Tidbits Quotations
To Accompany the January 16, 2014 edition of Tidbits
Bob Jensen at Trinity University

My Free Speech Political Quotations and Commentaries Directory and Log ---

If everyone is thinking alike, then somebody isn't thinking.
George S. Patton

It's better to walk alone than in a crowd going in the wrong direction.
Diane Grant

Hispanic Talent Is the Future for Big Companies . . . By 2050, Hispanics will represent over half of the nation’s workforce.
Tammy Erickson, Harvard Business Review Blog, January 14, 2014 --- Click Here
Jensen Comment
In spite of the image painted of Hispanics in the media, experience of companies in Mexico and the USA Southwest reveal that Hispanics are very good workers --- dedicated and reliable when given half a chance apart from criminal gangs and teen pregnancies. Hispanics are the future of smaller companies as well. By 2050 it will be harder to designate who is Hispanic just like it is harder and harder today to designate who is Norwegian or Swedish in Minnesota. Ole and Lena are distant memories.

Sheila Baer, chairman of the Federal Deposit Insurance Corp. during the Crash of 2008, was a lonely voice of sanity at that time. In 2012, she wrote an article for the Washington Post poking fun at the Fed for what it had been doing. It was entitled “Fix Inequality With $10 Million Loans For Everyone.”
Hunter Lewis --- http://townhall.com/columnists/hunterlewis/2014/01/13/why-doesnt-the-fed-lend-each-of-us-10-million-n1777957

Everyone in Norway became a theoretical crown millionaire on Wednesday in a milestone for the world's biggest sovereign wealth fund that has ballooned thanks to high oil and gas prices ---
Alister Doyle, Reuters, January 8, 2013 ---

Maine Gov. Paul LePage (R) said Tuesday that state regulations governing child labor are hurting the state’s economy, according to the Portland Press Herald. “We don’t allow children to work until they’re 16, but two years later, when they’re 18, they can go to war and fight for us,” LePage said at an agricultural trade show, according to the paper. “That’s causing damage to our economy. I started working far earlier than that, and it didn’t hurt me at all.
Paul Lapage, Governor of the State of Maine ---

Americans named President Barack Obama and former Secretary of State Hillary Clinton as the world's most admired living man and woman in 2013, according to a Gallup poll released on Monday.

First of all, it’s called the ‘Affordable Care Act"
House Minority Leader Nancy Pelosi now unhappy with the use of the word "Obamacare."

Chris Christie 2016: A Bridge Too Far
Cal Thomas

Chris Christie Was Never Going to Be President Anyway The New Jersey governor's chances at the Republican nomination were way overrated even before Bridgegate.
Charlie Cook, The Atlantic, January 14, 2014 ---

Chile’s Attempt to Cut Traffic Meets the Law of Unintended Consequences ---
Jensen Comment
The problem is that Chile did not invite Gov. Christie down for traffic consultation.

From Middlemarch (1874), by George Eliot:

There may be coarse hypocrites, who consciously affect beliefs and emotions for the sake of gulling the world, but Bulstrode was not one of them. He was simply a man whose desires had been stronger than his theoretic beliefs. If this be hypocrisy, it is a process which shows itself occasionally in us all, to whatever confession we belong, and whether we believe in the future perfection of our race or in the nearest date fixed for the end of the world.

I Can't Name A Time When Someone Would Rather Have A Check Than A Job
President Obama ---
Jensen Comment
There are tens of millions who would rather have checks or no checks instead of a job according the the U.S. Census
U.S. Census Report:  Only a small percentage of impoverished adults actually say it's because they can't find employment.
"Why The Poor Don't Work, According To The Poor," by Jordan Weissmann, The Atlantic, September 23, 2013 ---

2013:  Another Record Year for Food Stamps ---

Barack Obama beat Mitt Romney in the 2012 elections 65,909,451 Obama to 60,932,176 Romney votes.
Among the 48 million people of food stamps, how many voted for Mitt Romney?
The GOP will never win without gaining half the food stamp votes. Any reduction in food stamp recipients will be more than offset by the tens of millions of people commencing in 2014 who will be receiving free or highly subsidized health care and medications. The Republican Party has zero chance of winning future presidential elections in the USA. Good thing I'm not a Republican. I'm the continued Federal Reserve policy of printing trillions and trillions more without taxing or borrowing. Eat, Drink, and be Merry --- at least in the few years I have left in this crazy world.
Bob Jensen
Also see http://www.caintv.com/obama-while-were-at-it-lets-ju


"Backlash Against Israel Boycott Puts American Studies Assn. on Defensive," by Peter Schmidt, Chronicle of Higher Education, January 2, 2013 ---

. . .

As of this week, the boycott also has been denounced by three of the nation's most prominent higher-education organizations: the American Association of University Professors, the American Council on Education, and the Association of American Universities. "Such actions are misguided and greatly troubling, as they strike at the heart of academic freedom," said the American Council on Education's president, Molly Corbett Broad.

The scale and speed of the backlash against the boycott is striking, especially considering that the ASA has only about 4,000 members and lacks any formal ties with Israeli institutions in the first place.

"Why anyone should care what the ASA thinks bewilders me. It is not a very large academic association, and it is not one that characteristically has a big impact in the academy," said Stanley N. Katz, a higher-education policy expert at Princeton University and president emeritus of the American Council of Learned Societies. Mr. Katz said he opposes the boycott by the ASA, a group he dismisses as "more interested in politics than scholarship," but does not see it as likely to inspire similar actions by scholarly groups with more weight.

Heeding Constituents

Michael S. Roth, who, as president of Wesleyan University, wrote a Los Angeles Times op-ed calling the ASA boycott "a repugnant attack on academic freedom," said he does not see anything unusual about college presidents' speaking out on such an issue. He cited, as an example, how dozens of college presidents had responded to the December 2012 massacre at Sandy Hook Elementary School, in Newtown, Conn., by signing a statement urging the nation's leaders to adopt stricter gun laws.

Nevertheless, it is rare for college presidents to speak out on an issue so quickly and in such great numbers.

William G. Bowen, a former president of Princeton University and president emeritus of the Andrew W. Mellon Foundation, said college presidents were opposing the ASA boycott simply because they believe "boycotts are a bad idea."

"It is dangerous business, and basically unwise, for institutions to become embroiled in these kinds of debates," Mr. Bowen said. "The consequences for institutions are just too serious."

Henry S. Bienen, president emeritus of Northwestern University, said the intricate ties between American and Israeli universities, especially in areas such as scientific research, have also been a motivating factor. More broadly, he said, "Israel has a special place for lots of individuals in academic life," including Jewish academics who are well represented on the faculties and in the administrations of American higher-education institutions.

Leon Botstein, president of Bard College and a boycott opponent, said calls from alumni to take a stand against the boycott had also played a role. "As an active member of the Jewish community, I recognize that the American Jewish community is disproportionately generous to American higher education," he said. "For the president of an institution to express his or her solidarity with Israel is welcomed by a very important part of their support base."

Mr. Botstein, who has faulted his fellow presidents for not speaking out more on issues such as income inequality or declining government support of higher education, said the decision to oppose the ASA boycott was easy because the group's resolution was "clumsy and offensive." Taking a position against the boycott, he said, "doesn't show courage, it shows common sense."

Stifling Debate?

Curtis F. Marez, president of the American Studies Association, this week characterized its critics' assertions that the boycott threatens academic freedom as misplaced, because the boycott is directed at Israeli institutions and their representatives, not individual scholars or students, and would not affect routine scholarly collaborations and exchanges.

Continued in article

Also note the comments that follow the article.

What the ASA leaders won't admit is that what the ASA's Boycott will hurt the most are Jewish professors in Israel ---

Why are there no Jews on ABC's list of the 30 greatest women in music during the last 50 year?
Barbra Streisand and Carole King just were not as good or better than Lady Gaga. Blondie, Sharia Twain, and Janet Jackson. Yeah Right!
We can't really say this is liberal bias in the media since Barbara Streisand is about the most liberal celebrity that comes to mind.

Liberal Bias in the Media and Academe

Bob Jensen's threads on higher education controversies are at

The IRS Gets a Pass:  Officials say there will be no criminal charges for political targeting ---
The FBI would say if it conducted any investigations, but odds are that there were no serious investigations of fellow IRS employees or the Administration.

Also see

Also see

Jensen Comment
The same thing happens when Wall Street bankers and traders never or only rarely face criminal charges. Never facing fear of fines and imprisonment is simply a license to carry on with the criminal activities. I fully expect the IRS to continue patsy for the political party that controls the White House. And don't expect Wall Street bankers and traders to stop instigating felonies if they have no fear of jail time.

