Mr. President, Lower Rates are Killing Savers

As a real estate professional, one can clearly understand why President Trump wants to lower interest rates. Every deal he ever looks at, hinges on the underwriting of the property(ies) which is directly related to the prevailing mortgage rates currently being offered by banks.. A lower mortgage rate lowers the overall costs when purchasing and managing a property, elevating profits. Trump craves a lower interest rate at all costs, without assessing its unintended consequences. The mortgage rate fluctuates based on many factors, but primarily the 10 year treasury bond which is set by market forces and NOT by the government. The misconception is that the government sets your mortgage rate or the rate on your car loan, but in fact it is set by market forces.

The government through its mandate of the Federal Reserve sets the federal funds rate which is an overnight rate, a very short term rate. Compare a ten year interest rate to an overnight rate. The risk profile of lending money overnight versus lending money for 10 years is vastly different. Consider inflation risks. When lending money overnight, inflation is a nonfactor since there would not be any erosion of the principle due to overnight inflation. OTOH, over a ten year period, inflation could considerably erode the value of the principle and therefore a ten year yield must incorporate that risk when it is being traded. So if there is a perceived risk of future inflation, the longer term interest rate would have to be higher to incorporate the risk of principle erosion.

The administration desires a lower consumer borrowing rate in the belief that this will spur economic activity and boost the overall economy. Recent actions to lower the short term rate by the Fed and encouraged by the president has not lowered the 10 year rate and thus has had minimal effects on mortgage rates. This is due to the fact that lower rates promote inflationary fears thus negating the effects on the longer term bond. What it has done is to significantly hurt savers. 

Many savers have their money in short term instruments most notably money markets. The interest received in money markets is tightly related to the short term interest rate set by the Fed and every lowering of the rate by the fed decreases interest received to savers. This lowers spendable dollars which is a negative for the economy, the exact opposite of what was supposed to happen.

There is estimated to be 8 trillion dollars in money market funds and somewhere in the area of 7 trillion in short term treasury bills and 11 trillion dollars in savings and checking accounts. The interest received on these short term savings vehicles, totaling more than 26 trillion dollars, are directly tied to the short term rate set by the Fed and every lowering of interest rate by 25 basis points lowers the interest received by tens of billions of dollars. 

So what is occurring is, savers are penalized to the tune of tens of billions of dollars which effectively lowers spending in the economy, while borrowers get no real help with lower borrowing rates. 

If someone is losing, there must be a winner in this so who wins in this situation? As the difference, or the spread between the short term lending rate and the 10 year rate has been widening, (the Fed lowers the short term rates but the market forces do not lower the 10 yr rate, also known as a steepening yield curve), the clear winners are the banks . They are able to borrow money at a low rate and then lend it out long term at higher rates. This difference generated is the profit earned by banks and the greater the spread between short and long term rates, the greater the profits at banks. In a more extreme example, for those who have savings accounts in banks earning 0.4-0.6%, you are lending money to banks essentially for free and they are lending your money out at 6+% for the average mortgage rate. What a business!!

Every action has unintended consequences and the government has to consider the effects of its actions on savers and their contribution to the economy. There must be a balance between what the administration thinks it is doing to help spur the economy by lowering short term rates and its effects on people who rely on their savings, as well as those who are trying to save for a nest egg. By lowering short term rates, inflation perceptions grow, leading to higher long term rates, the exact opposite of the intended action. At this time, lowering the fed funds rate does little to help borrowers, but only pumps up bank's earnings while severely impacting savers.

American Healthcare Disruption

The US health system is completely broken and its time for a complete overhaul. A combination of government health care for all and a robust private system living side by side work in many countries and should be amenable to both Republicans and Democrats. The previous entry was for the quick fix. This is for the permanent fix.

1. Government sponsored healthcare for all US citizens. Essentially, medicare for all. Private company(ies) with the aid of AI to monitor usage and detect fraud and abuse by patients, providers, health care companies and hospitals. 

2. Managed care companies to compete with the government plan for patients as it does currently with medicare part c. Through competition of government and private insurance plans quality will improve at a lower cost. 

3. Optional supplemental private insurance to see providers and visit hospitals outside the medicare system.

4. Patients can choose to use either their medicare or go private or hybrid if available.

5. Doctors can choose to participate in medicare but also can have separate private hours to encounter patients privately with clearly laid out fees. (currently this is against medicare rules).

6. Value based care with risk adjustment. Essentially, providers are rewarded for better outcomes corrected for risk inherent in treating sicker patients. 

