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Guest Post: Money Down A Rathole: College, Healthcare, Housing

Tyler Durden's picture


Submitted by Charles Hugh Smith from Of Two Minds

Money Down A Rathole: College, Healthcare, Housing

Households are dumping trillions in hard-earned income down ratholes with marginal returns: costly higher education, healthcare and housing.

What happens when households dump huge percentages of their stagnant incomes down marginal-return ratholes? They get less wealthy, which is exactly what we're seeing. The average American household has been persuaded that pouring money into costly higher education, healthcare and housing are all "investments" that offer high yields.

Sadly, the opposite is true: the returns on these stupendously costly investments is marginal or negative. Let's start with higher education, a topic I have discussed at length numerous times.

In essence, a college degree has lost its scarcity value, and in an era of labor arbitrage (a.k.a. offshoring and international competition), automation and relentless pressure to lower costs, even advanced degrees in law, science and business management that once were perceived as guarantees of secure high-paying employment no longer have scarcity value: the number of people with advanced degrees far exceeds the number of open positions.

Meanwhile, the education cartel has raised prices at a rate that is three times the rate of inflation. The credulous "buyers" of expensive higher education continue to pay absurdly inflated prices for degrees that have marginal value in the real-world marketplace.

We can see the trend in the following chart: wages for college-educated workers have stagnated even as the costs of college have skyrocketed.

Banks that build lavish headquarters soon perish. There is something about erecting monuments of self-glorification and excess that exudes a fatal hubris. Please consider the lavish buildings universities have constructed in the supreme confidence that millions of debt-serfs will continue to willingly dump tens of thousands of dollars in hard-earned cash and crushing loans for degrees with increasingly marginal returns.

Sickcare, a.k.a. "healthcare," is another rathole of waste, fraud and malinvestment. I have covered the sickcare cartel in depth; the key metric of this rathole's depth is that we spend roughly twice as much per capita (per person) as competing developed democracies on healthcare and get questionable returns on the trillions spent.

Buying a house was sold as a "can't miss" avenue to build middle class wealth. Instead, it became a $10 trillion rathole that either loses nominal value or stumbles along, unable to keep pace with the rising costs of ownership (property taxes, special assessments, etc.).

When owners finally give up the idea that the housing bubble can be reinflated, the house is sold for less than the mortgage to an investor who offers to rent the home to the previous owner for half the cost of the mortgage he was paying.

As higher education and sickcare costs rise, labor's share of the national income is declining. Households are earning less when measured in purchasing power, and the costs of college and sickcare skyrocket even as the returns on those "investments" become ever more marginal.

With income stagnant and trillions being dumped into the ratholes of higher education, sickcare and housing, it's little wonder that median net worth has plummeted. Americans saw wealth plummet 40 percent from 2007 to 2010: The Federal Reserve said the median net worth of families plunged by 39 percent in just three years, from $126,400 in 2007 to $77,300 in 2010. That puts Americans roughly on par with where they were in 1992.

I am sickened by the vast sums I see households squandering on hopelessly marginal "investments" in expensive higher education, healthcare and housing. I too am caught in the crony-capitalist/State cartel web of waste, skimming and fraud: we have paid tens of thousands of dollars on no-frills healthcare insurance (no eyewear, no dental, no meds, $50 co-pay) in the past decade, and received perhaps 3% of this sum in care.

But to not have health insurance in America is to invite financial ruin should we suffer some serious illness. The same "must-have" argument supports the conventional wisdom about education: a young person "must have" a college degree if they hope to escape a lifetime of poverty. The issue isn't education per se, it's the ever-rising cost of an education that has arguably lost value in a global job market that faces a vast surplus of educated workers and a scarcity of secure, high-paying jobs.

Simply put, minting 10,000 PhD chemists (for example) does not magically create 10,000 jobs for PhD chemists.

I see family after family making enormous sacrifices to send their children to costly colleges or make bloated mortgage payments with little hope of positive return; I see families who did not have health insurance struggling to pay off crushing bills for hospital care. I personally know people with science PhDs and post-doctoral experience at top universities competing for scarce academic/research jobs against fields of 60 or more other qualified candidates.

Yes, education and healthcare are necessary, but cartels have leveraged this necessity into vast skimming operations that yield marginal returns even as their costs balloon without limit.

Housing is also a necessity, but it does not follow that it is a high-yield investment. Rather, it has become a sinkhole for hard-earned, scarce cash.

Ratholes are not investments, regardless of what the cartels profiting from the Status Quo claim.


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Fri, 08/10/2012 - 12:56 | 2694450 Concentrated po...
Concentrated power has always been the enemy of liberty.'s picture

Insolvency, Bitchez!

Fri, 08/10/2012 - 13:08 | 2694480 Hype Alert
Hype Alert's picture

So, who wants to hold some of this stock over the weekend? 

Fri, 08/10/2012 - 15:13 | 2694962 Precious
Precious's picture

Do your patriotic duty.  Refuse Health Insurance.

Fri, 08/10/2012 - 16:27 | 2695236 engineertheeconomy
engineertheeconomy's picture

On the other side of that "Rathole" are some very, very FAT rats...

Fri, 08/10/2012 - 19:02 | 2695687 neilhorn
neilhorn's picture

Healthcare is not an investment. It is an expense. Keep your premiums and save for your medical expenses. Doctors will discount their fees if you don't have insurance. Hospitals will take a promise to pay as long as you agree to pay something periodically. You don't need to pay the insurance company 300X your annual medical cost to protect yourself.

The American people have been conditioned by fear to believe that a medical catastrophe will bankrupt them, so they bankrupt themselves by paying exhorbitant medical premiums that have very little return. When we stop playing the establishment's game they will run out of volume and have to concede that they have been cheating us out of our livelihood. There will be a day for each of us when we will meet the ultimate medical demise. The insurance company can't stop it, nor will they want to pay for it.

Fri, 08/10/2012 - 19:43 | 2695769 northerngirl
northerngirl's picture

It is my understanding that the Amish do not carry any type of insurance because it is against their religion.  They seem to do just fine.  However, I like my car and indoor plumbing.  I guess there is a trade off for everything.

Fri, 08/10/2012 - 17:15 | 2695401 RafterManFMJ
RafterManFMJ's picture

I knew didn't going to school was the right choice for me and me missus.  We May not have much, but we have a toranado resistent trailer and each otter.

Fri, 08/10/2012 - 12:57 | 2694453 granolageek
granolageek's picture

Where are the trolls? Surely Obama is solely to blame for all these trends that started back when he was smoking dope in the choomwagon.

Fri, 08/10/2012 - 13:03 | 2694469 Meesohaawnee
Meesohaawnee's picture

no, but sure to be known in the history books as "the great enabler"

Fri, 08/10/2012 - 13:18 | 2694505 old naughty
old naughty's picture

Or, hole-filler. There are simply too many holes to fill, rabbit-; rat-; sink-; ass-; black-...

Fri, 08/10/2012 - 13:27 | 2694530 sgt_doom
sgt_doom's picture

This was explained far more intelligently in the paper below:

Fri, 08/10/2012 - 15:01 | 2694915 Jack Burton
Jack Burton's picture

Things were on the right track under George Bush, American jobs flourished and American power was world class.

Once Obama was elected he tanked the economy, enabled outsourcing and helped kill off a vibrante housing market.

Clearly Obama has destroyed America in three short years of socialism and muslim extremism.

Now, we have the change to replace a Muslim president with a good honest white Christian who has years of experience as a jobs creator. Under the new Christian leader, jobs will come back, housing will come back and America will conquer Syria and Iran and put in troops to enforce a free market and democracy.

