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Docs vs. Glocks August 8, 2012

Posted by The Armchair Economist in Commentary, Health Care, Medicine, Politics.
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Glad to see more politics being fought by proxy.  This time the second amendment being fought through patient care.  With the sue happy laws in Florida – I’m just waiting for that first suit where a doc gets sued by a family because they didn’t ask a depressed patient about having firearms in the house. Do gun owners really care that much about being asked? If you are a straight gun toting conservative, would you be more offended at me asking if you have MWM sex or if I ask if you have a gun in your house (to be clear: Id like to reserve the right to ask both)

The Fed just doesn’t get it.. February 9, 2009

Posted by The Armchair Economist in Business, Commentary, Consumerism, Economics, Politics.
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Late 2008, the the Fed gave out ~$350b, about half of the $700b ‘bailout’  Congressional hearings showed that  there was very poor accountability towards how banks spent that money.  Rather than  loan it out, banks just hoarded it.  When asked why they weren’t loaning the money, they said that they are increasing loan requirements due to the poor economic outlook.  In other words, the banks are doing what they should be doing… assessing the risk of nonpayment to potential borrowers.

Today, the Fed announced an overhaul in how the rest of the bailout money will be used: it will be used to buy back the ‘toxic assets’ that are supposedly weighing down the banks balance sheets.  How does this change the fundamental problem of banks not loaning the money out?  (more…)

Some quick points.. September 30, 2008

Posted by The Armchair Economist in Commentary, Economics, Politics.
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I’ve been studying for my board exams so haven’t been able to post.. but some quick points:

I’m glad to see the bailout fail in the house yesterday.  Unfortunately rather than scratching the current plan, they are merely adding more clauses to it to gain more votes.  While the stock market reaction was expected, I am also disgusted that politicians are using the market losses to justify passing the bailout.  In case people weren’t aware, investing in the stock market means inherent risk.  Using the bailout to prop up stock prices seems a tad short sighted, doesn’t it?  Perhaps our problem has nothing to do with decreasing housing prices.. and the root lies in our systemic aversion to accountability?

Open Letter to Senator Charles Schumer September 20, 2008

Posted by The Armchair Economist in Business, Commentary, Economics, Politics.
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The Honorable Charles Schumer,

I am writing to you, as a constituent and resident of New York State, to share with you my thoughts and concerns regarding the Federal Reserve’s action in response to this week’s financial upheaval on Wall Street.

While I understand the necessity for swift and decisive action in order to stabilize financial markets, the actions outlined by the Federal Reserve do nothing to address the root cause of the sub-prime lending debacle. It is of my opinion that our problems derive from monetary policy driven by our exclusive reliance on continual economic expansion to fund increasingly large government programs (and an unpopular war), a policy that favors growth over stability. (more…)

From a Feminist: Vote for Palin because shes a Woman! September 17, 2008

Posted by The Armchair Economist in Commentary, Politics.
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I came across an interesting post that seems to be a site for Ex-Hillary supporters who are going to vote for McCain/Palin. Rather than put forth any legitimate (am I being sexist since I’m a man?) reasons, this is what she is saying (I will extract the relevant points to save you from the wall of text):

…American women have NOT come a long way, baby… the overwhelming thing we all must do is to elect more women to local, state and federal government. Why? Because of the 30% Solution…. well-recognized fact that no significant progress is ever made on womens’ issues in any country unless the federal government is made up of at least 30% women. Our federal government is currently made up of 17% women, which explains why we have had such a difficult time moving forward… If 30% of the Senate and House were women, you can bet your increasingly-less-valuable paycheck that both parties would be feeling a lot more responsible to that constituency…. The Democrats have utterly failed to demonstrate their commitment to womens’ rights by refusing to nominate the woman who was the clear winner of the primaries this year… The main reason McCain picked Palin was to satisfy his conservative base, but he was also extremely aware of the pissed-off faction of the Democratic Party that has finally seen the impenetrably sexist nature of the Party we thought was our friend and advocate…. McCain and the Republicans are willing to elect a woman to the Executive Branch for the first time in the history of our country. They are advancing the 30% Solution. Obama and the Democrats are not, and are not. Do you get it now, Obamans?… It is time to acknowledge that, as Hillary said, Womens’ rights are human rights. And it is time to cast your vote for a woman this Election Day. I am casting my vote for two women, McKinney/Clemente, unless McCain comes close enough to win New York, in which case I will vote McCain/Palin at the top. And after this election, I am only casting my vote for women, unless I have no alternative.

