Continued from the previous post:

For small business borrowers, there are three problems. First, the fundamentals of their businesses have often deteriorated because of the length and severity of the recession—making many less creditworthy. Second, some sources of funding for small businesses—credit card borrowing and home equity loans—have dried up as banks have responded to rising credit losses in these areas by tightening credit standards. Third, small businesses have few alternative sources of funds. They are too small to borrow in the capital markets and the Small Business Administration programs are not large enough to accommodate more than a small fraction of the demand from this sector.

All of these factors will tend to inhibit the pace of the economic recovery.

How the Economy Will Bring Down Obama pt 3

Continued from the previous post:

The third, and perhaps most important factor, is that the banking system has still not fully recovered. Bank credit losses lag the business cycle and are still climbing. Thus, while banks’ access to the capital markets has sharply improved, banks are still capital constrained and hesitant to expand their lending. Most importantly, some significant classes of borrowers—namely commercial real estate and small business—are almost wholly dependent on the banking sector for funds, and those funds are not easily forthcoming.

How the Economy Will Bring Down Obama pt 2

Continued from the previous post.

The second force that could restrain the recovery is the fiscal outlook. The fiscal stimulus that is currently providing support to economic activity is temporary rather than permanent. This has to be the case if we are to ensure that fiscal policy is on a sustainable path over the long-run. This means that the positive impulse from fiscal stimulus will abate over the next year.

How the Economy Will Bring Down Obama pt 1

In about three years the GOP will ask the voting American public the same question Ronald Regan asked when he ran for President against James Earl Carter; 'Are you better off today than four years ago'. If the current Fed Reserve forecast is correct the answer will be no. That will lead to the defeat of Obama. Here are the remarks from the Fed.

From ZeroHedge:

The shock to household net worth seems likely to have several important implications for household behavior. The shock creates a risk that the household saving rate could increase further. For example, during the period from 1990 to 1992, the household saving rate averaged about 7 percent of disposable personal income, considerably higher than the 4.3 percent average rate during the first half of this year. If the household saving rate were to rise, then consumption would rise more slowly than income, making it more difficult for the economy to develop strong forward momentum. In addition, it seems likely that some workers will respond to the wealth shock by postponing their retirement. This suggests that the labor force participation rate may rise once labor market conditions improve. This would tend to push up the unemployment rate, all else being equal.

The source of Obama's stimulus push seem to come from Christina Romer who thought that FDR did not spend enough during the Great Depression. From the New Yorker:

One of her key papers as an economist at the University of California at Berkeley, where she had spent the previous twenty years, showed that, contrary to popular belief, Franklin D. Roosevelt’s spending programs hadn’t pulled America out of the Depression. (She found that monetary policy was the key factor.) Conservatives had seized on the paper to disprove the efficacy of fiscal stimulus, but Romer’s point wasn’t that Roosevelt had spent too much to no purpose; it was that he hadn’t spent enough. When faced with a severe recession, she believed in overwhelming force.

It seem intuitive to state that the 1940s and 1950s was an unusual time in world economic history because the US was the only viable and growing economy; producing everything the world wanted and employing Americans. FDRs huge budget out lays were recouped from taxes paid by various participants in this growing economy.

But today it seems like there is a lot of competition from other economies and the US would not be able to recoup the large federal deficits through growth. History never repeats but it does rhymes. In this case it seems that the ideologues have latched on to academic research that may not be relevant. Let's see what happens.

Healthcare for Dummies - Look at the numbers first

From Mona Charan

The president then adverted to “more than 30 million American citizens who cannot get coverage.” As theWashington Examiner’s Byron York notes, the 30 million figure represents a climb down from the president’s oft-repeated claim (most recently in August) that there are “47 million uninsured in this country.”

Perhaps by downgrading to 30 million, President Obama is attempting to exclude an estimated 9.3 million illegal aliens. But look closely at the rest of the uninsured. According to Census and HHS data, 10 million have incomes more than three hundred percent of the poverty line, meaning they could afford coverage but for some reason choose to forgo it. And speaking of those who forgo, 5 million are single childless adults between the ages of 18 and 34. An estimated 6.4 million are “Medicaid undercount,” meaning they receive Medicaid or SCHIP but tell census takers otherwise. Another 4.3 million are eligible for Medicaid or other government health programs but have failed to enroll. That leaves just 10.6 million U.S. citizens below 300 percent of the poverty line, not eligible for an existing government program, and not between 18 and 34.

Cost of a Doctor's Visit

My recent visit to an ENT specialist cost $200 for 5 MINUTES of face time!!!! All he did was look into by ear with a otoscope.

Do we need doctors with 4 yrs of medical school, 3 years of residency and 2 to 6 years sub-specializing to to this type of work? It should cost $20.

From the Washington Post:

Evidence that demand already exceeds the supply of primary-care doctors ripples through the system as patients increasingly have trouble finding a new doctor, then wait weeks or months for an appointment, spend more time in the waiting room than in the examining room, encounter physicians who refuse to take any form of insurance, and discover emergency rooms packed with sick people who cannot find a doctor anywhere else.

