If you are unfamiliar with hawala banking then I recommend reading Hawala Banking And Currency Controls Part I to become familiar with the concept before reading further. If you are familiar with how hawala banking works then you will probably know that hawala transactions are not inherently wrong and should not arouse any suspicion in the mind of a moral person.
However, there may be formal reporting to government depending on the peculiar nature of some of the assets depending on applicable rules for sale and transfer. In many countries there are legal rules which may impose civil and/or criminal penalties for each one of the transactions that I have described in earlier articles because they are considered money laundering by their governments.
HOW CURRENCY CONTROLS AFFECT HAWALA BANKING
The laws and regulations of various governments regarding financial transactions across the globe cover the entire spectrum from no regulation to very strict regulations. This is not a critique or recommendation based on any particular legal framework but only the fundamental principles surrounding the issue. Therefore, consult a local attorney before engaging in any financial transactions.
Currency controls can take many forms. Probably the most common form is the restriction, limitation or prohibition of the sale, purchase or exchange of certain goods or currencies within a country or between countries. Some of these controls include reporting requirements for financial transactions, registration of Money Service Businesses, record keeping requirements when you buy gold or sell silver, and identification requirements for transactors.
The informal nature of traditional hawala banking and the private nature of the transactions allows individuals to avoid interference with their fundamental human rights by currency controls which put a limit on transactions or demand “transparency” requirements. Even so, many nations have made hawala banking subject to these laws, but the laws suffer from these immoral fundamental flaws.
TRANSACTIONAL LIMITATIONS
The limitation, regulation or prohibition of some exchanges makes the goods or currencies like real estate in that they can no longer be freely moved from one country to the next. Things like official foreign currency exchange rates and limits to the amount of cash that can be taken into or out of a country are typical examples.
The solution to this problem, where it is not illegal to do so, is to effect the transaction using one, or a combination, of the examples in Part I. This way the transactional limitations can be lessened or even avoided completely. Nobody likes competition and therefore many vampire squid banks through the governments have made such transactions illegal. Even in the cases shown in Part I, where there is a legitimate reason or purpose behind “avoiding” the transactional limitations, most legal systems which outlaw avoidance would find these methods to be illegal as well.
TRANSPARENCY REQUIREMENTS
Transparency requirements are those laws like the ones found in the ironically named USA PATRIOT Act which require “know your customer” identification requirements, registration with the government to transmit money, record keeping requirements and mandatory Currency Transaction Reports and Suspicious Activity Reports. This framework was suggested by the IMF to governments around the world.
However, these laws are much like the Stamp Act of 1765. In both cases the requirement was unnecessary and used to fund activity which provided no benefit to the people taxed. The Stamp Act was quickly repealed after ardent opposition by the colonists in America. A young John Adams heard James Otis, Jr., a Boston attorney, vehemently speak out about these nefarious Writs of Assistance:
But Otis was a flame of fire! … American Independence was then and there born. The seeds of Patriots and Heroes, to defend the non sine Diis animosus infans;- to defend the vigorous youth were then and there sown. Every man, of an immense crowded audience, appeared to me to go away as I did, ready to take arms against writs of assistance.* Then, and there, was the first scene of the first act of opposition to the arbitrary claims of Great Britain-then and there the child Independence was born. In fifteen years, i.e. in 1776, he grew up to manhood, and declared himself free. [Annals Of The American Revolution Or A Record Of The Causes And Events, page 225]
The fundamental nature of hawala banking, an informal transaction among trusted individuals, makes all of these requirements superfluous and unnecessary for the hawaladars to operate successfully. The history of hawala banking shows that without any of the record keeping and regulation that banks are subject to, hawala banking is far more efficient, less expensive, is not subject to institutional or political risk, has been the source of vital funds for war torn and impoverished nations and is much faster than other systems of exchange. So why force people to use the Pony Express rather than the Internet?
