Kevin Drum

Greece's Big Fat No

| Sun Jul. 5, 2015 2:56 PM EDT

It appears that the Greek referendum is headed toward a landslide No vote. With about half of the votes counted as I write this, the No vote is very strongly in the lead and Greece's interior ministry has released an official projection showing the No side winning 61 percent of the vote.

There are a couple of takeaways from this. First, I obviously don't know squat about the Greek temperament. Let's see now. What exactly is it that I said a few days ago? Oh yes, here it is:

In the end, the Greek public will be unwilling to back Tsipras in Sunday's referendum and will vote to accept the European deal as is. The potential catastrophe of default and leaving the euro is just too scary for most of them to contemplate....So that's my prediction. Unless Tsipras caves completely beforehand, the referendum will be held on Sunday and Greeks will vote to stay in the euro and accept Germany's terms. It will basically be an unconditional surrender.

In technical terms, that was totally fucking wrong. Instead of caving in, the Greeks told Europe to take a hike. They refused to accept the austerity plan put in front of them and instead voted to support prime minister Alexis Tsipras's effort to demand better terms. In general, that means they want Europe to (a) offer debt relief, (b) permit the Greek government to pass a higher budget supported by higher taxes; and (c) go a little easier on pension cuts.

The second takeaway is....oh forget it. Why listen to me anymore after this predictive debacle? Anyway, I don't think anyone even knows what's next now. Tsipras obviously has a vote of confidence and will stay in power. Angela Merkel and the rest of the Troika will have to decide whether to make a few concessions or simply refuse and let Greece twist in the wind. I honestly have no idea what they'll choose. And the ECB will have to decide whether to keep Greece's banks on life support for a while longer.

Stay tuned. It's going to be a fascinating few weeks for those of us who don't actually live in Greece and have to personally face the possibility of economic catastrophe.

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Happy Independence Day!

| Sat Jul. 4, 2015 1:15 PM EDT

Jeez, what am I doing, blogging about serious stuff today? Well, that's it. I'm going to go clean the grill or watch a parade or do something else that's date appropriate. Have a happy 4th, everyone!

Obamacare Rates May Be Going Up Significantly in 2016 -- Or Maybe Not

| Sat Jul. 4, 2015 1:10 PM EDT

The New York Times reports that insurers are asking for significant rate increases for 2016:

Blue Cross and Blue Shield plans — market leaders in many states — are seeking rate increases that average 23 percent in Illinois, 25 percent in North Carolina, 31 percent in Oklahoma, 36 percent in Tennessee and 54 percent in Minnesota....The rate requests, from some of the more popular health plans, suggest that insurance markets are still adjusting to shock waves set off by the Affordable Care Act.

It is far from certain how many of the rate increases will hold up on review, or how much they might change. But already the proposals, buttressed with reams of actuarial data, are fueling fierce debate about the effectiveness of the health law.

....Insurers with decades of experience and brand-new plans underestimated claims costs. “Our enrollees generated 24 percent more claims than we thought they would when we set our 2014 rates,” said Nathan T. Johns, the chief financial officer of Arches Health Plan, which covers about one-fourth of the people who bought insurance through the federal exchange in Utah. As a result, the company said, it collected premiums of $39.7 million and had claims of $56.3 million in 2014. It has requested rate increases averaging 45 percent for 2016.

The rate requests are the first to reflect a full year of experience with the new insurance exchanges and federal standards that require insurers to accept all applicants.

I'd continue to counsel caution until we get further into the process. Big rate increase requests have been the opening bids from insurance companies for years, and they usually get knocked down to something much more reasonable by the time the regulatory process is finished. It's also the case that if lots of young people have been paying the tax penalty instead of getting insured, that might change as the penalty goes up. It was $95 in 2014, went up to $325 this year, and goes up to $695 in 2016. At some point, more and more of these folks are going to decide that they really ought to get something for their money instead of just paying a penalty to the IRS, and that will help broaden the insurance pool.

Still, the bottom line here is that credible evidence is growing that we might see biggish rate increases in 2016. They won't be the monster increases that Fox News will be hyping endlessly, but they might be bigger than us liberal types expected. We'll know in a few months.

