patrick.net

TOB,

you are missing an important aspect of the money supply... Brand alluded to it earlier.

You can print as much money as you want, but if no one is spending it... namely, if it's not changing hands, then you will continue to have deflation. It's called the velocity of money. The rate at which it changes hands.

The velocity goes much lower when people perceive that their dollar will be worth more stuff in the future. This is the case right now with almost everything... oil, houses, commodities in general. They are all getting cheaper. So why would I buy anything with my dollars now? I can get more stuff for them next year. And even more the year after that.

As long as this expectation persists, we will have deflation, no matter how much free money you give people.

Brand and Fuzzy are spot on.
What we will see in the very near future is QE or quantitative easing. The Fed will buy many more government bonds than would be required to set the interest rate to zero. It will also buy asset-backed securities, equities and extend the terms of its commercial paper purchasing operation.

Inflation will not gain traction until the 800lb goirilla has been removed - failing RE prices (both residential and commercial). At that point the Fed has a ton of tools to mob up excess liquidity so that can halt inflation. But the resetting of asset prices is pretty hard. $10t is already out of the system. $2t of that was pension wealth. And more is coming.

Very soon now we will see good and reponsible people hurting, not just the greedy and the speculative.

Duke Says:
Very soon now we will see good and reponsible people hurting

The only way "good and responsible people" (garp) will get hurt is through taxation to pay for bailouts. If the bloody government got out of the way, garps would actually have less to worry about.

Otherwise, my guess is that garps are doing okay - we have savings to tide us over the short term, have not put all our 401k into one asset class, and have avoided overexposure to speculative stocks. And we also stopped buying (stocks/homes/gold) when prices went beyond a reasonable redline.

The way I see it is that even if my 401k funds dropped like a rock, it was mostly because its valuation earlier this year was vastly above reality. Ditto for phantom home 'equity'.

Way back to the topic of this thread.
CA schools are funded at the state level. The state is not losing money on investments (unless you count things like CALPRS taking a huge haircut) that would effect the schools. However, the state IS losing a ton of property tax revenue, which funds schools.
We are all aware of the special session now being held by Arnie and how he is floating some pretty big cuts to schools. We have also seen 20 of 22 municipalities pass measures to fund their local schools.
Get used to it.
State revenues will continue to decline for a few years and local areas that want better schools will ask people to vote to tax themselves to get them. I can easily see a legal challenge to this that *may* erode prop 13.

http://www.ofheo.gov/media/cll/HighCostLoanLimits2009.pdf

Bay Area conforming loan limit set at $625,500 for 2009.

The only way “good and responsible people” (garp) will get hurt is through taxation to pay for bailouts. If the bloody government got out of the way, garps would actually have less to worry about.

Well said!

Hopefully, the 28th Amendment will limit taxation to 10% (tithing)!

If one is expected to give 10% to the church, why is he expected to pay more to the government? Crappy service is worth more than afterlife?

And why aren't they go after cash businesses and illegal aliens for back-taxes? We definitely need a simplified tax code so that IRS can focus its energy to go after tax cheats.

http://biz.yahoo.com/ap/081107/earns_gm.html

I love when the company earnings calls are all bullshit... UNLESS they are pandering for a government bailout.

this line says it all...

"Looking into the first two quarters of 2009, even with its planned actions, the company's estimated liquidity will fall significantly short of that amount unless economic and automotive industry conditions significantly improve or it receives government funding"

SP,

I think your definition of garps is different from Dukes. I think Duke was alluding to people who took out loans that they had the means and intentions of paying back, but will now find themselves unable to because of job/income loss.

By your definition, there are like 50 garps in the US.

After watching both my parents get decent care in spite of their lack of income (they had only social security and their house, along with support from their kids) I must say I'm impressed with Medicare and Medicaid. Or perhaps with laws that say medical institutions have to treat people who show up.

