 | | The Daily Reckoning | Tuesday, November 1, 2011 |
- Markets nosedive as Europe’s rescue plan falters at the very first hurdle,
- Faith in “the state” eroding — a few reasons why...and what’s to come,
- Plus, Bill Bonner with more on the General Theory of Zombieism: this time, it’s healthcare...
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|  | | | Who’s Going to Pay? | | Mounting Debt and the Future that Won’t Forget It | |  | | Bill Bonner |
Reckoning today from Paris, France...
What’s happening to 2011? It’s disappearing...
Yesterday was warm and sunny in this part of the world. Today, it is raining and gloomy.
This is All Saints day. After the mass, we’ll go over to the cemetery to put chrysanthemums on a family grave. Why chrysanthemums? We don’t know. But everyone does it. The graveyard will be as busy as a subway station today.
Investors seem to have turned gloomy too. The Dow lost 276 points yesterday. Gold fell $22.
What’s behind it? Maybe this had something to do with it. From the Telegraph:
China has stressed it will not be a “saviour” to Europe as President Hu Jintao embarks on an official visit to the continent that will take in this Thursday’s crucial G20 summit in Cannes.
The warning came as European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy urged G20 leaders to use the meeting of major economies to address Europe’s debt crisis, saying measures proposed last week were not enough by themselves.
French President Nicolas Sarkozy has said Beijing had a “major role to play” in proposals to expand the European Financial Stability Facility (EFSF) to €1 trillion (£877bn), possibly through a special purpose investment vehicle that would attract backing from sovereign wealth funds.
The head of the bail-out fund, Klaus Regling, was despatched to Beijing to discuss terms, but travelled on to Japan at the weekend without an agreement.
China, holder of the world’s largest foreign exchange reserves at $3.2 trillion, said it wanted more clarity before investing.
The official Xinhua news agency, used to communicate Communist Party policy, said Europe must address its own financial woes. “China can neither take up the role as a saviour to the Europeans, nor provide a ‘cure’ for the European malaise,” it stated. “Obviously, it is up to European countries themselves to tackle their financial problems.” Darned. Maybe the European rescue is not quite the done deal they thought it was. Europe’s heads of state said they would begin to commence to start putting together a plan to sort out the debt mess. That’s not the same as actually sorting it out. And it leaves out the essential bit of information — who’s going to pay?
You’ll notice that Europe’s envoy also paid a visit on the Japanese. That’s where this story becomes clear...and funny. Asking Japan for a loan is like asking a starving man for a piece of chocolate cake. Japan already has more government debt than anyone. Its public debt- to-GDP ratio is up to 230%.
Meanwhile, pressure is mounting on poor Silvio Berlusconi. Forget the Bunga-Bunga parties. Forget the underage prostitutes. Silvio’s problem is in the bond market, where yields on the 10-year note rose to 6.1% yesterday.
Almost all the developed nations have so much debt they can’t think about paying it back. They only worry about keeping up with the interest and refinancing costs. Japan only gets away with its debt burden because inflation and interest rates are both zero. It doesn’t cost anything to carry the debt.
But imagine that you have debt of 230% of GDP...and imagine that you have 6% interest. You can do the math. You’re paying 14% of GDP...just to keep up with the interest payments on money you spent years ago. In the US, that would be more than 30% of the entire federal budget. It would be 2/3rds of all tax revenues. It would be a disaster, in other words....
..it would also not happen. Because bond investors aren’t stupid. They would see immediately that they weren’t going to get their money back. They would sell bonds...forcing up interest rates even higher...and causing a meltdown of the whole system.
That’s the thing about debt. Somebody always pays. If not the debtor, as planned, then the creditor must pay. Or the taxpayer.
Debt never disappears. It represents resources that have been borrowed from the future. And the future never forgets. The future is a Shylock...always demanding its pound of flesh at the most inconvenient moment.
Here in France, there was a skit on TV that made its way to YouTube. It shows a cartoon character who looks for all the world like Barack Obama going up to an ATM machine. He puts in his card. But he finds he cannot get any money.
So, he goes to the Bank of China to get a loan. The Chinese banker, who bears a remarkable resemblance to China’s premier Hu Jintao makes the loan. But the Chinese want their pound of flesh too. In the next scene, Obama and French president Nicolas Sarkozy are both carrying a dragon in a Chinese New Year’s parade.
