Tuesday, September 29, 2009

Nine Questions for Ben Bernanke

I'm not a fan of the monetary or regulatory policies advocated by the Federal Reserve. I think Alan Greenspan was a crook; although unlike the politicians and corporate yes-men he served, he never claimed he wasn't. Nassim Taleb has called for Bernake's head, as have persons on both the right and left; although for quite different reasons. It is clear that Mr. Bernanke will be confirmed without undue problem, just as Greenspan was. If the Democrats were serious (which it doesn't appear to be) or at least a few outliers, like Representatives Ron Paul (R-TX) or Gary Ackerman (D-NY), who do sit on the House Financial Services Committee were able to ask the right questions, then we might actually understand where this listing ship will finally sink.

Elliot Spitzer, former Governor of NY, has listed some decisively intelligent questions that should be asked of Mr. Bernanke when he's subjected to appointment. They are:

1. How does the Fed define economic success? If the Fed is to be the macro giant that it seeks to be, we must understand whether its metrics for success focus on GDP growth, job growth, household median income growth, inflation moderation, or some other data.

2. What industrial policy does the Fed see best fitting our macro goals?

3. How do we define and measure systemic risk? If the Fed wishes to be granted the authority to be the regulator of risk, it better be able to explain how it measures it.

4. Has the Fed found the analytical error that permitted it to believe throughout 2008 that the crisis was contained and would not jump from the sub-prime sector to the entire financial system? If we cannot locate that analytical error, how can we possibly begin to spot systemic risk in the future?

5. Has the Fed examined why it permitted the avalanche of debt to course though the financial system without one of its own analysts observing that the risk of default was not reflected in the market's pricing of risk?

6. What bank structure will best accomplish the macro goals the Fed defines? Do we desire a market dominated by several institutions that are openly "TBTF"—too big to fail—or are we going to reverse the implicit and explicit federal guarantees of the past year and cut loose the major institutions? And if we are to cut them loose, how will the market be persuaded that they really are on their own, and the Fed will not rescue them next time, too?

7. Does the Fed stand by the notion that asset bubbles are better dealt with after the fact than during their creation? Does this view, which the chairman has articulated with some frequency, doom us to the incessant cycles we have lived through over the past decade?

8. Does the Fed still have faith in "self-regulation," the concept that was used to justify the decay that set in throughout the regulatory apparatus in Washington?

9. What governance structure is appropriate for the Fed, given its new authority?

Thursday, September 24, 2009

Why African Leaders Cannot be taken Seriously

Spread across the African continent there are tyrants, military dictators, and kleptomaniac authoritarians. Every odious and repulsive trait that can be imagined in the pantheon of incompetent and venal leadership has been exhibited in the post-colonial heads of state that represent the nations of the continent. Given human nature, (ie. tribalism, corruption, greed, sloth, and short-term thinking) I don't suspect there to be any change for the better soon or for that matter ever.

As an example, consider Libya's Col. Qaddafi's first and maybe last visit to the United Nations in New York, where the Guardian UK described him as, "fully [living] up to his reputation for eccentricity, bloody-mindedness and extreme verbiage."

He tore up a copy of the UN charter in front of startled delegates, accused the security council of being an al-Qaida like terrorist body, called for George Bush and Tony Blair to be put on trial for the Iraq war, demanded $7.7tn in compensation for the ravages of colonialism on Africa, and wondered whether swine flu was a biological weapon created in a military laboratory. At one point, he even demanded to know who was behind the killing of JFK. All in all, a pretty ordinary 100 minutes in the life of the colonel.

Then he gave praise to that magnanimous and generous Kenyan President, Barack Obama:
Having thus abused and alienated 99.99% of the world's top diplomats, he suddenly changed tack, heaping praise and devotion on the one man he appears to respect. "Now the black man doesn't have to sit in the back of the bus, the American people made him president and we are proud of that. We would be happy if Obama stayed president of America forever."
I'm sure Hugo Chavez, another miltary man in populace garbs, was taking points on how to make friends and alienate gringos.