7. Medical school is substantially subsidized by the government. The tuition is more than earned by their labor during internship and residency.

8. Primary care to be delivered by PAs and NPs. All MDs encouraged to have some specialty.

9. No more employer sponsored health insurance but employers will be charged a per employee tax to the federal government to support government sponsored healthcare.

10. Malpractice reform to include caps on pain and suffering, caps on lawyer's fees, loser pays, etc.

11. Medicaid to continue but at a level, lesser than for those on medicare for all in terms of availability and options. All poor and/or not covered by the employer tax are covered by medicaid.

12. All children through 25 years old are insured through their parents coverage whether government based or private.

13. Hospitals streamline and compete with each other for patients. They continue to compete with cheaper options like urgent care centers and outpatient surgery centers. Poorly functioning, unprofitable, redundant and unnecessary hospitals to close. Hospitals to specialize in certain fields which will improve outcomes.

14. Drugs are to be priced globally at a level that is fair to Americans so they do not subsidize the rest of the world. Yet, priced to incentivize the pharmaceutical companies to continue to innovate.

Obviously, this is an outline with each point representing a tome of rules and regulations. The time has come for a disruption of the American healthcare system.

It is Finally Time to Expand Medicare.

The current health care system is broken for millions of Americans. The vast majority of Americans are happy with their coverage through employer sponsored health care or within the Medicare system. These in combination with the millions of Americans on Medicaid cover most Americans. These programs should not be changed as they are functioning well for the most part. 

The part that is broken and currently the point of contention causing government to shut down is the approximately 25 million people who get insurance through the exchange/ ACA marketplace. Premiums have soared, primarily because they are subsidized by government which functions as a blank check for the insurance companies. Customers going to the exchange are faced with premiums costing over $30,000 per year for a plan with large deductibles ($10,000 before their insurance begins to pay). No surprise that subsidies are needed as this is unaffordable for most people. Available insurance that few can afford is a broken system.

The fastest and easiest solution to this debacle is to add to the exchanges the option to buy into Medicare and let the private companies compete with the Medicare program.  Currently, for those over 65, this private vs government competition functions well with the Medicare system (government) competing against Medicare Advantage plans (private). They exist in equilibrium by competing over quality and price, ultimately driving down costs. For those under 65, Medicare should be offered at a cost that is not subsidized and reflects the age adjusted risk and be actuarily sound.

The Medicare system already exists, functions well and has high satisfaction. It can easily be adapted, quickly implemented to those under 65, and priced at an actuarily sound level. Democrats should be happy with this as it a step towards a one payer system, their utopia. Republicans would hopefully support this as it increases competition even though that competition is coming from government. Perhaps throwing in an expansion of HSA will sway republican votes.

Early retirees are facing huge increases in their premiums and some pre-retirees are postponing retirement due to the fear of rising premiums which they will have to pay until they reach 65. Offering them to buy into medicare will spur retirement and free up many job opportunities for the younger generation at a time when job losses are mounting due to AI, corporate downsizing, etc.

Younger people are reluctant to be self employed or start a business but rather prefer getting a corporate job due to the security of employer sponsored health insurance. This stunts creativity and the entrepreneurial spirit so vital for the growth of the economy. We should be incentivizing creativity, not creating barriers.

Generally, solving problems by promoting competition in the the private sector is preferred over government solutions. But, evidently, the private solution with creation of health care exchanges is failing and has not resulted in a decrease in premiums as promised by the Obama administration. The idea of having private insurance companies compete with each other on the exchange to control prices has failed. Quite the contrary, premiums have tripled and have outpaced employer sponsored plans. Perhaps, the competition between private and government plans is the key to reduce costs.

The Republicans have no real solutions except HSA accounts which do not fix the problem of soaring premiums. Trump's idea of giving money directly to consumers will not work as this does not drive down costs and buying a health insurance policy as an individual will be prohibitive. The Democrats just want to throw more money at the problem through subsidies without admitting that their creation of Obamacare has failed and needs an overhaul.

A change is needed for the millions of Americans who get their health insurance on the ACA marketplace. It is failing too many Americans. The time has come to expand Medicare to those under 65 at actuarily sound unsubsidized premiums. Introducing this option will provide the necessary competition to drive down costs quickly.

