Tuesday, November 11, 2008

Calling the Bottom

Remember nine months ago, when economists were marvelling over an exceptionally well-performing world economy? Though energy and commodity prices were high, the overall picture seemed rosy. Consumer confidence was good, and all sorts of productive technologies were coming into application all over the globe. Steady increases in productivity, fostered especially by almost magical information technology, promised rising prosperity and increases in economic activity the world over.

What happened? The real estate speculative bubble burst, and the resulting jitters sent essentially everyone all over the globe to execute a generalized "run on the bank." Investments and assets of all kinds were suddenly being cashed-out. The fall in asset values across the board was thus the very definition of a deflationary crisis. An incredibly rapid contraction of the money supply thus fed this self-reinforcing spiral.

The crisis has been answered with reassuring speed and vigor by concerted central bank actions to re-expand the underlying money supply. Have the credit conditions been responding appropriately? Yes. The single best measure of the liquidity and health of the credit system is probably the "TED-spread." This is the difference in interest rates between Federal Reserve debt obligations and highest-quality commercial obligations for the same term. Effectively, Federal Reserve obligations are the working definition of zero-risk debt. The perceived risk of bonds of the highest quality, then, is effectively a good measure of overall economic confidence in future growth and ability of the entities to repay their obligations. If the spread between these two rates is small, there is confidence globally in the health of the global economy, and thus a willingness and ability to lend to good borrowers for good purposes. Though still rather high by historical standards, the spread as of today, November 11 is 1.75, falling very rapidly indeed from its mind-blowing, absolutely unprecedented peak of 4.64 on October 10, 2008.

By this TED-Spread measure, the current crisis started on the ironic anniversary, 9/11, when the spread stood at 1.21, already moderately high. One week later, it hit a new peak, 3.13, which was completely unprecedented. It had never in its history exceeded much over 2.0. Just another three weeks was needed for this to reach the mind-boggling peak of 4.64. See:

[courtesy of Bloomberg.com,

For a broader perspective, look at this measure over five years:

From the perspective of the credit markets (where this crisis originated and demolished the financial pillars of the "real economy"), the credit "crisis" is now just a moderate credit "crunch" and may well be back to fairly normal range within a week.

So, looking forward, what are the prospects for resumption of brisk growth? Excellent. Although willingness of consumers to spend may be dampened for some months, there is great benefit to having that income saved and re-invested rather than simply consumed. The underlying engine of economic growth--technology and it's inventive application to productive uses of all kinds all over the globe--never took a breather through this crisis. Great plans and ideas are sill on the drawing boards in every country on earth. Computing power and information transmission and processing capabilities are better now than they were a year ago.

There is one advantage right now that the global economy didn't have a year ago. Energy and raw materials are much cheaper. With access to capital for sound infrastructure investments, all those wonderful plans sitting on drawing boards can now be funded and carried out at substantially lower cost than they could have just one year ago. When in the history of economics have such investment opportunities existed before? Never. Never.

What we went through over the past two months is comparable in intensity to what happened during the Crash of 1929 and the Great Depression. The fairly mind-boggling difference is that we went from good times to abyss and now solidly on the way to recovery in two months rather than ten years.

How could this be? Simply, most money exists as information, not physical currency--account balances, ledger entries, contract obligations and the like. This is simply data. In this electronic information age, this data can be transported, recorded, verified, and exchanged all over the globe in the blink of an eye, in quantities that defy the ability of the mind to comprehend. The "positive feedback loops" of money creation and destruction now can now develop and reverse in days to weeks rather than months to years.

As long as the central banks can respond rationally, quickly, and vigorously, these self-reinforcing cycles of money creation and contraction (inflationary spirals and deflationary crashes) can be corrected with breathtaking speed. The central banks today sit at the tiller of a supersonic speedboat, instead of the great wheel of a stately steamship. Through the first eight months of 2008, they didn't realize the economy was drifting towards a deflationary crisis. Once the picture became clear, however, their actions were brisk, vigorous, rational, and concerted. Over this time, the central bankers look first pretty incompetent, and subsequently brilliant and courageous.

