News Can the market alone fix the economy?

[Astronuc]

Please let's stay on topic, which is "How to fix the economy". There are some interesting discussions on the philosophy and functionality of government and economy that are worthy of their own threads.

Meanwhile - Fed's Hoenig slams bank-rescue efforts
Calls for nationalizing all insolvent banks, big or small

WASHINGTON (MarketWatch) -- The president of the Kansas City Federal Reserve Bank slammed the government's approach to weak banks as counterproductive Friday and called for the government to move in, take over and clean house at insolvent institutions.

"We ... are drifting into a situation where institutions are being nationalized piecemeal with no resolution of the crisis," Thomas Hoenig remarked in a speech in Omaha, Neb.

The architects of the government response -- primarily Fed Chairman Ben Bernanke, former Treasury Secretary Henry Paulson and Paulson successor Timothy Geithner -- have argued that, because there were no rules to take over big but weak bank-holding companies, they have been forced to play a bad hand and keep the institutions operating and pushing in government money to strengthen them.

But as the cost of this approach keeps expanding beyond the initial $700 billion price tag, there is a growing sense that good money may be being thrown after bad. . . .

The takeovers of Washington Mutual, Wachovia, Countrywide and Merrill Lynch were "hasty," according to Hoenig. He called for the Obama administration to declare banks insolvent and use its power to take over failing institutions and continue operations under new management. This would be "temporary" and has precedent in history, he said.

"If institutions -- no matter what their size -- have lost market confidence and can't survive on their own, we must be willing to write down their losses, bring in capable management, sell off and reorganize misaligned activities and businesses and begin the process of restoring them to private ownership.
. . . .

On the other hand - Some banks try to escape TARP trap
Dividend cut may help Wells Fargo repay government quicker; exits will take time

However, analysts say it will still take years, not months, for big banks to extricate themselves from the Treasury's Troubled Asset Relief Program, or TARP.

In October, the government invested more than $100 billion in the nation's nine largest banks through TARP, with Wells Fargo getting $25 billion.

Since the first TARP money began flowing, the government has had to increase its support of Citigroup and Bank of America and a new administration has made it clear that other banks needing extra help will face much tougher restrictions on things like executive compensation.

Even though the government has stressed it doesn't want to manage big banks' day-to-day operations, a lot of political pressure has been exerted on institutions to get them to lend more.
. . . .
Wells Fargo said Friday that it will save $5 billion a year by cutting its dividend. The bank also hinted that the extra capital will help it repay the TARP investment more quickly.

"The U.S. Treasury's Capital Purchase Program investment is generating a return for the U.S. taxpayer -- at significant cost to the company," Wells Chief Executive John Stumpf said in a statement.
. . . .
Iberiabank Corp. and TCF Financial, two smaller banks, have already asked for approval to repay the TARP money they got last year.

"Recent actions, interpretations, and commentary regarding various aspects of the program places our company at an unacceptable competitive disadvantage," Iberiabank Chief Executive Daryl Byrd said in late February.

TCF Chief Executive William Cooper said the TARP rules had "definitely changed" since last year.

TARP was originally designed to encourage healthy banks to lend more to help revive the economy. But recent actions by the Treasury and possible restrictions imposed by Congress or regulators make it look like banks took TARP money out of weakness, he explained.
. . . .

If banks can do without TARP funds, then let them return the funds, and let's move on.


When economy bottoms out, how will we know?
http://news.yahoo.com/s/ap/20090307/ap_on_bi_ge/economy_where_s_the_bottom


If the banks aren't lending, then they presumable do not have confidence in the ability of the businesses or individuals to repay the loans, i.e. the banks (or financial institutions) looking forward are assuming that the demand (economic activity) is not there. At some point, that becomes a self-fulfilling prophesy, which induces a decline in economic acitivty.

The other point discussed in this thread is "what should be the role of government in regulating the ecomony" as well as "what level of regulation is acceptable". Should regulation include stimulation, or limited to setting the standards (rule of principles and practices) for economic activity? But these would seem to be topics for other threads.

 

[WhoWee]

Thank you, TT! Businesses in our current economy/government have far more rights than are accorded to individuals, with tax benefits that are sometimes obscene.