I think a Kenyan president with the Muslim religion was a bad choice for an America that is looking for Christian leadership like America is used to. Romney will, I feel, be elected as honest Americans react to the socialism and anti christan values of a foreign born Muslim who really has no business in America let alone in the White House. Clearly massive voter fraud put him there with all black people and criminals going from polling place to polling place claiming to be resident voters. With no need for photo ID, these voter cheats added millions of votes to a foreign born imposter.

The new laws that require fully honest voting will eliminate millions of fraudsters trying to vote for a welfare provider and muslim extremist. This means honest white American's vote will put Romney over the top and finally begin the resurgent American dream.

There is no question Romeny will be good for America and he is a christian job creator, that is what America needs. Plus he will invade Iran and restore American rule over them to pay them back for throwing out Shah and becoming an enemy of America/Israel.

Good times are coming soon. Unemployed Americans now have hope of good paying jobs and our military will be turned loose to restore freedom around the world.

Fri, 08/10/2012 - 15:46 | 2695061 HardAssets
HardAssets's picture

Tea Partiers are such Islamo-phobes, and easily manipulated.

Look up who is supporting Al Qaeda actions in Syria.

Youve been had.


'right' versus 'left' , 'dem' versus 'repub' is just an illusion . . . designed to keep your attention off being robbed

Fri, 08/10/2012 - 15:51 | 2695103 Buckaroo Banzai
Buckaroo Banzai's picture

Well, considering that the Muslim "religion" is not a religion, but a political system-- and a bloodthirsty one at that-- yeah, we're right to hate Muslims. Intolerance, war, and hatred of infidels are fundamental precepts of the Muslim, as fully documented in the Koran.

Ever stop and wonder why the US under both "W" and Obama have been busy destroying secular arab governments (Iraq, Egypt, and now Syria) and replacing those secular governments with Islamic fundamentalists? Its a little alarming, to say the least.

Fri, 08/10/2012 - 16:05 | 2695144 HardAssets
HardAssets's picture

It has been going on a lot longer than this presidency, and is designed to bring instability into the region. F. William Engdahl has written a great deal on this and how it fits into intl geo power politics.

You hate 'Muslims' ?  Just in general ?  And you read Arabic ?  Have you ever met a Muslim, did they do harm to you ?

A couple of nut cases recently hurt and killed a lot of innocent people in America. Are people to imagine that all Americans are raving lunatic killers ?   Do they believe this if they read it somewhere, or heard it on their radios and t.v.s ?

BTW - - - personally, I think O has been a disaster as a president and I usually can't bring myself to even spell out his whole name, but that is another issue.

Fri, 08/10/2012 - 16:33 | 2695258 engineertheeconomy
engineertheeconomy's picture

Jews hate the Muslims because the Muslims are honest, hard working people. Makes it hard for the Jews to steal, makes Jews look like the dishonest sons of bitches that they are

Fri, 08/10/2012 - 16:40 | 2695280 HardAssets
HardAssets's picture

Hmmmmm - - - 'Can't we just all get along ?"

Fri, 08/10/2012 - 16:58 | 2695331 rbg81
rbg81's picture

Wow--going full retard, are we?  So, Jews don't work hard, huh?  How many Nobel prizes do Jews have vs. Muslims?  Or pick any category of individual achievement or success.  Whatever the category, Jews dominate Muslims.  It isn't even close in raw numbers, despite the fact that Muslims outnumber Jews by like 200:1.  If it wasn't for oil, the GDP of most Middle Eastern nations would be indistinguishable from that of war torn African nations.  And when was the last time Jews killed each other in large numbers?  How about never. Face it, almost all Muslim nations are epic failures.

Fri, 08/10/2012 - 21:10 | 2695923 Bringin It
Bringin It's picture

Dude, if you are going to try a rebuttal, try to rebut something he said/wrote. 

He did not say Jews don't work hard did he?

You're only hope with the strawman approach is if it's not so obvious.

Sat, 08/11/2012 - 08:32 | 2696767 rbg81
rbg81's picture

Jews hate the Muslims because the Muslims are honest, hard working people. Makes it hard for the Jews to steal, makes Jews look like the dishonest sons of bitches that they are

Uh, not a strawman at all.  He clearly made the implication that the Muslims are honest & hardworking, but the Jews are dishonest theives who hate the Muslims for their virtuous qualities.  Again, any objective review of the facts shows the opposite is true.  Take away oil and almost all Muslim countries are economic and social basketcases.  Only exception is Indonesia.  The only endeavor that Muslims seem motivated to do is waging Jihad though terror.  The person who claims that XXX country or people is successful because of deceit or dishonesty is always wrong.   

Fri, 08/10/2012 - 22:27 | 2696129 Anusocracy
Anusocracy's picture

Productive Jews very good. They are very intelligent and capable.

Psychopathic Jews very bad. They are very intelligent and evil.

See how that works.

Sat, 08/11/2012 - 08:33 | 2696770 rbg81
rbg81's picture

Gee, I guess that's true of ALL people.

Wed, 08/15/2012 - 15:03 | 2707672 Anusocracy
Anusocracy's picture

Not to the extent of the Jewish.

Fri, 08/10/2012 - 16:21 | 2695205 Ghordius
Ghordius's picture

Christianity and Judaism have their political, social and cultural elements, too, in Islam they are just codified in a bit more orderly fashion (it is just younger) but, note, not enough that all thousand million muslim follow them to the same degree. Even if there were 300m war-loving intolerant hater of infidels, a silly notion at best, this would still leave two thirds of them not warranting the epitheth of "bloodthirsty".

In fact, if you look at their history it's the Christian Crusaders and the Zionist that were more often "naughty".

Egypt? First British Protectorate (a brief flirt with other things, including Russia), then US Protectorate (since the US called an Anglo-French invasion back) directly under the aegis of the Pentagon.

Iraq? Was a friend as long as it did what it was told, including a war with Iran. It even knocked at the door before invading Kuwait.

Syria? Still a satellite of Russia, with the key Russian Med Fleet Base.

But the trend away from secularism and toward fundamentalism has started in the 60's, W&O can't be blamed for that.

I do wonder a bit how the US can be at war so often in this region without at least five comments of this kind, here.


ah, HardAssets, same time. +1

Fri, 08/10/2012 - 16:01 | 2695143 Omen IV
Omen IV's picture

since i am a christian can i get a job first?

Fri, 08/10/2012 - 16:21 | 2695215 Henry Hub
Henry Hub's picture

Hay Jocko, I think you forgot the /sarc tag. At least I hope that's what it is.

Fri, 08/10/2012 - 16:56 | 2695337 smiler03
smiler03's picture

That's what I was thinking. I thought he was imitating MDB.

Fri, 08/10/2012 - 16:47 | 2695300 malek
malek's picture


Fri, 08/10/2012 - 17:40 | 2695468 Hurdy Gurdy Man
Hurdy Gurdy Man's picture

It's like a rapist asking you which mask you'd prefer

Fri, 08/10/2012 - 18:12 | 2695566 STONEHILLADY

I think your not getting it, it has taken a lot longer then Obama's short intervention to wreck this economy. It's been in decline of over consumption for way too long. The 80's was the top of the game....Greed really excelarated from that point on.... In 1968 Cornell only cost $4800. for a year, my room & board was $300 month including food which averaged $25 a week... worked as a waitress up at school & made $250 a was smooth, see the difference.?
Graduated with NO Debt which today is impossible... You young will NEVER see that even in 50 years from now unless the system does 180....!

Fri, 08/10/2012 - 18:16 | 2695577 STONEHILLADY

I think your not getting it, it has taken a lot longer then Obama's short intervention to wreck this economy. It's been in decline of over consumption for way too long. The 80's was the top of the game....Greed really excelarated from that point on.... In 1968 Cornell only cost $4800. for a year, my room & board was $300 month including food which averaged $25 a week... worked as a waitress up at school & made $250 a was smooth, see the difference.?
Graduated with NO Debt which today is impossible... You young will NEVER see that even in 50 years from now unless the system does 180....!