FIGHTING CRIME: Pretending To Be Batman
The competing claims that underlie this clash are between the right to privacy and the protection of innocent people against criminal activity. The argument used to justify the regulation of the informal hawala system is that it is necessary to identify and prevent crime and terrorism. Although it is untrue based on credible and verifiable sources, we will assume it is true that terrorism and organized crime use hawala transactions as a significant source for funding. The question then becomes, how much privacy may be sacrificed to ferret out crime and terrorism?
The Stamp Act opponents relied on the English Constitution for an argument against the Stamp Act, taxation without representation. The same offenses to liberty and human rights are present with anti-hawala laws but the same constitutional argument is not necessarily applicable here. The stronger one is to look to the US constitution, the Fourth Amendment which states:
The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
It cannot be more clear that in order to protect individuals from crime, before there is a search through private papers, there must be probable cause and a warrant issued to do so.
No transparency requirement as adopted in the USA PATRIOT Act or other financial regulation of hawala banking meets this critical test. Because the transactions are private, there should be probable cause and a proper warrant to search. In addition, the fundamental human right to freedom to contract gives the individuals and the hawaladars the freedom to agree not to maintain records of the individual transaction if they so choose. The same legal argument might not be available in all countries, but the fundamental rights of privacy and freedom of contract are the same for all people.
Thus, just like Batman does not always follow the law to ferret out crime, governments think they can ignore the law and legal principles to fight crime. But unlike Batman, costumed government officials do not actually succeed in reducing crime or terrorism by these means but they do manage to parasitically draw a paycheck from the productive members of society.
CONCLUSION
Hawala banking, where legal, provides opportunities to profit for hawaladars and significant other benefits for the parties to the transactions. Currency controls and other laws passed to regulate hawala banking are not only offensive to fundamental rights of freedom of contract and a right to privacy, but short of complete totalitarian control are impossible to effectively enforce in an informal system such as hawala. The private and informal nature of hawala banking makes detection of hawaladars extremely difficult. And it is the very currency controls that incentivize individuals to use the informal hawala banking system rather than the formal institutions which are slower, more expensive, less efficient, more intrusive and less secure.
By Eldon Mast, on November 19th, 2009
Earlier in the week, Lowe’s Cos. (LOW) said in the third quarter it saw improved sales in several major big-ticket categories, including major appliances and flooring projects.
Same-store-sales declines for Lowe’s progressively moderated as Q3 advanced, with October same-store sales only dropping 5.6%, following a 7.9% decline in September and an 8.7% drop in August. For the full quarter, same-store sales fell 7.5%, an improvement over the second-quarter’s 9.5% decline.
The firm sees inventory in better shape than a year ago and also sees signs that consumers are responding to good deals and promotions — underscoring the firm’s optimism.
“We certainly do feel better about how things are trending,” CFO Robert Hull said.
Lowe’s Chairman and Chief Executive Robert Niblock said appliances, flooring and interior paint posted same-store sales increases. A recent consumer survey found that flooring projects as well as kitchen and bath face-lifts are at the top of consumers’ lists of planned home improvement projects.
“The fact that these types of projects are at the top of homeowners’ to-do lists is encouraging,” Niblock said.
Earlier in the week, Lowe’s Cos. (LOW) said in the third quarter it saw improved sales in several major big-ticket categories, including major appliances and flooring projects.
By Thersites, on November 19th, 2009
Given the massive volume of ridiculous news stories revealing the travesties occurring in this country on a daily basis, I have decided to start regularly posting my thoughts on selected pieces each day. I will continue of course to produce lengthier more substantive pieces as well.
Without further ado, I present today’s Daily Quips:
As Pamela over at Atlas Shrugs highlights, AG Eric Holder gave his opinion on bringing KSM to justice in Manhattan, the site of his heinous crimes. Holder boldly asserted, “we need not cower in the face of this enemy. Our institutions are strong, our infrastructure is sturdy, our resolve is firm, and our people are ready.” In light of the remarks of government officials such as Henry Paulson: “It’s a safe banking system, a sound banking system. Our regulators are on top of it,” Barney Frank (on Fannie and Freddie): “I think we see entities that are fundamentally sound financially” and Barack Obama: “But I do have an unyielding belief that all people yearn for certain things: the ability to speak your mind and have a say in how you are governed, confidence in the rule of law and the equal administration of justice, government that is transparent and doesn’t steal from the people, the freedom to live as you choose. These are not just American ideas. They are human rights. And that is why we will support them everywhere,” all signs indicate that we should be running scared. If a bigwig politician tells you things are safe and sound, things naturally must be in awfully bad shape.