This morning, the economic future looks exceptionally bright. The "real economy" however, will surely take a few more months to reflect this reality; it hasn't had time to fully reflect the emergency (and near-catastrope) that has already happened in the financial markets.

In summary, Warren Buffet is surely correct that equity investments today represent an opportunity that may be of unprecedented value in the history of finance. It is time to invest.

Wednesday, November 05, 2008

How Vladimir Putin Selected President Obama

If you were a foreigner watching the unfolding US election, had a stake in the outcome, and had a few hundred billion dollars to spare, what would you do?

How many people have been in such a position in the current election cycle? Three: Vladimir Putin of Russia, President Hu Jintao of the People's Republic of China, and King Abdullah of Saudi Arabia.

Recent figures show dollar reserves of these three nations have been enormous, and rising briskly. Russia's dollar reserves recently stood at $260 billion. Saudia Arabia has banked over $800 billion. China holds over a trillion dollars. In all cases, current trade surpluses ensure that these reserves are guaranteed to increase briskly for some time to come--none of these autocratic rulers has any reason to be shy about using these funds for any reason of national importance.

Who would these powers prefer to win the US election, and how badly? In all cases, Obama, very badly. In Saudi Arabia's case, there are conflicting considerations. A McCain presidency might be viewed as more friendly to oil interests around the globe, not just domestic US oil company interests. McCain has had a long history of voting against alternative energy initiatives; Obama has supported vigorous support for alternatives to fossil fuels. As long as the US remains dependent upon oil for its transportation needs, imports are inevitable, regardless of how much "drill, baby, drill" unfolds. At first glance, McCain might be the preferred candidate for the Saudis.

But Saudi Arabia's rulers have interests more pressing than just keeping the oil money pouring in. The monarchy has never been entirely politically secure. Religious extremists within the kingdom routinely call for its downfall; al Qaeda has repeatedly called for an overthrow of the regime. More than anything else, the Saudi royal family needs to have political stability in the Middle east. From their perspective, a long-term presence of US troops in Iraq would likely continue to radicalize "the man on the Arab street," threatening the regime's security.

There is also the consideration of Iran. There is no love lost between the Sunni Saudis and the Shi'ite Ayatollahs of Iran. But a McCain administration would seem hell-bent on confrontation with Iran, quite plausibly leading to military strikes. Under such circumstances, the perception of an epic struggle between Islam and the Christian West would tend to overide narrower sectarian concerns; Sunni and Shia would unite in their fear and rage, and the Saudi royal family, being widely perceived as allied with US interests, would be at imminent risk of being deposed.

In contrast, an Obama administration promises a prompt (but not precipitous) withdrawal from Iraq, and dialogue with Iran that seems most likely to avert military conflict, while tending to keep Iran's potential influence in the region relatively reigned-in. This approach couldn't be more appealing to the Saudis if they'd written the plans themselves.

China's considerations in the election are similar, and possibly similarly compelling. On China's border sits North Korea, a nation of 23 million impoverished souls. McCain has publicly advocated a "get tough" policy with North Korea, opposing its removal from the US list of state sponsors of terror. McCain has also joked about engaging in military strikes against North Korea. The prospect of a renewed Korean War involving the US on its border must fill President Hu Jintao with dread. If nothing else, a war on its border would have a devastating effect on foreign investment in China. China would strongly favor a win for Obama.

The case with Russia is more compelling still. McCain has been a vigorous proponent of expansion of NATO within the borders of the former Soviet Union. McCain was especially bellicose during the recent war between Russia and Georgia. The tone of the McCain's commentary seemed to suggest the use of US troops to repulse the Russian invasion. The risk of such conflict between two nuclear powers might alarm the entire world, but nobody more than Vladimir Putin.

So, we have a list of suspects, we have established motive and ability. What would be the modus operandi for this detective mystery? The approach is straightforward. Beginning over a year ago, these three leaders would understand that a US economic downturn would tend to favor the Democratic challenger running against a Republican administration. It would also be obvious that Democratic campaigns have always been under-funded compared to the more wealthy and business-friendly Republican Party.

Two basic, simultaneous approaches would almost guarantee the desired outcome: funnel hundreds of millions of dollars into the Obama campaign, and engineer a severe economic downturn in the US.