Businesses thrive on the stable atmosphere that our system of governance provides, and they should pay more taxes than individuals because their existence and profitability depend on the health of our government. The naive notion that "business is good" for us is far out-dated. Too many businesses are stripping wealth from our country, shipping it off-shore, and sucking up benefits from the tax-payers who are expected to pay for their excesses.

Your rhetoric can be inflammatory and dangerous when taken out of context...again...when taken out of context.

Too many individuals group all businesses together in the "evil" column. You are talking about large multi-national conglomerates...I get it. But the anti-business sentiment has spread to include all businesses...from the corner pizza shop to the local plumber to the corner auto body shop to the local McDonald's franchisee to the local auto parts store to the town saw mill and the 200 employee fabrication shop that's struggling to compete with a Chinese factory to make component parts.

While it's easy to sit back and comment that government favors business...the statement is quite naive. In reality business is saddled with mandated expenses in order to comply with regulations such as SOX, high insurance costs to protect from law suits, matching taxes, workers comp, compliance with EPA, HIPPA, OSHA, hiring quotas, multitudes of audits, health and building codes, zoning, transportation rules, unions and maintaining a separate set of tax accounting books. Now cap and trade will add even more costs.

The truth is that government FEEDS off business. Business regulation creates the need for hundreds of thousands of government jobs.

The only time an individual experiences government regulations is when they pull a building permit or obtain a license...and most complain about the experience. Business deals with government intervention on a daily basis.

Do your homework and stop ignoring the relevant facts...small to medium sized businesses are over-regulated and often spend as much or more to maintain compliance as they pay in taxes.

 

[Astronuc]

While it's easy to sit back and comment that government favors business...the statement is quite naive. In reality business is saddled with mandated expenses in order to comply with regulations such as SOX, high insurance costs to protect from law suits, matching taxes, workers comp, compliance with EPA, HIPPA, OSHA, hiring quotas, multitudes of audits, health and building codes, zoning, transportation rules, unions and maintaining a separate set of tax accounting books. Now cap and trade will add even more costs.

The truth is that government FEEDS off business. Business regulation creates the need for hundreds of thousands of government jobs.

Or government feeds on business as the case may be.

Excessive regulation, or nonsense rules that simply make work for government employees, or high-priced consultants, is simply wasteful and costly.

But then how does one protect the General Welfare from 'bad' business practices. The rhetoric of "the market will regulate business", only works after the fact - after the damage is done.

How does the market protect against fraudulent mortgages or sub-prime loans? Clearly the government didn't perform its regulatory function, but then the financial industry failed to self-regulate.

How does the market enforce fiduciary responsibility and due diligence? It clearly didn't during the last decade or so. Even after Enron, WorldCom, Adelphia, Global Crossing, . . . . , we still got the Financial Meltdown.

How does the market protect against "credit default swaps" and other dubious instruments that have contributed to enormous losses?

How des the market protect against ponzi schemes like Bernie Madoff of Alan Stanford? After the $billions are gone - it's too late to correct. And we've seen this before.

How does the market protect the public against negligence, particularly criminal negligence resulting in severe injury or death? Most (tort) lawsuits would probably not be necessary if individuals were more careful or diligent.

One shouldn't generalize about poorly run large, medium and small corporations and unilaterally condemn all business. Most business people I know work really hard to do the right thing.

 

[WhoWee]

We are a country of laws. Our system allows for a single court ruling on an isolated event to affect everyone. Law students dream of the day they can argue such a case.

Unfortunately, this type of adjudication often leads to over-regulation (over-reaction)...which often creates a new set of circumstances.

Enron is a good example...to this day, very few people really comprehend what actually happened...from a business model perspective. But now we have the Sarbanes-Oxley Act to make sure it doesn't happen exactly that way again. Yet the problem with derivatives trading persists...in an arguably MORE complicated fashion than Enron's futures trading format.

EVERY ACTION of the Executive, Legislative and Judicial branches have long term and far reaching consequences...NO DECISIONS should ever be made in haste.

 

[OmCheeto]

Please let's stay on topic, which is "How to fix the economy". There are some interesting discussions on the philosophy and functionality of government and economy that are worthy of their own threads.

Meanwhile - Fed's Hoenig slams bank-rescue efforts
Calls for nationalizing all insolvent banks, big or small

I don't have a problem with this. Other than the fact it's not desirable. But I think it is the only rational fix to the current slide.

