Where is the money?

(originally posted February 29, 2008)

Confidence is what keeps the house of cards we call an economy standing. It usually does not take a lot to shake confidence and bring the economy down. The main stream media has ignored the phenomenal growth in the economy and personal prosperity for the past 5 years, focusing instead on telling everyone who still pays attention to the MSM just how bad things were. The people ignored that lie and continued to spend, and spend, and spend. The nations key economic indicator became not the GDP, but the consumer confidence rating.

Then in december a confluence of things occurred worldwide and the US economy, for the longest period of time since WW2 failed to grow and consumer spending began to wane. Now for the second month in a row consumer spending increased by less that 1/2 percent. A fact that the main stream media is using in an attempt to further shake consumer confidence that a recession is imminent.

But I wonder just how bad the economy is when more than one billion dollars have ended up being diverted into the various primary and presidential election coffers. This is money that would have ended up being used for consumer spending, and much of the remainder would have been invested in the markets.

The money is still being spent, just not where it is counted as consumer spending.

BOHICA

(originally posted February 16, 2008)

There is a traditional battle waged between the trial lawyers and the insurance industry. As bad as the influence of trial lawyers on legislation it is the insurance industry that owns a piece of every available politician and hold the mortgages for both national parties.

The Commonwealth of Virginia is the next big battleground. Virginia legislator Terry Kilgore sponsored a resolution that would force insurance companies to disclose coverage limits to attorney's of an injured person (or a person claiming to have been injured). This information is now available only through discovery, meaning after the suit has been filed. Virginia's proposed legislation will compel insurance companies to give out coverage information prior to filing a suit.

This means that instead of filing a suit that reflects the loss incurred by an injured person the lawyer, prior to filing, will know exactly where the ceiling is and set their sights accordingly.
The reason this legislation is ugly is not because it will cause additional losses to the insurance industry... they don't suffer P&C losses in the long term. What insurance companies do is raise premiums on property and casualty (liability) policies to take the added risk and assign it to their policyholders. Or in English: insurance companies will raise their rates to compensate for the added risk posed by the probability of higher payouts.

And while an extra hundred dollars a year to insure your car may not seem excessive, remember it's not just auto liability but all liability policies that would go up. So contractors, builders, taxis, any public space, such as a restaurant or store, will see their premiums go up. And like the government and insurance companies, they don't take losses, they pass them along to their customers.

And don't think this will stop in Virginia, if it passes expect it to spread epidemically throughout the country. This customized legislation will benefit no one except trial lawyers, but will cost everyone substantially.

It has already passed the lower house and is going to the state senate. If you are a Virginia resident feel free to give them a call and tell them to vote against it. Remember, insurance companies and trial lawyers don't lose money, people do.