Sunday, June 26, 2011
Friday, June 24, 2011
The next time your broker or 401(k) adviser tries to talk you into aggressively investing your retirement, consider the results of the latest Merrill Lynch- Gap Gemini survey of high net worth individuals:
The core of the rich portfolio is surprisingly conservative. The wealthy have, on average, 43% of their holdings in low-risk assets. That's 29% bonds and a thumping 14% in cash. So much for the idea that the more you have, the more risk you can take. (It matters, of course, that the rich are typically much older than the rest of us, and are therefore more likely to be risk-averse for that reason.)
They still only have 33% of their money in equities — a slow climb back from the 25% lows seen at the end of 2008. Ominously, while that 33% figure does not seem very high, it nonetheless equals the levels seen just before the crash. And the rich told surveys that they are planning to ramp up their equity holdings pretty substantially this year.
Real estate makes up 15% of the average allocation and gold and other alternative investments are down to 5%. The lesson learned 3 years ago is that real estate can be a risky investment (although housing is probably near a generational low price now at the moment), and for most small investors this has entailed a disproportionately large percentage of savings, even to the point that most of us are leveraged with a mortgage.
Your job is the best place to earn income-- learn a skill that is valued by society-- investments should be primarily for wealth preservation. Three lessons: 1) cash is an allocation, 2) not everyone should necessarily own a house, and 3) everyone is trying to sell you something, even your 401(k) adviser.
Thursday, June 23, 2011
Tuesday, June 21, 2011
Likewise, former President Bill Clinton has laid out a 14-point plan to bring smart jobs and increase energy efficiency with direct federal spending. The only question I have is why so little of this has been done to date. A crushing deflationary recession and increasing needs for fuel, food and functional jobs... this is a screaming call for stimulative Keynesian spending.
Clearly the increase in Federal Reserve liquidity alone has not increased jobs and we need direct federal spending on a massive scale. We learned this lesson in the 1930's and 40's, the last deflationary cycle that didn't end until Europe, Japan and the US put everyone back to work killing each other. It would be nice if we had learned that lesson well enough to obviate another world war. If Obama doesn't do something very soon to get unemployment below 8.5% his legacy will be of a one-term president who was elected with a mandate for change from a devoted and vibrant base, and instead he squandered his presidency on the status quo appealing to the tired tropes of endless war and wall street fat cats.
Obama could have been Marcus Aurelius and instead he chose to be Vitellius; could have been FDR, but opted alternatively to serve GWB's third term. It's really unbelieveable to me.
[One note: Bill Gross at PIMCO has been short Treasuries, so he's talking his book in wanting more deficit spending... but that doesn't make him wrong.]
Monday, June 20, 2011
The trouble is that if they actually said any of this clearly and publicly then no
one would vote for them. So instead they throw around incendiary decoy issues.
Behind closed doors they are perfectly happy to laugh at evangelical Christians,
but in public they will toss them a little red meat, say by appointing a crazy
judge or by cutting off funding to Planned Parenthood. (After all, it's mostly poor
women who are hurt by such cuts, and who cares about them?) Or they produce an
endless string of boogeymen only they can protect us from. (It's the gays! It's
the Muslims! It's the illegal immigrants!)
[Emphases mine] There was a time not too long ago that Republicans could be intellectually honest and not kow-tow to the extreme right-wing. Bill Buckley dressing down the John Birchers comes to mind, something that would never happen today. Rather, we have Newt ostracized because he got lax on message discipline and stated the facts about the unworkability of Paul Ryan's fantasy Medicare fix.
Remember when Nixon signed the EPA into existence? Something else that would never happen today. The GOP has moved into the farthest corner of silliness and the power brokers are laughing all the way to the bank. But the corollary effect is that the Democratic Party, while marginally better, has also moved further toward silliness. After all, they only need to appease enough of the middle to get re-elected while still remaining loyal to the plutocrats, therefore we still have "health reform" written by insurance companies, endless wars that enrich defense contractors, and bailouts that protect Wall Street bonuses while we tear apart our social safety nets-- and there are no checks on the power (Why that is is another issue, but see Jon Stewart's interview with Chris Wallace for a clue.).
Saturday, June 18, 2011
Discussions about U.S. health care reform are often parochial, with scant attention paid to other countries' experiences. It is thus surprising that in the ongoing debate over Medicare, some U.S. commentators have turned to the Netherlands as a model of regulated competition among private insurance companies.1 The Dutch experience is particularly relevant given the proposal by Congressman Paul Ryan (R-WI) to eliminate traditional Medicare and instead provide beneficiaries with vouchers to purchase private insurance. (The Republican majority in the House passed the Ryan plan as part of the 2012 budget resolution, but it was defeated in the Senate.)
It is easy to understand why Dutch health care — which does rely on regulated private insurance — would appeal to advocates of Medicare vouchers. Indeed, U.S. ideas about managed competition helped to shape health care reform in the Netherlands.2 But careful examination of the Dutch experience shows that insurance competition has not produced the expected benefits and in fact has created new problems, calling into question the merits of this reform model and its suitability for Medicare.
