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Morning Reading
This morning, reaction to the Fed's assessment of the economy. Plus, why in the world did President Obama say what he said about the Postal Service this week? But let's start with consumer spending. There isn't any.
Cash for Clunkers sure didn't do much for the numbers overall. From AP:
The Commerce Department said Thursday that retail sales fell 0.1 percent last month. Economists had expected a gain of 0.7 percent.
While autos, helped by the start of the Cash for Clunkers program, showed a 2.4 percent jump -- the biggest in six months -- there was widespread weakness elsewhere. Gasoline stations, department stores, electronics outlets and furniture stores all reported declines.
The Washington Post has four economists weigh in on the Fed's statement yesterday that the economy is "leveling out". Here a couple of samples:
DOUGLAS HOLTZ-EAKIN
If America were populated only by economic statisticians (a frightening image) then the worst would be over. Reams of economic data support the notion that, in the words of the Federal Reserve, "the economy is leveling out." Unfortunately, the labor market remains very weak, unemployment is more likely to rise again than to fall, and real labor income is essentially flat. That combination offers little relief to U.S. households...At the same time, the federal budget is in disastrous shape, and the Fed's massive liquidity injections pose a risk of a significant uptick in inflation in the years to come. Americans face the real possibility that "recovery" will consist of paring spending to rebuild wealth, paying higher taxes and facing higher inflation. A new generation may be exposed to the frustrating coincidence of chronically high unemployment and rising prices. So the numbers will be better, but the American psyche will take longer to recover.
ALICE RIVLIN
If you have lost your job, the worst may not be over for a long time. If you have a job, you may still lose it. The main reason for optimism is that the rapid deterioration of the economy has slowed down. Production and sales may even start increasing gradually in the next few months. For many businesses, the worst may be over. But don't expect a bounce. Scared consumers are hanging on to their cash, bemoaning the lost value of their houses and trying to reduce their debts...Public intervention has stabilized the big financial institutions, some of which are making substantial profits. To many this seems unfair, since it was the mistakes of those institutions that caused the crash. Unfair or not, a catastrophic financial meltdown was avoided. We'll have a long slog back to prosperity, but another Great Depression is not going to engulf us all.
At Real Clear Markets, CNBC's Larry Kudlow expounds on a rather bizarre comment President Obama made this week:
It's hard to know why President Obama said what he said at Tuesday's health-care town hall in New Hampshire. He actually stated, "If you think about it, UPS and FedEx are doing just fine. It's the Post Office that's always having problems."
Oops. Freudian slip? Subliminally speaking, was the president inferring that private health insurers are doing just fine?
...it's something of a mystery why the president went down the FedEx/UPS/Post Office turnpike. Perhaps the inner Obama is a free-enterprise guy. Maybe in the heat of battle his private-sector FedEx/UPS endorsement kind of, well, slipped out unconsciously.
The president must have made several statements about the post office. The one I heard was in response to the argument that a public insurance option would put private health insurance out of business. He used the example of the post office to make the point that the government run postal service did not put private shippers UPS and FEDEX out of business.
OK, as you say, the government run programs are so bad. Then it begs the question, if the public option will be so bad, what do the insurance companies have to fear? The public option will take in all those sick people that the insurance companies don't want to cover and all those poor people that can't pay high enough premiums that they can earn profits, while healthy well off people like you can get the cream of the crop private insurance plan and the stock you own in private insurance companies can keep paying dividends. Is that so bad?
The second alternative would be requiring the insurance companies to cover all the people. That will hurt their bottom line so bad they will have to raise your premiums too much or raise your taxes to subsidize some payer's premiums.
The third alternative is to leave things how they are. As the ecomony drops the value of an honest day's work for so many more people to below the cost health care, more people will need medicare/medicaide, get free care at emergency rooms, and county hospitals will need to add capacity. And your premiums and taxes will have to go up.
There is a fourth option. Stop placing such an economic burden on society. If someone is too poor to be healed, let them die a natural death of their illness. Your taxes could go down, your insurance premiums would go down, and the dividends on your stock would go up.
The post office didn't fall into decline just because of email. When I need to ship something in a box, I call UPS or Fedex and for good reason. They do it better and faster and cheaper.
The public school system is another classic example. Private, parochial, and even home-schooling get results that are better and faster and cheaper.
So when the socialists start talking government run health care, I get an uneasy feeling in the pit of my stomach.
Concerning the UPS/Fedex/Post Office comment and relating it to the US health care system: this seems like a irrelevant comparison of apples and oranges to me. It's easy to link anything with the notion of "government-run" to failure, but this is a false and unfair pairing.
I would point out that the US Post Office has held it's own competitively for a long time - it wasn't until this rise of electronic mail that usage declines started to hamper the US Post Office business model. The business of written communication is changing - why should we expect the Post Office to be immune to this sea change when newspapers are struggling for the same underlying reasons?
Most Americans will not send a letter if an email will suffice, and have turned to electronic billing for convenience and security just as many corporations are encouraging customers to use these electronic services to save on printing and postage costs. This reduces the USPS's revenue stream to reliance on junk/bulk mail, catalogs, packages and an ever dwindling number of postcards, invoices and payment coorespondence.
Time and technology has taken a toll on the USPS business model, not government ineptitude. Fedex and UPS prosper because we haven't developed the technology to teleport packages yet. To take this false analogy further and apply it to predict the future of Health Care in America does nothing, means nothing and is simply "noise" not "signal."