Friday, September 18, 2009

52 Weeks After the Meltdown

By law of periodical repetition, everything which has happened once must happen again and again -- and not capriciously, but at regular periods, and each thing in its own period, not another's and each obeying its own law.
- Mark Twain


We have become our own Greek tragedy, blinded by hubris and unwilling to understand that we are but permutations in time; whether it is in our genes or our empires. As a civilization we should realize, if history is to teach us anything, that this is the moment of our great undoing, for it has happened before, and we know it will happen again. Below is a summation of recent articles issued this past month discussing the fall of Lehman Brothers and the pertinacious crisis of capitalism.

The Economist
"Unnatural Selection: Wall Street and the City of London survived thanks to state support. Now they need to be weaned off it"
"The Promised Bland: One year after Lehman Brothers collapsed"
"What If?" an examination of what could have occurred if Lehman's didn't go bankrupt.

The NY Times
Has an entire section dedicated to the financial crisis. Some of the better reads are:
Alex Berenson "A year later, little change in Wall St."
Robert Frank "Flaw in free markets: Humans"
Paul Krugman "How Did Economists Get It So Wrong?"

The Financial Times
FT also has an extensive coverage section that details the crisis at different levels.
Niall Ferguson does his best imitation of an contrarian in,"Why a Lehman's Deal would not have saved us"
Martin Wolf "Do not learn wrong lessons from Lehman’s fall"

The Globe and Mail
A timeline of the events is described in "Lehman Brothers: one year later"
Sinclair Stewart "The day everything - and nothing - changed." The story remains the same, as it is a story of men empty of decency, moral strength, and even humanity.

Business Week
BW also has a reasonable section discussing the financial crisis one year later. Unfortunately those who need to learn most, will not be interested.

Der Spiegel (International edition) has a solid set of articles on the failures and return of American inspired Casino-Capitalism. Those who know about defeat that arises from hubris should be listened to.

Ralph Nader
, who predicted this entire fiasco more than a decade ago has a commentary on the return of casino capitalism in, "Rolling the Dice Again" Ignore at your own peril.

Robert Reich, former Sectatary of Labor in the first Clinton Admin. and constant critic of unregulated laissez-faire capitalism counters in his blog, "The Continuing Disaster of Wall Street, One Year Later."

Thursday, September 17, 2009

Carter on the Republican Noise Machine

The attempt of these right-wing zombies to portray their angst with this administration as having to do with reducing taxes, increasing liberty, or even reforming government based on firm conservative beliefs is farcical. If it were so, where were they when their Republican leaders were manufacturing consent for the Iraq war; doubling the federal debt; conducting a massive and illegal searches of Americans telephone conversations, emails, and sent mail; eliminating habeas corpus rights; and instituting torture as the first and last resort to any national security issue? No, their objective is nothing less than having this administration and equally America fail. Unable to articulate or even fiend a cogent argument based on facts and reason (not that they ever have) they reach deep into their primeval brains and vomit out voluminous buckets of venomous bile. To them Barrack Obama is considered a foreign agent who is hell-bent on destroying "their" America. To them he is simultaneously a socialist, a fascist, a Muslim, a Marxist, a communist, the Anti-Christ, and all things un-American.

Doublethink, the acceptance of two contradictory ideas or beliefs at the same time, has become the basis of the tea-baggers/Republican base's political ideology. As such, they are free to espouse the most ridiculous conceits without ever having to accept their inherent ignorance or bigotry.

When James Earl Carter, America's 39th president and Nobel prize winner, called a spade a spade, it was the mandarins of the mainstream media, too embarrassed by their own intellectual shallowness and outright pandering to those ignoble elements of American society, who first went to defend and then obfuscate the debate on the indecency of these tea-baggers and their right-wing accomplices. Despite the fact that the Republicans have been a party whose public philosophy, since Richard Nixon, has been that of ginning up white-alienation, race-baiting, persistent religious zealotry, and overt bigotry to win elections, we are told by the MSM and Republicans that their objections with Mr. Obama are honest. That and not the act of racism is the real news here.

***

Follow Up: McClatchy Press has a good article on this subject in, "There's no denying Obama's race plays a role in protests." The article gives a broad outline of the increase of racial taunts emitted by the standard culprits and also to the growing extremism in right-wing circles that have resulted, in what author Ron Kessler describes in his forthoming book on the US Secret Service, "that racists and white supremacists probably account for more than a third of the estimated 30 death threats that Obama allegedly receives every day, about four times as many as were directed at former President George W. Bush."