Fri, 08/10/2012 - 18:16 | 2695578 STONEHILLADY

I think your not getting it, it has taken a lot longer then Obama's short intervention to wreck this economy. It's been in decline of over consumption for way too long. The 80's was the top of the game....Greed really excelarated from that point on.... In 1968 Cornell only cost $4800. for a year, my room & board was $300 month including food which averaged $25 a week... worked as a waitress up at school & made $250 a was smooth, see the difference.?
Graduated with NO Debt which today is impossible... You young will NEVER see that even in 50 years from now unless the system does 180....!

Fri, 08/10/2012 - 18:18 | 2695582 potlatch
potlatch's picture

meh.  fair rant, horrible troll.  come on.  no spelling errors.  it's a trap.

Fri, 08/10/2012 - 12:57 | 2694454 vinu02
vinu02's picture

Does anyone feels the pinch, it feels 2012 is worst then 2008 ?

Fri, 08/10/2012 - 13:56 | 2694665 Unbezahlbar
Unbezahlbar's picture

define "worse"


My house is down 32% but my GLD and SLV and USO are up substantially more. So I'm ok. Bagholders and houseowners are hurting with sinking prices and loss of purchasing power esp if they only had CDs.  Don't forget, the Fed expanded the balance sheet (printing) over 230% since 2008.

Fri, 08/10/2012 - 12:59 | 2694460 The Wizard of Oz
The Wizard of Oz's picture


Fri, 08/10/2012 - 13:21 | 2694512 Joshua_D
Joshua_D's picture


Fri, 08/10/2012 - 13:03 | 2694466 dark pools of soros
dark pools of soros's picture

"the house is sold for less than the mortgage to an investor who offers to rent the home to the previous owner for half the cost of the mortgage he was paying."


HA!!! you mean the house is taken by the bank and rent tripled!!!


Fri, 08/10/2012 - 13:04 | 2694470 besodemuerte
besodemuerte's picture

Yep, so what do we do about it?

Fri, 08/10/2012 - 13:46 | 2694627 A Lunatic
A Lunatic's picture

Just keep bitching about it...........I think it's working..................

Fri, 08/10/2012 - 14:12 | 2694743 partimer1
partimer1's picture

yeah, I feel the same....   

Fri, 08/10/2012 - 15:05 | 2694937 Overfed
Overfed's picture

Elect more politicians who are promising to pass even more laws to fix it! /s

Fri, 08/10/2012 - 13:05 | 2694471 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

Just look back at the tuition costs when you were in school. Over 4 years, they expanded dramatically. And the building boom was in its infancy.

New cafeteria, a Scandal!

It's not about education, it's about OVER CONSUMPTION.

Americans are actually under educated, semi literate and prone to go hook line and sinker for subtle and not so subtle propaganda.

Leverage is fueled by labor arb, productivity gains, debt and high fructose corn syrup. They facilitate the disease of OVER CONSUMPTION.


Fri, 08/10/2012 - 14:06 | 2694724 sdmjake
sdmjake's picture

Their conclusion is we need more government intervention to equalize the incomes of the various workers... No thanks.

Fri, 08/10/2012 - 15:03 | 2694928 assembler
assembler's picture

Last Paragraph of cited paper:

In their paper posted on the Web site of the National Bureau of Economic Research, Levy and Temin conclude, “No rebalancing of the labor force can restore a more equal distribution of productivity gains without government intervention and changes in private sector behavior.”

Fri, 08/10/2012 - 16:50 | 2695313 Henry Hub
Henry Hub's picture

I have a neighbor who is a professor of woman's studies at the local college. Her salary is well into six figures. Last year she taught one class a semester. She way so exhausted from this that she had to go on sabbatical this year. Her benefits and pension are fantastic. This is one of the reasons for out of control higher education costs.

Fri, 08/10/2012 - 22:43 | 2696166 FEDbuster
FEDbuster's picture


Your story is just another sign that the end is near.  This bullshit cannot continue forever, but it will most likely last longer than we think it will.

Sat, 08/11/2012 - 00:35 | 2696364 cynicalskeptic
cynicalskeptic's picture

Sadly that is NOT the typical experience of those seeking a career in academia these days. The few, the tenured, live high on the hog while more and more associate priofessors teach one or two classes, are paid a pittance to do so - and get NO benefits.  Then you've got Grad students teaching undregrad classes for professors - at close to indentured servitude levels of compensation.  Yet senior administratrs seem to do well along with the elite tenured full professors.  Just TRY to get one of those positions though........   I've seen some astoundingly well qualified people teacihing part time at community colleges and in summer programs - doing whatever they can to make a living because good paying professorships are rarer and rarer these days.  Some full professor retires and they replace them with a couple part time associates.

Seems like higher education is - overall - following the general ternd of paying LESS and LESS to those actually doing the work - with more and more part time professors and less tenured full time professors.  

The example cited is even more of an anamoly as otherwise 'non-employable' degrees - 'Women's Studies, 18th cnetury French Literature, History, Philosophy, (and the list goes on) where 'advanced degrees' are of no use whatsoever except for teaching (or the abstract love of arcane and not particularly useful knowledge).  Technical degrees are in demand - though you see fewer and fewer Americans pursuing MS. or PhD's in Science and Engineering - even back whe I got out most grad students were foreign (though ther was substantial demand for advanced tech degrees).   The problem si that too many Americans do NOT consider whether or not their chosen degree will make them more employable (and employable enough to offset the costs they incur in getting that degreee).  Of course a BA from a top tier school can still open doors but I suspect family  connections count for more in getting that Harvard Philosohpy degree a spot as an analyst on Wall Street than their actual degree.  However simply getting inoto top teir schools distinguishes you as having skill levels beyond the average.

For Joe average, even a basic Busioness or Accounting degree from Mediocre U will not count for much - especially if they've learned little in gettin git.  I'm astounded at how bad cover letters and even resumes from supposed college graduaates can be.   In too many cases, 'college' isn''t even providing the skills someone SHOULD have getting out of high school.   But even as basic High School educatiosn degrade further we push 'college' on everyone, not even offering other choices anymore.  'Tech' - things like Auto Shop, Carpentry, Metal Shop are gone.   Too bad because many kids would do far better as tradesmen than going to a useless college.

Sat, 08/11/2012 - 02:56 | 2696535 Marigold
Marigold's picture

The way this is written is the best example of just how bad American education is with it's content of ramblings and misspellings.

Sat, 08/11/2012 - 09:35 | 2696885 Dollar Bill Hiccup
Dollar Bill Hiccup's picture

"To the victor, belong the spoils!"

Professors who can draw students, whether grad students or undergraduates, are "producers". The top producers drive revenues.

They bring in students. They are marketing fronts. The students take loans. Loans are skewed by government invervention in the market. That debt is packaged and sold. It drives banking revenues.

The labor arb afforded by graudate students and non tenured / part time professors is too good to believe for the administrators and the masters of the universe who are saving the world while on sabbatical! These are the serfs who are doing a great deal of the teaching.




Fri, 08/10/2012 - 13:05 | 2694473 optimator
optimator's picture

I take issue with college not being worth the expense.  If you're from the 'right' family, and go to the 'right' collecge you'll have the 'right' room mate and your future is guaranteed.

Fri, 08/10/2012 - 13:43 | 2694607 caustixoid
caustixoid's picture

exactly right!  how else to future board members, fed chairmen and bank execs connect to the matrix of corruption?  hell a connected chimp went to yale and harvard and became president!

Fri, 08/10/2012 - 14:12 | 2694747 optimator
optimator's picture

Money is just like incest to these folks, it's best kept in the family.

