Tag Archives: crisis

Healthcare debate: generational warfare

0
under economics, education, energy, environment, food, government, trend

That is why they’re bringing out the guns. It‘s not just the right-wing gothic imagination run amok (though it is that). It’s war.

The healthcare debate in a nutshell: declining revenues + rising costs = growing competition for shrinking resources. And on one side of that conflict, an aging segment of the population, weaned on and wedded to the postwar cult of youthfulness, painfully aware that as its ideals fade its healthcare costs will rise. They’ve grown fat on a diet of screwing younger people out of everything: cognitive capture through branding empires imprinted (literally) from diapers onward, consumer culture that’s cheap in substance only (young pay old), the compounding bloat of educational costs (we skipped out on our student loans therefore you can’t), the abyss of debt culture, the wilderness of mirrors called credit reporting, skyrocketing housing costs (lease-to-own mutated into default-to-turns-out-you-rented-sucker), the infinite proliferation of unaccountable “fees,” dwindling pay (and the threat of endless “internships”), the informalization of work (and destruction of labor), a ubiquitous cult of waste (whose roving shrine is the “SUV”), and social safety nets as frail as the generations that benefited from them. The old-timers are terrified on two fronts that granny really will be unplugged: first, because they secretly identify with “granny” and, second, because they (also secretly) know the values they’ve inculcated in their young all but guarantee it.

Rumbling Gates

0
under economics, international, medicine, science, trend

WSJ (14 Aug ’09)

The Bill and Melinda Gates Foundation [...] sold off almost all of its pharmaceutical, biotechnology and health-care investments in the quarter ended June 30, according to a regulatory filing published Friday. [It] sold its total holding of 2.5 million shares in health-care giant Johnson & Johnson in the quarter [as well as] millions of shares in major drug makers, including 14.9 million shares in Schering-Plough Corp., almost 1 million shares in Eli Lilly & Co., 8.1 million shares in Merck & Co. and 3.7 million shares in Wyeth, over the same time period. The foundation no longer holds shares in any of those companies. Among the other health and life sciences-related investments the foundation liquidated are Allos Therapeutics Inc., InterMune Inc., Auxilium Pharmaceuticals Inc. and Vertex Pharmaceuticals Inc. The only life science-related holding the foundation retains is a 3 million-share stake in Seattle Genetics Inc.

Weak journalistic analysis:

The foundation’s decision to drastically reduce its exposure to health-related stocks is striking, as many of its charity grants have been disbursed to address developing country health issues. Its move comes against the background of anxiety among drugmakers and healthcare insurance firms about the potential impact of the Obama administration’s proposed overhaul of the U.S. healthcare system, which could put pressure on prescription drug prices.

Sooner of later the GF (et al.) need to, as Nixon famously said he said, pee or get off the pot: whatever they may gain from healthcare-related investments is more than matched by losses incurred by the increasingly dysfunctional economics of “healthcare,” which are by no means limited to the current shouting match in the US.

Factors to consider: (1) alternative R&D models: the GF has become the major sponsor ofpublic–private research partnerships, but like every other philanthropic organization it’s facing serious liquidity concerns. Pulling these investments will free up funds to support alternative nitiatives and interests and (2) send a signal that major hands-on investors aren’t happy with current political trends; and (3) pensions: collapsing pension funds (cf. Detroit, California, etc.) will be forced to make drastic cuts in healthcare costs in general and pharmaceutical costs in particular. The market won’t bear skyrocketing pharma costs anymore; but there’s something more afoot here.