Important IRS Publication
The IRS has released a revised edition of Publication 17, Your Federal Income Tax (288 pages), for use in preparing 2013 tax returns ---

Jensen Comment
It's tempting to ignore this and related tax publications and turn your tax return preparation to Turbot Tax or other relatively cheap tax preparation software. Even though you, like me, use this software to file your annual returns, it may well be to your advantage to learn a bit more about what is going on with your money. For example, if the software asks what energy savings investments you made, it may be a good idea to read more about the tax advantages and traps of energy saving investments.

Always remember that the so-called "experts" who prepare your tax returns are probably not so great at tax planning. You can find out by doing your homework in advance by asking them questions that true "experts" should be able to answer without doing a Web search before responding.

One of the hardest areas of tax planning entails retirement planning and saving. Another complicated area entails gains and losses and adjustments to income.

There are many other (probably more important tax sites) at the IRS which, contrary to the belief that the government is incapable of creating good Web sites, is a very, very good site.

Always there almost always is some risk to investments that offer tax savings. This does not mean that you should not become somewhat aggressive in sheltering some earnings from current taxes. I'm an advocate of balancing portfolios with tax exempt and tax sheltered investments, but what is a good idea for me is not necessarily a good idea for you. You may be more worried about fluctuating value whereas I'm more concerned about having steady monthly cash flows that are exempt from taxation in spite of value fluctuations of my Vanguard "Insured" Long-Term Exempt Fund. Among other things learn what "insured" really means in this fund or related tax exempt mutual funds.

Also understand that age makes a huge difference. I'm a retired accounting accounting professor with one foot in the grave. Inflation risk does not concern me like it should concern you working stiffs. At some point inflation will be more worrisome on the nightly news than the winter weather. It's just that nobody knows when inflation will erupt like a volcano.

"Typical Boomer Retirement Modest Compared to Parents’," by Barry Ritholtz, January 4th, 2014,---
Jensen Comment
The Fed's absurd policy of near-zero interest return on USA savings funds is killing the boomer retirement plans unless they invest in higher risk alternatives that leave them somewhat vulnerable to losing a lot of their savings if the stock market crashes and --- it always crashes at some point in time!

When my father died in 2001, most of his savings (other than his pensions, home in town, and the family farm) were tied up in bank Certificates of Deposits (CDs) paying around 6% compounded interest. This gave him cash liquidity since he and my mother spent some of the interest each year without touching the capital. Since 2008 CDs pay little more than zero interest.

The next time you enter your bank bring out a crying tissue and ask the bank for the current rates on Certificates of Deposits (CDs). TIAA interest rates are a bit better, but they are nowhere near what they were in 2006 when I retired. My point is that your retirement deals vary a lot with when you retire, but now the deals are much lower due to Quantitative Easing by the Fed that reduces savings rates to almost zero.

Thanks Ben and Janet for making boomers remain in their jobs until they are over 80 years of age.  I ain't yellen' for Yellen's confirmation. ---

Video:  Nobel Laureate Eugene Fama on QE, Tapering, and Volatility
http://video.cnbc.cohttp://video.cnbc.com/gallery/?video=3000211021 m/gallery/?video=3000211021

Jensen Comment
Where QE has been monumentally successful is in compensating the savings of older people. Many could previously retire and have saving supplemented by safe Certificate Deposit interest income. Thanks to QE the CDs and other save savings alternatives pay virtually zero interest such that these old folks must more of their savings capital for living expenses. Thanks Ben. You wiped out the old folks and provide zero incentives for younger folks to save early in the career for compounded interest. Compounded interest? What's that?


Bob Jensen's tax planning helpers are at

By the way I don't do any tax advising to individuals or business firms. I ceased being a CPA tax accountant in 1960 and went on to become an accounting professor who taught no tax course. In fact I did not teach much of anything practical. The Academy works that way.

On  January 6, 2014 CBS Sixty Minutes did a depressing module on how the $150 billion of taxpayer dollars lost in stimulus funding of alternative energy plants. But pennies of that $150 loss may be recovered. The Chinese are buying up these empty plants at pennies on the dollar for alternative uses like making automobile parts to ship to China. USA taxpayers monumentally stimulated the Chinese economy.

But instead of breakthroughs, the sector suffered a string of expensive tax-funded flops. Suddenly Cleantech was a dirty word.
"The Cleantech Crash:  Despite billions invested by the U.S. government in so-called “Cleantech” energy, Washington and Silicon Valley have little to show for it," by Leslie Stahl, CBS News, January 5, 2014 ---

The following is a script from "The Cleantech Crash" which aired on Jan. 5, 2014. Lesley Stahl is the correspondent. Shachar Bar-On, producer.

About a decade ago, the smart people who funded the Internet turned their attention to the energy sector, rallying tech engineers to invent ways to get us off fossil fuels, devise powerful solar panels, clean cars, and futuristic batteries. The idea got a catchy name: “Cleantech.”

Silicon Valley got Washington excited about it. President Bush was an early supporter, but the federal purse strings truly loosened under President Obama. Hoping to create innovation and jobs, he committed north of a $100 billion in loans, grants and tax breaks to Cleantech. But instead of breakthroughs, the sector suffered a string of expensive tax-funded flops. Suddenly Cleantech was a dirty word.

Investor Vinod Khosla, known as the father of the Cleantech revolution, has poured over a billion dollars of his own money into some 50 energy startups. He took us to one in Columbus, Miss. KiOR is a biofuel company that’s replacing oil drilling with oil making.

Vinod Khosla: Nature takes a million years to produce our crude oil. KiOR can produce it in seconds.

The company took over this old paper mill, where logs are picked up by a giant claw, dropped into a shredder and pulverized into woodchips.

Vinod Khosla: And we take that, add this magic catalyst-

Lesley Stahl: This is the secret sauce?

Vinod Khosla: Yeah.

Lesley Stahl: You throw that on top of the chips?

Vinod Khosla: And then, out comes something that looks that looks just like crude oil.

The crude is created through a thermo-chemical reaction in seconds. And by using wood instead of corn, this biofuel doesn’t raise food prices which was a concern with ethanol.

Vinod Khosla: It smells like crude, it works like crude except it's 100 percent renewable.

Then it’s distilled onsite into…

Lesley Stahl: Clean gasoline?

Vinod Khosla: Clean green gasoline.

Lesley Stahl: This goes right into the tank, right? You don’t have to build a new infrastructure?

Vinod Khosla: Absolutely.

Lesley Stahl: You make it sound almost – sorry – too good to be true. There must be a downside.

Vinod Khosla: There is no downside.

Well there is: first off, his clean green gasoline costs much more than what you pay at the pump. And despite hundreds of millions of dollars invested – including 165 million of Khosla’s own money, KiOR is still in the red, and the manufacturing is so complex, it is riddled with delays.

Lesley Stahl: All kinds of glitches.

Vinod Khosla: That always happens but part of anything, whether you're building a refinery or a solar facility or a computer factory, you get exactly the same unanticipated glitches.

He’s downplaying the glitches. But the venture capital model is that for every 10 startups, nine go under. And he says he expects at least half of his energy companies will fail. But Khosla can take that gamble. He earned billions with two giant Silicon Valley winners: Sun Microsystems and Juniper Networks. It was successes like these that gave Khosla and the other Silicon Valley moneymen the moxie to jump into energy.

Steven Koonin: I think they saw it as a technical opportunity, thinking that the people in energy are just troglodytes and they don't understand what they're doing.

Former Energy Department under secretary, Physicist Steven Koonin, says there was a lot of arrogance. He thought the venture capitalists and Internet geniuses were underestimating the challenges of the energy sector.

Lesley Stahl: Like what?

Steven Koonin: Managing risks that have to do with market, with supply, with operation, with regulation. And in the end, hoping that you get returns on a 20 or 30-year time scale.

Lesley Stahl: Yeah, but they must’ve known they weren’t going to get a payoff for 20 or 30 years.

Steven Koonin: I don’t think they understood that. The average venture capitalist likes to get in and out in about 3 to 5 years.

While other venture capitalists have withdrawn from the energy sector, Khosla is staying in, but with a lot of help from taxpayers. Over the years, the federal government has committed north of a hundred million dollars to his various Cleantech ventures and several states have pitched in hundreds of millions as well. But his critics say he’s in over his head.

Robert Rapier: Vinod Khosla is very smart, but would you let him operate on your heart?

Lesley Stahl: No.

Robert Rapier: No, because that’s not his area of expertise.

Robert Rapier, a chemical engineer specializing in Biofuels, says Khosla and almost all the other venture capitalists in Silicon Valley got caught up in their own hype.

