Dan McLaughlin at CBS News has an excellent opinion/analysis of the current health care “debate”.  Here’s a few pastes, but read the whole thing:

Let’s review the options. The Democrats’ main argument is that restructuring the entire health care sector will reduce the nation’s total (public and private) outlay for health care. When you boil it down, though, there are only three variables you can cut: reduce the amount of medical care provided; reduce what providers of medical care earn for their products and services; and reduce intermediary costs. All are problematic.

I. Less Medical Care

One argument advanced by proponents of the various plans is that costs would be reduced by providing more care, because preventative care would prevent more expensive care from being needed… .Back on Earth, a rigorous study in the journal Circulation found that for cardiovascular diseases and diabetes, “if all the recommended prevention activities were applied with 100 percent success,” the prevention would cost almost 10 times as much as the savings, increasing the country’s total medical bill by 162 percent. That’s because prevention applied to large populations is very expensive, as shown by another report Elmendorf cites, a definitive review in the New England Journal of Medicine of hundreds of studies that found that more than 80 percent of preventive measures added to medical costs.

II. Medical Care For Less Cost

The issue of shortages brings us to the problem with the second option: rather than reducing the amount of care provided, reduce the amount paid to the people who provide it: doctors, nurses, and pharmaceutical and medical device companies. Certainly on the Left there is a fair amount of sentiment for making it less profitable to provide care. But there is really no getting around the basics of supply and demand: if we make it less profitable to become a doctor, we will end up with fewer doctors.

III. Cutting Out The Middleman

The elephant in the waiting room is the other big cost driver of intermediaries besides the scope of coverage and the cost of having shareholders and executives: lawsuits. Precise figures are again a subject of intense dispute, but a goodly chunk of what drives the amount of `unnecessary’ care provided, the cost of providing services and the cost of intermediaries is the need to protect against and pay for the cost of medical malpractice and denial of coverage litigation. None of the Democratic proposals, however, seek to make any practical inroads against this source of costs. Replacing a private system with a public one could arguably do so if the trial bar is effectively precluded from bringing against the government many of the kinds of lawsuits now used against private insurers – but aren’t liberals in favor of keeping those kinds of suits viable? And how likely is it that in the long run they won’t provide other mechanisms to keep one of their vital constituencies in business?

There will be no cost savings. There’s no sense in pretending otherwise.

The whole purpose of health care reform is to increase government control of the majority by an elite few.  This elite few’s power and income will be vastly enriched by this health care coup d’e'tat – if the elite can pull it off.  But make no mistake – that is, stop pretending otherwise – it has nothing to do with improving the lives of the American people.  We do need to gear up for a large increase in demand for health care in America, because of the aging of America.  If a higher percentage of the population is old we should expect that a higher percentage of GDP will be spent on health care.  To accommodate this, we need to augment the total supply of health care.  Price always rations whatever available supply there is.  We don’t need government elites to ration it based on their political whim rather than through price. If an increased supply is encouraged by reducing lawsuits and building more hospitals and medical schools, we can expect lower prices (than otherwise) with the increased supply of practitioners…it’s really that simple.

Here’s Barry Ritholtz, CEO of FusionIQ and author of Bailout Nation, arguing the crisis is over but the what is now a “normal” recession may not be declared over until fourth quarter or possibly the first quarter of 2010.

The Center for Responsive Politics shows a summary of 10 years of donations of the top 100 donors to political parties. What stands out to us about this list is the about equal split between for-profits and not-for-profits on it.  This vote buying must stop.  In a Republic, representatives are supposed to represent the people -in general – not these special interest groups.

