Thursday, April 01, 2010

No... Really...

" JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said he regrets using the Federal Deposit Insurance Corp.’s guarantee program to issue $40 billion in unsecured debt during the height of the financial crisis. 

“We didn’t need it,” Dimon, 54, said in his annual letter to shareholders, which was released yesterday. “And it just added to the argument that all banks had been bailed out and fueled the anger directed toward banks.”

Haha Bloomberg - good one - you almost had me. APRIL FOOLS!   Wait... that's a real story??! FAHHHHHK.  You must be kidding me.  Come on - if Dimon regretted using the FDIC's backstop/subsidy, he'd buyback the FDIC debt now and issue new debt.  He probably just issued a little bit of debt under the program, right?

"The company issued $20.8 billion in FDIC- guaranteed long-term debt in 2008, and $19.7 billion in 2009."

Gulp... Oops...  Way to beat the system, Jamie!

Then there's this:

"Chairman Henry A. Waxman and Subcommittee Chairman Bart Stupak today announced that the Subcommittee on Oversight and Investigations will hold a hearing on April 21, 2010, regarding claims by Caterpillar, Verizon, and Deere that provisions in the new health care reform law could adversely affect their company's ability to provide health insurance to their employees.  These assertions appear to conflict with independent analysis, which show that the new law will expand coverage and bring down costs."

Heheheheh.  That wacky Congressman Waxman - he's got such a sense of humor.  This announcement was clearly a leaked April Fool's Day joke.  He can't SERIOUSLY be challenging the accounting of four companies who are reporting the expected effects of this new legislation as they are REQUIRED TO DO BY LAW.  That's would be crazy... Hold on... wait.. what's that?  This isn't a joke?  Waxman is serious here?  And the the letter he sent to AT&T's CEO where he wrote:
"The new law is designed to expand coverage and bring down costs, so your assertions are a matter of concern. They also appear to conflict with independent analyses. The Congressional Budget Office has reported that companies that insure more than 50 employees would see a decrease of up to 3% in average premium costs per person by 2016. The Business Roundtable, an association of chief executive officers from leading U.S. companies, asserted in November 2009 that health care reform could reduce predicted health insurance cost trends for businesses by more than $3,000 per employee over the next ten years." 

That letter is real too?  You mean it's actually possible that Congress never considered the possibility that they were fed a load of crap in order to get a bill passed, and that there might be actual costs to the healthcare bill?  Get right out of town..

"In other words, shoot the messenger. Black-letter financial accounting rules require that corporations immediately restate their earnings to reflect the present value of their long-term health liabilities, including a higher tax burden. Should these companies have played chicken with the Securities and Exchange Commission to avoid this politically inconvenient reality? Democrats don't like what their bill is doing in the real world, so they now want to intimidate CEOs into keeping quiet."

And it gets much nastier if you read their full piece.

If you're a glutton for punishment, Megan McCardle has more thoughts on the subject: here, and Karl Denninger attacks it also.

Here's an idea for you:  we can get better healthcare benefits for more people, ban insurance companies from charging people with pre-existing conditions more for their coverage  - which is what INSURANCE is all about - charging people for risk - and it will be less expensive for everybody... APRIL FOOLS! 

Come to think of it, this all sounds a lot like the satirical John Galt Plan from Atlas Shrugged.  Ayn Rand meant the plan as an example of everything that is wrong with the promises politicians make, unfounded in reality:

“The John Galt plan will reconcile all conflicts. It will protect the property of the rich and give a greater share to the poor. It will cut down the burden of your taxes and provide you with more government benefits. It will lower prices and raise wages. It will give more freedom to the individual and strengthen the bonds of collective obligations. It will combine the efficiency of free markets with the generosity of a planned economy”

Anyway... that got depressing in a hurry didn't it?  Oh well - go put a whoopie cushion under someone's seat, put saran wrap over the toilet seat, or put a rubber band around the sink sprayer to soak your significant other. 

(tangent:  avid readers will notice that I've avoided writing about healthcare reform at all up to this point.  That was intentional - I don't think there are any easy answers, and I think it's insane that when I was living in NYC I couldn't even buy most of the decent massively overpriced plans (I'm talking about $2200 for my wife and I!) - if you're unemployed, they won't even sell you the plan! That's a problem.   And it's important to note here that I'm not against healthcare reform - but I am against lack of acknowledging reality.  For every person who is a higher insurance risk (which people with pre-existing conditions are) who is NOT charged a premium price, someone else has to pay that cost.  It's a simple fact: you can't get something for nothing.)


Anonymous said...

So, now that you're in NH, are you still "unemployed" and are you able to buy health insurance? I.e. was it simply a NYC thing?

Have you read the stories documenting that the IRS actually doesn't have the authority to enforce collection of the fine for not having insurance?

Yangabanga said...

re: anonymous. I saw an article that the IRS needs new powers and staff to collect the new fines. Total cost $5-10 BILLION over 10 years.

Good thing we're making the tax law more and more complicated as there is less and less to collect!

Kid Dynamite said...

vlc - yes, we were able to buy insurance in NH. I'm guessing it's some sort of fucked up risk pool - that if you're in NYC and you're unemployed, you'd marked with the scarlet letter. WHich is insane, because, as I tried to explain to the insurance company after my COBRA ran out, "I'm the same person, I want to pay you for the plan" - they mentioned something about how there was no administrator - which can cost what - $25-$50/month??? The new legislation should at least help with that problem

wcw said...

In re: the free healthcare lunch, it exists because the US spends way, way too much money now covering way, way too few people. If France can cover its populace, so can we.

Kid Dynamite said...

@wcw - France has much higher tax rates than we do in the US. that's not a free lunch.

there is no doubt that it's possible for us to provide healthcare for our populace. but it costs money.

Anonymous said...

"Come on - if Dimon regretted using the FDIC's backstop/subsidy, he'd buyback the FDIC debt now and issue new debt. ..."

Somewhere, I think in an article where Lloyd Blankfein rued his involvement in the same program, I read that they cannot do the above. The FDIC will not let them.

Does that make sense?

Kid Dynamite said...

JCH - it's quite possible... but when they are making up the rules as they go along (which they ARE!) - they can be changed!

EconomicDisconnect said...

the other KD (Denninger) said today whay I have been trying to tell anyone who will listen for years. I work at a top 10 pharma compnay and have worked at sevarl biotechs so I do have some idea about this. The point is that through patent protection and the ability to recoup research costs innovation has hit levels never seen before. The reason, no offense meant, little countries like Canada and others can set baby limits on drug prices is because the Americans pay through the nose. We effectively subsidize much of the worlds drug costs. What would happen if the US did the same thing? I will answer with a question; what would happen to socialized medicine all over the world if costs went up 500% overnight? At that pooint the only new drugs you would see are the recreational type to forget about any chance at health care.

Kid Dynamite said...

yeah GYSC - i read that same thing about a year ago - possible from Denninger. Basically, everyone else scrubs off the marginal low cost once we eat the big developmental costs