GIGO

0
under economics, finance, government, media

MSNBC 09-07-24 Bernanke and garbage bag

Note the insect that crawls across the screen right on cue @5:07:

Spitzer @5:30:

The Federal Reserve has benefited for decades from the notion that it is quasi-autonomous, it’s supposed to be independent. Let me tell you a dirty secret: the Fed has done an absolutely disastrous job since Paul Volcker left [11 Aug ’87]. [crosstalk] The reality is the Fed has blown it. Time and time again [...] they blew it — bubble after bubble, they failed to understand what they were doing to the economy [...] they’ve created multiple bubbles without permitting the economy underneath it to grow. We need to ask the hard questions. The most poignant example for me is the AIG bailout, where they gave billions, tens of billions of dollars that went right through, conduit payments to the investment banks that are now solvent. They needed to get the money to the banks. We didn’t get stock in those banks, they didn’t ask what had been going on. This begs and cries out for hard, tough examination. The fed was quasi-autonomous from the public but it was run by the banks. You look at the governing structure of the New York Fed, it was run by the very banks that got the money. This is a ponzi scheme, an inside job — it is outrageous. It is time for the Congress to say enough of this — and to give them more power now is even crazier.

He wouldn’t have said that if he hadn’t been busted.

The nondiscussion contrasting the Fed and the CIA is unenlighteningly enlightening too.

User-generated late capitalism

0
under economics, finance, government, law, standards, trend

Global economy = MMPORG, ratings = Facebook:

Reuters:

  • Berkshire cuts Moody’s stake to 16.98 pct
  • First reported reduction since 2000
  • Moody’s shares sink 10.6 pct after-hours[...]

Warren Buffett’s Berkshire Hathaway Inc (BRKa.N) (BRKb.N) this week lowered its stake in credit ratings provider Moody’s Corp (MCO.N) [no friends! :( ] to 16.98 percent from 20.4 percent, the first reported reduction since 2000. The sale of about 8 million shares was revealed three months after Moody’s stripped Berkshire of its own “Aaa” rating, and a day after the Obama administration proposed new disclosure and conflict of interest rules for rating agencies.

And the stock exchanges are hotornot, full of outstretched arms holding cellphones up to snap a pic in the mirror.

(felix salmon)

See also: QOTD,” “eBankrun.”

Freedom’s just another word for nothing left to lose

0
under economics, government, language, standards, trend

S&P to be headed up by legendary 1A lawyer Floyd Abrams:

What is this veteran of free-speech battles doing on the payroll of a company that analyzes securities? Making an argument about the First Amendment, to begin with. Mr. Abrams will contend that S.& P.’s ratings deserve exactly the sort of free-speech protections afforded to journalists, on the theory that a bond rating is like an editorial—an opinion based on an educated guess about the future. And for the same reason you can’t sue editorial writers, Mr. Abrams will argue that you can’t sue a bond rater because the economy went into a free fall that few saw coming.

A slightly modified fiction disclaimer would be a much cheaper solution:

This rating is a work of fiction. The names, characters, places, incidents, events, and data are products of the analysts’ imagination or have been used fictitiously and are not to be construed as real. Any resemblance to persons, living or dead, actual events, locale or organizations is entirely coincidental.

But they’d still have to find a litigator.

ATM = NO 2 CA IOU

0
under finance, government, money, standards, trend

Software (someonewithoverlyrestrictiverightssettings@flickr):

Chase ATM barfs on CA IOU

Hardware (alicegop@flickr):

unIDed ATM plaque nixing CA IOUs, flickr/alicegop/090711

eBankrun

0
under digital, economics, money, network, security, trend

BBC, “Billions stolen in online robbery” (3 Jul ’09):

Space trading game Eve Online has suffered a virtual version of the credit crunch. One of the game's biggest financial institutions lost a significant chunk of its deposits as a huge theft started a run on the bank. One of the bank's controllers stole about 200bn kredits and swapped them for real world cash of £3,115. As news of the theft spread, many of the bank's customers rushed to remove their virtual cash.

m3t00, quoting Daniel P. B. Smith, 21 Sep ’08:

“It might turn out that, without anyone really noticing, the global financial system has gradually turned into something that is mostly a MMORPG.”

(risks)

Funhouse Backed Securities (FBS); or, Against Tufte (public) note 00003

0
under digital, finance, media, network, trend

Six Flags ‘goes tits up,’ as the Brits say. One way to tell the story of how that story unfolded could involve the rigid application of Tufte’s parsimonious hectoring, sermonizing, and hucksterizing; but something like speculativebubble.com’s dramatization could be so much better.

