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Guest Post: $100 Oil Could Sink The Fed’s QE2

Tyler Durden's picture




 

Submitted byJed Graham of The Capital Hill blog

$100 Oil Could Sink The Fed’s QE2

As the U.S. prepares to embark on a new round of Federal Reserve
quantitative easing, there are plenty of reasons to doubt that it is
the right course for the economy and job creation.

Here’s another: The voyage might have to be aborted — or at least
diverted — soon after QE2 leaves the dock because the Fed may be
sailing into a political hurricane.

Even before the anticipated launch of the next round of Treasury
purchases — it’s expected to be made official on Nov. 3 — the Fed’s
unmistakable signals have fueled commodity price gains as the dollar
has sagged.

Since the Fed’s Sept. 21 policy statement, crude oil had surged
more than 9% to above $83 a barrel on Wednesday, approaching its highest
levels since October 2008. (Oil prices did retreat on Thursday.)

The risk for the Fed is that such price increases will be felt in the
economy long before any modest positive impact from lower interest
rates.

To some extent, unconventional Fed monetary policy actions may be
arcane enough to make them an unlikely target of populist politicians
and grass-roots activists.

Still, just last year, the Fed came under blistering criticism for
its close-to-the-vest dealings. Legislation to audit the Fed,
spearheaded by Tea Party favorite Ron Paul in the House and
self-styled socialist Bernie Sanders in the Senate, was largely
incorporated in the Dodd-Frank financial regulatory reform bill.

If there’s one thing that may turn Fed policy from yawn-inducer to
rallying cry, it’s oil prices rising above $100 a barrel, which would
hit Americans in their wallets on a frequent basis.

Now, triple-digit oil prices are no sure thing. If Friday’s jobs
report is far weaker than expected, it could stop the commodities
rally in its tracks. But $100 oil is clearly within the realm of
possibility, and if it occurred even as the economy continued to
struggle, there’s no telling how much hot air would fly the Fed’s way.
Perhaps enough to erode Fed Chairman Ben Bernanke’s gung-ho
consensus.

Then pressure for doing something about the jobs crisis would fall
squarely on the shoulders of Congress, exactly where it belongs.

Much has been made of hedge fund manager David Tepper’s comments on CNBC that asset values can only go up for now, driven either by an economic rebound or — if growth continues to sputter — by quantitative easing.

David Rosenberg, the influential former Merrill Lynch economist now
at Gluskin Sheff, offered a third scenario: QE2 might not work. Yet
another possibility is that the Fed has a lot less latitude to pursue
quantitative easing than is now assumed.

 

 

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Thu, 10/07/2010 - 16:51 | 633656 Quinvarius
Quinvarius's picture

I don't think QE has anything to do with the economy.  I think it has always been about the banks being bankrupt and the US gov geing hosed.  Whether they announce it or not, the monetization will continue. 

Thu, 10/07/2010 - 17:01 | 633675 cougar_w
cougar_w's picture

We have a winner.

Nothing much more need be said, I guess.

Thu, 10/07/2010 - 20:03 | 634025 Quinvarius
Quinvarius's picture

If we actually succeeded in trashing our currency to the point where we could export again, we would be totally screwed.  The money coming back into the country to buy exports, plus all the printing we have done, would blast into hyper inflation in less than a week.  I cannot imagine a functional economy is on any serious economists "to do" list.

Thu, 10/07/2010 - 21:30 | 634171 DosZap
DosZap's picture

Someone explain this to me.

QE seems to have morphed into a NON event as far as Inflation, Hyper Inflation inducing.

Before you can have that,you must have a currency event.( lackof confidence).

We have not printed ONE physical paper dollar..........

All that's been done is more zero's entered into a computer.

And, with the absolute lack of proof this affords the Fed, *who can know their doing any of it?.

They could have already dumped 20 Trillion more, and no one would be the wiser, except those in the know.

Congress does not have to approve that which they cannot audit, nor can they.

Not that which is made out of thin air.

A DELETE tab, on an entry is all that's needed, if they ever even needed one.

