Obamacare: The Mother Of All Market Distortions (Updated)

Market distortion occurs when government imposes artificiality on markets through regulation. Such distortions always - always - always - cost the economy and individuals. I am not talking about laws of contract and fraud which set the parameters of the playing field for the operation of the free market, but rather regulations limiting free market decisions. Some are simply corrupt - i.e., the protection of vested interests. Others are more insidious and derive from the penultimate deceit of the left - that they are more intelligent than millions of individuals making their own decisions on how and what to purchase and sell.

Its hard to top the left's subprime housing crisis that brought our economy to its knees for market distortion. But that was a distortion that took fifteen years to bear its poisonous fruit. The biggest market distortion we are likely to see in our lifetimes and this side of the Soviet Union - one that is already bearing immediate fruit - is Obamacare. Healthcare is one sixth of our entire economy, and Obamacare is just starting to explode it.

The left has taken over our healthcare industry, mandating vastly expanded mandatory areas of coverage, from pregnancy, mental health, pre-existing conditions, "free" wellness checks, and "free" contraception, including the "morning after" abortion pill. They have mandated universal coverage - for supposedly an additional 30 million people - as well as subsidized coverage for lower and lower middle economic class. For this to work without adding to government debt, the middle and upper class are going to have to pay much more for their coverage, the young need to buy into the plans so as to subsidize the old and sick, and there is going to have to be a lot of new tax revenue to take up the slack for subsidies.

There is zero chance that this plan will work as advertised by Obama and the left. It will not save people money. It will not bend down the cost of health care. It will not provide universal coverage. It will not reduce the deficit. And of course, people who like their coverage will not be able to keep it at their choosing.

Some of these claims were knowing falsehoods.



Others seem to be attributable to the supreme conceit of the left, that they are smarter than the free market.

Because Obama has unilaterally put off the employer mandate to 2015, we are going to have to wait one more year to be able to take full stock of the near term impact of Obamacare in all of its 'glory.' But my full expectation is that it will add steeply to the deficit, that it will send the economy into even greater stagnation, if not outright recession, and jobs will further contract. It will be a far left trifecta.

The only good thing about this is that the far left owns this monstrosity. Whatever the right does, it should not agree to anything as a fix. Any attempt to put a band aid on this cancer will only extend out the pain. There is one answer only - repeal.

There will likely never be a greater experiment in socialist and Keynsian economic theory than the Obama administration policies in virtually all areas of government. The only question is whether the American people will ever take realistic stock of the outcomes.

Additional Updates: From Powerline on the higher costs of insurance under Obamacare:

For a succinct explanation of why Obamacare is making health insurance more expensive for millions of Americans, check out this short interview with Aetna CEO Mark Bertolini. Bertolini identifies three main factors: 1) Obamacare imposes a requirement that, on an actuarial basis, insurance cover at least 60% of health care costs. Currently, more than half of Americans who buy individual coverage are below 50%. 2) Obamacare imposes 4% to 5% additional cost in the form of new taxes and fees. Aetna alone will pass on $1 billion in Obamacare taxes and fees to its policyholders. 3) Obamacare mandates many coverages, whether customers want them or not, and requires insurers to provide subsidized coverage to those who are already sick.

And via Hot Air, there is Charles Krauthammer:

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Demonizing Credit Default Swaps

If you listen to Obama and the left tell the story, the cause of our economic meltdown had nothing to do with Fannie, Freddie, fraudulent bond ratings, or - at the heart of all of these - race based market distortions introduced by Democrats and protected with the race card right up until Fannie and Freddie failed. The left's boogyman is Wall St. greed as expressed through transferring risk to Fannie and Freddie and the use of Credit Default Swaps. And this meme has been picked up in Europe as regards Greece's fiscal meltdown.

I blogged on Credit Default Swaps in a long post on the origins of our economic meltdown here. Credit Default Swaps are basically insurance - a way of managing risk. There is nothing untoward about them - though they failed during the mortgage meltdown because of mark to market accounting rules along with a big assist from fraudulent bond ratings.

