Greece was the model -- a national health care system that was both affordable and universal. Candidate Obama chided Americans for being the only developed country in the world unwilling to provide "affordable" health care. We now see where the "Affordable Health Care Act" is taking us.
Karolina Tagaris spells it out in a special Reuters report today:
"Greece's rundown state hospitals are cutting off vital drugs, limiting non-urgent operations and rationing even basic medical materials for exhausted doctors as a combination of economic crisis and political stalemate strangle health funding."
The 'rundown state hospitals' did not become rundown overnight. It took some time to destroy the medical system in Greece, but we are there now. I wonder if no health care is better than free market health care. Greece is about to find out.
What is the lesson? Contrary to Candidate Obama's loose talk, no nation can 'afford' "Affordable Health Care." You get what you pay for. If no one pays, eventually no one gets.
Jumat, 15 Juni 2012
Kamis, 14 Juni 2012
The Greek Vote Doesn't Matter
The only sense in which the Greek election on Sunday matters is as a time marker. Whoever wins cannot possibly follow through on the austerity program and, regardless of the outcome, Greek is headed for a Euro exit. It's just numbers now. Greece is gone.
The real news is what is happening in Spain and Italy. Yields on sovereign debt are rising quickly in both countries. They are past the point at which either country has any real shot at making it through this. Germany does not have the resources to rescue the situation, nor does the US and/or Britain. It is over for the Eurozone.
The failure to permit workouts and bankruptcy, which is what should have happened here, as well as in the US in 2008, is going to exact a huge price on the Eurozone. Massive unemployment, surging inflation, and collapsing GDP represent Europe's near term future. It is really far too late now to avoid catastrophe.
Hopefully, other countries will learn something from Europe's coming agonies. States like California, Illinois, New Jersey and Maryland are heading down the path to insolvency and quickly. The US national fiscal situation probably has a two to three year window left within which to tackle it's enormous debt problems. We shall see if anyone learns or if we are simply destined to follow Europe down the road to disaster.
Honesty and transparency would solve these problems. Pretending that there is some other fix by politicians guarantees economic and political chaos.
The real news is what is happening in Spain and Italy. Yields on sovereign debt are rising quickly in both countries. They are past the point at which either country has any real shot at making it through this. Germany does not have the resources to rescue the situation, nor does the US and/or Britain. It is over for the Eurozone.
The failure to permit workouts and bankruptcy, which is what should have happened here, as well as in the US in 2008, is going to exact a huge price on the Eurozone. Massive unemployment, surging inflation, and collapsing GDP represent Europe's near term future. It is really far too late now to avoid catastrophe.
Hopefully, other countries will learn something from Europe's coming agonies. States like California, Illinois, New Jersey and Maryland are heading down the path to insolvency and quickly. The US national fiscal situation probably has a two to three year window left within which to tackle it's enormous debt problems. We shall see if anyone learns or if we are simply destined to follow Europe down the road to disaster.
Honesty and transparency would solve these problems. Pretending that there is some other fix by politicians guarantees economic and political chaos.
Unrest Grows at UVA
The University of Virginia is in crisis. There can't be any doubt about it. There seems to be remarkable unity among those who question the Board of Visitor's recent decision to request the resignation of UVA President Teresa Sullivan. I suspect part of that unity is fed by the personality that Sullivan exposed to the community during her two year tenure at the University. Sullivan exudes happiness and optimism and seemed to immerse herself in all aspects of UVA from the moment of her arrival.
With a history of experience with very large universities and a research background in sociology, Sullivan's selection in 2010 was initially widely viewed with skepticism by many parts of the University community -- me included. But Sullivan took steps to meet and greet with all parts of her constituency and soon became a familiar and welcome figure around grounds. She held meetings with different employee groups, gave frequent talks in small settings, engaged groups that had never been engaged by a UVA President before, and was regularly seen cheering on UVA athletic teams, often alone without the usual entourage that accompanies the University's highest ranking employee.
In short, Sullivan is a very engaging and pleasant person who appeared to genuinely like the University and made herself visible in an apparent effort to reassure the restless that she would do what she could to make UVA a better place. That has left a residue of goodwill for Teresa Sullivan that the Board of Visitors is going to have a tough time dissipating.