Engineering the downturn would have been primarily accomplished by the Saudis. All they had to do (and did) was to dial down the spigots of oil output. Petroleum demand, being inelastic, promptly resulted in marked increases in prices. Overall, this strategy was no sacrifice for the Saudis...their reward for flat or decreased oil pumping was higher net revenues. With additional billions being pumped out of the US economy by oil imports, and with higher costs for economic activity, it is surprising that the economic downturn in the US didn't happen more quickly.

But all those vast holdings of US dollar-denominated assets could be used to push the economy down as well. Federal Reserve data has shown a fall in M3 "money supply" beginnning about a year ago, and accelerating since the summer. This could reflect cashing out investments, and holding currency in reserves in vaults or secured warehouses. There is a process of "money creation" in which currency in circulation expands many-fold as account balances that exist as ledger entries rather than paper bills. If $100 in currency is withdrawn from circulation, the fall in money supply is ten times greater. This piece of the economic maniupulation might have been accomplished most easily by the Chinese. Somewhere, there may be warehouses owned by China, packed with $100 bills withdrawn from the US economy.

The sale of stock and real estate holdings would also tend to depress the stock market indices and real estate prices. A rapid deflationary death spiral was triggered, then, that has been enormously greater than the initial stress to the economy. A firecracker was thrown into a dynamite factory, in effect. Those responsible probably only expected a loud bang. The actual explosion has shaken the entire global economy. Rapid, assertive central bank actions across the globe seem to be putting Humpty Dumpty back together again fairly promptly.

The other leg of the election strategy would have been accomplished by Putin's KGB friends. The goal would have been to funnel perhaps 100 million dollars or so into the Obama campaign without the origin of the funds being detected. KGB agents have long been active in the US, and have cultivated a vast range of contacts across the country. Distributing hundreds of briefcases full of $100 bills to contacts in organized crime syndicates, unions, and selected private groups could then translate into hudreds of thousands of "individual small donors." Donations of under $200 are not then reported by the campaign and would be ultimately untraceable in any case.

If this had actually happened, we would have seen the Obama campaign receive an unprecedented number of small donations, accounting for a remarkably high proportion of an enormous total campaign war chest. Is this what happened? You betcha.

Did the three foreign rulers act in concert, or each individually? Only the leaders of the three states know for sure. Each may have pursued such strategies independently, each unaware that the others were hoping to have a similar influence on the election outcome.

Would the Obama campaign have been knowing accomplices to these actions? Not a chance. There would have been no purpose to letting Obama know that his campaign was getting a foreign boost. If the information had gotten out prior to election day, the facts would have devastated Obama's chances. He'd have remained most effective if he believed all those small contributors were legitimate, patriotic US citizens.

Is there a shred of hard evidence to back up this interpretation of recent events? No. But if the plans had been executed carefully, there wouldn't be any convincing public evidence.

This could make a great movie. Secret plots, briefcases and warehouses full of cash, word leaders conspiring, scenes of Riyadh, Beijing, Moscow, and DC. Some James Bond character jet-setting around trying to piece together the clues, hounded by shadowy KGB agents....only, he discovers the plan only at the last minute, and is prevented from reporting the truth in time....stranded somewhere as the new world order unfolds, he and a beautiful KGB agent decide to make love, not war....

Anyway, globalization may have done more than give foreign nations a stronger interest in the outcome of US elections--it may have motivated actual interventions in the political process. A concern for genuine national security might favor a system of mandatory public campaign financing. Perhaps both parties might now embrace the concept.


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Friday, October 10, 2008

Wall Street Meltdown -- thoughts on the Deflationary Death Spiral

The press has mostly been describing the current economic meltdown as a "credit crisis." Well, this is true, but the term is not particularly illuminating.

There are other terms which more clearly describe the current crisis:

-- rapid contraction of the money supply

--"run on the bank," where "bank" means all financial institutions all over the globe

--deflationary crisis

--deflationary death spiral

The last is fairly inflammatory, but may be the most accurate. We haven't seen deflation since the Great Depression.