Is it me or does anyone else find it highly ironic and hilarious that someone who is out to advance women’s right is going to vote for a woman SIMPLY because she is a woman (rather than based on her abilities/accomplishments)? In their short sighted desire to see a woman in office, they are willing to vote for a person that has acknowledged a woman doesn’t have rights to her own body. How far back does this set the women’s lib movement?

Accountability and the Mortgage bailout May 17, 2008

Posted by The Armchair Economist in Commentary, Economics, Politics.
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Five years ago, I was three years out of college and had just written the check for the final payment of my college loans (hurray). My thrifty ways had led to a slowly growing pile of cash in my money market account. I considered purchasing a home since I was gainfully employed, had little expenses and had enough cash for a nice down payment. A little more research into the housing market showed that many of the newest mortgage loans were Adjustable Rate Mortgages, mortgages that had low teaser rates that were to reset in a few years (usually 3-5 years) at the prevailing interest rates. The historically low interest rates, coupled with the stratospheric (not yet ionospheric, as I was soon to see) housing market, and number of ARM mortgages was enough to put a slight pause into my own dreams of owning a home. I reckoned that by the time the interest rates rose in the next few years,  many people who bought in hoping for a quick buck will head towards the exit – all expecting to  cash out before their loans reset, leading a possible downturn in the housing market possibly creating some buying opportunities. By the way, this was before mortgage lenders found a way to mediate the perfect storm of less knowledgeable (subprime) borrowers , increasingly greedy banks willing to accept an amazing new form of seemingly low risk, high return mortgage products , and an increasing number mortgage brokers with surprisingly absent scruples that finally caused the housing market to crash and burn.

Last week, the House has passed a $300 billion in federal insurance to refinance troubled mortgages. While I feel some sympathy for some families that will lose their homes, I question the wisdom of not letting the market work out the kinks of the housing bubble. In the true American (read litigous) fashion, we’ll likely be arguing about who lied to who, who knew what when, and who is truly a victim for the next decade, the truth is that everyone involved in the entire chain of events is partially responsible and should be held financially and criminally (if warranted) liable. Why should bystanders and taxpayers be held financially responsible for other peoples actions? 

Subprime borrowers were giddy at the prospect of finally owning a home, but did they ever wonder WHY even though they didn’t have enough credit to buy a used car, people were now giving them hundreds of thousands of dollars without even checking their income (or even requiring a down payment!)? Did borrowers using ARM mortgages ever consider what would happen if the interest rates ever increased from historic lows (did they really think rates would stay there, or even go lower?!?). While I can see the excitement of owning your own home, as well as the prospect of watching it go up in value 100% every 3 years, did these borrowers ever consider that housing prices might not continue appreciating exponentially in perpetuity? Sure, I understand that that some of these folks might claim that mortgage brokers lied to them or misrepresented some aspects of the loans, but didn’t these borrowers have a duty to try to figure out ‘whats missing’ in this picture rather than blindly sign on the dotted line and hope that they wouldn’t need to consider the ‘what ifs’ should things go sour? In the end, sure, it sucks to lose your home, but should you have been able to purchase this home in the first place (ie: did you really lose it if it was never meant to be yours?). I won’t even get into borrowers who can afford to pay their loans but decided to walk away because their loans are now upside down (ie: they owe more on the house than the house is worth).

Mortgage brokers represent another one of the responsible parties. Enticed by hefty commissions on subprime mortgages, brokers did everything and anything to write loans to innappropriate borrowers.  Mortgage brokers first lowered the credit standard of the borrowers (ie; subprime borrowers, who never should have been able to borrow in the first place),  they lent money without even proof of the borrowers income via ‘Stated Income’ loans, they lent money with ‘No Money Down’ removing the borrowers stake in the gamble, and they underwrote loans for amounts greater than the collateral was worth (ie: money for your house AND renovations).  All of these tactics served to increase the pool of borrowers and ensure that the hefty commissions kept on rolling in.  Brokers may argue that their managers told them to lend money via these standards, while managers may argue that the brokers acted on their own but one cannot deny that as professionals, both parties should have enough understanding that basic mortgage underwriting principles were being violated. 