Tuesday, September 15, 2009

Darwin Bio-pic Causes Religious Uproar in America

"Nobody ever went broke underestimating the taste of the American public." H.L. Mencken.


This is the 200th anniversary of the birth of Charles Darwin, a man whose name has become synonymous with science, controversy and religious extremism. Darwin is perhaps one of the greatest scientific minds to have come out of the 19th century, producing the first cogent explanation of species diversity through natural selection. His topics included geology, botany, invertebrate zoology, human evolution, and sexual selection. In recognition of Darwin’s pre-eminence, he was one of only five 19th-century UK non-royal personages to be honoured by a state funeral, and was buried in Westminster Abbey, close to John Herschel and Isaac Newton.

Given the enormity and significance of this man, a film named curiously enough "Creation," staring husband and wife team Paul Bettany (as Darwin) and Oscar Award winning actress Jennifer Connelly and produced by Academy Award winner Jeremy Thomas, was the opening film at this year's Toronto Film Festival (TIFF). The film had its British premiere on Sunday. The distribution rights to the film has been sold in almost every territory and country; except America.

An article in the London Telegraph outlines the outrageous details:
US distributors have resolutely passed on a film which will prove hugely divisive in a country where, according to a Gallup poll conducted in February, only 39 per cent of Americans believe in the theory of evolution.

Movieguide.org, an influential site which reviews films from a Christian perspective, described Darwin as the father of eugenics and denounced him as "a racist, a bigot and an 1800s naturalist whose legacy is mass murder". His "half-baked theory" directly influenced Adolf Hitler and led to "atrocities, crimes against humanity, cloning and genetic engineering", the site stated.

The film has sparked fierce debate on US Christian websites, with a typical comment dismissing evolution as "a silly theory with a serious lack of evidence to support it despite over a century of trying."
The religious right, never shy to expose their anti-intellectual credentials have sought, through censoring the distribution of this movie, to slay their most loathed opponents; secularism and science. After eight years of having their man George W. Bush plunge America into a sea of economic and societal ruin, based on their no small support, they still continue with their drive to enslave us all with their dogma. When will these charlatans be expunged from modern society and be forced to toll on the periphery of civilization, where they belong?

Monday, September 14, 2009

Quote of the Year

Nassim Taleb, in typical fashion, counters all the current opinion that says we have turned the corner. He makes the case that not until a fever-pitched harmonic is achieved that deafens government officials and disposes of incompetent bankers alike who have run the world economy aground, will real systemic change be realized.

Ben Bernanke saved nothing! He shouldn't be allowed in Washington. He's like a doctor who misses the metastatic tumour and says the patient is doing very well. The first thing I would tell Chinese officials is, how can you buy U.S. bonds as long as Larry Summers is there? He's a textbook case of overconfidence. Look what happened to Harvard's finances. They took a lot of risk they didn't understand, and it was a disaster. That's the Larry Summers mentality.
Nassim Taleb in the Globe and Mail, "We still have the same disease"

Sunday, September 13, 2009

Hey, global warming skeptics, take your heads out of the sand | csmonitor.com




One of the more enduring alternative hypothesise that global warming skeptics have forwarded in attempting to rationalize why ambient global temperatures are on the increase, has been in correlating the natural periodicity of the planet to biosphere transformations. The basis of this argument is that Earth’s orbit varies in distance from the Sun over a 21,000 year cycle, leading to defined and determinable changes.

The above Christian Science Monitor article outlines research, conducted by Northern Arizona University (NAU) and the National Center for Atmospheric Research (NCAR) in Boulder, Colo., over a period of five-years, that has reconstructed 2,000 years of Arctic summer temperatures. The research team combined previous data from ice cores and tree rings with lake sediment data to build a record of events substantially beyond the existing 400 year record.

The study shows the Arctic is warming two to three times faster than anywhere else at a time when it should be cooling down. Natural changes in Earth’s orbit vary our distance from the Sun over a 21,000 year cycle. The closer we are, the warmer the Arctic and vice versa. Right now, we’re in the cool down part of that cycle. The study confirms a cooling trend over the past 2,000 years until it reversed about a century ago. The Arctic summer now is about 2.5 degrees warmer than it should be.

In an announcement of this result, team member Nicholas McKay explained that, “The 20th century is the first century for which how much energy we’re getting from the Sun is no longer the most important thing governing the temperature of the Arctic.” His co-author, Caspar Ammann at NCAR, said, “This study provides a clear example of how increased greenhouse gases are now changing our climate.”