The bit of economic data few seem to be recognizing is that ALL major items which can be purchased are falling in price, rapidly: stocks, real estate, commercial bonds, most commodities. The only things that don't seem to be falling rapidly are items that are considered essentially equivalent to currency: T-bills, gold, silver, the Japanese Yen, and the Swiss Franc. Even gold and silver aren't particularly strong.

If almost everything is falling in price, we have DEFLATION, by definition. Many will be slow to recognize the truth of this, because just a few months ago food and energy prices were increasing briskly. But crude oil prices are currently in a nosedive over the past week, and consumer price index data is pending for food.

What is a deflationary spiral all about? Loss of confidence in financial institutions results in increasing numbers of depositors closing accounts and converting balances to currency or the above dollar-equivalents.

From Wikipedia, entry for "deflation":
There have been three significant periods of deflation in the United States....
The third was between 1930-1933 when the rate of deflation was approximately 10 percent/year, part of America's slide into the Great Depression, where banks failed and unemployment peaked at 25%.

The deflation of the Great Depression, as in 1836, did not begin because of any sudden rise or surplus in output. It occurred because there was an enormous contraction of credit (money), bankruptcies creating an environment where cash was in frantic demand, and the Federal Reserve did not adequately accommodate that demand, so banks toppled one-by-one (because they were unable to meet the sudden demand for cash— see Fractional-reserve banking). From the standpoint of the Fisher equation (see above), there was a concomitant drop both in money supply (credit) and the velocity of money which was so profound that price deflation took hold despite the increases in money supply spurred by the Federal Reserve.
Sound familar? The similarities are very close. In both cases, the contraction came at the end of a speculative investment bubble that developed in the absence of effective, enforced regulations to prevent widespread fraudulent practices.

The biggest difference between 1930 - 1933 and 2008 is that the current economy is tied together with near-instantaneous communications. News events now cause changes of capital flows in minutes to hours, not weeks to months. This means that the development of new equilibrium of prices and money supply can happen much, much faster.

Reaching a new equilibrium much more quickly means that the pace of the contraction is accelerated and the time to "bottom" is quicker. It is entirely plausible that changes which took a decade to stabilize in the Great Depression might (MIGHT) now resolve over a period of months. There is today a much clearer understanding of the role of the money supply in these economic changes, and the Federal Reserve is now probably much more comfortable taking bold steps quickly.

Crucial to understanding the current disruption is a comprehension of the usual process of "money creation." Actual currency in circulation inexorably becomes the "support" for a much larger quantity of "money." Currency that is deposited in banks is lent out. The currency lent out is inevitably deposited again, only to be lent out again. Thus, a single $100 might "support" bank account balances totalling $1000. The bank balances these obligations with loans owed to them to balance their books. But the demand accounts entail a right of depositors to withdraw cash at any time. Loans can't generally be called in on demand. Similar processes apply to essentially any kind of "account" in which money is transferred in any way that could be deposited (or invested) elsewhere.

What happens when ten different depositors all want to simultaneously withdraw the same, single $100 bill that "supports" all this economic activity and wealth? In the absence of FDIC insurance, only the first-comer gets his money, the others find the establishment is out of business. Even with FDIC insurance, ony the first-comer gets his money right away--the others have to wait to be reimbursed.

This reality is both a cause and effect of money supply contraction. A demand to "cash out" accounts and investments and then hold onto cash (and cash-equivalents) means that the ratio of currency to total wealth becomes larger. A monetarist would say that the "velocity of money" is decreased. If the amount of currency in circulation is not increased to accomodate the new ratio, wealth must necessarily decrease, as measured in dollar terms.

Consider that in a deflationary crisis, holding currency itself (e.g., cash in home safes or under mattresses) is the best investment available--these bills are increasing in value just by sitting there. All other asset classes are decreasing in value, as measured in appreciating dollars.

We can also view this deflationary process as a reversal of the money-creation process described above with the $100 that multiplies like the proverbial loves and fishes into $1,000 of wealth. In the electronic "information age," this process can reverse at very, very high speed. This is what we're witnessing this week.

