Bloomberg.com has a summary of some of the tax implications of the law the President has just signed into law, in New Health-Care Taxes Help Obama 'Spread the Wealth'.
What is the logic of the refusal to allow insurance companies to not be able to deduct executive salaries above $500,000? A CEO can make millions a year elsewhere. Why insurance companies? Why not financial companies, auto companies, oil companies, medical product companies, steel companies, exporting companies, importing companies, computer companies, etc?
More to the ideological point, why not state that no organization can have non-profit status if it pays anyone more than $500,000 per year?
Moving on, did someone from Nevada or Florida decide to impose a special tax on tanning salons? What's special about them to single them out?
The law plans to impose a 3.8% tax on rental income as well as dividends. But working as a landlord is hardly the same as buying stock in a REIT. Why tax this occupation?
More broadly, the government gets the media to buy into the fiction of a "Medicare tax". There is no Medicare tax. There is only a tax.
Taxing something yields less of it. With the growing number of taxes aimed not at the truly high earners but only at a couple earning $250,000-- which could include two very hard-working people simply living a middle-class life in San Francisco-- it must be assumed that fewer professionals will do the marginal extra work, that more people will opt to aim below that number who might otherwise be more productive, and that more people will do less investing and more spending for the moment.
Moving on from incentives, why is there a tax on medical devices?
And what is the humanitarian intent of imposing a 2.3% tax on wheelchairs? Huh??? Wheelchairs?
Consistency and fairness matter in capitalism. Level playing field and let the better or luckier competitor win. Not in Obamacare. And not in economic policy, where Mr. Obama continued the Bush policy of bailouts of financial companies and their bondholders but destroyed bondholders of certain auto companies.
Keeping promises also matters. The President campaigned vociferously opposing Mrs. Clinton's preference for an individual mandate. Whoops! Once in power, position forgotten.
This blog stated over a year ago that there was a depression but it was not the Great Depression and never was going to be so, that all the conditions were present for a smoother functioning of the economy, and that in fact in some ways the economy was better balanced than when Big Finance was riding high.
Unfortunately, the typical post-bubble, post-credit crunch scenario is playing out. This involves financial asset prices rising faster than hiring.
Remember that what has happened has been a financial shell game. The government has used the Fannie/Freddie unlimited bailouts to work with the Fed to socialize the losses and sort of start the game again.
Thus the big banks may "surprise", but these surprises will be solely due to the public's assumption of their bad lending practices along with the Fed's massive money-printing.
The next thing you will see is stagflation, if the script is followed. There will be reports of growth but off of a horribly depressed base, but those reports will serve to embolden the mass of "investors" who sell stocks near the bottom of a recession/depression and who buy them only when prices are high and "confidence" has returned.
There will be growth in the spring, but all this money-printing has caused a huge inflation in stock prices and prices for short-term Treasuries and the like (causing unnaturally low yields on short term money). As the money gradually creeps back into the real economy and out of the financial system where too much "money" is overwhelming the supply of securities, then assuming the Fed stays easy, there is every reason to expect a rerun of the prior cycle, where eventually the inflation will cease being in financial assets. It is unlikely to move disproportionately to housing, but house prices will do OK if the government continues to support it heavily. We do not know yet what will be the favored asset class as people see the inflation and see their standard of living declining due in part to the arbitrary and unfair government policies in favor of Big Finance and the increasing control of the economy according to political dictates from a redistributionist President, Speaker of the House and Majority Leader of the Senate.
Mostly, the real standard of living is declining or in good times holding steady and the above pols are in power because America has lost its mojo. It has become too dependent on debt and not equity (savings or true wealth creation). There are too many people with no savings who then use the ballot box to improve their lot rather than the old-fashioned way of thrift and hard work. There is too little government support for the nuclear family. America recently was ranked 30th out of 30 countries in reading skills. This ranking follows decades of new thinking in education and large increases in spending on education. Unemployment among people in their 20s is at post-war records, yet Obamacare taxes them with an individual mandate to support medical care for the older folks, even if these youngsters do not smoke, exercise regularly, and otherwise maintain good health habits. There is no surer way to prevent a 20-something year old from becoming an entrepreneur than forcing him/her to pay through the nose for individual health insurance while trying to become a success by providing a new good or service to society. In the future, why not just do government work or relatively secure big-company work, get government-subsidized health coverage, and forget about the adventurous, risky course?
Just as with Fannie and Freddie, we can predict that the Democratic Party will move heaven and earth to make the new entitlement a success and that eventually it also will prove to be a financial house of cards. The first card to topple will probably be the lie that the CBO was forced to accept, namely that the Medicare "doc fix" will not once again be repealed for another year.
Many other nations simply set up a one-payer system paid for out of general revenues and leave it at that with variations on that theme.
This has the virtue of simplicity, especially if unlike Medicare and Medicaid, billing fraud is prevented.
What Obamacare instead has done is begin to build a large, complicated structure build on a deteriorating, irregular foundation. If you want a clean new stable house, you have to get a permit to demolish the old one. The President never applied to the people for that permit and thus got in bed with the Big Pharma guys. Now he can walk down the street with Big Finance on one side of him and Big Pharma on the other side.
And if the Repubs get in, the insurance companies they love now remain alive and with more customers than even coming, and they will get more goodies. The people will remain the losers.
What's coming promises to be a mess run largely by people who have run nothing other than political campaigns and professorial offices in academia. All sold to the American people on untrue statements including that the low-margin insurance companies are the villains in our current mess and that physicians take out tonsils rather than prescribe antibiotics because they are greedy and that surgeons make tens of thousands of dollars to take off a limb rather than prescribe diabetes medicine.
And on the half-lie that taxing for a few years before spending really begins counts as deficit reduction. Just wait for the spending to start in earnest.
"Bush lied" is old hat and literally not true re Iraq ("Cheney lied" is less false if such an epistemological statement can be made).
Candidate Obama misled us, and President Obama did the same.
How can transforming the health system this way end well?
Copyright (C) Long Lake LLC 2010
Showing posts with label health care reform. Show all posts
Showing posts with label health care reform. Show all posts
Wednesday, March 24, 2010
Monday, March 22, 2010
Financial Markets and Health Care "Reform"
Whether an investor considers the just-passed reshaping of the health insurance system in the U. S. as beneficial reform or "deform", your thoughts quickly turn to that which you can control: your money.
I confess that I have not kept up on the amount of tax increases that are now scheduled to take effect over the next few years before the real costs (benefits to recipients) are felt by taxpayers. For now, this legislation withdraws spending power from the public and taxes interest income and capital gains, I believe with a new 3.8% "Medicare tax" (a misnomer, as revenues go to the general fund).
This is occurring while two fundamental measures of stock market valuation each show at least 50% overvaluation: cyclically-adjusted price-earnings ratio (CAPE) and "q" (valuation of non-financial stocks based on replacement cost). Please click HERE for a link to Smithers & Co.'s chart and commentary on this.
Can the anti-stimulus measures of upcoming revenue enhancements and the real and psychological effects of increasing taxes on income derived from savings (which savings derive from income that has already been taxed) provide the impetus for declining stock prices and rising prices of Federal debt?
In other words, the Japan scenario, in which imposition of a national sales tax was associated with the above results in the 1990s?
Yes.
Copyright (C) Long Lake LLC 2010
I confess that I have not kept up on the amount of tax increases that are now scheduled to take effect over the next few years before the real costs (benefits to recipients) are felt by taxpayers. For now, this legislation withdraws spending power from the public and taxes interest income and capital gains, I believe with a new 3.8% "Medicare tax" (a misnomer, as revenues go to the general fund).
This is occurring while two fundamental measures of stock market valuation each show at least 50% overvaluation: cyclically-adjusted price-earnings ratio (CAPE) and "q" (valuation of non-financial stocks based on replacement cost). Please click HERE for a link to Smithers & Co.'s chart and commentary on this.
