The White House has released another of its health care reform clarification emails— there will be more. It seems strange to me that the focus is on insurance coverage rather than on the spiraling costs of health care itself.

Frankly, the drafters of the insurance reforms have little, if any, understanding of insurance, risk assessment, or underwriting— and nary a clue about running a business. But why should they care? This is Robin Hood politics, not business. Why do we continue to re-elect them is a far better question.

Incidentally, I am not a health insurance salesman or healthcare professional— just a payer of far too much in small-group insurance premiums in spite of a crazy-high deductible!

Insurance is neither a cost of obtaining healthcare services nor an expense associated with those services. Insurance is an agreement in which a private company agrees to pay part of someone else’s medical expenses in exchange for premiums it collects in advance from all of its insureds.

If President Obama owned the New World Order Health Insurance Company, he would not be willing to insure an applicant with brain cancer nor would he be willing to pay an unlimited lifetime benefit to all insureds— not without a premium that reflects the risks to his personal bank account.

Theoretically, insurance companies collect enough in premiums to operate profitably while paying all the claims they have agreed to pay under contracts with the individuals and groups that they insure. If we add more risk, the insurance company has no choice but to increase premiums.

The persons who own the insurance companies (you and me, pal) expect them to operate profitably. The companies employ thousands of actuaries, healthcare industry expense analysts, claims adjusters, fraud inspectors, service personnel, underwriters, risk assessors, etc. to assure that this happens.

Insurance companies protect us by standing ready to pay “covered” expenses over and above whatever deductions, exclusions, and limitations are agreed upon in advance. There is a viable legal contract between the parties— financial disasters are avoided if we get really sick.

Within the terms of their agreements, insurance companies determine who is insurable, and at what premium. Their job is to pay covered medical expenses— and they have a vested interest in keeping medical expenses as low as possible. But do they really?

Just as the financial crisis was partially caused by business conflicts of interest so too are there conflicting interests in the insurance-healthcare-drug-medical supply industries. These conflicts reduce the natural desire to control the costs of all healthcare services.

We can control the industry to eliminate the conflicts of interest. We can (and should) police the boardrooms of insurance companies to eliminate “abuse of shareholders” through excessive salary packages.

Perhaps we should require health care insurers to be “mutual” companies, or maybe “network” doctors should not be allowed to bill patients for amounts above what the insurance actually pays. Maybe the annual deductible could be dealt with differently without increasing premiums.

We can tax for-profit hospitals higher to encourage more non-profit care facilities; we can keep doctors, insurance and drug companies from owning hospitals; we can cap jury awards for medical malpractice or error, and we can give tax relief to medical practitioners who provide free health services to the indigent and uninsurable.

But the government’s efforts to redefine insurance are counter-productive. As cold as it may sound, if we make insurance companies cover pre-existing brain tumors, the expense is coming out of your pocket in the form of higher insurance premiums or higher taxes— and it’s likely that the healthiest among us will be the ones paying the increased taxes.

The White House list of reforms, every one of them, would increase insurance company costs and our premiums while doing nothing to reduce the price of the medical services we receive. They only sound good to those who do not understand insurance.

Insurance is designed to pay the bills— reforms need to make the bills smaller for everyone. Does this plan cut any costs, or just increase insurance premiums for those who will still be able to pay them?

Group health (and even dental) insurance is a benefit used by many employers to attract and retain employees. I’ve heard rumors that the reform plan will tax employers who don’t provide insurance and tax those employees who receive the benefits. True or not, neither approach helps the economy or reduces health care expenses— both raise taxes for everyone.

Insurance can only be made more affordable by reducing the costs of the healthcare that is provided. Let’s focus on streamlined record keeping, controlling ambulance chasers, jury awards, drug company advertising, an army of lobbyists, and industry conflicts of interest.

We should also make all government employees, from the top down, dance to the same tune as the rest of us— that’ll do away with the tax on benefits. Then, next chance you get, do away with an incumbent.