Fri, 08/10/2012 - 13:08 | 2694479 partimer1
partimer1's picture

Yes, reality sucks.  what do we do now?   Don't buy insurance?  don't go to college? don't buy a house?  don't pay for the kid's education?  what's the solution?   Reality is  Governement to big corporation to big university. the system is set up by those people who go to big colleges, working for big corporations.  You can bitch and whine all day long, nothing is changing. 

Fri, 08/10/2012 - 13:13 | 2694493 HardAssets
HardAssets's picture

Everything is changing.

Fri, 08/10/2012 - 13:28 | 2694536 Ying-Yang
Ying-Yang's picture

partimer1.. You may have hit on it! Yes say no to insurance, no to school and no to mortgages. If many more did this there would be a crash. The change would force revisons. Do we want a slow or fast train wreck?

Fri, 08/10/2012 - 14:07 | 2694725 partimer1
partimer1's picture

That's just BS.  Last time we have tried in 2008, and my premium went up almost 100%.  It was a big crash, and everyone ended up paying a lot more.  I see a big fast train, but I don't see a wreck.   

Fri, 08/10/2012 - 13:34 | 2694568 Zap Powerz
Zap Powerz's picture

Unsustainable things are just that and so they will change.

Fri, 08/10/2012 - 16:21 | 2695214 Hugh_Jorgan
Hugh_Jorgan's picture

You might want to think a bit more basic. Like; what can I do now that would allow my family to eat and live if interruptions to the steady flow of supplies to the stores were not uncommon, and would I give a crap about those things that have you flummoxed if this came to pass...

Fri, 08/10/2012 - 17:55 | 2695518 Roger Knights
Roger Knights's picture

"don't pay for the kid's education?  what's the solution?"

Online education, such as the U. of Phoenix, maybe.

Fri, 08/10/2012 - 18:19 | 2695585 potlatch
potlatch's picture

an online education is as deep as you make it. just like an adventure in world of warcraft.



Fri, 08/10/2012 - 13:17 | 2694481 Cognitive Dissonance
Cognitive Dissonance's picture

"....we have paid tens of thousands of dollars on no-frills healthcare insurance (no eyewear, no dental, no meds, $50 co-pay) in the past decade, and received perhaps 3% of this sum in care."

Consider yourself lucky CHS. I have paid tens of thousands in the past decade and I have a $5,000 deductible. And what exactly is a "co" pay because no one but me is paying for anything around here.

Fri, 08/10/2012 - 13:31 | 2694553 Ying-Yang
Ying-Yang's picture

Ahhh no CD... me too, exactly the same with me.

Fri, 08/10/2012 - 16:51 | 2695317 malek
malek's picture

Same here.
However, I find the premiums so far to be ... well, still acceptable.

Fri, 08/10/2012 - 13:10 | 2694483 mrktwtch2
mrktwtch2's picture

its not what you know its who you can come out of harvard with a d in basket weaving and get a job because of the connections..

Fri, 08/10/2012 - 15:39 | 2695055 Law97
Law97's picture

Yes.  The American rich have finally achieved their wet dream:  an old-world European-style inherited aristoricracy.  In fact, they are even doing it better now than the europeans themselves.

Fri, 08/10/2012 - 13:11 | 2694485 Spastica Rex
Spastica Rex's picture

But we have the best health care system in the world! Has the author even tried to get full mouth veneers, or decent cosmectic surgery, or a lifetime supply of the vast variety of mood correcting drugs we have in the USA elsewhere? Didn't think so. If Americans don't continue to support our great private health care system, death panels are just around the corner.

Fri, 08/10/2012 - 16:40 | 2695277 engineertheeconomy
engineertheeconomy's picture

Are you smoking Crack?

Fri, 08/10/2012 - 17:56 | 2695521 Roger Knights
Roger Knights's picture

He was being facetious.

Fri, 08/10/2012 - 13:12 | 2694489 HardAssets
HardAssets's picture

As for the need for college:

"I've never let my school interfere with my education." - - Mark Twain

Fri, 08/10/2012 - 17:58 | 2695525 Roger Knights
Roger Knights's picture

"College polishes pebbles and dulls diamonds."

Fri, 08/10/2012 - 13:36 | 2694578 NoClueSneaker
NoClueSneaker's picture

CB is flat broke, doesn't have any cash, leaving all bussinesses, desperately searching for some hedge against greek junk exposure ....

Oh, yeah, they still have some commercial RE as collateral,  leveraged about 20 times, thanx to corrupt german politicians who allow that scam. Reggie hasn't specified CB, but the most part of desperately insolvent EU-Banks r ready to drop the empty boxes to the hedgies ( and there will be some non-disclosed discounts ) .....

Fri, 08/10/2012 - 16:34 | 2695263 Henry Hub
Henry Hub's picture

This is unacceptable. Banks actually making principled moral decisions. This would destroy the fabric of our economic system. This must be stopped.

(I'll add the /sarc for those who need it.)

Fri, 08/10/2012 - 13:14 | 2694494 Rainman
Rainman's picture

" you didn't build that rathole, the government built it for you "

Fri, 08/10/2012 - 13:14 | 2694496 aerojet
aerojet's picture

"Vast skimming operations"--exactly to the point!  This is the tragedy--all the cream gets skimmed off.  I like that "never never" phrase some UK poster mentioned yesterday--never worth what you paid for it, never performs as an asset, or something like that.

Fri, 08/10/2012 - 13:14 | 2694497 Conax
Conax's picture

There is another price for higher education- an old friend worked and scrimped for years saving to put his bright, affectionate eldest daughter through school. She was his smartest kid and most likely to do well there.

They no longer speak to each other. Each time she came home for vacations or holidays, she was more bitter and critical of him, her family, and his lifestyle.  He hunts and fishes, raises hunting dogs for extra money and smokes Camel filters.

Her leftist diatribes wore him down til he finally told her to piss off.

So your kid gets a degree and intensive political conditioning to criticize and belittle you, if you aren't some metrosexual fop anyway.

He should have sent her to cosmetology school and bought some gold with the savings. He'd still have a daughter. And the gold.

Fri, 08/10/2012 - 13:28 | 2694534 Spastica Rex
Spastica Rex's picture

Why didn't he send her to Baylor?

Fri, 08/10/2012 - 13:41 | 2694598 machineh
machineh's picture

LOL -- he was afraid she'd get knocked up at a sorority party by a nice Baptist boy.

Fri, 08/10/2012 - 15:52 | 2695111 Buckaroo Banzai
Buckaroo Banzai's picture

Cultural Marxism at work. In this case a two-fer: program the student and undermine the family relationship.

Fri, 08/10/2012 - 16:50 | 2695259 Hugh_Jorgan
Hugh_Jorgan's picture

College is just the final transformation that they have been prepared for for years. Our kids sit in front of mostly leftist/collectivist teachers teaching a collectivist curriculum in public school for 9 months out of the year for 12 years. By the time they graduate High School have been conditioned with over 15,000 hours of instruction on how to be an employee and a political lemming. Can you compete with that level of influence in our kid's lives?

Don't send your kids off to Caesar for their education, and be all surprised when they come back thinking like a Roman citizen.

Homeschool your children, people. We have to break this chain, you can do it.

Fri, 08/10/2012 - 13:29 | 2694542 sgt_doom
sgt_doom's picture

"..smokes Camel filters.."

Wussy smokes filters, huh?

Fri, 08/10/2012 - 13:31 | 2694556 juangrande
juangrande's picture

She might come around in time. We graduate HS and/or college "knowing" everything (opinion = knowledge at that age.) We then spend our next 10-15 yrs. letting the universe slap us around teaching us we don't know a damn thing. Then, those that get it, start to learn, hopefully!

I've got a nephew, who is studying petroleum engineering, who swears to me that "fracking" for nat gas is absolutely safe. I asked him why he thinks that. He told me he knows because he's studying to be a PE and has interned for Chevron. Both school and corp. have assured him it is safe.