Can the anti-stimulus measures of upcoming revenue enhancements and the real and psychological effects of increasing taxes on income derived from savings (which savings derive from income that has already been taxed) provide the impetus for declining stock prices and rising prices of Federal debt?
In other words, the Japan scenario, in which imposition of a national sales tax was associated with the above results in the 1990s?
Yes.
Copyright (C) Long Lake LLC 2010
Monday, March 1, 2010
An Ultimate Insider Is Now Saying Dem Healthcare Reform Effort Is for Show
One of the remaining deans of Establishment D. C. journalism, David Broder, has an article out post-health care summit titled On Health Care, the Republicans Poll Advantage.
While the title itself would have been unthinkable less than a year ago, the commentary is more so:
Two hours before President Obama opened his health care summit, and two blocks away, a couple dozen reporters gathered at the invitation of The Christian Science Monitor for a breakfast at which the reform proposal's doom was foreshadowed.
The guests for the group interview were Bill McInturff, a Republican pollster whose firm advised John McCain in his presidential campaign and lists dozens of other congressional Republicans among its clients, and Newt Gingrich, who became speaker of the House largely by leading the fight in 1994 to kill the Clintons' effort at health reform.
By a similar margin, 54 percent to 42 percent, they support the Republican argument for starting over and focusing on smaller pieces of legislation embodying areas of bipartisan agreement, rather than merging the more comprehensive reform bills passed by the House and Senate and sending a measure to the president soon.
When David Broder talks, people listen. Few reporters have the contacts he has.
He does not use the word "doom" for the President's major domestic initiative lightly.
It just may be that ultimately, the pols are going to listen to the polls and that once again, sweeping healthcare reform aka socialized medicine (in corporatist fig leaf garb this time) is doomed and that no matter what the Democrats say now, incremental change will occur, giving both parties the proverbial seat at the table.
Copyright (C) Long Lake LLC 2010
While the title itself would have been unthinkable less than a year ago, the commentary is more so:
Two hours before President Obama opened his health care summit, and two blocks away, a couple dozen reporters gathered at the invitation of The Christian Science Monitor for a breakfast at which the reform proposal's doom was foreshadowed.
The guests for the group interview were Bill McInturff, a Republican pollster whose firm advised John McCain in his presidential campaign and lists dozens of other congressional Republicans among its clients, and Newt Gingrich, who became speaker of the House largely by leading the fight in 1994 to kill the Clintons' effort at health reform.
By a similar margin, 54 percent to 42 percent, they support the Republican argument for starting over and focusing on smaller pieces of legislation embodying areas of bipartisan agreement, rather than merging the more comprehensive reform bills passed by the House and Senate and sending a measure to the president soon.
When David Broder talks, people listen. Few reporters have the contacts he has.
He does not use the word "doom" for the President's major domestic initiative lightly.
It just may be that ultimately, the pols are going to listen to the polls and that once again, sweeping healthcare reform aka socialized medicine (in corporatist fig leaf garb this time) is doomed and that no matter what the Democrats say now, incremental change will occur, giving both parties the proverbial seat at the table.
Copyright (C) Long Lake LLC 2010
Wednesday, December 30, 2009
First, Kill All the Lawyers?
Bloomberg.com reports the least surprising headline of the week/month/?year:
Trial Lawyers Sidestep Malpractice Curbs With Blitz in Congress
Neither measure (Ed.: House and Senate versions of healthcare reform) caps awards for victims of medical malpractice. The absence of such a provision reflects the clout of trial lawyers, whose PAC contributed $1.1 million this year to Democrats, trailing only the International Union of Operating Engineers and International Brotherhood of Electrical Workers, according to the Center for Responsive Politics, a Washington research group.
Former Democratic National Committee Chairman Howard Dean said at a town-hall meeting in Virginia in August that his party refused to limit awards “because the people who wrote it did not want to take on the trial lawyers.”
The public supports limiting awards: An NBC-Wall Street Journal poll in September found 65 percent of respondents backing limits on payments to people injured by malpractice. . .
An Oct. 9 Congressional Budget Office report found that a $250,000 cap on awards for pain and suffering awards would reduce health costs by $54 billion over 10 years, or 0.5 percent of annual health-care spending.
Trial Lawyers Sidestep Malpractice Curbs With Blitz in Congress
Neither measure (Ed.: House and Senate versions of healthcare reform) caps awards for victims of medical malpractice. The absence of such a provision reflects the clout of trial lawyers, whose PAC contributed $1.1 million this year to Democrats, trailing only the International Union of Operating Engineers and International Brotherhood of Electrical Workers, according to the Center for Responsive Politics, a Washington research group.
Former Democratic National Committee Chairman Howard Dean said at a town-hall meeting in Virginia in August that his party refused to limit awards “because the people who wrote it did not want to take on the trial lawyers.”
The public supports limiting awards: An NBC-Wall Street Journal poll in September found 65 percent of respondents backing limits on payments to people injured by malpractice. . .
An Oct. 9 Congressional Budget Office report found that a $250,000 cap on awards for pain and suffering awards would reduce health costs by $54 billion over 10 years, or 0.5 percent of annual health-care spending.
Let's see here. A measly $1.1 million annual expenditure leads to over $5 billion extra costs yearly, including savings from less radiation from fewer scans ordered? One doesn't think that having both the President and the Vice President be lawyers has nothing to do with this, does one?
Birds of a feather are flocking together.
Copyright (C) Long Lake LLC 2009
Monday, December 28, 2009
Dumb and Dumber
In New restrictions to add to air-travel headaches, Yahoo/Finance is reporting:
New security restrictions swiftly implemented following a botched attempt to blow up an airliner on Christmas Day will make air travel more burdensome and could discourage some business fliers, key customers for the airlines.
Passengers will likely face longer lines at checkpoints and less freedom to move around the airplane during flight. Leisure travelers, such as the families that packed airports to return home on Sunday after the holiday, are likely to put up with the new inconveniences, as they have before.
But business travelers may think twice before flying if stepped-up security means spending hours at the airport. That's troubling to the airlines, because business travelers tend to fly frequently and pay higher fares.
Alarmed by the prospect of losing their best customers, airlines are already asking federal officials to make any new procedures palatable to passengers.
The past 24 hours, I have seen airline security experts and political pundits opine on this issue. What only one person (a Republican Senator) mentioned was the obvious, which is that Richard Reid and the latest villain were known adherents of jihadist Muslims. It's time for real profiling. The latest bad guy was in fact already on a terrorist watch list. What about putting any such air traveler through the wringer before he/she gets on a plane? Doh?
Instead, the CNN commentators yesterday all sort of agreed to a "what can you do" resignation to this problem, as did a security expert on FOX News this AM. Sorry. Fair-skinned grandmas and priests don't blow themselves up on airplanes. Regarding the Yahoo writeup, CEO road warrior don't do so either.
Switching topics but staying within the realm of common sense, if a Republican Congress passed a healthcare bill and called it a reform to benefit the people, but took drug reimportation from Canada off the table, do you think the Democrats in Congress and, let us say, a Democratic President, would yell and scream? Oh, but the practicalities of getting 60 Senate votes, they now wail.
The country has been captured by political correctness gone wild in the airline screening business and by corporate interests. Wouldst this Congress and administration believed in some political correctness in actually passing a healthcare bill that promoted generics, attacked bloated pharmaceutical company profit margins, provided benefits to the people the same time that taxes were imposed, and got practical with the life and death issue of screening air travelers.
Not to mention the Bushbama continuity continuing to socialize the losses while the winners of the past decade count their millions or billions.
The world has gone a bit mad.
Copyright (C) Long Lake LLC 2009
New security restrictions swiftly implemented following a botched attempt to blow up an airliner on Christmas Day will make air travel more burdensome and could discourage some business fliers, key customers for the airlines.
Passengers will likely face longer lines at checkpoints and less freedom to move around the airplane during flight. Leisure travelers, such as the families that packed airports to return home on Sunday after the holiday, are likely to put up with the new inconveniences, as they have before.