About the author
Steve Selengut
Professional Portfolio Management since 1979
Author of: “The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read”, and “A Millionaire’s Secret Investment Strategy”

Warren Buffet a highly influential American has finally hit the panic button, saying that we are going to be crushed under a mountain of debt taking into consideration the amount of debt the country is piling up.

Last year, Warren Buffett says, we were justified in using any means necessary to stave off another Great Depression. Now that the economy is beginning to recover, however, we need to curtail our out-of-control spending, or we’ll destroy the value of the dollar and many Americans’ life savings.

Here are some not-so-fun facts from Buffett’s editorial today in the New York Times:

* Congress is now spending 185% of what it takes in
* Our deficit is a post WWII record of 13% of GDP
* Our debt is growing by 1% a month
* We are borrowing $1.8 trillion a year

$1.8 trillion, that’s a lot of money. Even if the Chinese lend us $400 billion a year and Americans save a remarkable $500 billion and lend it to the government, we’ll still need another $900 billion.

Which brings us to the million Dollar question “where’s it going to come from?” Most likely the printing press. And, ultimately, that will destroy the value of the dollar.

His girlfriend’s house was surrounded by Federal agents in black SUV’s this afternoon, they told him to walk out and introduce himself. So he did, and he asked them, ‘If you’ve got a warrant, take me into custody. If you don’t, I’m going to Houston.’ And they did, so they arrested him.

Chairman of the troubled Stanford Financial Group, R. Allen Stanford surrendered to FBI agents in Virginia Thursday afternoon, his attorney said. Law enforcement officials said Stanford is in custody after surrendering in Stafford, Va. Authorities plan to unseal an indictment charging Stanford on Friday, the officials said, speaking on condition of anonymity because they were not authorized to discuss the case.

Stanford Financial Group has been under investigation by a grand jury in Houston. The Securities and Exchange Commission filed civil charges earlier this year accusing Stanford and his top executives of conducting an $8 billion fraud by advising clients to buy certificates of deposit from the Antigua-based Stanford International Bank.

The SEC’s lawsuit charged that the bank advertised its CDs in a brochure touting a conservative investment philosophy. But instead the bank’s portfolio was “misappropriated by Defendant Allen Stanford and used by him to acquire private equity investments and real estate,” the suit says.
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An amended complaint by the SEC has accused Stanford and his finance chief, James M. Davis, of conducting a “massive Ponzi scheme” in which early investors were paid returns from money put in by later investors. Davis promised in April to cooperate with federal investigators.

Stanford has maintained his innocence.

Stanford’s attorney in Houston, Dick DeGuerin told The Associated Press that Stanford “surrendered this afternoon to some FBI agents who were hiding out in black SUVs outside the residence where he was staying in Virginia.”

Richard Kolko the FBI spokesman declined to comment.

Chief investment officer, Laura Pendergest-Holt, of Stanford’s parent company, is facing criminal charges of obstructing the SEC’s investigation by lying about her knowledge of the firm’s activities and omitting key details.

“We heard the grand jury has been active, and we fully expect indictments,” her attorney Jeff Tillotson told the AP. “We obviously deny that our client has committed any crime.”

He has said she was “set up” by Stanford.

But, some economists say that the slowdown in August could be a temporary blip, and may not be indicative of a long-term trend.

China’s industrial output grew at its weakest pace in more than six year last month, partly due to the industrial shutdowns ordered by the government ahead of Olympics, the government’s statistics agency said on Friday. The sharp decline continued to be affected by the global economic downturn.

Industrial production in China expanded by 12.8% in August from a year earlier, the National Statistics Bureau said after a gain of 14.7% in July. The August reading was less than the 14.5% median estimate of economists. This was slowest rate since August 2002 and well below the 17.5% recorded in August 2007.

But, some economists said that the slowdown in August could be a temporary blip, and may not be indicative of a long-term trend. China’s industrial activity will pick up with the re opening of factories in Beijing and surrounding areas, JP Morgan’s local securities unit wrote in a note.