Meanwhile... Twitter-coupon blue-light special flash-mob permanent-floating-bailout-club just-add-water MMFery.

In a press release issued this morning, Dell (Nasdaq: DELL) claims it has sold $3 million worth of gear through Twitter since it set up camp on the microblogging site two years ago, with a third of that amount coming during the past six months. That’s a healthy jump from the $500,000 in refurbished computers that Dell was bragging about selling through Twitter.com tweets back in November. Meanwhile, coaster fans were flocking to the Six Flags (OTC BB: SIXF.OB) Twitter account yesterday, as the regional amusement-park operator offered $10 admissions to its Twitter followers for a few hours. After the link was posted on enthusiast sites including CoasterBuzz.com, “server capacity issues” overheated the chain’s online ordering page. The end result is that Six Flags gained thousands of new followers — a brilliant move — and is promising “another chance” at the marked-down turnstile clicks. Think that sounds cool? Well, Six Flags is a relative slacker compared to Holiday World. The Indiana-based amusement-park operator is a Twitter-holic. All told, it has treated its followers to 2,150 updates through Twitter, offering everything from operating anecdotes to new attraction teases to heads-up alerts on ticket giveaways and promotions.

Sustainable, for sure.

See also:Against Tufte, (public) note 00001,” “Electric Kool-Aid; or, Against Tufte, (public) note 00002,” and “Ways of seeing.”

Too big to fail: California

0
under economics, government, trend

California State Controller John Chiang in a 10 June ’09 letter to Schwarzenegger:

In the absence of legislative action, the State will not have sufficient cash to meet all of its payment obligations on July 28. By July 31, the cash deficit will increase to a negative $2.78 billion.

(calcrisk)

Unreal estate

0
under economics, finance, government, trend

A klein bottle:

klein bottle from www.ima.umn.edu

From the archives: how to fix a liquidity crisis (13 Dec ‘07)”—that is, in 2007—quoted the FT as saying:

The latest Fed flow of funds data shows that FHLBs [Federal Home Loan Banks, "a little-known network of government-sponsored bank co-operatives founded during the Great Depression"] issued new loans at an unprecedented annualised rate of $746bn (EU508bn, UKP366bn) in the third quarter, up from practically nothing in the second quarter.

Where’d they get the money? MBSes. Sunlight Projects:

The problem is that over the last few years, some of the FHLBs invested heavily in private mortgage-backed securities—the same types of investments that lost much of their value during the housing crisis. The FHLBs invested in very few securities backed by subprime loans—the so-called toxic assets we’ve heard so much about of late. Nonetheless, the values of some of the FHLB investments have plunged—and fast. In the space of just two months, for example, the ratings of about $1.4 billion of the Seattle bank’s investments were downgraded from AAA to junk status. That doesn’t mean they’re now worthless, but it certainly increases the chances that they won’t recover their full value. What’s more, the Seattle bank was only holding about $1.7 billion in capital on December 31, 2008; that capital is meant to protect it against losses.

Better still:

Because the banks believe these losses are temporary, they don’t have to be recognized on their accounting statements. [...] Home loan bank representatives say the setbacks are merely temporary because they intend to hold the securities to maturity. By then, they predict, the economy will have improved and these holdings will have recovered their value.

Go team.

See also:No one saw it coming (Citibank edition).”

Promising idea

0
under finance, idea, law

Deny pensions to former execs of too-big-but-failed companies.

See also:Troubled asse(t)s,” wherein Credit Suisse Group compensated bankers “with an illiquid group of junk bonds, mortgage-backed securities and corporate loans.” Cf. malus, n., “The return of performance-related compensation originally payed by an employer to an employee as a result of the discovery of a defect in the performance.”

POTD

0
under architecture, finance, language, neighborhood, trend, urban

Phrase of the day: see-through buildings.

Washington Business Journal:

Anyone who follows the commercial real estate market knows there are buildings in trouble throughout Washington, but as one drives along the Dulles Toll Road or Route 28, it’s hard to miss the signs of distress. “See-through buildings” dot the corridor, bereft of the interior office walls that don’t show up until a tenant does.