My dad went out in a very high-cost way: intensive care, lots of beeping machines, people doing stuff to him around the clock. My mom went out just the opposite: hospice care. Eventually she could not swallow, and they did nothing for her except morphine drops and keeping her clean. But she was in a nursing home since June, and she could not have afforded that without Medicaid.

Perhaps it would have been worse in a big urban area, but they were in a small town and the standard of care was pretty good and uniform for everyone.

So we already do have socialized medicine via Medicare/Medicaid to some degree, and it works. It was not a free ride for them because they both worked for their whole lives and both died on the young side. They may have been net contributors overall.

I think the system is abused a bit, because the nursing home got my mom an ultra-high end wheelchair via Medicaid when it was already clear she was never going to get to use it. But basically, the system is not that bad.

There is something to be said about a compassionate system where providing good care is the primary objective instead of a profit maximizing model. That is why I liked Obama's model. I don't have a problem with a government run system as long as the free market is allowed to compete against it. We need the government as a patch to free-market failures.

Being forced to take one or the other is a disaster, Patrick you have seen something work OK first hand. I have seen it work in England, but I would give the VA system a D. My brother had a relatively serious health issue as a Marine and I sat in that waiting room with him for over 5 hours just to talk to his doctor. It has to be properly funded with some sort of incentive for ensuring quality of care. I am very healthy and I have seen first hand the private system fail. I pay $80 a month for a PPO. I basically pay a premium to have Blue Cross deny this or that, or have some reason that my expense isn't applied to my annual deductible. I have seen how doctors pad the bill to get the negotiated fee, the one I have to then pay, as high as possible. Fraud and manipulation are inherent in both systems, but I would rather have a system where people get the care, and then aren't bankrupted. This nonsense of turning it all into some game of business is a big problem.

I have an immigrant friend and his aged mom immigrated here and had heart complications. She had heart surgery in her native country for about $5000. She probably had heart attack was taken to a hospital in Maryland and they opened up her heart and found previous surgeon has done excellent work and they could just work with medications. Now that was a stay of 2-3 days and it cost about 150K. I think Medicare paid around 70k and the rest had to be paid by my friend’s family. They took her back to their native country and she was fine for about 3-4 years and finally she died. She did get good care at hospital for about a month and it probably didn’t cost much for them.

Now Am I the only one who thinks medical care expenses are so outrageous here or that medical insurance is skewing all expenses to upside. I had a friend who took his car to Auto body shop for a small dent and body shop guy gave a quote of $300 assuming he didn’t have insurance. Later on he found out about insurance and came up with a quote $800.

I do believe medical insurance is a big scam. People should have insurance only for unforeseen complications.

Yes, the VA system is scary. Very badly broken, and a disgrace. I hate the war in Iraq, but those guys should definitely get much better care than they do, for being willing to risk their lives when the president says so.

Maybe the VA should be eliminated, and soldiers just given health coverage to go to normal institutions like everyone else.

don’t have a problem with a government run system as long as the free market is allowed to compete against it.

I agree and I am FOR universal health care.

However, I am against socialized health care for some but not all. They are now essentially discriminating against free health care customers based on age and income brackets.

I think public schools are a good model. They work, at least well enough to give everyone a decent chance in life. And if you don't like it and can afford the private alternative, that's available too.

Medical care should be something like that: universal and good enough so that we're not unduly discriminating against people who had the bad luck to be both sick and poor (or who got poor because they happened to get sick). But the private alternative should also remain available.

Universal health case solves many problems. We can consolidate VA, workers comp, medicare, medicaid and other systems.

If socialized health care cannot be avoided, any consolidation / merger should save taxpayer money.

I don't mind showering everyone with good medical care if an average hospital stay costs $1000, like in all other developed countries.

But not here. I have never seen a hospital bill below $10K a day, at least in the Bay Area, and even with the Medicare negotiated rate, you are talking about $4-5K a day, way beyond what normal people / taxpayers can bear.