One of the discouraging features of the current public relations debacle is that board minutes do not exhibit any disagreement between Sullivan and the Board over University policy, strategy or vision. If there are "philosophical differences," then these differences should play out at Board meetings. UVA is a public institution and the idea behind the legal requirement for open and public meetings is that policy differences should be aired publicly. One of the bizarre features of the current crisis is that, even now, no one seems to really know what these "philosophical differences" were.
Devil theories abound about why we are where we are, but the truth is more likely that all concerned are trying to do the right thing and genuinely believe the actions they have taken are the correct ones. I would not buy in to the view that this is some sort of conspiracy at work. A conspiracy would have handled matters very differently than the strange pattern of events that we are witnessing. It is far more likely that things weren't thought through adequately and well-intentioned people misread the reaction that would accompany their efforts to improve UVA's future.
But, we are where we are and this is not going away. It may sound like a ridiculous pipedream, but I would hope that Sullivan can be persuaded to return with perhaps a more formal mandate from the Board and the Board can begin a process to begin to adopt a strategic plan and vision that it feels is appropriate. Then if "differences" remain, the Board can take whatever action it feels is appropriate. Both sides in this fiasco can "win" something if this is handled openly. Absent some kind of good faith effort to reconcile the current differences between the UVA Board and the greater University community, I am afraid that the current conflict could escalate in directions that the Board may not now envision.
With a history of experience with very large universities and a research background in sociology, Sullivan's selection in 2010 was initially widely viewed with skepticism by many parts of the University community -- me included. But Sullivan took steps to meet and greet with all parts of her constituency and soon became a familiar and welcome figure around grounds. She held meetings with different employee groups, gave frequent talks in small settings, engaged groups that had never been engaged by a UVA President before, and was regularly seen cheering on UVA athletic teams, often alone without the usual entourage that accompanies the University's highest ranking employee.
In short, Sullivan is a very engaging and pleasant person who appeared to genuinely like the University and made herself visible in an apparent effort to reassure the restless that she would do what she could to make UVA a better place. That has left a residue of goodwill for Teresa Sullivan that the Board of Visitors is going to have a tough time dissipating.
One of the discouraging features of the current public relations debacle is that board minutes do not exhibit any disagreement between Sullivan and the Board over University policy, strategy or vision. If there are "philosophical differences," then these differences should play out at Board meetings. UVA is a public institution and the idea behind the legal requirement for open and public meetings is that policy differences should be aired publicly. One of the bizarre features of the current crisis is that, even now, no one seems to really know what these "philosophical differences" were.
Devil theories abound about why we are where we are, but the truth is more likely that all concerned are trying to do the right thing and genuinely believe the actions they have taken are the correct ones. I would not buy in to the view that this is some sort of conspiracy at work. A conspiracy would have handled matters very differently than the strange pattern of events that we are witnessing. It is far more likely that things weren't thought through adequately and well-intentioned people misread the reaction that would accompany their efforts to improve UVA's future.
But, we are where we are and this is not going away. It may sound like a ridiculous pipedream, but I would hope that Sullivan can be persuaded to return with perhaps a more formal mandate from the Board and the Board can begin a process to begin to adopt a strategic plan and vision that it feels is appropriate. Then if "differences" remain, the Board can take whatever action it feels is appropriate. Both sides in this fiasco can "win" something if this is handled openly. Absent some kind of good faith effort to reconcile the current differences between the UVA Board and the greater University community, I am afraid that the current conflict could escalate in directions that the Board may not now envision.
Rabu, 13 Juni 2012
Chaos Ahead and Soon
The Greeks will vote on Sunday. The election is probably going to install a far(ther) left political party that intends to renounce the austerity program that has been forced upon them by their richer European neighbors. That means the end of the Euro for Greece. Greece will then descend into utter chaos and likely political anarchy. If you were plotting a visit to the Acropolis this summer, it might be best to seek a refund before its too late.
So, Greece will be gone. Then what? Spain and Italy are already gone, but no one is yet willing to admit it. Yields on 10 year government debt in both Spain and Italy are rapidly moving to the 7 percent level. At debt levels of more than 120 percent of GDP (that's Spain's debt level, if you correct for last week's bailout), Spain and Italy are now past the point of no return. Their debt levels are not sustainable. It's over for Spain and Italy.
