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Morning Reading
Good morning. Just a few items to start the day, including -- how financial innovation causes bubbles, more on Toyota and some great iPad comedy.
Ditching health reform will only dig us into a deeper deficit (Washington Post)
The economic collapse of 2008 and 2009 did so much damage to the United States that only now can we begin to measure the devastation.
A sentence buried in the budget that President Obama submitted to Congress this week screamed for attention. "Household net worth fell from the third quarter of 2007 to the first quarter of 2009," it said, "by $17.5 trillion or 26.5 percent, which is the equivalent to more than one year's GDP."
How financial innovation causes bubbles (Felix Salmon)
Up until now, I've thought that the harmfulness of financial innovation was largely a function of its role in enabling regulatory arbitrage. But Smith's idea I think is stronger. Financial innovation, on this view, is in large part the art of turning illiquid assets into liquid assets. And once an asset is liquid, it's susceptible to highly-dangerous booms and busts.
The war on Toyota (Financial Post) The Canadian perspective on one of our topics from yesterday:
While it may be technically true that President Obama's team didn't explicitly reach a decision to target Toyota, nobody in this crowd needs a presidential order to turn the Japanese auto giant's Sudden Unintended Acceleration (SUA) problem into a national industrial advantage for the United States. The owners of union-dominated Government Motors can spot a strategic economic opportunity without waiting for the memo from head office.
Patchwork Nation: Toyota (PBS NewsHour)
The iPad is the butt of great comedy (BNet) Some pretty funny stuff.
<i>The sad truth is that until the federal government steps up to the issue of health care and entitlement costs, the country will continue to pay the price. </i><p>
The sad truth is that as long as the federal government meddles with health care and continues to create utterly unsustainable entitlements, the country will continue to descend to it's ultimate doom.<br> FTFY Mr. Broder.
I wonder what would happen if huge Medicare/Medicaid cuts were made. Hospitals go empty? Care denied? Needed and unneeded test not performed?
Would the price of hospital supplies and tests decrease because demand would drop off a cliff?
Is the Government manufacturing the increase in healthcare causes because of entitlement programs flooding the market with cash?
hhmmm.
It was just announced that health care takes up 17.3% of our entire economy, the biggest jump in history. Containing these costs needs to be a major priority. We are being eaten alive. Huge health care costs are a drag on economic recovery.
If I am not mistaken, other industrialized nations that have national health insurance are not paying anything near 17%. Perhaps they get poorer health care but at least they do not have 47 million uninsured fellow countrymen.