As alternative explanations to global warming continue to fall to the wayside, the evidence continues to point to the fact that anthropogenic sources of CO2 emissions arising from the massive industrialization in the 19th and 20th centuries has precipitated this climate shift. Instead of engaging this subject with our best minds and efforts, we have allowed oil and gas companies, people with no understanding of science (much less evolution and ecology), anti-intellectuals who believe in a 6,000 year old earth, and bought off Western politicians to dictate the future of all life on this planet. Military organizations across the world have already started war-gaming the outcomes and have begun making internal preparations. Yet those in power would rather dither and obfuscate the reality to the public, while the dumbest of our population scold us that the American president just may be a resident alien who is a closet-communist seeking to euthanize the elderly and incarcerate card carrying rednecks in FEMA holding cells.

In some ways the issue is moot, for humanity has already waited too long to prevent the problem. We are now past the point of no-return, as the tell tale products of global climate change emerge: acidification of oceans, irregular precipitation patterns, drought, forest fires that are larger and more destructive (i.e. Australia, Greece, and Western North America), declining agricultural production, rising ocean levels, and mounting civil unrest brought on by environmental scarcity. Even if we were to completely stop all industrialization tomorrow, the existing gases in the atmosphere will reside there for decades and continue to likewise heat the planet.

FLQ Terrorists of Quebec: Osama's Brethren

'Have you ever seen a bus full of the English blow up?'

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When examples of terrorist threats from Canada are considered, there are a number of obvious examples. The first being the millennium bomber, Ahmed Ressam, an Algerian recruited by Al-Qaeda to infiltrate and destroy Los Angeles International Airport (LAX) on the eve of the 2000 new year. Through his ineptitude and the good work on the part of US custom agents, Ressam was caught. The second example is the case of the Toronto-18, a group of delinquent youth with lofty ambitions, who conspired to blow up federal buildings in Toronto and Ottawa and behead Prime Minister Stephen Harper. While these pack-mules for Islamic duncery have been given plenty of press, they fail to reach the levels of criminality and wishful mayhem that Canada's first home grown terrorists, the FLQ, achieved.

The FLQ (Front de Libération du Quebec) was a left-wing nationalist and socialist revolutionary group in Quebec, with at least two terrorist cells. It was responsible for more than 200 bombings, including the bombing of the Montreal Stock Exchange in 1969 and the deaths of at least five people. These attacks culminated in 1970 with what is known as the October Crisis, in which British Trade Commissioner James Cross was kidnapped and Quebec Labour Minister Pierre Laporte was murdered.

In today's Montreal Gazette is a reminder that while the faces and exact threats to civilized society may change, the intent and desire by small groups driven by ideological fervor and murderous contempt of their fellow citizens remains constant. The author provides a chilling recount of their anarchist mind frame, which is nearly verbatim to the bogus self-serving victimology and ethno-religious superiority espoused by the above Islamists. Consider the FLQ's language, "We do not terrorize our people; on the contrary, the Front de Libération du Quebec is a vast front of love and fraternity."

Then examine their "loving" declarations:

In a little while the English, the federalists, the exploiters, the toadies of the occupiers, the lackeys of imperialism - all those who betray the workers and the Quebec nation - will fear for their lives and they will be right. For the FLQ will kill ... Our present cells will look like amateurs when our elite groups go into action.

Have you ever seen a bus full of the English blow up?
Have you ever seen an English library burning?
Have you ever seen the president of a Yankee corporation under fire?
Have you ever seen a pellet micro-bomb?
Have you ever seen a miniature incendiary bomb?
Have you ever seen a can explode on the shelf of a supermarket in the British quarter?
Have you ever seen a Protestant church burning?
Have you ever seen Westmount without telephones or electricity and with its water supply poisoned?
Have you ever seen sharp-shooters ambushed on roofs, shooting down traitors?
Be sure you soon will!!!
Despite the continuous failures of these domestic terrorists to achieve their ends, whether it is in the context of killing school children in Beslan Russia, murdering pre-schoolers at the Oklahoma federal building bombing, the incinerating of civilians in London, Madrid, or Bali attacks; it is also quite apparent that there will always remain an entrenched and obscene element of our society who affiliate themselves with these murderous entities. Gilles Duceppe, leader of the Quebec separatist party, the Bloc Quebecois, recently defended plans to read aloud the 1970 FLQ manifesto (a lengthy left-wing screed against the ills of capitalism) during a cultural festival in Quebec City, telling reporters it is history and those who object are condoning "censorship." When the manifesto was read to a public gathering at the outdoor festival, cheers of "Bravo" and the FLQ's battle-cry for revolution and social mayhem, “Nous vaincrons” (we will overcome) could be heard from sympathizers.