But business travelers may think twice before flying if stepped-up security means spending hours at the airport. That's troubling to the airlines, because business travelers tend to fly frequently and pay higher fares.
Alarmed by the prospect of losing their best customers, airlines are already asking federal officials to make any new procedures palatable to passengers.
The past 24 hours, I have seen airline security experts and political pundits opine on this issue. What only one person (a Republican Senator) mentioned was the obvious, which is that Richard Reid and the latest villain were known adherents of jihadist Muslims. It's time for real profiling. The latest bad guy was in fact already on a terrorist watch list. What about putting any such air traveler through the wringer before he/she gets on a plane? Doh?
Instead, the CNN commentators yesterday all sort of agreed to a "what can you do" resignation to this problem, as did a security expert on FOX News this AM. Sorry. Fair-skinned grandmas and priests don't blow themselves up on airplanes. Regarding the Yahoo writeup, CEO road warrior don't do so either.
Switching topics but staying within the realm of common sense, if a Republican Congress passed a healthcare bill and called it a reform to benefit the people, but took drug reimportation from Canada off the table, do you think the Democrats in Congress and, let us say, a Democratic President, would yell and scream? Oh, but the practicalities of getting 60 Senate votes, they now wail.
The country has been captured by political correctness gone wild in the airline screening business and by corporate interests. Wouldst this Congress and administration believed in some political correctness in actually passing a healthcare bill that promoted generics, attacked bloated pharmaceutical company profit margins, provided benefits to the people the same time that taxes were imposed, and got practical with the life and death issue of screening air travelers.
Not to mention the Bushbama continuity continuing to socialize the losses while the winners of the past decade count their millions or billions.
The world has gone a bit mad.
Copyright (C) Long Lake LLC 2009
Friday, December 18, 2009
Empty Agreement on Climate Change and Relevance to Health Insurance Legislation
What I found most relevant to my life in Bloomberg's Obama Snubbed by Chinese Premier at Climate Meeting was not the snub--which is of no importance to me-- but the following quote from it:
“Coming back with an empty agreement, I think, would be far worse than coming back empty-handed,” White House press secretary Robert Gibbs said yesterday in Washington.
Given what the healthcare "reform" effort has devolved into in the Senate, why does the White House principle on climate change not apply to health insurance?
Let's focus on health first, and insurance second. I once again call upon the smoker-in-chief to break the habit.
Copyright (C) Long Lake LLC 2009
“Coming back with an empty agreement, I think, would be far worse than coming back empty-handed,” White House press secretary Robert Gibbs said yesterday in Washington.
Given what the healthcare "reform" effort has devolved into in the Senate, why does the White House principle on climate change not apply to health insurance?
Let's focus on health first, and insurance second. I once again call upon the smoker-in-chief to break the habit.
Copyright (C) Long Lake LLC 2009
Wednesday, December 16, 2009
Obama on Health Financing: It's My Way Or I'll Bankrupt the Government
In an astonishing assertion, the President says that if whatever deal Congress can cobble together on health care financing is so vital that the Federal Government will spend more money than it can tax, print or borrow on healthcare rather than adjust expenditures to avoid bankruptcy:
President Obama said in an interview with ABC News' Charles Gibson today that if Congress fails to pass health care legislation that lowers costs, the federal government "will go bankrupt."
He also painted a gloomy picture resulting from the failure of health care overhaul.
"Anybody who says that they are concerned about deficit, concerned about debt, concerned about loading up taxes on future generations, you have to be supportive of this health care bill because if we don't do this, nobody argues with the fact that health care costs are going to consume the entire federal budget," the president said.
http://abcnews.go.com/Politics/HealthCare/health-care-reform-senate-joe-lieberman-ben-nelson/story?id=9351342
This is a version of "my way or the highway". It's childish, irresponsible and illogical. The Government can control its own spending on anything except interest and principal on direct obligations of the Federal Government. Everything else is elective.
The more the polls go south on the current deal, which has for now devolved into a handout to insurance companies (!) as well as Big Pharma, the more histrionic the President gets-- and he was over the top this summer, arguing against doctors who took out childrens' tonsils and took off limbs from diabetics simply to make more money.
This is the wrong way to pass something as important as healthcare "reform".
Copyright (C) Long Lake LLC 2009
President Obama said in an interview with ABC News' Charles Gibson today that if Congress fails to pass health care legislation that lowers costs, the federal government "will go bankrupt."
He also painted a gloomy picture resulting from the failure of health care overhaul.
"Anybody who says that they are concerned about deficit, concerned about debt, concerned about loading up taxes on future generations, you have to be supportive of this health care bill because if we don't do this, nobody argues with the fact that health care costs are going to consume the entire federal budget," the president said.
http://abcnews.go.com/Politics/HealthCare/health-care-reform-senate-joe-lieberman-ben-nelson/story?id=9351342
This is a version of "my way or the highway". It's childish, irresponsible and illogical. The Government can control its own spending on anything except interest and principal on direct obligations of the Federal Government. Everything else is elective.
The more the polls go south on the current deal, which has for now devolved into a handout to insurance companies (!) as well as Big Pharma, the more histrionic the President gets-- and he was over the top this summer, arguing against doctors who took out childrens' tonsils and took off limbs from diabetics simply to make more money.
This is the wrong way to pass something as important as healthcare "reform".
Copyright (C) Long Lake LLC 2009
Wednesday, November 4, 2009
Despite the President's Confidence, Talk About a Bad News Cycle!
Increasing evidence is that Barack Obama has suffered two body blows within a week-- and the stock market is rallying on the news. First is of course the off-year election defeats in states in which he campaigned--especially New Jersey, where he personally campaigned often. Nonetheless, despite his pre-election weekend personal appearance, the ending trend went against him.
More important from a policy standpoint is this report dated today from ABC News, Top Dems: No Health Care Bill in 2009 which begins:
Senior Congressional Democrats say reform before end of year is highly unlikely.
Senior Congressional Democrats told ABC News today it is highly unlikely that a health care reform bill will be completed this year, just a week after President Barack Obama declared he was "absolutely confident" he'll be able to sign one by then.
"Getting this done by the by the end of the year is a no-go," a senior Democratic leadership aide told ABC News. Two other key Congressional Democrats also told ABC News the same thing.
This may come as an unwelcome surprise for the White House, where officials from the president on down have repeatedly said the health care bill would be signed into law by the end of the year.
"I am absolutely confident that we are going to get health care done by the end of this year, and Nancy Pelosi is just as confident," Obama said Oct. 27 at a fundraiser for the Democratic Congressional Campaign Committee.
Along with what Republicans call "dithering" on Afghan policy, there is an increasing perception that Mr. Obama is a weak leader. This blog has criticized him for not proposing a specific healthcare bill. If no bill emerges this year, the idea of having various committees write different drafts of healthcare reform may go down as a major strategic blunder, on par with President Clinton claiming that Hillary was the functional equivalent of a government employee and putting her in charge of his reform effort. The result was a White House healthcare proposal that could not even get a vote on the floor of a House controlled strongly by Democrats.
Health care policy should not be a partisan effort. There should be changes to policy that appeal to the great majority of the people. This should not be a wedge or partisan issue.
Strangely, drug stocks are up sharply today on the above pieces of news, even though Big Pharma was treated well by the administration. I am not sure that this is an appropriate reaction by the market in the short term.
Longer term, they are decent value.
Perhaps 2010 will be a year for bipartisanship on Capitol Hill. You never know.
Copyright (C) Long Lake LLC 2009
More important from a policy standpoint is this report dated today from ABC News, Top Dems: No Health Care Bill in 2009 which begins:
Senior Congressional Democrats say reform before end of year is highly unlikely.
Senior Congressional Democrats told ABC News today it is highly unlikely that a health care reform bill will be completed this year, just a week after President Barack Obama declared he was "absolutely confident" he'll be able to sign one by then.
