patrick.net

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.

justme Says:
November 7th, 2008 at 12:36 pm
"On the topic of medical bills: I have barely any experience with seeing a “real” medical bill as describes by Malcolm, OO and others."

The part that sucks, as I've seen corroborated above, is when you don't even see the bill or know what it is going to cost. The example I gave was a dermatologist who said, don't pay now you'll get a bill in the mail for the BC negotiated rate. It was padded to the hilt. I was pissed off. Then I went somewere else and had the same procedure (an ingrown hair on my chin), paid them upfront (it was a fraction of the first place) then months later I get a check back from the second place which charged me less because of the 'maximum charge allowed by BC.' What the fuck?

Clearly, the psychiatrist example shows market efficiency. The free market works well for the elective stuff. Sure the institutional shrink makes more than he could charge boomers who want to get intouch with themselves. Cosmetic surgery, things that you shop around don't seem like they bankrupt people.

Just pray you never get cancer or need an organ transplant, or some other chronic disease. Yikes, Cuba starts looking desireable.

you can’t have a deflationary cycle with a super-low interest rate. Its an impossible scenario.

Missed this.

Not only is it possible, it has a name!

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

True poetic justice...

http://biz.yahoo.com/ap/081108/bank_closures_texas_california.html

The bank that invented mortgage backed securities gets crushed by them 20 years later.

Malcolm,

It was a little difficult for me to follow what you said: Let me see if you agree.

Provider1; $5200 total, although you used Blue Cross insurance

Procider2: $1900 total , but you got money back later because they said 1900 > BlueCross

Correct?

I'm also guessing that there is a pattern here, which is that the patient will get too see the bill if and ONLY if there is some *percentage* co-pay involved.

Interesting tidbit from Calculated Risk blog:

From Bloomberg: Bloomberg Sues Fed to Force Disclosure of Collateral

Bloomberg News asked a U.S. court today to force the Federal Reserve to disclose securities the central bank is accepting on behalf of American taxpayers as collateral for $1.5 trillion of loans to banks.

The lawsuit is based on the U.S. Freedom of Information Act ...

Here's something FED is doing w.r.t Commercial Paper.
AIG repays more of $85 billion Fed loan

Sounds disturbing? companies can keep rolling over their debts using FED facility at a low interest rate. As disturbing as this can be, imagine consequences without this facility. GE has commercial paper of about 550B. I don't want to think about it. Everybody is getting bailed out in some form or the other. All of us have to hold our noses and go about our life and fight for major changes in the way business is done.

Bloomberg Sues Fed to Force Disclosure of Collateral (Update1)

By Mark Pittman

Nov. 7 (Bloomberg) -- Bloomberg News asked a U.S. court today to force the Federal Reserve to disclose securities the central bank is accepting on behalf of American taxpayers as collateral for $1.5 trillion of loans to banks.

The lawsuit is based on the U.S. Freedom of Information Act, which requires federal agencies to make government documents available to the press and the public, according to the complaint. The suit, filed in New York, doesn't seek money damages.

``The American taxpayer is entitled to know the risks, costs and methodology associated with the unprecedented government bailout of the U.S. financial industry,'' said Matthew Winkler, the editor-in-chief of Bloomberg News, a unit of New York-based Bloomberg LP, in an e-mail.

The Fed has lent $1.5 trillion to banks, including Citigroup Inc. and Goldman Sachs Group Inc., through programs such as its discount window, the Primary Dealer Credit Facility and the Term Securities Lending Facility. Collateral is an asset pledged to a lender in the event that a loan payment isn't made.

The Fed made the loans under 11 programs in response to the biggest financial crisis since the Great Depression. The total doesn't include an additional $700 billion approved by Congress in a bailout package.

Fed's Position

Bloomberg News on May 21 asked the Fed to provide data on the collateral posted between April 4 and May 20. The central bank said on June 19 that it needed until July 3 to search out the documents and determine whether it would make them public. Bloomberg never received a formal response that would enable it to file an appeal. On Oct. 25, Bloomberg filed another request and has yet to receive a reply.

