Hello again. Its been awhile since I last posted my ruminations. I have been following the health care debate, the economy and the Ft. Hood disaster. Where should we stick that thermometer? I'll let you decide that answer.
Have you noticed a lot of commercials about gold lately? At $1,100 an ounce, I am tempted myself to yank out some teeth or melt down some coins to cash in. Why is this price so high? Gold has historically been the flight from panic commodity. Our money system used to be based on gold. Recently, India purchased a ton of gold from the IMF, in fact half of what the IMF was selling. Why is this important? It tells us that people, not just Americans, are nervous. While inflation seems to be far off, anyone that has any exposure to U.S. dollars, seems to believe that the dollar is not a long term play. Which brings me to the US dollar. There is an index called the Dollar Index that compares the dollar to a weighted basket of world wide currencies. Right now, that Index is very low. The weak dollar may help us sell goods overseas but doesn't help us buy stuff from overseas. As we all know, we have a trade deficit and import more than we export.
Where are the jobs? Stimulus? Hmm. I think there were some major problems with the way the stimulus was structured but it did have some benefit but not enough to prevent unemployment going to 10%. The weekly claims number came out and it was downright depressing. Another 500,000 out of work. This week, lawmakers ripped into the www.recovery.gov website. Apparently, people were reporting jobs created from Congressional districts that didn't exist. Yikes. Right now, companies are trying to get lean and mean. Making more with less is what the companies are looking at in face of less demand. Productivity is important. Once companies get to a point where they can't get any leaner, than we'll see jobs come back. At this point, my prediction is Q310 until we see sustainable and positive job growth.
Finally, government spending is alarming. The National Debt Clock just ticked at $12trillion. Wow, I can't even fathom that. Meanwhile, the various legislations passing through Congress are frightening. Cap and Trade (Climate Change), new financial regulation, caps on compensation and as of today, the health care reform bill. I believe the tally on that sucker is going to be $865 billion but it is tricky math. Did you know that the benefits for that plan don't roll out until 2014? Did you also know that you, me, everyone will be paying more taxes immediately to pay for it. I know this stuff is pretty dry and boring but like the mortgage situation that was ignored by the common citizen, if we don't pay attention, we'll see our taxes go up. I don't talk politics on this blog and will refrain. I focus on the financial impacts.
Before you grab the bottle of wine, Scotch or the pack of smokes, don't fret. We are Americans, with the Capital A. We live in the greatest country in the world and we'll survive. Keep your chin up and pay attention. Cheers!
Thursday, November 19, 2009
Thursday, October 22, 2009
Compensation
Good evening. The economy continues to flounder along. The initial new claims number came out today from the Labor Department and it was higher than expected. It actually increased. I didn't hear much from the spin doctors but apparently Wall Street shrugged it off as the market rose due to some positive earnings news. But I didn't want to discuss this as I have in previous posts. The big news was two announcements, one from the pay czar and one from the Fed Chairman about executive compensation.
While I am an adovacate of capitalism and the free market, it is hard to argue that compensation shouldn't be limited by the government for firms that take taxpayer money to bail them out. I just can't win that argument. I am concerned though about the pay limitations that the Fed wants to put on the nation's banks. Bonuses would be subject to the government's discretion. Compensation has been a seeping wound for many many years. The compensation of the higher echelon of executives have been outstripping the common worker exponentially over the last several decades. There are many arguments pro and con about how much somebody, particularly a CEO, is paid. I think policymakers are trying to take advantage of the current crisis by hamstringing the banks from paying high performers that create the wealth and strong stock prices that benefit many people. As a former commercial banker, bonuses for management were driven by company performance and personal performance. The overriding kicker was credit quality, or in other words if you took too many risks and had questionable loans, your bonus would be adjusted. While it seemed arbitrary at the time, the system worked. The current crisis started with the real estate market and some pretty bad actors. All of the United States's banks, probably about 8,000 of them were not all bad bankers. Of the ones that were, they either were shut down, acquired or will be. We need to take a breath before we overregulate our banks. Let's keep our eye on the problems of easy credit and lack of enforcement.
