Michael Kevane

Wow, you mean they give $1000 to poor people in Kenya and it really, really helps them!  Amazing!  All that time I was donating to dumb NGOs who didn’t do anything; I mean, they didn’t even evaluate rigorously what they were doing… I bet they weren’t doing anything. Just sitting on their asses.  Probably a bunch of dumb lazy liberals running those organizations, I bet.  Ripping us off.  Cripes, I feel had.  I definitely am only going to give to GiveDirectly from now on. Plus, my dollar will go further because Zuckie and the Gatester really like them. Together, we can eliminate poverty forever.  Yup, that’s my generation’s big challenge.  You old people had your challenges… but you didn’t really work very hard. I mean, maybe you worked hard. But not smart like us!  We figured out it was better to just give the money away.  And best thing is you don’t even have to take it by force from the rich people … they are happy to give it away, because all rich people now are smart like us. How do you think they got rich!?  They’re smart!  Took you long enough to figure it out Einstein.  They even got rich precisely so they could give it away. How cool is that.

What’s that? Little libraries in villages for kids to read.  Wait… you want me to donate so you can pay some village librarian to open the library?  Yeah right, I’m not a sucker.  How do I know the library is even open?  They’ll just take the money and waste it.  Bet they don’t even help their own village.  I’m not getting ripped off again.  Anyway, people in villages don’t even want to read.  Better to just give my money to randomly selected people in Kenya.  They proved that could work.

Nice article on inflation and monetary policy.  Sometimes incoherent, in that occasionally mistakes private benefit for public gains… (but rarely mistakes private losses for public losses)…

The Fed, in a break from its historic focus on suppressing inflation, has tried since the financial crisis to keep prices rising about 2 percent a year. Some Fed officials cite the slower pace of inflation as a reason, alongside reducing unemployment, to continue the central bank’s stimulus campaign.  Critics, including Professor Rogoff, say the Fed is being much too meek. He says that inflation should be pushed as high as 6 percent a year for a few years, a rate not seen since the early 1980s…. All this talk has prompted dismay among economists who see little benefit in inflation, and who warn that the Fed could lose control of prices as the economy recovers. As inflation accelerates, economists agree that any benefits can be quickly outstripped by the disruptive consequences of people rushing to spend money as soon as possible. Rising inflation also punishes people living on fixed incomes, and it discourages lending and long-term investments, imposing an enduring restraint on economic growth even if the inflation subsides.. Low inflation is not good for the economy because very low inflation increases the risks of deflation, which can cause an economy to stagnate,” the Fed’s chairman, Ben S. Bernanke, a student of Japan’s deflation, said in July. “The evidence is that falling and low inflation can be very bad for an economy.”  There is evidence that low inflation is hurting the American economy.

via In Fed and Out, Many Now Think Inflation Helps – NYTimes.com.

If 3 million people signed up to Kaiser, who otherwise didn’t have insurance, we’d be a better country with happier people (having insurance and a doctor available is very reassuring… and not having your neighborhood host fundraisers for insurance-less musicians who have cancer is also a good thing)… of course, there might be lower profits for all those businesses that currently cater to that category of people, those without insurance.  I’m OK with that.

Our great Kaiser Permanente plans are available through Marketplaces. In fact, if you or friends qualify for financial help, you will need to buy coverage through your Marketplace. Kaiser Permanente members outside of Washington, D.C. who purchase individual plans can still buy from Kaiser Permanente directly. In D.C., all individual and small group plans must be purchased through the Marketplace. Call 1-800-245-3181 toll free and we can help you figure out which Kaiser Permanente plan may work best for you before you go to the Marketplace. This way your Kaiser Permanente selection can be made more quickly.

via Kaiser Permanente Partners In Health – You ask about health care reform, we answer.

But those challenges aren’t insurmountable. The ranks of women in the presidency — as well as top administrators, including many in business positions — continue to grow. Women now lead half of the Ivy League, including universities that didn’t admit women as students until the 1970s. In contrast, no Catholic college that began as a men’s institution has a woman as president.

via Catholic colleges worry as number of female presidents falls | Inside Higher Ed.