What enabled the mortgage companies to underwrite such risky loans?  Weren’t they concerned about the fact that they wouldn’t be able to collect on their mortgage payments when the borrowers hit upon hard times?  The beauty of this scam lies in their ability to sell these mortgages to other investors, thus absolving them of the riskiness of these loans and yet keep the fees and commissions from writing these mortgages. 

Banks and Investors, in blind pursuit of ever increasing returns,  was the likely party that enabled the house of cards framework of the mortgage crises.  Companies such as Fannie Mae existed that bought mortgages from the primary mortgage market and bundled these mortgages together to sell as a portfolio product that promised high returns with limited risk (with favorable ratings by credit rating agencies).   The basic rule of finance and investment is high returns come with high risk, and there are VERY little opportunity to get high returns with low risk (free market economics states that there are no free lunches).  Securitidized mortgage products (a portfolio of thousands of mortgages bundled together reduces the risk of individual defaults much like the protection you receive when you buy a mutual fund and one of these companies goes bankrupt) have always held a dear place in investors hearts due to their predictable (and relatively safe) income stream.  With the increasing number of subprime loans, loans offered to risky borrowers and thus had higher interest rates, the rate of return of these packaged mortgage products rose accordingly.  For some reason that I don’t understand, credit rating agencies failed to see the risk inherent in these loans and gave them credit worthy scores.  These credit ratings encouraged investment banks to blindly invest in these products creating a cycle of more demand for risky mortgages.  At some point, why didn’t someone at the investment banks question WHAT had fundamentally changed to enable the once modest mortgage market to offer such an increased rate of return in exchange for minimal change in risk? 

One can argue how borrowers were coerced to borrow money by mortgage brokers; Mortgage brokers are just writing the loans that ‘help people own homes’ and to fulfill the demand of the securitidized mortgage products, and Investors were misled about the riskiness of the mortgage products. However each party likes to play victim, each should be responsible for their actions and the resulting consequences without burdening the rest of the population. 

Disclosure: I still don’t own a home.. maybe in a few years. digg story

A look at the reality of Universal health care December 23, 2007

Posted by The Armchair Economist in 2008 Election, Health Care, Medicine, Politics, Ron Paul.
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When it comes down to a persons life, it is easy to make a knee jerk reaction and blame it on the insurance company. If you’ve read some of my older posts, you should be familiar with my stance on why for profit insurance companies are a inherently flawed concept. However, the recent case of Nataline Sarkisyan illustrates the reality of resource management that would be necessary under a universal payer system of health care.

A 17-year-old died just hours after her health insurance company reversed its decision not to pay for a liver transplant that doctors said the girl needed.

Nataline Sarkisyan died Thursday night at about 6 p.m. at University of California, Los Angeles, Medical Center. She had been in a vegetative state for weeks, said her mother, Hilda.

“She passed away, and the insurance (company) is responsible for this,” she said.

“They took my daughter away from me,” said Nataline’s father, Krikor, who appeared at a news conference Friday with his 21-year-old son, Bedros. more on this case here

It is easy to automatically point the finger at the insurance company and blame them for the death of the girl. However, there are several considerations we need to think about. The primary issue being, would a liver transplant have saved her life? I do not have access to her medical records so the only thing I can do is postulate. In this case, the patient had leukemia and complications arose from a bone marrow transplant. She was already in a vegetative state for several weeks prior to the surgery. Would a new liver have improved her life in any significant manner? The insurance company originally denied her liver transplant based on the absence of any evidence that a liver transplant would improve her condition (The current trend in health care is something called “Evidence Based Medicine”, where treatment is only rendered if it is shown in clinical studies to therpeutic). In the absence of any evidence that this would prove therapeutic, should insurance companies be forced to pay? The alternative view is that the patient’s doctor felt that the liver transplant was necessary, so the question arises, is the doctor or the insurance company responsible for making medical decisions? One argument can be made that although the insurance company refused to pay for the operation, the doctors had a responsibility to give the transplant to the patient regardless if they will be reimbursed (this is consistent with how medical malpractice decisions have been rendered in recent cases). I would not be surprised if the patients family or insurance company brought up point in the ensuing lawsuit, but this is a whole other blog.