So, how would/could anyone know if they had, or have not added to the deficit?.

NO one can prove they did or did not.

It appears to me, they can do what they wish, when they wish,and never tell a soul they have done it.

Not even the POTUS.

In order to trash a currency,you must have one PRINTED, distributed, and tangible.

If you cannot put your hands ON it, it's not there.

So, is this not a way of adding all the  money you want , and doing so, without any accountability, nor anyway anyone can PROVE it even existed, or was done?.

Just as your or I can delete a post, if no one saw it, it never existed to anyone except the one who typed it, and deleted it.

Just like the Banks?...........they did not get trucks full of currency to make them solvent....they got more zeros, entered into their balance.

So, in reality is this QE, (if they wanted to end around everyone) really just a Ghost in a Machine?.

WHO says they must ADD it to the deficit?.

Wed, 10/27/2010 - 17:02 | 681541 nuinut
nuinut's picture

We have not printed ONE physical paper dollar..........

Really?

What are all those newly colored, freshly printed FRNs, yet to be released then?

Being so visibly different, the could easily be issued at a new rate, for example one "new" dollar equals ten "old" ones, giving them, technically, ten times the quantity. An overnight 90% devaluation.

They're well prepared for hyperinflation.

Thu, 10/07/2010 - 17:12 | 633700 1100-TACTICAL-12
1100-TACTICAL-12's picture

Glen Beck just sourced ZH, Server check...

Thu, 10/07/2010 - 17:20 | 633718 Ragnarok
Ragnarok's picture

I've been forwarding ZH and FOFOA articles to Glenn Beck and the Blaze for a while now in an attempt to get more attention and to frame certain issues.  Beck's followers know how to take things viral.

Thu, 10/07/2010 - 20:16 | 634041 puckles
puckles's picture

Beck's followers, like Beck himself, are also mainly unthinking, reflexive know-nothings.  He's just another demagogue, no different in many ways from Obama.  He probably has as many, or even more, books out as Obama does now, equally ghost-written.  Obama's people also knew how to get things viral.  If I were you, I'd avoid either camp like the plague.

What we need is neither of these idiots, or their followers. They pander to the least of us, and the worst of our obsessions.  There were reasons our forefathers (and I am a relative of a signer of the Declaration of Independence) did what they did, when they did it.  We are reaching a similar impasse today, but the general citizenry is much less well informed.  Those who understand what is actually going on, aside from TPTB, are exceedingly thin--too thin, in all likelihood, to deliver a real leader right now.

My best guess is that some thoroughly disaffected USMA/NA graduate, perhaps with an MBA from HBS or the like, and plenty of real world experience, will begin to rise to political awareness sometime soon.  Depending on this person's gifts,links,and   personality-- never discount the direct personal charm many of these people have--we will either have a benevolent revolution (somewhat like the Velvet Revolution), or utter chaos.

Fri, 10/08/2010 - 02:01 | 634517 OBRon
OBRon's picture

nm

Thu, 10/07/2010 - 21:48 | 634209 you enjoy myself
you enjoy myself's picture

yep, they have no choice but to print.  the Fed is looking at just two scenarios.  one, print away and risk consumer anger about $4 gas and the accompanying slowdown, all of which can at least be mitigated politically by blaming OPEC or 'speculators'.   two, don't print and have all asset classes discover their true pricing - banks and credit implode, and every state and municipal pension (counting on 8% returns) in the country becomes insolvent within months.

one means some protesting in the streets, two means a bloody revolution.

 

Thu, 10/07/2010 - 16:51 | 633657 Ragnarok
Ragnarok's picture

Maybe Obama wants high gas prices so he can push green subsidies, stricter control over oil companies etc.. It's a crisis a progressive would love to exploit.

Thu, 10/07/2010 - 17:15 | 633710 Edmon Plume
Edmon Plume's picture

Looks like the only way Leo's solars are going to make money is to legislate artificial demand.

