Economics & Finance

The US Treasury has announced that it will once again issue 30-year bonds. Dropping them in 2001 was probably a mistake, since it was based on the premise that the US would be running budget surpluses indefinitely. This improves Treasury’s ability to tailor its offerings to the shape of the yield curve.

And once again, this provides me a chance to shill for one of the most under-utilized tools available to the individual investor: buying Treasury bills, notes, and bonds under the Treasury Direct program. Under this program, you buy Treasury debt for $1,000 minimum, in increments of $1,000. Redemptions and interest payments are done through electronic funds transfer to your checking account. You get the same price as the big boys, and there are no commissions or fees.

Here’s a suggestion: subscribe to Treasury Direct, and buy equal amounts of 1-year, 3-year, and 5-year notes. Next year, when your 1-year note matures, buy 1-year, 3-year, and 5-year notes again. At that point, you own debt securities maturing in 1, 2, 3, 4, and 5 years and have constructed a bond ladder. This is a great strategy for your fixed income investments, since it minimizes your risk of interest rate changes. All you need to do is keep reinvesting the maturing notes in new 5-year notes. Your total investment could have been as low as $3,000 the first year and $2,000 the second.

Update: My face is red. Treasury doesn’t offer a 1-yr. note, as Uncle Jack points out in the comments. Substitute two consecutive 26-week T-bills and it works. Thanks, Uncle Jack!

I missed the apparent lovefest over healthcare between Newt and Hillary last Thursday at the National Press Club. It was covered in Friday’s WaPo article The Reformer and the Gadfly Agree on Health Care, also covered in philly.com’s piece entitled Former political foes patch up differences to tout health care.

Some of the more eyebrow-raising comments:

“Gingrich, out of elected office, was free to depart from his anti-government roots. With Clinton nodding in support, he came out in favor of mandatory daily physical education, healthful food in schools and a “transfer of finances” from rich to poor. Some of this,” Gingrich said after a long list of concessions to the left, “may surprise you.”

Mandatory exercise and diets? Mandatory??

Clinton had surprises, too. She nodded in support of Gingrich’s proposal to “voucherize Medicaid” and agreed with his statement that “welfare reform has really worked.” She granted that “there is enough money in the system right now to cover the uninsured” and she said that piecemeal reform was the best route.”
In other words, Clinton believes that egalitarian redistribution works and is cost-free.

This little sentence on the philly site is hilarious:
Clinton and Gingrich both said there were ways to fix the system that would not raise ideological red flags, or trigger bitter partisan fights.
Of course they do. It looks like both Dems and the GOP have agreed that piecemeal expansion of government power in health care can be a nonpartisan affair.

P.S. Has Gingrich gone completely mad?

Apparently, the Washington Post is shocked (-shocked-) that Bad Practices Net Hospitals More Money. This weekend’s article in the WaPo contains the following howlers:

In a four-year period, 106 heart patients at Palm Beach Gardens developed infections after surgery, according to lawsuits and government records. More than two dozen were readmitted with fevers, pneumonia and serious blood infections. The lawsuits included 16 patients who died.

How did Medicare, the federal health insurance program for the elderly, respond? It paid Palm Beach Gardens more.

and

Researchers at Dartmouth Medical School, who have been studying Medicare’s performance for three decades, estimate that as much as $1 of every $3 is wasted on unnecessary or inappropriate care. Other analysts put the figure as high as 40 percent.

Despite collecting “reams of information on quality of care”, the data are left unused. As a result, “[t]he way Medicare is set up …it actually punishes you for being good.”

So did WaPo finally discover that the market is superior? Nope.

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Incognito forwards an interesting article about the Florida real-estate market. The article mentions this site, which, coincidentally, another Chicago boy recently told me about.

Hmm. . .

My son-in-law sent an e-mail link to Fareed Zakaria’s interview with de Soto, a show with a moment’s open window at PBS. I suspect the argument will seem less like “a novel way to address global poverty” to most of the readers of this blog than the only way that has worked. Nonetheless, it is pleasant to see such an argument on PBS. The series, Foreign Exchange: Where America Meets the World was developed by Azimuth Media and Oregon Public Broadcasting. (We don’t get it locally but some of the largest markets in the state do.)