Tysons Corner, VA (mindgutter@flickr)

"see-through" (i.e., empty) office building in Tysons Corner, VA

This source says the phrase was coined “during the Texas real estate bust of the 1980s.”

(cr)

Let your fingers do the browsing

0
under digital, finance, media, network, trend

Denver Business Journal on the yellow pages going bust:

R. H. Donnelley CEO Dave Swanson says that no one could have foreseen the series of events that led to the tattered Yellow Pages publisher filing Friday for Chapter 11 bankruptcy protection. [...] “We just could not have anticipated the severity of the economic downturn,” Swanson said in a telephone interview. [...] “It’s business as usual at R. H. Donnelley today and it will be (in the future),” said Swanson. [...]

The article notes that “R. H. Donnelley has tried to remake itself in recent months” (emphasis added).

Interesting sidenote: “Donnelley traces its roots to 1886, when the Chicago Directory Co. began publishing a phone directory three times a year.” @ the speed of the telephone then. The shift to an annual publication must mark a significant turn—but of what?

Random number of the day

0
under architecture, economics, neighborhood, trend

One out of every 54 “homes” in California is in foreclosure.

BMOTD [bon mot of the day]

0
under economics, finance, government, language

Dean Baker:

This raises the obvious question, if the banks are in such good shape, why not take away the training wheels and let them fend for themselves in the market?

Training wheels.

FIRE, Detroit, GOP, Microsoft

3
under digital, network, security, trend

[FIRE = Finance, Insurance, and Real Estate]

MOFT:

At Microsoft, we see a future full of potential. We're working to expand the possibilities for computing every day, by continually improving and advancing our current products and embarking on fundamental research that paves the way for tomorrow's breakthroughs.

Fleishman:

Microsoft has revealed that Windows 7 will offer an optional, downloadable Windows XP virtual machine to provide full backwards compatibility.

Eight years behind Apple and three years after Apple dropped support for Classic.

Winsupersite:

Before, Microsoft could claim that Windows 7 would be at least as compatible as Windows Vista. Now, they can claim almost complete Windows XP compatibility, or almost 100 percent compatibility with all currently running Windows applications. [emphasis in orig]

The point isn't MICROSOFT SUXXX0RS!!! AAPL ROOLZ!!!, though if you had to boil it down to four words those ones are much closer to true than to false. Rather, the problem is that Microsoft is the Detroit of software. It makes big, ugly, dangerous, resource-hogging crap, and its “success” is based on...its “success.” Vast sectors of our economy, from enormous enterprises to mom-and-pop shops, desperately depend on its continued dominance; and when it collapses, they—and we—will be screwed. It was hardly obvious that falling real-estate values would materially contribute to the sudden collapse of Detroit; and it’s far from obvious what will topple Microsoft.

Window Steam blog:

We will be soon releasing the beta of Windows XP Mode and Windows Virtual PC for Windows 7 Professional and Windows 7 Ultimate.

“Ultimate” is right up there with naming an OS after the year of its release.

Upcoming UI innovations to look forward to:

MS UI grab

Some bloke named Steve:

This is impenetrable. It’s UI salad.

Gruber:

Keep rocking that floppy disk icon, Microsoft.

See also:As Estonia goes, so goes the world,” “Blowback for dummies,” “MS’s homeland security strategy,” “Judge to Ballmer: ‘GIVE IT UP FOR ME’,” “Missing from the stimulus bill.”

Consumer confusion

0
under economics, language, media

In Roubiniworld, metaphors are shaken not stirred:

While the worsening employment outlook is in line with Wall Street’s expectation, persistently high monthly job losses and the accelerating rise in the unemployment rate will further dampen Main Street’s consumption and animal spirits in an economy already facing considerable headwinds due to massive wealth destruction.

Disambiguate.

Just another future song

0
under economics, finance, neighborhood, trend, urban

Audio:

[Rev. ed. 09-05-21: Seeqpod went bust; you can manually reconstruct this post yourself by finding a recording of David Bowie’s “Diamond Dogs.”]