On the other hand - Some banks try to escape TARP trap
Dividend cut may help Wells Fargo repay government quicker; exits will take time
If banks can do without TARP funds, then let them return the funds, and let's move on.

The EESA/TARP restrictions don't seem all that draconian to me. Unless you are the CEO of one of these banks with a pot of gold to lose:

http://banking.senate.gov/public/_files/latestversionEESASummary.pdfd"
In order to participate in this program, companies will lose certain tax benefits and, in some cases, must limit executive pay. In addition, the bill limits “golden parachutes” and requires that unearned bonuses be returned.

When economy bottoms out, how will we know?
http://news.yahoo.com/s/ap/20090307/ap_on_bi_ge/economy_where_s_the_bottom


If the banks aren't lending, then they presumable do not have confidence in the ability of the businesses or individuals to repay the loans, i.e. the banks (or financial institutions) looking forward are assuming that the demand (economic activity) is not there. At some point, that becomes a self-fulfilling prophesy, which induces a decline in economic acitivty.

Which is why I stated earlier that everything that everyone seems to be doing is the wrong thing to do at this time, with the exception of Obama.

In hindsight, I do think that the market needed it's current correction. I wasn't even aware that there was a bubble going on before a few months ago. But looking over the charts for companies, indexes, and housing prices, over the last 50 years, it's pretty obvious.

The other point discussed in this thread is "what should be the role of government in regulating the ecomony" as well as "what level of regulation is acceptable". Should regulation include stimulation, or limited to setting the standards (rule of principles and practices) for economic activity? But these would seem to be topics for other threads.

There were regulations and policies that were in place before this fiasco began that were, over time, changed. It might be a good idea to put them back the way they were:
Mortgage interest deduction on home loans: 1913
Mortgage backed securities privatized: 1968 (OMG. Does that mean they were nationalized before that? Were our parents and grandparents a bunch of commies? OMG!)
First sub-prime mortgage: 1993
Uptick rule on shorting revoked: July 2007

And then there's that new financial "invention" that fed the blob:
Credit default swaps: invented in 1997

http://www.factcheck.org/elections-2008/who_caused_the_economic_crisis.html"
October 1, 2008

The U.S. economy is enormously complicated. Screwing it up takes a great deal of cooperation. Claiming that a single piece of legislation was responsible for (or could have averted) the crisis is just political grandstanding. We have no advice to offer on how best to solve the financial crisis.

The only thing that is keeping me from investing seriously in the market is trust.
I don't trust the buggers running the place.
Until there are enough rules and oversight that will keep my money from being sucked up by bear raiders, top level corporate hogs, et al, it's penny ante for me. And I probably speak for the rest of America.

And last, but not least, another pat on the back for Barack:

http://online.wsj.com/article/SB123559630127675581.html?mod=todays_us_page_one"
FEBRUARY 26, 2009
Upper-Income Americans Would See Deductions Cut on Charity and Mortgage Interest

 

[Ivan Seeking]

Perhaps the most distressing announcement that I've heard to date:

Tim Geithner: Earlier today I proposed that the Federal Treasury set aside $420 billion. This $420 billion will be placed in a special fund and will go to the first individual who comes up with a workable plan to solve the banking crisis.

From a Saturday Night Live parody
http://www.msnbc.msn.com/id/29581959/page/4/

 

[WhoWee]

Maybe Geithner is trying to tell us he's underpaid...wants a bonus?

Let's not forget...Geithner is the ONLY guy who can fix this mess...by the way, have they hired anyone to help him yet?

 

[Astronuc]

How to fix the economy?

Get a job!


Even in a recession, some companies are hiring
http://news.yahoo.com/s/ap/20090309/ap_on_bi_ge/help_wanted

Help wanted: pharmacists, engineers and nurses. Believe it or not, even some banks are hiring, at least for their technology teams.

While the recession has claimed 4.4 million jobs, the economy has created others, many of them for highly trained and specialized professionals. More than 2 million jobs openings now exist across a range of industries, according to government data!

Job seekers beware, though. An average of nearly five people are competing for each opening. That's up sharply from a ratio of less than 2-to-1 in December 2007, when the recession was just starting and nearly 4 million openings existed.

. . . .