"Getting this done by the by the end of the year is a no-go," a senior Democratic leadership aide told ABC News. Two other key Congressional Democrats also told ABC News the same thing.
This may come as an unwelcome surprise for the White House, where officials from the president on down have repeatedly said the health care bill would be signed into law by the end of the year.
"I am absolutely confident that we are going to get health care done by the end of this year, and Nancy Pelosi is just as confident," Obama said Oct. 27 at a fundraiser for the Democratic Congressional Campaign Committee.
Along with what Republicans call "dithering" on Afghan policy, there is an increasing perception that Mr. Obama is a weak leader. This blog has criticized him for not proposing a specific healthcare bill. If no bill emerges this year, the idea of having various committees write different drafts of healthcare reform may go down as a major strategic blunder, on par with President Clinton claiming that Hillary was the functional equivalent of a government employee and putting her in charge of his reform effort. The result was a White House healthcare proposal that could not even get a vote on the floor of a House controlled strongly by Democrats.
Health care policy should not be a partisan effort. There should be changes to policy that appeal to the great majority of the people. This should not be a wedge or partisan issue.
Strangely, drug stocks are up sharply today on the above pieces of news, even though Big Pharma was treated well by the administration. I am not sure that this is an appropriate reaction by the market in the short term.
Longer term, they are decent value.
Perhaps 2010 will be a year for bipartisanship on Capitol Hill. You never know.
Copyright (C) Long Lake LLC 2009
Wednesday, September 16, 2009
Surprises
Per Rasmussen, some surprising polling data:
One week after President Obama’s speech to Congress, opposition to his health care reform plan has reached a new high of 55%. The latest Rasmussen Reports daily tracking poll shows that just 42% now support the plan, matching the low first reached in August.
A week ago, 44% supported the proposal and 53% were opposed.
Also surprising, Treasury bonds reversed intraday to move upwards in price, down in yield; the % moves in TLT (proxy for the long bond), TNX (the 10-year's yield), gold and the S&P 500 are essentially identical as I write, all moving about 1%.
Now that virtually all bears are hibernating, some remain uncowed. Information about a proprietary sentiment service passed on to me by one of the remaining bears, Paul Lamont of Lamont Trading Advisors, suggests that investors/speculators have digested the green shoots of recovery and then some.
It takes courage to be a full-fledged out-of-the-stock market bear when so many have at least partly capitulated, some saying not to fight the tape.
The take here remains in sympathy with Mr. Lamont's views. It would appear that this recent cycle is being driven as the last one was, with liberal doses of credit and unremitting financial speculation. The stock indices are only now perhaps surpassing their 2001-2 lows when adjusted for inflation. In this context, it is no surprise that gold continues to trudge along, up as much as the S&P 500 on the year (counting dividends) but with less volatility, but outperforming it on 1-year and longer time frames.
Given that the Government and the Fed are transferring unbelievable amounts of either borrowed or newly-printed money into the financial markets (and some directly into the real economy), it is no surprise that matters look better in the markets.
A credible skeptic of the big financial companies with an impressive track record of predicting many blow-ups over the past two years is Reggie Middleton at boombustblog.com. Suffice it to say that he feels that prices for the stocks of the largest complex financial companies and many smaller banking companies are in looney-tunes territory, and that the financial crisis is far from over.
One thing about the markets: even Yogi Berra's famous saying isn't quite correct. The markets are never over.
Copyright (C) Long Lake LLC 2009
One week after President Obama’s speech to Congress, opposition to his health care reform plan has reached a new high of 55%. The latest Rasmussen Reports daily tracking poll shows that just 42% now support the plan, matching the low first reached in August.
A week ago, 44% supported the proposal and 53% were opposed.
Also surprising, Treasury bonds reversed intraday to move upwards in price, down in yield; the % moves in TLT (proxy for the long bond), TNX (the 10-year's yield), gold and the S&P 500 are essentially identical as I write, all moving about 1%.
Now that virtually all bears are hibernating, some remain uncowed. Information about a proprietary sentiment service passed on to me by one of the remaining bears, Paul Lamont of Lamont Trading Advisors, suggests that investors/speculators have digested the green shoots of recovery and then some.
It takes courage to be a full-fledged out-of-the-stock market bear when so many have at least partly capitulated, some saying not to fight the tape.
The take here remains in sympathy with Mr. Lamont's views. It would appear that this recent cycle is being driven as the last one was, with liberal doses of credit and unremitting financial speculation. The stock indices are only now perhaps surpassing their 2001-2 lows when adjusted for inflation. In this context, it is no surprise that gold continues to trudge along, up as much as the S&P 500 on the year (counting dividends) but with less volatility, but outperforming it on 1-year and longer time frames.
Given that the Government and the Fed are transferring unbelievable amounts of either borrowed or newly-printed money into the financial markets (and some directly into the real economy), it is no surprise that matters look better in the markets.
A credible skeptic of the big financial companies with an impressive track record of predicting many blow-ups over the past two years is Reggie Middleton at boombustblog.com. Suffice it to say that he feels that prices for the stocks of the largest complex financial companies and many smaller banking companies are in looney-tunes territory, and that the financial crisis is far from over.
One thing about the markets: even Yogi Berra's famous saying isn't quite correct. The markets are never over.
Copyright (C) Long Lake LLC 2009
Monday, September 14, 2009
Thoughts on Financial System Reform and American Leadership
Economic Donkeys, by former IMF chief economist Simon Johnson ("The Quiet Coup") and Peter Boone, head of the Effective Intervention charity, lays out a persuasive case for what should be done with Big Finance. Please read the entire piece. Here are excerpts:
DoctoRx here.
I believe that the United States and the world need personal leadership from President Obama on this issue.
While 30+ million U. S. citizens lack health insurance (millions of whom are eligible for programs such as Medicaid but have not joined) but by law do have access to emergency treatment is an important issue, the current (receding?) economic depression and financial crisis affects us all. Why the overwhelming emphasis on health insurance but not on a risky financial system that has been estimated to have cost $23.7 trillion in direct governmental expenditures and guarantees? (Estimate by Special Inspector General for TARP Barofsky)
Sadly, the President may be "distracted" from financial reform efforts by the effort to aid less than 10% of all Americans in obtaining health insurance. The job is indeed demanding, but he asked for it!
As the Johnson/Boone essay argues, the entire world needs enlightened American leadership to help build a stronger financial and banking system. It needed it from Barack Obama beginning the day he won the election. Nearly one year later, this leadership remains to too great a degree missing in action.
Copyright (C) Long Lake LLC 2009
Today, a year after global financial collapse and the ensuing tragedy for millions, our economic leaders are lining us up to suffer again (and again) through the same horrible experiences.
Today Lehman’s senior debt trades at a mere 10 cents on the dollar, suggesting its $600 billion in assets were a mirage. This outcome is even more startling when compared to senior debt at Kazakhstan’s defaulting large banks, where management is now accused of serious malfeasance, yet that debt trades at 20 cents on the dollar – twice the price of Lehman’s debt.
At the G20 meeting of finance ministers last week, political leaders united behind two key steps which they claim will “prevent another Lehman”: tighter controls on the pay of executives and more capital for banks. France and Germany blame the crisis on lax regulation in Anglo-Saxon markets and excessive pay packets that encourage irresponsible risk taking. The British and Americans counter that European banks have too much debt (i.e., in the jargon, are “overly leveraged”), and need to raise more capital. The final communiqué proposes to do both, and we will hear more of the same at the upcoming G20 heads of government summit in Pittsburgh. But, in reality, both sides want only minor adjustments that cannot solve the real problems posed by our financial system.
Tim Geithner, now US Treasury Secretary, is pushing for higher capital requirements for banks, i.e., they need to have more shareholder funds to protect against future losses. But he surely knows that two weeks prior to its bankruptcy, Lehman’s management reported they were well-capitalized, with a tier one capital ratio of 11% — roughly twice what the United States currently considers is needed for a well-capitalized bank, and much higher than the American side is proposing in private conversations.