Now, the left, and the Europeans, want to place substantial restrictions on Credit Default Swaps. It is suffice, it to say, an unwise idea. This from Prof. Bainbridge:

. . . This is just absurd.

Let's review what credit default swaps are and how they work:

Credit default swaps (CDS) are a form of insurance. Let's say you borrow money from me. I'm worried that you might default. So I hedge that risk by purchasing a CDS. If you end up unable to pay me back, the seller of the CDS will cover my losses. (The insurance analogy admittedly is not exact, but it suffices for present purposes.

As the Journal explained, banning the use of CDSs as a hedging device would have adverse consequences, just as banning insurance would:

Any attempt to restrict CDS trades could result in unintended consequences such as more risk for the financial system and higher borrowing costs for a range of nations and companies, some analysts and investors warn.

Restricting credit-default swap trading could push up borrowing costs for various nations if investors feel they have fewer ways to protect themselves if the bonds' prices decline. . . .

. . . As the Journal explained:

[A] study released Monday by Germany's financial regulator, BaFin, found no evidence that credit-default swaps have been used to speculate against Greek national debt. The study showed the net volume of outstanding credit-default contracts on Greek national debt has remained unchanged since January at about $9 billion. This compares to total Greek government debt of about $400 billion. "The market data do not show massive speculation in CDSs," the regulator concluded. . . .

There is much more. Do read the entire post. The bottom line is that CDS perform an important function, and to regulate them out of existence or to severely circumscribe their use is very likely to have unwanted consequences. And the last thing the world economy needs now is more volatility.

Of course, that is the rational way of looking at it all. For Obama, who has shown that he is quite willing to demonize anyone (Chysler secured debt holders) or anything (insurance companies) for political ends, rationality would seem to be of little consequence.

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Climate Update 21: AGW Investigation Begins? 100 Reasons AGW Is Natural, Green Profiteers, Conflict Of Interest & Arctic Sea Ice

Is there going to be a real investigation over Climategate? Perhaps so. The Dept. of Energy has issued a "litigation hold notice" to its employees. The notice requires employees, in relevant part, to "preserve any and all documents relevant to “global warming, the Climate Research Unit at he University of East Anglia In England, and/or climate change science.” " This is heartening news indeed.

There is not a complete MSM blackout on Climategate. The UK Daily Express again jumps into the fray, publishing a report of the European Foundation giving "100 reasons why global warming is natural." Many of the "reasons" discussed are political and have nothing to do with science. That said, here is a truncated list:

1) There is “no real scientific proof” that the current warming is caused by the rise of greenhouse gases from man’s activity.

2) Man-made carbon dioxide emissions throughout human history constitute less than 0.00022 percent of the total naturally emitted from the mantle of the earth during geological history.

3) Warmer periods of the Earth’s history came around 800 years before rises in CO2 levels.

4) After World War II, there was a huge surge in recorded CO2 emissions but global temperatures fell for four decades after 1940.

5) Throughout the Earth’s history, temperatures have often been warmer than now and CO2 levels have often been higher – more than ten times as high.

6) Significant changes in climate have continually occurred throughout geologic time.

7) The 0.7C increase in the average global temperature over the last hundred years is entirely consistent with well-established, long-term, natural climate trends.

8) The IPCC theory is driven by just 60 scientists and favourable reviewers not the 4,000 usually cited.

9) Leaked e-mails from British climate scientists – in a scandal known as “Climate-gate” - suggest that that has been manipulated to exaggerate global warming

10) A large body of scientific research suggests that the sun is responsible for the greater share of climate change during the past hundred years.

11) Politicians and activiists claim rising sea levels are a direct cause of global warming but sea levels rates have been increasing steadily since the last ice age 10,000 ago

12) Philip Stott, Emeritus Professor of Biogeography at the School of Oriental and African Studies in London says climate change is too complicated to be caused by just one factor, whether CO2 or clouds . . .