Omer Neutra

Omer Neutra was a 21 year old young man who grew up in Plainview, New York and was a typical Jewish American who loved sports, spent his summers at Jewish camps, and planned on attending Binghamton University. He deferred his enrollment and opted to spend a gap year enlisting in the Israeli army. Two years ago he was murdered by Hamas terrorists while working as a commander of a tank division. Last week, his remains were returned to Israel and was laid to rest. He prioritized his desire to defend a land that he did not grow up in but felt obligated to defend. Ultimately, at the cost of his life.

What is the average American supposed to think about this young man who enlisted in a foreign army and sacrificed his life defending a foreign land. Although inexact, there are thousands of Americans currently serving in the IDF. Are there any other countries where Americans enlist in foreign armies at such numbers or is it just a Jewish/Israel phenomenon? To some, this only confirms the notion that Jews have dual loyalty and prioritize risking their lives for Israel over enlisting in the US army and defending their actual homeland. And furthermore, if their loyalty is primarily to a foreign country, should their citizenship in the US be rescinded and shouldn't they be forced to move to Israel if they're connection is so deep even to the risk of their lives?

This is the naturalization oath of allegiance to the US that prospective citizens must declare:

"I hereby declare, on oath, that I absolutely and entirely renounce and abjure all allegiance and fidelity to any foreign prince, potentate, state, or sovereignty, of whom or which I have heretofore been a subject or citizen; that I will support and defend the Constitution and laws of the United States of America against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I will bear arms on behalf of the United States when required by the law;

It certainly seems that those who claim that Jews have dual loyalty have a point and that if their allegiance is primarily to Israel then they should just move there. 

However, it all depends on your perspective and the answer to a fundamental question. And furthermore, the answer to this question explains the anti-Israel sentiment that is spreading throughout both political parties. The ultimate defining question is whether the battle between Israel and its Arab/Persian neighbors is a local/regional war or is it the front of the battle between the West and the forces looking to destroy Western civilization. If it is the latter, then these American boys enlisting in the Israeli army are at the front of the West's existential battle against a fascistic ideology determined to topple Western civilization. They should be exalted by America and should receive all the benefits of an American veteran. They should be viewed by their American compatriots as tremendously brave heroes who volunteered to take it to America's enemies, fighting America's war preemptively by putting on a different uniform.

If there is any doubt whether this is a local/regional war or a civilizational war, just listen to the words of the enemy. "America is the great satan".

Similarly, Israel is spearheading the fight against the enemy of the West and should receive full support. Certainly, not the criticism and charges of genocide it has received by the woke progressives and the America first crowd. Yes, many Jews have dual loyalty, but their loyalty to Israel is not at the cost of diminishing their loyalty to the US, but rather accretive to it.

Omer Neutra is an American hero and his parents should be extremely proud of their son and his memory should always be a blessing. May he finally rest in peace.

  

JINO

The election of Mamdani as mayor of New York under a socialist label in the center of capitalism for the country and perhaps the world is astounding and scary. But even more shocking is that he was elected in a district that has the second largest jewish population in the world, Israel being the first. An individual, who chants to globalize the intafada, fails to denounce the terrorist Hamas, and happily sits with antizionists and avowed antisemites. He was elected with the help of the Jewish vote which in polls support him with 30%+ of their votes.

How can it be explained that a third of Jewish voters support Mamdani? It makes sense if you understand certain facts. A large group of Jews are Jews in name only, JINOs. They are, in reality, woke progressives masquerading as Jews. They have either co-opted the religion by using a veneer of Judaism while their true intention is political progressivism, or actually believe in their Jewish identity but have misinterpreted Judaism as a mandate for repairing the world through social justice, what they term tikkun olam. Either way, the end result is political progressivism.

Most JINOs are minimally observant, if at all, equating their Jewish identity with woke progressivism exclusively. Their religion is, in fact and in reality, woke progressivism and this trumps any desire to improve themselves as Jews, or for the betterment of the Jewish people as a whole, or the Jewish nation, Israel.  Instead of taking on the demands of the Jewish religion which ultimately leads to the betterment of the individual, they cede their responsibility to government and proclaim that by supporting the political party that supports social justice, they are "good Jews".

Thus, it becomes understandable how Mamdani received a third of the Jewish votes. The JINOs believe that woke progressivism is their utopia, their ultimate desire and everything else is secondary to it. The safety and security of the Jewish people in New York City is of secondary importance. The State of Israel is seen as a force contrary to social justice. The Torah is irrelevant to them. Woke progressivism is their religion, not Judaism, and Mamdani is the beneficiary of this mental disorder. They are Jews in name only, JINOs.

