Category Archives: Wealth

Quote of the day: On America’s plutocratic press


From an essay by musician and writer Will Meyer for Jacobin:

Today, at the same time local newspapers shut down and cut costs, the combination of increasingly concentrated ownership and for-profit technological innovation has convinced a new generation of billionaires to buy up media outlets and launch new media enterprises.

Some have become the personification of avarice and confused priorities. They purchase a newspaper, gloating about their investment in the public interest, and then offer their newsroom a big shrug as they slash jobs to increase profit margins. Others are philanthropists who support adversarial public interest journalism or inject much-needed cash into shrinking newsrooms.

Yet the problem isn’t the character of individual billionaires per se, but the fact that the political system has allowed such power to accumulate in the first place.

While it matters on some level whether these billionaire-owned or privately funded outlets churn out self-interested coverage (as Sheldon Adelson wants his Las Vegas Review-Journal to do) or critical reporting (as Pierre Omidyar justifiably sees his First Look Media as doing), a journalism dependent on the whims of the wealthy is not a media system worthy of a democracy.

Mexican gasoline price hike spurs anger, protests


Under neoliberal President Enrique Peña Nieto, just as north of the border, the rich have been getting richer, and once public assets have been auctioned off to the highest corporate bidders.

But now the consequences of one such sell-off of the commons has resulted in an outbreak of rage across the country.

And even one of Mexico’s drug cartels is threatening on the side of the public, threatening a wave of arsons.

From teleSUR English:

The people of Mexico are entering the New Year in a state of rage and anxiety, with protests planned for Sunday to strongly denounce the government’s huge hike in gasoline prices. The strong rise in prices has been called the “gasolinazo” in Spanish, which roughly translates to “gasoline-punch.”

Unpopular President Enrique Pena Nieto has promised that fuel prices will fall thanks to his neoliberal 2014 energy reforms, which dismantled the seven-decade-old national ownership of petroleum resources by state-owned firm Pemex.

The government plans to end subsidies and let the market dictate prices in March, but the already-strained Mexican people will feel the pinch at the pump before they start falling.

The finance ministry announced Tuesday that the price of gasoline would increase by as much as 20.1 percent to 88 cents per liter on Jan. 1, while diesel would rise by 16.5 percent to 83 cents.

The price ceiling will be adjusted daily starting Feb. 18, before letting supply and demand determine them in March.

Around 100 protestors blocked a service station in the Pacific Coast resort of Acapulco on Friday, while on Saturday an assembly of popular organizations in Chihuahua state’s capital pledged to block all commercial transportation from entering or exiting the city as a means toward paralyzing the economy and pressuring the federal government to reverse the hikes. The assembly of people’s organizations also announced their intention to block major highways and railways in response to what they see as a neoliberal looting of Mexico and handover of its resources to private capital, according to a statement.

Meanwhile, Jalisco authorities are investigating reports that the country’s powerful Jalisco New Generation cartel has entered the fray, threatening to torch gas stations in response to the price hikes.

“They are speculating in order to obtain million dollar profits from the majority of the people who don’t make even a minimum wage … we have already realized that the (shortage) of fuel is because dealers don’t want to sell fuel unless they can do so at a profit, all of our people are now ready to start the mission,” the cartel stated in a WhatsApp message circulating in Jalisco.

A protest is planned in the capital on Sunday while Mexicans were urged on social media to block service stations on Monday. People were also encouraged to boycott fuel for three days.

The Republican heathcare agenda targets the poor


J.B. Silvers is Professor of Health Finance at Case Western Reserve University, and as the former President and Chief Executive Officer of QualChoice, then owned by Catholic Health Initiatives, he knows healthcare insurance from the inside.

In this essay for The Conversation, an open source academic journal, he examines the Republican strategy for derailing Obamacare and predicts that Congress, under Rep. Paul Ryan, will effectively dismantle the program, an agenda directly targeted at America’s poorest and certain to drive insurers out of what companies think an onerous burden.

Call it class, rather than ethnic, cleansing:

There’s a joke among insurers that there are two things that health insurance companies hate to do – take risks and pay claims. But, of course, these are the essence of their business!

Yet, if they do too much of either, they will go broke, and if they do too little, their customers will find a better policy. This balancing act isn’t too hard if they have a pool sufficient to average out the highs and lows. I speak with some experience as the former CEO of one of these firms.

Employee-sponsored insurance has fit this model fairly well, providing good stability and reasonable predictability. Unfortunately, the market for individuals has never worked well.

Generally, this model forces insurers to take fewer risks so that they can still make money. They do this by excluding preexisting conditions and paying fewer claims. In such a market, fewer people are helped, and when they are able to get insurance, they pay a lot more for it than if they were part of an employee-sponsored plan.