Now, imagine a scenario in which the Bureau of the Mint has made a terrible mistake in printing of currency. All currency suddenly crumbles into dust. What happens to the economy? With no money in circulation, almost all economic activity stops or is replaced with barter or the like. How should this disaster be fixed? By putting new currency in circulation immediately. Fairness would dictate that the money should be distributed specifically to reimburse holders of crumbled bills. But the immediate problem of restoring economic activity will be corrected by any distribution approach that spreads these dollar bills widely. Economists speak hypothetically of dropping currency from helicopters. That would actually work in our current situation, but there are more advantageous methods of distribution.

Now, is the dollar really appreciating as fast as the stock market is falling? Almost certainly not. Banks, other financial institutions, and many businesses currently have an absolute requirement to obtain cash. With a contraction of the money supply and inexorable demands of customers to "cash out" accounts, many institutions have an absolute requirement to acquire more cash. Ordinarily, they could obtain short-term loans. But, one might note, such borrowing is currently grinding to a halt. Many, many institutions (and many individuals) have no choice but to raise cash by selling assets. When such a crisis develops quickly, liquid assets are inevitably sold before less-liquid assets. Thus, changes in value of liquid assets are going to be faster and more dramatic than changes in price of, say, say real estate, or art work, or stamp collections, etc. Essentially, stocks are now being sold "at fire sale prices." We can expect less-liquid assets to fall in price more slowly and reach their new equilibrium before falling to such low prices.

Now, if stocks and corporate bonds are truly being sold at "fire sale prices," and if we can anticipate relatively quick restoration of adequate money supply by vigorous Federal Reserve action, what does that say about the future dollar value of these over-depreciated stocks?

Yeah, this is an exceptional buying opportunity for stocks, almost certainly. This is not to say that the market has reached its bottom. Its bottom will almost certainly occur in close proximity to the bottom of the money supply contraction. Probably the best daily measure of the pace of money supply contraction is the "TED-spread." (Well, the TED-spread reflects a number of different factors, but right now, as long as it remains at historically unprecedented highs, we can be quite sure that the money supply is contracting.) See: TED-spread

My own hunch is that the market bottom will occur when the TED-spread reaches about 2.o. Maybe 1.0. But today, the spread appears to be at an all-time high, 4.64. Today, the money supply is probably contracting faster than ever before. This could change by Monday, though. Or not. It will change when the Federal Reserve pours currency into the economy faster than people are cashing out accounts and investments. The necessary action by the Fed is so far out of range of "normal" actions, that this institution might take weeks or months to gear up to actions of appropriate vigor.

If I were forced to guess the date of the stock market bottom and subsequent rally, I would suggest November 5. (Yes, the election. Markets hate uncertainty. The global economy would strongly prefer Obama, but I'd bet there'd still be a rally with a McCain victory.) With some ups and downs (of course) the Dow should be at 20,000 within 5 years, maybe 3. That's another wild guess. Don't sue me if the market stays in the doldrums for a decade.

Right now, I think it extremely prudent for the Federal Reserve and/or Treasury to start purchasing equity in stressed (but fundamentally sound) companies. The taxpayer will be buying low and will enventually be selling high. If the needed short-term monetary stimulus ends up causing an excessive growth in the money supply (as when all those home safes are emptied to put money back into real investments), the money supply can be quickly reigned in with the sale of those Fed-owned shares.

What should a wise individual do?

- ensure one is holding a generous supply of currency. (About the only stock to be buying is of companies that make and sell home safes.) The banks can literally run out of cash; ATMs could really stop dispensing cash.

-Don't blindly sell stock holdings. But some companies will fail in the current, deepening recession. You don't want to hold much in any individual company. Diversification is crucial.

-Diversification should be viewed very, very broadly. Not just stocks and bonds, but dollar-denominated assets should be balanced with a range of global investments in other currencies. Consider cash-in-hand as a part of a sound investment portfolio.

-Consider re-investing any substantial cash holdings into the stock market. Not necessarily right away, but soon. One could put, say, 2% of surplus cash holdings in the market each week. My suspicion is that the stock purchased over the next few weeks will be cheaper than subsequently, but nobody has a crystal ball.

