Fat: A big backflip underway

Up until a couple of years ago, we were all told that being  fat was bad for us. Then we heard that fat could be OK.  Now fat is positively GOOD for you.  Could there be any better evidence of government wisdom being often wrong?  In this matter, ignoring government pronouncements would clearly have been the wisest course

Because many diabetics are overweight, health crusaders have long argued that obesity causes diabetes -- ignoring the fact that most overweight people are not diabetic. But obsessive eating and drinking is a symptom of diabetes so the most reasonable conclusion is that diabetes causes obesity, not the other way around.  But never expect logic from people with a barrow to push

Fat can PROTECT you against obesity and diabetes, improving blood sugar control and metabolism, study finds

It has long been thought to be the enemy of the waistline. But fat can actually protect people against obesity and developing diabetes, scientists have today claimed.

Before reaching for a cream cake though, take note - it is 'good'  brown fat that is beneficial to the body, not white fat, which is amassed from gorging on too many calories.

Adults have a small amount of healthy brown fat, usually found in the front and back of the neck and upper back, which burns calories in order to generate heat.

In contrast, white fat is troublesome. It is the result of eating too many calories and is stored around the stomach, thighs and forms the dreaded love handle.

Brown fat, usually found in the front and back of the neck and upper back, can actually protect against obesity and diabetes, a study has found

A new study has revealed for the first time, those people with higher levels of brown fat have better blood sugar control, higher insulin sensitivity and a better metabolism for burning white fat stores.

The findings suggest the ability of brown fat to better regulate levels of sugar in the blood, could make it a potential medical weapon against diabetes.

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Employers Who Dump Workers onto Medicaid: The New Corporate Welfare Queens?

There have been a lot of predictions about the future of employer-based health benefits under Obamacare. Reports suggest that increasing numbers of small businesses are dropping health benefits and sending their employees to Obamacare's insurance exchanges, where they are partially subsidized.

Other businesses have found a bigger cost-shifting approach. BeneStream, a new benefits advisor, advises employers how to make their workers dependent on Medicaid, a welfare program fully funded by taxpayers. And businesses are taking advantage of its advice.

So: Are these employers corporate welfare queens? Well, it depends on how you look at it. On the one hand, Medicaid is welfare. It is disturbing to see Medicaid categorized as "health insurance" in the same way employer-based benefits or individually owned policies are. Nobody would consider someone in a homeless shelter to be "housed" in the way that someone paying rent or a mortgage is.

On the other hand, these employers pay corporate income taxes, which many economists consider double or triple taxation (because both the employees and investors have also paid income taxes). So, one way to look at their taking advantage of Medicaid could be to categorize it as a perverse sort of tax rebate.

Whichever way you look at it, it is not an outcome that the politicians who gave us Obamacare told us to expect.

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Study: 2014's Employment Boom Almost Entirely Due to the Expiration of Unemployment Benefits

Those who've listened to President Obama's speeches over the past couple months have heard him boast that 2014 has seen impressive improvements in the labor market - the best year in job creation since 1999, he points out, and he's right. But there's no obvious explanation for why 2014 has been, by a good margin, the best year of a weak jobs recovery. The president has naturally credited his policies (without any justification). But what if 2014's jobs boom is mostly thanks to the expiration of a program that the Obama administration and Democrats fervently pushed to renew?

That's the finding of a new NBER working paper from three economists - Marcus Hagedorn, Kurt Mitman, and Iourii Manovskii - who contend that the ending of federally extended unemployment benefits across the country at the end of 2013 explains much of the labor-market boom in 2014.

About 60 percent of the job creation in 2014, 1.8 million jobs, they find, can be attributed to the end of the extended-benefits program. That's a huge amount, and suggests that long-term unemployment benefits, while there's a good charitable case for them, could have played a big role in the ongoing lassitude of our labor market. (Indeed, an earlier working paper from a few of the same authors argued that extended benefits raised the unemployment rate during the Great Recession by three percentage points; see a summary of that paper here.)

So what was the program Democrats wanted to renew? States run their own unemployment-insurance programs, which provide around 26 weeks of benefits to people who've lost jobs and are looking for new ones. But during the recent recession, as they have in other downturns, Congress repeatedly authorized federal extensions that allowed people to draw benefits for much longer. At the end of 2013, the Senate narrowly passed a renewal of the program, but the House never took it up and the extensions, already much longer than any previous recession had seen, expired.

This created something of a "natural experiment." States had unemployment-insurance programs of widely varying length - they ranged from 40 weeks up to 73, roughly - but after the end of the federal extensions at the start of 2014, the duration of benefits in almost all states went back to around 26 weeks.

The paper uses that shift to examine how expiring benefits might have affected the labor market, and they find that the expiration of extended benefits produced a big boost to job creation, labor-force participation, and hiring. It's a dramatically different result than what the White House and Democrats were predicting at the end of 2013: The Obama administration was predicting that the drop-off in stimulative spending from the expiration would cost 240,000 jobs, while the NBER paper finds that it created 1.8 million jobs.

The authors don't think this happened the way you think it might: It's not so much that the cut-off drove individuals on benefits back to work, but more that less-generous benefits actually spurred job creation on a macro level, getting employers to hire and drawing into the labor force people who hadn't been looking for a job. They don't lay out how that worked, but in their October 2013 paper, argue that extended unemployment benefits artificially boosts wages - when they expire, employers then boost job openings and start hiring people.

Of course, the usual caveats apply: This is not a perfect experiment at all, and the paper, while very rigorous, can't get past the fact that it's just crunching numbers about macro trends. And there are some concerns with the authors' county-level data, though they try to make up for that.