The Affordable Care Act changed all of this. Companies were required to stop doing these bad things. In exchange for taking on substantially more risk of less healthy patients, they were promised more business by getting access to more potential customers.

The federal government offers subsidies to help pay the premiums for consumers whose income falls below a certain level. The law also stipulates that all people must be covered, or they face a penalty. This so-called individual mandate also guaranteed business for the insurance companies, because it led healthy people into the risk pool.

To entice insurers into the market, the ACA also offered well-established methods to reduce risk. For example, it built in protections for insurers who enrolled especially sick people. It also provided back-up payments for very high-cost cases and protected against big losses and limited big gains in the first three years.

These steps worked well in establishing a stable market for Medicare drug plans when this program started under President Bush in 2006. Competition there is vigorous, rates are lower than estimated and enrollees are satisfied. In other words, the market works well.

Congress did not honor the deal

But when the time came to pay up for risk reduction in the Obamacare exchanges, Congress reneged and paid only 12 percent of what was owed to the insurers. So, on top of the fact that the companies had to bear the risk of unknown costs and utilization in the start-up years, which turned out to be higher than they expected, insurers had to absorb legislative uncertainty of whether the rules would be rewritten.

It is no wonder that this year they have dramatically increased premiums, averaging 20 percent, to compensate for the extra risk they didn’t factor into the original lower rates. In contrast, underlying health costs are rising at about 5 percent.

Repeal and replace?

And now comes the reality of the “repeal and replace” initiatives from the Republicans. If the uncertainty of this market was large before with the ACA, it is almost unknowable under whatever comes next. Thus the initial exit of some latecomers, including United Healthcare, and undercapitalized minor entrants, such as nonprofit co-ops, is almost certain to become a flood of firms leaving the exchanges. They have little choice since the risks are too large and the actuarially appropriate rates are still not obvious given the political turmoil and changing rules.

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Chart of the day: Adding fuel to MENA flames


From Conventional Arms Transfers to Developing Nations, 2008-2015, a report by the Congressional Research Service, a look at who’s selling arms to nations in the inflamed Middle East/North Africa region [click on the image to enlarge]:

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Greek Christmas trees are dying of austerity


If there is one single story that epitomizes neoliberalism and its ruthless agenda, consider this one from the nation hardest hit by the Wall Street-bankster initirated Great Recession and the austerity regime imposed by the International Monetary Fund, European Central Bank, and the European Commission.

From Kathimerini:

Demand for real Christmas trees has been declining steadily since the start of the crisis in Greece, and this year the Environment Ministry has approved the felling of around 17,000 fewer firs than last year, figures show.

Last year, 124,976 fir trees were cut down in the country, and in 2014 the number was 153,728. This shows a marked reduction from before the crisis, when the number of Christmas trees harvested came to above 200,000 a year on average.

The majority of the Christmas trees sold (85,935) last year came from cultivated forests around the country and the remainder from private farms.

And see the comments below for more.

Troikarchs continue to ramp up heat on Greece


No extra help for pensioners, they declare, even though a series of more than ten pension cuts have pushed half of elderly Greek below the poverty line,

From Kathimerini:

The institutions involved in Greece’s aid program have issued a “critical” report assessing whether unilateral measures announced by Athens are compatible with its bailout obligations, a German Finance Ministry spokesman said on Friday.

“The report is preliminary and it is quite critical,” spokesman Dennis Kolberg said, adding that the German government would evaluate the content in detail next week.

Germany had asked the institutions involved in Greece’s aid program on Wednesday to assess whether a planned pre-Christmas payout to poor pensioners was compatible with Greece’s bailout obligations.

More from Reuters:

Under Greece’s latest bailout, Athens can spend more on social programs if it exceeds its fiscal targets, provided it consults its creditors first. Earlier this year, Greek lawmakers approved a social justice bill providing health insurance to vulnerable citizens and offering jobs for the unemployed.

But political experts say the bonus was calculated to garner public support ahead of a big showdown with Greece’s emergency lenders, the European Union and International Monetary Fund.

>Snip<

Almost a dozen pension cuts have pushed nearly half of Greece’s elderly to below the poverty line with income of less than 665 euros a month. After rent, utility bills and health care, they barely make ends meet.

Chart of the day: Renters lose financial ground


As home ownership rates fall, mortgage interest rates rise, and the housing bubble reinflates, America’s growing numbers of renters are falling behind, with all but the oldest and the wealthiest [often the same folks] losing financial ground.

From a new report on housing and household finances from the Pew Research Center:

blog-renters