Category / debt

by Hoosier Econ

Dutch Central Bank to US: Pound Sand

The United States Federal Reserve is not trusted and it doesn’t appear to be getting any better. In plain speak, the Dutch just told them they didn’t either. Also take this news as a great investment tip to start buying gold and silver as a precautionary investment.

The Dutch central bank, De Nederlandsche Bank, has repatriated in utmost secrecy 122.5 tonnes of gold from the Federal Reserve Bank of New York to its vaults in Amsterdam, The Netherlands, according to a press release from DNB published today.

“It is no longer wise to keep half of our gold in one part of the world,” a DNB spokesman said. WOW.

by Hoosier Econ

Why Doctors Are Leaving Medicaid

The new healthcare law that passed in 2010 was more of an expansion of getting people on medicaid then getting insurance. Medicaid is the “universal health care” that most don’t realize exists and it is taking on millions of new people each year. FORBES magazine has pretty lengthy write up about this program along with medicare.

Doctors seeing Medicare patients face a 24 percent cut in reimbursements beginning January 1.  But almost no one has grasped that those cuts will hit Medicaid too—thanks to Obamacare. Together both programs cover more than 100 million Americans, and the government expects about 9 million more people to join Medicaid next year.

The number of just regular doctors is drying up as new doctors coming out of med school go into specialty areas. Doctors cannot afford new Medicaid patients and here is one reason why:

Medicaid pays doctors about 59 percent of what medicare pays them—which is why doctors increasingly refuse to take new Medicaid patients.

In 2012 doctors ran to the exits in fleeing medicaid.

The Centers for Medicare and Medicaid Services (CMS) recently released a document showing that 9,500 doctors who had previously accepted Medicaid patients refused to do so in 2012.

In 2013 Congress voted to increase medicaid payments at the same rate of medicare. Now that is about to get cut again. The up and down of government intrusion in healthcare as this complicated law unfolds is taking a toll on our healthcare system. The people who suffer ultimately will be the patients.

by Hoosier Econ

Indiana State University Selling Debt

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Marketwatch.com is reporting Indiana State University is wanting to sell $20 Million in bonds so it can refund outstanding student fee bonds, and to pay costs of issuance. Fitch provided a detailed analysis and gave the university a grade of (AA-). This should make investors feel comfortable when buying the debt. Debt sale is planned for December 8th.

Here is some highlights of the article:

-As of fall 2014, the university had 11 residence halls with total occupancy for 3,660 students and a 99.5% occupancy rate, including the recently completed Reeve Hall.
-Indiana State has over $110 Million in existing bonds due to residence hall and food services upgrades
– the university’s fall enrollment headcount grew to a record high of 13,183 in fall 2014, increasing by 2,649 students (or 25.1%) over fall 2009.
– ISU’s available funds, defined by Fitch as cash and investments not permanently restricted, grew to about $157 million at the close of fiscal 2014, up 5.8% from the prior year and 39.9% from the period since fiscal 2010.

by Hoosier Econ

Illegal Immigrants Trashing Border

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An unspoken sin not addressed by pro immigrant advocates is the yearly waste and destruction illegals leave behind in the form of trash and human waste. The taxpayers in Southern states and on federal level get the bill for the cleanup according to Judicial Watch:

Each year illegal immigrants leave behind an estimated 2,000 tons of trash—including soiled diapers, plastic bottles and abandoned vehicles—in public Arizona lands along the border.
Getting cleanup crews and equipment to these increasingly remote portions of the desert is, not only tough, but also hazardous. Camp sites set up by illegal immigrants and drug smugglers are the most difficult to clean up.

How much does it cost to clean up?

This so-called “landfill fee” ranges from $37 to $49 per ton in southern Arizona and that doesn’t even include costs for materials, equipment, labor and transportation.

2007 financial report for the state of Arizona titled “The Southern Arizona Project To Mitigate Damages Resulting from Illegal Immigration”. In the report, clean up costs over a span of 5 years totaled $4.4 Million. Damage caused by illegals each year is just not trash but also infrastructure and national monuments in parks located on these corridors they travel on.
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by Hoosier Econ

Medicaid Eating Up State Budgets

Medicaid spending in state budgets is becoming the largest line item costs in many state governments. State Budget Solutions had this national average stat:

Though the federal government provides some Medicaid funds via matching rates, this welfare program has been taking up a larger and larger share of state budgets in recent years. In fact, Medicaid is the largest category of state spending, accounting for 23.6 percent of state budget expenditures according to the National Association of State Budget Officers.  That percentage is likely to increase over time.