Robert Rapier: He set up a system where he overpromised and under-delivered and so the public and the politicians all developed unreasonable expectations.

Lesley Stahl: But hasn’t technology advanced enough so that somebody like Vinod Khosla could think: “Ah, we can do it more cheaply, faster."

Robert Rapier: Well yeah, but in the field of advanced biofuels, he has not done very well. The companies that he’s brought out are in trouble. Their share prices are down 80, 85 percent. "[Vinod Khosla] set up a system where he overpromised and under-delivered, and so the public and the politicians all developed unreasonable expectations."

Lesley Stahl: What about this criticism that what it takes to be successful in Silicon Valley does not translate into the energy business? It's such a completely different field.

Vinod Khosla: That's fair criticism. But I am learning. And I am trying. And they're sitting there doing nothing. They're being the nay-sayers, the pundits who say why it can't be done. But they won't try. Now, sure we've done lots of things that failed in energy. But every time, we learned. Picked ourselves up and tried something new.

Robert Rapier: He’s getting up that learning curve, but taxpayers funded that. A billionaire came into the energy business –

Lesley Stahl: You’re saying we paid him to learn is what—

Robert Rapier: We paid him to learn the energy business.

The federal government has allocated a total of $150 billion to Cleantech – through loans, grants and tax breaks with little to show for it.

Lesley Stahl: The taxpayers have lost a lotta money in the general Cleantech area.

Vinod Khosla: Look, we have to take risks. And risks mean the risk of losing money. So let me ask you a question. We've been looking for a cure for cancer for a long time. How much money has the U.S. government spent? Billions and billions of dollars. Should we stop looking for a cure for cancer because we haven't found a cure?

But under the Obama Stimulus Act, the government wasn’t just supporting research. With Cleantech it was shoveling money to build assembly lines, helping startups in the manufacturing phase. Over half a billion dollars went to a solar-panel company named Solyndra to build a factory. When solar was undercut by low prices in China, Solyndra died.

Another half billion in loan guarantees went to Fisker, a clean car startup that promised to open a plant in Delaware, but went bankrupt. And in other cases production was ramped up before there was any demand – as with LG Chem in Michigan. "Look, we have to take risks. And risks mean the risk of losing money. So let me ask you a question. We've been looking for a cure for cancer for a long time. How much money has the U.S. government spent? Billions and billions of dollars. Should we stop looking for a cure for cancer because we haven't found a cure?"

[Obama: Shovels will soon be moving earth and trucks will be pouring concrete where we are standing.]

The plant was built with $151 million from the stimulus to make batteries for electric cars that people never bought. So the plant went idle and workers were paid tax dollars to sit around and do nothing.

These loans and grants were administered by the Energy Department. They wouldn’t give us an interview, but Steven Koonin was actually the head scientist for the department, approving many of the stimulus projects.

Lesley Stahl: The government spent about $150 billion into these innovations. Taxpayer dollars. Money well spent?

Steven Koonin: I think there are significant developments that have come out of that spending that impact our energy system now. New technologies demonstrated. I think it was good value for the money.

Lesley Stahl: Well, Solyndra went through over half a billion dollars before it failed. Then I'm gonna give you a list of other failures: Abound Energy, Beacon Power, Fisker, V.P.G., Range Fuels, Ener1, A123. ECOtality. I'm exhausted.

Steven Koonin: As I told you in the beginning, the energy business is tough.

Lesley Stahl: What happened?

Steven Koonin: Oh, gosh, there are so many reasons. I put some of the major blame on the government, both the executive branch and Congress, for an inability to set a thoughtful and consistent energy policy.

Lesley Stahl: Let me interrupt you. You were the government. How many of the loans were you involved in?

Steven Koonin: Difficult to know the exact number. But I would say in the order of 30.

Lesley Stahl: Did you make mistakes?

Steven Koonin: I think I didn’t do as good a job as I could’ve. In retrospect, I would’ve done things a bit differently.

Lesley Stahl: Part of this was supposed to be creating new jobs. Everything I've read there were not many jobs created.

Steven Koonin: That's correct.

Lesley Stahl: So what went wrong there?

Steven Koonin: I didn't say it would create jobs. Other people did.

Lesley Stahl: So you never thought it was gonna create-

Steven Koonin: I didn't think it mattered as a job creation, no.

Lesley Stahl: So, is Cleantech dead?

Steven Koonin: There are parts of it that I would say are on life support right now.

The stimulus investment wasn’t a total bust. It helped create the successful electric car company Tesla. A few of other companies are starting to show promise, and loans are being repaid.

But Cleantech was dealt a hammer blow by this: plentiful, inexpensive and relatively clean domestic natural gas. So by 2012, the moneymen of Silicon Valley were dropping energy from their portfolios and soon struggling and bankrupt Cleantech companies were on the auction block at firesale prices. And guess who snatched them up? China! The most aggressive buyer is arguably this man.

Pin Ni and his autoparts company Wanxiang have made six big investments in American Cleantech so far, including buying A123, another electric car battery startup that lost over 130 million tax dollars.

Lesley Stahl: A lot of the companies that you have bought in the Cleantech area got a lot of federal subsidies. I have the list.

Pin Ni: A123 did, yes.

Lesley Stahl: Well, Ener1 did –

Pin Ni: Ener1 did, yeah.

Lesley Stahl: Smith Electric Trucks.

Pin Ni: I would think so, yeah.

Lesley Stahl: There's something that just doesn't feel right about a Chinese company coming in and scooping it all up after the taxpayers put so much money into it.

Pin Ni: My answer will be: Do we like the capitalism or not? If we do, that is the capitalism.

Lesley Stahl: But do you think it’s a good business? Do you think Cleantech is going well?

Pin Ni: Cleantech is not going well.

But China is willing to make a long-term bet on the technology, and spend what it takes to develop the manufacturing. But here’s where it gets complicated: this is Wanxiang’s American subsidiary with 27 plants in 13 states and some 6,000 American workers. Pin Ni says every third car made in the U.S. has Wanxiang parts.

Lesley Stahl: You understand the suspicion around you, this company that you're here just to take our high-tech-

Pin Ni: Sure. Absolutely.

Lesley Stahl: --technology, you know, and get it back to China as fast as you can.

Pin Ni: But my simple question is: for what? I'm not the president of China. I'm the president of Wanxiang America, right? So whatever we do has to benefit us. We are here to conduct business. We are here to make money.

And so the irony: that taxpayer money for Cleantech and jobs ended up with a Chinese company creating Cleantech and Jobs… in America.

Lesley Stahl: American taxpayers have spent billions on Cleantech. Have we gotten our money's worth?

Pin Ni: If you measure them by today's standard I would say definitely not. You didn't see anything come out of it. But if you view this as a step stone to the future, when you get there, when you look back, I would say yes.

But Vinod Khosla says if the U.S. government doesn’t put more money into this technology – when we get there, it will all be in China. He wants to open KiOR biofuel plants like this in every defunct paper mill in the country.

Continued in article

Jensen Comment
Vinod Khosla wants to covert all the defunct paper mills into losing biomass fuel plants with the taxpayers footing the bill. Actually that is not quite true. If the Fed simply prints another trillion dollars Vinod's fiascos can be funded for with free money. But Vinod's gasoline will still be $20 per gallon.

"Unreliable German Solar and Wind Forcing New Coal Boom," PJ Media, January 25, 2014 ---

Not surprisingly, a wind farm operator is at the center of Germany’s latest major financial swindle.

With 1,300 employees, Prokon is a relatively small company. Yet its advertisements were well-known to Germans. They always had three parts: pictures of a wind farm; a vague message that “something” had to be “changed”; and a request to make a loan to Prokon. In return, one was promised nothing less than “a future worth living,” and 8 percent interest per annum.

One of these propositions must have been alluring to many Germans, for the company successfully gathered about 1.3 billion euros (2 billion dollars) in borrowed capital. That’s small money compared to Enron, Lehman Brothers, or Greece, but in the case of Prokon, no banks or equity funds were involved. All of the capital came from retail investors, some of whom gave a big chunk of their lifetime savings, according to media reports.

Now, we know that the whole operation was a Ponzi scheme. The interest was paid with the money from newcomers. Journalists are adding insult to injury, asking how Prokon´s creditors could have been so naďve with such an “extraordinarily high” interest rate being promised. Some coverage has mentioned that many of the investors were allegedly “elderly people.”

According to this media, one has to be well beyond the peak of cerebral activity to believe that a windfarm could generate enough profit to pay an 8 percent interest. Very well, then. But if so, how can it possibly be wise that windmills are supposed to become the backbone of the German electricity grid?

