Thus we have likely been watching the D.C. Street Theater (recently back from nationwide tour over the August recess at Town Hall meetings in every state) with some amazement. Knowing that the truth is that health care is the third leading cause of death, perhaps wondering if greater access for some of the ~50 million Americans without insurance is actually going to “fix” what’s wrong with health care in this country. Which is #37 on the list of 37 industrialized nations in both access and outcomes.

One of the more “important” results of what is now more honestly being called Health Insurance Reform is the promise of government subsities to enroll as many of those ~50 million uninsured Americans in for-profit health care as possible. This is of course a way to compensate for-profit insurers for new regulations that will prevent them from refusing to insure those with pre-existing conditions, rescinding policies when the person gets sick or injured, and other racketeering practices that have 3 of every 4 of the “medically bankrupt” bankrupt despite HAVING insurance.

So I went Googling to find out if the uninsured and underinsured use a lot of health care, since that doesn’t ring true. What Google responded with were various evaluations of how much the uninsured as a CLASS cost the delivery system every year. The best example is a pdf from Health Affairs entitled:

How Much Medical Care Do The Uninsured Use, And Who Pays For It?

Here we can see in black and white that the uninsured use the medical care delivery system far, far less often than anybody else. If we divvy up the total cost of health care in America evenly amongst a rounded 350 million citizens, the cost is $7439 per person every year. But the uninsured – 50 million of the 350 milliion – only cost $1253 per person. That means in real terms the per capita cost to 300 million insured Americans must go up to over $8250 per year!

Wow! Looks like the uninsured are a positive bargain! At least, in actuarial terms, as an insurance hack would view such things. Thus an extremely desirable, low-risk pool of potential patsies to bilk.

Now, we all know that most of overall expenditures reflect people who use way more than an equal share of medical care per year. In addition to the uninsured who use little health care, there are tens of millions more Americans who also don’t use the health care system unless they have to. Co-pays and deductibles have been rising as fast as premiums (at many times the rate of annual inflation), so even the middle class doesn’t have money to go to doctors anymore.

So what we’re looking at (in order of importance for the Congress) in the matter of health insurance reform is that -

1. The for-profit insurance companies are so RICO crooked that they absolutely must be regulated severely.

2. Co-pays and deductibles are completely unreasonable (and getting worse fast), making even expensive insurance these days useless except for Big Ticket items. For which you have to fight hard, threaten to sue, or go bankrupt. Unacceptable for those who have to eat the losses (We The People).

3. In order to get items 1 and 2 accomplished, the insurers must be ‘given’ that pool of ~50 million people who barely use the system at all. They can make good money on these people.

4. The “Public Option” we’ll end up getting will be a subsidy to the insurers to cover the people who seldom use health care, and the minimal pay-out for those who do.

The only way a public option can actually control costs (beyond any limits imposed on the insurers, which will be made up for by the increased pool) is for it to be a government-run single-payer system. One that bargains for prices on everything, and with clout. That is not what we’ll get, so all this is just shine to disguise a bailout of the insurers in exchange for absolutely necessary regulation of their fraudulent tendencies.

The pool of uninsured in this country is very desirable for profit-oriented insurance companies, but most of them cannot afford $3000 apiece a year for premiums. Regulation that limits their ability to refuse pre-existing conditions, drop people for no apparent reason when they get sick, or simply refuse to honor their contracts, is going to cut into the for-profit industry’s bottom line. And that bottom line is and has long been extremely lucrative. They’d love nothing better than to get their hands on all those relatively healthy people, whose premiums will be paid no-questions-asked by the government.

And what does the government get? Coverage of the Big Ticket items for the generally healthy population. They’ll spend about $3000 per capita for the policies with large personal deductibles and co-pays. Then when one of those people has a bad accident or comes down with cancer and costs $50,000 that year, the actual cost of the care is covered. That the difference will likely bankrupt the patient matters not. The bailout here is for the insurers and the government, not for the people.