Fri, 08/10/2012 - 16:37 | 2695264 HardAssets
HardAssets's picture

If you want to really rock your nephew's boat, have him check the YouTube video with Col Fletcher Prouty (former USAF liason with the CIA) discussing how oil became categorized as a 'fossil fuel' and on 'Peak Oil'.  Also have him research Russian deep abiotic oil wells - - far below where any fossils are found - - and their current ranking in global oil production. - - - That should put his youngster indoctrinated brain in a jamb.

"Yes Jimmy, . . your parents did lie to you about Santa Claus."

Fri, 08/10/2012 - 13:41 | 2694597 Zap Powerz
Zap Powerz's picture

Perhaps if he smoked cigars, like a boss, the outcome would have been different?

In all seriousness though, that scenario sounds painful.

Fri, 08/10/2012 - 13:57 | 2694673 blunderdog
blunderdog's picture

Educate people and they might start to think for themselves.  That may not be an acceptable risk if you can't tolerate differing opinions.

Fri, 08/10/2012 - 15:19 | 2694986 Totentänzerlied
Totentänzerlied's picture

Yes, THAT is why the government and Goldman Sachs and Education Management Corp and the College Board are SO interested in providing everyone with a college education. They are strongly committed to fostering individual thought and diversity of opinions.

Just because it's a university doesn't mean what's being taught is true, honest, accurate, or that it is somehow fostering people to think for themselves. Have you talked to any college graduates lately? Politico-economically, they're as indoctrinated and blind as anyone else. How many universities don't teach MMT and Keynesianism? Get real.

Fri, 08/10/2012 - 17:25 | 2695418 blunderdog
blunderdog's picture

Goldman Sachs and EMC and the College Board have no interest at all in providing ANYONE with a college education.

They just make money on the loans.

You're kneejerking.

Fri, 08/10/2012 - 15:06 | 2694924 rwe2late
rwe2late's picture



What an uppity daughter.

He should have sent her to "cosmetology" school to learn what's proper.

And she complained about his smoking habit!

No doubt those "leftist" views had something to do with equal rights for women.


No wonder your "old friend" had to tell his daughter to "piss off".

Fri, 08/10/2012 - 15:25 | 2695006 Totentänzerlied
Totentänzerlied's picture

Defend the zombie horde, regardless of political affiliation, all you want - they will not afford you the same consideration.

Funny that progressives espouse the cause of equal rigths for women, when it is and always has been their beloved government that has held the key to everyone's (lack of) rights. Surely more government will solve that problem. More of that top-notch academic thinking.

Fri, 08/10/2012 - 16:33 | 2695256 Hugh_Jorgan
Hugh_Jorgan's picture


Fri, 08/10/2012 - 16:54 | 2695332 malek
malek's picture

Either he got unlucky or he failed to teach his daughter critical thinking skills.

Fri, 08/10/2012 - 18:47 | 2695649 dolph9
dolph9's picture

Next thing you know she'll mate with a black and bring home a mullato or two.

Fri, 08/10/2012 - 20:31 | 2695845 Go Tribe
Go Tribe's picture

Guy's got his dogs and a nice rod collection. Who needs a f'n daughter?

Fri, 08/10/2012 - 23:04 | 2696215 Anusocracy
Anusocracy's picture

She was probably born with a hunter-gatherer mind.

College just exposed it sooner.


Fri, 08/10/2012 - 13:42 | 2694499 reader2010
reader2010's picture

Globalization is good for you as ignorance is strength.  Too bad too many Proles couldn't figure out the truth by doing the numbers themselves. When they do figure it out, often it's too late. 

Fri, 08/10/2012 - 13:16 | 2694500 Bob Sacamano
Bob Sacamano's picture


The answer is: College, Healthcare, Housing

Question:  What are the three sectors government feels compelled to throw money at (and to the extent those programs fail, it absolutely means more money must be thrown).

Fri, 08/10/2012 - 13:29 | 2694544 sgt_doom
sgt_doom's picture

Soylent green, bitchez?

Fri, 08/10/2012 - 13:37 | 2694580 BlueCollaredOne
BlueCollaredOne's picture

Beep Beep Beep. 


Im sorry Bob, but you didnt phrase your answer in the form of a question. 

Fri, 08/10/2012 - 13:17 | 2694501 tescher
tescher's picture

Thanks for an article stating the obvious. Now try something challenging, come up with some solutions and how to implement them.

Fri, 08/10/2012 - 13:22 | 2694515 HardAssets
HardAssets's picture

One sign of excessive public schooling is lack of creativity, critical thinking skills, and looking for someone else to provide 'the right answers'.

Fri, 08/10/2012 - 13:41 | 2694599 Muppet Pimp
Muppet Pimp's picture

Is your name pronounced with a latin accent?  "The tescher taught me how to do the maths."

Fri, 08/10/2012 - 14:02 | 2694684 Getting Old Sucks
Getting Old Sucks's picture

I have the same thought when I read articles pointing out the problems.  However, there are no solutions anymore.  You'd need a time machine to go back to the 1950's when family first, patriotism, made in America, for the good of the nation was practised thoughout society.  There was generally one bread winner in a majority of families and employers expected to have to pay that bread winner enough to support the family.  Children went to high school, then the sons got jobs and repeated the cycle, daughters got married (generally the only way they got to leave home).  Then in the late 60's, early 70's, women's rights started up and there went the one bread winner family.  Now employers figured that in time he could get a two for one.  That eventually happened in the 80's amist all the inflation accommodating it.  That's when things really started to go wrong.  Reagan came forth with the trickle down economy.  It sounded so good on TV, I actually wrote him a letter and still have his wet signature reply.  Problem was it didn't trickle down.  The rich took the money and ran.  Then came Globalization and manufacturers shipped the jobs over seas in the 90's. Our whole economy started to become service oriented.  Bubbles ensued. build and bust in the late 90's had everyone hopping for a while only to pop in the early 2,000's.  Then the housing bubble really heated up and the rest is history.  Now we have so much debt, private and public, no manufacturing, a lame market, healthcare most won't be able to afford, education costs most won't be able to afford (and what for?  flip burgers?).  No, I don't see any solutions cause nobody want's to go back.  LOL, they were really the good old days.  This is the way I saw it, some can disagree, that's OK. 

Fri, 08/10/2012 - 15:55 | 2695127 tescher
tescher's picture

Ah, you old people are just always cranky and wistful about the good old days (I know, I'm getting there).

Serioulsy, it seems like there are two parts to this: First, what solutions might there be? Some sort of public healthcare, similar to the way the rest of the world does it (lots of differing examples to choose from)? Limits on the building programs at public universities? Getting rid of the mortgage tax deduction?

Second, how is a consensus reached and how do they get implemented (passed into law)? There may not be a way to implement them given the current political and social climate (and its inherent corruption and moral hazards). What might be required for solutions to become feasible could include:

1) A visionary, popular leader who has the backbone, political capital, and independence to push through solutions (not likely for the foreseeable future).

2) A "creative destruction" event that makes #1 possible. I think this is more likely, I just hope it happens relatively soon when such an event could be relatively benign (like Occupy or Tea Party protests with staying power, another economic downturn, failure of some more systemically important institutions like TBTF banks) rather than dragging it out for a few more years or decades when the event could become much more destructive (riots, civil war, a breakdown of civilization as it is currently configured). 

Fri, 08/10/2012 - 17:11 | 2695387 Getting Old Sucks
Getting Old Sucks's picture

Well, I'm not for socialism because I don't believe that my children, who can afford their health insurance, should have to pay for illegals and welfare kings and queens that game the system.  I know that there are those that through no fault of their own fall on hard times.  Tell you what, support that anyone (except illegals) receiving welfare, section 8, food stamps, and extended unemployment benefits, report to their local municipality to do work in their community.  They can clean trash off the parkways, parks, and streets.  They can work in homeless shelters (where they actually might live).  There is plenty to do to earn their tax payer forced charity. 

