Volcker: Make Banks Less Risky
“Extensive participation in the impersonal, transaction-oriented capital market does not seem to me an intrinsic part of commercial banking.”
-Paul Volcker
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In his bluntest speech yet on reforming Wall Street former Federal Chair Paul Volcker called on banks to operate with “far less risk.” Banks need to stick to their knitting, taking in deposits and lending money to people who can afford to service that debt. Further, as federally insured institutions, they should not be “making trading bets with their own capital.” Instead, they should be trading on behalf of their clients, not their own prop desks.
You know, more like, well, banks — and less like Hedge Funds.
This is a welcome change from the milquetoast reform proposals coming out of the Obama White House.
The irony of this is that Volcker is chairman of the White House’s Economic Recovery Advisory Board. One unfortunately gets the sense his advice has been mostly ignored by the White House. Hence, his support of much stricter regulation than the proposals we have so far seen from the banker’s friendly defenders of the status quo, Tim Geithner and Larry Summers.
Excerpt:
“The activities Mr. Volcker criticized have caused banks to incur major losses in recent years. Nonetheless, proprietary trading and related activities appear to be making a comeback as markets have thawed.Mr. Volcker said banks should be banned from “sponsoring and capitalizing” hedge funds and private-equity firms, which are largely unregulated. He also said “particularly strict supervision, with strong capital and collateral requirements, should be directed toward limiting proprietary securities and derivatives trading.”
The activities Mr. Volcker criticized have caused banks to incur major losses in recent years. Nonetheless, proprietary trading and related activities appear to be making a comeback as markets have thawed. He also said collateral and leverage restrictions against the largest nonbank financial institutions “may be needed.”
The comments reflect Mr. Volcker’s long-held view that banks should act more in line with their traditional role and not take extremely risky gambles, which could threaten the viability of commercial banks and expose the Federal Reserve and taxpayers to large risks. Asked after his speech if his comments represent a break with the White House’s proposal, he replied: “Nothing I said today should be a surprise” to the administration.”
Next week, Volcker will appear before Congress, where one hopes he will testify on their inexcusable acquiescence to bank lobbyists, and their inability to reform finance. “Grow a spine, you corrupt, chicken-shit cowards, before the country goes to Hell,” we wish he was overheard to remark.
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Source:
Volcker Calls for Restricting Banks’ Risk, Trading Activity
DAMIAN PALETTA and JOHN R. EMSHWILLER
WSJ, SEPTEMBER 17, 2009
http://online.wsj.com/article/SB125313031639216991.html
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September 17th, 2009 at 7:15 am
In some ways, actually I would say in most ways, the bailout here has been “anti-citizen”…National government, which already was running a deficit against future generations, has determined that further future indebtedness of the citizenry is the way to go. Since we are a representative democracy, we no longer have that silly Pericles idea of mass voting on big issues by the entire citizenry. These representatives have long ago divorced themselves from the idea that they are most responsible to the individual voter, and have developed ties with big business, and lessened their ties with the voter after the voting season is over. The anti-citizen aspect is like having a big party, and the congress, when it is over, has voted that the citizenry will just have to clean up. They are obviously too busy planning the next party….big banks, it seems, have more of the attention of congress than the liability of the individual voter. Sorry Joe Six-Pack, if we are too big too fail, you are too small not to pay…
September 17th, 2009 at 9:26 am
He’s so seventies, doesn’t he know we discovered you can do that by changing accountin rules. We though feel sad for him in his day he did not get the advantage of new math.
September 17th, 2009 at 9:39 am
“Mr. Volcker said banks should be banned from “sponsoring and capitalizing” hedge funds and private-equity firms, which are largely unregulated. He also said “particularly strict supervision, with strong capital and collateral requirements, should be directed toward limiting proprietary securities and derivatives trading.”
Sure, Why not? They’ve, already, been let loose to pillage and plunder..
These actions, taken, convienently, now, are akin to building a Castle to protect the marauders.
The past participants don’t need ‘their own, personal, bureaucrat’ (more regulation), they deserve a visit from the DOJ’s RICO division..
Volcker, still a handy name to have to dance in front of the, supposedly, sober-minded..
http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=Volcker+Trilateral+Commission
September 17th, 2009 at 9:39 am
In my opinion Obama is just using Volcker to show a somewhat contrary view on things in order to try to placate those people who say that his entire administration is just supporting Wall St., rather than Main St. And if Volcker had any balls, he would resign from Obama’s team and start his own campaign to clean up the financial system. There are plenty of people who are against what Geithner and Summers have done and would be willing to support someone like Volcker in this.