The Fed staff planned to recommend that Bloomberg's request be denied under an exemption protecting ``confidential commercial information,'' according to Alison Thro, the Fed's FOIA Service Center senior counsel. The Fed in Washington has about 30 pages pertaining to the request, Thro said today before the filing of the suit. The bulk of the documents Bloomberg sought are at the Federal Reserve Bank of New York, which she said isn't subject to the freedom of information law.

``This type of information is considered highly sensitive, and it would remain so for some time in the future,'' Thro said.

The Fed didn't give Bloomberg a formal response because ``it got caught in the vortex of the things going on here,'' said Michael O'Rourke, another member of the Fed's FOIA staff.

Thro declined to comment on the lawsuit.

The case is Bloomberg LP v. Federal Reserve, U.S. District Court, Southern District of New York (Manhattan).

AIG is leading the abuse of CP so far. They first received a bailout loan with a steep note - 10% (not as bad as Egland's 12-15%). They next go to the CP facility to get cash for about 1% which they then use to pay down their 10% loan. Using 1 governement program to arbitrage another governement program. Phew. People should be PISSED.

Today I had to fill full tank of my Toyota Land Cruiser with premium. I thought something was wrong when the bill was less than $58. Then I realized gas price as 2.599 ... this is great!

How are Prius owners feeling now?

Perma,

If I was one, I would still be feeling good and doing good, and non-smugly so :-)

On the topic of small cars, I just saw an interview of Rahm Emanuel where he was walking to his little old clunker US-made car and getting in. It looked like a little 4-cylinder number. Way to go, Rahm.

Should I hire a real estate agent to sell my house ? Or should I do it myself ?

Selling on your own house is far less expensive than hiring a real estate agent, says Gerri Willis in her book Home Rich (Ballantine Books, $ 25 ) because you’ll save paying a commission, which can range from 5 percent to 7 percent of your house’s selling price. For example, if you sell your house for $ 165, 000 and you negotiate a sales commission for your agent of 5 percent, his services will cost you $ 8, 500.

The “For Sale by Owner” market is the object of much speculation but little analysis. Even so, it’s clear that some do-it-yourself efforts are more likely to be successful than others. Among them are sellers (with houses in desirable neighborhoods ) who are highly motivated, including those with little equity in the house, and those who find a buyer before they even start marketing the property.

There are downsides. You’ll have to be prepared to market your house on your own, host open houses and negotiate your own deal. For many people, this isn’t feasible — daily schedules and responsibilities may not accommodate these tasks. If you or your partner can’t drop everything at a moment’s notice to attend to a home-selling issue, you probably need to hire an agent.

Perma,

I think the biggest downside is that the local RE mafia will try their best to pretend that your house is not for sale, and otherwise talk sh*t about it if given a chance.

The job market's thriving at Apple, even as iPhone concerns multiply

The Cupertino, California-based company reported 32,000 full-time and 3,100 temporary and contract employees as of September 27. That's up from 21,600 full-time workers and 2,100 temporary or contract staffers in fiscal 2007. Of those new hires, it seems that 8,000 went to work at Apple's retail outlets -- 50 new Apple stores were opened during the course of fiscal 2008.

DOL sues defunct Silicon Valley companies over 401(k) funds

The U.S. Department of Labor said Friday it sued Vigilance Inc. of Sunnyvale and its subsidiary Harmony Software Inc. of San Mateo over their abandoned 401 (k) plans.

The DOL wants independent fiduciaries to manage and distribute approximately $580,565.22 in assets to participants covered by the two companies’ plans.

Separate lawsuits were filed against Vigilance and Harmony in U. S. District Court for the Northern District of California.

Both companies have ceased operations. Vigilance was a supplier of event software and Harmony Software was a business management software company.