Health insurance is not health care. It’s a futures market on the suffering of real people. Because health care in this country is more dangerous than not getting health care (unless you’ve got heart disease or cancer), there are tens of millions of people in this country who avoid the system like the plague. Because it IS a plague.

So… wake me up when they start talking about addressing what’s really wrong with health care in this country. Nothing coming out of Congress about insurance reform is going to change the lives of those of us on a Shoestring Budget. The government will buy insurance to protect the system against us if we get hurt or sick. Most of us weren’t worried about them in the first place.

The subprime mortgage crisis in just about over. Those whose loans came with usurious interest rates have, if they got behind or lost their jobs, already been foreclosed upon. Now the issue is negative equity, the fact that real estate is depreciating so fast that homes are no longer worth the price paid, even with prime interest rates. Being “upside down” and expecting a higher rate to kick in on the original price is causing more and more people to simply walk away from their mortgages.

And indeed, walking away from the debt may be the best option for people who purchased during the “bubble” of inflated valuation. Because the underlying problem the bubble was based upon – ever-increasing wages for the working classes – has dismally failed to materialize.

We’re all paying for the bubble and the ridiculous amount of side-bets that got made by financial pyramid schemers who artificially produced and inflated that bubble. When the “average” price of a below “average” home (say, 50 years old, in need of repair, in a bad neighborhood and too small for a family) rises above $120,000 in one of America’s “Officially Depressed Regions” where a majority of citizens are chronically out of work and wages hover right around minimum, you know something’s got to give. That’s how it is in my nearest county with an actual city in it – Buncombe County, NC, home to the city of Asheville (pop. less than 100,000).

See, the cost of living either keeps pace with what the semi-skilled or skilled laborer can expect to earn, or it doesn’t. Around here we’ve got a perpetual situation of “doesn’t.” This doesn’t just mean that the vast majority of the population must pay rent to the landholders who CAN afford the real estate, because the cost of rent is tied to the value of the property being rented. So if you have to pay $1200 to $1500 a month just for a kitchen, two bedrooms and a bath either way, the only difference between ownership and renting is that if you rent, the landlord has to fix the roof and furnace and plumbing. And when the average family with two full-time workers can no longer afford to live indoors and eat regularly, what are they supposed to do?

Economic greed of the sort that led us to this current “financial crisis” – is not just one of those deadly sins, it’s blind, deaf and dumb to its own interests. Stupidity of the inevitably terminal variety that we should NOT have to make good on after the crimes have been committed. A legitimate slave-owner had to provide food, clothing and ostensibly adequate shelter for his slaves. If they were starving they couldn’t work. If they were freezing or sick or naked they couldn’t work. It cost the slave owner money to replace his chattel, and the necessities of life had to come with the bargain. This hasn’t been so in America since slavery was outlawed. Of course there had to be a bad end to it all.

So now that the marginal debtors have been generally ‘liquidated’ in the first wave of cashing in our collective assets, the better debtors are scheduled to fall. As described in the Business section of the New York Times, this stage of the liquidation will cost more, be every bit as damaging, and is not expected to salvage any actual wealth for anyone but the bankers. It involves real properties so quickly falling in value that their prime mortgages are upside down enough that the debtors are simply walking away.

Those who don’t wish to walk away are being charged exorbitant fees for refinancing closer to value, and rising interest rates are also denting the effectiveness. Fannie and Freddie are big into this second wave heist, as apparently are Fed and Treasury. Just another way to clean out the higher end of the so-called “middle class.”

The bad news is that there is a building third wave building as well, as commercial properties either default or turn upside down. Soon there will be vast wastelands of once-nice suburban neighborhoods and shopping centers and malls where the homeless sleep at night sans utilities. They’ll be homeless even as millions of empty homes and apartment complexes sit dark and empty because no one owns them, they’re not worth buying and nobody’s renting.

In a future post we’ll take a look at some innovative options that abandoned property squatters can put to work for themselves toward necessary things like light, heat, cooking ability, water supply, sanitation, etc. – ways that people are either keeping the utilities on in a home they neither own nor rent/lease, or providing for themselves. Sure, these are the “future-slums” many complained they’d become when they were being built, but hundreds of thousands of once-productive Americans every month join the ranks of the “future-slum” dwellers they never thought they’d be.