Meanwhile, check out Germany's situation. The impact of the bailout adds debt on Germany's plate of nearly 40% of their GDP. That puts Germany in a perilous situation. Even though Germany's economy is still puttering along, their debt is rapidly moving toward the unsustainable level and, in truth, is not far behind Spain and Italy. So, Germany is toast as well. Is it worth analyzing the situation in France, which is not really much different now than the situation in Spain or Italy?
The whole house of cards is coming down and Act one of our chaotic future begins next week in Greece. All of this has been predictable; all of this was completely avoidable. To repeat the most recurrent theme of this blog: the modern welfare state is not affordable. There is no set of taxes, bond sales, or anything else that can provide the majority of any country's citizenry free goods and services at the expense of an ever-dwindling number of productive citizens. It is not a question of left or right wing politics or absence of political leadership. It is simply a question of arithmetic.
The lesson to be learned is that if no one is responsible for their own education, health care retirement, housing or anything else, then there will, in time, not be anyone left to produce these goods and services. "Taxing the rich" is the last refuge of the demagogue. Once you hear this theme, you know the game is over.
It doesn't really matter whether Obama wins or loses the election in November. The US is on the same trajectory as Europe and the ultimate outcome will be the same as what is now unfolding in Europe. Until the US body politic is willing to unwind the welfare state, eliminate bureaucratic rigidities to the free market, and face the fact that accumulation of wealth by individuals is a crucial and indispensable component of economic growth, then there is no avoiding the predictable outcome of the collapse of the modern welfare state.
So, Greece will be gone. Then what? Spain and Italy are already gone, but no one is yet willing to admit it. Yields on 10 year government debt in both Spain and Italy are rapidly moving to the 7 percent level. At debt levels of more than 120 percent of GDP (that's Spain's debt level, if you correct for last week's bailout), Spain and Italy are now past the point of no return. Their debt levels are not sustainable. It's over for Spain and Italy.
Meanwhile, check out Germany's situation. The impact of the bailout adds debt on Germany's plate of nearly 40% of their GDP. That puts Germany in a perilous situation. Even though Germany's economy is still puttering along, their debt is rapidly moving toward the unsustainable level and, in truth, is not far behind Spain and Italy. So, Germany is toast as well. Is it worth analyzing the situation in France, which is not really much different now than the situation in Spain or Italy?
The whole house of cards is coming down and Act one of our chaotic future begins next week in Greece. All of this has been predictable; all of this was completely avoidable. To repeat the most recurrent theme of this blog: the modern welfare state is not affordable. There is no set of taxes, bond sales, or anything else that can provide the majority of any country's citizenry free goods and services at the expense of an ever-dwindling number of productive citizens. It is not a question of left or right wing politics or absence of political leadership. It is simply a question of arithmetic.
The lesson to be learned is that if no one is responsible for their own education, health care retirement, housing or anything else, then there will, in time, not be anyone left to produce these goods and services. "Taxing the rich" is the last refuge of the demagogue. Once you hear this theme, you know the game is over.
It doesn't really matter whether Obama wins or loses the election in November. The US is on the same trajectory as Europe and the ultimate outcome will be the same as what is now unfolding in Europe. Until the US body politic is willing to unwind the welfare state, eliminate bureaucratic rigidities to the free market, and face the fact that accumulation of wealth by individuals is a crucial and indispensable component of economic growth, then there is no avoiding the predictable outcome of the collapse of the modern welfare state.
Senin, 11 Juni 2012
UVA's Sullivan Steps Down
With a little nudge from the University's Board of Visitors, University of Virginia President Teresa Sullivan resigned yesterday after not quite two years in office. Few know, in any real detail, why Sullivan was eased out so early in her tenure, but the background noise suggests the usual headaches.
Money and its allocation form the main issues in the modern University. Elaborate fund raising operations have grown up in the modern elite schools, a group in which UVA claims membership. Athletic programs have profitability issues front and center. Witness the reshuffling of athletic conferences, which is completely driven by monetary issues. Compensation for administrators and successful fund raisers far exceed their equivalents in the private sector. Meanwhile, the education quality at elite schools has eroded dramatically over the past four decades. The only measure that seems to be improving in the elite schools in the US is the quality of the incoming student. By any other measure, American universities are on the decline.