While I am an adovacate of capitalism and the free market, it is hard to argue that compensation shouldn't be limited by the government for firms that take taxpayer money to bail them out. I just can't win that argument. I am concerned though about the pay limitations that the Fed wants to put on the nation's banks. Bonuses would be subject to the government's discretion. Compensation has been a seeping wound for many many years. The compensation of the higher echelon of executives have been outstripping the common worker exponentially over the last several decades. There are many arguments pro and con about how much somebody, particularly a CEO, is paid. I think policymakers are trying to take advantage of the current crisis by hamstringing the banks from paying high performers that create the wealth and strong stock prices that benefit many people. As a former commercial banker, bonuses for management were driven by company performance and personal performance. The overriding kicker was credit quality, or in other words if you took too many risks and had questionable loans, your bonus would be adjusted. While it seemed arbitrary at the time, the system worked. The current crisis started with the real estate market and some pretty bad actors. All of the United States's banks, probably about 8,000 of them were not all bad bankers. Of the ones that were, they either were shut down, acquired or will be. We need to take a breath before we overregulate our banks. Let's keep our eye on the problems of easy credit and lack of enforcement.
Thursday, September 17, 2009
State of the Economy
Good morning everyone. Understandably from my last post, I took a bit of a hiatus from my postings to the blog. After digesting the news of the last month or so and watching the shenanigans on Capitol Hill, I am ready to get back in the saddle.
The other day, Fed Chairman Ben Bernanke made some positive comments about the economy. The quote that I saw was that the recession was likely over. Just like I heard the comment about "green shoots", I am very skeptical of course. To his credit, he did caution about a recovery being slow (or moderate) and 2010 would be not a stupendous year.
Every week, the Labor Department issues reports on the job market. This morning, jobless claims data came out. 545,000 people filed initial unemployment claims last week. The week before it was 557,000 people. The economists had forecasted a higher number and you'll see the spin doctors in force today saying the economy is improving. Look harder into those stories and the data. The data that gets buried is the fact that people that are still on unemployment is 6.23 million people. The other thing that I don't think is reported is the people that ran out of benefits or decided to give up. The last check on the unemployment rate was about 9.7% of the labor force.
Another lovely measure came out today, the housing starts number. The data showed a 1.5% jump in housing starts. Again, look at the numbers. Most of that jump was multi-family homes. While that is a positive sign, historically about 80% of housing starts is single family homes and that number declined.
Jobs and housing continue to struggle. The wonder of living in today's world is that we have many alternative sources for information and don't need to rely on three media outlets and newspapers. What I have learned (the hard way in some cases) is that you need to continue to read the whole story not just the headline. Before people dance in the streets thinking that the economy has recovered, think again. Once the number of unemployment moves down and that initial claims number continues to fall, then we can start slapping each other on the backs. Stay strong!
The other day, Fed Chairman Ben Bernanke made some positive comments about the economy. The quote that I saw was that the recession was likely over. Just like I heard the comment about "green shoots", I am very skeptical of course. To his credit, he did caution about a recovery being slow (or moderate) and 2010 would be not a stupendous year.
Every week, the Labor Department issues reports on the job market. This morning, jobless claims data came out. 545,000 people filed initial unemployment claims last week. The week before it was 557,000 people. The economists had forecasted a higher number and you'll see the spin doctors in force today saying the economy is improving. Look harder into those stories and the data. The data that gets buried is the fact that people that are still on unemployment is 6.23 million people. The other thing that I don't think is reported is the people that ran out of benefits or decided to give up. The last check on the unemployment rate was about 9.7% of the labor force.
Another lovely measure came out today, the housing starts number. The data showed a 1.5% jump in housing starts. Again, look at the numbers. Most of that jump was multi-family homes. While that is a positive sign, historically about 80% of housing starts is single family homes and that number declined.
Jobs and housing continue to struggle. The wonder of living in today's world is that we have many alternative sources for information and don't need to rely on three media outlets and newspapers. What I have learned (the hard way in some cases) is that you need to continue to read the whole story not just the headline. Before people dance in the streets thinking that the economy has recovered, think again. Once the number of unemployment moves down and that initial claims number continues to fall, then we can start slapping each other on the backs. Stay strong!
Monday, August 3, 2009
Mom and the Health Care System
In mid- 2002, we were basking in the glow of our recent wedding and pending arrival of our first child. Soon thereafter, Mom finally decided to start complaining about her pains in her stomach. Those pains were two football sized tumors on her ovaries. Mom was diagnosed with Stage 3 ovarian cancer. At that point on, I began to learn intimately about the healthcare system in the United States.