Indiana currently spends over 27% of their budget on Medicaid.

by Hoosier Econ

Live in Luxury While the World is Burning

Whether you believe in total economic collapse, government anarchy or the climate will implode there are options out there in how to make it through tough times. Many will have to become “Daryl” in order to survive, but those with money will have another option.

Via the Wall Street Journal (I encourage to click the link for more stories of buyers)

When Tyler Allen agreed to fork over $3 million in cash for a luxury condominium near Concordia, Kan., he wasn’t attracted by the indoor swimming pool, 17-seat movie theater, or hydroponic vegetable garden.
The real selling point of the 1,820-square-foot apartment: It will be buried 174 feet underground in a decommissioned missile silo sturdy enough to withstand a nuclear attack.

Mr. Allen, a 45-year-old Orlando, Fla., sports bar and nightclub owner, insists he isn’t a “tinfoil hat-wearing” type preparing for the end of the world. Rather, he cites growing security threats—such as a global health pandemic, cataclysmic weather and terror attacks. “There’s a Camp David for the president,” he says. “If you’re at a certain level where you can afford it, you can get that, too.”

The so-called Survival Condo complex boasts full and half-floor units that cost $1.5 million to $3 million each. The building can accommodate up to 75 people, and buyers include doctors, scientists and entrepreneurs, says developer Larry Hall.

Safeguarding your home is not just a niche anymore, revenue in the this type of business field is rising.

Spending on residential security rose from $7 billion in 2001 to $12 billion in 2011, and is projected to climb above $16 billion in 2016, according to Freedonia Group, a market-research firm based in Cleveland. That covers everything from routine security devices to the kind of reinforced chambers that gained widespread attention more than a decade ago and were featured in the 2002 film “Panic Room.”

Here are some photos:
prepping
prepping 2

by Hoosier Econ

Why Government Supports Minimum Wage Increases

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Tuesday, five states voted to hike minimum wage for workers. The common theme is that government really cares for the people. Not exactly. Government likes minimum wage increases because it means more taxes collected. Here is example:

“The minimum wage increase is not just the dollar an hour, but it’s also a raise in our taxes,” said Jason Lerner of Little Learner Academy. His family owns five child care centers in New Jersey, where the minimum wage rose from $7.25 to $8.25 on Jan. 1.
In total, these taxes add an extra 10.5% to Little Learner Academy’s payroll expenses.
Take Social Security. Employees have 6.2% of their wages withheld from each paycheck for Social Security. But what they don’t see is that their employer also chips in, matching the 6.2%. For Medicare, both the employer and the employee pay 1.45% of the wage.

Payroll taxes are a big concern when running a business. This tax is also regressive when managing a business. On top of this tax, business owners must also pay to the state disability/unemployment taxes based upon amount of employees they have.

Many years ago I had a boss tell me that payroll is the #1 controllable expense. When payroll goes up and sales don’t, payroll gets slashed.

by Hoosier Econ

How the Federal Government Sells it Debt

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In the United States, the federal government not having enough money for spending is the new normal. One thing that never gets discussed is how the government sells its debt in the form of “bonds”.

What may surprise many is that banks and other financial institutions  do it for the government and they are called “Primary Dealers”. Once the government has a certain amount to sell, these dealers take it to market and sell it. Here is the list of dealers:

Bank of Nova Scotia, New York Agency
BMO Capital Markets Corp.
BNP Paribas Securities Corp.
Barclays Capital Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Daiwa Capital Markets America Inc.
Deutsche Bank Securities Inc.
Goldman, Sachs & Co.
HSBC Securities (USA) Inc.
Jefferies LLC
J.P. Morgan Securities LLC
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Mizuho Securities USA Inc.
Morgan Stanley & Co. LLC
Nomura Securities International, Inc.
RBC Capital Markets, LLC
RBS Securities Inc.
SG Americas Securities, LLC
TD Securities (USA) LLC
UBS Securities LLC

So next time you hear a politician claim banks or financial institutions are evil, they are the ones selling the debt to help that same politician in their spending addiction.