The pre-crisis activities and portfolios of Barclays, Goldman Sachs, and other “survivors” of this crisis were only slightly different from Lehman Brothers or Bear Stearns, which failed. The “good” banks also securitized subprime assets, helped build the intricate web of IOUs between banks and insurance companies, and leveraged their balance sheets to enormous levels. The winners were not better, they were just smart enough to make sure someone else held the bad assets when the music stopped, and they were powerful enough to win generous bailout packages from their governments.The danger we face is that, by bailing out these institutions and rewarding failed managers with new powerful positions, we have now created a much more dangerous financial system. The politically well-connected, knowing they will most likely do fine in the next crisis, is now highly incentivized to take even greater risk.
Once we admit this profound problem in our system, we can begin to think of the radical measures needed to solve it. There is no doubt these solutions will include much greater capital requirements, so that bank shareholders know that they face substantial losses if their ventures fail.
But, we also need to ensure that our regulators are not captured by the banks that they are meant to oversee. This means we need to put checks on financial donations to political parties, and we need to buttress our regulators with more intellectual firepower and financial resources, along with rules that ensure independence, in order to be sure they can act in the interests of the broader population.
We also need to close the revolving door, through which politicians and regulators leave office to earn their nest eggs in finance, and “financial experts” move directly from failing banks to designing bailout packages. The conflicts of interest are abundant and most dangerous.
Last week the UK’s chief financial regulator, Adair Turner, faced heavy criticism from the City, Chancellor Darling, Boris Johnson, and editorials in the Financial Times and Wall Street Journal. His main offense was daring to raise the issue of whether parts of our financial system have become socially dysfunctional, in an interview with Prospect Magazine. He called for greater capital requirements at banks, and he pondered how it would be possible for regulators to preserve the valuable parts of our financial system, while ensuring that regulation limited the harmful parts. These are eminently sensible questions which anyone with a public spirit should understand are critical policy issues today.
Sadly, these public rebukes to Lord Turner are a further indication that very few of our leaders are prepared to even discuss the real problem, let alone seek a sufficient solution.DoctoRx here.
I believe that the United States and the world need personal leadership from President Obama on this issue.
While 30+ million U. S. citizens lack health insurance (millions of whom are eligible for programs such as Medicaid but have not joined) but by law do have access to emergency treatment is an important issue, the current (receding?) economic depression and financial crisis affects us all. Why the overwhelming emphasis on health insurance but not on a risky financial system that has been estimated to have cost $23.7 trillion in direct governmental expenditures and guarantees? (Estimate by Special Inspector General for TARP Barofsky)
Sadly, the President may be "distracted" from financial reform efforts by the effort to aid less than 10% of all Americans in obtaining health insurance. The job is indeed demanding, but he asked for it!
As the Johnson/Boone essay argues, the entire world needs enlightened American leadership to help build a stronger financial and banking system. It needed it from Barack Obama beginning the day he won the election. Nearly one year later, this leadership remains to too great a degree missing in action.
Copyright (C) Long Lake LLC 2009
Thursday, September 10, 2009
DoctoRx Comments on the President's Healthcare Speech and Goes Where Few Politicians Have Gone Before
The President has addressed Congress and the American people on health care reform; click HERE for the text of his speech. Also, you may click to see the Republican response (given by a heart surgeon).
One thought I have is on the following quote from the speech:
The only thing this plan would eliminate is the hundreds of billions of dollars in waste and fraud, as well as unwarranted subsidies in Medicare that go to insurance companies – subsidies that do everything to pad their profits and nothing to improve your care. And we will also create an independent commission of doctors and medical experts charged with identifying more waste in the years ahead.
Fraud and waste are not easy to eliminate, and "waste" is not even easy to define. These should be addressed ASAP and need not be part of sweeping health care reform. Medicare's famously low overhead administrative costs are part and parcel of not requiring pre-approval for tests or alleged surgeries, thus allowing fraud to exist on a significant scale. In my part of the country, Miami, Medicare fraud is a major industry. Eliminating it would put a lot of people on the dole!
So far as reducing subsidies to managed care companies: go for it! But once again, legislation on that issue could already have passed Congress. Despite being thwarted on broad healthcare reform, President Clinton moved successfully against Medicare HMOs, saving the taxpayer muchos dineros. Medicare HMOs are parasitic creatures, as are essentially all HMOs. If they are really so efficient, let them prove it by asking for no subsidy.
Regarding "preventive care": This term is often misused. A mammogram is a form of cancer screening; an abnormal mammogram is not designed to prevent cancer but rather to catch it early. In any case, I believe that early detection of cancer, diabetes, high blood pressure, etc., is a very good thing; but I also believe that it is expensive. Long ago, it was taught that long-term treatment of mild high blood pressure added but one year to a person's expected life span. Is this a good thing? Yes. Does it cost more money than it saves? Presumably, yes. I do not believe that the President has been accurately advised when he insists that preventive care is, say, revenue-neutral. I for one would much rather see my government have spent money on preventive health care than huge sums saving stockholders and bondholders of giant financial conglomerates from losses, but you can't always get what you want, and the good things that this President wants to do for the uninsured simply cost money. One reason for skepticism of his plan in certain quarters is the recollection that Medicare was supposed to cost small potatoes when it was created. Whoops!
Whether it's a social program or a war in the Middle East, people remember who promised wrongly at the outset, no matter whether or not the promise was made in good faith.
Now to the main event. Believe it or not, there are more important health care fish to fry than fiddling with insurance plans. Here goes:
The single most important thing that the Administration can do right now in the field of health is to create, support and enhance programs to combat the obesity and overweight problem in this country. The next most important thing is to stamp out cigarette smoking. Perhaps the President will lead the way in that regard. Mr. Obama should use the bully pulpit to aggressively promote health habits that will actually prevent heart disease, smoking-related cancer and lung disease, and the like. If he wants to really get with the DoctoRx program, the President will promote vegetarianism (or modified forms thereof) as part of a program both to achieve/maintain good health and to promote environmental greenness.
None of these initiatives requires a 4-year waiting period. There are numerous specific things that can be done by executive order, legislatively, and rhetorically to fight the good fight to get the pot bellies off Americans, prevent children from growing big bellies, and make cigarettes obsolete.
Those are just some initial goals. What about even tougher laws against drunk driving? What about persuading Hollywood to present getting drunk as unfunny and worse? Etc. and so on.
Where all sides in this debate have missed the main point is that a large portion of the ills that American flesh is now heir to are preventable by life-style improvements that cost both the individuals and the taxpayer less than nothing, but rather pay for themselves financially many times over. Can this unhealthy society change?
Yes. It. Can.
But. It's. Not. Easy.
Fitness first.
Copyright (C) Long Lake LLC 2009
One thought I have is on the following quote from the speech:
The only thing this plan would eliminate is the hundreds of billions of dollars in waste and fraud, as well as unwarranted subsidies in Medicare that go to insurance companies – subsidies that do everything to pad their profits and nothing to improve your care. And we will also create an independent commission of doctors and medical experts charged with identifying more waste in the years ahead.
Fraud and waste are not easy to eliminate, and "waste" is not even easy to define. These should be addressed ASAP and need not be part of sweeping health care reform. Medicare's famously low overhead administrative costs are part and parcel of not requiring pre-approval for tests or alleged surgeries, thus allowing fraud to exist on a significant scale. In my part of the country, Miami, Medicare fraud is a major industry. Eliminating it would put a lot of people on the dole!
So far as reducing subsidies to managed care companies: go for it! But once again, legislation on that issue could already have passed Congress. Despite being thwarted on broad healthcare reform, President Clinton moved successfully against Medicare HMOs, saving the taxpayer muchos dineros. Medicare HMOs are parasitic creatures, as are essentially all HMOs. If they are really so efficient, let them prove it by asking for no subsidy.