And yet, China has more than $3 trillion in savings. It is the rising star...the young, growing power. Like the US in the early 20th century, it is the nation to which the tired, old countries of the developed world look to finance their mistakes.
America financed Britain and France in WWI. But it did so for good reason — the money it lent was largely used to buy supplies from the US. Same thing in WWII. Lending money was a good business decision. After the wars were over, the US wanted its pound of flesh too. Trouble was, the debtors didn’t have a pound left.
More thoughts, after today’s essay...
| | | | Is this America’s Last Gasp? |
A terrible question. But it must be asked — and answered.
This urgent broadcast will do just that.
Tune in now for urgent news on our banks, agencies, retirement accounts — and even our trash collection!
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| | | A Brief Note From Joel Bowman, Reporting from Buenos Aires, Argentina... |
|  | | Joel Bowman |
Markets are in a tailspin this morning after news that “preliminary plans to begin thinking about commencing discussions regarding how to possibly, sometime in the future, deal with the euro-crisis” could face serious, perhaps prohibitive, delays.
Shocker!
In an announcement earlier today, Greece’s Prime Minister George Papandreou called for a popular referendum on a new debt deal with Greece’s foreign lenders. Reports The New York Times:
The revolt by lawmakers and a no-confidence vote planned for Friday raised the prospect of a government collapse that would not only render the referendum plan moot but likely scuttle — or at least delay — the debt deal that European leaders agreed on after marathon negotiations in Brussels last week.
That, in turn, could put Greece on a fast track to default and raises the prospect of the country’s exit from the monetary union of countries sharing the euro currency. France’s CAC 40 and Germany’s DAX Index both ended the session down by more than 5% on the news. In the US, major indexes are down between 2.5 and 3%...so far.
In light of unfolding events in the eurozone, in general, and Greece, in particular, we’ve decided to run a lightly edited excerpt from a presentation Eric Fry delivered recently at Agora Financial’s Survival Summit in Baltimore, MD. In short, Eric’s speech was about distrusting government. The Greek referendum demonstrates how capricious and unpredictable western governments — particularly those with lethal doses of debt coursing through their veins — have become. One day they are bailing each other out with taxpayer dollars and newly printed money. They next day they are refusing to pay their debts, even with the money they are counterfeiting!
Welcome, Fellow Reckoner, to The Age of the Broken Promise.
Get used to it...or rather, get ready for it! Now, over to Eric...
| | The Daily Reckoning Presents | | Anarchy — An Investor’s Best Friend | |  | | Eric Fry |
A revolution is underway — one that will topple the existing order.
It’s not the sort of revolution that decapitates monarchs or murders czars. But a revolution is underway, and it is the kind that’s going to overthrow faith in government.
But that’s not necessarily a bad thing. In fact, it might be a very helpful thing.
I think it is time now to begin investing as if there were no government guarantees...or at least no reliable government guarantees.
For my entire lifetime, no financial guarantee has been more reliable than the guarantee of the US government. The T-bond was the safest security, the dollar, the safest currency. No one doubted that Medicare, Unemployment insurance, food stamps, Social Security, etc., would be there for them if and when the time came.
But that confidence is wavering. Treasuries and the US dollar remain the go-to assets in times of stress. But at the margin, faith in a government guarantee is wavering. As this cycle unfolds, I predict that faith in government guarantees will all but disappear.
Why do I say this?
Because governments in the West are already growing feeble and untrustworthy. And not just economically. There are some sociological trends that are pointing in the same direction. As you examine life here in the States, for example, it is easy to see a government that is becoming a bit unreliable, at best, and hostile, at worst.
In fact, I would argue that the same government that initially advocated “life, liberty and the pursuit of happiness” is actively standing in the way of all three.
Now I’ve got a trivia question for all of you. What do all four songs in the following audio clip have in common?
All four songs were recorded originally on a Gibson guitar...
Some of you are laughing knowingly. Some of you are still perplexed. So I’m going to read you a little story about Gibson guitars we ran in The Daily Reckoning about one month ago. This story is extremely well written. I wish I had written it myself, but it was written by Joel Bowman:
Armed agents from the US Fish and Wildlife Service raided two of Gibson’s production facilities in Tennessee and its Nashville headquarters last Wednesday. The agents confiscated “nearly $1 million in Indian ebony, finished guitars and electronic data,” according to the company’s CEO, Henry Juszkiewicz.
“It was a nightmare,” fumed the CEO after the incident, “We had people sitting there making guitars. We had no weapons.”
