It is important to analyze the differences between costs and prices. Costs are the time or resources that could have been put into another activity instead of the one that has been performed, while prices are the actual amounts of money people are going to pay for a certain product or service. According to President Obama, the “cost” of healthcare in America will significantly decrease. However, the cost will keep being the same. For instance, the time put into the research to find a cure for a certain disease will be the same, as well as the time put into manufacturing certain medications will be the same. In other words, the right word for President Obama’s phrase would be price. Let’s thereby analyze what would happen if the government controlled the prices or certain medications. First off, as it has been explained in the latter phrases, the cost for creating and manufacturing certain medications will be the same. In this case, the only difference would be that the amount of money given to those researching would be lower, making their research less effective and shorter. In other words, it would be fairly hard to get new medications out in the market if these were government controlled. Secondly, less medications would be offered, since less profits would be made by those selling the medications causing their stocks to drop significantly. Therefore, it would be hard to find any medications at all, because their stock would run out quickly no more would be supplied in a short period of time. Thirdly, the quality of these medications would drop significantly. With small profits, the manufacturers of medications would invest less into their quality and make their products cheaper. All in all, the scheme of government lowering the prices of medications will delete all of the incentives to create, sell and invest in new medications in the long run.

Lately, all over the media, citizens have been appearing in town halls to say what they think about the health care reform. Among the top comments, several were about the money used to generate the health care reform, and other were about pre-existing conditions. Of course, the latter mentioned are only some of the thousands and thousands of things said during the past month. However, one huge and important thing has been missed, and that is the possible shortage of health care if the reform is passed by congress. Shortages usually happen when prices for products and services that are usually high (in this case in the cost of health care and life insurance), are artificially lowered by the government, causing a severe shortage. In other words, by lowering the cost of health care for Americans who earn less than $250,000, the government sells a cheaper version of this service for relatively unlimited use by the people. The problem is the following: people who usually go to the hospital for severe problems, such as a broken arm or other treatments that require trained professionals, are now going to go to the hospital for a minor headache, etc. This would create and extremely high demand for care, even though the supply would be very limited. Next, people who actually need a rather important treatment will have to wait in line for a long time to get treatment, since other citizens will use hospitals excessively. The results might end in life or death situations! After the first problem the government is going to encounter, life insurance companies are going to experience an even worse situation. Since a lot of people will be using public hospitals for treatments, insurance companies will find it useless to build new hospitals, making it highly unprofitable. On the other hand, with such demand and a tight budget at flat prices, the public hospitals will soon find themselves overwhelmed, and it would be very hard to maintain them, leaving them crumbling and almost not meeting the standards. People will soon realize that it isn’t worth the waiting to get public care, and will go back to the private insurance companies for care. From that point on, health care will be used by not many Americans, but paid by so many more.

During his presidential campaign, President Barack Obama claimed to not raise taxes on middle class families. However, with all of the present reforms and new systems attempted by President Obama, it doesn’t seem logic to put them all on the field with a tightened budget. Now, Treasury Secretary Timothy Geithner, and National Economic Council Director, Larry Summers have been indirectly suggesting the idea to raise taxes to deal with budget shortfalls. According to Mr. Geithner, “We can’t make these judgments yet about exactly what it’s going to take and how we are going to get there”. Summers, on CBS’s “Face the Nation” said that, “It is never a good idea to absolutely rule things out”. Moreover, the squeezed federal budget released by the Commerce of Department last week showed everyone that is has been the worst since the Great Depression. At the same time, tax revenues have dropped and have caused outlays for the unemployment compensation program to rise. In conclusion, what we were told was nothing but a mere deformation of the truth to get voters to vote for Mr. Obama. It is most likely that taxes are going to get higher for middle class families. With all of the current spending, the government is soon going to find itself taxing the lower class families for its costly programs, during one of the worst recessions this generation has ever seen. 