Thu, 10/07/2010 - 16:55 | 633660 Popo
Popo's picture

Oil bitchez

Thu, 10/07/2010 - 16:57 | 633661 themosmitsos
themosmitsos's picture

Yeah but this suits them as part of their whole Cars that do 0-60 in 5 1/2hrs, smell like turds, urine and vegetable oil, and wheat grass juice diet green-eco communist manifesto bullshit.

[I'm not anti green-just anti-dirty smelly fucking hippy]

Plus they get to blame the Iranians for it. You watch.

War Bitchez

with carrots

[throw a banana at 'em Mr President---that's right I said, bite me]

Thu, 10/07/2010 - 16:57 | 633663 Rusty Shorts
Rusty Shorts's picture

Oil was $8 a barrel 10 years ago, the good times are gone fella's.

Thu, 10/07/2010 - 17:35 | 633764 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Oil is going up because speculators are doing a final dash for the trash. They will be crushed since no demand is there. Party is over. Coming soon to a gas station near you, $1.25 a gallon gas. 

Thu, 10/07/2010 - 18:42 | 633883 DaveyJones
DaveyJones's picture

cause the supply is increasing and nobody needs the stuff and there's plenty of substitutes, uh huh

Fri, 10/08/2010 - 01:25 | 634501 RmcAZ
RmcAZ's picture

As long as the world population is increasing and developing countries are expanding, demand for oil will always go up regardless of what is happening in the U.S.

Thu, 10/07/2010 - 16:58 | 633664 cougar_w
cougar_w's picture

The Fed playing head-to-head chicken with the House of Saud.

If we're lucky they'll take each other out. Yeah, dreaming.

Thu, 10/07/2010 - 16:57 | 633665 francismarion
francismarion's picture

Can any good come from $100 oil?

Thu, 10/07/2010 - 16:59 | 633671 cougar_w
cougar_w's picture

Certainly. "Someone gets even filthy-er rich than they were last year."

Note that you didn't specify the object of the question.

Thu, 10/07/2010 - 21:06 | 634129 johnnynaps
johnnynaps's picture

Plenty good! It makes my motorcycle ride that much more enjoyable and probably safer because less dopes are on the road!

Fri, 10/08/2010 - 00:00 | 634415 snowball777
snowball777's picture

Sure:

- People will conserve like they did in the summer of 08.

- Hybrids and electrics look that much less expensive relative to ICEs

- Our domestic oil producers will have a windfall

- Our strategic reserve will be safe(r)

- Gold (silver, palladium) will go with it

- It may break Ben's mojo permanently

Thu, 10/07/2010 - 17:02 | 633670 Waterfallsparkles
Waterfallsparkles's picture

In Maryland BG&E (Constalation Energy) wants to raise utility rates.  We have some of the highest Energy Rates in the Country even without the raise.

I need to buy Heating Oil and the Tank is dry.  I have been waiting for the cost to go down does not look like it.  Just take the Wall Street Price for Heating Oil an add .70 cents and that is what the distributors charge.  Buy just 150 gallons and it will cost you $442.50 for about a month and a half for heat.  Fill the tank and it will cost $737.50.  I have a small house, hate to pay the bill for a BIG house.

So, Bernankie wants me to go out and spend money?  I am for Oil to heat my house.  Unfortunatly, all of the money goes to the Saudis.  Yes, that stimulates our economy with all of our money going to Saudi Arabia.

Thu, 10/07/2010 - 17:12 | 633698 impending doom
impending doom's picture

Well, not that I recommend it, but you could buy a diesel car and put your home heating oil in the tank for a big savings over what you'd pay at the pump. For those that don't know, home heating oil and diesel are in fact identical, except they add red dye to the one that doesn't have gasoline tax added...

Thu, 10/07/2010 - 17:18 | 633715 Waterfallsparkles
Waterfallsparkles's picture

I know, and I think Diesel fuel is cheeper than Heating Oil, even with the road taxes.  A friend of mine when he ran out of Heating Oil went an got Diesel Fuel to power his boiler.  I would not be supprised to see the Poor People filling Gas Cans with Diesel Fuel to get a few hours of heat if they cannot afford the minimum fill needed by the Oil Companies.

