Beware of Greeks bearing gifts...

I am proud of my Greek heritage, but this is no proud day for Greece:

"Greece has a budget deficit of almost 13 percent of gross domestic product. It has borrowed too much money for too long. Worse, rather than using that money to invest in improving the efficiency of its economy, it has blown it on lavish public spending and generous welfare benefits." - Matthew Lynn with Bloomberg News

Hmmm...sound familiar? Maybe we should accept this gift of foreshadowing that Greece has provided and DO SOMETHING about it!

Here are some intersting statistics:

In less than 3 years the US's Deficit spending (as a percent GDP) as gone from 1.14% (in 2007) to a whopping 10.54% (projected 2010 total)!!! Even if you don't want a projection and use the actual record from 2009, it had risen to 9.91%...in 2 years!

Say what you will about W Bush (even I thought he did some questionable things), but at least he was some what fiscally responsible...for awhile I used to believe that a lot of what was happening to Obama's administration was inherited problems from Bush.

Obama and the very Liberal Democrats are in serious need of a paradigm shift. Their heads are in the clouds and they are just daydreaming if they think the economy can go on like this for much longer. We simply can not pay for everything that our socialist President wants for our country.

"...rather than using that money to invest in improving the efficiency of its economy, it has blown it on lavish public spending and generous welfare benefits."

Wake up and smell the roses! Just because, "Yes We Can" doesn't mean we should.

We are by no means out of the woods either. Obama brags about the sharp increase of jobs in the first quarter 2010...how many were Federal Census jobs that are only temporary? The census is a large undertaking and has provided a lot of jobs at a critical time. But these jobs are not permanent and they are absolutely not indicative of an improving economy.

What is even worse is the fact that every recession for the past 30 plus years has been preceded by an increase in the price of energy. What happened right before the "great" recession we find ourselves in today? Oil reached a record high of nearly $150 per barrel in the middle of 2008! And it had never broken the $100 mark before that rise. Hmmm, highest energy costs ever followed by the worst recession in 70 years? I only bring this up to strengthen my point that the dark times are far from over: Energy costs are on the rise again (back up to $85/barrel).

The economy barely survived this last recession (if it can even be called over) and even then it was by massive amounts of spending by the Federal government; money borrowed from tomorrow without plans of getting it back...

"...rather than using that money to invest in improving the efficiency of its economy, it has blown it on lavish public spending and generous welfare benefits."

It's a pity we didn't invest in making the economy more efficient rather than pouring money into becoming socialistic.

How will we survive where we are currently headed? The answer is, quite simply, we won't. Something needs to be done now to change our direction and curb the actions of our out-of-control government.

And the answer is simple: austerity.

I wonder if Obama or the Liberals on the Hill even know what that word means...

Time to get cliche people...

It has to be done: my two cents on the "historic event" that happened today when the democrats kicked themselves out of office...

Sure, there are several ways to look at this bill (H.R.4872) - in other words, lots of gaping holes to poke it through. But I will stay with the simplest one to understand and the most blaring problem to go unaddressed by the White House....and that is the Individual Mandate for health care and a term we economists like to refer to as Adverse Selection.

The Economist ( www.economist.com ) defines Adverse Selection as:

When you do business with people you would be better off avoiding. This is one of two main sorts of market failure often associated with insurance. The other is moral hazard. Adverse selection can be a problem when there is asymmetric information between the seller of insurance and the buyer; in particular, insurance will often not be profitable when buyers have better information about their risk of claiming than does the seller. Ideally, insurance premiums should be set according to the risk of a randomly selected person in the insured slice of the population (55-year-old male smokers, say). In practice, this means the average risk of that group. When there is adverse selection, people who know they have a higher risk of claiming than the average of the group will buy the insurance, whereas those who have a below-average risk may decide it is too expensive to be worth buying. In this case, premiums set according to the average risk will not be sufficient to cover the claims that eventually arise, because among the people who have bought the policy more will have above-average risk than below-average risk. Putting up the premium will not solve this problem, for as the premium rises the insurance policy will become unattractive to more of the people who know they have a lower risk of claiming. One way to reduce adverse selection is to make the purchase of insurance compulsory, so that those for whom insurance priced for average risk is unattractive are not able to opt out.

...sigh... Adverse Selection and Moral Hazard - two sides of the same coin that destroys an individual mandate for Health care (insurance).

The young people will only get health insurance (and pay a fine lesser than the cost of health insurance) when they get sick because now they can not be refused for prior illness. Adverse Selection is achieved: only the sick get health insurance (when they actually need it). Moral hazard would be what we see in Canada with increase queue times for getting treatment - because EVERYONE with insurance will goto the doctor for any little reason, because why not?

SIGH. So many ways to reform health care...SO MANY WAYS...and we choose to slowly strangle the health care system to death. I guess that is one sort of reform. Thanks Obama! Way to put your presidential weight behind something SO productive, that will create jobs and lessen deficit spending....oh wait.

I call it now, Obama signed his pink slip for serving only 1 term as president when he signed the dotted line on the "Health Care and Education Affordability Reconciliation Act of 2010 (H.R.4872).

Moron.