Obama said “if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession.” Thank you captain obvious for the biggest understatement I have ever seen. First off, people are losing confidence in the USD and our economy as reflected in the rallies in foreign currencies and equity markets. Most importantly, the price of gold has been making new nominal highs on a daily basis. You think there might be consequences to quadrupling our deficit in less than a year of being President? You think there might be consequences to the fact that we have unfunded liabilities of over $100 trillion? The One may be the most enlightened President since George W. Bush.
The Press is doing everything they can to bring down Sarah Palin. Regardless of how you feel about her, and honestly I am not close to having fully formed a judgment about the woman, the hypocrisy of the media here is sickening. The double standard that the media employs when it comes to how they treat liberals versus conservatives, and in-particular wholesome middle-American female conservatives is abominable. The MSM has not fact-checked one thing about President Obama, yet they have repeatedly beaten Sarah Palin to death. I don’t care what your political leanings, the behavior of the media towards the former governor has been and continues to be beyond disgraceful.
POTUS Obama is “furious” about the leaks coming from the Afghanistan deliberations. I agree with him, these leaks are harmful to our troops. Almost as harmful as the fact that it is taking him MONTHS of playing with our soldiers’ lives to make a decision! Maybe if he had a firm grasp of the situation and acted accordingly there wouldn’t be time for all of these leaks. I am all for taking the time to make a prudent decision but something tells me Afghanistan is more about politics than national defense for this administration.
Barry Ritholtz over at the Big Picture illustrates why we are doomed for a long and painful Depression. The more you see the policies being enacted by this administration, and compare them to those of Hoover and FDR, the more you get the sense that this isn’t Barack Obama merely being naive, but actually intentionally trying to plunge us into the economic abyss.
By Ajay Shah, on November 19th, 2009
I wrote an article in Financial Express titled The problem of big banks. On this subject, also see:
- In the world of banks, bigger can be better, Charles Calomiris in the Wall Street Journal.
- A three-way split is the most logical, by John Gapper in the Financial Times.
- Narrow banking is not the answer to systemic fragility by Charles Goodhart.
- See the section titled Regulatory and legislative reaction and the foreign exchange market in Lessons for the foreign exchange market from the global financial crisis by Michael Melvin and Mark P. Taylor on voxEU.
By Thersites, on November 19th, 2009
President Barack Obama’s success as reflected in the recent gubernatorial races appears ever more staked on the state of the economy. Unemployment recently reached 10.2%, though the more honest measure of U-6 shows the nation running unemployment at a Depression-like 17.5%. In response to these numbers, Barack Obama has said that “I will not rest until all Americans who want work can.” Yet Mr. Obama’s policies belie his words. In fact, what his administration is doing will ensure massive unemployment and endless economic stagnation.
 To understand why I would make such a sweeping assertion, it is instructive to understand how our economy ended up in this predicament in the first place. For this, I must give a cursory explanation of the Austrian theory of the business cycle.
The interest rate is a price signal, no different from the price tag on any good. In a free market (which the US most certainly does not have), the interest rate — the cost of capital — is determined by the supply of and demand for capital. Individuals choose to consume or invest, and this dictates the amount of loanable funds in the economy, which businesses will use to undertake projects to bring goods to market for future consumption.
However, when a central bank like the Federal Reserve prints money, artificially lowering the interest rate and expanding the loanable pool of funds, producers are left with a false price signal. The interest rate will tell producers that consumers want them to undertake long term projects to bring goods to market. This artificially lowered interest rate will induce consumers to save less and borrow and spend more as debt is cheaper.
Resources are misallocated because of the conflicting demands of consumers and undertakings of producers, caused by the government-distorted (the Fed though nominally private is clearly an apparatus of the state) price signal of the interest rate. This leads to the bust, manifested for example in the empty houses and office buildings throughout the country.