A Marxist, Antisemitic, New York Mayor and the Jewish Vote

The race for the next mayor of New York is shaping up to be a major inflection point in the ongoing infiltration of socialist/woke/Marxist ideology into the fabric of the United States. The success of Zohran Mamdani is very concerning for the future of NYC, the most important and consequential city in the US. If he becomes the mayor, the deleterious effects will be immediately and permanently consequential. The seat of capitalism for the entire world will be led by a socialist, anti-capitalist. To boot, the most Jewish city outside of Israel will be run by an avowed antizionist, pro-Hamas, antisemite. 

It is a complete failure that a better candidate wasn't recruited to run for mayor. It is critical for the financial industry centered in New York to have a moderate mayor and the blame and consequence will be directed at them. Where are the finance leaders like Jamie Dimon that invest billions into NYC? Where are the NY real estate moguls that have so much to lose if Mamdani wins. There should have been a candidate for mayor from the business world. Instead we had the choice of a Marxist, a washed out disgraced politician in Andrew Cuomo, and an ineffective incumbent in Adams. But it is too late.

It is inconceivable that the majority of New Yorkers desire Mamdani to lead their city, but he can win for several reasons. The small but vocal woke minority will be sure to get a high percentage of its adherents to get out and vote, while the complacent moderates will have a lower turnout. Futhermore, it is appearing  that the  anybody but Mamdani vote will be split amongst more than one competitor. This anybody but Mamdani vote has to consolidate behind one candidate for their to be a chance.

Most importantly, the Jewish vote has to be motivated and mobilized to vote. There is every reason for every Jew in NY to vote against this antisemitic, anti-Zionist. The Jewish vote can sway the election holding 12% of the electorate with the potential for an even greater relative percentage by pumping up turnout. Every Rabbi should begin immediately sermonizing to their congregations about the importance of coming out to vote in November. Every Jewish organization should be pounding its NY members to vote.  

We cannot sit idly by and watch an anti-capitalist lead the center of capitalism and we cannot allow an anti-semite lead the center of Jewish life in the diaspora.

If you are horrified by the events of October 7 and the public's pro-Hamas response it is incumbent on you to vote. If you are Jewish or supporter of Israel, please make it your business to vote on November 4 . 

NO EXCUSES.

for early voting by mail or in person:

https://vote.nyc/RequestBallot

Private Equity Scam

 I recently had a very honest sprinkler mechanic come by my house to fix some issues and I was enlightened by his description of the sprinkler business. Basically, the sprinkler companies pump up their earnings by requiring their technicians to upsell questionable services and repairs. After achieving a certain level of revenue they sell the business to a private equity firm for a multiple of the revenue. The private equity firm consolidates several of the sprinkler acquisitions into one company which it then sells for a profit. Is this good for the consumer?

This model seems to be effecting many business, including the medical business, where private equity  gobbles up profitable, autonomous, doctors practices then employs doctors at a set rate. The doctor becomes an employee and earns a salary based on productivity and doesn't gain from the profit of the business. The PE firm tries to maximize its profit by increasing the revenue and minimizing expenses. Basically, the business goes from a doctor run enterprise to a doctor employee model. Does anybody think that the employed doctor would be as motivated as the doctor owner? Does anybody think the PE firm cares about the best interest of the patient's health?

We are experiencing the corporatization of many businesses that were traditionally run as Mom and Pop endeavors and are being consolidated into larger entities by private equity and this is not in the interest of the consumer. Pre-sale, it creates negative incentives for small business owners and results in unscrupulous business practices.  Post-sale, the corporatized employees that ultimate deliver the services have little incentive to generate satisfied, recurring customers but only to generate a cash flow for their bosses to pay off the debt incurred by the acquisition. Furthermore, the corporatized business will attempt to drive down expenses, including salaries, in an attempt to reach projected targets. The greater the profit minus debt service, the greater the value of the enterprise and hence, valuation to the next buyer. Until it all comes crumbling down.

I believe that many of these consolidated business entities will fail as they will have overpaid for the underlying businesses, projected unrealistic goals, and cannot generate the cash flow required to support the debt. Additionally, the services provided by these large businesses will be of poor quality in comparison to the small business providers, further decreasing their profits leading to their demise. 

Private equity is creating short term profit at the expense of reliable, honest, quality services. Their goal is only to increase the value of the business to sell to the next buyer at higher valuation. Ultimately this model will not succeed. But as with everything, opportunities arise when other things fail. The appeal of a committed local small service provider and the relationship between a local provider and his/her customer will be preferred. Personally, I always search out for the individual plumber, HVAC technician, or sprinkler mechanic.