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Today’s weak data also increases the chance that Beijing will soon announce measures to stimulate economic activity. The figure adds to the week’s weaker inflation and trade reports in signaling that the expansion of the world’s fourth-biggest economy may keep slowing as growth falters in the US, Europe and Japan.

China’s policy makers may cut the proportion of deposits that banks are required to set aside as reserves and maintain a slower pace of gains in the yuan to protect jobs, according to some economists.

The reserve ratio is expected to fall 50 basis points from a record 17.5% by year’s end, dropping to 15% in 2009. The yuan fell to 6.8452 against the dollar as of 12:51 p.m. in Shanghai from 6.8449 immediately before the data was released.

During the July to August period, China’s industrial output expanded by 15.7% from the year-earlier period. Apart from a seasonal slowdown during the Lunar New Year celebrations that fall in the January to February period, the figures represent the weakest rate of industrial output growth since August 2002.

Separately, China’s retail sales grew at nearly the fastest pace in at least nine years, as rising incomes encouraged consumer spending. Retail sales rose 23.2% in August from a year earlier to 876.8bn yuan (US$128bn), the National Bureau of Statistics said today, after gaining 23.3% in July.

That was more than the 23% median estimate of economists.

The presidential campaign of Sen. John McCain announced today that Alaska Gov. Sarah Palin’s teenage daughter is pregnant.

In a statement, Palin and husband Todd said, “Our beautiful daughter Bristol came to us with news that as parents we knew would make her grow up faster than we had ever planned. We are proud of Bristol’s decision to have her baby, and even prouder to become grandparents.”

Sarah Palin, the Republican vice-presidential hopeful and running mate of John McCain, has revealed that her 17-year-old unmarried daughter is five-months pregnant.

The couple said Bristol, 17, plans to marry the “young man” who is the father of her child. The Reuters news agency reported Monday that Bristol is five months pregnant.

“We’re proud of Bristol’s decision to have her baby and even prouder to become grandparents,” Sarah and her husband, Todd Palin, said in a statement on Monday.

The news comes as the Republican National Convention is to open in St Paul, Minnesota.

“Bristol and the young man she will marry are going to realise very quickly the difficulties of raising a child, which is why they will have the love and support of our entire family,” the statement added.
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Steve Schmidt, a spokesman for McCain, said the Arizona senator considered the issue to be “a private family matter”.

“As parents [the Palins] love their daughter unconditionally and are going to support their daughter. Life happens,” he said.

Privacy plea

A staunch anti-abortionist who opposes gun control and favours the death penalty, Palin was announced on Friday as McCain’s vice-presidential choice.

However Democrats and the Obama campaign have criticised the move, saying Palin, 44, is inexperienced.

Officials in McCain’s election team said they were aware of Palin’s daughter’s pregnancy when they decided to pick her as the Arizona senator’s running mate.

Both McCain’s campaign and the Palins have asked the US and global media to respect the couple’s privacy.

McCain officials told Reuters news agency on Monday that the news was being released to rebut “lies” circulating on the internet about Palin’s children.

“Just like children should not pay for the sins of the parents, the parents should not pay for the transgressions of the children.”

In less than a month crude oil, which some saw hitting $200 a barrel by year-end, has plunged $32 but a rebound could happen, for example, over the Iranian nuclear crisis, analysts say. From a record-high $147.27 on July 11, the New York futures contract slid to about $115 on Friday, losing almost 22 per cent in the course of four weeks.

In its wake, most other commodity prices, which were driven higher by the oil market surge, have fallen from their peaks.

An ounce of gold has dropped to $800 from $1,000; farm commodity prices are between 25pc and 40pc lower and petrol prices have dropped about 6pc.

“Oil is at a tipping point. It is an exaggeration to cry that a bubble has burst. It is a break, Oil market was not in a bubble.”

For James Williams at WTRG Energy, the law of supply and demand reins.

“The market is simple reflecting the fundamentals of supply and demand. Markets participants are considering the world slowdown, the deterioration in expectations for the growth worldwide,” Williams said.

The slowdown in economic growth has a significant impact on energy consumption, analysts say.