Is Germany a gigantic Prokon?

In his “climate change speech” at Georgetown University in June 2013, President Obama said:

Countries like China and Germany are going all in the race for clean energy. I want America to win that race, but we can’t win it if we’re not in it.

If it were up to the majority of the German people, however, they would rather opt out and let someone else win. According to surveys, only 18 percent approve of the current energy policy. Sixty percent of Germans reject the push for so-called “green” energy if it leads to higher prices, and the same amount think it inevitably does.

They are correct: the electricity price in Germany has doubled between 2000 and 2013. It is now about three times pricier than electricity in the U.S. because staggering amounts of money were channeled into solar and windmill companies. Last year alone, German households paid 20 billion euros (27 billion USD) for a “renewable energies surcharge,” which amounts to 240 euros (325 USD) for every citizen. More than 100 billion euros have been sunk into solar energy, which is the least efficient source and contributes only four percent to German electricity production. Germany has as many solar panels as the rest of the world combined — in a country where the sky is usually overcast.

Outside of the urban areas, there are windmills everywhere. Residents complain about the destruction of the landscape, the health hazards of infrasound, and plummeting real estate prices.

Electricity prices rise further with every windmill and solar panel installation because of how the “renewable energies surcharge” is calculated. The law is based on the idea that the owner of a windmill or a solar panel deserves a fixed return on his investment. Owners are guaranteed a long-term feed-in tariff — which is way above the market price. The consequence has been a massive overbuilding of “renewables” at the expense of consumers (industrial companies with high electricity consumption are exempted from the surcharge). This has triggered a debate about families with low incomes who have to spend an ever-growing segment of their budget on electricity.

Common sense suggests that nobody should pay for unsolicited goods. Unfortunately, common sense has no jurisdiction here. Instead, statist remedies are being discussed to cure an illness caused by statism.

Last year, Peter Altmaier – then the German minister for the environment — proposed that the state provide the poor with new refrigerators. Next, he said the unemployed could be trained to become advisors on energy saving. Like members of a Soviet Komsomol brigade, they would go door-to-door telling people to put a lid on the pot when cooking. Nobody embraced Altmaier´s ideas, but nobody offered a different proposition. So the question was dropped altogether.

It has become clear that “renewable” energies cause problems for the grid. There are no viable means for storing the electricity; it has to be consumed as it is produced. Production and consumption have to match. The larger the percentage of production coming from fickle solar and wind energy, the more difficult the job of the grid operator is. When Germany doesn’t produce enough electricity, it needs to import it from its neighbors, like it did in 2011 and 2012, when Merkel’s decision to immediately shut down eight nuclear power plants (out of fear that a tsunami like in Japan could strike them) would have caused a blackout. Austria and France stepped in to fill the gap. Sure enough, nobody ever thanked Germany’s friends. Instead, German environmentalists bragged about Germany’s record electricity exports.

Continued in article

Bob Jensen's fraud updates ---

At what point do local taxpayers object to paying for billion-dollar professional sports stadiums for teams owned by billionaires, rewarding players earning tens of millions each year, and providing kickbacks to corrupt business firms and labor unions largely at taxpayer expense?

Is public debt serving the debt of a mega-sports stadium in Detroit, Chicago, etc. more important than funding municipal services and schools? I think the economic benefits of such stadiums to cities is overhyped.

At what point do nations refuse to host costly and corruption-ridden Olympics events. The price tag for the Winter Olympics in Russia is over $51 billion and counting.

"The Waste and Corruption of Vladimir Putin's 2014 Winter Olympics," By Joshua Yaffa, Bloomberg Businessweek, January 3, 2014 ---

From 24/7 Wall Street on January 9, 2013

The U.S. has the highest corporate tax rate in the developed world
After Japan lowered its tax rate last year, the combined federal and average state tax rate of 39.2% in the U.S. was the highest of any nation in the Organization for Economic Co-operation and Development. Some mega-corporations pay little in federal or state taxes. General Motors, which had annual revenue of more than $150 billion, received a tax benefit of $28.6 billion.
These are the companies paying the most (and least) taxes.

Jensen Comment
The amount of taxes paid by corporations, especially large corporations, can vary greatly from year-to-year. For example, a few years ago GE was paying no corporate income tax, but this has since changed since GE's CEO became the top economic advisor to President Obama.

The USA may have the highest corporate tax breaks but Congress salivating over lobbying graft has salted the corporate tax code with lots of tax breaks. This is the reason why many of the largest USA corporations pay a lot less than others. This is why I personally favor eliminating corporate income taxes in favor of offsetting VAT taxes. Businesses hate the VAT tax since it's easier to collect and more immune from cheating. Business firms also fear that federal and state governments will run wild with a VAT tax. Nations in other parts of the world favor the VAT tax, especially nations having weak corporate and personal tax law enforcement --- like Greece.

Glass-Steagall Act --- http://en.wikipedia.org/wiki/Glass-Steagall_Act

"JPMorgan's Madoff Settlement Could Prove Elizabeth Warren Right," by Linette Lopez, Business Insider, January 7, 2013 ---

Another day, another $1.7 billion in fines for JP Morgan. This time, it's for failing to catch Ponzi schemer Bernie Madoff as it managed his ill gotten gains. Now the bank has to admit that it didn't have the systems in place to catch Madoff and implement them under a deferred criminal prosecution agreement.

You could call this a case of "too big to manage," one of anti-Wall Street crusader Senator Elizabeth Warren's (D-MA) favorite catchphrases.

Back in November, she used it to talk about reinstating Glass-Steagall, the regulation that once split commercial and investment banks.

"The new Glass-Steagall Act would attack both 'too big' and 'to fail,'" Warren said..."It would reduce failures of the big banks by making banking boring, protecting deposits, and providing stability to the system even in bad times. And it would reduce 'too big' by dismantling the behemoths, so that big banks would still be big—but not too big to fail or, for that matter, too big to manage, too big to regulate, too big for trial, or too big for jail."

In terms of management, the Madoff case is a catastrophe arguably worse than the London Whale.

Sure, the London Whale ended up costing JP Morgan $6 billion, and it was born in the bank's own Chief Investment Office, but that failing trade was only hidden from JPM's execs for about half a year. Madoff managed to fool everyone for decades.

Well, almost everyone. There were people at JP Morgan who sounded the alarm, according to Iriving Picard, the trustee appointed by New York's bankruptcy trustee to review Madoff's case for his "clients".

Picard's 2011 report indicates that two JPM executives knew something was wrong with Madoff, Risk Chairman John Hogan and COO Matt Zames.

Here's a quote from Hogan back in 2007 (From Picard's report, via CNN Money):

Continued in article

Jensen Comment
For its inception I've never been a cheerleader for repeal the Glass-Steagall Act.

"Warmers Use Magic to Create the Illusion of Science," by John Ransom, Townhall, January 7, 2014 ---

. . .

The UN’s Intergovernmental Panel on Climate Change (IPCC) has recently been forced to concede that a whole raft of predictions they’ve made have been incorrect. Global temperatures have risen to only 25% as high as predicted according to the IPCC models; as recently as the late Middle Ages, the earth enjoyed a period of approximately 300 years which were as warm if not warmer than today; and the IPCC is at a loss to explain why an Arctic sea ice is accumulating rather than shrinking as they had predicted.

In Australia’s New South Wales, the state government has ordered municipal governments to ignore IPCC estimates of sea rise that when measured against historical records, have been off by as much as 90%.

Some municipalities have taken aggressive action based on the too-aggressive forecasts by the IPCC writes The Australian ---

Virginia Supreme Court
"Dispute Over Climate Scientist's Records Pits Academe Against Media Groups," by Peter Schmidt, Chronicle of Higher Education, January 9, 2014 ---

"Recent Mexican Reforms and the Impact on the United States," by Nobel Laureate Gary Becker, The Becker-Posner Blog, January 6, 2014 ---

. . .

For the first time in a hundred years there is real hope that Mexico is getting its act together. Mexico might even eventually join its North American neighbors in doing justice to its people and natural resources, and attaining top-level economic status. This will have a major impact on the US, especially through reduced immigration from Mexico, and from having a much stronger neighbor.

"Mexico’s Economic Reforms, by Richard Posner, The Becker-Posner Blog, January 6, 2014 ---

. . .

I don’t see anything in the Mexican administration’s reform program concerning drug violence. There is an extraordinary level of drug violence in Mexico resulting from what amounts to warfare among the numerous drug cartels, and it is abetted by widespread public corruption. The drug wars, which appear to kill about 10,000 Mexicans a year, must be a drag on economic output. The annual number of murders in Mexico is almost twice the number of U.S. murders, even though the U.S. population is more than two and a half times the Mexican population.

