Healthcare Reform Bill

Obama’s healthcare reform bill which doesn’t provide any clear picture continues to drag his approval rating down (only 49% - down from 60% in April). He was able to avoid mistake of Clinton administration by not imposing his predetermined plan and let Congress comeup with the plan, but that has resulted in five different healthcare bills. These different plans have created so much mess which no one understands.

Very good analysis in today’s FT “The prosaic professor” and an interesting opinion “Pull the Plug on ObamaCare” in WSJ.

Healthcare Reform

A very nice article in Financial Times on the recent healthcare reform.

Cost control not coverage is the key to health reform

I agree that the president’s objective is off the mark. Rather than focusing on cost cutting, the president’s focus is on making bill revenue neutral. This may provide increase healthcare coverage but definitely not going to reduce cost, which is the root cause of problem.

Microfinance Bubble

Here is the reply from Vikram Akula on WSJ article on Credit Bubble in Microfinance.
What Microfinance Crisis in India?

Microfinance in Rural India

A recent article in WSJ reports that credit bubble is being created in Microfinance.
A Global Surge in Tiny Loans Spurs Credit Bubble in a Slum

Social benefits to rural population compare to greed of richer: Though there is a possibility of bubble it is still beneficial to rural population which has nothing to lose.

1) Surge in microfinancing will allow more rural population to start their own small entrepreneurial venture allowing them to have an opportunity to come out of poverty.
2) Easy access to credit may allow people to borrow more than what they can afford leading to higher default rate. It may be risky bet for financiers, but it is not bad for poors since if they default on their loans they are at the same position where they were before.
3) I believe microfinancing originated with the idea of helping poor people first then anything else (making profit). SKS Microfinance has been able to do both successfully. It seems that entrant in this industry seems to forget that this is not the same industry where normal business principal can be applied.

There are around 150 millions rural household in India. With average loan size of $300 per household, total microfinancing business size will be around 45 billions dollars. A 10% default rate will be $4.5 billions at risk which is a very tiny number compare to trillion dollars mortgage mess and other crisis.
A nice article on Economist
Microcredit may not work wonders but it does help the entrepreneurial poor