A case in point is US drivers, known as huge consumers of petrol, drove a third less in May compared with a year ago. Motor fuel consumption fell more than 2pc.

This trend is expected to extend to the emerging market countries where the increasing weakening of fuel subsidies is going to force consumers to fill up their tanks less.

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By contrast, petroleum inventories which had slumped early in the year, are rebuilding. The world’s largest energy consumer, the US, has witnessed an increase in its crude oil reserves in recent weeks.

“When investors realised how much demand was increasing, they bid up prices. and when they realised how much inflation was increasing … they bid up prices further.”

“Now growth rates are declining throughout the world, the market overreacts to that, too”.

Swept up in the record run-up of oil prices, analysts had revised upward their this year’s price forecasts, with some talking about $200 a barrel in the next six months.

Those scenarios, disastrous for the world economy, have been replaced by a more modest range: between $80 and $110 a barrel at the end of the year. But a return to the forefront of problems with energy supplies could once again send prices skyward, analysts warn.

They point notably to the escalating tensions between the US and Iran over Tehran’s nuclear program, which could threaten overstretched global supplies, Antoine Halff of Newedge Group says.

Iran, the second-largest oil producer in Opec, has warned that it would shut the Strait of Hormuz, where 40pc of the world’s oil exports transit, if its interests are threatened.

The explosion of growth in the Chinese and Indian economies and a rebound in growth in the industrialized countries in 2009 could also stoke demand, pushing up prices.

“You should convince millions of Chinese and Indians, who are willing to live an American way of life, that they don’t have to buy cars, they don’t need (a) fridge,” MF Global’s John Kilduff joked.

The site claims to scour far more of the Web than Google does. It promises to sift through more than 120 billion pages to arrive at the best results. Google no longer publicly offers up its breadth, though its silence there will only stir up the hype that Cuil is, in fact, the new Google.

Cuil is a search engine devised by a group of former Google employees. My initial impression of the site was that is was easy to use. It claims to have the largest database of indexed pages in the world, 121 billion – although Google won’t disclose the number of pages it has indexed. But how many pages a search engine has indexed may not mean that much. What matters is if it can find the one simple page a person is looking for.

So I did some tests of my own. I started with word “pirate”. Cuil’s top search result was a site called “Talk like a Pirate Day.” This site didn’t appear on the first page of Google’s results, although Google did find a wikipedia reference to it. Google’s top result was The Pirate Bay, a notorious file-sharing website. Pirate Bay was listed second in Cuil’s results. Beyond that, both sites offered, more or less, the same information.

But it was after the initial search that Cuil really began to shine. While Google offers some related searches, including pirate-related costumes, pictures and games, Cuil offered a much greater variety in alternative searches, including movies, games, software, sports, and even party suggestions.

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Cuil also gives users suggestions based on category. Using pirate as a general term, Cuil suggested I search English Pirates, Pirate Films, Offshore Radio and even the Pittsburgh Pirates, an American baseball team.

While the expanded search capacities seem to give Google a run for their money (based on my one off search term), the site failed to compare in other areas. For starter, there is no way to search specifically for pictures or news.

My second complain was the inability to customise the results. Using Google and another name as a search term, I found over 120,000 results. The large number of results is because Google finds every page with Scott and Shuey, even if that page is referring to professional athletes “Scott” Hamilton and Paul “Shuey”. However, Google also allows me to search for an exact match of any name. That resulted in only 1,340 results.

This option isn’t available with Cuil, which found 1,126 results for my name, with no way to expand or narrow the search, at least, none that I could find.

Reversing the order of the names just seemed to confuse the site. Searching for Shuey Scott on Google gave me the exact same results. Cuil gave different results.

So Cuil is cool if you’re looking for general information, but if you’re looking for specifics, the site can leave you cold.

Watch your back, Google — no matter how far away the items in the rearview mirror appear to be.

Search engine Cuil launched earlier this evening, claiming a bigger index size (120 billion web pages) than Google or any other search engine. The pedigree of the founders and execs, which includes three ex senior Googlers, means the service will be compared to Google from day one. And the way they will be compared is index size and, more importantly, relevance/ranking of results.