To all but the top 10% of wealth-holders things are well beyond mere recession at this point, whether any talking heads want to call it that or not.

Another Scam Alert

CNN Reports that fraudulent “discount medical cards” are spreading like wildfire, and offers some hits on how to recognize a scam:

1. You learn about it from a blast fax or internet popup ad.
2. They promise a certain percentage savings.
3. They use the term “guaranteed coverage.”
4. They won’t give you a list of providers until you buy.
5. It sounds too good to be true.

Because these scams are growing and a matter of concern to law enforcement in a number of states, always check out an offer through the BBB, your state’s attorney general’s website, the Coalition Against Insurance Fraud and National Association of Insurance Commissioners.

We’ve seen a lot of desperation as the world (and US) economy tanks in the wake of the mortgage-loss pyramid scheme crash. We’ve heard a lot of hyperbole and rhetoric from the candidates who want to replace Bush-Cheney as President and Vice-President of the United States. This is The Week That Was, votes will be counted tomorrow night, and we should know sometime in the wee hours of Wednesday which of the contestants gets the erstwhile “prize.”

As Wall Street began its precipitous fall, Republican candidate John McCain was busy informing the nation that the ‘fundamentals’ of our economy are strong. No, they aren’t strong, they’re utter failures after years of massive tax cuts to the wealthy, heavy borrowing to support two wars, and the “Unfettered Free Market” [TM] frenzy allowed by blanket de-regulation of the banking and investment sectors.

To get an idea of just how outrageous things had gotten, consider the so-called “Mortgage Meltdown” that took so many once-staid capitalist houses into ruin. We all know that housing prices had ballooned in most urban areas of the country, a ‘bubble’ sustained by the practice of lending to workers whose incomes haven’t seen even a minimal rise in more than 30 years, for houses that cost easily twice as much as they could hope to afford and three times what they were actually worth. Many of these loans were made with specific criminal intent to skim fees off the top, and saddled with adjustable interest rates that worked just like time bombs to force people into bankruptcy.

Knowing that these time bombs would explode X number of years down the line, the banks and futures traders on Wall Street invented a new paper vehicle called “Credit Default Swaps” for the express purpose of betting on strapped families defaulting on their mortgages. [Greenspan Slept as Off-Books Debt Escaped Scrutiny]These are an insurance vehicle, insurance to be paid out to the holders of the policies on bad mortgages. And those policies – as “Credit Default Swaps” were sold and resold hundreds of times. This is what led corporate insurance giant AIG to be one of the first Big-Time Players to fail, our government moved right in to nationalize it.

This situation is a prime example of the philosophy of “Privatizing the Profits, Socializing the Losses.” It’s a bail-out to rich gamblers necessitated by unregulated greed. Pure and simple. Look at how it worked…

The number of risky, possibly criminal, largely ARM mortgages in the US that have or soon will default amounts to approximately 1% of all the mortgages outstanding. The re-insurance scam ended up valuing these mortgages at 5 times the annual Gross Domestic Product of the entire world. They were of course never worth anywhere close to that much, this is just the amount of insurance pay-outs once they DID default. And default they did, that brought Wall Street – and the world markets which participated in the scam – to their knees.

Despite the fact that candidate McCain did not seem to have the slightest grasp on the impending doom (his chief financial advisor Phil Gramm famously called people concerned about the situation “whiners”), his tax promises to the nation if elected is still to maintain George W. Bush’s blanket tax cuts to the top 2% of wealthy citizens and corporate giants. Democratic challenger Barack Obama would reverse this situation by taxing the rich and giving significant tax cuts to the middle classes. Even to the point of eliminating income taxes altogether on seniors who make less than $50,000 a year.

McCain of course calls this tax-the-rich situation “Socialism,” as if that’s as scary a word these days as it was back in the ’50s. It is not. All governments receive taxes and use them to support infrastructure, public education and other social programs, thus all government is essentially socialist at heart. The fine points always apply to who pays the taxes and gets the benefits of governmental largesse.