September 17th, 2009 at 9:43 am
Goldman is basically a prop shop grafted onto an old-style investment banking house, more like Lazard.
Why not recommend that all IBs must go back to being private partnerships? That way, they can have a prop desk and trade as much as they want, but if they fail, it isn’t OPM, it’s the partners and their PE investors. I bet that would reduce leverage substantially.
September 17th, 2009 at 9:47 am
imho, the g20 is starting too squak at us, my guess is that since we have a short history and they have a long one, they see us partying like it’s 1999 and think, these guys are really brain dead, started two wars, depends on the kindness of strangers and need cheap oil, and what are they doing, acting like all is swell………meese thinks others think we need a slap in the face and they are tired of our bs
September 17th, 2009 at 9:59 am
Look at this moron:
Too much debt: please, we need more debt Says Ken Fisher
http://finance.yahoo.com/tech-ticker/article/334648/Too-Much-Debt–Please.–We-Need-MORE-Debt-Says-Ken-Fisher?tickers=tlt,tbt,spy,dia,^gspc,udn,uup
September 17th, 2009 at 10:05 am
BR noted:
In his bluntest speech yet on reforming Wall Street former Federal Chair Paul Volcker called on banks to operate with “far less risk.”
reply:
———
Yes! And here’s what we should demand next
a. Good pie that isn’t fattening
b. Cars that get 300 mpg
c. Teenagers that don’t act brain damaged
d. Free health care
e. Politicians that don’t lie and really care about the voters
f. Healthy cigarettes
g. A balanced federal budget
September 17th, 2009 at 10:06 am
@torrie-amos
The only “slap in the face” significant enough to be noticed would have to be a statement by the Chinese that they find the United States of Bananamerica to be unrepentant debt addicts, and that they have given up on ever getting their money back from their Treasury bond “investment” in Bananamerica, and are immediately selling their entire portfolio of Treasuries, placing the proceeds in a basket of other currencies and commodities.
Then we might see some serious attention paid by the White House (and eventually Congress, as they befuddledly figured out that something was up). The White House would trot out their spokesman to deceive the sheeple (Paul Volcker) and have him spew some line of BS about the goobermint being dedicated to a sound and strong financial system, based on conservative fiscal policies and practices.
If Volcker had any conscience remaining, he would have resigned with a public hissy fit over Summers’ and Geithner’s favoring of their banking buddies over the financial industry and nation. There is a point beyond which it makes no sense to sit quietly by and go along with the program — and Paul Volcker passed that point a long time ago. By this point, he is simply another one of the enablers.
September 17th, 2009 at 10:14 am
Allowing gambling and speculation with money that are basically underwritten by taxpayers and the FDIC is absolutely insane. Especially since those who are doing the gambling gets a cut of the winnings and just find a new job if the losses destroy the company. I hope Volcker gets to have more influence before it is to late.
September 17th, 2009 at 10:14 am
The best regulation we could come up with is failure. Had we not extinguished the fire we let consume Lehman, we would be well on our way to a conflagration that would clear all the old or dead or over-extended trees from the banking forest such that real green shoots could emerge.
We just don’t seem to get that actions taken to save old failures will ultimately prevent any new successes.
September 17th, 2009 at 10:15 am
@manhattanguy:
Fisher has been a perma-bull for as long as I can remember. I don’t think he has EVER called stocks overvalued. Hopefully his investors have suffered as a result of his idiocy…
HCF
September 17th, 2009 at 10:22 am
OT: Now you know where all that stimulus money (at least the Chinese version of it, which is nonetheless closely tied to the dollar because of the “trading range” peg) is going, and how commodities prices are increasing even as demand falters:
“Sept. 17 (Bloomberg) — Private investors in China, the world’s largest metals user, have stockpiled “substantial” quantities of copper as the government ramps up stimulus spending to spur the economy, according to Sucden Financial Ltd.
Pig farmers and other speculators may have amassed more than 50,000 metric tons, Jeremy Goldwyn, who oversees business development in Asia for London-based Sucden, wrote in an e- mailed report after a visit to China. That’s about half the level of inventories tallied by the Shanghai Futures Exchange, which stood last week at a two-year high of 97,396 tons.
Sucden’s estimate underscores the difficulty analysts face in gauging metals demand in China amid increased speculation by retail investors, whose holdings remain outside the reporting framework undertaken by exchanges. Private investors in China also had as much as 20,000 tons of nickel, Goldwyn wrote.