Thu, 10/07/2010 - 17:24 | 633731 Edmon Plume
Edmon Plume's picture

$2.96/gallon of diesel * 150 gallons ~= $444, so price diff is minimal.

http://www.eia.doe.gov/oog/info/gdu/dieselpump.html

Fri, 10/08/2010 - 11:29 | 634586 Hephasteus
Hephasteus's picture

You only get about 20 gallons of gas from each 42 gallon barrel of oil and only about 10 or 12 (I think not sure) gallons of deisel. When you start cooking the crude. The gasoline comes out first and then you heat it up more to pull the deisel out. So you can get to gas without having to affect deisel supplies but you can't get to deisel without glutting up on gasoline. Since lubrication is in short supply and shipping in all forms if fucked. They are just cooking gasoline out and then leaving the rest for later. There's probably millions of gallons and oil out there that are just waiting to be turned into d1 d2 and d4 deisel and lubricants that don't have an ounce of gasoline in them. Another nail in the coffin for "shipping and trucking aren't presently bustified".

I was just thinking this is going to be worst winter in history and many people will freeze to death. If they have to cook all this to get heating oil out then deisel is going to drop like a stone.

Thu, 10/07/2010 - 20:32 | 634069 puckles
puckles's picture

Even if you have to borrow to do it, fill the damned tank now.  Oil prices are rising daily, and will continue to do so as long as the geniuses in the FED and in the Treasury continue their idiotic policies; the speculators feed on this, and no, it does not all go to the Saudis, unless they all live on Wall Street. Constellation Energy is a federally and state regulated utility.  Much of the increase will be going to speculators in commodities vs. the dollar.  This should give you an idea about investing opportunities; if oil is repugnant, try grains--there's an ETF for that.

Once the tank is filled, look into converting to gas, which you should have done years ago, even if you have no city gas.  It's cheaper by far, and will continue to be so.  We have a super-abundance of the stuff nationally.  Maryland has typically given subsidies for conversion, and I believe this is still the case.  There may be additional tax advantages, both state and federal. Talk to a tax specialist; you may be surprised just how cheap a conversion can be.  Good luck!

Thu, 10/07/2010 - 22:47 | 634303 tom a taxpayer
tom a taxpayer's picture

Thanks for the link. Here's two gems from Willie

"The quintessential core of the Fascist Business Model is not the merger, but the conquest of the USDept Treasury by Goldman Sachs. New Treasury Secretaries must come from the marbled halls of Goldman Sachs with full pedigree in order to perpetuate entrenched ongoing activities, including vast role programs under the USGovt roof, in particular the Fannie Mae clearing house operations. Observe the Wall Street mortgage bond fraud, conflict of interest, counterfeit bonds, naked bond shorting, high frequency trade skimming, hidden monetization of USTreasury auctions, and the MERS database reliance. The MERS database and countless home foreclosures are at the center of legal investigations. Even a sitting US Senator has called for investigation of JPMorgan, Bank of America, and GMAC, regardless of their size, prominence, influence, or prestige. Not a single conviction has come to the elite in South Manhattan for criminal felonies of grotesque type."

 

"Perhaps the USCongress can hastily include a rider on some war appropriation bill or jobless insurance bill or some other bill that is approved but not examined, which exempts USGovt agencies and Wall Street firms from RICO prosecution, even ex-post facto to cover past pecadillos. Harken back to Hank Paulson as USTreasury Secretary, trying to explain Wall Street bond fraud as errors of judgment. The ploy did gain some traction, but the recent lawsuits over mortgage fraud, forged foreclosure documents, and more, run the risk of opening the RICO window to the organized crime that is central to the US financial system. Its three loci of activity are the USFed, Goldman Sachs, and JPMorgan."

Thu, 10/07/2010 - 17:01 | 633677 molecool
molecool's picture

Call me cynical but now I'm actually hoping for a good (fudged) job report and $100.- oil. May be short term bullish but the long term consequence may be a Fed QE2/3/4 stopper.