The biggest problem is that of governance. Who should run a University? Students, faculty, administrators, taxpayers, boards, and alumni all seem to think they should be in charge. Typical of private foundations or state-run institutions, the "stakeholder" theory of governance is in charge, which means that no one is in charge. Worse, there is a community of interest between students and faculty to diminish the actual effort put into education. Faculty want to teach less and students would like more leisure time. This conspiracy has dramatically reduced teaching hours, classroom hours, and studying time over the last few generations.
Meanwhile, numerous political agendae have invaded the University community and it's budget. Centers have proliferated that seem to have no real purpose but to create political activism among the student body. These centers are very expensive, are constantly expanding, and serve no real educational purpose. Worse, many students devote their time to "activism" to the neglect of their education. Many students graduate thinking they are headed out to perform great public service, with sociology and anthropology degrees in hand. Who hires this group?
The burgeoning cost of higher education has created a mountain of debt for graduating seniors, and for many who never graduate. These costs are largely the result of the shift in focus in the modern University away from education toward social activities, political activities, and the promotion of semi-professional athletic programs. The actual education process is absurdly inexpensive, but actual educational expenses have been a declining part of University budgets since the early 1960s.
The modern University is adrift. Technological change is coming to education, but it is not likely to be lead by a modern University, whose eyes are always in the rear view mirror. President Sullivan, who seems to be a very nice person and well liked in the University of Virginia community, probably found herself in the cross-hairs of the various conflicts in governance that plague the modern University. If education is no longer the goal of the modern University, then it's anybody's guess what the priorities of a modern University should be.
Money and its allocation form the main issues in the modern University. Elaborate fund raising operations have grown up in the modern elite schools, a group in which UVA claims membership. Athletic programs have profitability issues front and center. Witness the reshuffling of athletic conferences, which is completely driven by monetary issues. Compensation for administrators and successful fund raisers far exceed their equivalents in the private sector. Meanwhile, the education quality at elite schools has eroded dramatically over the past four decades. The only measure that seems to be improving in the elite schools in the US is the quality of the incoming student. By any other measure, American universities are on the decline.
The biggest problem is that of governance. Who should run a University? Students, faculty, administrators, taxpayers, boards, and alumni all seem to think they should be in charge. Typical of private foundations or state-run institutions, the "stakeholder" theory of governance is in charge, which means that no one is in charge. Worse, there is a community of interest between students and faculty to diminish the actual effort put into education. Faculty want to teach less and students would like more leisure time. This conspiracy has dramatically reduced teaching hours, classroom hours, and studying time over the last few generations.
Meanwhile, numerous political agendae have invaded the University community and it's budget. Centers have proliferated that seem to have no real purpose but to create political activism among the student body. These centers are very expensive, are constantly expanding, and serve no real educational purpose. Worse, many students devote their time to "activism" to the neglect of their education. Many students graduate thinking they are headed out to perform great public service, with sociology and anthropology degrees in hand. Who hires this group?
The burgeoning cost of higher education has created a mountain of debt for graduating seniors, and for many who never graduate. These costs are largely the result of the shift in focus in the modern University away from education toward social activities, political activities, and the promotion of semi-professional athletic programs. The actual education process is absurdly inexpensive, but actual educational expenses have been a declining part of University budgets since the early 1960s.
The modern University is adrift. Technological change is coming to education, but it is not likely to be lead by a modern University, whose eyes are always in the rear view mirror. President Sullivan, who seems to be a very nice person and well liked in the University of Virginia community, probably found herself in the cross-hairs of the various conflicts in governance that plague the modern University. If education is no longer the goal of the modern University, then it's anybody's guess what the priorities of a modern University should be.
Sabtu, 09 Juni 2012
Throwing Good Money After Bad
Spanish banks have been thrown a (temporary) lifeline by the European Union. The Spanish banks now a have a $ 125 billion loan (?) from the EU to prevent a collapse of the entire Spanish banking system. Spanish banks got in trouble lending heavily in the Spanish residential housing boom. But, their big trouble now is that the Spanish government has coerced the banks into buying Spanish government debt. That practice, no doubt, will continue. So Spain sells more government debt, the Spanish banks buy that debt, and other European nations underwrite the Spanish banks. To spell out the obvious, the EU has just bailed out (temporarily) the Spanish government.