Rank	Organization	Total	Dem %	Repub %	Tilt
1	AT&T Inc	$43,501,240	44%	55%
2	American Fedn of State, County & Municipal Employees	$40,965,173	98%	1%
3	National Assn of Realtors	$35,179,013	48%	51%
4	Goldman Sachs	$31,183,662	64%	35%
5	Intl Brotherhood of Electrical Workers	$30,920,696	97%	2%
6	American Assn for Justice	$30,734,429	90%	9%
7	National Education Assn	$29,908,625	92%	6%
8	Laborers Union	$28,201,600	92%	7%
9	Service Employees International Union	$27,510,257	95%	3%
10	Teamsters Union	$27,402,304	92%	6%
11	Carpenters & Joiners Union	$27,368,258	89%	10%
12	Communications Workers of America	$26,748,746	99%	0%
13	Citigroup Inc	$26,562,905	50%	49%
14	American Medical Assn	$26,213,449	39%	60%
15	American Federation of Teachers	$25,996,071	98%	0%
16	United Auto Workers	$25,767,002	98%	0%
17	Machinists & Aerospace Workers Union	$24,793,477	98%	0%
18	National Auto Dealers Assn	$24,048,808	31%	68%
19	Altria Group	$23,869,891	28%	71%
20	United Food & Commercial Workers Union	$23,742,074	98%	1%
21	United Parcel Service	$23,649,476	36%	63%
22	American Bankers Assn	$21,945,966	41%	58%
23	National Assn of Home Builders	$21,401,355	35%	64%
24	EMILY’s List	$20,984,384	99%	0%
25	National Beer Wholesalers Assn	$20,300,845	31%	68%
26	Microsoft Corp	$19,692,774	52%	46%
27	Time Warner	$19,653,331	71%	28%
28	JPMorgan Chase & Co	$19,395,548	51%	48%
29	National Assn of Letter Carriers	$19,206,784	88%	11%
30	Morgan Stanley	$18,173,708	45%	53%
31	AFL-CIO	$18,034,967	95%	4%
32	Verizon Communications	$17,812,927	39%	59%
33	FedEx Corp	$17,676,556	40%	58%
34	Lockheed Martin	$17,638,388	42%	57%
35	General Electric	$17,349,803	50%	49%
36	National Rifle Assn	$17,095,136	17%	82%
37	Sheet Metal Workers Union	$16,907,563	97%	2%
38	Ernst & Young	$16,746,413	44%	55%
39	Credit Union National Assn	$16,694,237	47%	51%
40	Bank of America	$16,568,591	47%	52%
41	Operating Engineers Union	$16,235,350	85%	14%
42	American Dental Assn	$16,134,579	46%	53%
43	American Hospital Assn	$16,126,109	52%	46%
44	Plumbers & Pipefitters Union	$15,807,536	94%	5%
45	Blue Cross/Blue Shield	$15,779,305	39%	60%
46	Air Line Pilots Assn	$15,478,917	84%	15%
47	International Assn of Fire Fighters	$15,372,243	82%	17%
48	Deloitte Touche Tohmatsu	$15,366,870	34%	65%
49	PricewaterhouseCoopers	$15,073,033	36%	63%
50	Natl Assn/Insurance & Financial Advisors	$14,845,205	42%	56%
51	AFLAC Inc	$14,582,269	44%	55%
52	Merrill Lynch	$14,299,160	37%	61%
53	Union Pacific Corp	$13,847,948	23%	76%
54	Boeing Co	$13,579,262	47%	52%
55	United Steelworkers	$13,477,947	99%	0%
56	United Transportation Union	$13,373,545	88%	11%
57	Reynolds American	$13,302,827	24%	75%
58	Pfizer Inc	$13,210,087	29%	70%
59	BellSouth Corp	$12,993,782	45%	54%
60	Ironworkers Union	$12,923,775	92%	7%
61	American Institute of CPAs	$12,698,585	42%	57%
62	Credit Suisse Group	$12,141,215	44%	55%
63	American Postal Workers Union	$11,925,473	95%	4%
64	National Rural Electric Cooperative Assn	$11,745,871	52%	47%
65	General Dynamics	$11,496,724	46%	53%
66	American Financial Group	$11,334,675	18%	81%
67	GlaxoSmithKline	$10,895,744	28%	70%
68	Walt Disney Co	$10,810,549	67%	32%
69	Chevron	$10,709,395	25%	74%
70	Exxon Mobil	$10,511,023	14%	85%
71	Natl Active & Retired Fed Employees Assn	$10,430,000	77%	21%
72	MBNA Corp	$10,059,006	17%	82%
73	General Motors	$9,950,919	38%	60%
74	UST Inc	$9,935,061	21%	78%
75	Freddie Mac	$9,859,490	43%	56%
76	AIG	$9,744,312	50%	49%
77	Human Rights Campaign	$9,741,375	90%	9%
78	National Restaurant Assn	$9,645,995	15%	83%
79	Southern Co	$9,544,345	31%	68%
80	Prudential Financial	$9,345,074	48%	51%
81	MetLife Inc	$9,284,365	55%	44%
82	American Academy of Ophthalmology	$9,162,538	52%	47%
83	National Cmte to Preserve Social Security & Medicare	$9,144,499	80%	19%
84	Eli Lilly & Co	$9,039,674	28%	71%
85	CSX Corp	$8,935,785	31%	68%
86	Associated General Contractors	$8,811,941	14%	85%
87	Amway/Alticor Inc	$8,716,601	0%	99%
88	National Cmte for an Effective Congress	$8,707,940	99%	0%
89	American Maritime Officers	$8,606,031	46%	53%
90	Archer Daniels Midland	$8,303,364	43%	56%
91	Seafarers International Union	$8,140,144	84%	14%
92	MCI Inc	$8,093,472	46%	53%
93	American Airlines	$8,052,023	47%	52%
94	American Council of Life Insurers	$7,581,090	37%	62%
95	Marine Engineers Beneficial Assn	$7,353,627	74%	25%
96	Bristol-Myers Squibb	$7,282,437	21%	78%
97	Enron Corp	$6,633,457	29%	70%
98	Andersen	$6,313,422	37%	62%
99	BP	$6,120,971	28%	70%
100	Vivendi	$4,455,940	66%	32%