Jensen Comment
I don's see a whole lot of hope for human rights and economic prosperity in any nation where the wolves (corrupt police and soldiers) guard the hen houses (ripe for plucking any time and any place). I don't see a whole lot of hope for any nation that is on the global top ten list for kidnapping risk.

There will probably be no real hope for Mexico until the war on drugs is won --- and this will probably never happen until law-abiding addicts in the USA can get pure narcotics like heroine, cocaine, and pot with medical prescriptions.

Be that as it may, the new reforms in Mexico are expected to increase the GDP and advance education, especially K-12. The criminals in Mexico are like leeches who live better on healthy hosts than dying hosts.

Here Are The USA States and Canadian Provinces That Everyone Using Atlas Van Lines Moved Into And Out Of In 2013 ---

The data are based upon only household moves of Atlas Van Lines. It probably is misleading to extrapolate the outcomes to total migration data. That means, among other things, that California is not really in steady-state yet. And Florida may be drowning in retirees who sold all their possessions up north and simply bought new condos, flip flops, and shorts after landing in Florida airports.

Compare the historical patterns here --- http://www.atlasvanlines.com/migration-patterns/archives/

Jensen Comment

There are some surprises here, notably the household moves from nearly all of Canada into the USA. Reasons could be climate, economic opportunity. lower taxes, and a desire for Affordable Care Act. Yeah Right! The provinces having the highest percentages of outbounders are Saskatchewan, Ontario, and Quebec. But the flows across the USA's northern border are nothing like the flood tides on its southern border. Most of the moves across the southern border did not use van lines of any type.

Another surprise is that California is not hemorrhaging with population net loss due to having high and ever increasing taxes. The states with the highest percentages of outbound population were Connecticut, New York, and Indiana. Connecticut and New York outbounders were probably driven by high and ever-increasing taxes. But Indiana's outbounders confuse me. The highest inbounder states are largely due to low taxes and oil and gas opportunities --- except for North Carolina. What's in North Carolina?

Florida is a bit of a surprise. I would have guessed it was flooding in new tax dodgers and sun-seeking retirees. The same goes for Arizona, although Arizona has fewer tax incentives.

Nevada is also a bit of a surprise because of the tremendous tax incentives. But Nevada is the worst of the 50 USA states in terms of job opportunities.

New Hampshire is one of the states with a high proportion if inbounders. I will vote for a 10-foot double fence surrounding the entire state. Come on folks. There's no oil and gas or jobs in New Hampshire. Must be the lure of low taxes.

The bottom line is that this is mostly an exercise for students seeking to learn how to mislead with statistics and graphs.

Chuck Pier forwarded more a more accurate migration graphic for the USA ---
California and New York seem to be losing it. Wonder why?

From the CFO Journal's Morning Ledger on January 24. 2014

Investors flee developing countries
Investors are dumping currencies in emerging markets, underscoring growing anxiety about the ability of these countries to prop up their economies as they face uneven growth,
the WSJ reports. The emerging-market slide reflects worries about outside forces—such as a shift in U.S. monetary policy, or China’s efforts to reorient its economy—colliding with domestic political and economic tensions, unsettling investors at home and abroad. The current situation puts the central banks of developing countries in a squeeze. If they raise interest rates to curb currency losses and fight inflation, that would also tighten the spigot of credit and slow domestic economic growth. But a failure to raise rates at the right time can diminish the central bank’s credibility.

The Emerging Market Currency Bloodbath In One Horrific Chart  ---


"Covered California clients have trouble finding doctors," by Victoria Colliver, San Francisco Chronicle, January 23, 2014 ---

Think signing up for health insurance through Covered California is hard? Some consumers say the real battle starts when it comes to finding a doctor or hospital that will take a plan purchased through the state-run health exchange.

Sue Kearney of Oakland thought she did her homework. She found the policy she thought was right for her - one from Anthem Blue Cross - and checked the plan's directory of doctors and hospitals to make sure she could get the specialist she wanted. Assured of that, she signed up for the plan in October.

But right before a doctor appointment this month, Kearney learned the physician's medical group will not accept any of Covered California plans.

Kearney, 63, who has a chronic digestive problem that hasn't responded to treatment, ended up paying $200 for the appointment, despite her newly minted coverage. "It's confusing and demoralizing," she said.

Most of the problems with the new health system have focused on online application glitches, long wait times to get help and delays in getting insurance cards and first-month premium bills to new enrollees.

'A lot of confusion'

But now that coverage has started, some people are finding it tough to determine whether their doctor or hospital will accept their coverage. Consumers say the insurer's directory of doctors and hospitals is inaccurate or out of date. In some cases, the doctors don't even know what to tell their patients.

"There's a lot of confusion. The physicians don't know if they're actually participating" in the exchange's networks, said Donald Waters, executive director of the Alameda-Contra Costa Medical Association, which represents 3,100 doctors in the East Bay.

The problem is not limited to California. A study released last month by the consulting group McKinsey found that many plans sold through the federal health law are using "narrow" or "ultra narrow" networks - physician and hospital lists that are limited to lower costs.

In more than two-thirds of all exchange networks analyzed by McKinsey, at least 30 percent of the largest 20 local hospitals were excluded. Insurers say the move to limit the number of doctors and hospitals on a network was necessary to keep the costs of premiums low.

In California, plans offered by Blue Shield through Covered California included just 60 percent of the doctors that participate in the insurer's group plans and just 75 percent of the hospitals. On top of that, Blue Shield is reimbursing doctors and hospitals in Covered California policies up to 30 percent less than those not in the exchange, spokesman Stephen Shivinsky said.

Limited networks

Sy Neilson, spokesman for Sutter Health, one of Northern California's largest health chains, said not all of its hospitals or doctors are participating in Covered California plans. But the hospitals and doctors that are participating are involved in limited networks, he said.

Anthem officials did not respond to requests for comment.

For his part, Peter Lee, Covered California's executive director, acknowledged that consumers may be getting misinformation from the state agency or insurer about whether their providers are participating. But, he said, the exchange is prepared to help those consumers get new plans that more suitably meet their needs.

"If our directory or the directory of the health plan is wrong and a consumer wants to change plans, we'll work with them to make sure they can do so," Lee said in a news call this week.

As for Kearney, she spent much of the past week trying to find a gastroenterologist and a lab to complete the tests ordered by the specialist she paid for. She said Alameda Health System's Highland Hospital - the county hospital - was the only center in her area that would take her, and not until March.

Kearney had even opted for more comprehensive coverage including a PPO, or preferred provider organization plan. "I chose a PPO so I could have had choice," she said. "The thing is, now I have nothing to choose from."

For Alison Berndt of Livermore, making sure her physicians were in her new plan's network is especially important because she was diagnosed with breast cancer in July.

Berndt, 61, selected a more expensive Covered California plan to ensure her five doctors, particularly her plastic surgeon, were in the network because she has yet to go through the reconstructive surgery.

Cutting medications

After she signed up, she called one of the doctors she thought was included on her Anthem policy and received conflicting information from the office staff about whether that was true. She spent a lot of time on the phone and eventually learned she was given misinformation and they were, indeed, accepting her coverage.

Berndt still hasn't been able to sort out a problem getting her drugs covered and has been forced to cut her blood pressure and cholesterol medication in half.

"Every step of the way has been crazy," she said.


From the CFO Journal's Morning Ledger on January 13, 2014

Accenture to take over fixing health-care site
Fixing the HealthCare.gov site will fall to Accenture, which was tapped to replace an embattled contractor that was largely responsible for creating the health portal
, the WSJ reports. Accenture Federal Services, a subsidiary based in Arlington, Va., won a one-year contract to continue technical improvements to the site after the government chose not to renew its contract with CGI Group. Accenture faces a tough task as the new lead contractor: repairing the online insurance marketplace quickly enough to enroll millions more consumers under the Affordable Care Act.

Jensen Comment
Accenture may fix the healthcare.com Website. But Accenture cannot fix the problem that health insurance premiums are too expensive for the middle class except for the millions that are subsidized heavily by taxpayers. The ACA was built on a foundation of deception and is not sustainable until major revisions are accomplished in a Congress that may never agree to revisions needed to stop the subsidy and Medicaid hemorrhaging.

Students in the USA should be flocking to Medicaid!
In terms of numbers of abusers I don't anticipate great abuse of Medicaid by most millionaires except by wealthy students who can lock assets away into trust funds that have only unrealized capital gains while they are still in school. This allows them to join millions and millions of poorer students who are flocking to Medicaid.

