Ban Ki-moon on Haiti...

Here is a good article in the Washington Post from Ban Ki-moon U.N. Secretary General about rebuilding Haiti.

This is just where every hope lies.

In partnership with the international community, Haiti's leaders are committing to a new social contract with their people. That means fully democratic government, grounded in sound economic and social policies that address extreme poverty and deep-rooted disparities of wealth. It also means fair and free elections, conducted with U.N. help, preferably by the end of this year.

This social contract must empower women -- as heads of households providing for their families, as entrepreneurs developing businesses, as advocates for the vulnerable, with full rights as decision makers in evolving democratic institutions and civic action organizations. It must offer new opportunities for economic advancement -- above all, jobs. The U.N. cash-for-work program should be a model. At the end of the day, only Haitians can build Haiti back better.

Two Cheers, One Jeer for ObamaCare!

There was a single frame political cartoon I saw in one of the dailies, just after The United States Government passed The Patient Protection and Affordable Care Act, 2010. It showed a caricature of House Speaker Nancy Pelosi in a doctor's uniform holding a newborn baby in a towel, with the word "Health Care Bill" written on it, standing next to a donkey dressed in nurse's outfit, looking over at the patients waiting bench with a human skeleton adorned in a workman’s outfit, with the donkey saying; “next patient”.

The economic giant that is The United States of America, was put to a standstill due to the issue of Health Care reform. The cartoon displayed this most humorously. The economic growth persons in the economic forecasting and analysis field were expecting by the end of 2009 was less than modest. In fact, it was spotty- at best- with no clear sign of anything to be thankful for other than to be one of the few people still left alive, if only half dead.

Hopefully, the recent U.S. health care bill, at its fruitful best, can prove as a model for other countries wishing to introduce a form of universal health care, or be basis on what to reform or what not to reform with an existing universal health care package- it's best we can gain from this process, for having to wait for economic deliverance from The USA.

The only country in The Caribbean that has a universal health care system is Trinidad and Tobago. This is on the basis that every person is afforded health care within the public system, even though the system has a private option.

Trinidad’s universal health care system isn't an insurance centric model, but rather one on the provision and availability of care, along with a prescription drug plan for chronic illness.

The Health Care bill just passed in The United States, was, primarily, centred on providing insurance options and insurance regulations for the benefit and protection of consumers. The biggest achievement to date was the fact that the bill actually passed, with moderate taxes to be levied along with additional reforms- such as the elimination of insurance discrimination on persons with pre-existing conditions.

This aspect makes the bill a little odd on one end, due to the extent that it actually mandates persons to purchase health insurance by making it illegal to not have any insurance, pre-existing condition or not. This, in effect, increases the amount of payments to insurance companies. While on the other end, it sets caps on premiums for certain circumstances.

Whether or not these premium caps cancel out the increased payments through the increase of persons paying into the insurance system (creating losses at the firm level), is something the insurance agencies must track and assess for themselves based on their new competitive environment.

The bill also provides for the expansion in government subsidies to persons earning between 30K and 45K a year, of up to 75% of the premium. However, the cuts in Medicare -the government sponsored senior citizen health care option- via the elimination in the Medicare Improvement Fund, would, more than likely, go towards only half of the subsidy coverage I dare estimate- taking into consideration the expected amount of increased persons into the system (over 30 million), additionally coupled with the wide range of persons that are un-insured currently who fall under the 45K per year income bracket.

Through all of this, the second biggest achievement is that the bill synergises subsidy payments for persons, to then be paid into the private insurance market (no public option), along with excise taxes on the insurance companies with higher premiums, for that to be paid back to the government (no clear mandate on if these payments are earmarked to go back into the system). While this "evens out" the market providers, it also does not crowd out private insurers with a government option- while at the same time providing coverage to persons who may not have been able to afford the premium, along with not widening the deficit and increasing the public debt to fund universal coverage.

While acknowledging that prime synergy- which I felt quieted the private insurers- the bill defeats itself on the core matter of taxes to be levied on medical devices, which in effect makes new technology for medical practices more costly and effectively raises the price for medical services. This should raise concerns over the quality of care to individuals.

Additionally, the bill does not provide for a targeted expansion of the amount medical service providers, in a way that would ease the burden of the increased amount of persons that will be seeking medical aid under the scheme.

Facilitating an increase in quality services seems like a "no-brainer". The fact that the health care systems in Canada and The United Kingdom, are strained because their universal health care system is undermanned and facilities under invested- even when factoring in the huge tax burden in both countries, which sets aside funding for health care and to which the US is implementing excise taxes on items such as medical devices.