Mom had a 5 hour surgery in the fall of 2002 to remove the tumors but the surgeon at the University of Florida-Shands Center told us that this wasn't the end of the cancer. After Mom underwent chemotherapy in the months that followed, the cancer was beaten for now. Well, we always knew it would come back. Sure enough in 2004, it spread to her colon. Yes, another battery of tests and surgery at Citrus Memorial in Inverness to remove the cancerous legions. Then another large tumor was found in her brain. In 2005, yet another series of tests and then surgery at George Washington Hospital to remove the tumor (which was malignant). Mom never complained and took every opportunity to spread her good humor with her caregivers.
In 2007, the cancer spread back into her brain and she endured another battery of tests and then radiation. Later in the year, we learned that the tumors grew and the oncologist told us there was nothing more to be done. Yet, Mom kept her chin up and lived each day as it was her last. Sadly, Mom's last day was Sunday on a warm, rainy morning in her nursing home bed in Warrenton, VA.
During this painful time, we watched her savings eaten away by the mounting medical bills. Medicare paid for a large amount but only 80% of the costs. Her secondary insurer, United would only pick up the cost if she paid a huge deductible. I witnessed first hand the professionalism and compassion of all the doctors, nurses and just plain old volunteers. They welcomed Mom's view on life and it gave them a bright spot in their day. The doctors and nurses were clearly overworked and carried themselves through on limited time for their own families. It was overwhelming to see the amount of the bills that came in during this time. I gained a perspective on both sides of the health care reform issue first hand. "Why can't Mom get that drug?" I would ask but she would get some other lesser known or less efficient drug. When her pain would go away because of one of her prescriptions, we were thankful. We realized that a lot of R&D, money and resources went into that drug to get it to the market. We also knew that there were another 9 or so drugs that didn't make it to that stage. I also knew that the younger generation who has less health issues were paying the premiums so my Mom could be kept alive and keep her treated so she could see her grandkids. Lastly, the continuous interactions between Mom and her caregivers were important and never driven by what she could afford. The goal was always on what would be done to help her.
As we get deeper and deeper into debate about the health care reform bill, the costs, criticisms of the current system and positions, let's remember that the current health system while it has its problems, it does have tremendous benefits. We were able to have Mom with us for another 6+ years but the lack of a cure for cancer robbed us of her wonderful presence for an unknown amount of years.
Cheers.
Mom had a 5 hour surgery in the fall of 2002 to remove the tumors but the surgeon at the University of Florida-Shands Center told us that this wasn't the end of the cancer. After Mom underwent chemotherapy in the months that followed, the cancer was beaten for now. Well, we always knew it would come back. Sure enough in 2004, it spread to her colon. Yes, another battery of tests and surgery at Citrus Memorial in Inverness to remove the cancerous legions. Then another large tumor was found in her brain. In 2005, yet another series of tests and then surgery at George Washington Hospital to remove the tumor (which was malignant). Mom never complained and took every opportunity to spread her good humor with her caregivers.
In 2007, the cancer spread back into her brain and she endured another battery of tests and then radiation. Later in the year, we learned that the tumors grew and the oncologist told us there was nothing more to be done. Yet, Mom kept her chin up and lived each day as it was her last. Sadly, Mom's last day was Sunday on a warm, rainy morning in her nursing home bed in Warrenton, VA.
During this painful time, we watched her savings eaten away by the mounting medical bills. Medicare paid for a large amount but only 80% of the costs. Her secondary insurer, United would only pick up the cost if she paid a huge deductible. I witnessed first hand the professionalism and compassion of all the doctors, nurses and just plain old volunteers. They welcomed Mom's view on life and it gave them a bright spot in their day. The doctors and nurses were clearly overworked and carried themselves through on limited time for their own families. It was overwhelming to see the amount of the bills that came in during this time. I gained a perspective on both sides of the health care reform issue first hand. "Why can't Mom get that drug?" I would ask but she would get some other lesser known or less efficient drug. When her pain would go away because of one of her prescriptions, we were thankful. We realized that a lot of R&D, money and resources went into that drug to get it to the market. We also knew that there were another 9 or so drugs that didn't make it to that stage. I also knew that the younger generation who has less health issues were paying the premiums so my Mom could be kept alive and keep her treated so she could see her grandkids. Lastly, the continuous interactions between Mom and her caregivers were important and never driven by what she could afford. The goal was always on what would be done to help her.
As we get deeper and deeper into debate about the health care reform bill, the costs, criticisms of the current system and positions, let's remember that the current health system while it has its problems, it does have tremendous benefits. We were able to have Mom with us for another 6+ years but the lack of a cure for cancer robbed us of her wonderful presence for an unknown amount of years.
Cheers.
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