The average annual income for family physicians is $173,000, while oncologists earn $335,000, radiologists $391,000 and cardiologists $419,000, according to recent data compiled by Merritt Hawkins, a medical recruiting firm.

The disparity results from Medicare-driven compensation that pays more to doctors who do procedures than to those who diagnose illness and dispense prescriptions. In 2005, for example, Medicare paid $89.64 for a half-hour visit to a primary-care doctor in Chicago, according to a Government Accountability Office report. It paid $422.90 to a gastroenterologist who spent about the same amount of time performing a colonoscopy in a private office. The colonoscopy, specialists point out, requires more equipment, specialized skills and higher malpractice premiums.

Primary Care Physicans -The Bottleneck for Obamacare

Obama's plan does not say anything about increasing the capacity (defined as the maximum sustainable patient throughput over an extended period of time) to handle the additional influx of patients into the US health care system while maintaining the current quality of care or increasing the quality of care.

From Fierce Health Care.

'If the primary-care physician shortage hasn't absolutely exploded, it seems we have your friendly immigrant doctor to thank. After all, unless something changes dramatically in the way U.S. healthcare in structured, we're not likely to see a change in the rate of new primary-care doctors coming into the profession, experts say.

As many FierceHealthcare readers already know, many U.S.-based medical students are shying away from primary care, largely because primary-care physicians make far less than specialists. As a result, many institutions are hiring foreign-trained residency graduates; in fact, more than half of all primary-care residency graduates are immigrants.'

Obama's Showdown with Goldman Sachs and Future of Finance

Goldman Sachs stated record revenues from proriatary trading for Q2 2009. It is an awesome display of using your scarce resouces (money, intellectual property, corporate culture) to make money in a difficult period. They have set aside $11 Billion to compensate employees (that is just for the first 6 months of the year).

This goes against the socialist philosophy of Obama who has made it clear he wants to regin in compensation and behavior of finanacial institutions. How will Obama respond? I am betting that the adminstration will fight a loosing battle and have egg on its face. Goldman is an example of what free markets can do.

From the WSJ

'The fact that Goldman has rebounded so strongly during the first half of the year could raise questions from lawmakers who have funneled hundreds of billions of dollars into the ailing financial system. Just weeks after repaying rescue funds, Goldman - a firm constantly under fire for its deep government connections - reported that compensation rose 41% to $6.65 billion since the first quarter.'

A Tax Problem That Might Hurt Sotomayor

From the TaxProf Blog:

'she was either doing the side legal work for free or for almost-free. Does the amount of work that she did and the income that she brought amount to a trade or business, justifying Schedule C (above the line) deductions? If she had represented the clients through the firm, then expenses either would have been the firm’s expenses (perhaps deductible by the firm but not by Judge Sotomayor) or, if she paid them herself, they would have been deductible below the line since she was an employee'

Moreover, what were the expenses? If they were minimal, who really cares. But suppose she was taking home office deductions. If my earlier presumption is correct, then the receipts from her side practice were likely to have been trivial or insignificant at best. Maybe she claimed to run a law practice out of her home so that she could take home office deductions when she was really (just) an employee whose employer provided her with an office, and the home office deductions would then have been improper. (Employees generally are not permitted to deduct the costs associated with home offices, no matter how much work they actually perform at home. But people who run businesses out of their homes often can.)

Swing States Loose Bling For Obama

This will be the trend in coming months. Ohio was one of the states that put Obama over the top in 2008 with a slight margin.

From RealClearPolitics

'President Obama's job approval in Ohio has dropped significantly in the last two months, dipping under the 50% mark for the first time, according to a new poll by Quinnipiac University. In the last Quinnipiac poll in Ohio taken in early May, Obama enjoyed a healthy 62% job approval rating, with only 31% disapproving. Today, Obama's job approval stands at 49%, with 44% disapproving - a twenty five point net drop in just eight weeks. '

The mendacity of Obama's Economic Policies

An explanation as to why the Fed's policies won't help the economy.

'Quantitative easing - expanding base money in circulation (mainly bank reserves with the central bank by purchasing government securities) - isn’t working in the US, the UK or Japan.

Credit easing - outright purchases of private securities by the central bank, which can either be monetised or sterilised - is achieving little in the US or the UK, although it has not been pushed too hard yet.

Enhanced credit support in the Euro Area - providing collateralised loans on demand at maturities up to a year at the official policy rate - is not working either.

These policies are not improving the ability and willingness of banks to lend to the non-financial sectors. They have had little positive impact on the corporate bond market. It is not surprising why this should be so, once we reflect on the actions and the conditions under which they are taking place.'

Are Charter Schools Making a Difference?

From Rand:

'A new study by the RAND Corporation found charter schools do not harm conventional public schools and charter students are more likely to graduate high school and go on to college than other public school children.'