On Independence Day, Pentagon Shows Off Some Real Fireworks

| Sat Jul. 4, 2015 12:20 PM EDT

From W.J. Hennigan on the front page of this morning's LA Times:

As diplomats rush to reach an agreement to curb Iran's nuclear program, the U.S. military is stockpiling conventional bombs so powerful that strategists say they could cripple Tehran's most heavily fortified nuclear complexes, including one deep underground....U.S. officials say the huge bombs, which have never been used in combat, are a crucial element in the White House deterrent strategy and contingency planning should diplomacy go awry and Iran seek to develop a nuclear bomb.

....U.S. officials have publicized the new bomb partly to rattle the Iranians. Some Pentagon officials warned not to underestimate U.S. military capabilities even if the bunker-busters can't eliminate Iran's nuclear program. Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, suggested at the same Pentagon news conference Thursday that airstrikes might be ordered multiple times if Iran tries to build a bomb.

The usual questions present themselves. (1) This is obviously a piece that was spoon-fed to the press. Why now? (2) Who is it targeted at? Iran, or our allies? Or Israel? (3) Is it credible? Does anyone truly believe that Obama will bomb Iran if talks fail? (4) Credible or not, does this kind of saber rattling do more harm than good? Discuss.

China Halts IPOs in Peculiar Attempt to Prop Up Stock Market

| Sat Jul. 4, 2015 12:05 PM EDT

The latest from China, where the stock market continues to plummet:

China has decided to suspend new stock sales and establish a market-stabilization fund aimed at fighting off the worst equities selloff in years, as concerns grow among China’s leadership that the stock-market malaise could be spreading to the other parts of the world’s second-largest economy.

...Previous steps including an interest-rate cut by the central bank have failed to impress investors, many of whom have been forced to unwind their leveraged bets as stocks continue to drop.

Chief among the decisions made is to halt new initial public offerings in a bid to preserve liquidity in an increasingly volatile market, the people said. Officials also discussed the setup of a market-stabilization fund.

Another odd move that I don't entirely understand. Do IPOs reduce market liquidity in any significant way? Put another way: Am I missing something here, or is this just another panicky move by the Chinese authorities that's unlikely to make things better?

Friday Cat Blogging - 3 July 2015

| Fri Jul. 3, 2015 1:36 PM EDT

Today you get a very special episode of Friday Catblogging. It's a movie! I made it with my shiny new Surface 3, and although it's not the greatest catblogging movie ever made, it does prove the old adage: any camera you have is better than any camera you don't. So sit back and enjoy Hopper using her passive-aggressive defensive skills to keep Hilbert at bay. Our show takes place atop the fireplace mantel, everyone's favorite new place these days.

Have a great 4th, everyone. See you next week.

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Greek Media Really, Really Wants Yes Vote On Euro-Bailout

| Fri Jul. 3, 2015 11:58 AM EDT

Henry Chu of the LA Times reports on how the Greek media is presenting Sunday's upcoming vote on the bailout:

Strong emotions are in abundant supply. But impartial reporting is not.

Along with Skai TV, nearly all the mainstream press and television stations in Greece have skewed their coverage or are openly in favor of the "yes" campaign, throwing in doubt just how fair Sunday's election will be. The snap referendum has already come under criticism for being called with too little notice by the left-wing Greek government — which is urging a "no" vote — to allow for proper campaigning and educating of voters.

....In a widely circulated examination of how the six biggest TV networks treated the rival referendum rallies Monday and Tuesday, freelance journalist Markos Petropoulos found that the pro-government "no" demonstration got about 81/2 minutes of coverage, whereas the "yes" protest received more than five times that much.

In another newscast, one network devoted 18 minutes to warnings and statements from European leaders about the breakdown of bailout negotiations with Athens and the surprise referendum announcement that had precipitated it. The Greek government's position got two minutes.

The bias toward the "yes" side reflects the fact that many of Greece's biggest news outlets are owned by corporate titans and other "oligarchs" whose business interests would be directly threatened by a "no" victory and the potential abandonment of the euro in favor of the drachma, [Nikolas] Leontopoulos said.