-Don't have conniptions about news stories of the government dishing out vast amounts of money. Money HAS to be distributed for the crisis to end. But pumping lots of money into banks alone would be unjust. The poor, folks who have lost their jobs, and retirees who have lost so much of their holdings should get a share of this money. Remember, the restoration of economic activity right now requires that the federal government supply more currency. Only the federal government can supply more money. We actually have no problem with how spending needs are to be "paid for." There is an urgent need for the printing and distribution of more money. We actually need to have HUGE federal budget deficits for the next year or two. We currently have the luxury of funding these deficits with newly-printed money.

The truth of the last three sentences surely boggles many minds. For everyone's lifetime, big budget deficits have been considered irresponsible. How can they be necessary, or even prudent? In truth, if one can put aside preconceptions and conventional wisdom, the logic is inexorable.

A deflationary crisis can only be reversed with massive "inflationary" stimulus.

Tuesday, October 07, 2008

Another Thinker's Take on the Current Deflation Crisis

What follows is an anstonishingly prescient post, since disappeared from the internet.
Original URL: http://investing.rogerdeng.com/blog/blog1.php/dow-theary-august-18-2008

Roger's Investing Thoughts [I presume this would be Roger Deng - ed]
Investing for the future ....

Dow Theory - August 18, 2008 --
To give you a hint of what I think the combined markets are now telling us -- I believe we are on the eve of world deflation. I pulled out a headline from the August 5 Wall Street Journal headline -- "INFLATION PACE IS FASTEST IN 17 YEARS."

Forget it, this is history -- this is not what's happening in the market. From what I see, the markets are telling us to prepare for hard times, and a global spate of the worst deflation to be seen in generations. This is why gold has been sinking, this is why stocks have been falling -- big money, sophisticated money, is cashing out, raising cash, preparing for world deflation. This is probably why Lowry's Selling Pressure stays at its high, smart money is selling into the stock market, day after day. They're raising cash in preparation for the hard times when deflation is in the saddle. Deflation is ushering in the new strong dollar. Big money sees deflation and the lower rates that go with deflation. Look, if you have five million dollars and you are only receiving 2% in interest on your money, that's only an income of hundred thousand dollars on your five million.

Big money realizes that in a deflation you need a mountain of cash to keep up your lifestyle.
What I see is a coming world deflation, and I believe that's the message the markets are sending.

What's the best stance in a deflationary situation? Lots of cash, and safe, solid, investments. Two areas that fit that requirement -- US dollars and US Treasury paper. What happens to stocks during deflationary times? They're sold to raise cash. What happens to business in deflationary times? It's crushed by ever-lower prices. What happens to the average citizen who's loaded with debt during deflationary times? They're battered unmercifully, as income buys less and less and as debt crushes them. What happens to assets during deflationary times? They're worth less and less and their sale brings in fewer and fewer dollars. Isn't the price of gold and oil already telling us that?

I just finished reading The New York Times, Los Angeles Times and Barron's and there isn't a hint of what I'm writing about above in any of these publications. Unfortunately, these coming deflationary times will come as a complete surprise to most people.

Sunday, October 05, 2008

Nothing Proposed Will Solve the Credit Crisis

The right terminology leads to more direct problem-solving.
Yes, we have a "credit crisis." But taking the facts from a different perspective, this is exactly the same as a "contraction of the money supply." Or, if you prefer, a DEFLATIONARY crisis. We haven't seen deflation since the start of the Great Depression, so the thinking is unfamiliar to most.

Government action can only make a given institution more creditworthy by giving it funding. Do it piecemeal, institution by institution, and you may or may not help the systemic problem, depending on specifics.

People are pulling cash out of accounts and into safes and under mattresses. A fairly small amount of this behavior can collapse lending instutions, even those well-run. The collapse of banks leads to more cash withdrawals, leading to more failures, leading to more withdrawals, and a high-speed reversal of the usual money creation process. For evidence of the current money supply contraction, see, for example:


Vast sums of real money are disappearing from the economy. Only the Federal government can produce more. If this doesn't happen, quickly, an unprecedented financial collapse will ensue. The Federal govenment might need to literally print trillions of dollars.