This is not the first time the feds have actively sought to bum Gibson’s vibe (a job-creating vibe, let us not forget — Gibson’s Tennessee factories alone employ over 700 people). The feds last crashed the party back in 2009, seizing a shipment of ebony from Madagascar. They claimed they were there — and, again, armed — to enforce the Lacey Act, a century-old endangered species act that was amended in 2008 to include plants and animals.
But it’s worth noting that Gibson is not your typical enemy of the planet.
“Agents seized wood that was Forest Stewardship Council controlled,” Juszkiewicz noted, in a quote carried on the company’s website. “Gibson has a long history of supporting sustainable and responsible sources of wood and has worked diligently with entities such as the Rainforest Alliance and Greenpeace to secure FSC-certified supplies. The wood seized on August 24 satisfied FSC standards.”
The CEO says the government won’t tell him exactly how — or if — his company has violated that law.
“We’re in this really incredible situation,” continued the CEO. “We have been implicated in wrongdoing and we haven’t been charged with anything,” he says. “Our business has been injured to millions of dollars. And we don’t even have a court we can go to and say, ‘Look, here’s our position.’” Maybe this raid was a random event. An outlier. But I don’t think so. Consider the case of Pascal Vieillard, whose Atlanta-area company, A-440 Pianos, imported several antique Bösendorfers.
Mr. Vieillard asked officials at the Convention on International Trade in Endangered Species how to fill out the correct paperwork — which simply encouraged them to alert US Customs to give his shipment added scrutiny.
There was never any question that the instruments were old enough to have grandfathered ivory keys. But Mr. Vieillard didn’t have his paperwork straight when two-dozen federal agents came calling. Vieillard faced up to a year in federal prison and a fine of $100,000. His company could be fined $500,000 and be placed on probation for five years.
So he decided to settle. He pleaded guilty to a misdemeanor count of violating the Lacey Act, and was handed a $17,500 fine and three years probation.
That seems capricious to me. But that’s part of the new, fire-ready- aim law enforcement culture that exists throughout the United States.
The American government has become like a mean drunk — a big, burly mean drunk. He’s angry and you can’t really say anything near him that won’t elicit some kind of angry response.
It doesn’t matter that the drunk may have been a wonderful husband and father for many years...or that he might go through rehab and be a great guy in the future. Right now, at this moment, he’s a mean drunk.
When you get too close to him, you have to be careful what you do.
You’ve all seen this person, right?
Even when normal things are happening around him, he reacts abnormally. When you’re in the presence of a mean drunk, there are no right answers to any question. There are no positive, fruitful conversations.
Am I exaggerating? Am I stretching this metaphor? Maybe, but let me share a couple more anecdotes....
In 2003, two long-standing government agencies disappeared.
The Immigration and Naturalization Service (INS) and the US Customs Service both disappeared.
In their place emerged the Department of Homeland Security that oversees agencies with very intimidating names like:
- (ICE) Immigration and Customs Enforcement
- (CBP) Customs and Border Protection
- Federal Protective Service
- National Protection and Programs Directorate
- Transportation Security Administration
That’s a lot of protecting going on. What happened to the good old Customs Service?
You don’t get that anymore.
So now that Department of Homeland Security boasts that it employs 2.2 million “first responders” nationwide.
According to The Washington Post, “The Department of Homeland Security has given $31 billion in grants since 2003 to state and local governments for homeland security and to improve their ability to find and protect against terrorists.”
Ergo, every single cop in the country is a “First Responder” in the War on Terror. You know the meter maid? She’s a first responder. And it’s true; she’ll be the very first person to respond to your expired parking meter, no doubt about it. But now she is enlisted as an agent in the war against terror.
So if every cop is a First Responder, that means every incident to which they respond is some kind of threat or crisis.
Here’s what a First Responder used to look like. His name was Big Bill. See he’s swinging his nightstick and he’s smiling.
Here’s what a First Responder looks like now.
Back in the 1950s, the First Responder helped Sally find her lost cat, Puff. His name was “Big Bill.” He was a nice guy. But now Big Bill, when he’s off duty, blogs on a Facebook page called “Big City Cops.” The blog’s logo is a skull and crossbones and its motto is, Oderint dum metuant.
You know where that phrase comes from? The sadistic Roman Emperor, Caligula. It means, “Let them hate, as long as they fear.” This is the logo of a Facebook page for policemen! I think I liked Big Bill more when he was looking for Puff, instead of “domestic terrorists.”