My dad was hospitalized in the best private hospital in Australia a year ago, for 4 days. The total bill? $5600 inclusive of everything (doctor fee, pathology etc.), including a small operation, and his Medicare plus private insurance paid it all. Now, that is bill that I can deal with even if I have to pay it entirely out of my pocket. Based on my experience with the American medical system, the same treatment at Stanford of Sequoia will cost you 10x, probably 5x with insurance negotiated rate. And the sad thing is, I do not see any difference in service delivered. They had more nurses attending to each patient. What I particularly appreciate in Australia is, you get a bill with ONE PRICING, there is no Medicare or Medibank pre-negotiated rate, there is only one damn rate.

In the US, the most disgusting thing is, different people get different rates for exactly the same service. Non-insured gets the highest rate, then insured gets different pre-negotiated rate (are you guys even aware of that?). My wife and I both have insurances, and our insurance packages are different. So when they bill out to two different insurance companies, there is a discrepancy of at least 20% in the pre-negotiated rate, which translates into more co-pay for one type of insurance compared to another! For the same darn thing.

Until we get medical system to be honest in this country, and hospitals don't bill people arbitrarily sucking taxpayers' blood dry, I do not want to pay for Medicare. Medicare needs to die in its current and present form.

If there is any redeeming feature from the former British Empire, it is its NHS system. Many Asian countries' healthy system models after NHS.

After living through NHS, it is just appalling to see how screwed up the so-called "socialized healthcare" in the US is. Lots of abuse, skyrocketing cost, boondoggle, user confusion, it is really a miracle that Medicare has even survived this long. The whole point about socialized medical care is to keep it cheap so that everyone can afford it, it is not about letting the cost go sky high that it will be assured of bankruptcy.

Patrick, your parents are lucky to be able to take advantage of Medicare during its last heydays as no cost control is put in place at all. Medicare operation as it is currently run WILL NOT survive, there will be no Medicare left for us when we are old.

But socialized medicine is already here. We are already paying for it yet most here cannot participate for free. Hopefully, Obama can consolidate the system so that we will pay less for the new system.

TOB,

the problem is NOT the doctors.

I have looked at the American doctor bills and the Australian doctor bills, they don't differ that much (negotiated rate of American doctors). I actually think the American doctors are underpaid given how hefty the whole medical bill is. In fact, in some circumstances, my doctor bill in the US at the negotiated insurance rate is LOWER than the doctor bill in other countries. My family doctor can only charge the insurance $65 per visit while in Australia, my dad's doctor charges $85 per visit. I see nothing wrong with the American doctors, they are the victims in the current medical system too, because American doctors have to take on $200K student loan to get through our medical school here, while in UK system, you can study medicine from undergrad level, at almost no cost to you.

The problem is with the hospitals! That is where the costs diverge so much, the divergence are so huge that sometimes for the same operating theater or "supplies", our hospitals easily charge 10x of what overseas hospitals do.

It is the liability lawsuits! Limit payouts now!

TOB,

I have seen enough doctor bills here in the US vs. other developed countries, and I can tell you the difference is minimal. Except for the surgeons, most doctors in the family practices make about the same amount of money everywhere in the world.

I do not see doctors living a high life. Surgeons in his top earning capacity (age 35-50) probably can make $500K a year, if he is good. Most family practice doctors are making less than the county government employees or firefighters. I don't know where you get this idea of doctors living the lifestyle of the rich and famous, most doctors I know are making $200K max, that is nothing rich and famous about.

The cost of med school is that way because the Doctors collectively want to keep the bar to their profession relatively high.

You mean the older doctors?

It is always about "I've got mine so screw you."

So...

Doctors do not want more cheap new doctors.
Lawyers want ever escalating litigation amounts.
Accountants want ever more complicated tax code.

We are screwed.