Fitch press release ( emphasis added):

Fitch Announces Expanded Review of U.S. Bank Commercial Real Estate Exposure
18 Aug 2009 10:43 AM (EDT) Fitch Ratings-New York-18 August 2009: The performance metrics of commercial real estate (CRE), an area with a significant risk exposure for the majority of Fitch’s U.S. bank universe, continues to deteriorate at an unprecedented pace. While CRE loans, excluding the more problematic construction and development portfolios, represent more than 125% of total equity for the 20 largest banks rated by Fitch, the risk is even higher for banks with less than $20 billion in assets, as average CRE exposure represents more than 200% of total equity for these institutions.

Given the degree of deterioration, and the substantial exposure of many U.S. banking and thrift institutions to CRE, Fitch has recently launched an information survey aimed at obtaining more granular data on the CRE portfolios of the institutions it rates. Fitch intends to use this information to enhance its insight on the size and performance of particular segments of banks’ CRE portfolios. This will allow Fitch to frame areas of specific concern across the industry, conduct various stress tests, and assess if ratings changes are needed to reflect what will likely be continued deterioration in asset quality.

As reported last week by Fitch’s commercial mortgage backed security (CMBS) group, CMBS loan delinquencies surpassed 3% in July and are expected to increase more than 60% by year end to at least 5%. Further, roll rates from 30 to 60 days have increased to over 50% in 2009 and resolutions continue to slow. “The same factors that are placing pressure on CMBS transactions are increasing pressure on the performance of bank and thrift-held CRE portfolios” according to Thomas Abruzzo, Managing Director and co-head of Fitch’s North America Financial Institutions group.

The stress is clearly not confined to CMBS activity. In commenting on the U.S. bank universe, Abruzzo went on to state, “large banking companies have seen levels of early-stage delinquencies, more severe delinquencies and non-accrual loans, as well as charge-offs increase markedly across their CRE and construction and development portfolios. While the 10%+ of construction and development loans in non-accrual is greatly attributed to residential construction activity, the 5% of the CRE book in non-accrual status evidences more widespread problems.”

Fitch currently assigns Negative Outlooks to nearly half of the 20 largest U.S. bank and thrift institutions it rates. As Fitch has indicated in its recent bank rating actions, a major concern contributing to these Negative Outlooks is the potential for further deterioration in the institutions’ loan portfolios with a specific focus on CRE exposures.