It is no doubt then why Ressam found himself such a welcomed guest within the province of Quebec, prior to his deluded mission.

Friday, September 11, 2009

Matthew Simmons: Peak Oil is Real and Has Arrived


The rise and fall of oil prices over the past few years has lead many to consider the finite nature of petroleum reserves. Optimists talk of the current price of natural gas, normalization of crude prices, and technological advancement that shall lead us to bountiful and stable energy reserves. Pessimists view structural limitations in creating a non-carbon based energy economy and a decline in fossil fuel reserves.

Matthew Simmons, who wrote "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy," offers the thesis that sudden and sharp oil production declines could happen at any time. Even under the most optimistic of scenarioes, Saudi Arabia (the world's largest producer) may be able to maintain current rates of production for several years, but will not be able to increase production enough to meet the expected increase in world demand. Eventually, a day of reckoning will arrive and the world economy will be confronted with a major shock that will stunt economic growth, increase inflation, and potentially destabilize the Middle East.

In Foreign Policy (FP) magazine, he offers a riposte to a number of critics who have recently dismissed his assertions.

First, alarming data from the International Energy Agency and the U.S. Department of Energy shows that the flow of global crude oil peaked in 2005 and is now sliding steadily. The world will never "run out of oil," but its flow is in decline. There may still be ample oil reserves left in the ground when oil flows fall to half of today's use. But these remaining reserves are all either very low-quality heavy oil, which is difficult to process, or tainted with toxic elements that make it hard to refine into usable petroleum products.
He goes on to argue that his opponents arguments, which he describes as being based on belief rather than hard empirical data and meaningful econometric arguments, are unsound. His years of experience and insights into the current situation need to be fully appreciated by consumers and world leaders alike. How many times in this past decade have we heard, "Don't worry, trust us!"

Another Village Idiot Blows His Cover

Until yesterday, I'd never heard of Congressman Joe Wilson from South Carolina. Not to be confused with the former Ambassador (Joseph C. Wilson) who called George W. Bush and his administration of war-mongers dishonest in the infamous Niger yellow-cake uranium debacle that preceded the Iraq War. No, this Joe was a good ole' southern boy who fears God, loves apple pie, and hates niggers! Although the first two items I cannot verify, the third can be. You see, this Mr. Wilson is a member of a right wing group called 'Sons of Confederate Veterans,' a group according to the Southern Poverty Law Center (SPLC) that is organized by radical neo-Confederates who favor secession and defend slavery as a benign institution. The group's leader, another self-appointed man of the cloth, one Rev. Eric Dean has attacked "racial interbreeding" as ungodly and described slavery as biblically sanctioned.

Having the full moral and intellectual vacuousness of his ill construed convictions behind him, Mr. Wilson, no doubt exhausted by the extravagances of the Obama administration, yelled out at the president, "Liar!" Facts, reason, civility, and general manners be damned, this village idiot needed to be heard. George Allen, former Governor and Senator from Virginia, had already used the racially tinged slur Macaca to insult another "colored" fellow with dubious American citizenship. What else could Mr. Wilson say under such blistering pressure?

I don't have a problem with politicians being called liars even by other politicians. However, if you are so disposed to calling out someone as deceitful, then at least you should know the definition of hypocrisy. The Republican party, that grand coalition of bigots, southern white dunces, flat-world believing anti-intellectuals, statists, and crony-corporatists, has been confirmed as issuing no less than 935 demonstrable falsehoods about the Iraq war. And yes Virginia in the reality based world we call these lies. According to the Centre for Public Integrity, they determined that the statements “were part of an orchestrated campaign that effectively galvanised public opinion and, in the process, led the nation to war under decidedly false pretences.” The study identifies 935 false statements that were issued by the White House in the two years after the September 11, 2001 terrorist attacks. Leading the pack, President Bush made 232 false statements about weapons of mass destruction in Iraq and 28 false statements about Iraq’s connections with Al Qaeda. Secretary of State Colin Powell followed close behind with 244 false statements about weapons of mass destruction and 10 about Al Qaeda links.

