This morning, oh, the hubris. Plus, the reason real health care reform (noted in my last post) won’t pass. And Yahoo may’ve just swallowed Microsoft cyanide.
The Wall Street Journal analyzes a speech by William Dudley, the ex-Goldman Sachs economist just appointed president of the New York Federal Reserve. Yes, you read that correctly.
Dudley thinks the Fed should be responsible for preventing asset bubbles. He believes the Fed can see them before they happen and should have the authority to control prices if necessary. Ben Bernanke disagrees:
According to Mr. Bernanke, even if the Fed “could identify bubbles, monetary policy is far too blunt a tool for effective use against them.” For these experienced central bankers, policy is a matter of risk-management under uncertainty; they don’t imagine that they are wise enough to detect every problem and solve it.
Mr. Dudley seems surer of himself. He notes confidently, by way of example, that “the housing bubble in the United States had been identified by many by 2005.” Well, that’s true. But it is only true in retrospect. It offers no justification for a leap toward government control of asset prices.
At Forbes, Mike Masnick has an interesting take on the Yahoo-Microsoft deal. He says the companies are still not thinking forward:
Looking at Yahoo!’s new deal with Microsoft, it looks like it’s still fighting that last battle. It’s still playing catch-up. It’s still looking for search market share, rather than relevance. The search battle is no longer a battle at all. Microsoft may have built a quality search engine in Bing (the reviews are lovely), but for most people, Google is good enough. The battle is over in search. There’s no reason to shift to another player, because there’s very little discontentment with what Google provides. Microsoft (and now Yahoo!) may pick up some users on the margin, but the market for search is no longer interesting or particularly important.
Matt Taibbi – the “Goldman Sachs is a giant vampire squid” guy – has set his next target: health care reform. From True/Slant:
The reason a real health-care bill is not going to get passed is simple: because nobody in Washington really wants it. There is insufficient political will to get it done. It doesn’t matter that it’s an urgent national calamity, that it is plainly obvious to anyone with an IQ over 8 that our system could not possibly be worse and needs to be fixed very soon, and that, moreover, the only people opposing a real reform bill are a pitifully small number of executives in the insurance industry who stand to lose the chance for a fifth summer house if this thing passes.
It won’t get done, because that’s not the way our government works. Our government doesn’t exist to protect voters from interests, it exists to protect interests from voters. The situation we have here is an angry and desperate population that at long last has voted in a majority that it believes should be able to pass a health care bill. It expects something to be done. The task of the lawmakers on the Hill, at least as they see things, is to create the appearance of having done something. And that’s what they’re doing. Personally, I think they’re doing a lousy job even of that.
NPR has a story about taxing so-called “gold-plated” health insurance. You’ve probably heard the outcry that taxing expensive health insurance plans is just a tax on the rich, but …
“It’s probably not just rich people,” says Len Burman, an economist who runs the Tax Policy Center at the Urban Institute. “Actually, government employees get really generous health insurance plans, unionized employees can get very generous health insurance plans.”
Burman says there are a lot of reasons people end up with expensive health care. It might be where you live. Health care just costs more in big cities, or in certain regions of the country. You probably pay more if you work for a company that has an older work force. Or for a small business–especially if one of your co-workers is fighting cancer or some other big medical cost and the insurer has just raised the rates for the whole company.
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