Remember my writing about how I didn't believe, given the facts, that Jobs got his liver by pure "luck" (being registered in more than one place, for openers) and that his getting one likely meant someone else didn't -- and may have died as a consequence.
Now there's always luck of the draw, and with a limited supply of livers (after all, we can't wave a wand and make more of them) this is how it's going to happen. And if it happens via random draw and thus luck, well, that's how it is.
But -- did you know that the doctor who performed the transplant moved into a palatial mansion Jobs bought to recover in just a few months after the operation, lived in it for two years, paid the same price for it that Jobs did (no appreciation) when he bought it from Jobs and it is not clear if he rented it for those two years prior (at a market rate or otherwise) or if he literally was gifted living in the house!
Yeah, that all apparently did happen. Oh, and apparently the utility bills and property taxes were paid for by Jobs' San Francisco lawyer too, so maybe -- just maybe -- it was a complete free ride.
May I ask an impolite question of the fair doctor: In compensation for exactly what?
The system for transplants is fair and transparent, and nobody jumps the line, ever, right?
Go right on believing that if you wish.
As I've repeatedly pointed out, I didn't buy that line of crap then and don't buy it now. I revoked my organ donor card a few years ago (writing on it when I did) and in my opinion you should too.
Nobody, and I do mean nobody, is going to have the opportunity to play profiteer off my death in that fashion and until I am convinced that this not only can't occur in the future but any previous occurrences have been punished with forfeiture and prison I'm not changing my position either.
The Fed Z1 dropped yesterday and all you heard on bubblevision was chatter about how people's equity portfolios had "recovered" and were "soaring."
Well, yeah. Why did nobody look at anything else in the Z1?
I'll tell you why -- the rest of the report was frightening, and if they had reported on it the market might have blown up in their face instantly.
Let's go through it, starting with what we already know and isn't (in comparison) all that scary:
What's growing in debt? Two things -- corporate debt (bad, unless matched cleanly against assets, which we'll get to) and Federal. The latter is of course what we already know, but it's where the so-called "growth" is coming from.
Is this balanced against GDP? In a word, no:
There is no material change there (black line, right scale.)
How's the debt-to-gdp chart looking?
Not so good. Note that the "Real GDP" line is flatlined -- that is, we're making no progress and the data is negative. Yes, GDP grew. But it was all new debt -- no new output. Meh.
How about personal income in monetary inflation terms?
You're still losing ground. Monetary inflation last quarter was 7.84% (annualized) while income growth (all sources, wages, asset income, etc) was 3.88% (annualized.) This is negative 3.96% anunally, an improvement over last quarter from negative 5.87% but still deeply negative by about 4%.
This is economy-wide and includes both wage income and income from assets, so for those who say that Americans are "benefiting" from the QE program in the general sense that is a lie.
So let's now look at corporations, because it is here that we should find fairly significant (if not outright large) benefits, right?
Non-farm/Non-financial leverage is now at levels exceeding that of 2007, and while there's still a bit to go to get to the 2000 levels, it's definitely not good. Let's look and see if equity prices reflect (fairly) the gains in asset values:
Note carefully: We are currently at higher valuations compared against assets less corporate credit liabilities now than we were in either 2000 or 2007. In other words we have a bigger stock bubble now than we had in either of the previous instances.
Pulitzer Prize-winning journalist Seymour Hersh has dropped yet another bombshell allegation: President Obama wasn't honest with the American people when he blamed Syrian President Bashar al-Assad for a sarin-gas attack in that killed hundreds of civilians.
In early September, Secretary of State John Kerry said the United States had proof that the nerve-gas attack was made on Assad's orders. "We know the Assad regime was responsible," President Obama told the nation in an address days after this revelation, which he said pushed him over the "red line" in considering military intervention.
But in a long story published Sunday for the London Review of Books, Hersh — best known for his exposés on the cover-ups of the My Lai Massacre and of Abu Ghraib – said the administration "cherry-picked intelligence," citing conversations with intelligence and military officials.
Of course they did.
I have written a number of articles on the Syria mess (you can find them by sticking the word "Syria" in the search box to the right.) What's been clear since the outset is that there was plenty of doubt as to who used chems over there -- but not that they were used.
