The problem that NO one is addressing is the plethora of health care costs that are hidden from patients. How much is that bag of IV fluid? How much is that mesh used to close your groin hernia? Why is it that a titanium rod to fix a femur (thigh bone) fracture costs over $1000? While there may be more obese patients in France and Germany compared to the US, I bet that there are far more scooter chairs here than there. I would bet that we are paying more per scooter chair than anywhere else in the world. It is these product expenses that are killing us and driving up the cost of health care.
Remember when there was a ton of worry about inflation? The worry-warts were talking about the federal reserve printing all of this money, which was going to lead to inflation. We were going to be 1930s Germany. We needed to pay off debt and stop government spending. Well, inflation as a rule has held steady. Groceries seems to be steadily increasing, but for the most part inflation has been held in check.
(The worry-warts forgot about the fact that we were in a recession and had high unemployment, which means that there was no demand. It is hard to have inflation with no demand for goods and services.)
This graph shows the year-over-year change for these four key measures of inflation. On a year-over-year basis, the median CPI rose 2.3%, the trimmed-mean CPI rose 2.0%, and core CPI rose 2.1%. Core PCE is for June and increased 1.8% year-over-year.
These measures suggest inflation is now at the Fed’s target of 2% on a year-over-year basis and it appears the inflation rate is slowing. On a monthly basis (annualized), two of these measure were well below the Fed’s target; trimmed-mean CPI was at 1.3%, Core CPI at 1.1% – although median CPI was at 2.5% and and Core PCE for June was at 2.5%. Based on initial data – and comparing to the increase in August 2011 – it is very likely that the August report will show a further decline in the year-over-year inflation rate.
One of the big dark clouds hanging over our economy is our very close ties to Europe. If the European economy tanks, we will be pulled down with it. This is a fact. S&P has downgraded France and just about everyone else in Europe except for Germany.
France and eight other euro-zone countries suffered ratings downgrades on their sovereign debt Friday, sparking renewed global worries over Europe’s ability to bail itself out of financial crisis.
Standard & Poor’s Ratings Services stripped triple-A ratings from France and Austria and downgraded seven others, including Spain, Italy and Portugal. It retained the triple-A rating on Europe’s No. 1 economy, Germany.
The downgrade to France, the zone’s second-largest economy, will make it harder—and potentially more expensive—for the euro zone’s bailout fund to help troubled states, because the fund’s own triple-A rating depends on those of its constituents. The downgrades also speak to how deeply the concerns over countries on the euro zone’s periphery have penetrated its core.
Oh, and don’t forget Greece. Their debt talks have collapsed.