The argument goes that students can elect to stay on their parent's medical insurance. Yeah Right!
The the parents are likely on plans with relatively large co-payments every time a family member goes to the doctor or to a hospital. And medications are not likely to be such a good deal as getting those medicines free on Medicaid. I see no rationale other than ignorance for a student to stay on the medical plan of a parent until age 26 when that student can opt for Medicaid's free medical services and totally free medicines.

Then we have the middle class workers newly added to Medicaid who have modest wealth that prevented them from getting Medicaid until 2014.
They can now have millionaire assets and no longer have to give up their joint ownership with spouses on homes and savings funds accumulating unrealized capital gains rather than interest and dividends.
"Millionaires on Medicaid Got a house worth $802,000, lots of savings and a nice car? You might still qualify for benefits," by Mark Warshawsky,, The Wall Street Journal, January 6, 2014 ---

Then there's the long-term care discussed by  Mark Warshawsky above
Medicare patients have coverage for hospitals, but when they are booted out of hospitals to nursing homes the nursing home bills are not covered by Medicare. Supplemental long-term care insurance is very expensive and generally pays only a pittance of the nursing home monthly billings. Retired folks making more than $50,000 per year are not likely to abandon Medicare. But those who own their own own homes and have less annual income might consider abandoning Medicare.

For example, Mr. and Mrs Smith own their own home and live on $22,000 a year after Medicare fees are deducted from their Social Security benefits. They could probably save money and get much better medical care by abandoning Medicare and opting for free Medicaid. They can still own their home and possibly even get a reverse mortgage for more tax free cash flow. They could save the Medicare premiums (that are substantial), have zero Medicare co-pays for medical care and medicines --- medicines are not totally free under Medicare-D like they are under Medicaid. Medicare has a 20% co-pay.

And when Mr. Smith has a stroke and must vegetate in a nursing home, Medicaid, unlike Medicare, will pay his nursing home fees for as long as he lives.

Add to this the fraudulent wealth transfers that can take place with adult children to hide savings income that would made oldsters ineligible for Medicaid, and you have another government program that can be abused for billions and billions of dollars.

CPAs who advise regarding personal finances should learn all the legal strategies that did not exist before 2014


The 10 Best Places In The World To Retire --- 
Read more: http://www.nextavenue.org/blog/best-places-world-retire-2014-edition#ixzz2poA6idXM

Jensen Comment
These are the worst places to retire. The best places to retire are the states in the USA that will soon be providing free lifetime nursing home care to most folks who now find it to their advantage of to drop Medicare (that pays zero for nursing home care)  in favor of Medicaid (that pays all nursing home care) ---
"Millionaires on Medicaid Got a house worth $802,000, lots of savings and a nice car? You might still qualify for benefits," by Mark Warshawsky,, The Wall Street Journal, January 6, 2014 ---

How CPAs Can Prepare Clients for Healthcare Reform, especially small businesses ---

CPAs who advise retired folks on their personal finances need to update their knowledge of the new strategies available.

"Millionaires on Medicaid Got a house worth $802,000, lots of savings and a nice car? You might still qualify for benefits," by Mark Warshawsky,, The Wall Street Journal, January 6, 2014 ---

Expanding Medicaid coverage to an estimated nine million more Americans—as mandated by the Affordable Care Act—reinforces the idea that Medicaid only serves the poor. That perception is not accurate. And it distracts from a looming budgetary threat to the program: long-term care.

More than two-thirds of annual spending on long-term care for the elderly is paid by state and federal governments, $60 billion of which flows from Medicaid. With 10,000 baby boomers reaching retirement age every day for the next 19 years, the Congressional Budget Office projects that spending on long-term care will more than double by 2050—to 3% of GDP from 1.3%.

We might accept these rising costs if benefits flowed only to the elderly poor, as originally intended. But that is not the case. Significant long-term care benefits flow to individuals in the top 20% of retirement earnings, enabled by Medicaid's generous asset-exclusion limits.

In many states, an elderly person may own a home valued at $802,000, plus home furnishings, jewelry and an automobile of uncapped value while receiving long-term Medicaid support. In addition, they are allowed to have various life-insurance policies, retirement accounts with unlimited assets, $115,920 in assets for a spouse, income from Social Security, and a defined-benefit pension plan. By most standards, such a household would be considered wealthy.

Despite these generous rules, some individuals even game the system further by arranging complex asset transfers or insurance transactions that sidestep congressional efforts to curb fraud.

The rules wouldn't matter if wealthy individuals shunned Medicaid long-term care benefits. But with Medicaid crowding out private alternatives, many don't. In fact, 15% of elderly individuals in the middle-income quintile, 8% in the upper-middle quintile, and 5% in the top quintile receive Medicaid benefits.

Even these numbers don't capture the burden wealthy individuals place on Medicaid because they live much longer than the poor. Beneficiaries in the top income quintile receive, on average, double the lifetime payouts of those that are less well-off. And because Medicaid lowers reimbursement rates to providers and restricts benefits to contain costs, the poor are tied to lower-quality care and enjoy far less provider flexibility.

Funds for Medicaid are disbursed to the states by the federal government through complicated formulas. States in turn administer Medicaid and long-term care to state residents. While the rules for each state vary, state governments are mandated by law to pursue the estates of wealthy residents to recoup the costs incurred by their use of long-term care programs. Yet the most recent study by Health and Human Services found that most states recoup less than 2% of total long-term care spending. Four states—Alaska, Georgia, Michigan and Texas—even reported no reimbursements whatsoever.

Tightening eligibility rules is the first step toward a solution. Before receiving Medicaid payouts, for example, wealthier households should first be asked to draw down the value of their home through a reverse mortgage to help pay for long-term care. Wealthier households could also be asked to meet long-term care expenses through life annuity payouts from their retirement accounts. Such changes would help ensure that Medicaid benefits flow to the financially needy.

Clearly, alternatives to Medicaid long-term care are needed for those with means, while the safety net for the elderly poor remains intact. Four key policy changes would help transform the system into a more equitable and sustainable one that better serves America's seniors:

First, provide a tax preference for long-term care insurance policies through retirement and health accounts. Allowing tax-free withdrawals from existing 401(k), IRA, or Section 125 accounts to pay for private long-term care insurance would have minimal budget implications. Lower tax revenues would be offset by cost savings provided by wealthier seniors drawing on private resources—rather than public funds—to pay for care.

Second, promote innovative products, such as "life-care" annuities, which marry life annuities to long-term care insurance, allowing individuals to finance their care as well as their retirement. Combining long-term care insurance and life annuities would decrease their combined costs and considerably ease underwriting standards, enabling more seniors to afford long-term care coverage.

Third, foster long-term care partnership programs already operating in most states. These public-private partnerships allow residents to purchase long-term care insurance and still qualify for Medicaid if their insurance is exhausted—without depleting all of their assets. That combines the benefits of private insurance with the backing and safety net of the government.

Fourth, allow a Medicaid "buyout." Upon retirement, individuals should have the choice of receiving a lump-sum payment from the government for a significant portion of the expected value of their Medicaid benefits. Retirees would be obliged to use the payment to purchase private, permanent long-term care insurance in place of Medicaid coverage. This would further reduce Medicaid's future liabilities.

Continued in article

Jensen Comment
Students in the USA should be flocking to Medicaid!
In terms of numbers of abusers I don't anticipate great abuse of Medicaid by most millionaires except by wealthy students who can lock assets away into trust funds that have only unrealized capital gains while they are still in school. This allows them to join millions and millions of poorer students who are flocking to Medicaid.

The argument goes that students can elect to stay on their parent's medical insurance. Yeah Right!
The the parents are likely on plans with relatively large co-payments every time a family member goes to the doctor or to a hospital. And medications are not likely to be such a good deal as getting those medicines free on Medicaid. I see no rationale other than ignorance for a student to stay on the medical plan of a parent until age 26 when that student can opt for Medicaid's free medical services and totally free medicines.

Then we have the middle class workers newly added to Medicaid who have modest wealth that prevented them from getting Medicaid until 2014.
They can now have millionaire assets and no longer have to give up their joint ownership with spouses on homes and savings funds accumulating unrealized capital gains rather than interest and dividends.
"Millionaires on Medicaid Got a house worth $802,000, lots of savings and a nice car? You might still qualify for benefits," by Mark Warshawsky,, The Wall Street Journal, January 6, 2014 ---

Then there's the long-term care discussed by  Mark Warshawsky above
Medicare patients have coverage for hospitals, but when they are booted out of hospitals to nursing homes the nursing home bills are not covered by Medicare. Supplemental long-term care insurance is very expensive and generally pays only a pittance of the nursing home monthly billings. Retired folks making more than $50,000 per year are not likely to abandon Medicare. But those who own their own own homes and have less annual income might consider abandoning Medicare.