As a response,


John Edwards tonight cited the case of a 17-year-old California girl who died after her insurance company refused coverage on a liver transplant to save her life as a call to action to change the current system of healthcare in America.
“Are you telling me that we’re gonna sit at a table and negotiate with those people?” asked a visibly angered Edwards, challenging the health care companies. “We’re gonna take their power away and we’re not gonna have this kind of problem again.” More here

Why is this case relevant to national health care? John Edward’s platform on health care (as with the other Dems) is to transform America’s health care system and provide universal health care for every man, woman and child in America (cited directly from his candidacy webpage).

In any type of universal health care, there are limited resources and tough decisions need to be made on who deserves to use these resources. For all the ills of insurance companies, there is still one thing that they do well: manage resources. In this case, Cigna (the insurance company in this case) is a perfect metaphor for a national payer in universal health care. For example, should more money be devoted to treatment of cancer in a 65 year old patient who has smoked 2 packs of cigarettes a day for 40 years, or for preventative health care for a 6 month old infant? Consider the fact that one major limitation of organ donation is the dearth in supply of organs relative to demand of organs. According to the OPTN, there are 16,679 patients on the Liver Transplant waiting list (Source). Where a liver is so highly valued, should the liver be used on this particular patient where the outcome is uncertain.. or should the liver be used in someone with a diagnosis that is expected to have a more proven outcome?

These might seem like preposterously extreme decisions, but in universal health care rules will need to be made to clearly delineate who should and should not receive care. In this case I am confident enough to bet my degree that in a universal health care setting, that this patient would NOT have gotten her liver transplant.

While it is noble to want to give everyone in the country free health care, one needs to understand the ramifications of universal health care on an individuals choice and true effect on quality of health care. digg story

Why Ron Paul? December 15, 2007

Posted by The Armchair Economist in 2008 Election, Politics, Ron Paul.
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Ok. I’m coming out of the closet to officially endorse Ron Paul for the GOP nomination.

Why Ron Paul?

This man is the epitome of integrity, he votes exactly what he believes in (not what is the flavor of the month).
I challenge you to the following:
a) Understand his platform, its quite revolutionary (and you may disagree with some or all of it, and even if you disagree you will have a better understanding of our constitution and how it relates to our country) In brief.. its noninterventionalist, constitutionalist, personal freedom (not bush’s version of freedom which requires war mongering and nation bankrupting tactics to achieve) http://www.ronpaul2008.com/, http://en.wikipedia.org/wiki/Political_positions_of_Ron_Paul

b) Look at his voting record (http://www.vote-smart.org/voting_category.php?can_id=296). (He’s actually known as ‘Dr. No’ on the hill.) I challenge you to find ONE other candidate that votes as consistently with his beliefs and I’ll recant my support for Ron Paul immediately.

2) This man has good judgment . He is the only GOP candidate that voted against the Iraq war, and believes that we don’t belong. And don’t tell me you are not COMPLETELY dissappointed in the little the Dems have done in ending the war/funding since they have taken control of the senate and house? Ron Paul is the sole candidate that is a man of his word.

3) Don’t be scared by his party affiliation. I’m a (former) Democrat, and Ron Paul actually ran for the presidency as an Independent in 88, but I feel out of all of the candidates (of any election in recent history) he has the firmest grasp on what our nation SHOULD be (ie: as defined by the constitution). *depending on what state you are from you NEED TO CHANGE YOUR PARTY AFFILIATION TO REPUBLICAN BY SPECIFIC DATES TO VOTE IN THE GOP PRIMARIES*.. otherwise a crook like Giuliani will get into office and will make bush and cheney look like mother teresa and gandhi.

One problem (of many) with our system of health care August 21, 2007

Posted by The Armchair Economist in Commentary, Health, Health Care, Politics, Technology.
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Its 1am. I have to be at the hospital in 5 hrs. These mid afternoon naps are killin me I tell ya.