PSA Peugeot Citroen said that if made a great sum of money in the first half, and Daimler AG, Honda Motor Co. and Nissan Motor Co. notified quarterly results that are better than expected. Moreover, Peugeot said it had 467 million euros in free cash, after reducing all of the unsold stocks. Professional analysts were proved to be wrong when they predicted a 40 billion yen loss for Honda, while the company actually reported a net income of 7.5 billion yen. On the other hand, Daimler still reported a deficit. However, it was much narrower than the estimated results. Nissan was predicted a 58.5 billion yen loss, yet it turned out to be a 16.5 billion deficit. According to Edwin Meyer, “It will be a very bad year, but it’s getting better … The general consensus is that things will start to look a lot better from October”. All over the media, signs of the ease in the recession have been alerted. The Newsweek magazine posted on its cover that the recession is over. People all over the world are starting to have optimism, yet lots are still skeptical. Even if the recession is over, there is still a lot of debt to pay off, and don’t even think the average American will start spending money right away; it will take years for consumer spending to rise once again. The real question is, could this be the end to the recession, or just a temporary state of balance?

We have been hearing of all the changes that are to come from President Obama. First, it was the cap-and-trade bill, now it’s the health-care reform, and coming soon is the public education reform; all during the course of six months! To make such changes to a country as big as the United States, a lot of time is needed, time that used wisely would accomplish all these objectives. Therefore, the time we are talking about is to be measured in years, not months. However, what our current President does not seem to understand, is that time is to be given to these situations, and if rushed through, several and fatal mistakes could be made. He passed the cap-and-trade bill by only seven votes. Now struggling to get the votes in for the health-care reform, President Obama has lost much of his credibility, and is now blaming former President Bush for all the debt our nation has to face. The next question is, what are we to see for the education reform? How are we going to improve the standards by changing the dates breaks are to take place? Shouldn’t President Obama invest in new methods of teaching, new school material to raise the standards instead of just swapping the breaks around? Shouldn’t he just take a little bit more time at the desk and think through this plans to make them work? Shouldn’t he just slow down?

During May, a new type of flu was reported to be deadly in Mexico. Now all over the Americas, extending from Argentina to Canada, the swine flu has taken thousands of lives and infected thousands of people as well. What looked like a rather small flu ended as a devastating pandemic. Now, if anyone gets to see a global map of where the swine flu is, a strong, yet strange sense comes in: the swine flu is mostly in the Americas, and not much of it is in the Middle East. In fact, one of the only countries where there have been swine flu cases in the Middle East is Israel. Is this just a strange coincidence, or a new type of terrorism? Let’s analyze both sides. Coincidences happen all the time; just think of the millions there are: our existence, our survival through the ages and millions more. If the swine flu is really a natural flu, then we should assume it can only live in regions where the climate is similar to the Americas’. The true problem is that the Americas’ climate can range from negative ten degrees to one hundred degrees. Isn’t that a little bit strange? Moving on, let’s analyze the other side of the story. Since terrorists have no way of reaching America, could they have hired scientists to create the next world pandemic, in the attempt to destroy the United States? The question might sound very scary, yet it has its own logic. If security in airports has doubled since 9/11/2001, there would be almost no way of a terrorist to infiltrate into the country. Bombing attacks in other countries would be useless to them, so there was no other way of getting here. However, a virus can travel by itself, and as it has been seen in the maps, it is now everywhere. So, what is the true reason for all of this; just a coincidence, or a next generation attack?

It was simply stunning to hear President Obama speak in New Jersey. His whole speech on healthcare was nothing than a mere deformation of the real facts that would affect the economy. As he put it, the healthcare plan would provide “lower costs, more choices, and coverage you can count on”. Let’s start analyzing the phrase that was mentioned. First of all, come the “lower costs”, one of the most controversial topics in this healthcare reform. It should be changed to “higher costs”, since the taxes will dramatically increase for the wealthy, who have worked so much to accomplish what they have, and pay for the other millions of Americans who hadn’t had the chance to get there. In the conservative point of view, personal responsibility is not promoted in the least, yet submerged significantly. Secondly, let’s analyze the “more choices” it offers. Once more, the government will control where you can get different treatments, since it will be to expensive for them to let people choose where to go. Lastly, the “coverage you can count on” is simply depressing. Not only taxes are going to be high, and you will be able to choose between a small selection of hospitals near you, the heath care quality will be substandard, since the government will be paying doctors a mere portion of what they used to get. We need to understand, that even if the current healthcare is not very good, that the government-run health care system will be both more expensive and much worse than the current one. 