So when the lies of George W. Bush yielded a two-trillion dollar war lacking an exit strategy and with thousands of Americans dead, hundreds of thousands of Iraqi dead, millions of Iraqi displaced and pushed out of their own country, and not a single milligram of WMDs found, Mr. Wilson had nothing to publicly say; not a single word.

Thursday, September 10, 2009

Bend Over: This Will Hurt


"To practice and prescribe to the best of my ability for the good of my patients, and to try to avoid harming them."
- Hippocratic Oath.


Would you go to a car repair shop which was evasive and opaque with its pricing; persistently overcharged you for simple services and applied usurious costs for necessary repairs; had a history of neglect or incompetence; acted in collusion with regional shops to eliminate competition; and in some instances, were forced to call other shops to repair your vehicle when they further damaged it instead of repairing it?

Well this is the current scenario with the American health care system.

Consider the anecdotal story of Steve Spivey, a 44 year old Texan, who developed breathing problems after spine surgery at physician-owned and for-profit speciality hospital. As a result of there being no physicians on hand (at this physician owned and operated facility), the administrators were forced to call 911 and have him taken to a nearby and regular full-service hospital. He was unfortunately pronounced dead a short time afterwards. What makes this case so galling, is that according to state Medicare records, the same West Texas Hospital, which failed to adequately prepare for the post-surgery complications that Mr. Spivey encountered, called 911 for an ambulance 15 times to transfer patients during medical emergencies since it opened in May 2005. This wasn't an accident; this was a cost-benefit analysis, where a patient's life was jeopardized because the doctors didn't want to invest their time and money in making sure Mr. Spivey would survive their butcher knives.

As an American citizen, Mr. Spivey was not alone in his abandonment by those he ensured with his life and well being. According to studies completed over the past decade, as many as 200,000 people a year could be dying in U.S. hospitals and patient care facilities because of easily prevented errors. For example, 20-30% of patients in American hospitals or long-term care receive incorrect medical care; including incorrect medicine, wrong dosages, lethal infections arising from hospitalization, incorrect surgical operations, and general patient neglect. If listed along with other CDC morbidity indexes, medical errors would rank as the sixth leading cause of death, ahead of diabetes, pneumonia, Alzheimer's disease, and renal disease. In comparison with all other industrialized nations the United States stands out for inefficient care and errors and is an outlier on access/cost barriers.

Public Health

Fifty years ago, Americans used to be amongst the healthiest people anywhere. Today, the nation ranks dead last amongst Western industrialized nations and has been overtaken by some less than prosperous ones. With respect to the general population, life expectancy in America continues to slip, descending to 77.3 at birth, compared to Canada at 79.8 years and the Japanese reigning at 81.9. America is unique among Western nations in that 63% of its population are overweight, with an unprecedented 34% of the general population being obese and as many as six million being morbidly (or super) obese. Additional factors unique to America include that it has the highest homicide rate of all industrialized countries and given its size, is the largest consumer of illegal drugs in the world.

American children like their adult counterparts are also experiencing higher levels of obesity, hypertension, diabetes, and heart disease than previous generations and are likely to impose a severe cost upon any future social security and health care systems. Other less than stellar achievements in the areas of childhood care include the fact that the country has the highest infant-mortality rate, the highest child-poverty rate, the highest teen-pregnancy rate, and the highest child-abuse death rate in relation to its peers.

Dr. Stephen Bezruchka, a senior lecturer in the School of Public Health at the University of Washington in Seattle states, "There isn't a single measure in which the U.S. excels in the health arena…We spend half of the world's health care bill and we are less healthy than all the other rich countries."

Economics

The American health care system as a whole is a behemoth that only as recently as 2004 was spending $1.9 trillion dollars per annum, or 16% of GDP; nearly twice the OECD average. Despite years of bipartisan posturing about reform (including the infamous Bush Medicare donut) this year alone health-care expenditures are expected to account for about 18% of US GDP. President Obama’s Commerce Secretary, Gary Locke, recently opined in the Wall Street Journal that without reform, health care costs will increase to 28% in 2030 and to 34% in 2040 of GDP.