 

[Ivan Seeking]

There was one pundit punditting the other day... not sure who now, but his logic caught my attention. He was first arguing that IT jobs will help the economy recover so we should focus our efforts to that effect. Later he complained about how our health care system is far behind any other industry in regards to IT - that one of the main ways to cut medical costs is to apply state-of-the-art IT to the medical industry. The last point was that while he supports the stimulus package, now is not the time to take-on health care costs.

While I understand his objections to overloading the political system, I also think this is one example of what Obama calls "opportunity" - solutions that operate on multiple levels. In order to revamp health-care, we provide a broad stimulus to the IT industry. This in turn helps to create jobs and reverse the downward trends. Next, long-term economic stability depends greatly on controlling health care costs. So by focusing on health care now, we improve health care, reduce costs, provide a short-term stimulus for jobs, and provide for long-term economic stability.

..oh yes, and because of circumstances, we can get it done. That might not be true later. I think it was George Will, on ABC's, This Week, who said that the first attempt to reform health care was under the Roosevelt Administration - Teddy, not Franklin.

 

[Astronuc]

Health care must move away from treatment toward prevention. It's much less costly to prevent illness, than to treat it. Of course, the industry would rather have people pay $10-100 billions for treatment as opposed to $million or a few $billion for prevention.


Meanwhile - Sickly U.S. economy set for 2nd half rebound: survey
http://news.yahoo.com/s/nm/20090310/bs_nm/us_usa_economy_bluechip

The consensus of the 51 forecasters surveyed looks for U.S. gross domestic product to tumble at a sharp 5.3 percent annual rate in the first quarter and to decline at a 2 percent pace in the second quarter.

In the third quarter, however, economists expect the economy to expand at a 0.5 percent rate, followed by a 1.8 percent fourth-quarter gain.

For the year as a whole, the economy is expected to shrink 2.6 percent, which would be the largest annual contraction since the Great Depression. A month ago the survey pointed to a drop of 1.9 percent.

Good sign -
Pandit: Citi operating at profit through February
http://biz.yahoo.com/ap/090310/citigroup_ceo_letter.html

 

[turbo]

We might have saved ourselves a lot of this grief if Congress and Bush had set strict compensation limits for bank officers that had their hands out for the first "bailout". I wonder how many of the beggars would have re-evaluated their "need" for the money and turned it down rather than having their compensations cut...

 

[Astronuc]

The economy may be starting to fix itself.

Stocks shoot higher on Citigroup profit news
http://news.yahoo.com/s/ap/20090310/ap_on_bi_st_ma_re/wall_street

NEW YORK – Wall Street has had its best day of the year, storming higher after some good news from Citigroup.

Citigroup Inc. says it operated at a profit during the first two months of the year. That energized financial stocks and in turn, the entire stock market. Surprised investors drove the major indexes up more than 5.5 percent to their biggest one-day rally of the year. The Dow Jones industrials shot up nearly 380 points.

However, many analysts are still cautious — noting that Wall Street has seen many blips higher since the credit crisis and recession began. Word of Citi's performance broke a months-long torrent of bad news from the banking industry but analysts weren't ready to say the stock market was at a turning point and about to barrel higher after a slide that's lasted more than 16 months.

"To have a sustained rally, we have to have a shift in sentiment," said Kurt Karl, chief U.S. economist at Swiss Re. "One day isn't going to make a trend."

Still, the Citigroup news offered investors some hope that the first quarter will show signs of improvement.

In a letter to employees Monday, Citi Chief Executive Vikram Pandit said the performance this year has been the bank's best since the third quarter of 2007 — the last time it booked a profit for a full quarter. Based on historical revenue and expense rates, Citi's projected earnings before taxes and one-time charges would be about $8.3 billion for the full quarter.

. . . .

Maybe time to by some shares in Citigroup, which moved up $0.40 or 38%. GE had a good day moving up $1.46 (19.70%). One day doesn't make a rally, but it may be a start. Nevertheless, we have to wait for the quarterly reports in early April.

 

[Ivan Seeking]

The economy may be starting to fix itself.

Since Obama gets blamed for the drops now, clearly this is a response to his recovery package.

We won't recover until the credit markets are in order.