As it has been announced, the Obama administration plans to change the financial security system completely. What the current administration doesn’t understand is the fact that the market, as well as the people have memories; we can remember certain things. The market will automatically know what not to do, and the people have learned their lesson to not investing money in very risky stocks. New rules, and new terms will create new problems unknown to people. These new problems will have to be resolved, yet new organizations will have to be created to control the new problems. In the end, with this never ending circle, the markets will be fully controlled by the government, just like in a command regime. The following paragraph written by the great economist Adam Smith in his book, The Wealth of Nations describes how the market auto-regulates itself to fit the effectual demand by the people, and how regulations can turn out be very harmful to the economy:

The market price of any particular commodity, though it may continue long above, can seldom continue long below, its natural price. Whatever part of it was paid bellow the natural rate, the persons whose interest it affected would immediately feel the loss, and would immediately withdraw either so much land, or so much labor, or so much stock, from being employed about it, that the quantity brought to market would soon be no more than sufficient to supply the effectual demand. Its market price, therefore, would soon rise to the natural price. This would be at least the case where there was perfect liberty. 

After it very narrowly passed by the legislation, the cap-and-trade policy to invest on green industries was very controversial. It was supposed to help global warming, even if we don’t even know it exists. So, what’s the real meaning of green? In the following, rather short post, we will be discussing the meaning and the possible use of green technology. Is it truly made to fully help the environment? In my opinion, the green technology is meant to, in part, help the environment, yet majorly to make the United States independent from the Middle Eastern nations, from which it buys its oil supply from. This is a very possible answer, considering the major struggle of the United States to get its oil, even in tough times like a recession. The local oil production is not enough to satisfy the needs, as it is shown by all the transactions between the U.S. and OPEC, and other oil exporters. Just imagine, the whole world would change if another source of energy was found to work. The supply and demand scheme would change completely, if a mineral or chemical product found in the U.S. was to work as a source of energy. The U.S. would soon be selling this new energy source all over the world! Then, why is it that the government calls this technology green, making the population think that its main objective is to help the environment, while the real objective is the one discussed in the latter sentences? Why can’t the government be clear on this, and let us know, the citizens, the real things that they are doing with our tax money?

As it was mentioned in his campaign, President Obama is proposing a government-run healthcare plan. For most, this is good news: having a universal healthcare plan paid with taxes. The last phrase represents the common reasoning of most Americans, which believe this is true. However, there are a lot of hidden facts, the ones that the Obama administration doesn’t want to show. First, the healthcare plan will significantly reduce the salary for most doctors, which means the quality of the healthcare will have a significant downturn. Therefore, since the healthcare quality will get worse, and the salary of doctors, nurses, dentists and much more will be reduced, Americans will come back to the private healthcare corporations. This will leave public hospitals desolated and incompetent. In the end, not many people will use public hospitals, even though they will have to pay higher taxes for services they don’t even use.  Luckily, senate Democrats forecasted that President Obama doesn’t have enough votes to pass the healthcare reform. As Sen. Diane Feinstein (D-Calif.) put it, “I don’t know that [Obama] has the votes right now. I think there’s a lot of concern in the Democrats caucus”. In conclusion, it’s the taxpayers’ money that is in risk of being wasted into something that might make the economy go even worse. 

Signs of optimism and ease in the global recession are starting to show up. According to reports made by the Government, manufacturing and service industries located in Europe contracted in June. In fact, it was the slowest pace in nine months. At the same time, U.S. consumer spending rose very gradually in May, just like it was said on my last post. Surprisingly, the Organization for Economic Cooperation got more hopeful and raised its forecast for the economy, as well as the economy of the other thirty nations that are members of this organization. As the Financial Stability Board put it, it “noted signs of improvement in the global macroeconomic outlook and in some financial markets”. Mario Draghi, chairman of the Financial Stability Board said that the world economy is showing “convincing signs of stability”. As Mr. Draghi put it, “We observe signs of improvement here and there … Still, the fragilities of the economy and the financial system are there”. On the other hand, the Dow Jones Industrial average has been showing not the most optimistic signs. It has risen since its lowest point on Thursday, and is now in the mid 8,400s. Are these truly signs of optimism, or just a parody made by the government to keep the population happy?