“People who have nothing at all to do with the copper trade have been buying copper as a store of value, much like they would with gold,” said Jiang Mingjun, an analyst at Shanghai Oriental Futures Co. ”
http://www.bloomberg.com/apps/news?pid=20601109&sid=a1B_ZBQfii8Q
September 17th, 2009 at 10:30 am
@constantnormal after reading your fine post I reread what Nassim Taleb said in interview with Globe and Mail and there’s uncanny symmetry;)
Excerpts:
Margaret Wente: Happy days are here again. The central bankers say the recession is over. The markets are buoyant. Can we relax?
Nassim Taleb: Not at all. Central bankers have no clue. In the first place, the financial crisis was not a black swan. It was perfectly predictable. They ignored the phenomenal buildup in leverage since 1980. They acted like airline pilots who’d never heard of hurricanes.
After finishing The Black Swan, I realized there was a cancer. The cancer was a huge buildup of risk-taking based on the lack of understanding of reality. The second problem is the hidden risk with new financial products. And the third is the interdependence among financial institutions.
MW: But aren’t those the very problems we’re supposed to be fixing?
NT: They’re all still here. Today we still have the same amount of debt, but it belongs to governments. Normally debt would get destroyed and turn to air. Debt is a mistake between lender and borrower, and both should suffer. But the government is socializing all these losses by transforming them into liabilities for your children and grandchildren and great-grandchildren. What is the effect? The doctor has shown up and relieved the patient’s symptoms – and transformed the tumour into a metastatic tumour. We still have the same disease. We still have too much debt, too many big banks, too much state sponsorship of risk-taking. And now we have six million more Americans who are unemployed – a lot more than that if you count hidden unemployment.
MW: Are you saying the U.S. shouldn’t have done all those bailouts? What was the alternative?
NT: Blood , sweat and tears. A lot of the growth of the past few years was fake growth from debt. So swallow the losses, be dignified and move on. Suck it up. I gather you’re not too impressed with the folks in Washington who are handling this crisis.
Ben Bernanke saved nothing! He shouldn’t be allowed in Washington. He’s like a doctor who misses the metastatic tumour and says the patient is doing very well. The first thing I would tell Chinese officials is, how can you buy U.S. bonds as long as Larry Summers is there? He’s a textbook case of overconfidence. Look what happened to Harvard’s finances. They took a lot of risk they didn’t understand, and it was a disaster. That’s the Larry Summers mentality.
http://www.theglobeandmail.com/report-on-business/crash-and-recovery/we-still-have-the-same-disease/article1286246/
September 17th, 2009 at 10:31 am
Dynasty Metals and Mining: http://www.google.com/finance?q=TSE:DMM
http://incakolanews.blogspot.com/2009/09/ecuador-and-mining-mining-minister.html
Now go make some money. Vai trabalhar!
September 17th, 2009 at 11:02 am
Barry, why not use some of your notoriety of late and get together a petition signed by financially astute bloggers to support Mr. Volcker’s views for his Congressional testimony.
Sure, it’ll be a shot that disappears into the dark but maybe our technology savvy President will take note that CNN and Fox are not really dictating the competing tensions out in public and that the new influencers in the blogosphere are socially relevant. Someone needs to demonstrate that empty sound bites backed by political cash are not imnipotent.
September 17th, 2009 at 11:05 am
manattan guy @ 9:59-
just got out of a meeting and pulled up that same article-
what a fool- probably talking it up that way because he wants the market to stay juiced- $$$ in his pocket-
obviously could care less about individual indebtedness and the primacy of banks- in fact i am sure he prefers it that way
September 17th, 2009 at 11:10 am
Another sensible voice, the Verizon CEO: Economy Is Still Contracting, No Job Creation
10:23 AM ET | Dow Jones
September 17th, 2009 at 11:18 am
constantnormal,
agree completely, my point is fwiw i’m starting too read articles of discontent from other governments, what they do who knows, my point is they are voicng what they are thinking which means the mind is mulling possible actions…………….
September 17th, 2009 at 11:23 am
what’s the problem with banks anyone haven’t you heard they are mega profitable
it’s obvious now where money is going, the lending is to business’s that need it too stay afloat, kodak, american airlines, etc……………crappy companies with bad balance sheets where folks are employed, who in there right mind would lend amr 3 bil when they have bled red for years, oh me oh my, they have orders in at ba, hmmmmmmm
September 17th, 2009 at 11:26 am
karen-
you have to wonder when a CEO says anything- it may as simple as looking for cover-
not that it isn’t what he believes though-
you have been pretty quiet in your candlestick analysis lately-
any new tea reading to relay to us less less technical folk?
