Congress and President ignore the first law of holes

When you are in one, stop digging--Donald Marron's 6-step program for derailing our fiscal train wreck:

1. Set firm budget goals, like a 70% debt-to-GDP ratio, and put mechanisms in place to ensure you will be held accountable for meeting them. 
2. Keep all options open, by combining proposals to cut spending, increase revenues, and, where possible, boost growth. 
3. Reduce the growth rate of spending.
4. Recognize that different spending challenges require different approaches. For Social Security, the key issue is political will... For Medicare and Medicaid ... policymakers should approach health spending as a research-and-development challenge, not as a one-time matter of setting specific policy dials. 
5. Not all taxes are created equal --Taxes on income, for example, are usually worse for the economy than taxes on consumption.
6. Obey the first law of holes

Buffet vs. Barack

Debtholders apparently have more faith in the Sage of Omaha versus Uncle Sam:

Two-year notes sold by the billionaire’s Berkshire Hathaway Inc. in February yield 3.5 basis points less than Treasuries of similar maturity, according to data compiled by Bloomberg.

“It’s a slap upside the head of the government,” said Mitchell Stapley, the chief fixed-income officer in Grand Rapids, Michigan, at Fifth Third Asset Management, which oversees $22 billion.

Rotten Real Estate

America's most underwater housing markets:

Las Vegas, NV
Merced, CA
Phoenix, AZ
Orlando, FL
Greely, CO
Bend, OR
Minneapolis - St. Paul, MN
Memphis, TN
Cleveland, OH
Grand Rapids, MI

You might be an economist if...

• You don't want to sell your children because you think they will be worth more later; or
• Human interest stories don' t interest you

The Stand-up Economist is coming to Nashville and YOU’RE INVITED to a fun and educational evening at University School of Nashville featuring, IN PERSON, THE WORLD’S FIRST AND ONLY STAND-UP ECONOMIST YORAM BAUMAN Author of The Cartoon Introduction to Economics

UNIVERSITY SCHOOL OF
NASHVILLE AUDITORIUM
2000 EDGEHILL AVE.
NASHVILLE, TN 37212
MONDAY, APRIL 5
5:30 p.m. (There will be a book signing and reception at 5pm)

FREE FOR ALL AREA STUDENTS AND TEACHERS, $5 FOR THE REST OF US TO BENEFIT USN's SCHOLARSHIP FUND.

SEE YOU THERE.

Is the stock market over-valued?

John Mauldin says it looks expensive:

Based on the above research findings, with the S&P 500 Index's current ten-year normalized PE of 20.3 and ten-year normalized dividend yield of 2.1%, investors should be aware of the fact that the market is by historical standards expensive. As far as the market in general is concerned, this argues for unexciting long-term returns, possibly a "muddle-through" trading range for quite a number of years to come.

Nice visual

A student explains the budget.

Chapt. 3 lecture: Accounting costs don't mean squat

This recession is different

One of the usual engines of recovery - residential investment - isn't contributing this time.

The reason RI is moving sideways is because of the huge overhang of existing housing units (both single family and rental units). And this is one of the key reasons I think the current recovery will be sluggish and choppy - and that unemployment will stay elevated for some time.

Canada's growing private health sector

Fewer Canadians may be coming to the US to get medical care (Danny Williams, Premier of Newfoundland flew to the US to get his heart surgery done a coupe of months ago):

But a Supreme Court ruling last June — it found that a Quebec provincial ban on private health insurance was unconstitutional when patients were suffering and even dying on waiting lists — appears to have become a turning point for the entire country.

"The prohibition on obtaining private health insurance is not constitutional where the public system fails to deliver reasonable services," the court ruled

In response, the Quebec premier, Jean Charest, proposed this month to allow private hospitals to subcontract hip, knee and cataract surgery to private clinics when patients are unable to be treated quickly enough under the public system. The premiers of British Columbia and Alberta have suggested they will go much further to encourage private health services and insurance in legislation they plan to propose in the next few months.

Private doctors across the country are not waiting for changes in the law, figuring provincial governments will not try to stop them only to face more test cases in the Supreme Court.
Private clinics are opening around the country by an estimated one a week, and private insurance companies are about to find a gold mine.

Payors vs providers: the bargaining continues

The alternatives to agreement determine the terms of agreement:

... insurers contend that in recent years big hospital systems have been buying up smaller medical centers and using their dominance in a region to demand big rate increases. America's Health Insurance Plans, a trade organization, points to data showing hospital markets are 47% more concentrated than they were 13 years ago....

In a first-quarter earnings report to Wall Street analysts, WellPoint's Ms. Braly told investors that her company is getting support for more aggressive contract negotiations from its employer customers, who want to keep their own costs down.

Empire's Mr. Wagar says customers are telling him, "No. This is enough," while Cigna Inc. is enlisting its customers to lobby hospitals with which it is in disputes, to push for lower prices. "We will have a large employer go to a facility and say 'these are my numbers, I'm not going to pay this,' " says Cigna chief executive David Cordani.

Several hospital executives counter that they have no choice but to ask for more money. "We're looking for double-digit increases in reimbursements," says Vin Capece, the COO of Middlesex Hospital in Middletown, Conn., a 210-patient bed center with $350 million in annual revenue. "That's being driven by growing Medicaid numbers. We've got this growing uncompensated care issue."