It's nothing new for our government to intentionally distort data or even lie outright for political purposes when it comes to international matters, say much less domestic ones. Indeed, one of the hallmarks of the Obama administration in particular seems to be a willful and intentional refusal to deal with the truth. Then again Clinton liked bombing aspirin factories while at the same time ignoring the slaughter in Rwanda -- one had white people impacted, the other not-so-white -- so this is not exactly a new problem. We can charge Bush with the same crap too, if you'd like.
What continues to astound me is how we, the people in this country, refuse to stand up and eject our so-called "leaders" for this sort of crap. It's almost bad enough to charge the United States population with bullying, and then condemn us all as felons -- especially the fellating media which is quick to scream when a Republican President does something like this (as they did with Bush) but is oddly silent when a Democrat does the same thing.
The problem in this case is that al-Nusra, a radical muzzie group, was known to the administration to be able to both make and use Sarin -- and they intentionally buried that intelligence.
There are plenty of people who think Obama is a closet Muslim -- perhaps even a Wahhabi Muslim.
This sort of intentional obfuscation only serves to fuel that theory and to the extent that people come to believe it, the Obama administration can hardly complain when they act to intentionally bury intelligence data on radical Muslims being capable of making and using poison gas.
The two drugs have been declared equivalently miraculous. Tested side by side in six major trials, both prevent blindness in a common old-age affliction. Biologically, they are cousins. They’re even made by the same company.
But one holds a clear price advantage.
Avastin costs about $50 per injection.
Lucentis costs about $2,000 per injection.
That is, 40 times higher, or 4,000%.
In anything approaching a market one would choose between these two based on their own preference. The science says there are few if any material differences in outcomes between the two drugs used for the same purpose.
The maker tried to obstruct obtaining that science.
The maker still obstructs, to this day, appropriate approvals so it can package the cheaper drug for this use.
Our so-called "regulatory" apparatus makes this sort of crap possible, as do restrictions that Medicare has imposed on it by law. Most people who suffer from wet macular degeneration are seniors, and thus they are inextricably connected to Medicare.
This is one of many examples of how the medical industry has interlocked itself with government in a way that extracts billions of dollars from you each and every year -- money that does not need to be spent in the medical sector at all.
Ken Langone and CNBS are pontificating again on so-called "defensive medicine" and all sorts of other crap this morning. What's being ignored -- deliberately -- is restraint of trade and differential pricing for like kind and quantity that is endemic and intentional through the entire medical system.
Those practices are supposed to be a felony. So says the Sherman and Clayton Act (15 USC §1-3). So says (in respect to commodities) Robinson-Patman (15 USC §13) .
So where are the prosecutions? They're missing, because we also have McCarran-Ferguson that exempts insurance companies from most of the Sherman and Clayton act (explicitly!) and that, along with other laws, effectively exempts the medical industry from laws that prohibit this behavior in virtually every other line of business.
As a direct consequence these 4,000% price disparities exist.
As a direct consequence you pay 4,000% more, directly and indirectly, than you should.
This -- the outrageous ramping of cost in the medical industry supported by guns being shoved in your face by government diktat to force you to pay -- is why we have a Federal, State and Local budget problem, it is why we have pensions that are going bankrupt and it is why we have an economy that is being strangled.
Until we face this issue head-on and deal with it there is nothing that can be done to address what's structurally broken in the US economy, nor in federal, state and local budgets.
I would add a “c,” a third point for you to bear in mind: You had all better use to the good this unusual period in economic history of proactively accommodative monetary policy by the Federal Reserve and other major central banks. The FOMC has made money the cheapest and most widely available of any time in American history. Interest rates dipped to their lowest level in 237 years; bond and stock markets rallied to historic highs in both nominal and real terms; bankers and investors are flush with liquidity; for anybody who is creditworthy, money is über-abundant. This will not last forever. One would be foolish not to exploit it now.
But here's what Fisher doesn't mention, but damn well ougth to have been talking about: Your "exploiting" of it means that someone else will have their income diminished for the duration of the exploitation you gain.
This is the 900lb Gorilla in the china shop that nobody is modeling, but they damn well ought to. It's why Japan has run this crap for two decades and it has done exactly nothing of benefit.
Note what Fisher has considered "healthy":
To be sure, the job creators in our economy—private companies—have used this period of accommodative monetary policy to clean up the liability side of their balance sheets and fine-tune their bottom lines by buying shares and increasing dividends. They have also continued achieving productivity enhancement and relentless reduction in SG&A (selling, general and administrative expenses).