Your 1) and 2) will result in "(riots, civil war, a breakdown of civilization as it is currently configured).   I understand where you're coming from.  You're either someone who has so much that it's fine to be socialistic (Soros), someone who is doing ok, and feels sorry for the under class, or part of the needy.  Listen, back in my day, It was LOVE, LOVE, LOVE, ALL YOU NEED IS LOVE.  Very moving, but it's BULLSHIT!

Fri, 08/10/2012 - 17:34 | 2695445 tescher
tescher's picture

I don't think that sympathy to the under class plays into so much in my mind (at least I don't think it does). I'm looking at it more from the aggregate. How can we move society as a whole forward and toward more wealth and prosperity? What raises the mean and the median?

Putting people receiveing entitlements to work is a great idea in my opinion. The problem, of course, is that pure free-marketeers will see this as government competition in the employment marketplace, driving up the wages they need to pay for labor.

The problem we have right now is that debates never get past that level. It would be great if we could look at actual stats, reasonably sit around a table, and hammer out a solution that will hit the goals I think most people share, and get them implemented.

The problem is that I think that is wishful thinking and it will take some "non-linear event" (as us engineers like to call them) to force the issue, and then hopefully something reasonable can come out of that.

Fri, 08/10/2012 - 18:26 | 2695607 Getting Old Sucks
Getting Old Sucks's picture

I'm sorry but I've been where the poorest in this country without any government assistance is better off than the poorest there.  It's almost as if Americans are entitled to be taken care of just because they are Americans.  Have you seen the commercial lately for free cell phones and usage for anyone receiving government benefits?  Next it will be free internet services.  So, what happens when anyone not working or providing for their own needs, can receive everything that the one working or providing for their onw needs?  Why work?  You remember the old saying?  "Want to help the poor?  Don't become one of them".  Moving society ahead only goes so far.  You can't move everyone to the point where no one will collect municiple garbage, work in fast food restaurants, mow lawns, etc.  That's utopian.  If you socialize the basics, Health, Education, and Shelter with built in SNAPS, nobody's working.

Fri, 08/10/2012 - 13:19 | 2694506 crazyv
crazyv's picture

don't let facts get in the way of a good rant.

There would be something very wrong if most people recovered more than what they paid for insurance. I have insured my home /car for years and thank god never recovered but a small fraction of what I paid. The problem is not people recover too little from their health insurance but rather that they recover too much. i.e. health insurance is covering too many things that are really not of an insurable nature. e.g. it makes absolutely no sense for health insurance to cover something that everybody is expected to incur eg mamogram or annual physical. Since the insurance company expects everybody to avail themselves of this they simply price the cost into their premium plus charge the markup for their administrative costs plus profit. Thus by having insurance cover it we are actually paying 150% of what it would cost if we paid for it directly.

As I said don't let facts get in the way of a good rant.

Fri, 08/10/2012 - 13:28 | 2694537 haskelslocal
haskelslocal's picture

True! But this is game theory bubba. If you know what I know, that's one thing. But what if I know what you know regarding what I know? That's how the game is played. And that machine that takes the mamo? The one that is a service that everyone is insured by which drives up insurance costs? It costs maybe 5% of what they make off it. I've been in the business of making medical equipment for years and everything we sell is supremely overpriced and paid for.

Fri, 08/10/2012 - 13:39 | 2694589 Ying-Yang
Ying-Yang's picture

Simply have no one carry any kind of insurance. Crash the system. Much like the FED, Insurance companies should be abolished. When they have losses they raise rates or are bailed out. Blood sucking vampires!

You may say... what will we do? If everyone dropped insurance prices would reset because everyone has to eat!

Fri, 08/10/2012 - 15:29 | 2695019 Totentänzerlied
Totentänzerlied's picture

Or, the government would mandate insurance and set up a cartel system. And the people would comply. Oh, shit, I gave it away didn't I!

When your government controls the printing press, they can always hold out longer than you.

Fri, 08/10/2012 - 16:58 | 2695342 malek
malek's picture

You're missing the very important point that doctors and hospitals will charge you on average three times what they can charge your insurance.

Just because of that a minimal insurance with the highest deductible available is a must.

Fri, 08/10/2012 - 13:30 | 2694550 sitenine
sitenine's picture

exactly right, thank you. There does seem to be a fundamental misunderstanding (too much TV propaganda?) of just exactly what insurance IS.

Fri, 08/10/2012 - 13:31 | 2694557 odatruf
odatruf's picture

"e.g. it makes absolutely no sense for health insurance to cover something that everybody is expected"

^^  This, is exactly my complaint with the stupid requirement that insurance companies pay for birth control. Not because I give a flying fuck about birth control, abortion or sex.  Pump em if you got em, I say.  No, my bitch is that these pills are fully fucking planable, optional for the cast majority of people who take them, and aren't that expensive to start with.  Why not cover aspirin?  Or orange juice or milk. 

GRRRRRRRRRRRRRR!  Grumble, piss, toss things, punch shit.  Fuck!

/ Rant over

Fri, 08/10/2012 - 14:09 | 2694734 blunderdog
blunderdog's picture

    Why not cover aspirin?  Or orange juice or milk.

Those can be purchased without a prescription, while birth control pills cannot.

It's a cartelized racket.

End drug prohibition.

Fri, 08/10/2012 - 15:36 | 2695048 Totentänzerlied
Totentänzerlied's picture

Ding ding ding we have a winner. It's all about money and control.

Fri, 08/10/2012 - 14:39 | 2694848 Hohum
Hohum's picture

See Dmitry Orlov on health "insurance" versus fire insurance and flood insurance.  Most insurance is for something unlikely to happen.  Not so with health "insurance."

Fri, 08/10/2012 - 13:28 | 2694533 Itch
Itch's picture

Universities claim to increase fees so that students can obtain a better education, i.e better lecturers and facilities, but if you have a good look around (im sure there are a lot of people that have seen this locally), lecturers and staff are being laid off left right and centre. What continues however is the building and expanding of campuses, into these huge multimillion property portfolios. The university nearest to me has just bought up a whole street of town houses, the most expensive in the area, and have also just completed a multi-storey library that looks more like a shopping center than a library.

How do they do it? They let anyone through the door, they “go easy” on the students by drastically relaxing the entry requirements, then keep them there for 4 years by letting the students see carbon copies of the exam papers before they sit the exam, then practically making sure no one is allowed to fail by using imaginative cumulative marking regimes...the poor students are being milked the most, something they never realise until they are saddled with 40k if debt in a 20k job. It’s a racket, with huge consequences. 

Fri, 08/10/2012 - 13:28 | 2694539 Composter
Composter's picture

i graduated from Stanford with a BS in engineering in 1979.


tuition back then was $4000 a year.  i graduated with zero debt.

the best engineer i've worked with in Silicon Valley had a physics degree from U. of Connecticut.

one of my current coaches in 3D animation went to a small community college in Nebraska.


bottom line is, there's a lot of great schools that are affordable.

problem is, a "name-brand" degree can have advantages in a job-hunt situation ... sometimes.


as a sometime interviewer of tech. candidates, i would say that knowing your stuff inside out left right upside down & forward, is far more impressive (to me) than a degree from Name Brand School #X.

Fri, 08/10/2012 - 13:32 | 2694562 sgt_doom
sgt_doom's picture

Thanks for the intelligent and insightful comments, Composter, getting to be a rarity here.