Logically, one might think that the best way to fix this mess would be to liquidate the malinvestments of businesses, pay down our debts and start fresh. One might say that we must allow for the market mechanism to correct the imbalances and distortions created during the artificial boom.
Only neanderthals (i.e. policymakers in the pre-Depression era) would advocate the above. The enlightened Barack Obama and his team of trusty economic advisers, along with the ever-compliant Messrs Bernanke and Geithner have other ideas. Practically every single policy they have enacted is intended to stop the market from clearing out the wastes and excesses of the boom. The government has undertaken programs to encourage greater home ownership and keep people in homes that they cannot currently afford, and to buy more cars, fictiously propping up GDP numbers. They have bailed out failing enterprises. They have abrogated contractual obligations. They have created make-work, politically oriented and naturally often fraudulent and wasteful public works projects. They have also increased the money supply at an unprecedented rate, easing the Federal Reserve-controlled interest rate to a ridiculous 0%. They have done all of this while exponentially expanding a national debt which was already egregiously large.
All of these policies in their own way have prevented and will continue to prevent any sort of recovery. They are designed to stop markets from reflecting reality, continuing the distortions already created by government tinkering. History seems to be repeating itself, with Obama following Hoover and FDR’s favorite anti-Depression prescriptions.
There are major costs to these programs. Besides the fact that government is prolonging the downturn by not allowing the gears of the markets to function, the government has created a major moral hazard in bailing out failed companies, hurt those successful companies who have been forced to subsidize the failed ones, and also in propping up failing enterprises, prevented entrepreneurs from putting the assets being tied up in unproductive businesses to better use. The government has also completely misled both businesses and their investors by running roughshod over contracts in both the case of the AIG bonuses and in the relationship between debtor and creditor in the GM boondoggle.
The government has also used its largess to “save or create 600,000 jobs,” a number which is not only dubious but also fallacious. As Frederic Bastiat told us, the good economist examines not only what is seen, but the unseen. This arbitrary number of 600,000 hides the fact that government make-work projects and propping up of unsound ventures stops new and more profitable industries from springing up given the diversion of land, labor and capital in projects that would otherwise not exist. This prevents new job opportunities from being created, and also prevents workers from learning new skills to become viable employees in new and profitable businesses. At best, if there was no politicization, corruption, waste and the government was able to build things both solid and aesthetically pleasing, the government can merely divert resources. They will not be meeting any type of demand of the consumer like a private enterprise because they lack a price mechanism of the market when undertaking their projects, and are not responding to the demands of consumers. They are responding to the demands of political interests. Put more succinctly, we don’t know how many jobs have been lost because of the ones that have theoretically been saved or created.
Not to mention the fact that the resources that are paying to save or create these jobs (and for all of the other bailouts and programs enacted by the government) have to come from somewhere. They come from bilking the taxpayer, or future generations of taxpayers. Ventures that private individuals choose not to undertake with their own capital are instead created by the government.
In addition, low interest rates have not only kept banks alive which would have failed, but allowed them to generate profits on the taxpayer dime by borrowing from the government at 0% and either lending it back to the Federal Reserve or pumping it into the financial markets, where we see the results of continued monetary inflation in the increase in stock, bond and commodity prices. What this represents is a massive wealth transfer from the American people to the financial system, whose participants it should be noted prop up the government itself by underwriting and creating markets in its debt. Most important of all, in keeping interest rates artificially low, the government continues to distort the price signaling mechanism, which caused the whole crisis in the first place.
There are also major costs due to the debt that the government issues in financing their intervention. The massive increase in our debt undermines the creditworthiness of the country which will ultimately lead to an increase in interest rates as people lose faith in our government and in the viability of our economy to generate the funds necessary to pay down these crushing debts. The only way for the government to pay off these debts since they cannot do it honestly by directly taxing will be through the indirect tax of inflation, which as I have mentioned they have been doing since this crisis began and at an absurdly fast rate ever since the Federal Reserve was instituted. And again, this will continue the price-signal distortion.