15) Professor Plimer, Professor of Geology and Earth Sciences at the University of Adelaide, stated that the idea of taking a single trace gas in the atmosphere, accusing it and finding it guilty of total responsibility for climate change, is an “absurdity” . . .

18) Despite activist concerns over CO2 levels, CO2 is a minor greenhouse gas, unlike water vapour which is tied to climate concerns, and which we can’t even pretend to control. . .

20) It is claimed the average global temperature increased at a dangerously fast rate in the 20th century but the recent rate of average global temperature rise has been between 1 and 2 degrees C per century - within natural rates

21) Professor Zbigniew Jaworowski, Chairman of the Scientific Council of the Central Laboratory for Radiological Protection in Warsaw, Poland says the earth’s temperature has more to do with cloud cover and water vapor than CO2 concentration in the atmosphere.

22) There is strong evidence from solar studies which suggests that the Earth’s current temperature stasis will be followed by climatic cooling over the next few decades

23) It is myth that receding glaciers are proof of global warming as glaciers have been receding and growing cyclically for many centuries

24) It is a falsehood that the earth’s poles are warming because that is natural variation and while the western Arctic may be getting somewhat warmer we also see that the Eastern Arctic and Greenland are getting colder

25) The IPCC claims climate driven “impacts on biodiversity are significant and of key relevance” but those claims are simply not supported by scientific research

26) The IPCC threat of climate change to the world’s species does not make sense as wild species are at least one million years old, which means they have all been through hundreds of climate cycles

27) Research goes strongly against claims that CO2-induced global warming would cause catastrophic disintegration of the Greenland and Antarctic Ice Sheets.

28) Despite activist concerns over CO2 levels, rising CO2 levels are our best hope of raising crop yields to feed an ever-growing population

29) The biggest climate change ever experienced on earth took place around 700 million years ago

30) The slight increase in temperature which has been observed since 1900 is entirely consistent with well-established, long-term natural climate cycles

31) Despite activist concerns over CO2 levels, rising CO2 levels of some so-called “greenhouse gases” may be contributing to higher oxygen levels and global cooling, not warming

32) Accurate satellite, balloon and mountain top observations made over the last three decades have not shown any significant change in the long term rate of increase in global temperatures

33) Today’s CO2 concentration of around 385 ppm is very low compared to most of the earth’s history – we actually live in a carbon-deficient atmosphere

34) It is a myth that CO2 is the most common greenhouse gas because greenhouse gases form about 3% of the atmosphere by volume, and CO2 constitutes about 0.037% of the atmosphere

35) It is a myth that computer models verify that CO2 increases will cause significant global warming because computer models can be made to “verify” anything

36) There is no scientific or statistical evidence whatsoever that global warming will cause more storms and other weather extremes

37) One statement deleted from a UN report in 1996 stated that “none of the studies cited above has shown clear evidence that we can attribute the observed climate changes to increases in greenhouse gases”

38) The world “warmed” by 0.07 +/- 0.07 degrees C from 1999 to 2008, not the 0.20 degrees C expected by the IPCC

39) The Intergovernmental Panel on Climate Change says “it is likely that future tropical cyclones (typhoons and hurricanes) will become more intense” but there has been no increase in the intensity or frequency of tropical cyclones globally

40) Rising CO2 levels in the atmosphere can be shown not only to have a negligible effect on the Earth’s many ecosystems, but in some cases to be a positive help to many organisms

41) Researchers who compare and contrast climate change impact on civilizations found warm periods are beneficial to mankind and cold periods harmful

42) The Met Office asserts we are in the hottest decade since records began but this is precisely what the world should expect if the climate is cyclical

43) Rising CO2 levels increase plant growth and make plants more resistant to drought and pests

44) The historical increase in the air’s CO2 content has improved human nutrition by raising crop yields during the past 150 years

45) The increase of the air’s CO2 content has probably helped lengthen human lifespans since the beginning of the Industrial Revolution

46) The IPCC alleges that “climate change currently contributes to the global burden of disease and premature deaths” but the evidence shows that higher temperatures and rising CO2 levels has helped global populations. . .