One immediately hears cries "but that will lead to inflation!!" Umm, yeah. That's why we need to recognize the current problem as a deflationary crisis. One can only reverse a deflationary crisis with inflationary stimulus.
About Wall Street Crisis
Read the Article at HuffingtonPost

Saturday, October 04, 2008

For bailout to work, housing market needs to mend



What we're seeing is a simultaneous bursting of the real estate bubble with contraction of the money supply. On the latter, see, for example:


The two processes are mutually-reinforcing. Yes, a vicious cycle. This is a DEFLATIONARY crisis.

The crux of the solution is monetary stimulus: expansion of the money supply--along with re-regulation of the finance industry.

The US has been here before, with the Great Crash of 1929 and the onset of the Great Depression. It took a few years for the Federal Government to get the right economists, the right laws, and the right approach in place.

This time, I think the (New) New Deal can be put into place much more quickly. Perhaps right after Inauguration Day in January.

Read the Article at HuffingtonPost

Friday, September 19, 2008

A Nation of Village Idiots



Excellent research !! It's worth pointing out explictly that McCain voted for this Gramm-sponsored legislation, while Biden voted against it:


Another fundamental cause of this crisis is Gramm-Leach-Bliley Act, which broke down much of the Depression-era regulation that separated insurance, banking, and the stock market. Again, sponsored by Gramm, voted for by McCain, and voted against by Biden.

Conclusion: McCain has helped devastate the asset wealth of the wealthiest Americans. McCain has been toxic to the interests of the rich and poor, alike !!!

Had Biden been listened to at the time, neither Enron nor any of the current chaos would have ever happened.
About Economy
Read the Article at HuffingtonPost

Thursday, January 10, 2008

document is publicly viewable at: http://docs.google.com/Doc?id=ddh9xk76_51f8z44zht



the Audacious Ideas blog, of the Open Society Institute-Baltimore, Diana Morris, Director

John Fairhall has embarassed a fine newspaper by producing a series of articles on buprenorphine that is biased, misleading, and sensationalistic. His efforts make the Baltimore Sun look like a cheap tabloid.

Even his self-defense, given in the face of rather blistering criticism, is misleading and/or false. He claims five "undisputed" key findings of his series. They are all wrong or misleading; as such, we dispute them all:

1. "Diversion of buprenorphine is growing." All prescription medications are diverted to unprescribed uses to some degree. Buprenorphine wasn't on the market until recently. Until then, it couldn't be diverted. Now it can, therefore it is, in small amounts. The legitimate question is whether there is a substantial, problematic amount of diversion going on. There is no evidence of a significant problem of buprenorphine diversion in the US. His assertion is misleading.

2. "Buprenorphine is being abused; naloxone hasn't prevented this as much as was hoped." Hoped? We all hope for world peace. Failing to achieve a hope isn't news. Bupe does get abused on occasion, so does Tylenol. So does Ex-Lax. As far as anyone can tell, abuse of Ex-Lax by young women wanting to remain thin is a far bigger problem than what is going on with buprenorphine. Will John Fairhall be producing a three-part expose of Ex-Lax?

3. "Eight hours of training isn't enough." Compared to what? The ZERO hours required for prescribing morphine or cancer chemotherapy agents? The zero hours for performing any particular surgery? Only buprenorphine, among all medications, has a particular training requirement enshrined in federal law. Professional and state regulations guide legitimate practice. The federal training requirement is a peculiar, unique, unnecessary, and excessive requirement. It is eight hours more than enough.

4. "The price of the drug and the associated doctor fees are an obstacle to treatment." The context here is healthcare in America. The price of any and all drugs, and any and all doctor fees, are obstacles to treatment of all diseases. This applies to cancer, heart disease, all mental health problems, everything. There is absolutely nothing unique here in regards to buprenorphine or addiction. His assertion is misleading.

5. "Congress did not take these issues into consideration when it laid the legal foundation for widespread prescribing of bupe." Since "these issues" are false, exaggerated, misleading, or obvious, there's no evidence that Congress failed to take any of them into appropriate consideration.

John Fairhall owes his newspaper, its readers, and his profession an apology, not additional distorted assertions.

Steve Coulter, MD


document is publicly viewable at: http://docs.google.com/Doc?id=ddh9xk76_51f8z44zht