Category Archives: Economics

A House Divided

We have all been witnessing the division of this country for several years.  But it would seem that we’re at a place now that us ‘boomers’ haven’t seen in our lifetime.?!  Quite scary.  But the question is, how could this affect us in the immediate future?

Revolutions are started sometimes over not such serious issues.  Situations have a way of getting blown out of proportion.  Typically this is because there is a tremendous amount of anxiety built up, usually over a long period of time.  The extraordinary response is typically due to that anxiety (anger).  Personally, I believe this is because of the progressive movement’s fear of lost ground.

In the following article the author makes several reasonable cases for how our country could turn like others around the world in recent years.  Although I don’t think this is any reason to move to Canada next week, it is something to consider.  Being forewarned is to be forearmed…

America: A House Divided


This article was taken from a pessimistic website.  Although, it has published several good points over recent years worth reading.  Given our current direction, I believe he may well be spot on sometime in the future..?




Plan-B — Republican’s Insurance Plan

So is it a good thing?  Personally I’m not sure — I don’t trust Ryan to start.  And, the republicans have become democrat light over the last few decades.  So where does that put us?  I think you know.

But here’s an article that gave me a different slant on the insurance game.  From it, I get that we’ll get ‘the hose’ no matter which direction we go..?


Mauldin Economics

March 7, 2017

Why Interstate Health Insurance Won’t Fix Obamacare

By Patrick Watson

Congress has a new healthcare plan to replace Obamacare. It may go nowhere since many Republicans aren’t happy with it… and the problems it tries to solve will remain.

Worse, anything that gets past the House and Senate may not matter if insurers refuse to play in 2018. The big ones haven’t committed yet.

If the new plan doesn’t fly and Obamacare collapses, as seems likely, what’s Plan C?

President Trump listed several ideas in his speech to Congress last week. Among them was this:

The time has come to give Americans the freedom to purchase health insurance across state lines—which will create a truly competitive national marketplace that will bring costs way down and provide far better care.

That sounds practical and conservative. Just reduce regulations, and the free market will provide.

Often, that’s true. This time, it’s not.

To find out what the problem is, look no further than a deal Citibank made with South Dakota 37 years ago.

Credit Card Loophole

When you read the fine print on one of your credit cards, you’ll likely see the issuer is a bank in South Dakota. It might be Delaware or Nevada, but probably South Dakota.

Why are the big banks issuing credit cards through South Dakota subsidiaries?

Back in 1980, with both inflation and interest rates at double-digit levels, banks were getting squeezed on credit card loans. State usury laws capped the interest rates they could charge borrowers, but not the banks’ own cost of funds.

Legendary Citibank Chairman Walter Wriston found a loophole. A 1978 Supreme Court ruling said banks could set consumer loan interest rates based on the state in which the bank was located, instead of the borrower’s state.

Photo: Getty Images

Wriston had been asking New York legislators to raise the usury limit so New York-based Citi could charge higher rates nationwide.

When they refused, he looked for friendlier politicians… and found them in South Dakota.

Wriston called then-Governor Bill Janklow with a generous offer. Here’s how a Frontline documentary described it.

In an effort to stimulate the local economy, South Dakota was in the midst of eliminating its usury laws. Mr. Wriston told Mr. Janklow that if South Dakota would quickly pass a bill inviting Citibank into the state, he would bring 400 jobs. To preempt concerns from local banks about new competition, Citibank also promised to open only “a limited” bank. “We’ll put the facility in an inconvenient place for customers and we’ll pay different interest rates,” Mr. Wriston recalled telling Mr. Janklow. “All we want to do is use it to issue cards.”

For Mr. Janklow, it was an easy decision.

“To me, this wasn’t a credit card deal, it was a jobs deal,” he said. “It was an economic opportunity for the state. I was slowly bleeding to death.”

With bipartisan support and backing from South Dakota’s banking association, Janklow proposed a special “emergency” bill. “Citibank actually drafted the legislation,” he said. “Literally we introduced it, and it passed our legislature in one day.”

The arrangement ultimately brought 3,000 high-paying jobs to South Dakota and a host of new suitors from banks across the country.