 

[Ivan Seeking]

We might have saved ourselves a lot of this grief if Congress and Bush had set strict compensation limits for bank officers that had their hands out for the first "bailout". I wonder how many of the beggars would have re-evaluated their "need" for the money and turned it down rather than having their compensations cut...

By all accounts that I've heard, there was simply no time. Many people look to the first bailout as if it was intended to fix the economy, but it wasn't. It was intended to prevent a collapse of the financial system, which apparently it did.

 

[turbo]

By all accounts that I've heard, there was simply no time. Many people look to the first bailout as if it was intended to fix the economy, but it wasn't. It was intended to prevent a collapse of the financial system, which apparently it did.

It needn't have taken a lot of time. Simply specify that the bank officers could not get any bonuses or stock options until the TARP funds were repaid. Not a complex thing.

I bet that most of the beggars would have re-evaluated their positions when they found out that they would have to agree to forgo the "sugar" they were accustomed to.

 

[Ivan Seeking]

It needn't have taken a lot of time. Simply specify that the bank officers could not get any bonuses or stock options until the TARP funds were repaid. Not a complex thing.

I don't think that was possible. Bonuses are part of the normal income structure. It would be like telling a company that they can't pay their salesmen commissions until the loan is paid off.

I bet that most of the beggars would have re-evaluated their positions when they found out that they would have to agree to forgo the "sugar" they were accustomed to.

Keep in mind that they were told by Paulson that they would take the money - they had no choice. They were handed a one-page form and effectively ordered to sign it.

 

[Ivan Seeking]

Health care must move away from treatment toward prevention. It's much less costly to prevent illness, than to treat it. Of course, the industry would rather have people pay $10-100 billions for treatment as opposed to $million or a few $billion for prevention.

True, but a lot of progress can be made by simply increasing the efficiency of the system through IT. I would have dig around to find the figures, but it has been shown before that paperwork accounts for a signficant percentage of health care cost. Having been in the medical field myself, and being married to someone who has been in medicine for over thirty-five years, there is no doubt in my mind that this is the case. There are also many medical errors made that that cost lives and money, that could be prevented through IT. For example, one of the most common errors is to misread a doctor's handwriting. A simple mistake like this can result in many $millions in legal fees and settlements.

 

[Al68]

Good. You acknowledge that talk of free markets is just rhetorics?

I don't think so.

Now it all depends on where we draw the line. That is a purely subjective matter and determining the degree of rightness is also purely subjective. That is because in one model we can give some freedoms that don't exist in the other one. Comparing two freedoms and assigning them a quantized freedom value hasn't been done. So essentially any choice we make is in some sense the right and the free one.

That must be a joke.

 

[Al68]

I don't think that any individual should be taxed at a higher rate than any other individual. I do think that the profits of collective enterprises should be taxed at a higher rate than individuals , and that they should be held to higher standards of social responsibility than individuals.

These statements contradict each other.

Only if the consequences of the collective actions of two or more people are taken to be necessarily equivalent to those of a single person -- and since they aren't, necessarily, then it might be argued that the principle of individual liberty doesn't necessarily apply to collectives.

The tax rate paid by each member of the "collective" is exactly equal to the tax rate applied to the "collective". That makes your statements contradict each other.

However, until I learn something that changes my mind, and notwithstanding the apparent inconsistency of the position, I think that collectives should generally be held to higher standards of social responsibility (generally closer scrutiny by regulatory agencies and whatever it takes to keep them from screwing up environments, coercing government officials, monopolizing markets, undermining collective bargaining efforts, etc.) than individuals, because the power of a collective to suppress or diminish the liberty of its individual constituents, or other individuals who its actions might affect, is greater than the power of any of its individual constituents to do that.

I have no problem with, and I advocate laws that forbid violating anyone's individual liberty. Applicable to both businesses and individuals and government agents. Of course no private company has ever had any legal authority to give me orders or restrict my liberty in any way, so I've never had that problem. Maybe an example of what you're talking about would help.

As far as flat taxes, how about a Dick Armey style tax? Flat rate with HUGE standard deductions but no other deductions. This was about 15 yrs ago, but I remember the standard deduction being about $38,000 for a family of four. It had the advantage (or disadvantage?) that it was so simple that people couldn't easily be misled about tax policy.

