Great article. However, it is disheartening to know your stance on taxing rich people and helping poor.

Do you know that health care takes up a big part of our monthly expense here? In spite of this, most residents(including your humble reader) here are one car wreck or one accident or one family illness away from personal bankruptcy/ total disaster to one’s nest egg.

Regards,
Shankar
Atlanta USA

Kalidas Says ….Friday, December 11, 2009
Do you know why the health care cost has quadrupled (up 4 times) in Greenspan’s non inflationary economy?

Low interest rates. The insurance companis are traditionally Bond Investors. They usually park their money in interest bearing bonds to earn the income from where they pay the claims, expenses etc.

However, due to Greenspan’s low rate policy forced them to earn quick return which they found in CDO/CDS or other exotic derivatives. When those derivatives collapsed, they could not handle MediClaim with existent premia income. So they raised the Health care costs.

If the long term interest rates were 8% or about, there was no incentive for insurance companies to venture outside traditional investments. However, Fed with very large deficits, wanted to keep the interest servicing cost low, so wanted lower interest rates, which in turn caused Insurance companies to lose billions of dollars in worthless derivatives. This is the main cause of higher health care costs, which even Obama does not understand.