“The Department of Labor is committed to doing everything we can to assist workers whose plans are abandoned,” said Bradford P. Campbell, Assistant Secretary of the Labor Department’s Employee Benefits Security Administration. “This legal action paves the way for the plan’s participants to receive retirement assets due them.”

Start-up companies in Silicon Valley face harsh financial realities as venture capital disapppears

Silicon Valley start-ups must grow up and start making some real money, entrepreneurs, venture capitalists and company chiefs were told at the Web 2.0 Summit this week.

The economic downturn has begun to bite hard and young start-ups looking for the traditional “free” venture capital (VC) money to develop their projects are being turned down. Better-established firms are being told that only the fittest will survive. The tone was set by a sobering analysis by Mary Meeker, a managing director of Morgan Stanley and leader of its global technology research team.

In a series of slides, she showed how America’s GDP had plummeted, the market capitalisation of technology companies in the United States had fallen through the floor and how advertising revenue growth, even online, may go negative.

A further stark illustration of the problems now facing the technology sector was the “layoff tracker” on the authoritative Techcrunch blog. It is not a scientific poll, but the total number of tech job losses announced globally since September stands at more than 44,000. The worst-hit companies have been the small and medium-sized start-ups that began with the traditional plan – that is to say no plan – on how to make money. Normally they would look to billion-dollar IPOs or to sell out to Google for pots of money. Neither is now possible and the VC money to keep going while they wait for the good times to return is not available.

Related Links
Fear and opportunity in Silicon Valley
US meltdown sends chill through Silicon Valley
John Doerr, one of the leading venture capitalists in tech, told the conference that VC investment peaked in 2007 at $37 billion. This year such investment was likely to be about $15 billion or $16 billion and next year it was predicted to be in the order of $5 billion to $10 billion.

Mr Doerr, of Kleiner Perkins Cau-field & Byers, said: “We might not see very much liquidity for the next three or four years. Google is just not going to buy all these or even a lot of the internet-related start-ups. You have to hunker down, take the long view, don’t cut with a meat axe, and focus on your core.”

Companies are going to have to make money for themselves. One of the best recent examples has been Zynga, an online gaming company that is making waves with its applications for social networks. The company raised $29 million in VC funding this year but has yet to touch a cent of it despite having a staff of 80. Its free online games, including Dragon Wars and Scramble, have proved huge hits on both MySpace and Facebook. The company makes money primarily from virtual goods or currencies that are purchased with real credit cards by players who have been drawn in by the games. Its business is said to be doubling every 90 days.

Chris DeWolfe, the co-founder and chief executive of MySpace, who was at the summit to talk about the launch of MySpace Music, said that concentrating on growing a real business was crucial in an economic downturn. For more established companies, diversifying revenue streams was similarly vital. MySpace is attempting to do that with MySpace Music, a joint venture with the four major music labels. The move is a recognition that it is not possible to force people to buy music because there is so much pirated material available. MySpace, which is owned by News Corporation, the parent company of The Times, will make money through advertising and charging for downloads if users want to keep tracks on their computers or MP3 players.

Mr DeWolfe told The Times: “We had to get away from the idea that every media company is stupid and is going to fail and start doing partnerships with them.” He said that consumers had streamed music more than 1 billion times in the first few days and have created 80 million playlists since the launch. Five million bands had uploaded their music to the site.

Earlier in the day another co-founder and chief executive had a little more trouble answering the question of how to make money. Evan Williams, head of the hip microblogging site Twitter, was celebrating a particularly successful US election, which saw traffic and membership soar.

Asked how this was going to be turned into dollars, Mr Williams was able to say only that they were thinking of charging corporate customers to use the site. Advertising, he implied, was not a route he wanted to go down. “It’s still very early for Twitter,” he said. Despite the downturn, hope springs eternal in the Valley.

