Wednesday Night #1426

Written by  //  July 1, 2009  //  Herb Bercovitz, Reports, Wednesday Nights  //  No comments

Healthcare reform in the United States (see also Healthcare and A Doctor by Choice, a Businessman by Necessity a detailed personal account that expands on much of what was said on this Wednesday Night.)
President Obama’s town hall meeting today served as an excellent departure point for what became the evening’s principal topic.  Under the current system, Americans have achieved rather extensive health care coverage for a high percentage of its citizens, but at excessive cost and with a significant portion of the population receiving inadequate treatment or monitoring. President Obama’s challenge will be to overcome the sanctity of the free enterprise obsession in the health care field, accepting a single monitoring and payment agency as has been done in most countries on this planet.
The U.S. spends much more per capita on medical care than does any other country, yet is in thirty-seventh place in world health statistics, a situation that President Obama is determined to change.  However, because of Americans’ aversion to “socialization” and to tampering with the free enterprise system, will be difficult to do so.  It is not that most Americans are deprived of medical care.  Members of the armed forces and their families, people over sixty-five and the indigent are provided accessible medical care at no cost to themselves.  The cost of health care of many employees is covered by their employers, thus leaving a relatively small number of Americans without access to excellent medical care.  The problem is to provide care to those who do not fall into any of these categories and to reduce the cost to somewhere near world norms, a difficult problem due to the various stumbling blocks within the American system.
The quest for profit probably plays a part in the cost to the patient of necessary prescription drugs which many Americans cannot afford and/or do not take or take in inadequate doses. The ease with which unnecessary tests and consultations can be ordered, paid for by the government and/or insurance companies can be a powerful incentive to maximize the income of professionals with little effort.  Even hospitals operate on a for-profit basis, adding to the cost.  Multiple payers lead to additional costs and inefficiencies to the system.  The problem is not one of poor quality but of poor value for money spent and disparity of access to different classes of citizens.
A large part of the cost appears to be more legal than medical in nature.  In Canada, the required level of medical care is covered by contract law.  Provided the patient has been informed of the nature of treatment, especially in surgical cases, is of age, has the capacity to understand and offers his or her informed consent, the physician or surgeon is not required to guarantee results, but only to treat the patient with care within professional norms.  In dire emergencies when the patient is unconscious, consent is implied.  The majority of jurisprudence here has involved intervention without having received informed consent.  In the United States, all possible measures must have been taken if litigation is to be avoided, making the cost of malpractice insurance a significant factor in the cost of health care.
On the positive side in the U.S., measures are being introduce to improve health and longevity including telephone monitoring for arrhythmias, pulse, blood pressure, heart rate, blood analysis, and in France, the use of stem cells to repair heart tissue.

Unrelated to the general topic of the President’s proposed reform of the labyrinthine U.S. health care system, the scandal at the Walter Reed Army Medical Centre speaks more to the destructive nature of war than to a faulty medical system.  Although evident since humans started killing each other for control of territory, it has only been relatively recently acknowledged that the psychological damage to humans caused by wars is as destructive and long lasting as physical damage or even death.  With little or no cure for post traumatic stress syndrome, Psychiatrists and Psychologists, inadequate in number to treat the psychiatric victims of Iraq and Afghanistan, ultimately find that no more can be done for increasing numbers of these young victims whose trauma will remain with them for life.

The market & the economy
If humans acted intelligently upon the cyclical logic and/or randomness of events, the number of impoverished gamblers would be greatly diminished.  In the world of securities, prices are determined by supply and demand which, in turn, are determined by the cyclical nature of fear, greed and hopeThe sell-off in November led to a rally. A second decline in March followed by another rally, currently believed to be the possible beginning of a recovery which, following the traditionally weak months of July and August, another rally is anticipated from September until the end of 2009.
The world has become used to the idea that the oil-rich countries of the Middle East would somehow continue their prosperity despite the financial crisis. However, Dubai’s real estate bubble has now burst and the outlook is not good; a number of western banks may have considerable exposure. [July 7 Update from Reuters: S&P cuts ratings on four Dubai banks amid slump and from Gulf News: Dubai shares plunge 3.42% [in response to] Uncertainty surrounding UAE bank exposures to the troubled Saad and Algosaibi groups of Saudi Arabia.]
[Editor’s note: for a devastating report on Dubai, see Johann Hari in The Independent of April 7: The dark side of Dubai Dubai was meant to be a Middle-Eastern Shangri-La, a glittering monument to Arab enterprise and western capitalism. But as hard times arrive in the city state that rose from the desert sands, an uglier story is emerging.]

U.S. states are facing grim budget deficits.  Alarm bells are ringing in the media on the eve of the year-end of state budgets in the U.S. We are reminded that this information was available – or at least predictable – a year ago, but nobody was talking about it. However, now it is big news, but will not influence the markets as the information has already been discounted.

At its heart, the state budget crises are driven by the recession and the impoverishment of the working class. Layoffs and wage cuts are rapidly diminishing returns on state and local taxation—income, sales, and property taxes. At the same time, increasing numbers of unemployed workers and their families are turning to state-administered social safety programs already woefully unprepared for hard times. Now, as the fiscal year approached its June 30 end, the budget crisis is being used by Democratic and Republican governors alike to launch a new attack in the social position of the working class. This will be carried out through cuts to social programs, education, and transportation; layoffs and wage and benefit cuts for state workers; and regressive forms of taxation targeting the spending and income of working class households. State-level income tax collections plummeted 26 percent in the first quarter of 2009 from the same period last year, according to a recently released analysis by the Nelson A. Rockefeller Institute of Government. Another new study, by the National Governors Association, shows that sales tax revenue has fallen 3.2 percent over the previous year—the biggest decline on record—and corporate income tax has tumbled by 15.2 percent. More from Global Research