Or the flat sales tax with a monthly check to everyone that re-inburses a fixed amount to everyone, which would effectively exempt all poor and most middle class income? Again, since it's simple, there is a great opposition to it.

 

[Ivan Seeking]

Here we go.

...Kerry's $350 billion figure for what's spent on health care paperwork and administrative overhead is far less certain, but still a reasonable estimate. Various scholarly studies have put the cost of paperwork and administrative overhead at anywhere from 7.6% to 31% of the total cost of healthcare in the US. Kerry's figure is just over 23%, on the high side but still not unreasonable...

http://www.factcheck.org/kerry_paperwork_ad_accurate.html

 

[WhoWee]

True, but a lot of progress can be made by simply increasing the efficiency of the system through IT. I would have dig around to find the figures, but it has been shown before that paperwork accounts for a signficant percentage of health care cost. Having been in the medical field myself, and being married to someone who has been in medicine for over thirty-five years, there is no doubt in my mind that this is the case. There are also many medical errors made that that cost lives and money, that could be prevented through IT. For example, one of the most common errors is to misread a doctor's handwriting. A simple mistake like this can result in many $millions in legal fees and settlements.

The investment in IT is nothing new in health insurance...all of the major insurers have large investments. By the way

http://www.mib.com/

...every prescription you've ever had filled is already available online, along with the most of your medical records.

One of the by-products of these technology advances was HIPPA and revised rules pertaining to debt collection.

http://www.hhs.gov/ocr/privacy/index.html

I'm over-simplifying my description...HIPPA it is more comprehensive than just protection of record handling/storage.

The concern now is how Government agencies might use the information they gather...and how they might share the information among other agencies.

I personally don't want a government worker deciding whether or not I should have an operation. I don't even want only a single doctor making that decision.

Here's a final thought...Japan has a Universal Healthcare system that many proponents point to as successful. However, did you know that Japan is the best market in the world for Aflac?

Why? Specifically...their cancer indemnity plans and hospital plans are needed to fill in the HUGE gaps in coverage.

It's good to address making health care better, but ...haste makes waste.

 

[Ivan Seeking]

The investment in IT is nothing new in health insurance...all of the major insurers have large investments. By the way

http://www.mib.com/

...every prescription you've ever had filled is already available online, along with the most of your medical records.

They have only scratched the surface. For example, only now do we find that most X-Ray departments have switched or are switching to digital technology, rather than using film, yet this technology has been around for decades. Patients could be given RFID tags that contain their entire medical history, medication schedules, patient history, scheduling information, and so on. Remote doctoring [using robots] could be implemented generally. This allows the doctors to make much more efficient use of their time; most patients even seem to like it. Nurses, doctors, and other hospital personnel could carry blackberries that allow one to interface with patient records; schedule surgery, send in presciptions, notify insurance companies. Medication conflicts could be generated on the spot so the attending physician can adjust accordingly. etc, all without ever generating any paper. These are just a few thoughts off the top of my head [taken from other discussions], but in no way is this scheme representitive of what we find in hospitals today.

The concern now is how Government agencies might use the information they gather...and how they might share the information among other agencies.

That is always a concern. If anything, an overhaul of the system would allow that better safeties be built-in. Right now your privacy is in the hands of insurance companies that have no interest in civil rights or privacy. In fact their economic incentives are contrary to privacy rights.

I personally don't want a government worker deciding whether or not I should have an operation. I don't even want only a single doctor making that decision.

Where does this come from? Besides, right now your insurance company is making the call. Also, I am quites sure that Obama has specified that doctors should make medical decisions.

Here's a final thought...Japan has a Universal Healthcare system that many proponents point to as successful. However, did you know that Japan is the best market in the world for Aflac?

Why? Specifically...their cancer indemnity plans and hospital plans are needed to fill in the HUGE gaps in coverage.

As opposed to what we find in the US today...?

It's good to address making health care better, but ...haste makes waste.

We have been trying to address health care for a century now. We know that the cost of health care benefits is why companies like GM can't compete. We also know that the future of the economy requires that health care costs be controlled. It is said to be a greater imperative than SS.

How long would you like to wait?

Any solution will require modifications over time. But there may never be a better time to finally pass health care legislation - the longer a President holds office, the less power he has.

 

[WhoWee]

GM (like many other union shops) spends too much on health insurance...if the insured person doesn't care what the cost is...then nobody will care. The market system only works if there is downward pressure on price.