While it could have been equally as bad to have within the next 5 years an increase in service providers- as pointed out earlier that the bill does not provide for- coupled with the excise taxes on medical devices, causing an effect of cutting into the market share of the existing service providers and squeezing their margins and consequentially pushing their prices up, it is clear that this bill doesn't factor in provisions for adequate and timely ran facilities and services for the expected increase in patients.

While we have to praise the political and subsequent insurance achievements of ObamaCare, the possibilities of inadequacies in future health care quality needs certain attention.

Initiatives I would have ideally fought for are 1. Subsidizing and expanding “mandatory” employee insurance and full medical coverage, to and for all persons who worked over three years for the rest of their life along with their children, but only up to a certain age (with tax and subsidy mixes for special brackets); 2. Mandatory government provisions for persons with disabilities along with their children up to a certain age; 3. Zero tariffs on certain prescription drugs; 4. Increased scholarship and training within the health care field; and 5. Tax reform and increased income and excise taxes in certain sectors- but not on medical care providers or devices for the funding of this programme.

The start of KempCare...some shudder to think!

I guess some people still think its pretty bad...

FT article from Robert Reich.

My guess is that now, America, can focus on its economy and not health care...its over, for now.

The debate has to shift to the economy now, after the Obama presidency and the congress, held America hostage with the health care debate.

What will be the way forward? As Reich suggests, it has to be with credit to small businesses.

Blaming banks for not lending, is not a good solution. We have to find a secure way. Government crowding out private banks, is not a good solution either- you risk diluting the private entrepreneurship spirit, as well as closing the market on smaller banks. Also, you run the risk of lowering services, especially to the small businesses you wish to help.

A simple idea is for government to simply keep on supporting private banks. And, to be honest, wait it out....sad, but true!

The changes and changes that remain constant!

We are at a stalemate. Nothing is being done, faster than ever. Especially in the USA, President Obama is quickly getting much done about nothing.

I guess this is the black man's curse- trying to accomplish things that don't get done. Health Care, War in Iraq and Afghanistan and all and sundry- least of which is the economy.

Where will we go? Sadly, Europe is just as bad. In fact, they are at a stalemate with everything.

Financial regulation in Europe is a non-starter, regardless of Sarkozy's demand for swift reform. And, countries like Greece, Italy and Spain, become worse.

I guess this is the price you pay for democracy.

No new news, is bad news!

The Caribbean needs a strategy for fighting inflation!

Trinidad and Jamaica have been plagued by the persistent scourge of high inflation and, subsequently, the high price of goods and sevices.

Less pronounced is the creeping inflation in The Bahamas- this is the steady and consistent rise in prices between 1 and 6 percent, to which there hasn’t been a deflationary session, to bring prices back under the point from where they began their incline.

Inflation matters, for all the right reasons. Governments through macroeconomic policy and central banks through prudentially active monetary policy should continually be cognizant of inflation. In fact, one should not just monitor inflation- you should fight it.

Inflation has two direct causes- demand pull and cost push. The former is caused as a result of increased demand, with shrinking, or, weak supply- law of supply and demand, lower supply raises the price and vice versa, in "most" cases. The latter, is as a result of the rise in cost of the factors that produce goods and services- for example, the rise in the price of crude oil, due to the machine parts that are used to drill crude, or, the rise in education costs, which affects the price of service related jobs.

Let's examine the price levels in the three countries mentioned- Jamaica, Trinidad and The Bahamas. Here is the IMF's statistics on average and average end of period consumer prices between 2003 and 2011- projected from 2009 and beyond:


Jamaica- the country with the highest inflation- has a considerable challenge with managing inflation and currency value, even before the inflationary spike between 2007 and 2008.

Throughout the 80's and 90's, the Jamaican Central Bank has been, unfairly, commented on as being a printing press, rather than a place were monetary policy complements economic growth through the stabilizing prices. But instead, the trade off has been towards creating employment and financing public sector projects.

Even more so, higher wage demands have been a consequence along with the need for higher salaried job creation in the public sector- which is part of the failing of macroeconomic policy on one side, coupled with a lack of assertiveness of monetary policy makers, on the other.

Trinidad has been on a high inflationary course, since their oil boom. Trinidad has also been reluctant in revaluing the Trinidadian dollar. This is as a result of the need for the Trinidadian government to assist with expanding their export potential in oil and other light manufacturing.

This causes higher than needed inflation in Trinidad, by having, on the one hand, a need for increasing money supply to fund employment and higher, nominal wage levels. On the other hand, Trinidad’s need to keep export industry prices low, in order to maintain production and keep relative prices for export competing goods, competitive, also influences policy decisions.