Canada’s nuclear capability – Chalk River 
It appears that the Canadian government is determined to move counter to the current new enthusiasm for nuclear-generated electricity, evidencced by Areva  and talk in the U.S. about 100 nuclear energy plants across the country. – among other things  Often, considerations of the survival and well-being of a political party surpass the long term well being of the country.  Following Chernobyl, nuclear engineers suddenly lost their place among Canada’s most respected professionals.  In terms exceeding the political life of any federal member of parliament, saving and rebuilding AECL would be costly, but worth it in terms of the place in the world that had been achieved by Canadian talent at Chalk River. This is not merely a question of producing isotopes – and at present, there are only 4 countries with this capability.  Once lost, the CANDU reactor, the highest quality and safest nuclear reactor capability that has been Canada’s heritage will never be reconstituted. The expertise and institutional memory will be lost. Yet, unfortunately, the current government appears to be bent on doing just that, in addition to cancelling the MAPLE reactor (for miniature power plants) program at a time when it appears scientists were only months away from solving the technical problems. If spent today, the money to upgrade AECL would constitute more a worthwhile investment than an expense. Meantime, the federal government (Natural Resources Canada) has put together a government-industry-academia consortium to undertake geomapping of  Canada’s North which will allow uranium companies to produce more targeted work.

T H E  I N V I T A T I O N

At the top of our local news list is Helen Fotopulos’ nomination (acclamation we believe) for a City Council seat in Côte-des-Neiges, “the district where I live and the borough where I first campaigned in 1978, then as campaign organizer for Abe Limonchik.” Helen notes that her “decision is rooted in the fact that I believe we must resist with all our strength any kind of a return to the era of centralization that is being advocated by people who have so poorly served Montreal, and now dare to want to be considered as saviours.” Take that Mme Harel!
Iran  and NOT Michael Jackson (How Michael Jackson answered the ayatollah’s prayers) remains at the top of our list , along with the passage of the U.S. Energy Bill by the House last Friday (the interview with President Obama is worth reading). Of course, it remains to be seen what the Senate will do, and the Republicans are out in full cry.

There’s the bizarre coup in Honduras, which seems a bit Opéra bouffe, happening as it did only hours before the referendum on whether he could overturn the constitution.

We should have a moment of silence for our prized WN topic: Nortel (Nortel: tragic end of a Canadian icon). On Friday, it was delisted from the TSE. The final price: 18.5 cents per common share. Compare that to 2000, when the share price was $124.50 and the company was valued at $400 billion, with 95,000 employees around the world. Another blow to Canada’s once-vaunted telecom technology. [Coincidentally, last week Minister of Industry Tony Clement hosted a gathering of industry gurus to discuss Canada’s Digital Economy: Moving Forward. Hope everyone has learned something from the Nortel débacle.] One Wednesday Nighter points out rather acidly: Nortel grew up in the shelter of Bell and had world leading technology already deployed before being freed to face capital markets on its own in the mid-1990s. Its most durable contribution was as an incubator for Ottawa’s ICT spinoffs many of which are still doing OK in highly specialized niches. Even in its last days, Nortel’s R&D spending was close to that of the rest of the ICT sector as a whole. In the furor over the isotope mess-up, few observers are seriously asking why a consortium of Canadian investors failed to emerge to turn it around and re-position it for an ICT-rich future.

We should also remedy our failure to mention last week the ‘launch’ (odd word) of the Canadian Securities Regulator Transition Office – long overdue and welcome news, and the appointees as Chair and Vice-Chair are suitably impressive.

A propos securities regulation, we cannot ignore the just-in news that Bernie Madoff has been Sentenced to 150 Years In Prison from which there is no parole. Astonishing how relatively swiftly justice can be served in such a case – we wonder how many years it would take to get through the Canadian – Quebec – system. [ See Christie Blatchford:  There is something to admire about the U.S. justice system, but what I really like about it is its speed. … I have actually written about a case in which two men, co-accused of the same offences in the same crime, were tried separately, one in Michigan, one in Ontario. The guy in the States had been convicted and served his not insubstantial sentence before the Canadian ever got to trial.]
And this leads us to the U.S. Supreme Court ruling on the white firefighters discrimination case that overturns nominee Sotomayor’s decision in the Appeals Court. We look forward to the debate on the merits of the case with our civil rights experts, as we hate to side with the conservative elements of the Supreme Court, but have a nagging feeling that the initial ruling was unfair. The impact of the ruling will be considerable “[it is sure to be closely studied by personnel departments and their lawyers for indications of how far employers can go, and under what circumstances, in considering race in decisions on hiring and promotion”. … and thus open the door to even more litigation.]

Last week, we also skipped over the news of the forming of an expert panel on the isotope supply question – why does it always take a crisis for our government to decide to look at critical issues?

Finally, in response to the main topic of last week, one Wednesday Nighter wrote: “If we are to promote innovation we must invest not only in what there is, but also in what there may be by ensuring a sound, compulsory education in science from childhood on up. What child has not longed to play Doctor , or be a fireman, or an astronaut? WE could monetize that early curiosity into a productive culture of innovation to the benefit of future generations of leadership candidates as well as science.”
To which we say AMEN and point to Tom Friedman’s recent column:
Invent, Invent, Invent
“When times are tight, people look for new, less expensive ways to do old things. Necessity breeds invention.
Therefore, the country that uses this crisis to make its population smarter and more innovative — and endows its people with more tools and basic research to invent new goods and services — is the one that will not just survive but thrive down the road.
We might be able to stimulate our way back to stability, but we can only invent our way back to prosperity. We need everyone at every level to get smarter.”

We thank the gods for the inventiveness of our Wednesday Nighters and look forward, as always, to having you join us.

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