Thu, 10/07/2010 - 17:03 | 633678 treemagnet
treemagnet's picture

Oil will go way higher than $100/barrel if the fed proceeds with operation lubricant 2.0+

Thu, 10/07/2010 - 17:14 | 633703 Waterfallsparkles
Waterfallsparkles's picture

Bernankie really seems to have something against Old People.  It is like he wants to desimate them.

His policys have reduced the interest on their savings.  He has raised the cost of food and Oil, Gas.  There has been no increase in Social Security.

He wants to "get rid of Social Security and Medicare".  Interesting because the FED gave Social Security IOU's for Money taken out of the Trust Fund.

What is wrong with this Guy.  What does he not understand about Honoring your Elders?

Thu, 10/07/2010 - 17:33 | 633756 Ragnarok
Ragnarok's picture

I will honor my elders as in my parents, the rest of the narcissistic, arrogant, selfish, all consuming baby boomers can go eat cat food and fuck off.

 

Generational warfare, get some.

Thu, 10/07/2010 - 17:37 | 633770 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

+++++++++++++ Hippie bitchez!

Thu, 10/07/2010 - 18:07 | 633811 francismarion
francismarion's picture

Seen that line of thought too many times. It's impossible to ethically blame a person for the behavior of the matrix he is enmeshed in, one that he had no conscious role in creating.

Better to look to the individuals responsible, baby boomers and the generation preceeding them, though I admit it takes a little effort; and consider that the upcoming generation has its own monsters a-birthing.

Thu, 10/07/2010 - 21:53 | 634213 DosZap
DosZap's picture

Hmmmmmm.........

What would your portfolio's/education, consist of, had it not been for those Boomers, and the Generation before them?.

I would venture to say, nowhere near what it is.

As most parents, even the Boomers, and their parents( you know those sorry fucks that won WWII?,Korea, Vietnam), all they did was go to work, war, and want more for their kids.

Sorry no account mother fuckers. Why not do the world a favor shoot everyone over 55.

Maybe that will make ya'll feel mo beta.

It's really funny when WE who are the ones who made the sacrifices, read this shit stop and think, why did we do without for these ungrateful assholes?.

francis(this was not particularly directed at your entire comment ).

Just getting a whole lot tired of getting blamed for shit I had little, to zero control over.

Thu, 10/07/2010 - 18:44 | 633886 DaveyJones
DaveyJones's picture

wish you were wrong but it's probably coming to that with the caveat that lots of folks have a parent (or two)

Thu, 10/07/2010 - 21:10 | 634135 johnnynaps
johnnynaps's picture

Well said! My elders as a group are the same ones who make the very decisions all of zerohedge complains about!

Thu, 10/07/2010 - 21:45 | 634198 Bob
Bob's picture

Damn parents nowadays.

Thu, 10/07/2010 - 21:41 | 634190 DosZap
DosZap's picture

My aren't we judgmental,it say's Honor your Elders.

And your parents.

You do not get the choice........but with that nasty ass attitude, who would want your honor.

Appears limited. I figure you likely were raised better.\

If you live long enough,maybe you will fit your own criteria for those you judge without knowing............won't be so damn skippy then will it.

Thu, 10/07/2010 - 21:48 | 634207 Bob
Bob's picture

Funny, I just wrote something similar but then thought better of it.  Must be nice to have the luxury of blaming everything on somebody else, huh?

Yet look at our thoroughly disrespectful kids!

Thu, 10/07/2010 - 17:15 | 633708 DocLogo
DocLogo's picture

Peak Cheap Oil

Thu, 10/07/2010 - 17:18 | 633714 sumo
sumo's picture

Extremely cold winter coming?

http://www.israpundit.com/archives/28807

Thu, 10/07/2010 - 17:18 | 633716 Id fight Gandhi
Id fight Gandhi's picture

The higher the oil price due to the dollar drop the worse for OPEC.

