07.24.09
Posted in Health care, Uncategorized at 4:16 pm by Administrator
I’ve been mostly silent about the legislation and debate being waged in health care, partly because it’s a moving target and partly because many of the proposals were ill-conceived. But I’ve heard one idea proposed that makes sense, and of course all the interest groups and their respective lawmakers are airing opposition. The idea is to allow the MedPac report to recommend cuts to the Medicare program. I used to read MedPac reports in the late-90s when I was solely focused on health care. Allowing the objective, non-politicized information to be informative and do some of the heavylifting in Medicare makes sense. Congress will not do their job on this. Perhaps MedPac data can help them.
The WSJ writes on July 24th: “The Medicare Payment Advisory Commission, created by Congress in 1997, has recommended more than $200 billion in cost cuts in the last year alone that lawmakers have ignored. Mr. Orszag wants to reconstitute the commission as an independent agency whose recommendations would automatically take effect — unless Congress expressly stops them.”
The Medicare problem will start eating all of our proverbial lunches. It needs to be reset, especially in light of the aging population. AARP doesn’t like the savings idea from MedPac unless the savings are spent to cover the uninsured, and I’m not sure that logic makes sense. AARP has had a strangehold on Medicare and all things “senior” for a while. It’s time to get real and think about generations to come.
How can we compete in a globalized world while bleeding and wasting so much on health care. Starting next year when Baby Boomers begin retiring, and into the following decade, soaring Medicare costs will put us in deficit even more. You think bank bailouts and economic stimulus deficits scare us now, wait til the public realizes they are paying for motorized wheechairs for those who may not need them, Viagra, and the like. It’s shameful. Frankly, Medicare pays for too many non-essentials already, in addition to incentives which encourage excess spending.
Retirees will also pay for this in terms of a less secure retirement. Excessive spending in Medicare will cause taxes to rise and the productivity gains of the last decade to evaporate. This spending will crowd out funds for education, which can create long-term growth of the economy to support government programs in turn. There is a whole feedback loop that the AARPs and lawmakers who want to spare their oxygen-supply provider constituents fail to acknowledge. If these deliberated ideas are not adopted, cuts will come somehow, and be very, very painful.
The US economy and political system took a big hit financially and in terms of reputation. If we cannot put the brakes on unbridled health care spending, we are going to see a crisis of another sort. Financial markets get it; there’s no where to hide, except of course behind politics.
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07.20.09
Posted in Econ at 3:32 pm by Administrator
A group called the Investors Working Group made up of former heavy-weights in the financial world and investors overseeing $3 trillion came out with a counter proposal about the new systemic risk regulator. They don’t want the Fed taking on the role as it might dilute their mission, the group says. One statement stood out:
“The lack of sufficient authority, resources and will on the part of regulators helped fuel the financial meltdown at least as much as the absence of systemic risk oversight,” the group said.
Ex-SEC Chair Donaldson was interviewed on NPR the latter part of week when the group’s report came out. His views were very compelling.
On the more theoretical side, The Economist just published (July 18) a briefing on the state of economics. The gist of it was that economists of all camps need to do some “spadework” about the causes of crises past and present to offer some fresh thinking. They say that neglected prophets like Hyman Minsky, who acknowledged a more holistic viewpoint about the “real” economy and the financial world than many of today’s economists, should be given another look. An idea of Minsky’s that I gravitated toward in my recent presentation was:
that in spite of longer term trend projections by economists about growth, inflation, etc. — short-term developments like bubbles and manias impact theoretical projections. (Financial innovation is included as a mania in my view because it was used in overly greedy ways, not the way economists intended. I am not knocking financial innovation at all, just how it manifested in practice over the last five years or so.) This is the space in which regulators overlooked or entirely missed the party that was going on. We had signs in the form of “irrational exuberance” a decade ago.
I finally believe that more “truth” or at least relevancy is coming forth that will eventually get us on the right path. The Investors Working Group offers a voice of reason that needs to be heard. And The Economist gets back to the roots of where some of the thinking originated that has informed the path of finance.
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07.03.09
Posted in Uncategorized at 6:37 pm by Administrator
For some reason I had taken to reading the tea leaves about year 2008 on Dec 12, 2007 on PBS The World site. Here’s what I wrote, for your interest or entertainment:
• The volatility witnessed in U.S. financial markets will cause new thinking about retirement security in both private and public sectors. Risk/return tradeoffs will begin to resemble more rational thinking, ie., that financial innovation cannot hedge risks to the degree many theorists or sophisticated investors believed due to excess risk-taking not being incorporated into the models. Everything old becomes new and many things new become history. The Wild West of financial markets gets tamed until another day.
If you want to read the rest of my predictions, go here: http://tiny.cc/6SyGB
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