We’ve been testing the engine for the last hour. Based on our test queries Cuil is an excellent search engine, particularly since it is all of an hour old. But it doesn’t appear to have the depth of results that Google has, despite their claims. And the results are not nearly as relevant.

A search for Dog returns 280 million results on Cuil and 498 million on Google. Judging relevance of results is subjective, but Google returns Wikipedia as the first result, then dog.com. Cuil returns Dog.com, wikipedia isn’t listed on the first page of results. Both are meaningful results, but Google is better.

More searches, Cuil v. Google: Apple (83 m v. 571 million) – neither mention the fruit. France (102 m v. 1.5 billion) – Cuil’s category refinement makes their results better for this query. Stonehenge (800k v. 8.5 million). Silicon Valley (3.2 m v. 24 m). Techcrunch (600k v. 6.5 m).

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It seems pretty clear that Google’s index of web pages is significantly larger than Cuil’s unless we’re randomly choosing the wrong queries. Based on the queries above, Google is averaging nearly 10x the number of results of Cuil.

And Cuil’s ranking isn’t as good as Google’s based on the pure results returned from both queries. Where Cuil excels is with the related categories, which return results that are extremely relevant. With Google, we’ve all gotten used to trying a slightly different search to get the refined results we need. Cuil does a good job of guessing what we’ll want next and presents that in the top right widget. That means Cuil saves time for more research based queries.

And I want to reemphasize that Cuil is only an hour old at this point, Google has had a decade to perfect their search engine.

Source – Techcrunch

U.S. stocks will continue to fall next week, in continuation of a sell-off that saw the Dow Jones Industrial Average experience its worst week in over four years, due to nervousness that the easy-money binge of the last few years has come to an end. No fireworks in earnings so far.

It will be tough for Wall Street to shake off the bear market blues next week if the price of oil keeps rising and the earnings season kick-off from Alcoa and General Electric disappoints investors. Stocks will remain vulnerable to any new signs of distress from hedge funds hit by their exposure to bad U.S. home loans, as well as from credit markets, where Wall Street firms and corporations are finding it harder and harder to obtain financing.

Oil has become the biggest wild card for growth and corporate profits. It jumped to a record above $145 a barrel on Thursday, driven by tensions between Israel and Iran, before the long holiday weekend to mark US Independence Day.

The price of crude is up 50 percent so far this year.

On Friday, US markets are closed on July 4th for the Independence Day holiday.

Financial results from Alcoa and GE will kick off the second-quarter earnings season next week. Aluminum company Alcoa, the first Dow component to report results, will release its quarterly numbers on Tuesday. GE, another Dow industrial and a bellwether for the US economy, will report earnings on Friday. Aside from second-quarter results, investors are anxious to see the companies’ forecasts for world economic growth and their own corporate sales prospects.

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More clarity on the economic outlook may come from Federal Reserve chairman Ben Bernanke. He is expected to speak twice, first at an FDIC mortgage lending forum on Tuesday and on Thursday, he will testify before on financial market regulation before the House Financial Services Committee.

But it’s oil that will remain a top concern.

“The price of crude oil is on the top of everyone’s list,” said Dan Peirce, a portfolio manager of the global asset allocation group at State Street Global Advisors in Boston.

“We saw a pullback one month ago, only to see it come back with a vengeance, which really pressured major equity markets.”

Expectation was high that a combination of a weak US dollar, lower US crude stockpiles and tension between Israel and major oil producer Iran would push prices to $150 a barrel before the close of trade, in line with a prediction made last month.

For the holiday-shortened week, the Dow Jones industrial average ended down 0.5 per cent, the Standard & Poor’s 500 Index slid 1.2pc and the Nasdaq Composite Index dropped 3pc. This was the fifth straight weekly decline for the S&P 500 and the Nasdaq, and the Dow’s third straight week of losses.

On Wednesday the Dow closed more than 20pc below its all-time closing high reached in October, crossing the threshold typically considered as the onset of a bear market.