I suppose it's no surprise that Greece's corporate class is deeply unthrilled by Prime Minister Alexis Tsipras's leftist government, and would be happy to see him humiliated and tossed out of office. I assume that they also prefer the devil they know—grinding European-imposed austerity for years—to the devil they don't—exiting the euro amid chaos and eventually rebuilding their economy with a devalued drachma. After all, they'll stay rich either way, and sticking with their fellow European moguls probably seems the better bet by far.

Less than 48 hours to go now.

Bobby Jindal Really, Really, Really Hates Gay Marriage

| Fri Jul. 3, 2015 11:05 AM EDT

From The Advocate:

After three courts told him he had to, Louisiana governor Bobby Jindal will finally allow his administration to issue marriage licenses to same-sex couples today.

....Jindal's administration argued it's possible the Supreme Court's ruling didn't apply to the Fifth Circuit Court of Appeals, where Louisiana had been defending its statewide ban....On Wednesday, the circuit court actually went through the motion of confirming the Supreme Court has jurisdiction over it.

....But Jindal's administration jumped on that as reason to delay even further. The Fifth Circuit technically sent the case back to the lower, district court where its earlier ruling in favor of the state had to be corrected. The New Orleans Times-Picayune reported that Jindal's spokesman said no same-sex couple would be recognized until the district court formally reversed itself. And so it did that today."

I've seen several people wondering why Jindal wasted time with this, since he knew perfectly well what the outcome would be. The answer is obvious: He's trying to position himself as the most tea-partyish, most anti-Obama, most combative conservative in the Republican field. So this is basically brand marketing. Republican voters now know that no one will stand up for traditional values as strongly as Bobby Jindal. Message sent and received.

China Adopts an Unusual Approach to Fighting a Stock Market Crash

| Thu Jul. 2, 2015 2:38 PM EDT

Hum de hum hum. Greece is in trouble. Puerto Rico too. And don't forget China:

Chinese shares plunged Thursday, even as Beijing grasps for solutions to stem the selling, including relaxing rules on the use of borrowed funds to invest in stocks....The Shanghai Composite closed down 3.5% while the smaller Shenzhen market was down 5.6%. The ChiNext board, composed of small-cap stocks, sank 4%. Even after losing nearly a quarter of its value from a mid-June high, China’s main stock market has almost doubled in value over the past year.

....In a rare move late Wednesday, Chinese regulators set in motion draft proposals to ease restrictions on margin lending earlier than scheduled....Regulators’ sudden shift in attitude about margin trading comes after vocal warnings about its risks in recent months. In April, regulators took various steps to rein in the practice, which had allowed investors to borrow several times their investment money.

Inscrutable, those Chinese. Their stock market is crashing so they're promoting an increase in margin trading. That's sort of like lighting a tree on fire when it gets dark outside and all your flashlights are dead. It'll work. For a while. But it's really not considered best practice.

Then again, maybe there's something I don't understand here. All I know is that panicky measures to halt a panic don't usually work. And the Chinese stock market still has a long way to fall. I sure hope they figure something out.

My $500 Pill Revealed

| Thu Jul. 2, 2015 1:03 PM EDT

Have you ever wondered what a $500 pill looks like? Well, here's your answer: it looks like pretty much any other pill.

Anyway, I'm supposed to take this for 21 days, then a week off, then another 21 days, etc. This will last a few months before we know if it's working. If it does work, then I'll be taking it forever (I think). So that's $126,000 per year to keep Kevin alive. Of course, I pay only a fraction of that thanks to having excellent health insurance, and I'm sure that even Kaiser pays nowhere near that list price. Maybe half that, or a third. Still, pretty expensive!

Luckily I'm not on Obamacare. From what I hear, my case would have gone straight to a death panel, which almost certainly would have decided that my societal worth didn't measure up to the cost of the treatment. And who could argue? I mean, blogging? Seriously?

POSTSCRIPT: I forgot to mention something in my previous health update: I feel great. Not 100 percent, mind you, but pretty good. My stomach is in fine fettle (in fact, I'm overeating these days), I'm sleeping well, and my energy level has recovered almost to normal. The long-term prognosis for the multiple myeloma is obviously still uncertain, and that's an unhappy thing, but in the meantime at least I feel good for the first time in eight months!