CNNMoney recently published an article about the different tax plans of the candidates, along with a breakdown of just how much your taxes will go up or down according to your income. McCain, Obama and your tax bill is recommended reading for everyone out there who hasn’t already voted, and is concerned about the recession/depression that we now know will last more than a year.

Then get out there and vote on November 4th, as if your way of life depended on it – because it does!

Links:

McCain, Obama and your tax bill
Greenspan Slept as Off-Books Debt Escaped Scrutiny
Economists see recession through 2009

Well, it was a tough weekend. After insurance giant AIG hinted that it might be heading for bankruptcy, investment bank Lehman Bros. went ahead and filed Chapter 11. Merrill Lynch grabbed at a $50 billion takeover from Bank of America, which is already regretting its takeover of the nation’s largest mortgage lender [Countrywide]. Stocks fell worldwide on Monday even after intervention from the Fed promising eased restrictions on emergency funds.

It’s not difficult to find gloom and doom on Wall Street today over how many jobs in the financial sector are going to be lost. Worse, that concern will in fact translate into a whole lot more jobs lost out in the real world where you and I live. Factories will be closed, inability to finance durable goods orders will exacerbate the problems, and GM is about to go under too. It ain’t even close to over yet, folks. If all you lose is your home, you’ll be among the lucky ones.

I’ll be posting more good information on stretching leftover dollars for those real people being harmed by all this, maybe even have something to say about the fact that there’s no gas in my region right now at all, leaving nothing to ration. Or tell you how I fare on my plan to sell my now-useless diesel ‘vintage’ Mercedes so I can buy a horse (have plenty of grass and kudzu). But in the meantime, best advice – if you’ve got gas – is to head directly to your regional farmer’s market and buy as much rice, other grains, fresh veggies and fruits as you can possibly afford. I’ll talk a bit about how to preserve it through the winter too, since it’s not really that hard.

I will also start posting information about growing some of your own food, even in the winter. There will be lots of links to great sources for information on these strategies too, so please stay tuned. The best advice I can give to people who end up here after searching something on Google because they’re just now joining our Shoestring Budget ranks, is…

Don’t Panic.

All you really have to do is survive. The future is the future, it’ll bring its own problems and opportunities. Right now you just need to “ride it out” in one piece (and all of a piece family-wise). Money’s just paper at this end of real life, you CAN learn to make do on much less of it. And who knows? Once you’re out the other end of the tunnel, you might even find that you can live a much happier, fulfilled and truly shared life without all that much of it. It’s a good lesson to learn. It puts things in perspective, something this modern world could use more of.

Links:

Lehman Brothers collapse stuns global markets
Lehman Files for Bankruptcy, Merrill Sold, AIG Seeks Cash
Wall St.’s Turmoil Sends Stocks Reeling
Credit Crunch: How to Survive the Recession
20 Ways to Live on Almost Nothing
Uninsured? More Ways to Survive

Pittsburgh: Forty people wearing red tee shirts and carrying signs marched right into a National City Bank last Friday morning. They chanted “Criminal Offenders, Predatory Lenders!” and blew whistles. They demanded an immediate halt to home foreclosures.

The group dispersed after police were called and nobody got arrested, but no one got any relief from foreclosure either. The demonstration was part of a national effort by the group ACORN, the Association of Community Organizations for Reform Now, which provides free counseling to low and moderate income home buyers. As more and more families lose their homes, ACORN hopes protest actions will become more and more visible.

From shelters and coalitions for the homeless all over the country, reports are coming in of overwhelmed facilities and no end in sight as new faces join the ranks of the homeless. The ‘lucky’ ones, about 76% of renters and homeowners displaced by the continuing mortgage crisis, are moving in with relatives and friends. The rest are on the streets, living in their cars, or filling emergency shelters. It’s going to get worse.

Meanwhile, the Federal Deposit Insurance Corporation, a.k.a. FDIC, reported in March the highest number of “problem institutions” it’s seen since the savings and loan crisis of the late 1980s. These tend to be smaller banks finding themselves short on required capital and facing failure due to construction loans secured by the value of those new homes, which are now worth just a fraction of the original estimated value.

