Steve Forbes

Forbes September 21, 2009 the New Masters of Wall Street (Single Issue)
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The key article in this issue is "Somewhat Socialized Medicine," which tells of the public/private health care system in Germany. Their public insurance system is the choice of 90% of the population, though the private plans also benefit from the cost controls of the public system.

Germany spends $3,588/capita (10.4% GDP), vs. $7,290 for the U.S. (16%) - despite having a somewhat older population (20% over 65, vs. the U.S.' 12.5%). German coverage is virtually universal - all but 200,000 (guest workers and the self-employed) covered out of about 74 million.

Germany's public insurance is largely financed by a 14.9% payroll tax (7.9% paid by the employees). Employers also pay 6 weeks of salary for disability, with the sickness fund paying 80% of salary for 18 months (subject to a cap). Unemployment insurance pays the fees for those out of a job. Private insurance premiums are based not on salary, but age and risk, and sometimes deductibles are required. (Co-pays only for the public system.) Those 55 and older cannot switch from a private to public plan - avoids overburdening the public plan. Waiting times to see a specialist in Germany are slightly shorter than in the U.S.

Germany sets reimbursement rates for hospitals and drug companies; patients pay the difference between drug prices and reimbursement rates. G.P.s earn about half their counterparts in the U.S.; not all German doctors accept the low public reimbursement. Because of the high coverage rate, Germany's E.R. use for issues treatable by an office visit to a G.P. are much lower (about 1/3) than that in the U.S.

The article also included comparative GDP health care expenditures for a number of other nations. Canada - 10.1%, China - 4.5%, France - 11%, India - 4.9%, Italy - 8.7%, Japan - 7.9%, and Russia - 5%.

A second excellent article dealt with high-speed trading ('Wall Street's New Masters'). High-frequency traders (up to thousands of times a second) are believed to account for 50-70% of the activity on the NYSE and other markets. Flash orders give favored traders a .1 second crack at incoming orders before others, and may be banned by the SEC. Others post bids and offers simultaneously for the same securities, scooping up spreads of a tenth or hundredth of a penny/share thousands of times/day, while limiting capital at risk.

Trading software may cost hundreds of millions to develop; dedicated fiber-optic lines used are capable of transmitting up to 5,000 orders/second. The need for speed has also led to a rush for real estate as close to securities exchanges as possible. In Chicago, six square feet in the data center where the big exchanges house their computers goes for $2,000/month.

Some high-frequency traders are sending out 1,000 orders/second - in two minutes with a $20 stock that represents a $2.4 billion potential for disaster in the event of a computer glitch.

'Dark pools' allow trading large blocks anonymously. They prefer not to print the trades to any public data feed, or if legally required to do so, will do so with as large a delay as legally possible - all to reduce the market impact of any trade.

In the past two years these new approaches have cut the NYSE share of equity volume from 50% to 28%.

How Capitalism Will Save Us: Why Free People and Free Markets Are the Best Answer in Today's Economy
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This is a fantastic book. This brings together all the issues facing us economically today and the solutions needed to get our economy back on track. It should be read, and understood, by all politicians and bureaucrats who are taking us down the path of socialism. Certainly, many still will cling to their failure laden socialist ideas (and will post negative comments here), but maybe a few will see the light. The timing of this book couldn't be better. Republicans and Democrats alike should be reading this book.

Flat Tax Revolution: Using a Postcard to Abolish the IRS
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I am an independent voter that keeps an open mind about most proposed policies that are talked about by politicians and private citizens. This book is a true master piece that compiles data from many economists and government agencies to illustrate the incredible burden of our current tax system. The proposed flat tax would invigorate the economy and give everyone a massive tax cut while actually increasing the revenue of the government. This is a must read for anyone that cares about this country and its growth.

A New Birth of Freedom: A Vision for America
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The title of my review ought to paraprhase all the nice things I have to say about this book. Mr. Forbes is an eloquent writer, who glibly conveys his thoughts. Often, when people refer to the adjectives "conservative" and "liberal", they, quite understandably so, misconstrue their meanings to be "dogmatic" and "progressive". Not so. Steve Forbes believes in the inherent goodness of people, and is certain that when they're given more control of their own assets, they will direct it to good cause.