Buying back shares and paying dividends with borrowed money is "cleaning up the liability side" of the balance sheet? Where did you get the crack you are smoking behind the lectern Richard?
What is holding them back is not the cost or the availability of credit and finance. What is holding them (ed: companies) back is fiscal and regulatory policy that is, at best, uncertain, and at worst, counterproductive.
Well, yes. Obamacare anyone? I mean, c'mon -- now the IRS wants to call volunteer fire departments "employers" for the purpose of the employer mandate? That's not "uncertain", it's deliberately destructive.
The real issue facing the American economy is, I'm convinced, almost-entirely related to the health care "industry" that has latched onto the government as a means of compulsion to further its extraction of economic output -- a process that had hit the wall and threatened to turn southbound and detonate in their face. The problem at its core is that exponential growth is always like this; two interrelated exponential functions will always run away from one another if one has a larger value than the other.
This is the core point that I laid forward in Leverage, and I remain as astonished more than two years after its publication as I have been for the previous couple of decades that this mathematical fact is willfully and intentionally ignored on a serial, notorious and outrageous basis virtually everywhere in the monetary and fiscal policy arena.
It really is as simple as this graph demonstrates:
You can't avoid this outcome any time you have that relationship in place. That is, as long as you have growth of some sub-component of the economy at a rate that exceeds the actual economic output growth the bad outcome depicted in that red line will happen -- every single time. It will happen because it mathematically must happen.
The FOMC has helped enable a sharp turn in the housing market and roaring stock and bond markets. I would argue that the former benefited the middle-income quartiles, while the latter has primarily benefited the rich and the quick.
Who owns the interest-producing assets that have been harmed? As a banker Fisher certainly understands that everything is a balance sheet, and that for everyone who "benefited" someone got screwed in exactly equal amount. The problem is that the "screwee" impact is deferred and not instantly-apparent for the simple reason that most interest-income portfolios are laddered and thus the impact comes on slowly as the ladder reprices over a period of years.
But this means that the screwing, once it happens, doesn't go away when policy changes -- it only fades out over an equivalent period of years! This is what got Japan stuck in a morass that they have been unable to exit from, and it is what threatens us now.
By intentionally ignoring the other side of the balance sheet and either poo-pooing the impact on same or denying its existence outright the Japanese dug themselves a hole they have been unable to extricate themselves from, as they "believed" that the costs in question were less than the benefits.
But this can never be true just as one cannot book an asset without a balancing liability. The only way to "cheat" is for the liability to be booked somewhere that is a near-infinite sink. This is why you can only prosper, in the end, by mining, growing or manufacturing something -- the other side of the balance sheet is either that which you dug out of the ground (a very large sink), the energy from the sun (ditto) or human effort (chargeable against your body and mind, a very-slowly-depleting resource over your lifetime.)
Efficient capital formation happens in an environment where labor can save its surplus economic output as a store of value unmolested by the capital side of the economy. That means no inflation -- not "low and secure" inflation, but zero structural monetary inflation and thus productivity accrues to labor in the form of mild and persistent increases in purchasing power -- that is, a mild and persistent deflation.
Because this is how economic balance, where capital and labor both have incentives to improve productivity and invest wisely, share in the fruits of same. It is how you address income inequality. It is how labor finds its reward and thus is incentivized to produce more. It is how capital formation is funded not by making a forward promise that is inherently dishonest since nobody can predict the certainty of outcome in a new venture, but with previously-produced economic surplus which is a known quantity as it has already been earned. It makes "investing" in worthless ventures stupid rather than providing incentives to create ponzi schemes and scams, because the alternative to investing -- saving -- is a slow-growing purchasing power in the sum saved rather than destruction of said power if those funds are not immediately spent.
I give Richard Fisher credit for being one of the few who will sound the alarm at the stupidity of the Fed's policy, even if his whistle is as flaccid as the intellectual vapidity found in FOMC as a whole.
But where I will not give him credit is found in the fact that he is well-aware of the fact that everything that The Fed does in regard to manipulating interest rates, irrespective of how, creates both a "winner" in the lowering of an interest payment and a "loser" who receives one dollar less for each dollar that is not paid by the winner in same.
It is the willful and intentional refusal to bring forward that fact into the public discussion that is the worst and largest mark of malfeasance both in the FOMC and the endless parade of jackasses that we see in the mainstream media.
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