So. What if you live in the suburbs in a neighborhood with more ‘For Sale’ signs than political placards in the yards, and your bank’s tellers are becoming less cheerful and helpful lately? What if the bank closed early on Saturday and suddenly a fleet of identical, nondescript rental cars show up in the parking lot, full of nondescript guys and gals in dark business suits carrying briefcases march in, and don’t leave?

The Charleston SC Post and Courier offers a blow-by-blow description by Damian Paletta of the Wall Street Journal, Anatomy of a bank failure: When the liquidators come calling that might help ease the jitters of those who wonder about just how ‘safe’ their money really is in these times of non-recession Depression…

First Integrity, which had two branches and $55 million in assets, was the fourth FDIC-insured bank to fail this year. That’s one more than during the entire three-year stretch leading up to 2008. Some analysts predict that as many as 150 banks, mostly small and medium-size, could fail over the next three years.

Those concerned about growing financial crisis that shows all signs of being far worse than anyone in the government, financial sector or mainstream press wants to admit should read Paletta’s article. So long as your deposits at the bank are $100,000 or less, it won’t disappear even if the bank fails. If you’ve got more than $100,000 in deposits, securities and other investments held by any single bank, it’s time to diversify – divvy them up and into unaffiliated institutions, each advertising that FDIC logo on the window.

Forewarned is forearmed. Just as the government won’t admit to recession, and routinely underreports all the important indicators – unemployment, home and business foreclosures, etc. – you can be sure they’re underreporting current and expected future bank failures too. Don’t get ‘liquidated’ if you can help it.

Links:

Family Storms Pittsburgh Bank, Protests Mortgage Crisis
New recession worry: Bank failures
Anatomy of a bank failure: When the liquidators come calling
New Faces Join Homeless Ranks

The cost of everything is still rising fast, despite the influx of ready cash to taxpayers in the way of rebates going to pay arrears on the mortgage or electric bill. The number of people losing their homes and losing their jobs continues to rise as well. And in a little-publicized indicator no one likes to talk much about these days, the number of Americans declaring bankruptcy is shooting through the roof – up nearly 30% [27.0] in the first quarter of 2008 over the same period in 2007. As Samuel J. Gerdano, Executive Director of the American Bankruptcy Institute says…

“Bankruptcies are rising due to the heavy burden of household debt and growing mortgage problems. We expect this trend to continue through 2008.

So there doesn’t look to be any break in the recession cloud this year, with indicators that it may well descend all the way into depression by election day in November.

I saw an interesting series over at the Popcrunch website entitled Famous People Who Lost It All, which really quite surprised me. The surprise wasn’t the famous people who had it all and died destitute, but the famous people who had it all, lost it all, then got it back. For instance…

I didn’t know that 5-time Academy Award winning producer Francis Ford Coppola had to declare bankruptcy in 1982 after the musical One From The Heart failed. At which point he borrowed money from his mother and went into the winery business and did just fine.

Nor did I know that Walt Disney declared bankruptcy in 1923 after his first company – the Laugh-O-Gram Corporation – went belly-up. So he moved to Hollywood, and the rest is history! Abraham Lincoln declared bankruptcy in 1833 when his business failed. He paid off his obligations and had a rather spectacular political career right up to the moment of his death. Political pamphleteer and revolutionary Thomas Paine came to America due to bankruptcy in England in 1774, and the ‘Great Master’ Rembrandt went bankrupt in 1656.

So it’s not all just heiresses, actors and rock stars that get rich, lose it all, and manage to do quite well for themselves! If you’re in a situation that bankruptcy might help alleviate (because the falling economy isn’t going to turn around), you might find the series at popcrunch heartening.

Links:
Consumer Bankruptcy: The Complete Guide
Bankruptcy Law – Consumer Bankruptcy Information
Major Consumer Bankruptcy Effects of the 2005 Reform Legislation [pdf]
Family Legal Guide: Bankruptcy [pdf]