So these are just a few anecdotes. They don’t mean anything necessarily. They could be distant outliers that have nothing to do with mainstream culture today. But it feels like these disturbing outliers are becoming more numerous, while also moving dangerously close to the middle of the bell curve.
So I submit that Uncle Sam is getting a little crazy. He’s a mean drunk. He’s also broke. So after he’s finished hassling you, he will probably try to force you to pay for his drinks.
Do you want to loan money to this guy? Do you want to place your financial future in his hands? Do you want to believe anything he tells you? Do you want to trust that he won’t change his mind later and renege on a promise?
Just asking.
Regards,
Eric J. Fry,
for The Daily Reckoning
Joel’s Note: A revolution is indeed coming. It’s underway right now, in fact, expressing itself at Tea Party rallies and Occupy Wall Street encampments across the country. As with all revolutions, this one is starting out as a rough assembly of the cheated and the scammed...a sort of “free-for-all grievance swap meet.”
People are angry, yes. They know the system is corrupted, rotten to the core. And so they are revolting, en masse. But they’re missing one important point...
The problem with revolutions is that, by definition, they end up at the point of origin, back where they started. They don’t evolve...they revolve. That’s why they say history repeats itself...or at least that it rhymes. Out with one state, in with another. Overthrow one mob, promote another mob to power. Do away with one system of force and coercion...only to force and coerce another system into its place. Old bums out, new bums in. In the end, it’s all “same same.”
Isn’t it time for a new experiment? Something closer aligned to preserving and promoting freedoms, rather than electing one or another group to destroy and erode them?
Enter Addison’s latest project, codenamed “Project X.” It’s not a book or a newsletter. It’s not a conference or even a documentary. And it’s definitely NOT a political party.
It’s a new kind of experiment...and it begins later this week.
As of this morning, more than 24,000 of your Fellow Reckoners had signed up to take part in the project. If you haven’t yet done so, you can join them here.
P.S. This invitation expires on Thursday night, when doors to Project X will be closed. Not another word will be mentioned outside the Project X circle after then. So, if you want in, you’ll have to get on board before then. Click here for details.
| | | | | Bill Bonner | | Everybody Hates Capitalism | | | | Bill Bonner |
Reckoning from Paris, France...
We begin another look at Zombieland with this editorial from Martin Wolf in The Financial Times:
Why did it take so long? It is over four years since the financial crisis began. Yet only now are anti-capitalist protests emerging, including at St Paul’s Cathedral. So is this the beginning of a resurgent leftwing politics? I doubt it. Are the protesters raising some big questions? Yes, they are.
Socialism failed as a way of running economies. It did, however, succeed in establishing welfare states. Socialism is a conservative force, dedicated to defending entitlements built up over a century. Meanwhile, organised labour is only strongly entrenched in the public sector. This gives it the same conservative agenda: defending the welfare state. Strikes by UK public sector workers against the fiscal cuts will demonstrate this.
We have promoted an insider form of capitalism which exploits and indeed creates subsidies and tax loopholes on which the insiders prosper. The need to rescue banks was horrifying. The role of money in politics is disturbing. The danger is that we are moving from what the Nobel laureate economic historian, Douglass North, calls an “open-access order” to its opposite, a system in which political influence is decisive.
The era of bail-outs must end. We rarely agree with Mr. Wolf. But he is right...so far. Later in his editorial he proceeds to fall into gross and obvious error — arguing that “we” need to find solutions to capitalism’s inherent excesses.
Humans seem prone to self-fulfilling waves of optimism and pessimism. Ways of mitigating the extent and the consequences of such instability always need to be found. We see no reason to mitigate the instability of free markets. That’s what makes them so much fun!
But when The Financial Times undertakes to encourage its readers to fix capitalism, you realize how few real friends that disagreeable creed must have.
Few people really like capitalism — even people who call themselves capitalists. The feds could probably round them all up and gun them down in an afternoon. Capitalism is too chancy...too unpredictable...and too uncontrollable. No wonder so few people are fond of it; capitalism is a poor friend. It is disloyal. It is mischievous and willful. It is hard to get along with.
Capitalism offers is no sure route to success. You can be smart, work hard, and go to the best schools. There is still no guarantee that you will succeed.
Nor, once you’ve succeeded, is there any sure way to maintain your wealth, power and status. Wealth has no fidelity, neither to any one person, group, or family. It goes where it wants. It is fickle and unreliable.