GM retirees who are losing benefits and now need to pay $1,000+ per month on COBRA (great timing the 65% offset for 9 months in the stimulus bill?) are starting to realize how good they've had it. Many are also shopping for more affordable coverage...now that they need to pay.Also, let's not confuse Medicare with private health care. Medicare is the 800# gorilla in the industry. Again, nobody on Medicare cares what it costs the rest of us.

http://www.tscl.org/NewContent/101499.asp
http://www.cms.hhs.gov/apps/media/p...ge=&showAll=&pYear=&year=&desc=&cboOrder=date
http://www.hhs.gov/medicarefraud/

The problem of waste/fraud is well known...with recent estimates up to 35%.

Health care is a very complicated issue. Allocating a "down payment" of $hundreds of billions ...without a plan ...is ridiculous at best.

The government needs to learn how to run Medicare before it tries to take over the rest of the industry.

Are we ready for progressive policies like Holland?

http://www.independent.co.uk/news/world/europe/holland-is-first-country-to-legalise-euthanasia-622930.html

 

[OmCheeto]

Are we ready for progressive policies like Holland?

http://www.independent.co.uk/news/world/europe/holland-is-first-country-to-legalise-euthanasia-622930.html

Are we ready?...

Bah! They stole an American idea...

http://en.wikipedia.org/wiki/Oregon_Death_with_Dignity_Act

 

[lisab]

Are we ready for progressive policies like Holland?

http://www.independent.co.uk/news/world/europe/holland-is-first-country-to-legalise-euthanasia-622930.html

Ready and willing...it http://seattletimes.nwsource.com/html/nationworld/2008352350_assistedsuicide05m.html" , Washington. My life, how I live it and how I end it, is MY business, not the government's.

 

[SixNein]

I think in that the theory of capitalism has been broken. The basic idea is that greed will indirectly benefit society. Introduce globalization and you have the greedy people circumventing that concept. So I believe that regulation will have to occur on a number of different layers to restart that indirect effect.

 

[Astronuc]

Speaking of medical IT - Wal-Mart Plans to Market Digital Health Records System
http://www.nytimes.com/2009/03/11/business/11record.html

So let Wal-Mart run the entire medical insurance system. Low prices everyday!


Bernanke Says Financial Rules Need an Overhaul
http://www.nytimes.com/2009/03/11/business/economy/11fed.html

WASHINGTON — The chairman of the Federal Reserve, Ben S. Bernanke, called on Tuesday for a broad overhaul of financial regulation that would include a powerful new regulator to keep a much tighter grip on institutions considered “too big to fail.”

At the same time, Mr. Bernanke stoked a new controversy by endorsing more flexible accounting rules that would not force banks to book as many losses during an economic downturn as current rules require.

In so doing, the Fed chairman came closer than other top officials to supporting a policy known as “regulatory forbearance,” a phrase that became an epithet among policy makers after the savings and loan crisis of the early 1990s.

Although the Fed chairman did not use that phrase, he called for reducing the “pro-cyclical” aspects of current regulation — the tendency of accounting rules and capital requirements to aggravate both financial retrenchment during a slowdown and financial excesses during a boom.

Investors and supporters of the banking industry cheered. The battered shares of Citigroup and other banks rose more than 20 percent, though part of that was in response to a statement by Citigroup’s chief executive that the bank turned a profit in the first two months of this year.

But some regulatory experts denounced Mr. Bernanke’s proposals, saying they would merely give banks new ways to hide their true losses.

“If Bernanke thinks he can regulate the cyclicality out of banking, then he’s a fool,” said Lynn Turner, a former chief accountant at the Securities and Exchange Commission. “If you’re regulating banks and you’re doing a good job, you’re making sure that the banks are building their capital reserves during good times. The problem in this country has been that the regulators became captives of the banks and didn’t require them to build up enough capital.”

. . . .

It seems to me that the rules/regulations should be such that the current situation is preventable.

 

[neu]

It seems to me that the rules/regulations should be such that the current situation is preventable.

They should, but the solution isn't just regulation, it's a complete overhaul. The logic of free market capitalism is that regulation is the enemy; if something goes wrong it's because the market isn't free enough to obey the laws of Freidmanite economics. The fact that everything has gone to sh*t wouldn't disuede Freidmanites from their beliefs, they would see it a confirmation of their theory.