So just to review, the government is preventing markets from adjusting, preventing businesses from going belly-up and their assets being put to better uses by more competent businessmen and women, creating wasteful public works projects, all while ruining the nation’s creditworthiness and debauching the currency.
There is a last point which must be made. Besides the fact that the government’s policies inherently either encourage non-productivity or reward bad actors which weakens the moral fabric of the people, as during FDR’s presidency, market entrepreneurs (as opposed to the political ones who profit from the aforementioned government swindling) are genuinely afraid of this administration. To say that the GM bailout in addition to the coercion of the banks and most notably Ken Lewis had a chilling effect is an understatement. People in business do not know how arbitrary or onerous government regulations will be.
As the government runs from one whimsical plan to another, all market participants can be sure of is that regarding regulation and intervention, there will be more, and that they will be soaked by taxes either direct or indirect. With businesses unsure of the economic environment but most likely rightfully anticipating (though in my opinion underestimating) an increase in outright socialism in the economy, this will surely quell economic growth.
Thus, we see that Obama’s policies are not only misguided but also incredibly destructive. If we fail to work through the carnage caused by the government-induced boom, and instead try to continue down the path of unsustainability; if instead of letting the economy adjust and liquidate, painful as it may be, we try to continue the illusory boom, we will be doomed to years of unemployment, stagnation and ultimately the “crackup boom” of the economy. And this isn’t even to mention the threats to our economy posed by national healthcare, cap-and-tax and even scarier Mr. Obama’s foreign policy.
The only way to create jobs and fix a broken economic model is to release the entrepreneurial forces of America. Each and every one of these policies retards the necessary adjustment, depriving businesses of valuable assets that can be put to more profitable lines of work and consumers of receiving the products they seek.
By Trace Mayer, on November 18th, 2009
On HowToVanish many people have been asking questions in response to an article I posted about hawala banking. It is a great topic and one that I enjoy talking about so I thought I would respond by fleshing out what kinds of transactions take place in a hawala system and then answer the biggest question by far; how do I find a hawaladar?
HAWALA BANKING TRANSACTIONS
There are a few archetypical transactions that most hawala transactions will resemble. The first is the most common; remittances. For example: a person from very poor country X is working in country Y. He sends home $100 USD of purchasing power to his family twice a month. The cost to bank wire this amount is $10 USD or more and costs him a large percentage of his minimal remittance amount. It is difficult to save up and send larger sums on a less frequent basis because banking is unreliable at best in country X and large amounts of cash are not safe to store with his elderly parents, wife and children who are living alone. An exchange through two hawaladars will efficiently facilitate such a transaction on a regular basis at a much lower cost.
The second situation is that of the transactional broker. For example, I want to buy options on a certain stock but I do not have enough money in my trading account to meet the margin or liquidity requirements. My good friend is planning on purchasing options on the same stock so I give him some money and he buys a few extra options which he will pay me for when I want to cash out. My friend has acted like a hawaladar for the exchange.
A third situation is that of the repatriation or expatriation of wealth. Real estate is a good example because, regardless of legal restrictions, you cannot take real estate away from or add it to a country, with the exception of Iraq, California which is going to fall into the ocean and Dubai whose palm tree shaped coastline is not a natural phenomenon. If you own real estate in country A but live in country B you cannot simply tuck it into your pocket like a gold coin and repatriate that wealth. You will need to find a buyer of that property to convert the wealth into mobile wealth that can be taken out of country A and brought into country B. Once the wealth is more liquid then it can be transferred to someone acting like a hawaladar for the transaction.
HOW ACCOUNTS ARE SETTLED
The main characteristic of a hawala transaction is that they are informal exchanges made relying on the trust of the parties and generally outside of a structured banking system. In each of these scenarios there must be some settlement made for the transactions. The remitting and receiving hawaladars will maintain a tally of the total amount owed between them and settle their account at a later date. Almost all hawaladars destroy the records of the individual transactions once they are completed. They can then wire the money all at once, or they may simply offset the balance against another account between the two.
