Mish's Global Economic Trend Analysis

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More Mindless Sanctions? Merkel a Liar or a Fool? Posted: 30 Aug 2014 09:58 PM PDT As the tide in the Ukraine civil war turns, the EU threatens Russia with more mindless sanctions. Bloomberg reports EU Vows More Russia Sanctions If War in Ukraine Worsens. European Union leaders agreed to impose tougher sanctions on Russia, possibly targeting energy and finance, if the war in Ukraine worsens. Leaders early today gave the European Commission a week to deliver proposals for the penalties. The EU left open the precise trigger for further sanctions, contrasting with a four-point ultimatum issued to Russian President Vladimir Putin on June 27 that preceded the latest curbs. "We are close to the point of no return," Ukrainian President Petro Poroshenko told reporters at the EU summit. "Thousands of foreign troops and hundreds of foreign tanks are now on the territory of Ukraine."  Earlier, EU leaders selected Polish Prime Minister Donald Tusk as the bloc's next president and Italian Foreign Minister Federica Mogherini as chief diplomat after a bitter contest that showed the 28-nation EU's divisions on how to deal with the Kremlin. Tusk has pushed for tougher sanctions on Russia while Mogherini has favored diplomacy. Leaders also met with Poroshenko. The EU and the U.S. have already slapped visa bans and asset freezes on Russian individuals and companies, and since July have imposed steadily tougher sanctions targeting the country's energy, finance and defense industries. Merkel said the EU is looking at more measures to target Russia's energy and finance industry. Leaders disagreed about possible military assistance to Ukraine, with Lithuanian President Dalia Grybauskaite telling reporters before the meeting: "We need militarily to support and send military materials to Ukraine." Disagreements Everywhere The entire, yet unstated, gist of the above article is there are disagreements everywhere: On sanctions, on military aid, on diplomacy vs. sanctions, and on triggers. If this is a bluff, it is easily transparent. If it's not a bluff, it's economically stupid. Merkel a Liar or a Fool? Who is fooling whom when it comes to Merkel's claims "the EU is looking at more measures to target Russia's energy and finance industry." Merkel is either a liar or a fool. I believe Merkel knows full well sanctions are a losing game. Target Russian energy and Russia will likely shut off natural gas supplies to Europe. It was reckless enough to suggest that possibility in April. This is September. Winter is on the horizon. Want to risk it now? My guess is that Merkel is a liar. If you prefer, call it an "obvious bluff". Politically, Merkel has played her hand very well at every turn, with countless lies, bluffs, reversals, and opportunistic moves along the way, on countless eurozone issues. Why should this time be any different? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Obamacare Fine Print: Beware the Medicaid and Medi-Cal Clawbacks and Liens Posted: 30 Aug 2014 10:49 AM PDT Obamacare greatly expanded Medicaid coverage, but there is a hidden gotcha that may come back and haunt your heirs for benefits you receive from age 55-64. This is not new news, but few read and understand the "fine print". In a warning about the "fine print" and in response to Moral Dilemma: Should a Libertarian Who Does Not Need Food Stamps, but Qualifies for Them, Take Them? reader "TL" writes ... Hello Mish, Your friend Steven may want to carefully research taking Medi-Cal benefits. Medi-Cal, and many other state Medicaid programs include a 'claw-back' provision for recovery of costs incurred by the state to provide medical care.  While there is much variation in particulars from one state to another, the bottom line is these costs include a monthly 'administrative fee' The 'claw-back' mechanism functions via the state placing 'liens' on individual assets at the point the Medicaid recipient reaches age 55, then recovers the money at the point the Medicaid recipient dies by 'seizing' the money from the estate. When first put into effect, these 'claw-back' provisions were primarily intended to recover costs to the state of providing long term nursing home care for older recipients.  ObamaCare's expanded Medicaid has, of course, now waived the assets portion of the 'means test'.  But under current law, those assets are subject to 'claw-back'.  At the moment, the monthly 'administrative fee' amount for Medi-Cal is $611.  Those who sign up for Medicaid may not be doing themselves any favors. Medi-Cal Clawbacks and Liens The California Healthcare Foundation explains the rules in Estate Recovery Under Medi-Cal Medi-Cal estate recovery refers to state action to reclaim certain Medi-Cal costs from the estates of beneficiaries after their death. This program, which has been in place for decades, has received renewed attention from policymakers because of reports that some individuals newly eligible for Medi-Cal as expanded under the Affordable Care Act (ACA) may not enroll for fear that their house and assets could later be seized. ... States also have the option to take a more expansive approach and seek recovery of costs for other covered services, not just LTSS, provided to beneficiaries age 55 and older. California has chosen this option and seeks recovery of Medi-Cal costs for all covered services provided to beneficiaries age 55 and over, with the exception of personal care services provided through the state's In-Home Supportive Services (IHSS) program.  California has elected to use property liens to protect its claim in cases where the beneficiary was permanently institutionalized and not expected to return home. Medi-Cal places a lien against the beneficiary's property while the beneficiary is still alive so it can seek recovery when the individual passes away or when the property is sold.  Medicaid Fine Print The Seattle Times discusses the fine print in Expanded Medicaid's fine print holds surprise: 'payback' from estate after death With an estimated 223,000 adults seeking health insurance headed toward Washington's expanded Medicaid program over the next three years, the state's estate-recovery rules, which allow collection of nearly all medical expenses, have come under fire. Medicaid, in keeping with federal policy, has long tapped into estates. But because most low-income adults without disabilities could not qualify for typical medical coverage through Medicaid, recovery primarily involved expenses for nursing homes and other long-term care. The federal Affordable Care Act (ACA) changed that. Now many more low-income residents will qualify for Medicaid, called Apple Health in Washington state. But if they qualify for Medicaid, they're not eligible for tax credits to subsidize a private health plan under the ACA, which requires all adults to have health insurance by March 31. Unclear rules One reason this snafu has become so troublesome is that ACA rules appear to give those who qualify for Medicaid little choice but to accept the coverage. People cannot receive a tax credit to subsidize their purchase of a private health plan if their income qualifies them for Medicaid, said Bethany Frey, spokeswoman for the Washington Health Benefit Exchange. Obama Care "Final Payment" Paul Craig Roberts chimes in with Obamacare: The Final Payment–Raiding the Assets of Low-Income and Poor Americans Kevin Knauss highlights Expanded Medi-Cal costs $611 per member per month California Math Under California recovery rules, $611 per month for 10 years (age 55-64), amounts to $73,320 (minimum) that would come from the estate. Those signing up thinking Medicaid is free, better learn the rules. It appears that Steven who now gets foods stamps is also trapped in a Medi-Cal program with claw-back rules, when he would simply prefer his prior medical plan, at his old rate. Obamacare gotchas keep piling on. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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