Video:

The Top 25 Fortune 500 Companies in New York City
rank in: corporation Headquarters
(New York, NY)
Fortune 500 industry group 2007
Revenues
($ million)
Stock
price
2008
NYC NYS US
1 1 8 Citigroup 399 Park Ave. 10043 Commercial Banks
$159,229
77.2%
2 2 12 J.P. Morgan Chase & Co. 270 Park Ave. 10017 Commercial Banks
116,353
–27.8%
3 3 13 American International Group 70 Pine St. 10270 Insurance: Property and Casualty (stock)
110,064
97.3%
4 5 17 Verizon Communications 140 West St. 10007 Telecommunications
98,786
–22.0%
5 6 20 Goldman Sachs Group 85 Broad St. 10004 Securities
93,775
60.8%
6 7 21 Morgan Stanley 1585 Broadway 10036 Securities
87,968
69.8%
7 8 30 Merrill Lynch 4 World Financial Center 10080 Securities
87,879
78.3%
8 9 37 Lehman Brothers Holdings 745 Seventh Ave. 10019 Securities
64,217
 
9 10 43 MetLife 200 Park Ave. 10166 Insurance: Life, Health (stock)
59,003
–43.4%
10 11 47 Pfizer 235 E. 42nd St. 10017 Pharmaceuticals
53,150
–22.1%
11 12 49 Time Warner 1 Time Warner Center 10019 Entertainment
48,418
–39.1%
12 14 75 American Express 200 Vesey St. 10285 Diversified Financials
46,615
64.3%
13 15 77 Hess Corporation 1185 Sixth Ave. 10036 Petroleum Refining
39,474
–46.8%
14 16 80 Alcoa 390 Park Ave. 10022 Metals
32,316
69.2%
15 17 82 New York Life Insurance 51 Madison Ave. 10010 Insurance: Life, Health (mutual)
31,924
 
16 18 84 News Corporation 1211 Sixth Ave. 10036 Entertainment
30,748
55.6%
17 19 86 TIAA-CREF 730 Third Ave. 10017 Insurance: Life, Health (mutual)
29,280
 
18 20 125 Bristol-Myers Squibb 345 Park Ave. 10154 Pharmaceuticals
28,655
–12.3%
19 21 139 Loews Corporation 667 Madison Ave. 10021 Insurance: Property and Casualty (stock)
27,526
–43.9%
20 22 156 Bear Stearns 383 Madison Ave. 10179 Securities
19,977
 
21 24 172 Bank of New York Mellon Corporation 1 Wall Street 10286 Commercial Banks
17,920
–41.9%
22 25 181 CBS 51 W. 52nd St. 10019 Entertainment
16,151
69.2%
23 26 182 L-3 Communications 600 Third Ave. 10016 Aerospace and Defense
15,985
–30.4%
24 27 186 Colgate-Palmolive 300 Park Ave. 10022 Household and Personal Products
14,798
–12.1%
25 29 191 Viacom 1515 Broadway 10036 Entertainment
14,073
54.3%
NYC = New York City; NYS = New York State; US = United States

See also:Whiter shade of gray,” “Minor detail.”

(jl | kazys varnelis | wikipedia)

Finance allegory #1

0
under economics, government, media

Shades of Lehman, toxic assets, and stress tests:


And, of course, Detroit.

Bailout bill

0
under LDCs, design, economics, government, money

The Zimbabwean (.co.uk, “a voice for the voiceless”), which offers among other things “daily cholera updates and alerts,” writes:

One of the most eloquent symbols of Zimbabwe’s collapse is the Z$100 trillion dollar note, a symptom of their world record inflation. This note cannot buy anything, not even a loaf of bread and certainly not any advertising, but it can become the advertising, it can be a powerful reminder about Zimbabwe’s plight and the need to hold someone accountable.

Their Flickr photostream purports to show a one hundred trillion dollar note (uploaded 25 Mar ’09):

Zim 100 trillion note (www.thezimbabwean.co.uk )

zim hundred trillion note+ (www.thezimbabwean.co.uk)

The source of the images is an ad campaign that uses Zimbabwean currency for billboard paper.