Far too many studies over the past 5 decades have proven that the most innovative, creative and value-producing types in American society (not financial engineers do I speak!!! -- but the real creators and producers) come out of smaller and cheaper colleges, not the Ivy Leagues nor the Seven Sisters!


Fri, 08/10/2012 - 13:44 | 2694610 Meesohaawnee
Meesohaawnee's picture

but really. does the name brand really matter after the first job? ive never understood it. Face it college it what you make of it.

Fri, 08/10/2012 - 13:45 | 2694619 machineh
machineh's picture

Two "Name Brand School #X and #Y" graduated the U.S. presidents of the past 22 years.

And the country got fuckin' high schooled ...

Fri, 08/10/2012 - 22:07 | 2696081 The Navigator
The Navigator's picture

and the country got fucking highjacked

Fri, 08/10/2012 - 15:17 | 2694975 Xanthias
Xanthias's picture

I totally agree.  You can find smart people everywhere, and the Ivies have hardly cornered the market on brains.  But things may have changed since you were in school.  Most of the famous schools have need-blind admissions, and are providing scholarships to more incoming students from a variety of backgrounds.  I've seen comments here that seem to stereotype these students as a nothing but a bunch of lazy well-heeled and -connected networkers; my experience with them couldn't be more different: overall a community of idealistic people motivated by enormous energy, humor, and work-ethic.  The value of an education is something hard to quantify, in contrast to that of a commodity or a piece of real estate.  But the realities of the market will probably prevail, and the design of education will follow suit.

Fri, 08/10/2012 - 13:31 | 2694559 penexpers
penexpers's picture

I took a chance: I'm 27, I did two years at a community college, kept my 1996 Mazda with 150,000 miles, stayed in the labor force working in print/packaging sales, gained a lot of experience and was recently hired in January full-time at a Bay Area manufacturer. That's right: full-time at an American manufcaturing facility... in 2012. I don't drink. I play music as a hobby and spend time with my beautiful girlfriend.

I'm very proud of what I accomplished: staying out of debt and working hard.

Others aren't so lucky.

Don't allow these petty technocrats to persuade to pour money in these fucking ratholes.

"The man is the richest whose pleasures are the cheapest." - Thoreau


Fri, 08/10/2012 - 17:05 | 2695367 malek
malek's picture

First of all congrats for being debt free. Best of luck for staying employed.

But please tell the whole story: what did you do before you entered college at 24 or 25?
Did you work and save for later college?

Just keep driving an old car isn't going to pay for anyone's college ed.

And please don't yell "Collapse the State" now that you have become a sucessfully full integrated part of it.

Fri, 08/10/2012 - 17:25 | 2695420 penexpers
penexpers's picture


What was I doing when I was 24-25? Working. Converting a partial sum of my Federal Reserve Notes into physical silver (when it was about $6-8$ an ounce).

And community college here in the Bay Area in relatively inexpensive. I paid for it upfront.

I'll yell anything I want.

I'd rather have the the statist global paradigm collapse even if it means losing my job.

We'll be back producing very quickly once we shrug of the parasitic system we have now.

Fri, 08/10/2012 - 17:40 | 2695469 malek
malek's picture

Yes, but you're not the one collapsing it, so stay a little humble.

Sat, 08/11/2012 - 00:36 | 2696365 neilhorn
neilhorn's picture

You did not get that job on your own. A lot of people built highways and bridges for your transportation to school and work. The mailman delivered your grade reports. Taxpayers payed for your teachers' salary and pension and insurance and union benefits. Taxpayers subsidized the vehicle you drove and the fuel it burned. Your government ensured that you would either find a job or be able to live off of someone elses labor if you couldn't make it. The federal government insured that your money would not be stolen by some low life crook while it was being held in a financial institution that was accessible to only the highest caliber of thieves.

Don't be too cocky, or all your acheivements will be taken back. You may possibly be a drug addicted, homicidal, terrost threat to the public and may have to be gunned down on TV, so that people will know that the state is protecting us from the likes of you.

Fri, 08/10/2012 - 13:43 | 2694603 Don Levit
Don Levit's picture

Health insurance premiums are going down a rathole, because it is a pay-as-you-go system.

Each year, one starts all over again, usually with increased premiums.

We need to convert a portion of pay-as-you-go to paid-up as you go.

This is what 3 others and I have been working on for months with Milliman, an actuarial firm.

For $250 a month, we can build $25,000 of paid-up coverage in 3- 5 years, increasing on a monthly basis.

How are we able to do this?

First, we are looking at a break-even health insurance product.

Second, and more importantly, wehile the reserves are owned by the not-for-profit health insurer, they are "set aside" for the low or no claimants.

By having a $25,000 paid-up policy, premiums are reduced by 60%.

By having a $50,000 paid-up policy, premiums are reduced 80%.

In 2 weeks, we will have the numbers and the reports to provide to interested life insurers, who wish to form a 501(c)(4) subsidiary in order to provide more of their life insurance and annuities to more cash-heavy policyholders.

Don Levit

Fri, 08/10/2012 - 16:00 | 2695138 Buckaroo Banzai
Buckaroo Banzai's picture

Bullshit. Outcomes like death, crime, and building fires can be statistically modeled, because they are objectively determinable outcomes. But you can't do actuarial work on "health", because health is an entirely subjective outcome. Different people respond differently to different treatments, and behaviors that one person considers "unhealthy" (like smoking), are not considered so by others. The fact that some smokers live long lives without visits to the doctor proves that it isn't an unhealthy activity for everybody.

Health care is NOT an insurable risk. Only solution: go back to fee-for-service, and get insurance (both private insurance and public insurance) OUT of the health care system.


Fri, 08/10/2012 - 16:23 | 2695206 HardAssets
HardAssets's picture

Yep - - as late as the 60s, before govt got involved and the insurance companies , doctors actually did house calls & people could pay out of pocket without being bankrupted. BigGovt/Insurance/Pharma has been robbing Americans while their general health has declined and become more expensive. (Under the theft of Obama/Romney 'care' we're going to be shafted even more.)   Back to a fee-for-service system !

Fri, 08/10/2012 - 16:35 | 2695265 Ghordius
Ghordius's picture

+1, very interesting and something to ponder about, thx

nevertheless, there are two known ways to provide insurance.

The English system, that sets up insurance as a kind of bet (you go to Lloyd's pub and ask who is willing to bet that your ship comes back), and the Continental system, that pools together the risks and let's all bleed a bit (you pool fifty farmers all willing to share the replacement costs of any cow dying in any barn of them).

If you are correct and health is not insurable with the English Method because not "fitting" statistical models, then you are perhaps just making a very socialist and very good argument for a National Health Service like the Brits have, or many other nations?  ;-)

Sat, 08/11/2012 - 01:19 | 2696444 neilhorn
neilhorn's picture

If it is a "bet" then the house must be the insurance company. There is only one way an insurance company stays in business, and that is by taking in revenues that exceed expense, ie benefits and overhead.

If I can keep my premium, the excess of the insurance company's revenue over expense, and use it to pay the doctor when I need it I will save the money the insurance company expects to profit as well as saving money for future health expenses. I won't bother the doctor as often, because I have to pay out of pocket for a visit. And, the doctor won't charge me as much because I pay him cash without him having to deal with a bureaucratic, hierarchical insurance company that doesn't want to pay.

Insurance is a collectivist idea that has been sold to people through fear tactics to make us believe we have to have it. The collectivists are the ones collecting the premium and scaring us with anecdotes of catastrophic health care costs. Very few of us are really sick, but the insurance companies want each of us to believe we may be dying right now.

Stop paying for insurance and accept some risk on your own terms. Negotiate how much you will pay for a doctor visit, or test or procedure. Ask the doctor if the test/procedure will make a difference in the way you feel. I have found that doctors who are willing to talk openly and honestly will welcome a conversation about what test/procedures I actually need and how much he/she can discount the cost. It is a completely different paradigm from the insured process of show up and wait, let the doctor look a you, go wait, get a diagnosis and a "goodbye we'll bill your insurance".

