Strategy for Helping U.S. Automakers and Reforming Health Care

If the U.S. auto industry wants a bailout, let us respond by offering to foot their health care bills. The U.S. auto industry is at a comparative disadvantage to foreign auto companies because they pay for part of employee (including retired employee) health insurance. This dollar figure has grown far faster than inflation for over a decade. If the U.S. government offered to include all auto industry employees in its government employee health care pool (this is Obama's plan for national health care), it would not only take a huge weight off of Detroit's shoulders, but also benefit the US by serving as a proof-of-concept for national health care. The success of the plan will take a lot of wind out of the sails of the anti-national healthcare lobbying groups (who derailed Hillary's proposal in 1993).

It's a win-win idea!

History of Commercial Paper

Derivatives

I learned about Derivatives way, way back in 1989 when I worked at the Chicago Board of Trade. Although at first I was a bit overwhelmed at their very existence and seemingly unfathomable potential for complexity, I took it that they were well understood by the mainstream business class. So, it still seems bizarre to me these days when financial reporters seem to have to instruct the audience about them. Anway, I like how Warren Buffet put it:

"The range of derivatives contracts is limited only by the imagination of man (or sometimes, so it seems, madmen)."

Back in 1989, these class of investments seemed to just simply be called Derivatives (ocassionally Shorts, Forwards, etc), but perhaps nowadays the jargon has expanded. They served a useful purpose for commodities markets, protecting the farmer (I posess no objective lens on this, I was exposed to the CBOT just out of High School) from the vagaries of weather. I'm supposing now that the real problem that eventually sprung up was the application of these hedge strategies to inappropriate lengths... insuring against nature is one thing, but insuring against man-made calamities is another.

Anyway, be sure you understand Derivatives.

On the Bailout, or Your Wikipedia Assignment

I still have conflicting opinions on the bailout (not, however, on the Paulson bailout plan, which is clearly reckless). I think it behooves anyone hoping to formulate an opinion to brush up on the following:

Federal Reserve

Federal Reserve Act (I think the resulting compromise legislation effectively debunks conspiracy theories propounded by Libertarians)

Shadow Banking System

Extra credit:
Commercial Paper

Money Fund

In any case, I think opinions necessarily have to fall into the Practical and the Ideal, so keep that in mind when you hear people talk about the bailout.

Dodd's Plan versus Paulsen's Plan

Compare and contrast:

Bush Administration or Paulsen's Plan

Democratic Senator Chris Dodd's Plan in PDF in HTML