For example, Mr. and Mrs Smith own their own home and live on $22,000 a year after Medicare fees are deducted from their Social Security benefits. They could probably save money and get much better medical care by abandoning Medicare and opting for free Medicaid. They can still own their home and possibly even get a reverse mortgage for more tax free cash flow. They could save the Medicare premiums (that are substantial), have zero Medicare co-pays for medical care and medicines --- medicines are not totally free under Medicare-D like they are under Medicaid. Medicare has a 20% co-pay.

And when Mr. Smith has a stroke and must vegetate in a nursing home, Medicaid, unlike Medicare, will pay his nursing home fees for as long as he lives.

Add to this the fraudulent wealth transfers that can take place with adult children to hide savings income that would made oldsters ineligible for Medicaid, and you have another government program that can be abused for billions and billions of dollars.

CPAs who advise regarding personal finances should learn all the legal strategies that did not exist before 2014.

Heads Up for CPA's Advising Clients About Signing Up for the ACA

The ACA made it possible in some states for even millionaires to get Medicaid's free medical care, nursing care, and medications.
"Will You Owe Debt After Death? The Medicaid Surprise," by Morgan Brittany, Townhall, January 27, 2014 ---

This was not in the fine print of the Affordable Care Act (that no one read), and there was nothing in it that changed the existing law from 1993. The ACA however, did expand the number of people who are eligible for Medicaid, so now there are more people from the ages of 55 to 65 whose estates could be on the hook for Medicaid expenses after the beneficiary dies.

This sounds like a cash grab to me. Many states have not changed the law to limit the amount of expenses the government can claim are owed for Medicaid, but Oregon and Washington have issued emergency rule changes.In Washington it now says that the state can only recover the cost of nursing home care for the 55-65 age groups.Oregon followed this path as well.However there are 23 other states that have expanded Medicare under Obamacare and they have not changed their estate recovery policies. This could end up with the deceased person’s heirs losing homes, property and other assets.

The 1993 law stated that spouses and children under 21 of the deceased person were exempt from estate recovery, but the rules can vary by state. However, with rule changes running rampant under this administration, there is no guarantee of anything anymore. Laws and rules can be changed on a whim and the public will never even be aware of it.

Just to give you an example of the amount of money that the states could potentially confiscate, in 2004, California collected $44.6 million through estate recovery and MediCal officials say that they expect 1 to 2 million more enrollees by 2015. That could add up to a lot of money. Minnesota collected $25 million in 2004 and is keeping its recovery program in place with no alterations.

Dr. Jane Orient of The Association of American Physicians and Surgeons says; “I think that people are maybe in for a shock when they find out that their heirs are going to be paying for their care, because they got into a system under false pretenses”. Just one more thing that no one told us about Obamacare and the mainstream media is not mentioning even now.

Continued in article



Was President Obama correct in promising that the ACA insurance would transfer Medicaid patients from ER rooms to ACA networked physicians?

How does the ACA expansion of Medicaid greatly increase the moral hazard of new Medicare patients?

One of the naive promises made by President Obama was that uninsured people previously seeking free care in Emergency Rooms (ER) would relieve the ER rooms for all the new Medicaid patients who could now have access to network physicians with their new free medical care and medication insurance policies. This was naive because he should have known that previous Medicaid patients preferred ER rooms even when they had  freeMedicaid insurance. He should have known that when Oregon expanded the number of people on Medicaid that demand for ER services increased by 40%.

People receiving free medical care and medications are inclined to favor ER services even when they can have care from network physicians. Reasons are complicated especially when walk-in medical clinics are available. One reason is that walk-in clinics serving Medicaid patients are not usually as close by as hospitals with ER services. The physicians in the ER facilities are likely to not only be MDs, they are sometimes better MDs that the staff of walk-in medical clinics who often hire newly graduated MDs still in residency or physicians assistants. In other words, if you want the best physicians the odds are usually better for ER rooms than networked ACA physicians and walk-in clinics.

When walk-in clinics are not convenient, getting an appointment with a networked physician may take weeks or even months. Top physicians are available 24/7 for emergency patients and non-emergency Medicaid patients. Insured patients not on Medicaid may be discouraged by co-pays of expensive ER services. But Medicaid patients never have to worry about co-payments.

Last night CBS News reported that ER use expanded by 40% due to new Medicaid patients.


"Medicaid Expansion Boosted Emergency Room Visits In Oregon," by Julie Royner, NPR, January 3, 2014 ---

Giving poor people health insurance, the belief was, would decrease their dependence on hospital emergency rooms by providing them access to more appropriate, lower-cost primary care.

But a study published in the journal Science on Thursday finds that's not the case. When you give people Medicaid, it seems they use both more primary care and more emergency room services.

"Medicaid coverage increases emergency department use, both overall and for a broad range of types of visits, conditions, and subpopulations," says Amy Finkelstein, an economics professor at MIT and one of the authors of the study. "Including visits for conditions that may be most readily treatable in primary care settings."

In other words, people are going to the emergency department for things that aren't emergencies. This is exactly what policymakers hoped to avoid by giving people health insurance – including the huge increase in Medicaid coverage coming as part of the Affordable Care Act.

And the increase in ER use found in the study was significant – "about 40 percent," Finkelstein said.

This would be a good place to point out this is not just any study. It is the third major paper from something called the Oregon Health Insurance Experiment, which Finkelstein heads along with Katherine Baicker from the Harvard School of Public Health.

The experiment was a rare opportunity to create a randomized controlled experiment – the gold standard of scientific research. It came about almost by accident, thanks to Oregon's decision in 2008 to expand its Medicaid program via a lottery.

The result, said Finkelstein, was that the groups of people with or without insurance were identical, "except for the fact that some have insurance and some don't. You've literally randomized the allocation of insurance coverage."

And that gave researchers the ability to compare the effects of having health insurance — in this case, Medicaid.

The first paper from the research team, published in 2011, was mostly positive. It found that people who got Medicaid coverage were more likely to use health services in general, less likely to suffer from depression, and less likely to suffer financial problems related to medical bills than those who remained uninsured.

The results in the second paper, published last spring, were more equivocal. Researchers found no measurable health benefits in the Medicaid group for several chronic conditions, including hypertension, high cholesterol and diabetes.

It's not clear that the emergency room results will translate nationwide: The study only lasted 18 months and the study population is both more while and more urban than the rest of the nation.

But that's not stopping critics of Medicaid expansion.

"When you make ER care free to people, they consume more of it. They consume 40 percent more of it," says Michael Cannon, head of health policy for the libertarian Cato Institute. "Even as they're consuming more preventive care. And so one of the main arguments for how Obamacare was going to reduce health care costs is just flat out false."

Cannon says the study will likely further hurt President Obama's credibility for vowing that expanding Medicaid would help get people out of emergency rooms. But what's likely to bother the administration even more, he says, is what it may do to the half of the states that have yet to adopt the Medicaid expansion.

"This study is going to make it less likely that the 25 states that decided not to expand Medicaid are going to change their minds and decide to expand Medicaid," Cannon predicts.

But this study doesn't come as much of a surprise to those people who actually run Medicaid programs around the country.

"This is not something that is unexpected and not something that we're not prepared for," says Kathleen Nolan. She's director of state policy and programs for the National Association of Medicaid Directors.

Continued in article

Jensen Comment
The majority of new Medicaid patients will be poor, although it is possible for millionaires to now qualify for Medicaid with devious financial planning such as low income students having million dollar trust funds. The poor patients have incentives to game the ER services for prescription pain medicine. With one network physician or clinic, there will be records as to when prescriptions can be renewed. Given the Administration's track record for implementing databases, I strongly doubt that a Medicaid patient intent upon selling prescription pain killers can be prevented by traveling around to different hospital ER service for prescriptions that would not be granted if the ER physician was aware of the last time a Medicaid patient received such a prescription in another hospital and another and another.

I'm not certain how well pharmacies share prescription data or even if privacy laws even allow CVC and Walgreen and Wal-mart to even share a person's prescription data without receiving permission from the patient.

The moral hazard is greater with poor people in need of selling their pills like they sell food stamps.

Can prescription data be shared between different corporations without patient consent?

And then there's the problem of granting Medicaid to people who do not qualify for Medicaid. For example, an audit in Illinois revealed that have the people on Medicaid did not qualify for Medicaid. This appears to be yet another entitlement going crazy at taxpayer expense.

