Monday, March 8, 2010

Being Goldman Sachs

David Pfeiffer, Communications Director for the White House, wrote in a blog post on Sunday that Goldman Sachs advised their investors that "profits will continue to soar under the status quo." Now, where do you think Goldman Sachs' interests lie?


DB said...

Since when has anything ever soared under any status quo?

Judith Ellis said...

Right, DB! But for Goldman Sachs the matter is an issue of WHAT soars. Profits soar when insurance companies can raise rates by 100% and release those who have paid their premiums due to preexisting conditions.

walderson said...

Would you be opposed to health insurance looking like car insurance? Affordable, easy to obtain, many companies competing for your business? Most auto insurance companies are quite profitable. Currently, I have insurance through one huge company that insured my acccident prone son at a higher rate and a smaller, successful company we have used on our vehicles for years.

Everytime something happens it is easy to do the paper work and the service is great.

These companies are successful and hugely profitable and their product is very affordable and their service is excellent.

Open health insurance competition across state lines and separate it from our employer. Then get ready of a myriad of companies that want to serve you, regardless of your condition.

Judith Ellis said...

Walderson - Thanks for your comment. But I disagree. Goldman is not simply successful because of the great work that they do. Although legal, their practices are highly suspect and unethical. Goldman Sachs is now using derivatives to bankrupt Greece and other European cities. But Goldman Sachs might be bankrupt itself without the government bailout of AIG and the direct infusion of capital by the taxpayers in this investment bank which acted as a commercial banks without deposits. When have the FDIC backed investment banks? What's next, outright hedge funds? I do agree, however, that the bailout was necessary considering the many cities and states who trusted Goldman investments and to bring us back from the financial ruin. I invite you to do a search of my blog. I have written quite a lot on Goldman Sachs. I have also written articles for the Huffington Post.

With regards to being able to purchase health care across state lines, I would be open to that. You can, after all, purchase insurance online and the state matters not. But health care can't be compared to car insurance as the former is a life and death issue, obviously. The issues of affordability and pre-existing conditions are in no way comparable, although I get the point with regards to your son. Does the large pool not allow you to insure your son more cost effectively? (It was funny listening to the health care summit and to some advocating a system that allows for the bare necessities of insurance that they themselves would never buy. They, of course, have the best at the taxpayers' expense.) On the other hand, aren't we all required to get car insurance? This makes the pool large and more affordable. Are you opposed to everyone being required to get health insurance? Would this not make the pool larger and drive the cost down?

walderson said...

The requirement for car insurance is only for collision - in the event you harm the other guy. You are only required to purchase it if you choose to own a car. Whether or not to insure your vehicle is your choice. I think I deserve the choice to pay for health insurance or not to pay for insurance and what I want my insurance to look like.

Requiring everyone to purchase a specific insurance or anything else is not a right of the government. I am the one with the right to decide my insurance purchases. And I don't think I should be penalized upwards of $750 if I don't want the government insurance, which is the current plan.

The larger company competes nationally for my business. I pay more for my son who was dropped by our small insurer. I pay less for my own insurance using our small insurance co. than I would with the larger company. I can shop for the best deal for each circumstance. That is what I would like to do with my health insurance.

If companies are competing for my business, the service goes up and the price goes down. I was lucky to have been pregnant in the 80's when there were lots of insurance companies competing for maternity health insurance. Hospitals began competing for expectant mothers. Great care, excellent physicians, beautiful birthing rooms, no out of pocket expense because hospitals took your insurance which paid 80% as payment in full.

Now there are only a few insurers that can exist in the state and be profitable. Service has deteriorated.

Why do you think there all these great cancer/heart centers in the U.S.? People buy additional cancer/heart policies - based on their physical history.

Why can't people be allowed to design their health care policy based on there perceived needs?

The key word referencing Goldman Sachs is that what they did was legal. The finance laws that both created a need for and allowed derivatives are a result of government creating the situation and then blaming Goldman for acting within the confines of that. It is a smoke trick...the villain is the creator of the laws by which the institution acts to survive. It's like training a dog to pee in the corner and then whipping it when it does.

Greece's downfall is deeper than derivatives and Goldman. If you think about it, Goldman Sachs sells a financial service. It answers to a customer. What advantage to they have in bankrupting their customer - Greece? That is how it stays in business. It has no enforcement entity other than the customer's agreement to pay for the service and it's requirement to stay within the law. How can it bring down a country? I think maybe Greece's downfall is part of the reason the taxpayer has been called to prop up Goldman.

If Goldman Sachs has engaged in unprofitable business practices, I don't wish to bail them out. There are other companies that are willing to take over their business. But now they won't have a chance to because it is propped up by us - I can't afford to prop them up forever.

Judith Ellis said...

Walderson - We are going to pay for others if they don't have insurance in our emergency rooms all over America, so why not require it? Why not make citizens responsible and save Medicare? The CBO reports the the bill that passed the Senate and House will also reduce the deficit considerably. (Did you answer the question regarding the insurance that Federal employees and member of Congress receive that lower costs?) Also, I think that it is not a comparable analogy: health care and car insurance. You can walk, take the bus or subway. If you get sick, hospitals cannot turn you away. Who pays then? We all do. You may continue to shop for the best health care insurance for you and your family. Now, you will have a government exchange from which to choose.

The current bills that passed the House and Senate do not require you to purchase government insurance. (Please give me references and I will look this up. I have not read such.) You may go right ahead and keep what you have now. The problem is that with this option insurance companies will not be able to hike your premiums up to 100% because you will otherwise simply walk away and be insured elsewhere. There is without doubt collusion in this industry. I say repeal this industry's anti-trust exception.

Regarding Goldman Sachs, I did not mean to suggest that the problems with Greece and Europe is solely due to Goldman Sachs, just as the housing market here was not; there were many players. But without these derivatives which were basically incomprehensible to the seller and purchaser, as they were designed in a vacuum by quants, the people would not have been able to act. Goldman helped Greece to hide billions of debt through a swap that was considered a currency exchange and not a loan. This created a bubble that hedge fund managers delight in hedging against. Greece was not strong-armed, but the swaps are deceiving. It did not appear as a loan, as I mentioned earlier. Legal? Yes. Potential for great global economic ruin where technology puts everything at our fingertips? Yes.

I agree with you with regards to propping the likes of Goldman Sachs forever. I also agree that we have to change laws that forbid what occurred. Of course, deregulation played a large role in bringing the US economy to near collapse. Free market thinkers such as Milton Friedman are largely ideologues. Ronald Reagan was such a one. He talked about deficit reduction and ran up the deficit the greatest in history to that point. What Friedman and others like him espouse occurred over the last decade and look where it has brought us. They want to get government "down to the size where we can drown it in the bathtub." (Norquist) But this does not include, of course, no bid big multi-billion-dollar-government contracts: no competition there for big business. Big seems largely bad for "little" people all around.

Thank you for your comments.

walderson said...

What happened? End of discussion? Was I rude?

Judith Ellis said...

Oh, no, not at all, Walderson. Did you think that my gratitude for your comments was indication of the end of the discussion? Not at all. You may always go on and on. I will usually hang in there with you, often times both agreeing and disagreeing. I try to be fair even when expressing my opinions. I am not always 100% successful. :-) But it's all good, really.