Regarding "preventive care": This term is often misused. A mammogram is a form of cancer screening; an abnormal mammogram is not designed to prevent cancer but rather to catch it early. In any case, I believe that early detection of cancer, diabetes, high blood pressure, etc., is a very good thing; but I also believe that it is expensive. Long ago, it was taught that long-term treatment of mild high blood pressure added but one year to a person's expected life span. Is this a good thing? Yes. Does it cost more money than it saves? Presumably, yes. I do not believe that the President has been accurately advised when he insists that preventive care is, say, revenue-neutral. I for one would much rather see my government have spent money on preventive health care than huge sums saving stockholders and bondholders of giant financial conglomerates from losses, but you can't always get what you want, and the good things that this President wants to do for the uninsured simply cost money. One reason for skepticism of his plan in certain quarters is the recollection that Medicare was supposed to cost small potatoes when it was created. Whoops!
Whether it's a social program or a war in the Middle East, people remember who promised wrongly at the outset, no matter whether or not the promise was made in good faith.
Now to the main event. Believe it or not, there are more important health care fish to fry than fiddling with insurance plans. Here goes:
The single most important thing that the Administration can do right now in the field of health is to create, support and enhance programs to combat the obesity and overweight problem in this country. The next most important thing is to stamp out cigarette smoking. Perhaps the President will lead the way in that regard. Mr. Obama should use the bully pulpit to aggressively promote health habits that will actually prevent heart disease, smoking-related cancer and lung disease, and the like. If he wants to really get with the DoctoRx program, the President will promote vegetarianism (or modified forms thereof) as part of a program both to achieve/maintain good health and to promote environmental greenness.
None of these initiatives requires a 4-year waiting period. There are numerous specific things that can be done by executive order, legislatively, and rhetorically to fight the good fight to get the pot bellies off Americans, prevent children from growing big bellies, and make cigarettes obsolete.
Those are just some initial goals. What about even tougher laws against drunk driving? What about persuading Hollywood to present getting drunk as unfunny and worse? Etc. and so on.
Where all sides in this debate have missed the main point is that a large portion of the ills that American flesh is now heir to are preventable by life-style improvements that cost both the individuals and the taxpayer less than nothing, but rather pay for themselves financially many times over. Can this unhealthy society change?
Yes. It. Can.
But. It's. Not. Easy.
Fitness first.
Copyright (C) Long Lake LLC 2009
Sunday, September 6, 2009
Physicians Comment on Health Care Reform
In advance of the President's speech to Congress a few days from now on health care reform, it may be interesting to consider a point of view generally lacking from the debate, that of a practicing physician, in this an academic cardiologist. While I do not agree with every specific point or implication in this WaPo op-ed, I am sympathetic to the overall message. Additionally, I would ask the lawyer-in-chief and the lawyer-heavy Congress whether they and their practicing-lawyer colleagues would trade places with doctors both under the current system or under the proposed health care reform. The answer is--not many. Lawyers value their professional independence too much and insist on the ability to set their own rates. Yet access to courts, not physicians, is a Constitutional right. Sauce for the goose . . .
You may click HERE for the link to Dr. Feldman's op-ed (note I "hate" the title, which likely was added by a staffer to help "sell" the op-ed in cyberspace).
Copyright (C) Long Lake LLC 2009
You may click HERE for the link to Dr. Feldman's op-ed (note I "hate" the title, which likely was added by a staffer to help "sell" the op-ed in cyberspace).
Copyright (C) Long Lake LLC 2009
Friday, September 4, 2009
On Unexpected U-Turns and Priorities
The headline you thought you would never see, absent another Pearl Harbor: Obama Urged to Rally Support for War.
This within a few days of an address to Congress to rally support for healthcare reform, or health insurance reform, or whatever.
And both of the above when the economy is still apparently losing jobs, which to the average person is the only definition of "recession". If you have any doubts about that, ask George H. W. Bush and Bill Clinton ("It's the Economy, Stupid) circa November 1992, which turned on the economy about a year-and-a-half after the recession officially ended.
A reminder: It's still the economy, Mr. President.
Copyright (C) Long Lake LLC 2009
This within a few days of an address to Congress to rally support for healthcare reform, or health insurance reform, or whatever.
And both of the above when the economy is still apparently losing jobs, which to the average person is the only definition of "recession". If you have any doubts about that, ask George H. W. Bush and Bill Clinton ("It's the Economy, Stupid) circa November 1992, which turned on the economy about a year-and-a-half after the recession officially ended.
A reminder: It's still the economy, Mr. President.
Copyright (C) Long Lake LLC 2009
Thursday, August 20, 2009
Bigger Trouble for Healthcare Reform
Mr. Obama's healthcare efforts have come in for withering criticism today from unexpected sources. Here are the links and titles. They are both "must reads" for anyone interested in the topics.
First, from the L. A. Times:
Activists say poor nations' access to affordable drugs stymied:
The White House is accused of protecting pharmaceutical companies to win their support for healthcare reform.
Second, from the civil libertarian Nat Hentoff:
I Am Finally Scared of a White House Administration
This relates to rationing health care for the elderly.
In addition, a non-partisan poll shows that Floridians overwhelmingly disagree with the idea propounded by the Democrats that the town hall protests are "un-American".
Incredibly, the wheels may be coming off the health-care reform effort.
Everyone knows that many improvements are needed. A week or two ago, I E-mailed Yves Smith at Naked Capitalism a link to the breaking news that Big Pharma was "in bed" with Team Obama and would spend the amazing sum of $150 MM to promote the reform effort. Yves commented on her blog that this meant that (true) reform was now dead on arrival.
With opposition mounting from the libertarian left and the "cannot be criticized" groups of Oxfam and Doctors Without Borders, as well as with continued opposition from the Republicans, it is crunch time for an inexperienced White House and an unaccomplished Congress.
Copyright (C) Long Lake LLC 2009
First, from the L. A. Times:
Activists say poor nations' access to affordable drugs stymied:
The White House is accused of protecting pharmaceutical companies to win their support for healthcare reform.
Second, from the civil libertarian Nat Hentoff:
I Am Finally Scared of a White House Administration
This relates to rationing health care for the elderly.
In addition, a non-partisan poll shows that Floridians overwhelmingly disagree with the idea propounded by the Democrats that the town hall protests are "un-American".
Incredibly, the wheels may be coming off the health-care reform effort.
Everyone knows that many improvements are needed. A week or two ago, I E-mailed Yves Smith at Naked Capitalism a link to the breaking news that Big Pharma was "in bed" with Team Obama and would spend the amazing sum of $150 MM to promote the reform effort. Yves commented on her blog that this meant that (true) reform was now dead on arrival.
With opposition mounting from the libertarian left and the "cannot be criticized" groups of Oxfam and Doctors Without Borders, as well as with continued opposition from the Republicans, it is crunch time for an inexperienced White House and an unaccomplished Congress.
Copyright (C) Long Lake LLC 2009
Sunday, August 16, 2009
Another Reason Why Tim Geithner Should Leave His Job
The WSJ points out in Treasury Bailout's Limits on Lobbyists Still Haven't Taken Effect that:
A plan by Treasury Secretary Timothy Geithner to limit lobbyists' influence over the $700 billion bailout program has yet to get off the ground -- even as the program nears an end.
Just a few hours after being sworn in last January, Mr. Geithner promised to craft rules preventing external influence over bailout decisions. More than six months later -- and 100 days before the financial-industry bailout program is scheduled to stop taking applications for aid -- those rules have yet to be finalized.
Treasury whines that it has been busy, but the obvious conclusion is that it has not been trying very hard on this matter, as shown by the following:
When the Treasury announced its plans to curb bailout lobbying earlier this year, a spokeswoman said the department intended to publish weekly communication logs showing contact between public officials and external entities -- such as lobbyists -- discussing rescue plans for specific institutions. No such logs have been made available.
We have Government run by the allies of Big Finance for the benefit of Big Finance.