“While the relative size of the CRE portfolio is smaller for some of the very large banks Fitch rates, the recent performance trends, expectations for continued economic weakness and the uncertain availability of the CMBS market increases the concern regarding CRE exposure and makes it a likely rating driver as we look out over the next few quarters,” stated James Moss, Managing Director and co-head of Fitch’s North America Financial Institutions group.

As part of Fitch’s expanded analysis it has sent surveys to more than 75 Fitch-rated U.S. bank and thrift institutions requesting additional detail on the institution’s exposure to CRE, covering both the banks’ loan and investment portfolios. Among the uniform information requested is: collateral type, geography, internal risk rating, and performance. Fitch also requested additional detail on each bank’s largest exposures and watch credits. Fitch has asked that this information be provided by the middle of September.

Once in receipt of this information the data will be compiled and Fitch will begin to provide commentary at an industry level on areas of exposure in order to provide investors with a better sense of where the significant risk exposures are. Fitch will conduct various stress tests to gauge a bank’s ability to withstand incremental deterioration. Results of these scenarios will be highlighted in any rating actions Fitch determines to be warranted.

Fitch’s current bank and thrift ratings already incorporate further CRE portfolio stress, and many rating actions in the last couple of years have been driven in part by problematic exposures to CRE, particularly the residential construction sector. Fitch believes current indicators point to the potential for continued deterioration to surpass Fitch’s current expectations. The analysis of the additional data will assist in highlighting which, if any, institution’s portfolios are particularly vulnerable to an extended period of stress.

Contact: James Moss +1-312-368-3213, Chicago; or Thomas Abruzzo +1-212-908-0793 and Christopher Wolfe +1-212-908-0771, New York.

Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549, Email: brian.bertsch@fitchratings.com.

Fitch’s rating definitions and the terms of use of such ratings are available on the agency’s public site, ‘www.fitchratings.com’. Published ratings, criteria and methodologies are available from this site, at all times. Fitch’s code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the ‘Code of Conduct’ section of this site.

The International Monetary Fund’s (IMF) Press section reports that their chief economist, Olivier Blanchard predicted on Tuesday the world’s recovery:

“The global economy is beginning to recover from the worst recession since the Great Depression, but sustaining it will require engineering greater U.S. exports and larger Asian domestic demand”. Blanchard said that two rebalancing acts will have to come into play: ‘First, rebalancing from public to private spending. Second, rebalancing aggregate demand across countries, with a shift from domestic to foreign demand in the US and a reverse shift from foreign to domestic demand in the rest of the world.’ …”

So…this reminds us of a cartoon that shows a business executive with a chart showing declining sales and simply drawing a new rising line on the chart.  Come on! The IMF is saying that all that has to happen for world recovery to occur is: 1.private demand must take over from the government and 2. Asia must buy more goods from the US than the US buys from Asia.  That’s all —-no problem – right?  When we see Dumbo fly!

Bloomberg (emphasis added):

Myron Scholes and Robert Merton shared the 1997 Nobel price for economics, and they are now united in calling for banks to give more accurate valuations on their illiquid assets….Banks that oppose new accounting standards on asset values want to conceal depressed prices, Merton wrote in the Financial Times yesterday. He composed the column with Robert Kaplan, a professor at the Harvard Business School along with Merton, and Scott Richard, a professor at the University of Pennsylvania’s Wharton School.

From the FT comment by Merton (emphasis added):

Legislators and regulators fear that marking banks’ assets down to fair-value estimates will trigger automatic actions as capital ratios deteriorate. But using accounting rules to mislead regulators with inaccurate information is a poor policy. If capital calculations are based on inaccurate values of assets, the ratios are already lower than they appear. Banks should provide regulators with the best information about their assets and liabilities and, separately, allow them the flexibility and discretion to adjust capital adequacy ratios based on the economic situation. Regulators can lower capital ratios during downturns and raise them during good economic times.

