Germany's Economy

One of the few economies in the euro zone that was considered stable during the 2008-09 recession was Germany.  Germany’s GDP is worth $3310 billion it is 5.34% of the world economy according to the World Bank.  The country’s economy is the largest in Europe and the 5th largest in the world in purchasing power parity terms according to The World Factbook.   Germany is an export-oriented economy it leads in exporting machinery, chemicals and vehicles.  Their GDP contracted by 5% in 2009 and grew 2.7% in 2011.  The increase was led by more manufacturing orders and exports that came from outside the euro zone.  According to Forbes there were 55 German billionaires reported this year that is the fourth highest number worldwide.

The central bank in Germany projects their GDP will grow about 0.6% in 2012.  It is no secret that Europe is hurting right now but then again so are the rest of us we are not out of the water just yet. The fact that the U.S. stock market recently took a fall starting the day the fed announced no signs of more stimulus makes it obvious.   Although Germany is strong it cannot take on the burden of the European financial crisis without taking a significant hit to their own economy. 

The German unemployment rate was steadily falling before 2008-09 and slightly increased due to the great recession then it continued to drop but starting in 2012 it has picked up and was last reported at 7.4%.  The country’s consumer confidence increased from 5.4 in February 2012 to 22.3 last month.  Germany’s inflation rate is currently at 2.1% and since it is part of the EU it is pegged to the Euro Area interest rate.  The interest rate is currently at 1% these decisions are taken by the Governing Council of the European Central Bank.

The DAX is a major stock market index that tracks the largest companies based in Germany, it has declined 253 points in the last month.  It was last trading in the 6,552.32 – 6,743.01 range one of the top performers was Merck KGaA a pharmaceutical company that researches drugs in neurodegenerative as well as autoimmune and inflammatory diseases.

Europe is still in a financial crisis, the strong players are not immune and neither is the rest of the world.  China is also slowing down and they are getting pressured to let the Yuan appreciate.  The U.S. is starting to see slow growth but it still needs to improve its job market.  Despite the clouds there may be a pleasant surprise in store for us inflation though is the wild card.  Will it affect our recovery?



Russia's Economy

Russia's GDP is worth $1480 billion it makes up about 2.39% of the world economy according to the World Bank.  A large part of the federal budget revenue comes from payments and taxes from the fuel and energy sector.  Russia's unemployment rate has been declining it is currently at 6.6%, poverty has continued to go down and this has led to the expansion of the middle class.  According to Forbes there were 96 Russian billionaires reported this year that is the second highest number worldwide.

Consumer confidence has been improving in the country, Russian interest rates are currently at 8%.  The decision over interest rates are taken by the Central Bank of the Russian Federation.  Russia's inflation rate is currently at 3.7% and the USD/RUB is trading at 29.5802, the ruble has appreciated during the last month.  The Russian Government Bond 10 Year Note is currently at a 6% yield.  The INDEXCF is a major stock index that tracks 30 of the most liquid stocks of Russia's most developed and biggest companies from 10 economic sectors.  It declined about 91 points during the last month.  It was last trading within the 1,494.66 - 1,529.72 range the top performer was OGK-3 which generates and distributes thermal energy and electricity in the Republic of Buryatia and other parts of the Russian Federation.

Russia is the second-largest producer of natural gas and holds the world's largest natural gas reserves according to The World Factbook.  It also became the world's leading oil producer beating Saudi Arabia in 2011, the country is the third-largest exporter of steel and primary aluminium.  The Russian economy was severely hit by the 2008-09 great recession as oil prices plummeted, The Central Bank of Russia had to spend $200 billion of international reserves in 2008 to slow the devaluation of the ruble.  As a result of high oil prices in 2011, Russia was able to reduce the budget deficit that was created in 2008-09.

Medicaid and Long Term Care

As people start aging and diseases are more likely to affect their lives it is important for them to start strategizing for the future.  It is a must to have a few pieces of paperwork prepared such as a Living Will, Health Care Proxy and Power of Attorney.

Once the forms have been covered eligibility for long-term care should be considered.  Medicare requires people to be 65 or older to start receiving coverage, if someone is disabled they can receive coverage earlier.  Medicare does not pay for long-term care it pays only for medically necessary skilled nursing facility.  When speaking of long-term care we refer to support services such as bathing, getting dressed and using the bathroom.  Medicare does not pay for custodial care which is non-skilled care, diabetes monitoring would fall under this as well.

Although long-term care can be needed by anyone at any age the majority of people that need it are 65 or older.  According to Medicare.gov this year about 9 million people over the age of 65 will need it and by 2020 the number will reach 12 million.  Individuals that are 65 have a 40% chance of entering a nursing home according to a study by the U.S. Department of Health and Human Services.

Medicaid spending for long-term care has increased incredibly and it will soon overtake Medicare as the fourth largest federal budget item.  It is no surprise why it is difficult to qualify for it and why people often have to resort to elder law attorneys to evade financial ruin.

Medicaid eligibility varies from state to state. In NYC a single person can only have income of $812 a month and assets worth $14,250.  For a married couple the monthly income is set at $1,179 and assets at $20,850.  If you will receive long-term care at home then you will not have to worry about the 5 year look back it may be something like 3 months.

When speaking of institutional Medicaid which will cover nursing home care the 5 year look back kicks in.  The 60 month period starts when the person applies for Medicaid therefore every financial transfer conducted within that time period will be analyzed.  For example if you transferred $100,000 3 years ago and the average cost of receiving nursing home care is $10,000 per month the person will be penalized for 10 months ($100k /$10k = 10).  That means if that money was given to a family member and they spent it all you will not receive long-term care until you get $100,000 and pay for your first ten months only then will Medicaid start paying.

There are strategies for people to protect some of their wealth from easily being destroyed by the need of long-term care.  Preparation is a must, if the money has already been transferred before the 5 year period there is no need to worry.  Few people can accurately predict when they will develop a disease so they can resort to gifting, private annuities and protective trusts to protect some of their wealth.  To evade handing over monthly excess income to Medicaid a pooled income trust can be set up. 

Long-term care insurance is an alternative that may work as well but I recommend looking at the fine print and seeing what type of insurance will work best for you and your needs.  A progressive disease like Alzheimer's will only worsen over time and the amount of long term care needed will only increase.