The myth that competition has been key to cost containment in the Netherlands has obscured a crucial reality. Health care systems in Europe, Canada, Japan, and beyond, all of which spend much less than the United States on medical services, rely on regulation of prices, coordinated payment, budgets, and in some cases limits on selected expensive medical technologies, to contain health care spending.5 Systemwide regulation of spending, rather than competition among insurers, is the key to controlling health care costs. The Netherlands, after all, spent much less on medical care than the United States with virtually universal insurance coverage long before it began experimenting with managed competition in 2006.
The Dutch experience provides a cautionary tale about the place of private insurance competition in health care reform. The Dutch reforms have fallen far short of expectations — a reminder that policy intentions should not be confused with outcomes and that managed competition is hardly a panacea. The idea that the Dutch reforms provide a successful model for U.S. Medicare to emulate is bizarre. The Dutch case in fact underscores the pitfalls of the casual use (and misuse) of international experience in U.S. health care reform debates.5 Before we learn from other countries' experiences with medical care, we first need to learn about them.
Friday, June 10, 2011
The world is becoming much more of this hustlers game. The conservative folk, who survive by playing it straight, see rules change and bend before their eyes....
The old and unworldly had the worst of it. Many were driven to begging, many to suicide. The young and quick-witted did well. Overnight they became free, rich, and independent. It was a situation in which mental inertia and reliance on past experience were punished by starvation and death, but rapid appraisal of new situations and speed of reaction were rewarded with sudden, vast riches. -Sebastian Haffner on the early 20's Weimar economy in Defying Hitler
Thursday, June 09, 2011
Tuesday, June 07, 2011
It seems that Americans are in the midst of a raging epidemic of
mental illness, at least as judged by the increase in the numbers treated for
it. The tally of those who are so disabled by mental disorders that they qualify
for Supplemental Security Income ( ) or Social Security Disability Insurance ( )
increased nearly two and a half times between 1987 and 2007—from one in 184
Americans to one in seventy-six. For children, the rise is even more startling—a
thirty-five-fold increase in the same two decades. Mental illness is now the
leading cause of disability in children, well ahead of physical disabilities
like cerebral palsy or Down syndrome, for which the federal programs were
Read the whole article. Our society is medicated beyond belief and the efficacy and long term effects of these psychoactive drugs are suspect, especially in children. The conflicts of interests among doctors, patients and industry is examined.
Part two of the 2-part article:
At the very least, we need to stop thinking of psychoactive drugs as the
best, and often the only, treatment for mental illness or emotional distress.
Both psychotherapy and exercise have been shown to be as effective as drugs for
depression, and their effects are longer-lasting, but unfortunately, there is no
industry to push these alternatives and Americans have come to believe that
pills must be more potent. More research is needed to study alternatives to
psychoactive drugs, and the results should be included in medical
In particular, we need to rethink the care of troubled children. Here
the problem is often troubled families in troubled circumstances. Treatment
directed at these environmental conditions—such as one-on-one tutoring to help
parents cope or after-school centers for the children—should be studied and
compared with drug treatment. In the long run, such alternatives would probably
be less expensive. Our reliance on psychoactive drugs, seemingly for all of
life’s discontents, tends to close off other options. In view of the risks and
questionable long-term effectiveness of drugs, we need to do better. Above all,
we should remember the time-honored medical dictum: first, do no harm (primum
So much of medicine is unscientific-- one of the glaring disappointments I've always had with the profession-- but few things are less scientific or more reckless than treating kids with antipsychotics.
Monday, June 06, 2011
LOS ANGELES (MarketWatch) — Once provisions of the Affordable Care Act start to kick in during 2014, at least three of every 10 employers will probably stop offering health coverage, a survey released Monday shows.
While only 7% of employees will be forced to switch to subsidized-exchange programs, at least 30% of companies say they will “definitely or probably” stop offering employer-sponsored coverage, according to the study published in McKinsey Quarterly.
The survey of 1,300 employers says those who are keenly aware of the health-reform measure probably are more likely to consider an alternative to employer-sponsored plans, with 50% to 60% in this group expected to make a change. It also found that for some, it makes more sense to switch.
My comment: This is not a bad thing, employer-based health insurance is an anachronistic inefficiency left over from the wage-control era of the last century. It was bound to be destroyed with the next deflationary cycle in the employment market-- which is now. This will allow individuals more mobility and choice, and my prediction is that it's one step closer Medicare-for-all basic national health insurance which can be supplemented by private policies.
Friday, June 03, 2011
World War II and the draft were creating academic opportunities for women; to her delight, Dr. Yalow was awarded a teaching assistantship at the College of Engineering at the University of Illinois. She tore up her steno books and headed to Champaign-Urbana, becoming the first woman to join the engineering school’s faculty in 24 years.Dr. Yalow received her doctorate in nuclear physics in 1945, and went to teach at Hunter College the following year. When she could not find a research position, she volunteered to work in a medical lab at Columbia University, where she was introduced to the new field of radiotherapy. She moved to the Bronx Veterans Administration Hospital, now the James J. Peters Veterans Affairs Medical Center, as a part-time researcher in 1947 and began working full time in 1950. That same year, she began her 22-year collaboration with Dr. Berson.In their work on radioimmunoassay, Dr. Yalow and Dr. Berson used radioactive tracers to measure hormones that were otherwise difficult or impossible to detect because they occur in extremely low concentrations. They went on to use the test to measure concentrations of vitamins, viruses and other substances in the body.