48) The “Climate-gate” scandal pointed to a expensive public campaign of disinformation and the denigration of scientists who opposed the belief that CO2 emissions were causing climate change

49) The head of Britain’s climate change watchdog has predicted households will need to spend up to £15,000 on a full energy efficiency makeover if the Government is to meet its ambitious targets for cutting carbon emissions. . .

51) Wind farms are not an efficient way to produce energy. The British Wind Energy Association (BWEA) accepts a figure of 75 per cent back-up power is required.

52) Global temperatures are below the low end of IPCC predictions not at “at the top end of IPCC estimates”. . .

56) The manner in which US President Barack Obama sidestepped Congress to order emission cuts shows how undemocratic and irrational the entire international decision-making process has become with regards to emission-target setting.

57) William Kininmonth, a former head of the National Climate Centre and a consultant to the World Meteorological Organisation, wrote “the likely extent of global temperature rise from a doubling of CO2 is less than 1C. Such warming is well within the envelope of variation experienced during the past 10,000 years and insignificant in the context of glacial cycles during the past million years, when Earth has been predominantly very cold and covered by extensive ice sheets.” . . .

61) The UN’s panel on climate change warned that Himalayan glaciers could melt to a fifth of current levels by 2035. J. Graham Cogley a professor at Ontario Trent University, claims this inaccurate stating the UN authors got the date from an earlier report wrong by more than 300 years. . . .

64) Michael Mann of Penn State University has actually shown that the Medieval Warm Period and the Little Ice Age did in fact exist, which contrasts with his earlier work which produced the “hockey stick graph” which showed a constant temperature over the past thousand years or so followed by a recent dramatic upturn. . . .

67) Global temperatures have not risen in any statistically-significant sense for 15 years and have actually been falling for nine years. The “Climate-gate” scandal revealed a scientific team had expressed dismay at the fact global warming was contrary to their predictions and admitted their inability to explain it was “a travesty”. . . .

70) Richard Lindzen, Professor of Atmospheric Sciences at Massachusetts Institute of Technology, wrote: “The notion of a static, unchanging climate is foreign to the history of the Earth or any other planet with a fluid envelope. Such hysteria (over global warming) simply represents the scientific illiteracy of much of the public, the susceptibility of the public to the substitution of repetition for truth.” . . .

76) Dr Roy Spencer, a principal research scientist at the University of Alabama in Huntsville, has indicated that out of the 21 climate models tracked by the IPCC the differences in warming exhibited by those models is mostly the result of different strengths of positive cloud feedback – and that increasing CO2 is insufficient to explain global-average warming in the last 50 to 100 years. . . .

78) A proper analysis of ice core records from the past 650,000 years demonstrates that temperature increases have come before, and not resulted from, increases in CO2 by hundreds of years. . . .

85) Ice-core data clearly show that temperatures change centuries before concentrations of atmospheric CO2 change. Thus, there appears to be little evidence for insisting that changes in concentrations of CO2 are the cause of past temperature and climate change.

86) There are no experimentally verified processes explaining how CO2 concentrations can fall in a few centuries without falling temperatures – in fact it is changing temperatures which cause changes in CO2 concentrations, which is consistent with experiments that show CO2 is the atmospheric gas most readily absorbed by water. . . .

89) It is a myth that CO2 is a pollutant, because nitrogen forms 80% of our atmosphere and human beings could not live in 100% nitrogen either: CO2 is no more a pollutant than nitrogen is and CO2 is essential to life.

90) Politicians and climate activists make claims to rising sea levels but certain members in the IPCC chose an area to measure in Hong Kong that is subsiding. They used the record reading of 2.3 mm per year rise of sea level.

91) The accepted global average temperature statistics used by the Intergovernmental Panel on Climate Change show that no ground-based warming has occurred since 1998.