Yes But Do They Turn Out To Be Good Doctors

From Academic Medicine

A Change to Pass/Fail Grading in the First Two Years at One Medical School Results in Improved Psychological Well-Being'

'Our study has demonstrated that a change from a five-interval (A, B, C, D, F) to a two-interval (pass/fail) grading system in the first two years of medical school at the University of Virginia School of Medicine was not associated with a decline in students' academic performance (course performance in the first two years of the curriculum, USMLE Step 1 scores, clerkship grades, or USMLE Step 2 CK scores). This is consistent with previous data from the University of Michigan Medical School showing that a change from a four-interval (honors, high pass, pass, fail) to a two-interval (pass/fail) grading system in the first year of medical school resulted in no statistically significant change in performance'

How premature regulation can kill innovation.

Another area that Obama will be looking to regulate I am sure. How do dolts in government know what is good for the market?

From Nanowerk

A majority of the jurisdictions examined have additionally issued policy statements on nanotechnology regulation. Pelley and Saner argue that these statements are designed to serve a dual purpose: "On one hand, they signal to industry that the jurisdiction in question is committed to the continued development of nanotechnology, and that it is therefore safe for companies to invest in that jurisdiction. On the other hand, they signal to consumers that jurisdictional governments are committed to ensuring the continued health and safety of its citizens and of the environment."

Financial Innovation

I don't believe this analysis of financial innovation is accurate. On average most financial products that have been invented in the last 30 to 40 years have been a huge benefit to society as a means of reducing risk, and allocation capital to its highest and best use. Using data points from a small time period to conjure up generalizations is a disservice.

From The Baseline Scenario:
'financial innovation is generally good in and of itself, although it has a high risk of creating “negative spillovers” – a higher risk than for non-financial innovation: “Most financial innovations are positive, and we don’t know ex ante which will be negative, so giving ourselves the power to block certain innovations because they might have negative spillovers is risky.” At first blush, this seems like a reasonable extension from real-world innovation to financial innovation.'

Obama's Big Government Approach Turning Off Voters

Latest from Rasmussen:

Sixty percent (60%) of Americans say the federal government has too much power and too much money, according to a new Rasmussen Reports national telephone survey.

Just nine percent (9%) say the government has too little power and money. Twenty-four percent (24%) believe the government has about the right amount of both.

While slightly more than half of those working for both the government and private industry say the government is too big, 79% of entrepreneurs feel that way.

Republicans and adults not affiliated with either major political party are far more concerned about the government’s size and wealth than Democrats are. Eighty-eight percent (88%) of Republicans and 62% of unaffiliateds say the federal government as too much power and money. Among Democrats, however, just 35% agree, while 44% think the size of government is about right.

Those who earn less than $40,000 per year are more wary of the size of the government than are those who earn more. Sixty-two percent (62%) of investors say the government has too much money and power, compared to 57% of non-investors.

Call To Let Big Bad Banks Fail, falls on Obama's Deaf Ears!

Those big ears must be useless.

From a recent testimony by some prominent economists:

Columbia University professor Joseph Stiglitz and MIT professor Simon Johnson warned the Joint Economic Committee of Congress that the current government policy of propping up troubled financial giants could impede an economic recovery.

They each said spending taxpayer dollars freely on behalf of struggling big banks risks drowning U.S. productive capacity in debt -- while handing what amounts to an enormously costly subsidy to politically powerful financial sector insiders.

If the Obama administration fails to hold troubled banks accountable for their problems, the U.S. could face a lost decade of economic growth like Japan's in the 1990s, they said.

The third skeptic, Federal Reserve Bank of Kansas City President Thomas Hoenig, said policymakers must allow troubled firms to fail rather than propping them up, a la AIG (AIG, Fortune 500). He said banks must be treated consistently, regardless of their size or connections, for the sake of restoring confidence to markets and normal function to the economy.

Will Aneesh Chopra (New CTO) Teach Obama A Thing or Two

From a speech Aneesh Chopara gave in 2006

To make health care and other core services more readily available to people in need, management efficiencies will never go far enough, he said, speaking Sept. 10 at the Commonwealth of Virginia Innovative Technology Symposium.

During the group’s travels, they visited a hospital dedicated to heart care. More than 6,000 patients have open heart surgery at the hospital each year, with surgeons performing an average of 14 a day at a cost of $1,500 each. In contrast, the average doctor in the United States performs at most four a day, at a cost of $35,000 or more, Chopra said. Yet the doctors in India do not make dramatically less money than their U.S. counterparts, he said.

Electronic medical records are another example of where the debate must change. EMRs have the potential to improve care for everyone, but such systems can cost $30,000. Many people are wondering how physicians will pay for that, Chopra said, when they really should be asking how to lower that price to $1,000

Obama & Liberals Blowing Smoke on Uninsured Americans

From Keith Hennessey:

The traditional Beltway logic on health care reform goes like this:

• The problem is that 46 million Americans lack health insurance.
  
• Government should provide health insurance to those 46 million people, or at least pay for it.
• Let’s expand a taxpayer-subsidized health insurance program to cover the 46 million, or maybe create a new program.
  • (Alternately: Let’s mandate that everyone has to buy/have health insurance.)
• This means everyone will have health insurance. We have solved the problem.

Much of the health policy debate centers on how to solve this problem. Liberals want to expand government programs: