Insurance Quotes

Credit default swaps were in large part responsible for the melt down of the economy of 2008 and the Great Recession thereafter. A credit default swap was one of the favorite derivatives that became popular. Is an insurance policy that a company will pay off its bonds and not go bankrupt. It is a cross between an insurance mechanism and a stock exchange type security mechanism, and through heavy lobbying, escaped any kind of regulation. It cost a company no money to write a credit default swap, and they were paid to do so. As long as business and the economy was good, it was a terrific business but there was no way of ever knowing how much risk they were taking. So companies who wrote credit default swaps did not have to have the money to pay to back them up. When that happened in 2008, even the largest insurance company in the world collapsed because of the risk of having to pay the credit default swap and the U. S. Government had to take over the insurance company. In 2010, the Obama administration passed a financial reform bill that began to regulate credit default swaps. Buffet, the American who had made the most money in financial securities, realized the great danger not only to the company, but to the entire national economy. Most of the rest of the financial institutions, could make large amounts of money without have to have much capital as long as things went well. So credit default swaps began to exceed the other financial instruments in activity. Neither the Federal Reserve or the other government regulatory agencies chose to regulate these risky instruments nor even to require that they be publicly disclosed -- See {637987}, {637986} and {637992}.

The Treasure Officials had a reason for bailing out the bondholders. They were afraid that if bank bondholders and owners took big losses at that time, it would “spook” the financial markets and cause even worse panics than then existed. The political pressure would be to bail out the financial institutions which would have lost much more money after the “spooking”. So it was, they argued, less cost to the taxpayer to bail out the bondholders at the beginning and save the bailout costs later. Some argued that there was no reason to bail out the richest people in America if they lose a lot of money so it is not an issue of bail out now or later. History shoed that the financial leaders did have the clout to force the government to bail them out however. There are some who wanted to have a showdown with the wealth banks and other financial institutions and let them go bankrupt and then the economy would right itself. No one really knows for sure which is why Economics is called the “dismal science”—See {596873}.

Unlike most forms of insurance virtually everyone will have one or more claims and collect in his or her lifetime. Many of use will never have an automobile crash and collect on our insurance policy, but health is different in that we all change health status from well to ill at times and if we are fortunate we return to a state of wellness. But as Eigen observes, most of us who are tell are only temporarily well, With time our state will change to ill and if we are not very fortunate we will never use our health insurance as we will be dead. There is almost no way to age in a modern society without needing health care or funeral services, That is the consequence of the normal process of aging. So with health insurance schemes we, in effect, pass money from the living well to the living ill. So if health care costs increase fastr than inflation, which it has almost always done in the last half century, the temporarily well will be paying more and more. The only way to break that cycle is to somehow limit the cost increases of health care to that of the inflationary increase. Eigen has argued that most of us focus on the wrong problem--the details of the way the well pay for the ill, when the only soltuion is to reduce the rate of increases of health care costs. And there are only 2 ways to do that: Reduce the compensation for all the health care actors--physicians, nurses, other staff, hospitals, and manufacturers of medical equipment, supplies and expecially pharmaceuticals which have been increasing at the fastest rate of all or wer privide more and more effective prevention.

This statement was quoted over and over by his Presidential opponent, Lyndon Johnson in the campaign of 1964. Although, a wealthy person could on the average do a little better with a private investment of equivalent money and a disability insurance, those citizens of less wealth could not do so as easily. And few could obtain the disability and survivor benefits that comes along with Social Security. Goldwater wanted to make Social Security Voluntary, and most Americans thought the Goldwater prescription for Social Security would kill the program and did not support him. Conservatives have argued for this idea ever since, including Geirge W. Bush who made it a centerpiece of his administration’s program. It was rejected by the voters, and most of those were proven right when with the 2008 stocks had lost 50% of their value—the people who had retired and depended on their return from investments were mostly in terrible trouble. And of course, even in good times, some people who invest in the stock and bond markets do well and some do poorly. What would society do about those who lost most of their retirement. Let them starve because they invested badly?

This quotation illustrates how out of touch with reality a CEO of a large company can get. At the time, leading insurance companies were urging auto manufacturers to at least offer seat belts as an option. The Department of Transportation test also showed that airbags would save many lives and reduce injuries. Ford was not alone in refusing the examine the experiments seriously. Thousands of Americans died and were maimed while Airbags became an issue that had to be mandated politically rather than leaving it to the leaders of the automotive industry. This quotation is often used to show that the Private Sector simply cannot be trusted to place the public’s health and lives above their profits and hence regulation is needed.

Whitmore uncovered massive company underreporting of injury on the forms that were required by Federal law and OSHA regulations. The George W. Bush administration position had been that industrial accidents were much reduced citing the reports which the companies had systematically underreported. Whitmore who was in charge of the OSHA records confirmed the underreporting to the House Committee on Education and Labor. His agency, OSHA, tried to keep him from testifying, but he did so as a private citizen. He was then placed on ‘administrative leave’ and had no access to any OSHA records thereafter. This was an unusual time in American history, and this atypical administration censored government scientists and repeatedly refused to be truthful in Congressional Hearings. It was so bad that the Attorney General resigned in large part over his testimony to Congress.