September 17th, 2009 at 11:35 am
I recently came across your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.
Trader Blastradius
September 17th, 2009 at 11:36 am
To any knowledgeable on the subject, I would greatly appreciate his (or her) enlightenment… I can clearly see the principle causes behind the shift in bank governance, motives behind government policy, a tendency toward more risky and questionable behavior on the part of government and private actors that have directly and indirectly precipitated the current sad state of affairs in the financial world.
Nevertheless, I am unclear as to why this began to occur over the past few decades specifically. Why not earlier? Later? When exactly did the drive for the F.I.R.E. sector’s deregulation begin? What was the initial impetus that got it rolling? Are there any particular events, social circumstances, political or technological conditions that may need to be known first in order to fully understand why the relatively sudden shift in attitudes in a field like banking which had for the longest time otherwise been notable for its sobriety and conservatism.
Any ideas?
September 17th, 2009 at 11:37 am
“Grow a spine, you corrupt, chicken-shit cowards, before the country goes to Hell,”
Couldn’t have said it better. But kind of like asking a slug to sit up straight.
Previous point that Volcker is being used to “pretend” is dead on.
BS Obama is probably painfully aware that his house of cards (healthcare and other agenda items) is built on sand (sucking up to the banksters, corporations, and their k-street jackals).
J6P is certainly sensing it.
Just doing a little damage control in the MSM without any real substance behind it.
The ole “good cop – bad cop” ploy.
September 17th, 2009 at 11:42 am
Housing starts: right in line
Jobless Claims: much better than expected (Bloomberg adds that the trend in no fluke)
Philly Fed: Blew away expectations and is very strong
Industrial Production: Showing strength
Retail Sales: Much better than anticipated
CPI/PPI: No inflation on the horizon
I keep hearing posters say I don’t list my reasons for being optimistic. We’ll here are fundamental reasons. These numbers are undeniably good. Technically we’re in a vacuum straight up with no resistance for quite some time.
I maintain that the US economy is going to boom for the next few quarters.
September 17th, 2009 at 11:43 am
This morning, I accidentally tripped over (figuratively) CNBC stock courtesan Erin Burnett asking somebody, “How do you regulation-proof a portfolio?”
That is precisely the type of knee-jerk, moronic, simpletonian, Republican assumption about how the world and business works that led to the creation of my online masterpiece, CNBC Sucks! The world is far too complex and businesspeople too smart for regulations to automatically mean lower earnings for any industry, much less valuations and returns for a portfolio! As a registered Republican defender of a nation, I had to take it upon myself to counter such vile and dangerous corporatist nonsense. I myself have declared victory, but I am glad to see my ally Ritholtz shall continue the fight!
That’s my long-winded but on-topic way of saying I am done with my FF trading program for a while, so I will also be just lurking the Ritholtz blog (I try to not call it “The Big Picture”…too presumptious), for a while. TRY to conjure up The Great CNBC Sucks if you must, but I will quietly just tend to my own little “finance” blog where our biggest concern is tennis player Simona Halep’s breast reduction surgery.
September 17th, 2009 at 11:52 am
Gold is down. The dollar is down. Yet they are buy the 5,10 and 30 year treasuries. What gives?
September 17th, 2009 at 11:54 am
“Extensive participation in the impersonal, transaction-oriented capital market does not seem to me an intrinsic part of commercial banking.”
But it is FUN, dammit, FUN. There is a certain thrill… and if we lose, what the hell? The government will just make people pay us anyway.
September 17th, 2009 at 11:58 am
“In some ways, actually I would say in most ways, the bailout here has been “anti-citizen”
No kidding, Bruce? You actually think that government using its coercive power of taxation to peel off people’s future earnings so that old school buddies can have a few more million-dollar bonus years as a reward for for fall-on-their-face failure is somehow a bad thing for our country?
September 17th, 2009 at 12:04 pm
“Gold is down. The dollar is down. Yet they are buy the 5,10 and 30 year treasuries. What gives?”
Flight to Quantity, old chap…. :-)
Some people think the Fed may announce a winding down of the QE program, which would be (less negative) for Treasuries. There is also the small matter of the rather stratospheric levels of the equity markets, not to mention the high yield markets which are priced for perfection. Note that the curve is getting SHALLOWER – 2s selling off a bit and 10s catching a bid – that presages a lame-ass weaker economy post-inventory rebuild, clunkers and other forms of idiot manipulation- and not a muscular robust studly economy of the type that Mr Wanger envisages.