What if the debtor on the tally sheet does not have cash to pay the debt? Because this is a private transaction, they may settle the debt using any value they wish. The hawaladars remitting and receiving money might both have sufficient wealth in both countries and will be able to settle their debts with each other through the intra-national exchange of the amount in cash. In addition they might choose not to settle in cash. The hawaladar in poor country X may accept payment in chickens or vampire squids rather than in cash. The friend who bought the option for you might settle what he owes by buying gold for you or a nice steak dinner. The real estate purchaser may not have the cash for the property but gives you his sailboat which is at a slip near your home.
HOW DO I FIND A HAWALADAR?
These situations and a combination of them are representative of most hawala transactions. Now remains the biggest question that I recieve about hawala banking: how do I find a hawaladar?
For a person who is not already part of the culture where hawala banking takes place, finding hawala services is not easy but here are a few suggestions.
BECOME A PART OF THE RIGHT COMMUNITY
The main use of hawala is to remit money to the home country of an immigrant worker. Thus you can find where these people are, befriend them and ask to be connected to a hawaladar.
Remember that hawala is the formal name given to an informal system so they might not even know what the word hawala means. Simply look for someone offering the kinds of services you want. Some good communities to look for would be people from Mexico, which receives more money in remittances from the United States than any other country. Middle Eastern countries, East African countries, and South and South Central Asian countries have a long history of hawala practices.
I have had rather good discussions with one person in particular about the cultural barriers to interacting with these kinds of communities. If direct interaction is out of the question, you may need to hire a private courier or messenger to be the intermediary for your search for a hawaladar. My new friend came up with a great idea of hiring a bellhop or a taxi driver because they can move easily in and out of the complex social structures. Another suggestion for those living in a foreign country would be to find a westerner who has a local spouse. The local spouse will likely have more access to these kinds of communities than westerners.
SEARCH ADVERTISEMENTS
Sometimes hawaladars will advertise their services in the local ethnic newspaper. Of course if you do not speak the language of the paper, you may want to hire a translator. A website like Craigslist or other discussion forums might even list some of these kinds of services. It is probably a good idea to look for the exact services you want rather than the word hawala or hawaladar.
UTILIZE YOUR NETWORK
Ask people you know. Given the financial incentives that may come with the transaction, many people are willing to use their network of friends to engage in these kinds of transactions, especially if it is to help another friend or family member. I have used this method numerous times for all kinds of transactions. A good person to ask might be a friend with a liquid cash position such as a pawn shop owner or a rich uncle.
CONCLUSION
There are significant benefits to hawala banking in many kinds of transactions. Although for many westerners finding hawala services from hawladars on demand may be difficult, the need may become more acute because of the exacerbation of current currency controls and it is likely that these kinds of hawala services will become much more commonplace. In the meantime, it is good to be prepared and have access to those services.
By Eldon Mast, on November 18th, 2009
On Monday UPS announced that its projections show it will handle more parcel deliveries this holiday season than it did last year.
UPS will deliver about 400 million packages worldwide between Thanksgiving and Christmas.
Further UPS announced that it will hire 50,000 temporary workers to handle the greater volume.
Last week FedEx also reported that it anticipates shipping more this year.
FedEx said it will hire 14,000 additional part-time and temporary holiday workers.
Both UPS and FedEx are considered indicators of U.S. economic activity because their business booms and cools with the broader economy.
Post recession, labor markets usually improve first by showing a significant pickup in temporary labor, followed shortly thereafter by a return to full-time job growth.
This time is no different.
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By Winton Bates, on November 17th, 2009
Prosperity. However, my initial reaction when I first looked at the index was that it was more like an index of the quality of life or well-being than of prosperity. My perception of prosperity was too narrow. One of the purposes of the index is apparently to encourage people ‘to take a holistic view of prosperity’. The authors might have a point. Dictionary definitions of prosperity don’t focus solely on economics – they suggest that prosperous is synonymous with flourishing, successful and thriving.
The index has nine components or sub-indexes:
• Economic fundamentals
• Entrepreneurship and innovation
• Democratic institutions
• Education
• Health
• Safety and security
• Governance
• Personal freedom
• Social capital.
