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FIRE's Profitable Complexity -- ObamaCare and Derivatives

Rainbow Girl's picture

From "Derivatives are Weapons of Slow Economic Destruction," by Mark Gongloff, via HuffPo, recapping well how the complexity of derivatives is a feature not a bug crucial to how the derivatives sell-side (mainly, 5 banks) has been (and continues to be) incredibly successful at turning the buy-side (pension funds, mutual funds, municipalities) into highly-profitable vehicles of rent extraction. How do you get a buy-side dupe to take a derivative-loan with a fee 10 times higher than a regular loan? Make it complicated!

An observation in the article made me think of the ObamaCare Insurance Products (i.e., the health "care" insurance policies that reportedly will be available on the PPACA Insurance Exchange Marketplaces.)

"Because the pricing of derivatives was so complex, customers almost never understood how much a bank charged for entering into the derivative," Turbeville writes. "This constitutes a massive distortion of the credit markets."

This easily translates into a sentence from an imaginary article written a couple or a few years from now on how ObamaCare turned out to be the biggest consumer fraud scheme in U.S. history:

"Because the pricing of PPACA Exchange Policies was so complex, customers almost never understood how much the insurance company charged for the health insurance policy they were buying.

This constituted a massive distortion of the health care insurance market where hundreds of millions of capitve premium payments streamed to the insurance companies while customers received liitle or no health care coverage despite paying steep prices for the PPACA Exchange Marketplace policies.

Former President Obama, who is taking private golf lessons in an undisclosed private island in the South Pacific, had no comment."

The only thing that is clear to me about how ObamaCare is supposed to work (even with all the regulations, explainers, articles, and what have you that are proliferating) is its migraine-inducing (and unresolvable) complexity.

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katiebird's picture
Submitted by katiebird on

Trying & failing to figure out either the subsidy or cost for one family with circumstances not that unusual prove your point.

6 hours no answer.

And here's the funny part -- I can't even figure out who to ask!!

(I will)