Reading all of the above interesting comments on health care, I have to say that the first item that comes to mind is TRANSPARENCY. Without transparency there can be no competition.

For health care to be affordable, it is absolutely essential that all doctors and hospitals are required to make their their rates public, preferably on the web.

Rates for room, board, doctors, nurses, overhead, surgeons, supplies, medicines. Everything.

And when you go in for a procedure, they should offer a *package* of services, including follow-up, at a fixed pre-determined price.

On the topic of medical bills: I have barely any experience with seeing a "real" medical bill as describes by Malcolm, OO and others.

What are the conditions under which the patient is exposed to the inner workings of the system?

TOB,

I don't necessarily disagree with you. But I do find it illustrative that law and medicine are among the few professions where the client or patient does not get a price quotation on the work about to be ordered, and ahead of time.

It is clear that we do not want a doctor to spend much time on negotiating deals with the patients. But that does not preclude a larger element of transparency. In reality, I think that it is COMPETITION that the HC and medical industries do not want.

I really like the idea of transparency, just so that patients can make an informed choice before committing. Right now, it's "charge me whatever you think you can get away with."

There was a great article in the NYT maybe 1 year ago, showing via graphs that more than 50% of US health costs go to pay insurance company overhead and profit.

Could the government manage to waste 50% on overhead? Probably, but it wouldn't be any worse than our current system.

FuzzyMath Says:
I think Duke was alluding to people who took out loans that they had the means and intentions of paying back

Merely having means and intentions is a necessary but insufficient condition.

Even if you _can_ afford the payment (based on employment at that time), taking out a loan to buy a house in 2005, is not what I would consider very GARPy behavior.

By your definition, there are like 50 garps in the US.

:-) LOL - I may be a bit of an eccentric outlier - I have attained such extreme Garphood that I refused to buy a house during the bubble even though I could have bought for cash. But surely, the number of more reasonable garps must be more than 50! Not everyone ended up rolling the dice - it only feels that way because the ones that did make all the noise...

OO, not so sure. I see the doctors living the high life. Its like going to med school is a ticket to lifestyles of the rich and famous. It can’t last forever.

I can verify this is true. At our uni medical center, there are about 1,000 doctors making more than our (meaning the campus) president.

Health care costs need to come down. We need to create a 'health engineer' type job class that can be attained via a low-cost 2 or 4 year program.

We need more WalMart healthcare, not Neiman-Marcus.

We should also tax the crap out of unhealthy and risky consumer foods/goods to subsidize health care.

There was a great article in the NYT maybe 1 year ago, showing via graphs that more than 50% of US health costs go to pay insurance company overhead and profit.

I'll tell you, Insurance is one of the biggest scams in this country. There will not be any accountability if patient is not the one paying for the service.

Yes, healthcare costs need to come down.

We should also tax the crap out of unhealthy and risky consumer foods/goods to subsidize health care.

Average family pays $12500 for medical insurance, lets put $1000 for healthclub and make everybody put in some minimum hours in gym. If they don't like to do it, let them pay higher premiums. I do not even like insurance idea, we should only have insurance for unforseen complications above a particular amount. I am positive most healthy families would save $5000/year.

We need to create a ‘health engineer’ type job class that can be attained via a low-cost 2 or 4 year program.

I agree, 4-5 years would be preferable.

If they don’t like to do it, let them pay higher premiums. I do not even like insurance idea, we should only have insurance for unforseen complications above a particular amount. I am positive most healthy families would save $5000/year.

Indeed.

I love Coca-Cola. A frosty Coke and some pizza is my favorite thing in the world.

However, I was also diagnosed with metabolic syndrome (basically pre-diabetes) two years ago, so the soda pop had to go. I really miss it. :(

So why on earth should I have to pay health care premiums to subsidize obese people that drink a two liter of sugar water a day?

We need to create a ‘health engineer’ type job class that can be attained via a low-cost 2 or 4 year program.

They're called "nurses".