What better way to spend my time than to write about the new developments going on at our favorite health care buyer – Medicare. Medicare announced over the weekend that they will stop paying for procedures that stem from medical errors, ranging from instruments left in surgical patients to patient falls to infections acquired while in the hospital (specifically UTIs from cathed patients). Basically they are only going to pay for treatment relating to what the patient originally presented with… (makes sense right?).. however the reality is that being in a hospital brings a whole host of risks that arent always preventable (not really ‘medical errors’) which brings up another issue.. in order to accurately diagnose a patient, lots of tests need to be run (no, it isnt supposed to be this way..).. but medicare only reimburses a flat rate for each case… (btw. i’m not going to talk about the inexcusable cases where the wrong leg is amputated or where a scalpel is left in the body.. these things happen.. but its so rare that the news media actually decide to write about it.. more of the financial impact to health institutions will come through ‘errors’ such as patient falls and nosocomial infections)

Unfortunately, whatever Medicare does, the private insurance industry will adapt and pervert to their will. It will be interesting to see how things shake out.. for example, how exactly do you minimize the number of times that a 75 year old patient needs to go to the bathroom (ie:to prevent falls)? You can give them a bed pan (very dignified eh?).. or maybe make them ring the nurse everytime they need to go (uh.. good luck with that.. might as well keep a bed pan handy)… or maybe you can just put them on a catheter… wait.. that increases the chance of infection.. for which treatment is no longer covered. Also, regarding preventable infections.. unfortunately until we know how to eliminate bacteria there is no such thing as ‘preventable infections’.. no matter where you are, even in the sterile surgical field, there are bound to be bacteria.. the question is whether the antibiotics and your immune system are up to snuff in dealing with it. The main point is that there are always complications (almost ‘expected’ if you will).. and it is alittle rediculous to say that no complications will ever happen. (it kind of provides indirect validation to people who sue due to bad outcomes rather than bad decision making or medical errors).

What we need is to close the liability gap between the payer and the care provider. The problem stands in that the liability for error falls in the health care providers hands.. while the purse strings are being controlled by another party who has no liability whatsoever. For example, if a 10y/o kid presents with recurrent headache with nausea and vomiting, the diagnostician has to consider brain tumor (no matter how remote the idea). The physician will order an MRI, the insurance company will come back with ‘we won’t reimburse for an MRI in this case (basically the chances of an brain tumor is very low, while the number of people who have recurrent headaches with nausea and vomiting are very high.. so it is a business decision not to do reimburse for the MRI.. otherwise they would go bankrupt)… but note: they didnt say don’t get it, they just say they won’t reimburse for it, so now, they’ve thrown te ball back into the doctors court. its up to the doctor to decide what to do.. either make the hospital foot the bill or make the patient foot the bill (btw: its very expensive).. If the doctor thinks that its REALLY low on the differential, perhaps they will tell the patient its most likely nothing (or they could be a real bastard and leave it up to the patient to decide if they want it or not ie: not give them any guidance)… but 5 years down the line, if it really happened to be a brain tumor, guess who gets sued? (by the way, doctors have been sued (and lost) by telling patients time and again to get specific tests.. (ie: writing prescriptions time and again).. but the patients never got it.. and when their disease progressed to an advanced stage, they sued the doctor because the doctor never stressed how important it was for them to get the test!! Its actually progressed to the point in which doctors can call CPS (ie: child protective services.. the same people who come if you are caught abusing your children) if parents don’t get necessary tests for their kids (ie: lead screenings)… now if that isn’t an adversarial/defensive relationship, I’m not sure what is. To be fair, I don’t really know how often this is invoked or how accurate it is.. the anecdote was just passed on to me by another doc)

If the insurance companies want to make decisions on what to reimburse for (ie: they think they know enough to make the decision of what is important and what isnt), they need to share some of the liability.

(btw: regardless of how good you think a hospital is or how good the doctors are, you never want to be in a hospital any longer than you need to be.. consider it a risk benefit decision.. )

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The Privatization of the Office of Vice President June 4, 2007

Posted by The Armchair Economist in Business, Commentary, Ethics, Politics.
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Just as he pays little attention to old-fangled notions of the separation of powers, Mr. Cheney does not overly bother himself about the bright line that should exist between his last job as chief of the energy giant Halliburton and his current one on the public payroll. With the attention being paid to corporate executive compensation and questionable ethical judgment, it makes you wonder why Cheney’s actions haven’t been more carefully scrutinized.  Oh wait, to do so would be pose a danger to national security. (I’d like to see the next corporate exec who takes the stand use that line).

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