Within a week or two the Greek bailouts will probably come crashing down and Eurozone will begin the process of unraveling. The $ 125 billion is intended as a firewall to keep Spain from going down with Greece. All this $ 125 billion will do is keep Spain from making the decisions necessary to slow the rapid disintegration of their economy. Now they can make it for another few months. Why upset the applecart with a few reforms? After all, Germany hasn't run out of money yet.
Yet is the key word here. Germany is now on the hook for Greece and Spain, as well as Ireland and Portugal. Gradually, Germany is being sucked into absorbing the costs of the welfare states in all of these countries. The truth is that Germany cannot afford their own welfare state, so absorbing the costs of other welfare states will simply hasten Germany's economic decline.
You have to wonder what France is putting into the kitty on this deal. France is broke and has nothing but its arrogance to offer the floundering European Union.
It will be interesting to see how German and French bond auctions go after this additional bailout. At some point, rising yields will hit both Germany and France and folks will begin to find it difficult to distinguish German credit from Spanish credit from Greek credit. None of it will be any good.
But for now, this will give the appearance of a fix to what ails the Eurozone. The Obama folks should be delighted, though, in reality, it won't do anything for America's economic woes, which have nothing to do with what is going in the Eurozone. Markets should react favorably until the giddy feeling slides into a dulling headache once more.
None of these guarantees, bailouts and so forth can do anything but postpone the day of reckoning for the out-of-control spending habits of Eurozone governments. Promises to pay wear thin when nothing is ever paid.
The US will be having these same discussions with Detroit, California and Illinois very soon -- perhaps before the year is out. It will be the same tired arguments. "This is a national problem," it will be argued. Those who have behaved frugally will be asked to underwrite the profligate. That's what's happening in the Eurozone and the same discussion is headed our way.
Within a week or two the Greek bailouts will probably come crashing down and Eurozone will begin the process of unraveling. The $ 125 billion is intended as a firewall to keep Spain from going down with Greece. All this $ 125 billion will do is keep Spain from making the decisions necessary to slow the rapid disintegration of their economy. Now they can make it for another few months. Why upset the applecart with a few reforms? After all, Germany hasn't run out of money yet.
Yet is the key word here. Germany is now on the hook for Greece and Spain, as well as Ireland and Portugal. Gradually, Germany is being sucked into absorbing the costs of the welfare states in all of these countries. The truth is that Germany cannot afford their own welfare state, so absorbing the costs of other welfare states will simply hasten Germany's economic decline.
You have to wonder what France is putting into the kitty on this deal. France is broke and has nothing but its arrogance to offer the floundering European Union.
It will be interesting to see how German and French bond auctions go after this additional bailout. At some point, rising yields will hit both Germany and France and folks will begin to find it difficult to distinguish German credit from Spanish credit from Greek credit. None of it will be any good.
But for now, this will give the appearance of a fix to what ails the Eurozone. The Obama folks should be delighted, though, in reality, it won't do anything for America's economic woes, which have nothing to do with what is going in the Eurozone. Markets should react favorably until the giddy feeling slides into a dulling headache once more.
None of these guarantees, bailouts and so forth can do anything but postpone the day of reckoning for the out-of-control spending habits of Eurozone governments. Promises to pay wear thin when nothing is ever paid.
The US will be having these same discussions with Detroit, California and Illinois very soon -- perhaps before the year is out. It will be the same tired arguments. "This is a national problem," it will be argued. Those who have behaved frugally will be asked to underwrite the profligate. That's what's happening in the Eurozone and the same discussion is headed our way.
Obama Outs Himself
"The big challenge we have in our economy right now is state and local government hiring has been going in the wrong direction." Moments earlier, Obama uttered the now famous remark: "The private sector is doing fine."
So, now we have it. Basically, the President is saying that the private sector is an irrelevancy. All that matters are government workers.
We knew all along that the President really didn't like free enterprise, but yesterday's comments truly say it all.
Even thought the President made an effort later in the day to to "clarify" his remarks, the remarks speak for themselves and explain a lot about the economic policies and the economic results of the Obama Administration.
So, now we have it. Basically, the President is saying that the private sector is an irrelevancy. All that matters are government workers.
We knew all along that the President really didn't like free enterprise, but yesterday's comments truly say it all.
Even thought the President made an effort later in the day to to "clarify" his remarks, the remarks speak for themselves and explain a lot about the economic policies and the economic results of the Obama Administration.
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