The Dow closed above that mark on Thursday. But the broader S&P 500 index on Thursday slipped into bear territory during the trading session, unable to withstand the avalanche of gloomy global economic news and profit outlooks, surging inflation fears and weakening consumer confidence.

While the S&P 500 eked out a slight advance by Thursday’s close to climb out the bear market, optimism appeared scarce that there would be enough bargain hunting next week to help stocks decisively snap out of their slump.

“We’ve become nervous bulls,” said Brian Gendreau, a New York-based investment strategist at ING Investment Management Americas, which recently went “neutral” on US stocks.

“Equities have become a play on oil and we just do not know what oil will do. So we are on the sidelines for now,” he added.

General Electric, the second-largest US company by market capitalization, will garner a great deal of attention when it releases quarterly earnings at the end of the week.

The company is viewed as an economic bellwether because of the range of its businesses. Since financial services account for a large chunk of its revenues, GE’s results are also scrutinised for clues on the health of the financial sector, the biggest drag on the stock market this year.

Reuters Estimates sees GE reporting profit of $5.33 billion in the second quarter, or 54 cents per share, compared with year-earlier earnings of $5.4bn.

Results deviating from forecasts are expected to wield a disproportionate impact on the market, for better – if earnings are higher than expected – or worse, if the company misses earnings, such as occurred in the first quarter.

Fresh in the market’s memory is GE posting an unexpected drop of 6 percent in first-quarter profit, with an EPS of 44 cents a share, 7 cents below analysts’ forecasts.

The news drove GE’s stock down nearly 13pc, their sharpest drop in two decades, wiping out about $45bn of market value and dragging global markets down into the mud.

The earnings figures aside, the stock market will be looking for market direction by poring over what GE has to say about the next quarter or two, said Andre Bakhos, president of Princeton Financial Group in Princeton, New Jersey.

“They (investors) don’t want to hear about a slowdown in any major economies,” he said. “They don’t want to hear about paring back revenue estimates. That would exacerbate already heightened fears of recession woven into the market.”

Alcoa’s earnings on Tuesday will be put under the microscope for comments about industrial demand in economies abroad, particularly Asia and South America, he said.

France’s banking regulator yesterday fined Societe Generale four million euros ($6.3m) over “grave deficiencies” in its internal controls that enabled a massive rogue trade scandal at the bank, that led to nearly $7.8 billion in trading losses announced earlier this year.

In a decision e-mailed to Reuters, the Banking Commission also reprimanded France’s second-biggest listed bank for poor supervision that led to the unauthorized trades by Jerome Kerviel, the former SocGen trader blamed for the losses earlier this year. This 31-year-old trader made his fraud by investing several billion in Futures.

The banking commission said it had also issued a formal warning to Societe Generale for failing to prevent the staggering losses of 4.9 billion euros, which it has blamed on 31-year-old trader Jerome Kerviel.

After interviewing representatives of the bank on June 20, the commission said it detected “grave deficiencies in the internal control system” that “made possible the development of the fraud and its serious financial consequences.”

“The weaknesses brought to light, in particular the deficiencies in hierarchical controls, carried on over a long period, throughout 2007, without being detected or rectified by the internal control systems,” it said.

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One of France’s big three banks, Societe Generale shocked the financial world in January by announcing the losses, incurred as it was forced to unwind more than 50bn euros of unauthorised deals Kerviel is said to have made.

Kerviel turned himself in to police on January 26, two days after the bank revealed the losses, and on January 28 was charged with breach of trust, fabricating documents and illegally accessing computers.

SocGen did not discover Kerviel’s unauthorized trades until Jan. 18, even though the bank’s internal reports showed that Kerviel had in 2007 raised alarms with derivatives exchange Eurex and been the subject of more than 70 “alert” warnings.

The losses from the Kerviel scandal made SocGen vulnerable to a takeover bid from rivals such as BNP Paribas and forced the bank to raise 5.5 billion euros in capital to shore up its finances, also weakened by subprime losses.

The trader is the only person charged over the biggest rogue trade scandal in banking history.