92) If one factors in non-greenhouse influences such as El Nino events and large volcanic eruptions, lower atmosphere satellite-based temperature measurements show little, if any, global warming since 1979, a period over which atmospheric CO2 has increased by 55 ppm (17 per cent). . . .

100) A report by the Nongovernmental International Panel on Climate Change concluded “We find no support for the IPCC’s claim that climate observations during the twentieth century are either unprecedented or provide evidence of an anthropogenic effect on climate.”

The carbon market creates a massive market distortion. Likewise is the market distortion being caused by the move into all things green, most of which cannot survive on their own with massive subsidies. Among the many things - most bad - that happen in a situation of market distortion, a few favored rent seekers stand to become extraordinarily wealthy. And that is the subject of a recent article in The Telegraph.

Al Gore has made lots of money by lecturing us all about being green. Some say he's become the world's first "carbon billionaire".

What you can be sure of is that the move toward a more environmentally sustainable future is an unstoppable trend – and Mr Gore is unlikely to be the first to get very rich from environmental policy.

One great business to be in as we move into a greener future is the copper industry. Copper is going to help us cut down on carbon. . . .

You can read the entire article. Gore is merely the face of "green backs from selling green snake oil." Another carbon multi-millionare is none other than the IPCC's Chairman Mao, Dr Rajendra Kumar Pachaur. EU Referendum has done a yeoman's job in itemizing Pachaur's deep financial interests in such thing as the carbon trading scheme and other "green" regulations. One might think that a conflict of interest for an IPCC chariman.

The AGW crowd is quick to point out that 2007 was saw a lowpoint for ice in the Arctic. Since 2007, the ice cap in the Arctic has rebounded - indeed, it is clearly shown in sattelite photos.



Hmmm, that's a problem. How to possibly challenge that? Enter Dr. David Barber, who takes a short trip into the arctic and concludes that the sattelite images are wrong and that the new ice is "rotten." As Watts Up With That responds:

If this “rotten ice” problem and satellite duping proposed by Dr. Barber is in fact real, I’d fully expect that the National Snow and Ice Data Center (NSIDC) would make some sort of announcement or post a caveat about it on the “Arctic Sea Ice News and analysis” web page where they present the satellite data. I couldn’t find anything on that page about “rotten ice” or satellite data being inaccurate.

Read the entire post.

Prior Posts:

- - Climategate and Surrealism
- - More Climategate Fallout
- - Climategate Update 3
- - Climategate Update 4: CRU Records Worthless
- - Climategate Update 5: IPCC's Chairman Mao
- - Climategate Update 6: Climategate In Video
- - UNEP, Green Religion & Global Governance
- - Climate Update 7: IPCC's Chairman Mao Plays The Obama Card, Peer Review Analyzed, Scientific Method Explained For Paul Krugman
- - Climategate Update 8: The NYT Reports
- - Climategate Update 9: CRU Head Phil Jones Steps Down During Investigation, An MIT Prof Explains The Holes In AGW Theory, And Climate Fraud Is Everywhere
- - Climategate Update 10: Climategate Reverberates From The UK To Down Under
- - Climategate Update 11: Finally An AGW Consensus, "Hockey Stick" Mann Attacks Jones, Gore Goes To Ground
- - Climategate Update 12: The AGW Wall Starts To Crumble, The Smoking Code & The Tiger Woods Index
- - Clmategate Update 13: Hack Job Alert - Washington Post Leads With Climategate and A Complete Defense Of Global Warming
- - Climate Update 14: A Tale of 4 Graphs & An Influential Tree, Hide The Decline Explained, Corrupt Measurements, Goebbelswarming at Copenhagen
- - Climategate Update 15: Copenhagen, EPA Makes Final Finding On CO2, Courts & Clean Air
- - Climategate Update 16: Copenhagen'$ Goal$, Palin Weighs In, As Do Scientists Obama Holds American Economy Hostage Over Cap and Trade
- - Climategate Updage 17: What Greenland's Ice Core Tells Us, The EPA's Reliance On The IPCC, & The Left's War On Coal
- - Gorebbelswarming
- - Krauthammer On The New Socialism & The EPA's Power Grab
- - Climategate Update 18: Ice Core Flicks, Long Term Climate, Anti-Scientific Method Then & Now, Confirmation Bias Or Fraud
- - Climategate Update 19: The Daily Mail Hits The Bulls Eye On Climategate; The AP Spins
- - Climategate Update 20: Snowing Around The World, But Warming In Antarctica?