Having a weak dollar sucks

Thu, 10/07/2010 - 17:28 | 633735 Waterfallsparkles
Waterfallsparkles's picture

Think about it your Dollar is worth 20% less and Oil and Food is 20% higher.  It is a hidden 40% Tax Hike on the Elderly an the average person.

All of the FED printing of money only benifits the Wall Street Banks.  It is an under the raidar way to transfeer Americans weath to the Banker and charge the Americans for the Transfeer.

No wonder why Wall Street is so excited about QE2.  They are getting all of OUR Money for FREE.

Thu, 10/07/2010 - 17:34 | 633755 NotApplicable
NotApplicable's picture

That ain't your money, it's Ben's. You're just the sucker who has to use it to protect your wealth.

Thu, 10/07/2010 - 17:54 | 633749 ssp2s
ssp2s's picture

Man:  "Look.  It is a black swan." 

Ben:  "Nope.  That is just a white swan covered in oil."

Man:  "Still looks black to me."

Thu, 10/07/2010 - 17:32 | 633752 NotApplicable
NotApplicable's picture

Sink QE2? Big deal. That will just create the mandate for QE3.

Besides, $100 oil will be considered cheap given the ensuing monetary destruction.

Thu, 10/07/2010 - 17:36 | 633768 gwar5
gwar5's picture

The Keystone cops are in charge of this operation.

Maybe next time they should ask the Saudi's about the oil thingy first. The Chinese and Japanese who also have a lot of USD holdings too.  

.

Thu, 10/07/2010 - 17:54 | 633793 George Costanza
George Costanza's picture

Fed can get by with Gold going to new highs, but if Oil skyrockets that is a big problem for them.   I don't think they care all that much about gold, it's something they can live with.

Thu, 10/07/2010 - 17:55 | 633794 George Costanza
George Costanza's picture

Fed can get by with Gold going to new highs, but if Oil skyrockets that is a big problem for them.   I don't think they care all that much about gold, it's something they can live with.

Thu, 10/07/2010 - 18:02 | 633803 Steaming_Wookie_Doo
Steaming_Wookie_Doo's picture

So, what about the dichotomy of the fact that oil is (currently) priced in dollars? Won't that create a huge demand for dollars, thereby strengthening the dollar, and changing the dynamics?

Thu, 10/07/2010 - 19:43 | 633988 Janice
Janice's picture

Not a problem as China, Russia, Iran and Argentina have agreed to transact business in their currencies....OR trade wheat for oil OR nuclear power for oil.  And I bet if the rest of the world offered gold for oil (or a gold backed currency), FRNs would flood our borders.  All we would have are left-handshakes in comparison to those offering gold.

Thu, 10/07/2010 - 18:13 | 633824 bugs_
bugs_'s picture

So the realization is that there are certain assets the Fed cannot control.

Thu, 10/07/2010 - 18:37 | 633875 Wags
Wags's picture

Zero Hedge continues it ground breaking expose of the Govt-Wall Street-Federal Reserve Complex. Great Work!

Thu, 10/07/2010 - 18:58 | 633920 MountainHawk
MountainHawk's picture

Tyler...any reason ZeroHedge doesn't have a official Facebook page?

Fri, 10/08/2010 - 05:32 | 634588 Hephasteus
Hephasteus's picture

Because facebook and twitter are nothing but spying tools which is probably why shit that comes from wikileaks is so weak and loves to link to twitter.

Thu, 10/07/2010 - 19:20 | 633955 max2205
max2205's picture

McDonald's, 29 other firms get health care coverage waivers
Updated 6h 43m ago |  Comments 1,433  |  Recommend 69 E-mail | Save | Print |
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By Drew Armstrong, Bloomberg Business News
Nearly a million workers won't get a consumer protection in the U.S. health reform law meant to cap insurance costs because the government exempted their employers.
Thirty companies and organizations, including McDonald's (MCD) and Jack in the Box (JACK), won't be required to raise the minimum annual benefit included in low-cost health plans, which are often used to cover part-time or low-wage employees.

The Department of Health and Human Services, which provided a list of exemptions, said it granted waivers in late September so workers with such plans wouldn't lose coverage from employers who might choose instead to drop health insurance altogether.