Nor does it go necessarily to the strongest, fastest, or smartest. As it says of the race in Ecclesiastes, time and chance play a big roll. Neither can be made to stay put. Once you have made a lot of money, the same wheel of fortune that brought it to you can take it away from you. It never stops turning.
The rich tend to be even bigger anti-capitalists than the poor. As soon as they get some wealth they try to put the brakes on. They set up tests and hurdles...designed to keep the hoi polloi off their tennis courts and out of their businesses. They use every means possible to separate themselves from the masses — language, education, dress, customs, geography. They tend to speak differently...sometimes even using a completely different language. Probably the most recent and best known example comes from Britain, where the upper classes still speak a heavily Latinized version of English, called “RP” for ‘received pronunciation,’ while the lower classes speak a more Germanic, more archaic version. A thousand years earlier, the upper classes actually spoke a different language all together — French.
In France itself, the development of “French” was itself a long process; until the 19th century the language was foreign to most people who lived in France. It, and Latin before it, was used almost exclusively by the rich, the powerful, and the well-educated.
Education is another common means of helping the rich to hold onto their money. Special schools typically cater only to the upper classes, teach the right accents and attitudes, and help young people make the sort of connections that will keep them, and their money, in the same group. These schools were rarely hermetic, however. They usually allowed a few particularly bright people from the lower orders to enter into the moneyed classes. This had three beneficial effects. It nourished the gene pool of the rich. It provided them with the top talent they needed to stay rich. And it drew in ambitious and able young people who might otherwise compete against them.
Of course, the rich — especially if they are a coherent cultural group — tend to live together, socialize together, and do business together. These things too help to keep money “in the family” and out of the hands of strangers.
Nor do the rich typically stop at honest means. They also avail themselves of the police power of the state. Many laws, edits, and rules have been announced to regulate everything from the professions people must practice to the clothes they wear. “Serfs” were shackled to their farms, masters, and their station in life by law as well as by custom. Sumptuary laws forbade new money from imitating the fine dress of old money. Licensing requirements, tariffs, and regulations generally make it more difficult to enter into a profitable trade or business, thereby protecting those who are already in it.
The rich are not above using the tax code either. In pre- revolutionary France, for example, the aristocracy and the clergy were exempt from taxes. Even today, most taxes are taxes on getting rich, not on being rich. Governments tax income, not wealth. France is an exception with a wealth tax. But it is a relatively modest one — never exceeding 2% of assets. Compare that to the top marginal rate on income. Combined with social charges, it rises to more than 71%.
Warren Buffett has famously pointed this out, indirectly. He claimed that he paid a lower tax rate than his secretary. That was because his taxes were paid at rates levied on people who were already rich — capital gains and dividends — rather than income. The poor secretary had to pay taxes on the fruits of her own labors.
Does that mean the rich like government? Yes, of course they do. The state is a rich man’s best friend. The rich return the friendship, in cash.
As Bill Gross reported in January of 2010, what is amazing is not that politicians can be bought, but that they can be bought so cheaply. He wrote that “public records show that combined labor, insurance, big pharma and related corporate interests spent just under $500 million last year on healthcare lobbying (not much of which went to politicians) for what is likely to be a $50-100 billion annual return.”
But while hardly anyone actually likes capitalism, there’s a problem with the alternative. Efforts made to hinder, tame, and put a ball and chain on it always make things worse. They lead to zombification.
What’s that?
Here is the foundation of our General Theory of Zombieism:
1. All (or almost all) people want wealth, power and status.
2. They want to get it in the easiest way possible.
3. The easiest way to get wealth is to steal it, which is why all groups turn to the government, the only institution which gets to steal lawfully.
4. Over time, more and more groups are able to use the system for their own ends.
If they are poor, they implore the government to ‘tax the rich’ and give the money to the poor. If they are rich, they want the government to protect their wealth and status — with every means available to them. Democratic governments generally do both. They support the poor with loud attacks on the rich combined with whimpers of money (for the poor can generally be bought — vote for vote — much cheaper than the rich). As for the rich, their support is more subtle and underhanded. There are tax credits and loopholes for anyone who can afford them; sugar-laden contracts for the insiders and plenty of jobs for well-credentialized blowhards. The rich complain about the poor. The poor complain about the rich. Both complain about the government. And everybody hates capitalism.