September 17th, 2009 at 12:04 pm
F411 becomes invisible and H Wanker appears. Both sound similar, but yet, both sound contrived and scripted. Who are they/ who is he really and their/his act is starting to look a little tired. Even EricTyson presents a genuine personality along with his sometimes unusual assertions. I think F411/H Wanker are a couple of phonies who might even be a couple of shills for bucket shops.
September 17th, 2009 at 12:05 pm
Most important for me right now are bond prices and the yen/euro… rising bond prices = a rising dollar = falling gold and crude. Japan ? and China ? are going to have to buy a lot of our bonds to keep the dollar afloat and interest rates low.. how else can we buy stuff?
September 17th, 2009 at 12:06 pm
-This morning, I accidentally tripped over (figuratively) CNBC stock courtesan Erin Burnett asking somebody, “How do you regulation-proof a portfolio?”-
A quick thought on regulation, back in 2002 XEL dropped off a cliff and hit a low of 5.12. If one was aware of the PUC regulation that obliged the company to ‘reserve’ 2.50 USD per share than one knew they weren’t going bankrupt despite the apparent NRG death spiral. A very good position could have been opened in that stock in July-Aug of 2002. One shouldn’t ‘regulation-proof’, one should understand the ‘to what extent, how, why etc of regulation’. OODA loop!
As for ‘courtesan’, I have noticed that some CNBC reporters have moved to Bloomberg. The management and producers are committing a sort of violence by injecting so much ideology into their coverage.
September 17th, 2009 at 12:07 pm
Had Enough,
Business and Life Cycle intersections. Demographics, baby boomers………..
Carter was a miser with money, Regan opened up the spigots and ran up the debt, that debt went to work right around an inflection point of technological revolution and a massive wave of 20 somethings into the work place, that’s item number 1.
2. Russia got very stupid invading afganistan and bankrupted the country, Regan pulled a back door and cut a deal with the Saudi’s, when russia invaded afganistan oil was 20 bucks and that funded the war, regan got saudi’s too flood the world with oil and BK russia
3. Efficiency gains with technology and worlwide pent up demand from lower oil opened up world markets worlwide, we had so much money we invested in emerging markets……….don’t buy the BS dozens of us companies started divisions in china in 1976, a few years after Nixon said Red is gold
2000 was a culmination bubble and the fed printed cheap money for fear of losing more jobs in dotcom bomb,,,,,,,,,,,cheap money went too work all based on cheap energy, ie, 25 dollar oil, hey it had been that way for 30 years…………………….so you have an economy levered up built on ultra cheap energy which is in all the budgets……………..
when war breaks out, you short the currency and buy commodities, and since you have cheap money you buy more and more and more as prices rises
apparently we like bubbles, lot’s and lot’s of bubbles
that’s about it
September 17th, 2009 at 12:12 pm
MRegan Says:
September 17th, 2009 at 12:06 pm
-This morning, I accidentally tripped over (figuratively) CNBC stock courtesan Erin Burnett asking somebody, “How do you regulation-proof a portfolio?”-
reply:
——–
I don’t know but I wonder if H Wanker is really Joe Kernan.
September 17th, 2009 at 12:13 pm
Ronald ReAgan- kind of a sore spot for me. Donald Regan was his TreasSec and CoS until he was tossed out.
September 17th, 2009 at 12:17 pm
Joe Kernan studied at Xavier High School in Cincinnati, a Jesuit institution. Some recall that in the past Jesuits were expert at casuistry (technified sophistry- or big city lawyering).
http://en.wikipedia.org/wiki/Casuistry
September 17th, 2009 at 12:20 pm
MRegan Says:
September 17th, 2009 at 12:17 pm
Joe Kernan studied at Xavier High School in Cincinnati, a Jesuit institution. Some recall that in the past Jesuits were expert at casuistry (technified sophistry- or big city lawyering).
reply:
———-
I have to get my dyslexia looked into. At first I read ‘castrati’.
September 17th, 2009 at 12:22 pm
I am talking about ’cause’, not ‘effect’…
September 17th, 2009 at 12:30 pm
[...] Volcker wants banks to act more like banks and less like hedge funds (Big Picture, Matt [...]