Very gradual increases in the consumer spending rates have been seen, with a 0.3 percent increase in May. The Obama administration’s stimulus plans have spurred a small gain in American incomes, a rather optimistic sign that the process of getting the economy back in its track is paying off. The 0.3 percent increase mentioned before was the first gain in the past three months. Earnings have also risen by 1.4 percent, the biggest gain in a whole year. All of this events have led to the 15-year high savings rate. The consumer sentiment rose in June to its highest level since February 2008. All of the efforts done by the government to get credit working back and lift the incomes are allowing consumers to spend while the unemployment rate rises. In fact, the unemployment rate hasn’t been this high even since the 1980s. The destruction of wealth caused by the housing downturn has led to the present high savings rate. As Michael Feroli put it, “It’s still too early to look for consumers to be an engine of growth for the economy”. Signs for the future? While a 10 percent unemployment rate is expected nationwide, the average household is to save every penny it has to survive the rollercoaster path of the economy, by making smaller purchases, more conservative investments and only purchasing what it needs- not what it wants.  

Home prices have once again dropped by 17 percent in May since 2008. This is mainly good news for first time home buyers, since most of these homes are in the state of foreclosure. The drop in the prices mentioned before have contributed in mayor ways to “reduce the nation’s glut of unsold properties”, as Courtney Schlisserman said writing for the Bloomberg.com. There was a 2.4 percent rise, which brings the annual rate to 4.77 million, which is still lower than forecast. Not very surprisingly, this price drop is ranked third among the deepest on record in U.S. history. The tax breaks from the Obama administration and the significantly lower mortgage rates have made it more affordable have helped support the housing industry during its fourth year in a row of downturns. However, limited recovery is likely to be expected because of the rising unemployment rates and loan costs rising once again. In the years to come, we might see the housing market rising once again, yet very gradually. Just like I said on my last blog article, people are tending to more conservative investments. Buying a home right now is very risky for a lot of American people. This is just another one of the many effects of the recession.

As President Obama said, a “cascade of mistakes” has now made his mind to propose the biggest overhaul in the U.S. financial regulatory system ever since the Great Depression, 75 years ago. This plan to literally control the market has been very controversial in the media, especially because it is going to add a new layer of regulation for the biggest financial firms, such as the ones that were bailed out during the past year. The plan is designed to add an agency to supervise consumer financial products, let the Federal Reserve oversee the companies that deemed too much to fail, and turn hedge and private equity funds under the federal government. What would we see in the future? Most likely, a lot more government control in the market, new laws, and restrictions in how to invest in the market. President Obama says he wants to sign legislation by the end of the year. The only problem is that, by that time, the “sweeping overhaul”, will sweep the market, and all of its freedom.  

As the first quarter of the year soon comes to its end, the household wealth plunged down with a $1.3 trillion deficit; the biggest downturn ever since 1952, when quarterly household wealth was kept in record. As stocks slowly emerge, yet still have their ups and downs, and the housing market and house prices are very low, the average American household has lost a very big part of what makes up its own wealth. Even though this might seem very bad, the American people are now having different points of view towards how to spend their money, saving their money more than ever, due to the new tax breaks from the Obama administration and the stimulus plans, imposing much more government control. As Christopher Low put it, “it is going to be very difficult to have any recovery in consumer spending without jobs and incomes recovering first”. However, retail sales rose in May for the first time in three months, mainly because of U.S. shoppers buying new cars and looking for bargains due to the rising price of gasoline. What are we going to see in the future? Probably, people saving their money more, making less purchases and more conservative investments, in the struggle to keep up with the economic depression. There is no doubt that tough times are ahead.