Bank regulators (FDIC and the Federal Reserve) don’t listen to Nobel prize winners much – they don’t have enough political clout and are not usually big hitters in the banks that control them.  The regulators are obviously in cahoots with the banks to “conceal depressed prices” – so it’s inaccurate to think that the regulators are “mislead”.  The banks and the regulators will, of course, fight Merton’s and Scholes’ suggestions to the death – perhaps (in a financial survival sense) literally…

Mish reminds us that In his public meetings to defend his actions in late July, Ben Bernanke said:

“It takes GDP growth of about 2.5 percent to keep the jobless rate constant. But the Fed expects growth of only about 1 percent in the last six months of the year. So that’s not enough to bring down the unemployment rate.”

As Mish also points out, if we don’t get 2.5%, then unemployment will not only NOT come down…it WILL CONTINUE TO RISE.

Pray tell what happens if GDP can’t exceed 2.5% for a couple of years? What about a decade (or on and off for a decade)?  If you have come to the conclusion that we are going to have structurally high unemployment for a decade, you have come to the right conclusion. Ask yourself: Is that what the stock market is priced for?

The Federal Reserve itself has said that they expect unemployment to remain high for as long as 10 years.  Those unemployed consumers aren’t gonna be able to increase their consumption.  It will have to be the bank employees who get all the bonuses who lead us out of recession.  Are there enough of them?

So…since inflation benefits the people who owe lots of money and hurts people who are savers…guess who the economists want to benefit?  That’s right!- we figured you’d get it.  According to Bloomberg, since May, economists have been calling for inflation to trick people into spending/consuming rather than saving and to “lessen” the burden of the “debt bomb”.  Funny thing, the debt is owed to someone and it’s those people who are owed that suffer when they are paid back with devalued dollars.  So who is the group that benefits most directly from inflation?  You might think people who owe home mortgages.  But, since they are NOT seeing any wage inflation, they’re not benefiting…  It’s the banks- they are levered to the hilt and they get to pay back their debtholders with newly printed money.  Recently, a long list was published of economists who advocated “independence” of the Federal Reserve – independence meaning freedom from Congressional oversight. We suppose all economists aspire to work for the Federal Reserve and that’s why they all protect the FED at the expense of savers.  But even though the FED may be free from Congressional oversight, the FED is never free from its legal owners – the very same levered banks who benefit most from inflation.  IStockAnalyst has a good piece on this here.

The unemployment rate in the U.S. was 9.4 percent in July, but some cities are better than others to look for a job. Of the top 50 metro areas, Washington, D.C., is the easiest for unemployed workers to find a job (Uncle Sam), while Detroit is the hardest, according to a new Job Market Competition index put together by Indeed, a job search engine.

The index ranks cities based on how many unemployed people there are compared to job listings. For every one unemployed person in Washington, D.C., for example, there are six job postings. Whereas in Detroit, there is only one job posting for every 18 unemployed people.

Best places to find a job:

1. Washington, DC (6:1)
2. Jacksonville, FL (3:1)
3. Baltimore, MD (1:1)
4. Salt Lake City, UT (1:2)
5. New York, NY (1:2)
6. San Jose, CA (1:2)
7. Hartford, CT (1:2)
8. Oklahoma City, OK (1:3)
9. Austin, TX (1:3)
10. Boston, MA (1:3)

Worst places to find a job:

41. Buffalo, NY (1:6)
42. Orlando, FL (1:6)
43. Sacramento, CA (1:6)
44. Rochester, NY (1:6)
45. Chicago, IL (1:7)
46. Portland, OR (1:7)
47. Los Angeles, CA (1:8)
48. Riverside, CA (1:9)
49. Miami, FL (1:10)
50. Detroit, MI (1:18)

The Producer Price Index for Finished Goods declined 0.9 percent in July, seasonally adjusted. This decrease followed advances of 1.8 percent in June and 0.2 percent in May.  The index for finished goods other than foods and energy edged down 0.1 percent compared with a 0.5-percent rise in June.

Finished goods prices over the last 12 months decreased an average of  0.54% per month, or at an average annualized rate of -6.5%.