September 17th, 2009 at 12:53 pm
Unfortunately the man of sense and personal courage to stand up to politicos has been frozen out by politico in Chief Larry Summers. I have a piece on the same subject out tonight Barry.
http://www.fundmymutualfund.com/2009/06/bloomberg-volcker-marginalized-major.html
September 17th, 2009 at 12:54 pm
jturner has it right
“In my opinion Obama is just using Volcker to show a somewhat contrary view on things in order to try to placate those people who say that his entire administration is just supporting Wall St., rather than Main St. And if Volcker had any balls, he would resign from Obama’s team and start his own campaign to clean up the financial system. There are plenty of people who are against what Geithner and Summers have done and would be willing to support someone like Volcker in this.”
September 17th, 2009 at 12:58 pm
how do a few of you have avatars? can’t find a place to do it in “profile” :) thanks
September 17th, 2009 at 1:00 pm
@alfred
i may regret this, but i’d actually be really really interested in what you think ought to be done about healthcare. it’s obvious that you would not support anything obama and the dems come up with. but what would YOU like to see enacted? just very very curious.
September 17th, 2009 at 1:02 pm
go to gravatar.com and link it to the email you use for this blog- then upload a picture, crop and roll :-)
September 17th, 2009 at 1:17 pm
bubba-
i’m all for single payer universal health care- the only way you cut out the fat mushy middle- however-i think many people are shell shocked over the ominous debt- brutal-
but i am still in for the single payer- i think it will create dividends in the end- however-
if the insurance companies are empowered in any way- i’m not in- not that it matters what the common schmoe thinks-
lobbies are all powerful
September 17th, 2009 at 1:20 pm
karen@11.10
Seems like CEO’s of both AT&T and Verizon are seeing the reality (unlike the man named Harry Wanker).
http://finance.yahoo.com/news/ATT-Verizon-chiefs-give-mixed-rb-2113372011.html?x=0&sec=topStories&pos=6&asset=&ccode=
September 17th, 2009 at 1:25 pm
trademark @ 12:58-
see my 1:02 post about setting up an avatar- forgot to reference to your attention
September 17th, 2009 at 1:26 pm
@ahab
as much as i’d like to see it, single payer will never ever be a reality, not in these United States of Amurica. the next best thing is to include a public option. if a bill gets passed w/o a public option, i will probably not vote obama again, or any dems for that matter…
September 17th, 2009 at 1:43 pm
bubba-
sadly- Obama threw the public option under the bus at an early stage in the fight- he should have held firm- may still get one however-
we will see- as i keep saying it is health care that is desired- not health insurace-
insurance slops it all up- i broke my hand last fall flippiing over my bicycle- saw an orthopedic doctor- in his office- tops 30 minutes – and that means from the time i walked into the building and and having a x-ray done-
my bill- $1500- no cast or anything- of course i only paid my copay of $30-
but what if i was walking in w/o insurance? would it still have been $1500- or would it have been an amount that seems reasonable for the service provided so that someone could pay out of pocket?
my take- insurance inflates the costs of health care- and people don’t care because they only see what they pay as the cost
September 17th, 2009 at 1:47 pm
@bubba:
Same here. If everything Taibbi laid out in his article gets dumped on the Millenials, I’m voting Repub 2010 out of spite (and Paul 2012).
September 17th, 2009 at 1:53 pm
@bubba: Ever since healthcare was allowed to become “for-profit” it has evolved into an all-consuming behemoth of layers that feed off each other from healthcare providers to hospitals to insurance companies to Medicare. Medicare fraud runs rampant.
Most seem to want to put the blame on the insurance companies and tag them as the single greatest source of inefficiency and waste. Don’t agree with that assessment. Sure, they are as bad as the rest, but no worse.
If Obama’s plan can’t guaranty cost-reductions through improved efficiency, and not require Medicare cut-backs, then it’s pissing into the wind as the flames get higher.
The current plans being proposed are little more than congress gaming citizens into believing they are achieving actual improvements. Kind of like some time back they crowed they had eliminated preexisting conditions, when all they had really done was allow it to be handled by “high-risk”pools like auto.
I don’t think a single plan approach will ever survive the K street lobbyists unless someone passes a law drastically reducing their campaign contribution.
I suspect a government option might create the possibility of an evolving improvement in efficiency, but it’s not guaranteed. Could just become another source for “Medicare-like” fraud and escalating costs due to a new bureaucracy.
Besides, the real underlying lobbying impetus is to try to contain medicare/medicaid and the national emergency room medical plan (including for illegals) the hospitals have to factor into their billing rates for paying customers. And to generate new revenue sources to cover those hospital costs.
As you should see, I have seen enough to remain totally cynical about anything meaningful coming out of congress.
In an earlier time something might have been possible. But not in this post-modern greed-fed, the velocity of money is sinking age. The elites will be well-served by our congress.