New secrets of company survival

John Doerr, on the board of Amazon and Google, has developed an 11-point plan on how to survive the downturn:

1 Act now, and act with speed

2 Protect the vital core of the business. Cut once, and cut deeper than you need to

3 Make sure you have 18 months’ worth of cash. Make sure you know where you stand with your investors

4 Do not spend money on facilities or technical infrastructure or even software you do not need to run your business

5 Reevaluate research and development priorities

6 Renegotiate all contracts

7 Make sure everybody in the company, from the receptionist to the engineers, is selling the company’s value proposition

8 Offer people equity instead of a cash bonus

9 Secure your cash reserves

10 Figure out what your lead indicators for revenue are

11 Overcommunicate with all your staff. Make sure employees and their families know where they stand

About 401k plans (Perma):

Is there anyone here that is knowledgeable about the behind-the-scenes workings of 401k plans?

Specifically, based on previous experience, I have been concerned that sometimes the assets of a 401k plan are not always held at the proper arms-length distance from the assets of the mother company.

Any lawyers here that can explain how it is supposed to work, in that respect?

I am not knowledgeable about the inner workings of 401K, but my instinct disallowed me from owning one even with "obvious" financial benefits. The same instinct convinced me not to buy a house in 2005.

Not investment advice.

Is there anyone here that is knowledgeable about the behind-the-scenes workings of 401k plans?

This is how a 401k plan usually works.

You contribute a dollar to your 401k, which your employer matches.

The two dollars is given to a management firm, which takes their fees then invests in the market. Say, buy purchasing futures on one of the common indexes.

Then, they lend the newly purchased shares to someone like me. I sell them back to them after they've lost two dollars and pocket you and your companies money. Your financial services company keeps their fees.

PermaRenter Says:
November 8th, 2008 at 12:19 pm
"Today I had to fill full tank of my Toyota Land Cruiser with premium. I thought something was wrong when the bill was less than $58. Then I realized gas price as 2.599 … this is great!

How are Prius owners feeling now?"

Fine, especially those of us who only leased one and have less than a year left on it and are waiting for the full plug in hybrids. $2.59 is still not cheap though, but I think it is going to keep falling. Prius owners are part of the reason prices are falling, people found alternatives to the high prices, they didn're really expect that. Also, keep in mind, saving money is just one component for people who hate the idea of funding enemies with foreign oil.

justme Says:
November 8th, 2008 at 7:14 am
"Malcolm,
It was a little difficult for me to follow what you said: Let me see if you agree.

Provider1; $5200 total, although you used Blue Cross insurance

Procider2: $1900 total , but you got money back later because they said 1900 > BlueCross

Correct?"

Correct, the numbers were much smaller, but the guy who did the exact same thing and charged less ended up sending me back $150. What pisses me off is when the BC bill comes in and it says, non qualifying not applied to out of pocket maximum or deductible. That sort of crap pisses me off.

"didn't" in the Prius post.

One other thought, while there is some smuggness that comes with the notion of being insulated from inflating oil prices, my household's gasoline bill is dropping as well. I don't want to pay more just to feel good about the savings, I'm happy to be paying less just like anyone else.

justme Says:
November 7th, 2008 at 12:36 pm
"What are the conditions under which the patient is exposed to the inner workings of the system?"

The patient isn't, that's why if feels like you are getting fucked. I'm glad my deal was very small but the idea of doing something without knowing what the cost is going to be because "it is determined by the provider and insurance company" who isn't actually paying anything under a PPO and ends up excluding it from the annual deductible anyway. So in essence someone else who isn't paying anything is negotiating the price after the fact for you.

BAP,

That's the redevelopment department hard at work. It's not just Merced County. It's Stanislaus, Contra Costa, and just about every other county that has access to the funds. It's just that they have more to whine about now so it makes the news.

Look at the bright side. As long as lending institutions don't make ridiculous loans, people cannot afford to buy the houses and prices will stay low.

"Prius owners are part of the reason [gasoline] prices are falling..."

Yes, and perhaps just a little is also due to the anticipated slow down in global demand. In particular, China's inability to decouple from the US economy played a big role in this. Peak oil is just not as imminent as speculators thought it was.

