This is a graph from a new NBER study by Maxim Pinkovskiy and Xavier Sala-i-Martin. It shows world poverty rates over the last forty years. There is a clear downtrend. Here are some other insights.Straight talk from a California Democrat. This is how I feel every time I watch the news.
With the overwhelming success of previous federal government programs, such as AmTrak, Fannie Mae & Freddie Mac, Government Motors (GM), the U.S. Postal Service, Medicare, and Medicaid, it seems incomprehensible that taxpayers wouldn't support a government ran health insurance plan.
Click on Graphic to Enlarge.By Linda Sandler and Erik Larson
Sept. 4 (Bloomberg) -- The U.S. Treasury has sent the bankrupt remains of Chrysler LLC a default notice, saying the company failed to pay back a loan due June 30.
Treasury sent the notice of default on Aug. 13, said old Chrysler, now known as Old Carco LLC, in a bankruptcy court filing today. The U.S. government lent Old Carco $3.34 billion to complete its bankruptcy, according to the filing.
Old Carco said it was negotiating with Treasury to “address” the default. The best assets of the old company were sold to a group led by SpA. Old Carco has now reported an $11.8 billion loss on the Fiat sale, leading to a net loss of $10.2 billion in June, court records show.
The company’s private creditors, who lent Chrysler $6.9 billion and expected to get about $2 billion back from the Fiat sale, might get nothing if the Treasury demanded payment of its loans, said the lawyer for a group of creditors who tried to block the Fiat deal earlier this year.
“Having stripped Chrysler’s first lien lenders of $5 billion in connection with the sham sale of Chrysler’s assets to a shell corporation, Treasury is now trying to make it difficult for the lenders to recover any of their losses from the scraps that were left behind,” said Thomas Lauria, who represented the group, in an e-mail today.
Treasury spokeswoman Meg Reilly declined to comment.
‘Nothing at All’
“Neither Chrysler nor the government could have expected the loan would actually be repaid that quickly,” said Lynn LoPucki, who teaches bankruptcy law at the University of California, Los Angeles and Harvard.
“What they must have intended was that the bankruptcy estate of old Chrysler would be at the mercy of the government. In the current negotiations, the government will decide how much, if anything, it will leave in the estate for other creditors of Chrysler -- including the professionals working in the case. That can be nothing at all,” he said.
The new automaker run by Fiat, Chrysler Group LLC, would be unaffected by a Treasury demand for payment, said Shawn Morgan, a spokeswoman for the Auburn Hills, Michigan-based company that was spun off from Old Carco and is now being run by Fiat.
“This has nothing to do with Chrysler Group,” she said.
The U.S. government owns 9.85 percent of the new Chrysler and Canada has 2.46 percent, according to court documents. Fiat, Italy’s biggest manufacturer, has said it aims to raise its 20 percent stake to 35 percent. A union health-care trust owns 67.69 percent.
Fiat Deal
Chrysler sold its best assets to Fiat in a deal funded by the U.S. and Canadian governments. The deal paid $2 billion in cash to Old Carco, to be used at the company’s discretion to pay secured lenders.
Since filing for bankruptcy on April 30, Old Carco paid $55 million for advice from lawyers, bankers and accountants, according to the monthly operating report filed today in U.S. Bankruptcy Court in Manhattan.
Old Carco had free and restricted cash of $296 million included in total assets of $2.3 billion at June 30, according to the filing. The company owed the U.S. Treasury $3.34 billion for bankruptcy financing.
Its loss was reduced by a $600 million gain taken in June after Germany’s Daimler AG, Chrysler’s onetime owner, took on $600 million of the carmaker’s pension obligation.
To understand this threat, we need to look at where we stand historically. If we leave aside the war-impacted years of 1942 to 1946, the largest annual deficit the United States has incurred since 1920 was 6 percent of gross domestic product. This fiscal year, though, the deficit will rise to about 13 percent of G.D.P., more than twice the non-wartime record. In dollars, that equates to a staggering $1.8 trillion. Fiscally, we are in uncharted territory.
Because of this gigantic deficit, our country’s “net debt” (that is, the amount held publicly) is mushrooming. During this fiscal year, it will increase more than one percentage point per month, climbing to about 56 percent of G.D.P. from 41 percent. Admittedly, other countries, like Japan and Italy, have far higher ratios and no one can know the precise level of net debt to G.D.P. at which the United States will lose its reputation for financial integrity. But a few more years like this one and we will find out...Rather than expanding the role of government in the health-care market, Congress should implement a patient-centered approach to health-care reform. A patient-centered approach focuses on the patient-doctor relationship and empowers the patient and the doctor to make effective and economical choices.
A patient-centered health-care reform begins with individual ownership of insurance policies and leverages Health Savings Accounts, a low-premium, high-deductible alternative to traditional insurance that includes a tax-advantaged savings account. It allows people to purchase insurance policies across state lines and reduces the number of mandated benefits insurers are required to cover. It reallocates the majority of Medicaid spending into a simple voucher for low-income individuals to purchase their own insurance. And it reduces the cost of medical procedures by reforming tort liability laws.
By empowering patients and doctors to manage health-care decisions, a patient-centered health-care reform will control costs, improve health outcomes, and improve the overall efficiency of the health-care system.
Excerpts from Arthur Laffer's Editorial, "Obama's Health-Care Proposals Won't Make Health-Care Better", from today's Wall Street Journal.