Without waivers, companies would have had to provide a minimum of $750,000 in coverage next year, increasing to $1.25 million in 2012, $2 million in 2013 and unlimited in 2014.

FIGHTS: Lawsuits over health care law heat up
REFORM: A consumer primer for health insurance changes in 2011
WHAT'S CHANGING: Provisions of the new health law
HEALTH CARE: New website compares coverage prices
Q&A: Answers on adding adult children to health insurance
"The big political issue here is the president promised no one would lose the coverage they've got," says Robert Laszewski, chief executive officer of consulting company Health Policy and Strategy Associates. "Here we are a month before the election, and these companies represent 1 million people who would lose the coverage they've got."

The United Agricultural Benefit Trust, the California-based cooperative that offers coverage to farm workers, was allowed to exempt 17,347 people. San Diego-based Jack in the Box's waiver is for 1,130 workers, while McDonald's asked to excuse 115,000.

The plans will be exempt from rules intended to keep people from having to pay for all their care once they reach a preset coverage cap. McDonald's, which offers the programs as a way to cover part-time employees, told the Obama administration it might re-evaluate the plans unless it got a waiver.

McDonald's and Jack in the Box didn't immediately respond to requests for comment.

The waiver program is intended to provide continuous coverage until 2014, when government-organized marketplaces will offer insurance subsidized by tax credits, says HHS spokeswoman Jessica Santillo.

The regulations would have hit some insurance plans for young adults in the universal coverage program run by the state of Massachusetts. The program, enacted in 2006, has a plan for individuals ages 18 to 26 who can't get coverage through work, covering about 5,000 people. The waiver obtained by the state "will give us time to implement the transition plan in a manner designed to mitigate premium increases," says Dick Powers, a spokesman for the state program.

The biggest single waiver, for 351,000 people, was for the United Federation of Teachers Welfare Fund, a New York union providing coverage for city teachers. The waivers are effective for a year and were granted to insurance plans and companies that showed that employee premiums would rise or that workers would lose coverage without them, Santillo says.

© 2010 Bloomberg L.P. All Rights Reserved

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Thu, 10/07/2010 - 19:24 | 633960 max2205
max2205's picture

95% of gas prices are taxes. Forget that ever dropping

Thu, 10/07/2010 - 19:47 | 634003 idoubtit
idoubtit's picture

It won't work.  The article is right.  The Fed can "create inflation expectations" all they want but the problem isn't that people don't want to spend,  but that people are broke.  Real unemployment is almost 20%.  Businesses have no pricing power.  All higher commodity prices are going to do is drive the economy down as already broke people are going to have to pay more to live.  The Fed better be careful.  At a certain point, the backlash will be so strong their very existence might be threatened.

 

Thu, 10/07/2010 - 20:23 | 634055 pitz
pitz's picture

The commodity producers will do just fine.  The middlemen and the thieves are going to get fried.

...which is how it ought to be.  Too many instances of an engineer being paid $100k, to produce a product that is ultimately leveraged through the supply chain for $2M, with the $1.9M being skimmed off.

Thu, 10/07/2010 - 21:19 | 634153 MacHoolahan
MacHoolahan's picture

It's a gruesome process going on, QE just ends up abroad - in global assets, owned by GS and the rest - like water out of a colander. No jobs are created by QE.

The FED is certifiably insane (by which I mean corrupt) to be going down this path - which is obvious to everybody else in the world as "devaluation with no national gain". The amount of inflation they are trying, to make the banks be back "in the money", will reduce your earnings, your savings, your country - to nothing.

Why are you letting it stand? Stop paying your taxes - this is utter robbery. 

 

 

Thu, 10/07/2010 - 23:40 | 634391 snowball777
snowball777's picture

This is less about the direct effect at the pump (on people who perhaps aren't driving too work anyway) than it is about the knock-on effect on other prices when gas gets expensive. They do not pass the savings on to you.

Wed, 10/27/2010 - 08:45 | 680140 daniel
daniel's picture

 

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