Deflation,
Agreed.

Kewp,

I liked your tongue-in-cheek answer, but I was actually being serious.

I'm quite well acquainted with how the 401k works on a day-to-day basis. My question really was about something else. I'll try to paraphrase:

"who holds title to the assets while they are in the 401k plan, and can the company and/or plan trustees under any circumstances divert the assets for other purposes, either on a temporary or semi-permanent basis?"

This is the gist of my original question. And I am talking about MY contribution, and not potentially un-vested matching funds.

@deflation,

Well, if oil consumption, and therefore production, is falling and never again reaches 2007 levels, then by definition, peak oil occurred in 2007. So peak oil indeed perhaps it is not imminent, but rather past.

One can hope.

Alright, I'm starting to get a little freaked out by the articles I'm reading about the need for an "international overhaul of the financial system". With the "free market dogma of the past has been shown not to work" kind of statements.

Christ. As if the market was anything close to free. If the market was free, the failing corporations would be allowed to fail. Lo and behold, it would solve the problem.

I think what they really mean is that the "free market dogma" has shown not to consistently produce fantasy profits forever and ever. Fucking morons.

I think Ron Paul had it right when he said the result of all this would be a new World Central Bank and some unified currency. God we are so fucked. They are taking a housing downturn and turning it into the end of the free world.

The only thing to fear at this point is our own government.

@justme,

I believe the highs we saw were caused by speculators blowing the Chinese growth engine out of proportion with respect to oil consumption (not to mention the Prius owners:).

I may be wrong, but I always considered peak oil to be the maximum rate at which they are able to pump (irrespective of demand) and implied a depletion of oil from the source.

We can have "peak oil" and falling prices at the same time. But it may take a supply shock to send prices up again.

Do not blame the speculators. Without them, price shocks will still be there, price discovery will be slower, and liquidity will be less readily available.

Yet here we are, at 1/2 the price and dropping while OPEC is decreasing production. I'm not arguing that we shouldn't have speculators.

Just that they were very wrong this time as happens at times.

Justme,

The assets in a 401(k) are generally held in trust by a fiduciary for the benefit of the plan members. The fiduciary's duties are specified under ERISA, and breach of fiduciary responsibility is a serious crime - up to 1 year in jail and a big fine. Second occurance is a felony.

Did anyone ever answer Charles' (the original poster's) question?

See for example www.dol.gov/ebsa/publications/fiduciaryresponsibility.html

TOB, democrats do not tolerate liberty because free-minded people are impervious to their populist claims.

YES WE CAN!

When those young people were chanting, they failed to realized that the word 'WE' was referring to populist elites.

I still think Ron Paul was the only good candidate.

BTW, I prefer Ronald Reagan's "It CAN be done."

Deflation,

>>I may be wrong, but I always considered peak oil to be the maximum rate at which they are able to pump (irrespective of demand) and implied a depletion of oil from the source.

Good point, and this is exactly the distinction I was trying to make.

From Wikipedia:

Peak oil is the point in time when the maximum rate of global petroleum extraction is reached, after which the rate of production enters terminal decline.

Since this definition uses the word *extraction*, it does not refer to peak pumping capacity (per day or month or year), but rather the peak volume actually getting pumped.

The peak volume getting pumped will occur at some point in time where the current price combined with current demand causes a never-to-be-exceeded (daily, monthly, yearly) production numeric value.

Another way of saying the same thing: It is likely that peak oil will occur because of higher price pushing the demand down rather than a constant or falling price and hitting a hard limit on pumping capacity. Oil price has a way of soaring instantly once demand gets even close to the supply capacity.

I agree that the difference can perhaps be called somewhat subtle or technical, but also think that it means that peak oil *production* will be reached sooner rather than later. The reason simply being that oil production will peak at the point of maximum oil affordability, as determined by oil price and expendable income (or macro-economic equivalent).