Sunday, October 28, 2012

Health Insurance, Who is really “Jerking Us Around?”

If you look at an insurance company, it’s a group of people insuring against a certain risk. It could be your home, your car, your life or your health to cite a few. For these insurance companies, it is quite easy to gage the amount of risk involved and charge accordingly. The insurance company is willing to insure to a limited dollar amount, while the the insured and Congress are expecting unlimited coverage.

When the government steps in to fill the void at age 65, it may seem like the right thing to do, but you have to ask only one question, what does government bring to the table to make it affordable to offer it to everyone? Deep pockets are the answer (AKA the National Debt checkbook).

The real issue isn’t that apparent. Once you limit what health insurance companies can and cannot do, and you limit their profit margins, you eliminate their ability to survive. Obama might accuse the insurance companies of “Jerking people around,” but it is the President who is jerking private for-profit-businesses around. The net result, the private health insurance industry will fade out of existence. Profits are the driving engine of competition. Private health insurance cannot compete with Obamacare; the government doesn’t have to make a profit to survive.

People that never even gave a thought to health insurance, (those from the age of 18 to 45) would suddenly find themselves in a situation where health insurance is now mandatory. The question they may ask is; “Why am I forced to pay for something I don’t feel I need?”

What makes Obamacare so insidious is the fact that they are dictating what sort of profit margins are acceptable for insurance companies to have. Bill Gates at Microsoft probably has a profit margin of about 85 percent. Pill factories probably have a 400 percent profit margin. Blue Cross was having problems justifying a 5% profit margin during a recent Congressional investigation.

Forcing insurance companies to insure people with previous conditions is a death sentence. Rates are determined by the number insured without problems. The government is now saying that preexisting conditions have to be insured. This changes the risk for the underwriters and negates all actuary tables that have been used previously. The new risk cannot be calculated, when people can sign up with preexisting conditions.

What happens in this case? The health insurance investors realize that there is no profit in writing coverage and move their funds elsewhere for a better return.

The end result, the insurance industry will continue to write home, auto and life and let you go to the government for your health care insurance. Think about it for one moment, is anybody accusing the life insurance industry or the auto or home insurance industry of “jerking anyone around?” You aren't being forced to take the government insurance as long as you can find a private provider.

So what happens when the health insurance industry drops dead? The government will add it your paycheck deductions and they can adjust your rates for this new “health insurance,” without having to ask Congress. It won’t count as a tax; it’s your health insurance. You might think I am kidding, but it will be about $6,000 to $12,000 a year (Your employer pays half, guffaw, guffaw).

Obama claims that health insurers are "Jerking us around." Let’s rephrase it, health insurers are pointing out the real costs of health insurance, and we have to make decisions on how much of it, we can afford. Life will end for all of us, and for a politician to suggest that government health care insurance will solve our problems is wishful thinking. That is the person “jerking you around.” He wants your vote and that new health care revenue stream. There is no free ride. Of course if you have nothing, the "free ride" is better than nothing.

Obamacare could be the biggest tax increase to ever face our Republic. It is the death knell for private health insurance. I'd rather they force everyone to get car insurance instead. This government is going to harness the working young to pay all of our debts. After you get your first job, here is what the "Company Store" wants from your paycheck: State and Federal taxes, Social Security, Student loan payments and the new one, health insurance. I remember when I was young; I had a hard time trying to afford girls and car insurance. So what Obamacare really boils down to is a tax on being young and dumb.

As a concept, I have no objections to Obamacare. But if you understand how Congress works, this new found money will be spent on anything but health care and will destroy the private health insurance industry by dictating their rates. Show me one thing that the government can do better than private industry for less money. One thing is certain; we are being jerked around, by a bunch of politicians in Congress promising "Surf and Turf" and delivering "biscuits and gravy."

The irony of history (tongue in cheek) it took a Republican to free the slaves, and a Democrat to put the chains back on.

Copyright 2012 by Jim Brubaker

Thursday, October 18, 2012

QE3 Makes Gold An Attractive Investment.

Ever wonder why a country buys gold? If you’re a deadbeat country, you might need it for international trade. Of course, if you are printing money like crazy, buy gold now at x dollars and sell it a few years down the pike at 3x dollars. As a Government, you know what you’re doing even if the rest of the world doesn’t. Of course if you’re a country running a tight ship, buying gold could be a way of tightening up the money supply. Not too many countries are in that boat.

Normally holding physical gold for the average investor, was a losing proposition because, gold pays no interest. Well, with 8% inflation and 1% interest rates, gold is a better deal than a printed dollar. Plus if interest rates stay low like this, you’re at least making the difference between the current inflation rate and interest rates.

There is one problem, if everyone starts reaching for gold, the price will climb. The problem is the government needs to stop that from happening. They will again have to outlaw gold possession.