The simplest form of the analysis was just looking at states that had long benefit terms versus short ones. In 2013, job creation was worse in more generous states than the national average; in 2014, after those states dropped their much more generous programs, it was much better than the national average:

There's a lot more analysis they did, which I won't get into - but to untangle related effects, they look at neighboring counties in states with different unemployment regimes, etc.

Now, this is just one paper and it involves some fancy econometrics, but it answers an unresolved question - why 2014 saw the labor market perk up (there's also a possible end-of-austerity explanation, but it's the labor market, not the economy overall, that's really improved noticeably).

It should prompt passionate supporters of the extended unemployment-insurance program to consider whether it made as much sense as they thought. Even conservative economists, such as Michael Strain, pushed for the extension of long-term benefits. The length and scale of benefits during the Great Recession was unprecedented, but advocates for the program argued that this was necessary so long as unemployment, and especially long-term unemployment, remained historically elevated.

Besides the moral case for supporting the unemployed, the market-friendly case for extending benefits is that one has to be searching for a job to get them. Cut the benefits, and you'll see the long-term unemployed drop out of the labor force for good, the argument went. (It's extremely hard to tell what did happen with these people when benefits expired, and the NBER paper here doesn't comment on that.)

Advocates for extended benefits also argued that it was just an effective form of stimulus for the economy, because recipients spend their benefits immediately. That was always a pretty lame case, since the program's value to the economy in spending terms - in the Obama White House's generous estimation, 240,000 jobs in 2014 - would probably be outweighed if either side's arguments about the labor-market effects proved mostly true. Indeed, if the new NBER paper is right, letting benefits expire produced 7.5 times as many jobs as the White House said it would cost.

The general economic consensus has always been that unemployment insurance slightly boosts the unemployment rate. Even liberal economists accept this, although they lampoon the idea that people might prefer benefits to working (that isn't the point, Paul - people act at the margin). But we still have unemployment insurance, of course, because we want a safety net for people in the event of job loss. That just has to be balanced against the costs that the program imposes on the labor market. The new NBER paper doesn't find that those costs in general are much higher than economists generally assume; rather, it suggests that the benefits of reining in long-term programs can be quite substantial.

There was always good reason to think this is the case: One of the many differences between American and European labor markets is that most of the latter have unemployment benefits systems of effectively unlimited duration - and much higher levels of structural unemployment.

SOURCE

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FDIC Changes Tactics in Response to Operation Choke Point

The Federal Deposit Insurance Corp. has acknowledged its role in Operation Choke Point and is taking dramatic steps to reverse its policies in targeting legal and legitimate industries that are disfavored by the Obama administration.

"We're very pleased they've acknowledged their wrongdoing and they've accepted our suggestions to put in place measures to stop this activity," Rep. Blaine Luetkemeyer, R-Mo., told The Daily Signal in a phone call this morning.

Luetkemeyer, a member of the House Financial Services Committee and leader in the fight to end Operation Choke Point, met with FDIC Chairman Martin Gruenbery and Vice Chairman Thomas Hoenig earlier today as a follow-up to concerns voiced last November.

The Justice Department contends that Operation Choke Point combats unlawful, mass-market consumer fraud by "choking" their access to banking systems. But a report by the House Oversight Committee found the program's targets, under direction of the FDIC, included legal businesses such as short-term lenders, firearms and ammunition merchants, coin dealers, tobacco sellers and home-based charities.

To address concerned raised about Operation Choke Point, the FDIC will now require bank examiners to put in writing any recommendation or requirement for an account termination.

The examiner will also be required to indicate what law or regulation they believe the bank or the customer of the bank is violating.

The policy shift was announced today in an official Financial Institution Letter sent to all FDIC supervisory staff. In it, the FDIC states:

The FDIC is aware that some institutions may be hesitant to provide certain types of banking services due to concerns that they will be unable to comply with the associated requirements of the Bank Secrecy Act (BSA). The FDIC and the other federal banking agencies recognize that as a practical matter, it is not possible for a financial institution to detect and report all potentially illicit transactions that flow through an institution.

The letter reiterates that decisions on accounts need to be made on a case-by-case basis and stresses they should not be made based on industry or moral objection.

The Daily Signal has reported multiple cases of legal business owners being dropped by their banks and payment processors simply because their industry is considered a "reputational risk."

Last December, a 20-page investigative report by the House Oversight and Government Reform Committee detailed FDIC officials working closely with the Justice Department to implement Operation Choke Point.

Emails unearthed by investigators showed employees scheming to influence banks' decisions on who to do business with by labeling certain industries "reputational risks," ensuring banks "get the message" about the businesses the regulators don't like, and pressuring banks to cut credit or close those accounts, effectively discouraging entire industries.

FDIC officials were also seen inserting their personal and moral opinions into banking decisions.

"The FDIC has allowed a culture within their agency to blossom that they believe it's OK to impose their personal opinions and value system in a regulatory way," says Luetkemeyer. "They are not a regulatory police-their job is to enforce the law."

Luetkemeyer left his meeting this morning pleased that the FDIC has implemented the majority of his proposed policy changes administratively, but says he still intends to move forward with a bill introduced last year that aims at ending Operation Choke Point.

Luetkemeyer says the FDIC also intends to work with the Justice Department's inspector general to investigate Operation Choke Point and hold those within the FDIC accountable for any wrongdoings.

"We're pleased that they're working with the [inspector general] so that they can change the culture of what goes on in their agency," he said. "But we're not going to take anything off of the table until we get this program stopped."

SOURCE

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