Sat, 08/11/2012 - 03:50 | 2696571 Ghordius
Ghordius's picture

you are not getting my point - I'm not discussing the specifics of the US Healthcare situation, I'm discussing:

- the difference between risks that can be modeled and those that can't (see Nassim Taleb)

- the difference between the insurance models of "making a bet" and "pooling/sharing the costs of risk"

and which model should be used for which kind of risk


what you are suggesting is sound - nevertheless it's based on a personal preference that is not shared universally - otherwise it would not be a hot button issue

Sat, 08/11/2012 - 04:30 | 2696582 i-dog
i-dog's picture

No ... you are discussing the difference between private (voluntary) insurance and public (mandatory) insurance and using the perjorative term "bet" for the private option - notwithstanding that both are actuarily calculated on exactly the same basis (expected revenue minus expected expenditure over all contributors).

The fundamental difference between the collectivist "mandatory for all" and the private "optional for all" is that your collectivist option allows rampant overspending and dipping into general tax revenues to make up the shortfall.

Sat, 08/11/2012 - 09:03 | 2696812 Ghordius
Ghordius's picture

i-dog, the perjorative term is used this way and seen this way by many. Again, he says some risks can be captured by a model and some can't.

Mandelbrot, Taleb and many others (including me) agree. There are two ways to "solve" the original need. An insurance with a fixed fee or sharing the costs. This is a different beast, IMHO.

Is this neutral enough? So: he is practically saying that the "standard" insurance model used in the US is not useful for health "insurance".

This means that either there is the need for a different private model or for the usual state model (you probably prefer none of both).

Now again, you catch making a bit of fun out of it, but IMO the whole political discussion could have been framed slightly differently with different, smarter results

IF there would not be that little detail of the laws governing how corporations, in particular big ones, can handle their health insurance for their employees

go on and tell me that this MegaCorpInterest was not dominant in the political framing discussion

Fri, 08/10/2012 - 13:43 | 2694609 slewie the pi-rat
slewie the pi-rat's picture

down a rathole?

hey chuck! rats gotta eat, too

fringe vermin, BiCheZ!

besides when a generation gets totally ass-fuked for money, it tends to wake up, get fuked up, and get organized to fight the statusQuo which has pissed it off so royally

then, we can repress them and build more jails b/c they are a threat to theHomeyLand!  invest now!  slewie's new uniformsForUnicornsIPO

moRatholes for capitalistPigs!

Fri, 08/10/2012 - 15:48 | 2695090 Law97
Law97's picture

Excuse me, but is there someone who can speak jive?

Fri, 08/10/2012 - 13:44 | 2694614 jplotinus
jplotinus's picture

Although articles that summarize key indicators of the utter failure of capitalism--arguably, in its corrupted crony and corporatist format, rather than its pure format (which might be worse, not better), if that helps those who are wont to defend capitalism, tooth and nail--have some usefulness, such articles only have a true value if they articulate solutions. Charles Hugh Smith does not present solutions in the article we are here commenting upon.

Let me articulate one:

Dump capitalism, replace it with socialism.

If anyone here is unclear as to the meaning of "dump capitalism, replace it with socialism" let me know and I will do my best to clarify and make this solution easier to understand.



Fri, 08/10/2012 - 13:47 | 2694631 wonderatitall
wonderatitall's picture

enlighten us.....nazi

Fri, 08/10/2012 - 13:51 | 2694650 Zap Powerz
Zap Powerz's picture

I know right? Because, as everyone knows, socialists are uncorruptable and capitalists are just born corrupt.  There is just something special, unique, dare I say "divine" about a socialist.  Their motives always pure, their ideas always right.  They have been touched by the flying spagetti monster in the sky and given special powers to resist the corrupting influences of power and wealth.  Its good to see someone else sees the world so clearly because the world is not complex.  Its simple: socialism good. Capitalism bad.



Fri, 08/10/2012 - 14:27 | 2694775 Getting Old Sucks
Getting Old Sucks's picture

Socialism leads to totalitarianism.  Watch what happens to Greece.

Fri, 08/10/2012 - 13:49 | 2694625 DUNTHAT
DUNTHAT's picture

Fri, 08/10/2012 - 13:47 | 2694629 Zap Powerz
Zap Powerz's picture

We live in a system the punishes virture and rewards vice.  Its totally fucked up and wont last much longer. The zombie apocalypse is near.

The silver lining (I hope) is that when the dust settles and the dead weight has been eliminated our collective memory wont allow us to repeat these stupid mistakes for at least 50 years.

Humans are resilent, but they are dumb.

Fri, 08/10/2012 - 14:36 | 2694833 slewie the pi-rat
slewie the pi-rat's picture

hey BiCheZ!  a new zH prophet of doom has been born

less than a week ago, too!  L0L!!!

sarcs about socialism(above) but trusts "our collective memory"? and apparently an authority on the "humanCondition" too

our lucky fuking day or whaaaat?

Fri, 08/10/2012 - 13:55 | 2694663 JR
JR's picture

The bankers with a complicit Congress have craftily positioned themselves as profiteers between the people and their inalienable rights to life, liberty and the pursuit of happiness.

The bankers, in a financial coup d’etat, now stand as the Simon Legrees between the people and their rightful ownership to their possessions -- their homes, the universities they built to educate their children, the job opportunities they created via a miraculous private market economy that made provision for their old age, and the property rights they secured by borders against off-shoring and corporatists beating the Third World bushes for an illegal influx of cheap labor to displace Americans from their jobs.

It is the globalist bankers who have perverted and smashed the American economic miracle, not the people or outrageous fortune.

R. W. Emerson made the people’s case long ago in “The Conservative” (1841):

“I laid my bones to, and drudged for the good I possess; it was not got by fraud, nor by luck, but by work, and you must show me a warrant like these stubborn facts in your own fidelity and labor before I suffer you, on the faith of a few fine words, to ride into my estate, and claim to scatter it as your own.”

Paul Craig Roberts said it yesterday on Market Oracle (August 9, 2012):

“The $750 billion TARP bankster bailout, a small part of the total and ongoing bailout, would have sufficed to cover any holes in these budgets for a long time. Instead, the money went to reward those who caused the financial crisis and threw millions of Americans out of their homes…

“The greatest irony about Obamacare is that it was written by the private insurance companies and diverts Medicaid and Medicare funds to their profits. It is socialized medicine all right, but it is socialism for the private insurance companies…

The US is ruled by a private oligarchy. The government is merely their front. The country’s resources are diverted to the pockets of Wall Street, the military/security complex, and to the service of greater Israel…

“The oligarchs have succeeded in making Americans a dispossessed majority in their own country. In November Americans will again give their approval to one of the oligarchy’s two candidates.”

Fri, 08/10/2012 - 13:59 | 2694681 rogersails
rogersails's picture

Education, Healthcare, Housing

What do all 3 have in common ?

Soaring costs far beyond general inflation (even counting the partial housing correction)

Government blank check subsidies and backstops.

'Nuff said.

Fri, 08/10/2012 - 14:51 | 2694884 slewie the pi-rat
slewie the pi-rat's picture

not quite, but the poltical diatribe might suffer here if anyone points out that many individyuals made terrible "purchase/investment" decisions due to a neoCon crime wave that they can't wait to re-launch

the emptor(s) did not express enough caveat when going into debt?  in debt to the criminals they trusted b/ they there were "neighbors"?  or "doctors"?  or "professors"?  selling d.e.b.t.

<:and still are btw:>

so maybe they have more "in common" than ya realized?  and finally (!) when did the inflation in these 3 areas start?  anjd what were the specific "subsidies and backstops" involved?  link?

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