Numismaster:

Officially the inflation rate is at 231 million percent, but the Feb. 2 issue of the London (England) newspaper The Times estimated the true rate to be an astronomical 5,000,000,000,000,000,000,000 per cent.

Al Jazeera:

Tendai Biti, the finance minister, last month projected inflation would fall to just 10 per cent by the end of this year as the use of foreign currency [i.e., the USD] would help to stabilise prices.

See also:What’s a few zeroes between friends?,” “Currency design software,” “Like printing money,” “I Promise to pay the bearer on demand.”

(anorak | house of marketing | ideate; also noted in adrants. Where the hell is the international press on this?)

SLM: I Have good news and bad news

0
under economics, education, finance, trend

First the good news:

Sallie Mae gave some hope to the unemployed Monday, announcing it will bring 2,000 jobs to the U.S. within the next 18 months as it shifts call center and other operations from overseas. The move marks somewhat of a turnaround for the nation’s largest private student lender, which two years ago was faced with the need to slash costs amid collapsing capital markets. “We were at the point where we couldn’t make a student loan at a profit,” Chief Executive Albert L. Lord said during a conference call. Sallie Mae quickly scuttled jobs overseas as part of a plan to save about $300 million over a 12-month period. “The company had to re-engineer itself. It had to cut jobs and it had to move jobs. At least that’s how we felt at the time,” Lord explained. Once the cost cuts were made, Sallie Mae started to look into returning those positions to the U.S. [AP, 6 apr ’09]

And now for the bad news... Choose all that apply:

  1. Employment numbers are tanking and will continue to do so.
  2. Graduating students won’t find jobs.
  3. Their parents are strapped as well.
  4. Forbearances and defaults will skyrocket.
  5. Having foreign national dun recent grads for money would be really bad PR.

Bespoke

0
under economics, finance, government, international, network, trend

Alas:

See also:McCain’s modest proposal.”

(salmon)

“Because nature doesn’t do bailouts”

0
under economics, international, trend

Ainger, “Once beaten for stating the obvious, our time has come,” Teh Grauniad, 26 Mar ’09):

Ten years ago, the anticapitalist movement predicted this recession.

(pr@nettime)

Pity party

0
under economics, government, law, trend

AIG EVP Jake DeSantis to AIG CEO Edward Liddy:

I am proud of everything I have done for the commodity and equity divisions of A.I.G.-F.P. I was in no way involved in—or responsible for—the credit default swap transactions that have hamstrung A.I.G. Nor were more than a handful of the 400 current employees of A.I.G.-F.P. Most of those responsible have left the company and have conspicuously escaped the public outrage.

First, one has to wonder who shared DeSantis’s letter with the NYT. Perhaps that same person might like to share the names of the “handful” of culprits so that they, in turn, can get their fare share of public outrage. What do you think, Jake? Or are you really saying that you drafted this for Liddy’s eyes only, and not for the NYT’s readership?

And, second—Jake—countless blue-collar workers could tell similar if less exalted tales about being sideswiped for other’s sins—about how it’s not their fault, about how promises made to them were broken, about how they lost their jobs and benefits, and so on. Sad stories, all, though most of them lack your string-section melodrama about how poor orphans won’t get as much as they deserve because Evil Congress is trying to “rais[e] the tax on the retention payments to 90 percent.” (Never mind that the proximate cause of your charity is the name-and-shame threats of Andrew Cuomo, whom you also castigate.) But, really, where were all your high-minded histrionics when their jobs contracts were getting broken and job were getting cut over the last few decades? Your generous compensation never had anything to do with that trend, did it?

[Update: takedown. Note the shift in who’s being addressed, between Jake and the reader.]

Self-inflating flotation device

0
under economics, finance, government, trend

Doug Henwood:

(By the way, the buzz is that some banks may participate in the bailout scheme, borrowing money from the gov to buy their own bad assets at ridiculously inflated prices. That renders them technically solvent, with Washington holding the bag. Nice.)

Gangster.