When I was in college in the 1960’s a ten dollar bill bought two full tanks of gas and you had a couple of dollars left over. Today a hundred dollar bill will buy two tanks of gas—maybe. The peculiar thing this time around, is that the hundred dollar bill is our biggest bill in circulation.

To the young people just entering the work force, today’s prices are the only ones they have ever seen. Everything appears normal to them. However if you had put 10 hard dollars earned in 1965 into a savings account, you don’t have the same buying power today that that ten dollars had 60 years ago. Of course the price of gold was 35 dollars in 1964.

With interest rate at 1%, bonds use to be the retirement vehicle for most retirees. Why even bother with them? Convert your savings to gold or put your dollars in a safety deposit box and apply for Supplemental Social Security (if you have no funds in the bank, you qualify).

As long as our government wants to spend a trillion dollars more than they take in in taxes, your savings are being taxed by inflation. Gold and silver have maintained their value over the ages. They are a store of value that pays no interest. If Bernanke thinks that keeping interest rates low is good for the economy, let’s all buy gold and silver. Let him covet his paper dollars, while we laugh at him.

They’ll have to start printing Thousand dollar bills pretty soon,--but doesn’t that pretty much give away what is actually going on? Of course not! If you have been poor all your life and now have a $1,000 dollar bill in your hand, you have made it! You are rich! You’ll earn 5 times more than what your dad did and you’ll be proud. Even though your pay raise each year is just the cost of inflation, it is a pay raise, as far as the average worker is concerned.

Then we have Ben Bernanke saying he will buy all housing paper (40 billion a month) (because the banks aren’t dumb enough to buy it) for two years, kind of blows me away. These people in office are going to save us, but I kind of wonder what they are trying to save us from?

I just wish I had bought gold at $35!

Copyright 2012 by Jim Brubaker

Sunday, October 07, 2012

Four More Years of This?

Listened to the Presidential debate the other night and did a ho hum. I went to the gas pump the next day and said what the hell—FIVE DOLLAR gas????

Then I started to review the last 4 years from my perspective. The price of gas has more than doubled. My wages have been frozen for the last three years and they are still laying off people at Camp Pendleton. The price of steak and hamburger has doubled. Can goods on the shelf, are smaller 14 oz vs. 16 oz. Laundry soap is now $8 dollars a box, shampoo is $8 a bottle. The price of coffee is out of sight, and they are messing with the container size. We used to get $10,000 in interest on our saving and I think we’ll get about $700 this year (great interest rates).

Then if you want to add up cable, phone, heat, lights, water and sewage, they are all up 30 percent. Our water and sewer bill is 100 dollars a month. We buy drinking water for about another $40 a month only because the tap water isn’t fit to drink.

The Democrats want to make sure everyone has health insurance because many people can’t afford it. This phrase comes to mind; “In order for government to give money to someone who has none, they have to take it from someone who has some.” The food stamp program is another great vote getter, and remember if you want more food stamps, think carefully before you vote. With food stamps, you get the option to keep the cell phone and cable TV.

When we take our evening walk now, my wife and I marvel over the number of cars parked in front of each house. We are talking three car garages with 3 cars in the driveway and 3 on the roadside for many homes (the garages are now used for storage). Four years ago the street sweeper might have had to dodge one or two cars on our street. Now, people kill for a parking spot at night. Listen to the pundits and you hear that real estate is coming back and I don’t see it. The kids are coming back for sure, to live with mom and dad. Our next door neighbor rents out two rooms of his 4 bedroom home. The lack of privacy would drive me insane.

My Sister and her husband in Colorado gave up looking for jobs and both retired at age 62. Kind of makes you wonder about the unemployment stats they just published. There must be an election coming up. They both voted for Obama last time, and I don’t want to raise my blood pressure by asking them who they are going to vote for this year.

Bernanke using his car salesman rhetoric is trying to keep us “from having a double dip recession.” We never got out of the first one (if you ask me), so if you buy his line, things must be getting better. However, this recession is now labeled the “Greatest Recession since the Great Depression.”

Ben is printing too many dollars, and he will print more. It looks like this will stop when these wantobe million dollar homes out here are finally worth a million dollars. When that happens, bread should be $10 a loaf. Of course if you are in a retirement home, a million dollars might only last a year. Kind of a cruel joke for someone who saved all of their life. But if you spent every dime you had, you’re going to fit right in, to this new economy.

30 days until the election. Four more years of what we just had, kind of sucks. The difference I see, is that Romney will pragmatically work with Democrats. Obama left the Republicans out of the legislative process when he passed Obamacare with an “I don’t need you“ attitude. He burned a bridge that has “payback” written all over it.

During his term in office, Obama has vacationed the world, been on TV every day lecturing us like children, and been campaigning incessantly for re election. His executive powers to enforce the laws have entered the realm of legislative powers when he chooses which laws to enforce. If you are leaning on a shovel, talking to me, you aren't working as far as I'm concerned. A new face with different ideas could be the fresh start this country needs.

Copyright 2012 by Jim Brubaker