They’re called “nurses”.

I know! We should think of a less loaded name for them and let them treat basic health issues at cheap neighborhood clinics without even having MD/GP's involved.

Just take your medication and chug a liter of coke every day.

You know, its funny.

I don't expose myself to any advertising. I block all online ads, I skip TV commercials with my DVR and I take a bus to work and keep my nose in a book the whole time. I don't read print magazines or newspapers.

So, when I'm over at someones house or a sports bar, I'm somewhat cynical and perceptive when I'm actually exposed to advertising.

People used to talk about the military-industrial complex.

I think these days we have a junk food-prescription drug complex.

Half the ads on TV seem to be for poisonous food/beverage products that make you sick, depressed and/or impotent. The other half of the ads are for drugs to treat these afflictions.

You don't need any special experience to be exposed to the healthcare insider system. All you need to do is to USE the system once or twice.

Most people don't care because they only pay the $200 deductible and $300 co-pay and be done with it. Then if you have a billing mess-up like my wife had, you started to realize how deep the rabbit hole is.

Just to give an illustration, a small procedure that would have cost my wifeless than $700 in Australia ended up billing her for $5200 in the US. I know this because my sister-in-law did the same day procedure down under. Now the plot gets even thicker. My insurance allows $1900 of that procedure and so we have to pay 15% of that, which becomes $285. Her insurance allows $900 (!!!) and pays 10% of that, which becomes $90.

So where did the hospital pull $5200 out of its ass? If its negotiated rate with insurance company is only $900, how does it make any profit?

I personally think this is the most important issue for the next few years, because we are going to have massive, massive job losses, and most people's medical insurance is tied to their jobs, no jobs no insurance. The rejection rate of individual insurance has shot up lately, so lots of people who are out of jobs for over 6 months will be left without ANY insurance. On top of that, COBRA is NOT cheap, so I doubt how many people can even afford COBRA.

We have plenty of land, plenty of housing, plenty of food, but healthcare is one "little" area that may just strangle the nation completely.

Those doctors employed by the government get the best deal. People in private practice make less.

Do you know that a psychiatrist at a correction facility could be making $300K? No way can private practice make even close that amount.

Hey a double header! Happy Bank Failure Friday everyone.

http://www.fdic.gov/bank/individual/failed/franklinbank.html

On November 7, 2008, Franklin Bank, SSB, Houston, TX was closed by the Texas Department of Savings and Mortgage Lending and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.

I love the names "Security"

http://www.fdic.gov/bank/individual/failed/securitypacific.html

On November 7, 2008, Security Pacific Bank, Los Angeles, CA was closed by the California Department of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.

OO,

Thanks for the insight. It illustrates that one of the main benefits of being on a health insurance plan is that the rates are pre-negotiated.

The government clearly can negotiate the rates for us, if there is single payer insurance. The problem with Medicare and Medicaid appears to be that there is too little auditing of the charges that are incurred, and plenty of fraud in the system.

WIkipedia has an interesting article about Medicare.

(CEP News) Toronto - In what fell short of a complete mea culpa, former Federal Reserve chairman Alan Greenspan offered little in the way of taking the blame for the U.S. housing bubble that touched off the global financial meltdown during a speech in Toronto on Friday. Though many experts have criticized him for causing the housing bubble by slashing the Fed's key rate to just 1% in 2001, Greenspan said unforeseen factors were at play.

He said the Fed and other major U.S. institutions considered a regulatory review of rules allowing subprime mortgage lending, but the consensus back then was "better wait and see."

He said that appeared to work, since the earliest stages of the subprime crisis did not really become "toxic" until 2005, years after the rate was cut to 1%.

Greenspan also blamed the current crisis on an unprecedented globalization of the world's financial systems, including huge growth in financial activity in the developing world.

He said a new global market for long-term securities now exists, which no longer makes it possible for rate cuts to stimulate markets as they would in the past.