The Special Inspector General of the TARP bailout (SIGTARP) has reported that there have been $23.7 trillion or so dollars spent or backstopped to the financial sector within the past year. In contrast, a pittance has been spent on the people. The trio of actors: the Fed, the President/Treasury, and the Congress have all followed Sutton's law and have gone where the money is (was).
This is why the economic downturn has gone on so long and has been so severe. The guilty have been rewarded; the needy and innocent have had little help.
Copyright (C) Long Lake LLC 2009
A plan by Treasury Secretary Timothy Geithner to limit lobbyists' influence over the $700 billion bailout program has yet to get off the ground -- even as the program nears an end.
Just a few hours after being sworn in last January, Mr. Geithner promised to craft rules preventing external influence over bailout decisions. More than six months later -- and 100 days before the financial-industry bailout program is scheduled to stop taking applications for aid -- those rules have yet to be finalized.
Treasury whines that it has been busy, but the obvious conclusion is that it has not been trying very hard on this matter, as shown by the following:
When the Treasury announced its plans to curb bailout lobbying earlier this year, a spokeswoman said the department intended to publish weekly communication logs showing contact between public officials and external entities -- such as lobbyists -- discussing rescue plans for specific institutions. No such logs have been made available.
We have Government run by the allies of Big Finance for the benefit of Big Finance.
The Special Inspector General of the TARP bailout (SIGTARP) has reported that there have been $23.7 trillion or so dollars spent or backstopped to the financial sector within the past year. In contrast, a pittance has been spent on the people. The trio of actors: the Fed, the President/Treasury, and the Congress have all followed Sutton's law and have gone where the money is (was).
This is why the economic downturn has gone on so long and has been so severe. The guilty have been rewarded; the needy and innocent have had little help.
Copyright (C) Long Lake LLC 2009
Friday, August 14, 2009
Voodoo Medical Economics
From the medical doctor (and conservative pundit) Charles Krauthammer's The Great 'Prevention' Myth column in the WaPo today:
In Obamaworld, as explained by the president in his Tuesday town hall, if we pour money into primary care for diabetics instead of giving surgeons "$30,000, $40,000, $50,000" for a later amputation -- a whopper that misrepresents the surgeon's fee by a factor of at least 30 -- "that will save us money." Back on Earth, a rigorous study in the journal Circulation found that for cardiovascular diseases and diabetes, "if all the recommended prevention activities were applied with 100 percent success," the prevention would cost almost 10 times as much as the savings, increasing the country's total medical bill by 162 percent. That's because prevention applied to large populations is very expensive, as shown by another report Elmendorf cites, a definitive review in the New England Journal of Medicine of hundreds of studies that found that more than 80 percent of preventive measures added to medical costs.
The DoctoRx approach to preventive health was and is simple. Eat right and exercise. And take your statin if your doctor recommends it; the same applies to high blood pressure treatment. The life you save, extend or improve the quality of is your own.
For health and "green" reasons, consider eating as little flesh of animals with legs as possible, especially those with four legs; gilled animals (e.g. fish) are OK health-wise although overfishing is a major ecological problem.
Preventing disease is good. It costs money, as do most good things. In fact, it costs lots of money. This is in my personal opinion money better spent than on pleasure trips to wherever, and it is better for the environment. But that's just my opinion. Other people may feel that the enjoyment of a bag of junk food a day is more important to them than better health. My usual response is to persuade them to do otherwise, and I favor price incentives to change their behavior along the lines of the price disincentives for smoking cigarettes that have been shown to decrease smoking rates. So there are ways to offset the good things that flow from prevention, but they do involve taxes and other revenue enhancement measures.
If Ronald Reagan could sign on to revenue enhancements year after year, so can the wannabe transformative President named Barack Obama.
What will not work is for any President to misrepresent prevention to be a cost saving when it is, truth be told, but another worthy but costly cause. That is voodoo medical economics. It will also not do for the most powerful lawyer in America to keep on misrepresenting doctors as getting rich from doing their jobs. Doctors as a class are far more trusted than politicians, and they do a better job, too. And successful doctors can't go from practicing medicine to trade on their connections to make millions of dollars a year as successful politicians, such as Tom Daschle (who like Al Gore hit the jackpot after losing a close election) and Bill Tauzin routinely do. And Angelo Mozilo did not personally refer mere physicians to Countrywide's VIP mortgage division. Need I vent further?
Even the rare doctor who makes a seven figure income, such as the most successful plastic surgeons (who do not work for insurance/Government rates), earn chump change compared with equally hard-working people in Big Finance who the Bushbama Continuity love so much (such as all of Goldman Sachs and such as Lawrence Summers, the $5 M man for 1 day a week work for a hedge fund after being forced out of Harvard).
When I, a moderate Democrat when I started medical practice, started complaining about Hillarycare to certain patients in the quiet of my consultation room, that may have been a harbinger that that "prequel" version of "Obamacare" was foundering. Are the President's attacks against physicians tied in to a similar phenomenon now?
Wait a bit and you will know more. Sadly, your knowledge of the facts of medical economics will have to come from elsewhere than this White House.
Copyright (C) Long Lake LLC
In Obamaworld, as explained by the president in his Tuesday town hall, if we pour money into primary care for diabetics instead of giving surgeons "$30,000, $40,000, $50,000" for a later amputation -- a whopper that misrepresents the surgeon's fee by a factor of at least 30 -- "that will save us money." Back on Earth, a rigorous study in the journal Circulation found that for cardiovascular diseases and diabetes, "if all the recommended prevention activities were applied with 100 percent success," the prevention would cost almost 10 times as much as the savings, increasing the country's total medical bill by 162 percent. That's because prevention applied to large populations is very expensive, as shown by another report Elmendorf cites, a definitive review in the New England Journal of Medicine of hundreds of studies that found that more than 80 percent of preventive measures added to medical costs.
The DoctoRx approach to preventive health was and is simple. Eat right and exercise. And take your statin if your doctor recommends it; the same applies to high blood pressure treatment. The life you save, extend or improve the quality of is your own.
For health and "green" reasons, consider eating as little flesh of animals with legs as possible, especially those with four legs; gilled animals (e.g. fish) are OK health-wise although overfishing is a major ecological problem.
Preventing disease is good. It costs money, as do most good things. In fact, it costs lots of money. This is in my personal opinion money better spent than on pleasure trips to wherever, and it is better for the environment. But that's just my opinion. Other people may feel that the enjoyment of a bag of junk food a day is more important to them than better health. My usual response is to persuade them to do otherwise, and I favor price incentives to change their behavior along the lines of the price disincentives for smoking cigarettes that have been shown to decrease smoking rates. So there are ways to offset the good things that flow from prevention, but they do involve taxes and other revenue enhancement measures.
If Ronald Reagan could sign on to revenue enhancements year after year, so can the wannabe transformative President named Barack Obama.
What will not work is for any President to misrepresent prevention to be a cost saving when it is, truth be told, but another worthy but costly cause. That is voodoo medical economics. It will also not do for the most powerful lawyer in America to keep on misrepresenting doctors as getting rich from doing their jobs. Doctors as a class are far more trusted than politicians, and they do a better job, too. And successful doctors can't go from practicing medicine to trade on their connections to make millions of dollars a year as successful politicians, such as Tom Daschle (who like Al Gore hit the jackpot after losing a close election) and Bill Tauzin routinely do. And Angelo Mozilo did not personally refer mere physicians to Countrywide's VIP mortgage division. Need I vent further?
Even the rare doctor who makes a seven figure income, such as the most successful plastic surgeons (who do not work for insurance/Government rates), earn chump change compared with equally hard-working people in Big Finance who the Bushbama Continuity love so much (such as all of Goldman Sachs and such as Lawrence Summers, the $5 M man for 1 day a week work for a hedge fund after being forced out of Harvard).
When I, a moderate Democrat when I started medical practice, started complaining about Hillarycare to certain patients in the quiet of my consultation room, that may have been a harbinger that that "prequel" version of "Obamacare" was foundering. Are the President's attacks against physicians tied in to a similar phenomenon now?