The number of persons sequestered to administer and manage the system has increased between the years 1969 and 1999, from 18.2 percent to 27.3 percent. Compared to Canada, which has a universal health care system, its percentage of the labour force dedicated to health care only grew from 16.0 percent in 1971 to 19.1 percent in 1996. With medical inflation outpacing inflation, American companies continue to reduce the health coverage they offer to employees. The percentage of workers who receive health insurance from their own employer has fallen from almost 70% in the late 1970s to around 50% today. So what we have today is a system that continues to grow without constraint, while providing fewer services and most certainly value to a smaller proportion of the working force.

With decades of growth across a patch-work of state health systems, the Byzantine network of American health care has created opportunities ripe for fraud and corruption. FBI data indicates that between 3-10% of health care funding is lost to fraud. There maybe as much as $75-250 billion dollars being squeezed out of the current Medicare system every year by crooked pharmacies, doctors, HMO’s, and equipment providers. Pfizer Inc, one of the world’s largest pharmaceutical companies, recently agreed to pay $2.3 billion, the largest health care fraud settlement in the history of the Department of Justice, to resolve criminal and civil liability arising from the illegal promotion of certain pharmaceutical products. UnitedHealth Group at the beginning of 2009 was forced to pay a record $350 million to defrauded customers to resolve allegations of price fixing. Similarly, Aetna, the United States’ third-largest health insurance company, agreed to pay $20 million to a non-profit body that would fairly determine rates for patients who use doctors outside the network.

The American Medical Council, a professional group which certifies internists, makes the statement that, "Primary care is on the verge of collapse." They explain that, "Very few young physicians are going into primary care and those already in practice are under such stress that they are looking for an exit strategy."

So unless wholesale and systemic changes are made to the way health care is paid for, delivered, and managed, the entire system is posed to collapse.

Alternatives

What is not in dispute is that America has some of the greatest public health centers in the world. The Mayo Clinic, the Cleveland Clinic, the Johns Hopkins Hospital System, Massachusetts General…etc are world renown institutions that service countless Americans and people from across the world. If you have the finances, the ability, and/or status to pay top dollar for your health concerns, then you will be more than adequately serviced by these hospitals. Although there may be some physicians and hospitals that offer similar treatments elsewhere, the collection of these centers of health excellence are what Americans think about when they say their country offers the best in health care.

The Bush administration deduced that the reason health costs were too high was because people had too much insurance and purchased too much medical care. Their solution was what the population needed were “tax-advantaged health savings accounts tied to plans with high deductibles that induce people to pay more of their medical expenses out of pocket.” Of course as with all things Dubya, this would (again) favour his true base; the rich and the very-rich. The standard Republican line is deference to big-pharma, increase the monopoly power of the insurance companies, and shriek about states rights when it comes to regulation. Yes the public continues to suffer and get taken to the bank (which curiously enough they now perversely own), but I'm sure that's what the founding fathers would have wanted.

Many Democrats, especially economists like Paul Krugman and public health practitioners advocate either a Canadian or European style system. Given that 40% of Americans already receive health care through Medicare, state plans (Medicaid), children health insurance plans (CHIP), Native American health care systems, and/or military/veterans’ affairs, a large minority already have that system in place. From 2000 to 2005, per capita health-care spending in Canada grew by 33 percent, in France by 37 percent, in the U.K. by 47 percent—all comparable to the 40 percent growth experienced by the U.S. in that period. So regardless of the nation or model being used, health care cost everywhere continue to rise at an unstable level and consume larger-and-larger portions of government spending. Furthermore, the United States has a number of cultural and societal attributes, as discussed above, that impose significant limitations towards the successful adoption of any foreign system in the long-term.

The Brookings Institute summarizes the attributes that meaningful reform will need to entail in America:
Reforming our health care delivery system to improve the quality and value of care is essential to address escalating costs, poor quality, and increasing numbers of Americans without health insurance coverage. Reforms should improve access to the right care at the right time in the right setting. They should keep people healthy and prevent common, avoidable complications of illnesses to the greatest extent possible. Thoughtfully constructed reforms would support greater access to health-improving care — in contrast to the current system, which encourages more tests, procedures, and treatments that are at best unnecessary and at worst harmful.