Bob Jensen's health care messaging updates --- http://www.trinity.edu/rjensen/Health.htm

Slightly over 75% of the ACA signups prior to mid*January are over 35 years of age, raising huge concerns about those  prospects18-34 years of age that are vital to funding the ACA. A third of the signups are age 55-64 which adds even more worry that the ACA will operate deeply in the red. At age 65 most people become eligible for Medicare which is funded differently based upon contributions of workers and employers over the years of their working life.

The Administration revealed 79% of the 2.2 million received premium subsidies (not counting Medicaid)  to be paid by taxpayers ---

Most of the people who bought coverage on the exchanges this fall got subsidies to help them afford the premiums. That’s in contrast to the first month of the program, when less than one-third of buyers were subsidized. People earning up to four times the poverty rate—as much as $96,000 a year for a family of four—can get help buying coverage.

Also about 40% of those signed up have not actually paid their first premiums,  some of whom will not pay once they (especially students) learn that they are eligible for Medicaid free coverage. An even larger percentage may default of premiums down the road and still be covered for three months under the ACA provision of carrying defaulters for 90 days with insurance companies paying for their medical care for 30 days and doctors and hospitals paying for their care for an additional 60 days. This could become a game of paying the premium for one month and then getting four months of coverage followed by paying another premium for one month followed by four months of coverage and on and on and on. Paying three monthly premiums may get you 12 months of coverage.

Four million people have additionally signed up for the Medicaid totally free medical services and medicines intended for additional people supposedly who are poor but can have substantial assets, including some millionaires who are long on assets like houses, land, and stocks but short on cash income. I'm totally amazed that millions more students did not immediately sign up for Medicaid since in most instances Medicaid is a better deal than staying on policies of parents where there are copayments and deductibles.

The bottom line is that its probably too soon to tell how good or how bad the sign up process is going for the Affordable Health Care Act.
Millions more will soon be signing up for private plans without taxpayer subsidies, private plans with taxpayer subsidies, and totally subsidized Medicaid plans.

To date about 70% of the 2.2 million people signing up for private plans chose the Silver Plan that has a whopping 30% deductible.

"Older Pool of Health Care Enrollees Stirs Fears on Costs," by Michael D. Shear and Robert Pearson, The New York Times, January 13, 2014 ---

"Health Sign-Ups Skew Older, Raising Fears Over Costs Release of Data Shows Challenge in Persuading Young People to Enroll," by Louise Radnofsky and Christopher Weaver, The Wall Street Journal, January 13, 2014 ---

Also see

Also see

"What 2014 means for Obamacare," by Sarah Kliff, The Washington Post, January 1, 2014 ---

. . .

The next Obamacare fight is going to be about access.
After three months of enrollment, January will be the first month when shoppers can see what they purchased. We know that the plans for sale on the marketplace tend to have relatively limited networks, as insurers restricted doctor access to hold down premium prices. New subscribers could find that a doctor they want isn't in network, and get frustrated. Co-payments may seem alarmingly high -- a byproduct of keeping premiums low. While the health-care system probably has the capacity to absorb a few million new insurance subscribers (for a variety of reasons explored here) there is still room for issues about access to specific doctors and the price tag that comes along with trips to the doctor's office.

Continued in article

Jensen Comment
While the new Medicaid patients will probably flood the hospital ERs instead of seeking out network physicians, the patients on plans requiring co-payments and deductibles will probably seek out physicians on their network plans. Hospital ERs tend to charge large co-payments which of course do not matter to Medicaid patients since they do not have to pay any co-payments.

In some instances physicians who are suing the ACA network insurers after being dropped by the networks
",MDs sue ObamaCare insurer over dropped doctors" by Geoff Earle, Fox News, December 28, 2013 ---

A group of New York doctors is suing insurance giant UnitedHealthcare, charging that it booted doctors from its network to avoid cost hikes imposed by ObamaCare.

The company’s decision to kick more than 2,000 docs from its Medicare Advantage network threatens to harm elderly and disabled patients, according to the filing in Brooklyn federal court.

“By terminating numerous physicians from the . . . network, United seeks to stem financial losses occasioned by reduced federal payments under the Affordable Care Act,” the suit launched by the Medical Society of the State of New York claims.

“This, of course, comes at the expense of physicians,” the suit continues, arguing that the company violated doctors’ contracts by failing to give sufficient notice, among other things.

Tugging at the heartstrings, the suit specifically mentions elderly and disabled patients “who must now either find new physicians (including traveling farther distances to find a participating . . . provider), switch plans to continue treatment with the terminated physicians, or pay significant additional out-of-pocket costs to continue treatment with an ‘out-of-network’ provider.”

It accuses United of “shifting the financial burdens imposed by the Affordable Care Act from itself, a multibillion-dollar company,” to providers and patients.

Medical Society President Sam Unterricht told The Post the company’s decision was unfair to patients, since they had to choose a new plan under Medicare Advantage, a private alternative to traditional Medicare, by Dec. 7, when company Web sites still showed doctors who were being kicked out of the network at the start of the new year.

“For some people who are medically fragile it can really be dangerous. There can be gaps in care,” he said.

Unterricht said reduced Medicare Advantage payments to physicians are being used as a cost-saving measure to fund ObamaCare. He said docs would get paid 20 percent or even 40 percent less per patient.

“A lot of doctors are not going to be able to accept that and really give good medical care at that kind of a price,” he said.

Continued in article

Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

$4,878 Room and Board Charge for One Night in the Hospital:  Those meals must've been fantastic
"This $55,000 Bill Is The Perfect Example Of Our Broken Hospital System," by Lauren F. Friedman, Business Insider, December 30, 2013 ---
See a copy of the bill itself (note how the charge for aspirin is now hidden)

Jensen Comment
Cost Accounting Student Assignment:  Backflush the line items on this bill to identify possible components and justify the charges
Hint:  Don't forget hospital bad debts and executive salaries and subtle kickbacks to doctors.
For example, it's common for physicians in the Emergency Room to recommend at least one night at $10,000 in ICU when a $4,878 room for one night would probably suffice.

Bob Jensen's health care messaging updates --- http://www.trinity.edu/rjensen/Health.htm

Detroit police chief to citizens: Arm yourselves Former gun-control advocate changes tune in combating crime ---

Chevy Volt Electric Range Drops to 20 Miles in Cold (below 25F)---
The problem is more risky for all electric cars having no gasoline engines. And tonight the forecast up here is for -22F.

"Electric Vehicles Out in the Cold:  Electric vehicle range drops in cold weather, and technological solutions are years away.," by Kevin Bullis, MIT's Technology Review, December 13, 2013 ---

Bob Jensen's universal health care messaging --- http://www.trinity.edu/rjensen/Health.htm

Bob Jensen's Tidbits Archives ---

Bob Jensen's Pictures and Stories

Summary of Major Accounting Scandals --- http://en.wikipedia.org/wiki/Accounting_scandals

Bob Jensen's threads on such scandals:

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Current and past editions of my newsletter called Fraud Updates ---

Enron --- http://www.trinity.edu/rjensen/FraudEnron.htm

Rotten to the Core --- http://www.trinity.edu/rjensen/FraudRotten.htm

American History of Fraud --- http://www.trinity.edu/rjensen/FraudAmericanHistory.htm

Bob Jensen's fraud conclusions ---

Bob Jensen's threads on auditor professionalism and independence are at

Bob Jensen's threads on corporate governance are at


Shielding Against Validity Challenges in Plato's Cave ---

·     With a Rejoinder from the 2010 Senior Editor of The Accounting Review (TAR), Steven J. Kachelmeier

·     With Replies in Appendix 4 to Professor Kachemeier by Professors Jagdish Gangolly and Paul Williams

·     With Added Conjectures in Appendix 1 as to Why the Profession of Accountancy Ignores TAR

·     With Suggestions in Appendix 2 for Incorporating Accounting Research into Undergraduate Accounting Courses

Shielding Against Validity Challenges in Plato's Cave  --- http://www.trinity.edu/rjensen/TheoryTAR.htm
By Bob Jensen

What went wrong in accounting/accountics research?  ---

The Sad State of Accountancy Doctoral Programs That Do Not Appeal to Most Accountants ---


Bob Jensen's threads on accounting theory ---

Tom Lehrer on Mathematical Models and Statistics ---

Systemic problems of accountancy (especially the vegetable nutrition paradox) that probably will never be solved ---

Bob Jensen's economic crisis messaging http://www.trinity.edu/rjensen/2008Bailout.htm

Bob Jensen's threads --- http://www.trinity.edu/rjensen/threads.htm

Bob Jensen's Home Page --- http://www.trinity.edu/rjensen/