Developed democracies aren't able to perform complete free market reforms (not for want of trying).

Apologies, I haven't read the thread in full.

 

[ThomasT]

Al68, I'll reply to your statements below about taxes, as they affect the economy. Wrt other more philosophical considerations, I'll start another thread (in the philosophy forum?) later on today.

The tax rate paid by each member of the "collective" is exactly equal to the tax rate applied to the "collective". That makes your statements contradict each other.

Individual salaries and wages, and the profits of collective enterprises are separate tax categories.

As far as flat taxes, how about a Dick Armey style tax? Flat rate with HUGE standard deductions but no other deductions. This was about 15 yrs ago, but I remember the standard deduction being about $38,000 for a family of four. It had the advantage (or disadvantage?) that it was so simple that people couldn't easily be misled about tax policy.

No deductions. We want the income tax rate to be the same for every entity that's taxed. Individuals' incomes as well as collective profits. Not just for equality of liberty, but because it would be necessary in order to generate sufficient revenue.

The minimum flat rate would have to be about 22% -- probably more.

Or the flat sales tax with a monthly check to everyone that re-inburses a fixed amount to everyone, which would effectively exempt all poor and most middle class income? Again, since it's simple, there is a great opposition to it.

I don't think a federal sales tax would be necessary. But a simple way to do it would be to tax items costing over a certain amount. This would also effectively exempt the poor and lower middle classes without having to mail out 100 million checks every month.

Wrt income tax -- no reimbursements, no deductions, and no exemptions. No tax credits of any kind. No taxes on gifts or inheritances. Separate taxes on certain goods and services would be necessary though. Raise taxes on tobacco and alcohol. Legalize marijuana and prostitution and tax them. Etc.

Wrt income tax, the poor would pay the same percentage as the rich, but there are programs to help them with necessities that they can't afford. For example, medicare and medicaid programs can be extended.

I think a flat income tax would help to 'fix' the economy. Simplification is usually a good thing. Wrt the tax code, I think it's a necessary thing.

 

[WhoWee]

Speaking of medical IT - Wal-Mart Plans to Market Digital Health Records System
http://www.nytimes.com/2009/03/11/business/11record.html

So let Wal-Mart run the entire medical insurance system. Low prices everyday!


Bernanke Says Financial Rules Need an Overhaul
http://www.nytimes.com/2009/03/11/business/economy/11fed.html

It seems to me that the rules/regulations should be such that the current situation is preventable.

Unfortunately, they too will soon be a union shop (if card check passes - stock downgraded yesterday). Once the union takes over...WalMart "customer service" and low prices might undergo changes (not good ones either).

Speaking of unions...can anyone tell me why the government needs unions for their workers? If the rights of workers aren't protected by the government...?

Back to the economy...there are several news reports lately that the economy can not be fixed without addressing health care.

However, one major problem is not being discussed...litigation. The costs of malpractice insurance and the steps doctors take (unnecessary extra tests) have added tremendously to health care costs.

http://www.iii.org/media/hottopics/insurance/medicalmal/

# But the dollar amount of each claim is increasing. In a report on the medical malpractice insurance environment, Gen Re notes that claim costs for physicians and surgeons rose 7 percent and 9.5 percent for hospitals. Likewise, the insurance broker Aon, in its Hospital Professional Liability and Physician Liability 2006 Benchmark Analysis, examining more than 47,700 claims representing more than $4.4 billion of incurred losses, found that while claim frequency is stabilizing, the average size of claims continues to increase at a rate of 6 percent a year. The average amount paid to plaintiffs increased only 3 percent, while amounts paid to defend against liability claims rose 17 percent as hospitals mount a more aggressive defense of claims.

# Claims, Jury Awards and Settlements: A report on the state’s medical malpractice insurance market by the Florida Department of Insurance shows the breakdown of claims payments in 2006. Insurers paid out $602 million on 3,811 closed claims, with 62 percent going for economic damages and 38 percent for noneconomic damages such as pain and suffering.

http://www.nber.org/aginghealth/fall04/w10709.html

Tort reform IS helping...but to date the real and anticipated costs are all built into pricing matrices.