But over time, the giveaways, bribes, regulations, intercessions and meddling on the part of the government have a big effect on the economy. The more the government interferes with market signals and market-based capital allocation, the less able the economy is to produce real wealth. More and more resources are purloined by the insiders before the truck reaches its destination. Paperwork, lawyers, administration, regulation, taxes take a toll. So does misallocation of capital investment to huge, unproductive industries such as education, health, and defense. There is also a shift of wealth generally from those who earn it to those to whom it is redistributed...and from capital formation to consumption. And gradually the economy becomes paralyzed and parasitic...and nearly everyone gets poorer. And often, the state...and the mobs that support it...become desperate for more money. Then...the rich had better watch out!
We’ve already seen how zombieism overtook the education industry. Now lee’s look at another one — health.
The health care industry is demonstrably unproductive. We know that because we can compare the spending with the results. For our purposes we will measure ‘health’ by life expectancy. They are not exactly the same thing; but close enough.
The relationship between spending money and living long is weak, if there is any at all. Singapore spends about $1,000 per person on health care. Its people live longer than those in the US, which spends about $5,000. In fact, the US stands out in health care...as it does in education and defense. It spends more and gets less. Money is invested badly, with either no return...or a negative return. The people of the US are not very different culturally, racially and economically from the people of the United Kingdom. Yet the British live longer while spending less than half as much on health care.
Most of the health improvements in a society can be achieved by simple procedures at modest cost. This is another thing we can thank the communists for. They demonstrated that “barefoot doctors” in China, or poorly supplied, underpaid doctors in Cuba do about as well as the expensive professionals that fill South Florida. Cuba spends barely $100 per capita for health care; in terms of life expectancy, it gets the same results that Florida gets, 90 miles away. In Florida, however, people spend 45 times more on health care.
But isn’t the US a free economy? Why would people spend so much and get so little for it. Why don’t competitors step up to the plate and offer a better product? Why doesn’t someone start a “Pretty Good Health Care 4 Less” franchise? You have a problem? We can imagine how it might work. You walk in. You don’t see a doctor. You see someone with a computer who has been trained for 6 months on how to use it. He listens. He gives you an exam. He asks questions. He reviews your symptoms. He feeds the data into a computer. The computer is programmed to draw upon the entire world’s medical experience and give you an answer. Or...to pass...and tell you to go see a real doctor.
Most people do not have strange ailments. They have the problems that most people have. Those are the ailments that a person with modest training could recognize and treat with simple procedures and cheap generic drugs. Aided by electronic tools...and perhaps a few good doctors in India, connected by Skype...you could probably get as good advice as you could get anywhere. Maybe better.
You would pay about as much as you would pay to have your muffler changed. You would agree not to sue anyone. In and out. No muss. No fuss. Nothing fancy about it. And if you had a brain tumor you should probably go elsewhere. But if you want cheap medical care...it would be the place to go.
Soon, there would be competing nationwide chains...giving customers a choice...and a range of prices that would accommodate each income bracket. Employers would pay a modest fee to enroll their employees. If the employee wanted to spend more, he could enroll in a more traditional program.
Why won’t that work? Really, dear reader, sometimes you surprise us. Were you born yesterday? It’s against the law! The feds reward their protected industries with almost boundless wealth. And they punish interlopers. You can’t practice medicine without a license. And you wouldn’t be re-imbursed by insurance programs...and certainly not covered by Medicare or Medicaid. And even though your clients had specifically agreed not to sue, you’d be pursued by every shyster lawyer in the country.
Health care is a protected industry. It’s a zombie industry, which cushions life for the people who profit from it. And based on the numbers...it squanders at least $2,500 per person per year. That’s the equivalent of the entire Pentagon budget...or nearly half the entire 2011 deficit. It’s spent on unnecessary and ineffective tests and treatments — not to mention a mountain of patent medicines. And these costs do not include all the indirect costs of lawyers and court time, caused by the medical malpractice industry.
Why can’t a patient agree not to sue in return for lower medical costs? Where have you been, dear reader? Tort lawyers, those who bring these sorts of cases...and who advertise on billboards in poor neighborhoods...are among the biggest campaign contributors to the political system. They, along with doctors, pharmaceutical companies, hospitals, insurance companies — all support lobbyists. All have an interest in keeping the industry alive — as it is. None wants to see an upstart competitor bringing destruction to his zombie life. None wants to give up his edge...his subsidy...or his privileges. None wants capitalism in the health industry.
More to come...
Regards,
Bill Bonner
for The Daily Reckoning |
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