That’s why your credit cards come from South Dakota. Citibank literally picked its own regulator and wrote its own law. Delaware and Nevada later made similar moves, but South Dakota was first.

The result wasn’t all bad. Today, credit cards are widely available in every state. Your interest rate may be higher and your spending limit lower if you have poor credit, but you can probably get a card.

If you think enabling more Americans to take on more debt is a good idea, we have the perfect system to do it. But what we don’t have is competition between states.

In theory, banks in any state can issue credit cards. But good luck getting one that isn’t from South Dakota, Delaware, or Nevada. Those are the choices the banks give us.

Photo: Getty Images

Separate Risk Pools

A state-based national market for credit cards isn’t exactly the same as one for health insurance, but it’s similar in some ways.

Instead of usury limits, insurance companies face state laws mandating certain benefits that raise costs and reduce profits. They’re one reason health insurance premiums are higher in some states.

So if we let insurers sell health coverage across state lines, people can bypass all that and buy in a state whose insurers best suit their needs. Sounds great, right?

The problem is that health insurers will likely do what the banks do with credit cards: congregate in whichever state lets them do what they want—which is to insure only healthy people.

The result, within a couple of years, will be separated risk pools. Young, healthy consumers will buy stripped-down, low-priced policies from states that allow them, while older, sicker people all cluster in the few states willing to cover them at a reasonable cost—if any will.

Sound familiar? Something like that is why Obamacare isn’t working.

This is where the credit card analogy breaks down. No one has to have a credit card. You won’t die without one. But everyone will get sick or have an accident sooner or later.

There’s another problem: Providing health insurance isn’t as simple as just mailing someone a card and billing them every month. The insurer has to deliver care locally, wherever the customer lives. Building hospital and doctor networks is expensive.

Five states—Georgia, Kentucky, Maine, Rhode Island, and Wyoming—already did what President Trump suggests. They’ve opened their borders to insurers from other states.

Has it worked? Have insurers from other states rushed into these wide-open markets?

No, they haven’t. So erasing the state lines may not be as helpful as proponents think.

Photo: Getty Images

Insurance ≠ Care

Politicians choose their words carefully when they talk about this. They’ll often say everyone should have “access to health insurance.”

Sounds nice, but it misses a few things.

Access to health insurance is not the same as access to health care. People are learning that the hard way right now.

In many parts of the country, Obamacare plans come with deductibles of $5,000 or more. So you’re covered only after you’ve spent $5,000 that you probably don’t have.

Median household income in the US is only around $56,000. Median means half of all household incomes are below that amount, and few people have an extra $5,000 sitting around. They’re insured, yes, but they can’t afford to use their insurance even if tax credits cover the premiums.

So Obamacare isn’t the solution, because it’s not working either.

But interstate insurance is no cure. At best, it will leave us with the same problems Obamacare hasn’t solved. It might even make them worse.

I wrote last year how our healthcare system suppresses job creation and undermines economic growth. We need a better solution.

We know what doesn’t work. We need to find out what does.

See you at the top,

Patrick Watson

Left vs. Right? Is There a Difference?

Just in case my readers potentially miss it, I’m adding this YouTube video for everyone to watch.  If you ever wondered why congress has only a 10% approval rate, this will explain why!

The following video is of Rand Paul speaking about the proposed budget submitted by the Republican party.  This, after gaining the majority in the House, Senate, and now Presidency.  Incompetent criminals…

Rand Paul on the 2017 Budget


And all of this is done under the guise of repealing Obamacare!!!  Yet another continuing resolution.  The video is a little over 20 minutes.  But you’ll get the idea after only a minute or two.  Truly unbelievable.

After posting this article, I got an idea for an alternative solution to the spending quandary we live with in congress.  Here’s my idea:

Connect the American budget with congress’s salary.  If they cut the budget 10%, they get a 10% raise.  If the budget goes up 10%, their salary is cut.  So let’s look at an example.

Current congress salaries (House and Senate) = $93,625,000/year (poor guys)  So if the budget was cut 10%, their salaries would go up $9,362,500 — a nice raise!  Now considering the current U.S. annual budget is about $3.8T, that would mean we’d save $380B.!!!  At that rate we’d be saving some ‘real money’ before you know it!!  I don’t know about you, but this sounds like a good deal to me!!?