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Green Madness & Government Intervention

The ill-advised ethanol saga continues.

Government mandates and subsidies for ehtanol were a massive boondoggle from the start. As I've blogged many times, it harms - not helps - the environment and moves large-scale production of agriculture from food to fuel, raising world food prices significantly - a World Bank estimate puts the increase at 75% - at a time when demand is increasing and production is decreasing (ironically driven by increasingly cold temperatures). Hot Air covers the latest in the saga.

The government mandates and subsidies have now led to a glut of ethanol, with the Obama EPA considering upping the blending requirements from 10% ethanol to 20% or more to take care of all the profiteers who, enticed by the government, have invested heavilly in expanding ethanol production. Think of it as the agricultural equivalent of doubling down on the AIG bailout - a bad idea set now to get exponentially worse. This will only further depress food production and raise food prices concomitantly. But in an added twist, requiring a higher ethanol mix threatens the integrity of our car engines. The only things not mentioned by the Hot Air authors are that increasing the ethanol mix in gasoline also lowers fuel economy (E20 lowers it by 7.7% over pure gasoline) and has a very adverse effect on small non-road engines.

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The Wages Of Green

We are paying dearly for the green agenda. We are paying for it with out of control energy prices that set new records seemingly daily. And we are paying for it as part of the insane biofuel agenda. As to the latter, according to the Guardian, an unreleased World Bank report cites biofuels as being the cause of a 75% increase in world food prices.
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This from the Guardian:

Biofuels have forced global food prices up by 75% - far more than previously estimated - according to a confidential World Bank report obtained by the Guardian.

The damning unpublished assessment is based on the most detailed analysis of the crisis so far, carried out by an internationally-respected economist at global financial body.

The figure emphatically contradicts the US government's claims that plant-derived fuels contribute less than 3% to food-price rises. It will add to pressure on governments in Washington and across Europe, which have turned to plant-derived fuels to reduce emissions of greenhouse gases and reduce their dependence on imported oil.

. . . The news comes at a critical point in the world's negotiations on biofuels policy. Leaders of the G8 industrialised countries meet next week in Hokkaido, Japan, where they will discuss the food crisis and come under intense lobbying from campaigners calling for a moratorium on the use of plant-derived fuels.

. . . Rising food prices have pushed 100m people worldwide below the poverty line, estimates the World Bank, and have sparked riots from Bangladesh to Egypt. Government ministers here have described higher food and fuel prices as "the first real economic crisis of globalisation".

. . . [P]roduction of biofuels has distorted food markets in three main ways. First, it has diverted grain away from food for fuel, with over a third of US corn now used to produce ethanol and about half of vegetable oils in the EU going towards the production of biodiesel. Second, farmers have been encouraged to set land aside for biofuel production. Third, it has sparked financial speculation in grains, driving prices up higher.

. . . [T]he report author, Don Mitchell, is a senior economist at the Bank and has done a detailed, month-by-month analysis of the surge in food prices, which allows much closer examination of the link between biofuels and food supply.

. . . "It is clear that some biofuels have huge impacts on food prices," said Dr David King, the government's former chief scientific adviser, last night. "All we are doing by supporting these is subsidising higher food prices, while doing nothing to tackle climate change."

Read the article.

The rush to biofuels taking agricultural land out of food production has been one a huge boon for select special interests and an utter disaster for the world. Yet with all of the accumulating information and with the price of staples seeming to rise daily, nothing is being done to stop the madness.

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