Next thing you know the plan will include a derivative market for insurance risks.
And then we’re really screwed. If not already.
September 17th, 2009 at 2:02 pm
Matt Taibbi has an interesting post on this, describing Obama’s jettison of progressive advisors like Volker after his election as “bait and switch”. I sincerely hope Obama is still listening to these guys.
September 17th, 2009 at 2:08 pm
CTB – do you have a link?
September 17th, 2009 at 2:11 pm
“Grow a spine, you corrupt, chicken-shit cowards, before the country goes to Hell”
That (and the public option-less heath care being considered) reminds me of a cartoon…
http://afrocityblog.files.wordpress.com/2009/08/spine.jpg
September 17th, 2009 at 2:21 pm
karen: “Japan ? and China ? are going to have to buy a lot of our bonds to keep the dollar afloat and interest rates low..”
Not necessarily:
http://seekingalpha.com/article/156526-the-usg-doesnt-need-foreigners-to-finance-the-u-s-fiscal-deficit-who-knew
September 17th, 2009 at 2:23 pm
“my bill- $1500- no cast or anything- of course i only paid my copay of $30-”
ahab the dirty little secret is that your bill would probably have been substantially higher. That is how it works in most hospitals (although individual docs may chose to do it differently). The insurance company has negotiated a discount on everything so without insurance the bill is much higher. That is one of the tragic things when uninsured people ends up in emergencies, they often get bills more than twice of what an insured person would get for the same condition – and they end up having to pay for it all.
September 17th, 2009 at 2:40 pm
Seattle – Excellent article!
September 17th, 2009 at 2:43 pm
dedude-
could be true i guess- what you say- but-
i will say this- i do not have dental insurance- cracked my tooth a while back- was a dentist i have been going to for awhile- was in the dentist chair about 30 minutes- tooth fixed-
because I was paying cash- $75-
for insurance customers- $150.00
so maybe the insurance companies do cram it down- and that is why he charges $150.00- knowing after he is paid by the insurance company- he will get $75
???
September 17th, 2009 at 2:45 pm
You can’t get through to someone who is driven by outright greed. Volcker’s message falls on deaf ears, both CEO’s and politicians. That’s the exposure this country has with its free-market system. Greed drives the financial institutions, the politicians are driven by greed fed by lobbyists and the whole system is locked up with very little potential that any changes will be made until the pitchforks are finally pulled out of storage by the little guys. Our political system has no incentive to work for the voters anymore; only the big money benefits.
September 17th, 2009 at 2:50 pm
alfred e,
w/this: “Ever since healthcare was allowed to become “for-profit” it has evolved into an all-consuming behemoth of layers that feed off each other from healthcare providers to hospitals to insurance companies to Medicare. Medicare fraud runs rampant.”
…
“The current plans being proposed are little more than congress gaming citizens into believing they are achieving actual improvements. Kind of like some time back they crowed they had eliminated preexisting conditions, when all they had really done was allow it to be handled by “high-risk”pools like auto. ”
nice points~
this behemonth– HC, lack thereof, and its attendant Costs– has long been roaming unmolested and free to graze on any, and, all, available budgetary flora for all too long..
see, for starters http://clusty.com/search?input-form=clusty-simple&v%3Asources=webplus&query=medicare+medicaid+effects+on+cost+of+healthcare
there are whole Industries that have mushroomed up– out of sight, or sound, of our diligent DWTS-watchers/ voters/ conned-mooers– just, to provide, targeted, media coverage of this Animals exploits.
also, to say nothing of the man-hours, of the Cast, devoured, devoted to studying its cast: http://scholar.google.com/scholar?q=medicare+medicaid+effects+on+cost+of+healthcare&hl=en&btnG=Search
note: that, hardly, begins to fill its footsteps..
The opacity that shrouds this Topic, and the manufactured Ignorance of it, should be etched onto Tombstone to mark the grave of this Beast.
September 17th, 2009 at 3:01 pm
ahab; yes out in private practice individual providers may give you a special deal if they know you, or think you may not have a lot of money. They do have an adversarial relationship with insurance companies so they will often charge as high as they can and add revenue creating things that are not needed. Cost is also higher because they have to hire a full time person to fight back and forth with the insurance companies to get paid – so it makes sense to charge less for cash service.
