JonLowder.com

The Week That Was

This has been an interesting week.  I spent a couple of days in Raleigh for the day job and had my first opportunity to get a first hand look at the NC legislature in action.  Here's my takeaways from the experience:

• Compared to the US Capitol the state legislature is very casual.  It's nothing special to bump into a state rep or senator and give them your two cents while walking to a meeting or getting on an elevator.  Heck, it's expected.
• There's no security to speak of;  no line to go through a metal detector and no one standing at the door to wand you.  Of course there are security guards but I've seen tighter security at a day care center.
• With some exceptions their offices are tiny. I'm talking room for a desk and two chairs.
• The legislators, and their staffs, were very responsive.  When I contacted them last week to try and schedule appointments I heard back from most in a matter of hours, which I found pretty impressive given the amount of work they're doing right now.

The other thing that made this week interesting was the hometown drama known as the downtown baseball stadium.  While I could probably write dozens of pages of thoughts on the whole situation, I'd rather just ask the leaders of Winston-Salem some questions:

• What the heck were you thinking when you broke the multi-million dollar news on Friday and told the public they had a whole weekend to share their thoughts and give you their feedback before a probable vote at a special city council meeting on Monday night? 
• Were you trying to make it look like you were railroading the thing? 
• Were you trying to make people even more suspicious than they already were? 
• In short, were you trying to be obtuse?

Seriously, the city's leadership couldn't have tried to make this deal look any worse.  I'm really not sure what the motivation could have been to handle it this way, but whatever it was I can't imagine that it balances out the negative taste that this left in the public's mouth.  Put it this way: Mayor Joines and the city council spent a whole lot of their political capital to get this done and while they were going to take a hit no matter how they handled this, I think they at least doubled the damage by handling it in the manner that they did.  It will be interesting to see what happens with the next economic development deal that comes along.

Relativity

So a report by the Mortgage Bankers Association says that the number of mortgage applications plummeted thanks to a large jump in interest rates.  Sounds bad when you equate economic recovery with housing starts, but on the other hand if you look at where the interest rates ended up, 5.25% for a 30-year fixed mortgage, and if you're old enough to remember interest rates that were double figures, you find it hard to exclaim, "Holy crap that's a high rate!"  I can still remember my Mom being happy about her 13%-ish interest rate back in the late 70s or early 80s.  After all just a few years earlier rates were closer to 20%.  Don't believe me? Check out this table of prime interest rates since 1947 and pay particular attention to the jump in rates from October, 1980 to December, 1980, from 13.5% to 21.5%.  Ouch.

How's That Recession Treating You?

Truliant Federal Credit Union surveyed its members to see how the recession has affected their behavior and over 3,000 shared their thoughts. Some of the results are highlighted in this press release.  Anyone who's seen all the restaurants shuttered recently won't be surprised by this one:

Q: If you have cut back on spending, what areas are most affected? 

73% - Dining Out 
70% - Entertainment 
64% - Travel, vacations 
59% - Clothing 
55% - Home Electronics 
45% - Auto (buying/leasing a new vehicle, repairs) 
35% - Home Appliances 
22% - Cell Phones and/or calling plans 
5% - Other 

From the “other” category, popular items that were mentioned include groceries, medications, food and club memberships. Another trend that the “other” category highlighted is that more of Truliant’s member-owners are starting to purchase generic products to help them save money.

Walking the Tightrope With No Safety Net

Ed Cone points to an article on the front page of the Washington Post that highlights the dire straits that many (25%) of North Carolinians are in with health care.  Literally 1/4 of all adult North Carolinians, or 1.8 million people, are living without health insurance and an additional 9% are underinsured. 

On a related note one of the doctor's from Lewisville Family Physicians wrote a Letter to the Editor at the Winston-Salem Journal pointing out that the terms "health insurance", "health-care coverage" and "health care" are incorrectly used interchangeably.  He says that instead of looking for health care reform we should be looking for health insurance reform.  From his letter:

Health insurance has become exorbitantly expensive. Insurance companies continue to raise premiums while at the same time reducing benefits. They can do this with impunity because they know that policy holders have no other choice but to pay what they demand, or choose to go without coverage. They also refuse to increase payments for services, continuing to pocket the growing difference. More and more people are taking the gamble and choosing to go without coverage.

I can tell you from our family's perspective it's hard to argue with him.  When we're spending over $8,000 a year on premiums alone, and we're doing pretty well compared to other families we've talked to, then you know there's something out of whack with the system.  It's also easy to understand how so many people end up having to live without insurance in the first place.  

Have Your Say in the $3 Trillion Spending Spree

The Boston Globe has an interview with Elizabeth Warren, the chair of the Congressional Oversight Panel that is overseeing the bailout of America's financial system (thanks to Lex for the pointer).  It's a pretty quick read and if you're at all interested in what's going on with your trillions of dollars in taxpayer subsidies to the financial muckety-mucks then I suggest you read it.  Here's the end of the interview, which I think gives you an idea of the stakes:

Q: Is there anything else that you would want people to understand?
A: I don't have a badge and a gun. The power of this panel is derived entirely from the voice of the American people. If they stay out of the policy debates, then Treasury can spend at will and reshape the American economy with no one in the room but insiders. If they are involved, the policies will look different.
It's the design of the rules going forward that will tell us or that will determine whether we are moving to a cyclical economy with high wealth, high risk, and crashes every 10 to 15 years. Or whether we will emerge, as we did following the new regulatory reforms in the Great Depression, with a more stable economic system that benefits people across the economic spectrum. It's an amazing moment in history.