Wait a bit and you will know more. Sadly, your knowledge of the facts of medical economics will have to come from elsewhere than this White House.
Copyright (C) Long Lake LLC
Sunday, August 9, 2009
Corporatism Run Wild
From the WaPo, Pay Czar Quietly Meets With Rescued Companies; Deadline to Propose Compensation Looms:
President Obama's compensation czar has been meeting for weeks with executives at some of the country's largest and most troubled companies as they face a Thursday deadline to propose how much they will pay their top employees.
Kenneth R. Feinberg has the unprecedented task of deciding executive compensation at seven companies that received large government bailouts. His meetings with American International Group, Citigroup, Bank of America, General Motors, Chrysler, Chrysler Financial and GMAC have been conducted in secret, with neither Feinberg nor the companies willing to say much in public.
President Obama's compensation czar has been meeting for weeks with executives at some of the country's largest and most troubled companies as they face a Thursday deadline to propose how much they will pay their top employees.
Kenneth R. Feinberg has the unprecedented task of deciding executive compensation at seven companies that received large government bailouts. His meetings with American International Group, Citigroup, Bank of America, General Motors, Chrysler, Chrysler Financial and GMAC have been conducted in secret, with neither Feinberg nor the companies willing to say much in public.
This is change. I don't believe in it. I'll take Reaganomics over this.
In the meantime, no one expected headlines like this:
Drug Industry to Run Ads Favoring White House Plan (NYT)
The drug industry has authorized its lobbyists to spend as much as $150 million on television commercials supporting President Obama’s health care overhaul, beginning over the August Congressional recess, people briefed on the plans said Saturday.
Clearly the pharmaceutical makers expect to make a bundle off of "reform".
Strange days . . .
Copyright (C) Long Lake LLC 2009
Thursday, July 30, 2009
Why "Fixing" Health Care Is So Difficult
The New York Times has an article today on the contentious health care reform effort that ends as follows:
In one finding, 75 percent of respondents said they were concerned that the cost of their own health care would eventually go up if the government did not create a system of providing health care for all Americans. But in another finding, 77 percent said they were concerned that the cost of health care would go up if the government did create such a system.
As I've said about the economy, if you're not confused about health reform, it appears that you're not alone.
Copyright (C) Long Lake LLC 2009
In one finding, 75 percent of respondents said they were concerned that the cost of their own health care would eventually go up if the government did not create a system of providing health care for all Americans. But in another finding, 77 percent said they were concerned that the cost of health care would go up if the government did create such a system.
As I've said about the economy, if you're not confused about health reform, it appears that you're not alone.
Copyright (C) Long Lake LLC 2009
Thursday, July 23, 2009
It's Time for Lawyer Jokes
The President of the United States had the following to say to help promote health reform at his press conference tonight:
Right now, doctors a lot of times are forced to make decisions based on the fee payment schedule that's out there. So if they're looking and you come in and you've got a bad sore throat or your child has a bad sore throat or has repeated sore throats, the doctor may look at the reimbursement system and say to himself, "You know what? I make a lot more money if I take this kid's tonsils out."
And when a town has only one lawyer, he/she starves, but when a second moves in, they each get rich.
Eventually, Cheetum Cummin & Goin gets formed to handle all the business.
Copyright (C) Long Lake LLC 2009
Right now, doctors a lot of times are forced to make decisions based on the fee payment schedule that's out there. So if they're looking and you come in and you've got a bad sore throat or your child has a bad sore throat or has repeated sore throats, the doctor may look at the reimbursement system and say to himself, "You know what? I make a lot more money if I take this kid's tonsils out."
And when a town has only one lawyer, he/she starves, but when a second moves in, they each get rich.
Eventually, Cheetum Cummin & Goin gets formed to handle all the business.
Copyright (C) Long Lake LLC 2009
Tuesday, July 21, 2009
Health Care Bill Less Likely to Pass Soon: Investment Considerations
In the New York Times article Democrats May Limit Tax Increases for Health Care Plan, the real news is the likely acceptance by the President that this priority of his is going to involve a longer time line than he wishes:
But rather than repeating his demand that each chamber of Congress pass a health care bill before the August break, Mr. Obama emphasized the need to reach a final agreement by the end of the year. “So let’s fight our way through the politics of the moment,” he said. “Let’s pass reform by the end of this year.”
Despite White House insistence to the contrary, the end-of-year deadline suggested that Mr. Obama was backing away slightly from his timetable; previously he had called on Congress to send him legislation to sign by mid-October.
Given EBR's focus on generating income with one's capital (or else owning gold to profit from or at least keep up with inflation), it brings the reader's attention to Eli Lilly, which yields 5.9%, sells for 8 times this year's estimated earnings and has rising earnings estimates both for this year and next year. In addition, while its market cap is close to $40 B, a small number of super-giant pharma companies could acquire it. The long-term chart of LLY happens to stink, but yours truly owns it. The stock is back where it was a dozen years ago. A previously-miserably run company that appears to have stabilized is Bristol-Myers Squibb ("BMY"), which yields 6.2%.
This spring, EBR mentioned a small number of stocks with strong fundamentals and strong long-term and short-term charts. Amongst them was Teva ("TEVA"). Teva recently hit an all-time high, has a long-term growth rate in the high teens, yields as much as cash in the bank (1.2%), and sells at 12 times estimated next year's earnings. This has been a beautifully-run (Israeli) company that has delivered for shareholders while being uninvolved in the various shenanigans afflicting so much of American industry.
None of LLY, BMY or TEVA play the stock buyback game to a significant extent. Teva can win regardless of the fate of health care reform. It is felt at EBR that valuations on LLY and BMY are low enough that P/E risk is low even if "Obamacare" passes, and that if it fails, P/E and dividend yield could allow for substantial long-term returns to shareholders.
Note: The author of this post owns TEVA and LLY and may sell either without notice. None of the commentary herein constitutes advice to anyone to buy or sell any security.
Copyright (C) Long Lake LLC 2009
But rather than repeating his demand that each chamber of Congress pass a health care bill before the August break, Mr. Obama emphasized the need to reach a final agreement by the end of the year. “So let’s fight our way through the politics of the moment,” he said. “Let’s pass reform by the end of this year.”
Despite White House insistence to the contrary, the end-of-year deadline suggested that Mr. Obama was backing away slightly from his timetable; previously he had called on Congress to send him legislation to sign by mid-October.
Given EBR's focus on generating income with one's capital (or else owning gold to profit from or at least keep up with inflation), it brings the reader's attention to Eli Lilly, which yields 5.9%, sells for 8 times this year's estimated earnings and has rising earnings estimates both for this year and next year. In addition, while its market cap is close to $40 B, a small number of super-giant pharma companies could acquire it. The long-term chart of LLY happens to stink, but yours truly owns it. The stock is back where it was a dozen years ago. A previously-miserably run company that appears to have stabilized is Bristol-Myers Squibb ("BMY"), which yields 6.2%.
This spring, EBR mentioned a small number of stocks with strong fundamentals and strong long-term and short-term charts. Amongst them was Teva ("TEVA"). Teva recently hit an all-time high, has a long-term growth rate in the high teens, yields as much as cash in the bank (1.2%), and sells at 12 times estimated next year's earnings. This has been a beautifully-run (Israeli) company that has delivered for shareholders while being uninvolved in the various shenanigans afflicting so much of American industry.
None of LLY, BMY or TEVA play the stock buyback game to a significant extent. Teva can win regardless of the fate of health care reform. It is felt at EBR that valuations on LLY and BMY are low enough that P/E risk is low even if "Obamacare" passes, and that if it fails, P/E and dividend yield could allow for substantial long-term returns to shareholders.
Note: The author of this post owns TEVA and LLY and may sell either without notice. None of the commentary herein constitutes advice to anyone to buy or sell any security.
Copyright (C) Long Lake LLC 2009
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