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Generational Dynamics Web Log for 19-Oct-2013
19-Oct-13 World View -- Saudi Arabia shocks U.N. by rejecting Security Council seat

Web Log - October, 2013

19-Oct-13 World View -- Saudi Arabia shocks U.N. by rejecting Security Council seat

Obamacare insurance companies trapped in a vicious financial Catch-22

This morning's key headlines from GenerationalDynamics.com

Israel / Turkey relations poisoned further by spy revelation accusation


Erdogan and Netanyahu
Erdogan and Netanyahu

The mutual personal hatred of Turkey's hardline president Recep Tayyip Erdogan and Israel's hardline Prime Minister Benjamin Netanyahu has been pretty apparent the last few years as Israeli-Turkish relations have become poisonous, especially after the the deaths of nine Turkish citizens on May 31, 2010, in a confrontation between Israel's navy and the boat Mavi Marmara in a flotilla headed for Gaza in violation of Israel's Gaza blockade. Israel finally apologized several months ago (see "15-Apr-13 World View -- Turkey warns Israel against 'dirty bargaining' over flotilla compensation"), but it did little to help the relationship between the two countries.

Now, a new accusation is threatening to worsen relations even further. According to a report by David Ignatius in the Washington Post, at the height of the mutual bitterness over the Mavi Marmara incident, Hakan Fidan, the head of Turkey’s National Intelligence Organization (MIT), transmitted to Iranian intelligence the identities of up to ten Iranians who had been working with Israel's Mossad intelligence agency. Israel believes that the disclosure by Erdogan's government was deliberate, and that President Obama supported Erdogan.

However, Turkey is vehemently denying the charges, and is countercharging that the Israelis are manufacturing accusations as a form of "psychological warfare against the government and its intelligence service." According to one of Erdogan's advisers, "Ignatius' article is so incoherent. The intelligence world operates according to agreements." Washington Post and Hurriyet (Istanbul)

Saudi Arabia shocks U.N. by rejecting Security Council seat

After spending months lobbying to get one of the nine non-permanent seats on the United Nations Security Council, and after finally achieving their goal when they were awarded at seat on Thursday, Saudi Arabia shocked the U.N. diplomats by rejecting the seat because of the U.N.'s hypocrisy. The Saudis are giving the following reasons for the dramatic rejection:

It's very hard to disagree with the criticisms, especially after the recent debacle over Syria, where al-Assad has been committing massive genocide of innocent civilians through heavy weapons supplied by Russia and by chemical weapons. This is happening right before our eyes, but the U.S. is too confused and the United Nations is too pathetic to do anything about it.

Meanwhile, Sunni and Shia jihadists from around the world are converging in the Mideast, particularly in Iraq and Syria, in preparation for sectarian war which can be blamed on the Russia and the U.S. and, most of all, the United Nations. Saudi Gazette and CS Monitor

Obamacare insurance companies trapped in a vicious financial Catch-22

A survey by the Wall St. Journal finds that the insurance companies that have received insurance plan signups from the Obamacare web sites are finding that the information they're receiving is wrong. Some spouses are shown as children, some people are shown as signing up for multiple plans, in other cases data is missing. "Luckily," there have only a few signups for many insurance companies, so they're calling the customers on the phone to verify the information that the Obamacare web site has provided.

This is giving rise to a kind of "Catch-22." In order to control prices, the Obamacare law specifies that insurance companies are only allowed to charge 20% of the premiums they receive to administrative purposes. In order to make Obamacare work, millions of young, healthy people have to sign up. But if that ever happened, then the insurance companies would have enormous administrative costs verifying the signup data, putting them into a huge financial squeeze.

Obviously, millions of young, healthy people are not signing up for Obamacare, and it's very unlikely that they will. The only people who are willing to put up with the "glitches" on the web site are those who desperately need insurance -- that is, the old and sick people. This would destroy the entire financial model of Obamacare. (See "15-Oct-13 World View -- Aetna CEO predicts Obamacare IT failures until 2017")

Long-time readers are aware that from the day it was first proposed in 2009, I've referred to President Barack Obama's health care plan as a proposal of economic insanity, because it's a repeat of President Richard Nixon's wage-price controls, which were an utter, total disaster for the economy.

Some people have written to me to complain that the comparison to Nixon's wage-price controls is not valid because there are no price controls in Obamacare.

I'm no expert on the details of Obamacare, but from the day it was proposed in 2009, I heard story after story about all the different ways that prices were going to be controlled. Insurance companies are limited in profits, hospitals and doctors were restricted in charges, and so forth. Some of the loudest complainers are labor unions who are being taxed because they offer "Cadillac" plans. Whether done by taxes or restricting prices, these are all price controls, as in the case of Nixon's wage-price controls.

For those of you who are "liberal" and "progressive," you're the ones who owe the world an explanation, not me.

If you're "liberal" or "progressive," then you have to believe that Nixon's wage-price controls should have worked. They were enthusiastically backed by labor unions and other liberals, they were fully backed by the Nixon administration, and almost everyone thought they'd work to reduce inflation from 2-3% down to 1% or so.

Instead, they were a disaster, and inflation rocketed to 10%. ( "5-Jul-13 World View -- Eurozone and Obamacare continue their parallel economic collapse")

If you're liberal or progressive, then you owe me and other people an explanation why that happened. This is a simple non-ideological question.

Wage-price controls were a typical liberal program, attempting to control the markets through government regulation, and it was a disaster. Give me and others an explanation of why this typical liberal program was a disaster.

When you go past your ideology and understand that you have no explanation why Nixon's wage-price controls were a catastrophe, then you'll also understand why Obamacare is a catastrophe.

In simple economic terms:

That's exactly what happened in the Nixon era, and it's exactly what's happening today.

Once again, forget your ideology for a moment, and go back and check out what happened under Nixon's wage-price controls, and you'll see the same thing happening today.

One bit of irony: Labor unions were the loudest advocates of wage-price controls, and they were the loudest complainers when the controls failed. Today, labor unions were the loudest advocates of Obamacare, and today they're the loudest complainers. Go figure. WSJ and USA Today

(Comments: For reader comments, questions and discussion, see the 19-Oct-13 World View -- Saudi Arabia shocks U.N. by rejecting Security Council seat thread of the Generational Dynamics forum. Comments may be posted anonymously.) (19-Oct-2013) Permanent Link
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