American Idiots

Found this via Ed Cone: Kevin Phillips doesn't think the average American can grasp the scope of our financial disaster, and because of that we're doomed to be continually led down the path of financial cornholery by the same abusers who have taken us this far.  Have to say I probably agree, and when you read Phillips' post you might too.

The principal inventors, hustlers , borrowers and culprits were the nation's 15-20 largest and best known financial institutions - including the ones that keep making headlines by demanding more bail-out money from Washington and giving huge bonuses. These same institutions got much of the early bail-out money and as of December 2008 they accounted for over half of the bad assets written off. The reason these needed so much money is that they government had let them merge, speculate, expand and experiment on dimensions beyond all logic. That is why the complicit politicians and regulators have to talk about $100 billion here and $1 trillion there even while they pretend that it's all under control and that the run-amok financial sector remains sound.

This is a much grander-scale disaster than anything that happened in 1929-33. Worse, it dwarfs the abuses of debt, finance and financialization that brought down previous leading world economic powers like Britain and Holland (back when New York was New Amsterdam). I will return to these little-mentioned precedents in another post this week.

But for the moment, let me underscore: the average American knows little of the dimensions of the financial sector aggrandizement and misbehavior involved. Until this is remedied, there probably will not be enough informed, focused indignation to achieve far-reaching reform in the teeth of financial sector money and influence. Equivocation will triumph. This will not displease politicians and regulators leery of offending their contributors and backers.

Obama Turning Into a Skid or Accelerating Into a Concrete Wall?

Penn Jillette writes a commentary piece that asks the right questions about our current straits in his own quirky way.  It comes down to this: is spending our way out of the recession/depression a counterintuitive necessity like turning into a skid on an icy road, or is it a suicidal decision like accelerating your car as you approach an oncoming reinforced concrete wall?

Depression?

Ken at The Seventh Sense reports on the new unemployment numbers and links to Robert Reich's piece on TPM where Reich says we're in a depression.  The unemployment numbers are definitely depressing but are we actually in a depression?  

Layoffs = No Insurance or Crappy Insurance

News that should surprise no one: North Carolina has the fastest growing population of people without health insurance.  Since North Carolina is also a leader in lost jobs this isn't exactly shocking news.  The report referenced in the story contains an estimate of 1.75 million people in the state who don't have health insurance.  The US Census shows North Carolina's population in 2007 as 9,061,032 so that means that the percentage of people in North Carolina without health insurance is roughly 19%.  

As scary a number as 19% is, I'm wondering how many of the other 81% are under-insured?  I can tell you from first hand experience that it's very expensive to buy insurance that offers decent coverage and I suspect that there are plenty of people who have purchased what can only be termed "crappy" insurance in order to keep their premiums affordable.  Having purchased some crappy insurance myself in an effort to battle premiums that jumped 30% one year I can tell you what the results were:

• Our insurer basically disputed every claim.
• Our riders that were supposed to provide a certain number of office visits at no additional cost basically did nothing.  We still ended up paying out of pocket. 
• Our coverage was almost impossible to understand which means we started avoiding the doctor for fear that it would cost us $120 to find out one of us had a simple soar throat. 
• Luckily we didn't experience any major illnesses, but if we'd kept that coverage I think we might have ended up with undiagnosed illnesses because we tried to avoid the doctor.  

Basically we started to view our insurance as "armageddon coverage", only to be used in case of a catastrophe and I'm not entirely confident it would have covered us even in those circumstances.  My point is that if even 10% of the 81% of insured North Carolinians has similar coverage then we're probably looking at close to 700,000 people that could be living with easily treatable illnesses that could grow into major health crises because they're afraid to see the doctor and who might not then be covered adequately when they end up in the hospital.  Add that to the 1.75 million people without any insurance and you have a really frightening number of people at risk for financial devastation if they get sick.

North Carolina Ahead of the Curve

It might be hard to believe right now, but we here in North Carolina might be leading indicators for the US economy.  Just as we started feeling the brunt of the recession before most of the rest of the country we might also be the first to feel the 'bottom' and see a recovery.  This occurred to me when I read that foreclosures in February were down almost 50% compared to February of last year in North Carolina, but the rest of the country experienced a 30% increase in foreclosures.  Yeah, yeah this is just one indicator and it's surrounded by other negative stories like the sales of existing homes in Greensboro falling 38% in February, but since foreclosures were a key factor in the start of our economic collapse it would seem that a decline in foreclosures would be a good sign that the bottom might be near.

Call be a pie-eyed optimist, but I'll take good news anywhere I can get it.