There’s only one problem with my idea…   congress would have to vote on it for approval!!  NO WAY would that fly with the fat lazy self-serving ‘representatives’ we have today!!  (*&^%#$%^





Trump & Our Future — Optimistic or Pessimistic

Although Trump won the election (as believed by most people), the question now is, will he do even half of what he has promised?  And he’s promised a LOT!

Yesterday I talked to an attorney at the NRA regarding ‘gun free zones’ and what we can do to help alleviate the potential danger.  I was surprised to hear that they weren’t really interested in my idea of creating a special concealed carry license.  Instead their plan is to eliminate those zones all together!  Wow!  And, they believe they have the support of Trump.  What a rosy picture of our future!

The real question is, will things turn around and will we all live happily ever after?  Hmmm..?  I guess that question means we have to look at our current situation with a realistic and/or objective view.

Please read the following article and consider the 11 realities that the author presents.  It would seem to me that they are real and must be faced…  some day?!

11 Very Depressing Economic Realities

Source:  The Economic Collapse

I guess one could look at this as a glass half full or empty.?  How successful do you see Trump and our congress (with a 10% approval rating) over the next four years?




Why Move to Texas?

We’ve been asked numerous times why we moved to Texas.  My answer is simple.  I can name that tune in two notes:  California, Texas.

If you look at California (where we moved from), you’ll find a hard left mentality which leads to numerous laws which protect the guilty — not the innocent.  Illegal aliens in California are basically ‘hands off’.

As recent as last week the chief of police for Los Angeles stated publicly that he would not enforce any laws pertaining to immigration.  Although he is not part of the federal immigration system, he is required to report anyone suspected of a crime to ICE.  San Francisco is clearly a sanctuary city.  Concurrently the state is releasing tens of thousands of felons back into society to commit yet more crimes against society.

Here’s just a little evidence of the insanity occurring on a daily basis in California.  Focus on proposition 57 which redefines ‘violent crimes’ — especially the supporters and opposition at the bottom of the page.

Here in Texas there are four cities which are basically venues similar to California as a whole (maybe I meant ‘hole’?).  Austin, Dallas, Houston, and San Antonio are way left compared the the other 70% of the state.  Where we’re fortunate (for the time being), we have a Governor, Lt. Governor, and Attorney General with right thinking brains.  As a result, this state is moving further toward being the best state to live in this country.

Please read the following article regarding the priorities in our next session of Texas congress.  Only in Texas folks.

Texas 2017 Legislative Priorities

So, it should be rather clear at this point why a ‘good old boy’ from communist central would move to Texas..?!

Restoring America’s Economic Mobility

First, what is economic mobility?

Millions of people from all over the world come to this country for it.  They have been drawn to America by the magnet of ‘opportunity’.  The opportunity to come here and succeed, if you have what it takes.  And what it takes is: motivation, drive, a sense of strong work ethic, skills, intelligence (not a whole lot), a desire to succeed, a will to work with others, entrepreneurship,  and the tenacity to keep going, to not give up.

Economic mobility means that you come to this country with $50 in your pocket and possibly have a million in short order compared to most other countries.  But, it is not a guarantee!  Today too many Americans have few of this attributes (combined).  Too many have a sense of entitlement — you owe it to me, I shouldn’t have to work for it.  Why?  Because I’m special!!

Please read the following article which explains why we’re in trouble today and how we could pull ourselves out of this ‘dive’.  A well written article.

Restoring America’s Economic Mobility





Working Adults — The Trend is Not Good

Americans are being fed statistics that apparently come from some dark place void of conscience and factual information.  We’re told that the economy is booming and that we’re ‘on the road to recovery’..?  Yet the average worker is getting nowhere fast.  Too many people are not working.  Who says so?  Of all places, the Washington Post!  Yes, the left leaning paper back east.

But worse they tell of a trend that is worse than a high unemployment number today.  They talk about the number of people working tomorrow.

A disaster is looming for American men

I’m not sure how to reconcile how our government is going to feed and house that many people in the future..?  One must ask, where will that money come from?