Is this a comprehensive list of factors affecting human flourishing? One apparent omission is environmental quality. Although this is considered to some degree in the indicators used for health, I get the impression that the authors’ view of prosperity does not place much value on the enjoyment that people obtain from the natural environment. I wonder whether that view is backed up by research findings.
The main problem I have with this report is that I am not sure how much substance lies behind it. The presentation is incredibly smooth, mainly because it is completely uninterrupted by references to research papers or data sources. The preface suggests that information on data sources is available on the prosperity web site. All I could find on that site, however, apart from the acknowledgement of input from research consultancy, Oxford Analytica, is a statement that the index draws on the Gallup World Poll and other data and includes only factors for which a statistical link with material wealth or life satisfaction can be shown.
The Legatum Institute claims to be a think tank. It seems to me that no organisation claiming to be a think tank should publish research findings without making sure that the underlying research is open to public scrutiny.
However, leaving aside my doubts, this report is worth looking at just to view the chart showing that countries with high prosperity tend to have high performance on all sub-indexes and those with low prosperity have low performance on nearly all sub-indexes.
By Eldon Mast, on November 17th, 2009
Rapidly growing neighbors as well as government stimulus programs helped Japan return to growth much more quickly than any had expected. Japan’s Q3 growth surged sharply at a 4.8% annualized clip. It was Japan’s second consecutive quarter of growth — accelerating from the 2.7% annualized rate of Q2.
The good news for Japan early Monday comes on the heals of solid growth reports from the U.S. and Europe where GDPs have also started expanding again. Japan’s report adds additional creditably to the notion suggesting a broad global recovery is solidly under way.
The news will likely add fresh rally fuel to Wall Street as Y/Y stock market gains continue to shine.
By Russ Nelson, on November 17th, 2009
Folks, I have bad news for you. The Barack Obama Health Care Reform (shepherded through by Nancy Pelosi) will be, as written, an utter and unmitigated disaster. It attempts to do two things which are, in combination, impossible. First, it makes health insurance much more widely available through the mind-boggling deal it made with the insurance companies. To wit: the health insurance companies agree to insure everyone, and the federal government forces everyone to buy health insurance. While that’s a huge give-away to health insurance companies of your personal tax dollars, that’s not impossible.
No, the impossibility comes when you combine that with: Second, Barack is going to pay for this new plan by reducing costs. There’s two problems with this idea. A) if costs could be reduced, insurance companies would have already done it, and pocketed the money. B) when you pay less for something, you get less of it. This is one of the iron laws of economics, which is just as inviolable as the laws of thermodynamics, or the laws of mutual attraction (things fall at 32ft/sec/sec absent wind resistance).
So Obamacare will attempt to 1) increase the amount of medical care needed because you have all these newly insured people, AND 2) decrease the amount of medical care available by paying less for it.
No, really.
Stop laughing.
This is our PRESIDENT, and he deserves the same respect due to any other politician who is ignorant of economics yet tries to regulate markets: zero.
There can be only two results: either we’ll have less medical care (think you’re having a hard time finding a doctor now??), or we’ll pay a lot more for it (think your doctor’s visits are expensive now??).
But there is a different way: free market health care. Reduce every possible barrier to health care. First, stop protecting the doctor’s union. Let anybody practice medicine, but give the doctor’s union a super-trademark on the term “physician”, just like the 4-H shamrock and Olympic rings are protected. If you want a graduate of a medical school, you can have one; just go looking for a physician. Second, stop treating us like children, and let anybody buy any medicine they want. Abolish the FDA. Pharmacies will compete to provide the safest and most effective medicines. Abolish the patent system. Drugs are only expensive to develop because of the FDA and don’t need patent protection. Testing can be provided by pharmacies. Stop expecting doctors to be medical deities. Greatly reduce the available torts to only those things that doctors have control over, like leaving sponges inside patients after surgery. I’m sure there is more government hampering that I’m just not thinking of right now. Oh, yes, stop the war on (some) drugs. Abolish the ONDCP.
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