Well, don’t believe their baloney. I just went to Cover California, and in about 30 seconds I could see health insurance plans available for me.*  The premium plans for family of four costs about $1800 per month.  Expensive, but actually this is less than what my employer and I together currently pay.  So, the only conclusion I can draw as an economist: excellent that now anyone, no matter whether they have an employer, are self-employed, have a pre-existing condition… they can get very similar coverage to what I have.  They just have to earn enough to buy it.  And that’s what we want, right?  Your identity no longer matters, just your purchasing power.  So for people who don’t earn enough, as a society we can make the decision whether to subsidize them enough for the bronze plan…

I wonder if the Republicans will turn populist, and eliminate the union working class, professional class (me!) and middle-class tax-subsidy (where health insurance is pre-tax through employer) and use the proceeds to pay down the deficit and subsidize the bottom 40% of the population.  Woah, what rabbit hole did I go down there for a second.

*And you know what… think about it for a second.  Emusic regularly fails when I try to download a song for $.49.  Even the mighty itunes often fails.  Amazon… are you kidding… you can go in circles there.  And one of the main arguments against the healthcare exchanges is that insurers will collude… well guess where some of the examples of that collusion come from? amazon.com!  Have you ever really tracked your frequent flyer miles?  Impossible on those “professional” websites.  I just spend 20 minutes trying to figure out why an ipad app just wouldn’t work.  All I’m saying: for-profit corporations have websites that have problems pretty regularly.

I’m teaching using Mankiw’s Macroeconomics 8th edition and on page 138, Chapter 6, he uses an example to illustrate and develop intuition of what is always a problem for students, that capital flows have to equal current account (NX = S – I).  The trouble is, in his example Mankiw writes as if an exporter who obtains currency represents one capital outflow and then when she trades yen currency for yen stocks or bonds is another capital outflow.  But that is just transforming the financial asset… the outflow happened already with the obtaining of currency.  Students might be terribly confused.

At present, according to news reports, the only sticking point is what to do about the medical devices tax (2.3%) which is estimated to raise about $3 b a year, how long the deal should be for (Jan? Feb?), and whether 600 people in Congress/Executive should get employer match (OK that is just grandstanding, because Darrel Issa said he would match everyone out of his personal fortune, natch.)  So, the whole negotiation is over $3b a year.

Since government shutdown is paying workers anyway, the value of services lost over two weeks probably exceeds 10 years of the medical devices tax.  So this is all pure loss, with nothing except political posturing at stake.  Let me say that again: neither side actually gets anything really valuable (in terms of a policy change) for all the drama of these negotiations.  I could see negotiating to the brink over a $400 billion reduction in defense spending, or a major revision of Affordable Care Act… but $3 b a year?  Really?

Will be interesting to see how share prices of medical device makers move when final deal announced.

From Reorg Research.

As a heavily levered U.S. Territory, Puerto Rico has nearly $70 billion worth of debt to which numerous U.S. and foreign financial institutions have heavy exposure. Tangentially connected banks and companies too have suffered from the current economic turmoil pervading the territory, as the territory’s municipal debt has been downgraded to near-junk and has been in a continuous spiral throughout the year. The duress has driven up the cost of debt and stoked concerns about Puerto Rico’s future access to capital markets – factors that have caught the attention of an increasing number of distressed investors and funds.

Given that the municipalities of a U.S. territory cannot file for chapter 9 protection – the specifics of which Reorg Research outlined earlier – the type of workout or restructuring for the region is uncertain if it reaches the point at which it simply cannot meet its obligations.

Puerto Rico Governor Garcia Padilla, who took office in January, has been taking urgent measures to put off what many market participants see as an impending crisis: In a presentation regarding the 2014 budget, the Puerto Rican government has suggested several initiatives in an attempt to balance the budget over the next two years, which mentioned the recent measures of overhauling the territory’s pension system, raising utility rates, and passing new tax measures.

Currently, 34% of Puerto Rico’s public debt pertains to the general fund and the remainder with public corporations, sales tax debt and municipalities. Separate from outstanding debt, the country also has a significant amount of underfunded pension liabilities. As of September, the public pension fund liabilities amounted to approximately $33 billion with only $4 billion of assets to cover such obligations.

Puerto Rico’s securities meanwhile have failed to keep pace with the broader U.S. muni market. For one, Puerto Rico’s $632 million in 5% general obligation bonds due 2041 traded at 61.83 today the $459.3 million 5.5% notes due in 2039 last traded at 68.5, according to trade data, down from the 90s and par, respectively, as late as June.

See more Breakdown of Puerto Rico Cap Structure on Reorg Research