The Bahamas in slight contrast, as with the case for Jamaica, Trinidad and most other Caribbean countries, has an ongoing problem with positively sustaining the effects of external supply shocks.

Take for example the impact that oil has on the global market. The current price makers for crude oil are all denominated in US dollars- which can be described loosely as the “petrodollar”. The two major oil bourses are the New York Mercantile Exchange (NYMEX) in New York City and the IntercontinentalExchange (ICE) in London & Atlanta, which are housed between the USA and the U.K.

This means that as the US cuts interest rates, oil is affected in a substantial way: an increase in US dollars in the market to trade, will increase oil speculation. In addition, the TARP programme administered by the American government to support financial institutions, both commercial and investment, have sustained both short term lending and trading activity and added fuel to the fire- so to speak.

These financial firms ran away from mortgage related lending and trading, and instead found havens in the oil and metals markets and, that speculation, elevated price levels artificially as the activity, was as a response to investor/institution appetite to sustain returns, even during the current economic crisis.

In fact, the huge spike in crude oil prices at the end of 2007 through 2008 can be directly correlated to the lowering of the rates on the US dollar, coupled with the investment in large financials in the US through TARP.

When we examine both the fluctuations of interest rate reductions and crude oil price levels, we see a strong correlation and a co-movement of both variables and further relationships with three variables, when we factor in the weighted roll out of the TARP funding schema as an additional variable.

In light of this, I feel that it is clear that the region needs a committed and coordinated plan to contain and fight inflation. The cost to businesses and households, demands that a comprehensive strategy be put in place to mitigate some of the more harmful effects of external supply shocks on regional inflationary pressure.

One thing can be too simultaneously revalue currencies up by 10% of the band, especially in the case for Trinidad and The Bahamas, while, perhaps, cutting the rates by25 bps at the very least. This would strengthen purchasing power, while at the same time increasing the money supply in order for it to compete for goods, relatively, with other regions.

The only issues would be with regard to fixed exchange rate ineffectiveness, in addition to causing a run on foreign reserves. However, it would ease domestic inflation by creating money supply and spurring activity while strengthening purchasing power, during this still yet current crisis.

To go even further, tariffs on consumer goods should be relaxed in order to allow for businesses to take advantage of import competing goods at a relative cheaper rate. In addition, this will attract currency traders by creating speculation and spurring demand for the dollar as well as attract foreign direct investment, by increasing the capacity to develop without high inflationary costs -if conventional wisdom on currency revaluation dictates otherwise.

A longer term external supply shock plan must be put into the regional discussion as a way to combat inflation uncertainty in the long term. A plan that involves increasing capacity in food security, oil reserve maintenance and coordinated Central Bank policy that entails- where appropriate- a pegged exchange rate version of inflation targeting, foreign reserve and petrodollar risk sharing and management in addition to maintaining upward stability when US interest rates rise.

Did you set your clocks forward?

Daylight savings time was today...set your clocks one hour forward. Forgot all about it. Does not make much sense to me, but I guess it serves a purpose.

Nice article..

Robert J. Samuelson, posted a good article on the Washington Post's website....
Here.

Its about the Millennials and how the baby boomer generation, in particular, has up not only their opportunities, but the opportunities for Generation X and even for the baby boomer generation themselves.

There is no way, on holy ground, could they expect to get the type of social benefits throughout the rest of their twilight. If they secure it for themselves before the make a true exit, it would be probably worked out to less than what they put aside for themselves.

That's not being cruel, but it is, well, being economically efficient- you can't subsidize, or support something that is putting in no equal value in return.

These are rough times. And, baby boomers, caused it all....

Will Cameron be the next British PM?

FT linky!

I like him (Cameron). But, I also appreciate Gordon Brown. Brown has showed tremendous leadership during this crisis and took over a Britain, behind a Tony Blair, who was one of the more stellar global statesmen that we had ever seen- more charismatic than Thatcher. To follow a path like that, like John Major tried, would have been foolhardy!

To be frank- Gordon Brown hasn't done me or any Brit, anything aside from preside over an economic crisis that no one knew would or could happen.

Also, Cameron, is a little weak on his platform- his attacks on Brown are spectacular, however. But, attacks, with a very intelligent British electorate, does not get you very far.

Cameron will be PM one day. Maybe in May- a refreshing change is needed in the British parliament. Hopefully, he will get in before Brown hands the reigns over to David Milliband- another well like, well spoken, attractive leader within the Labour ranks!

Time will tell.