September 17th, 2009 at 3:12 pm
Thor:
http://trueslant.com/matttaibbi/2009/09/17/volcker-renews-call-for-limits-on-systemically-important-banks/
September 17th, 2009 at 3:12 pm
@alfred
thank you for your thoughtful response. it’s impossible not to be cynical about anything that involves congress, politics in general. you nailed it in your first sentence: “Ever since healthcare was allowed to become “for-profit” it has evolved into an all-consuming behemoth of layers that feed off each other from healthcare providers to hospitals to insurance companies to Medicare. Medicare fraud runs rampant.” yes, it’s a complex problem that doesn’t have an easy solution…unless you flush the whole system including the political system where lobbyists essentially write the laws (case in point the baucus bill). but you can’t just throw up your hands in disgust. the current healthcare situation is unsustainable and the status quo unacceptable.
to your point about fraud and corruption, yes, as long as you have humans running anything there will always be fraud. do you think there’s no fraud in the military/dod? but somehow we seem to be ok with it.
September 17th, 2009 at 3:24 pm
bubba,
w/this: ” do you think there’s no fraud in the military/dod? but somehow we seem to be ok with it.”
there’s plenty W, F & A in the DoD, as well, if the ‘Cained Peep had the remotest Idea of the Extent of it, the IRS would need to swell their Employment rolls to 150MM, in effort to collect Taxes from the other Half.
Why do you think the VAT is making its Media rounds?
September 17th, 2009 at 4:05 pm
@emmanuel117
i’m serious as a heart attack — if obama half asses this and accepts a bill w/o the po, i ain’t voting for him again. but giving my protest vote to the current crop of gopers? sorry, ain’t going there either.
@the hoff
VAT? for a second there i thought you were talking about these guys http://en.wikipedia.org/wiki/VAT_69/UTK
hehe
September 17th, 2009 at 4:32 pm
bubba,
no kidding~ from your link, pre-click-through, I was thinking http://en.wikipedia.org/wiki/Vat_69
which, given the current state of the Media, would have been eminently plausible.. ;
September 17th, 2009 at 4:39 pm
Bubba – You and me both.
September 17th, 2009 at 5:01 pm
@ dead hobo at 12:04 pm
“I think F411/H Wanker are a couple of phonies who might even be a couple of shills for bucket shops.”
Regardless, whoever/whatever they are, they are quite successful at yanking the chains of some commenters here.
The resultant back-and-forth is (usually) less than illuminating.
September 17th, 2009 at 5:06 pm
RE Wanger’s singing the good news re the Philly Fed Index
see Denninger’s comments @ http://market-ticker.denninger.net/archives/P1.html
Idiot Parade (Philly Fed Index)
This is what happens when you listen to the fools on CNBC proclaiming “green shoots!”
*SEPT PHILADELPHIA FED INDEX: 14.1 V 8.0E
**sub-Indices:
- Prices Paid: 14.9 v 10.0 prior
- New Orders: 3.3 v 4.2 prior
- Employment: -14.3 v -12.9 prior**
- Inventories: -18.1 v 0.3 prior
- 6-month business conditions outlook: 47.8 v 56.8 prior
See the problems in here?
Prices paid up. By 50%. That’s not good – what does that do to margins? Only two choices there, right? Pass it through or eat it.
New Orders: Down. That’s not so good either, right?
Employment: Down. With what will consumers buy your products that now have input costs rising? Their disappearing paychecks or their good looks?
Inventories: Where?
6 month business conditions outlook: Flagging.
Given the above how tough is this one to figure out?
So this “improvement” is all prices paid skyrocketing?
This is good?
I tried to warn people but was called all sorts of names…….
September 17th, 2009 at 5:19 pm
@bubba:
I understand. I think the GOP is a loony bin too. But seeing the Dems fuck up their agenda while having the Presidency and supermajorities in the House and Senate is enraging and makes me nihilistic about our political system.
September 17th, 2009 at 5:41 pm
@emmanuel117
“But seeing the Dems fuck up their agenda while having the Presidency and supermajorities in the House and Senate is enraging and makes me nihilistic about our political system.”
i’m totally with you here. well, if it’s any consolation…if the dems do implode under their own incompetent weight, it’d be good fodder for john stewart.
September 17th, 2009 at 8:13 pm
Ouch Iceland
FTSE drops Iceland from equity benchmarks. Next thing you know, it will be Ireland.
http://www.ft.com/cms/s/0/e934e7f6-a3bb-11de-9fed-00144feabdc0.html?ftcamp=rss&nclick_check=1
But Harry will be buying real estate in Iceland with his both hands.
September 17th, 2009 at 9:24 pm
[...] the WSJ (Hat tip to The Big Picture). Paul Volcker with a novel [...]