Wednesday, December 30, 2009

Arabia Felix: Yemen Then

Arabia Felix, Lucky Arabia, or present day Yemen, was at the heart of some of the most profitable commerce at the time of Emperor Augustus.

Incense, frankincense, was used extensively in Rome to mask the smell of burning flesh when they immolated their dead, a common Roman practice. It was a gateway north towards Rome and Byzantium, through the Red Sea as well as the trade routes through Mecca and of Medina, and south across the Indian Ocean to India and China.

It was a hub of global commerce with its own resources as well and Sanaa the capitol city was a beautiful hub of wealth and fine architecture.

The Historian Strabo, known for his books on geography stated about Arabia Felix, the following"

“The country of the Sanaaei (Arabia Felix), a very populous nation, is contiguous, and is the most fertile of all, producing myrrh, frankincense, and cinnamon. On the coast is found balsamum and another kind of herb of a very fragrant smell, but which is soon dissipated.

There are also sweet-smelling palms and the calamus. There are snakes also of a dark red color, a span in length, which spring up as high as a man's waist, and whose bite is incurable.

On account of the abundance which the soil produces, the people are lazy and indolent in their mode of life. The lower class of people live on roots, and sleep on the trees. The people who live near each other receive, in continued succession, the loads of perfumes and deliver them to others, who convey them as far as Syria and Mesopotamia. When the carriers become drowsy by the odor of the aromatics, the drowsiness is removed by the fumes of asphalt and of oat's beard.

Mariaba or Sanaa, the capital, is situated upon a mountain, well wooded. ... The people cultivate the ground, or follow the trade of dealing in aromatics, both the indigenous sort and those brought from Ethiopia; in order to procure them, they sail through the straits in vessels covered with skins. There is such an abundance of these aromatics, that cinnamon, cassia, and other spices are used by them instead of sticks and firewood.

By the trade in these aromatics both the Sanaaeans ... have become the richest of all the tribes, and possess a great quantity of wrought articles in gold and silver, as couches, tripods, basins, drinking-vessels, to which we must add the costly magnificence of their houses; for the doors, walls, and roofs are variegated with inlaid ivory, gold, silver, and precious stones. . ."

Arabia Felix prospered for centuries until the beginning of the seventh century, when Rome no longer burned their dead, they were buried, the demand for their product decreased, Byzantium was at war with Persia, Aden was ruled by Romans, Ethiopian Christians, Jews, and then Persians. The trade routes slowly faded.

Imagine Cable Costing $1,000 per Month!

There is a battle brewing in New York City over the FOX local channel, Channel 5, demanding to get paid $1 per subscriber from Time Warner. The NY Times reports:

"The News Corporation is threatening to remove its Fox stations from Time Warner Cable systems at the end of this week if the cable company does not agree to pay sizable subscriber fees, the same way it does for cable channels. In negotiations, the News Corporation is pushing for about $1 a month for each subscriber, potentially setting a precedent for broadcasters that are seeking a new revenue stream to offset advertising declines."

Now I like Murdoch and I also was a Group President at Warner Cable almost thirty years ago so I have a set of divided loyalties in this fight. Yet as a consumer I think it is stupid.

Let's see. We have Cablevision and the fighting Dolans getting an arm and a leg for the MSG network already. You see I never ever watch sports. I went to one baseball game in my life, it was with the Brooklyn Dodgers and yes in Brooklyn. Never again. Never saw a football game, saw two or three basketball games. You see in my world sports is getting exercise, climbing mountains, cycling, swimming in heavy surf, and the like, not sitting with a stuffed tummy and a beer, I don't drink the stuff.

So why should I pay for MSG. I can even give up FOX in New York and see Family Guy reruns on the dozens of other channels. House has gotten dull, he should be sent to a good institution, and I have never seen the other reality shows. So why should I pay for FOX if I never watch it. If the CATV company was charged $1 for every channel times all its subs then I may be paying for one channel at a time by at the rate in excess of $1,000 per month, most going to the content providers! Insane.

You see, it is these tipping points, I really hate to use such a well worn phrase, but it does apply here, the tipping point is reached. Stop cable, keep broadband, and then use only Internet content which is free! Disintermediate the FOX and MSG owners. There is a point that Mr. Murdoch must come to understand when the customer just says no more and goes elsewhere.

You see just a few weeks ago in the same NY Times, they had shown everyone how to disintermediate cable content. The author states:

"Although the initial investment was costly, totaling $550, it took only a few months to recoup the money. Back in the olden days of cable we were forced to shell out a relatively standard $140 a month, for television service alone. This cost gave us access to a digital video recorder and hundreds of unwatched TV channels.

Contrast this with today, where our only expense is $9 a month to stream Netflix videos from the Web and the $30 a month that we always spent on an Internet connection. O.K., maybe that’s not completely accurate. When the wireless keyboard died a few weeks ago I was forced to spend another $4 for two new AA batteries. We’ve not yet recovered from that financial loss.

We still come home from work and watch any number of shows, just like the people who continue to pay for cable. We just do it a little differently, starting the computer and then using services like Hulu, Boxee, iTunes and Joost. Another interesting twist to this experience is that we’re no longer limited to consuming traditional programming. With these applications we can spend an entire evening flicking through videos from YouTube, CollegeHumor or Web-only programs."

The old business model for broadcast TV was give it away and make money by advertising. The new one is charge everyone whether or not the look at it and again charge for advertising. Somewhere in this new model is a class action lawsuit!

Net Neutrality: Going to the Extreme

I have been discussing Net Neutrality for over five years now. The issue should be simple. First, the packets to and from me should be secure and not open to any form of inspection or discrimination by any intermediary. Second, if I send a hundred pound packet I should pay 100 times more than if I send a one pound packet, thereabouts. Simple.

Not quite. First the FCC has no authority here, really. Yet that has not stopped them from issuing an NPRM and in turn starting the rule-making. Yes it will be thrown out by the DC Circuit. But that has never stopped the FCC before. They have the reputation to keep of being the most Luddite group in DC, and that is truly saying something. One may have thought Martin rather heavy handed, well just look at the crowd now.

Now on to the most recent venture, the attempt to make Google adhere to net neutrality in searching, whatever that is. Yesterday in the NY Times some member of what appears to be a disadvantaged company, also called a flop by some, bemoans the fact that he alleges that Google did not treat him and his company properly, whatever that means. He states:

"Today, search engines like Google, Yahoo and Microsoft’s new Bing have become the Internet’s gatekeepers, and the crucial role they play in directing users to Web sites means they are now as essential a component of its infrastructure as the physical network itself. The F.C.C. needs to look beyond network neutrality and include “search neutrality”: the principle that search engines should have no editorial policies other than that their results be comprehensive, impartial and based solely on relevance."

You cannot make this up! Search Neutrality! How about the First Amendment to the Constitution. Must the Times allow equal time on Page 1 for dissenting opinions? I think not. Google has a service, if you do not like it go somewhere else. The FCC has even less authority here my poor disgruntled young person! At least in net neutrality as I had discussed it there is over a thousand years of common law in bailments to hang your hat on. What is the basis of your claim? Oh I forgot, this is the generation where every student is on the honor roll and every student is a winner at sports. Not like that in life!

This whining young person then continues:

"Google’s treatment of Foundem stifled our growth and constrained the development of our innovative search technology. The preferential placement of Google Maps helped it unseat MapQuest from its position as America’s leading online mapping service virtually overnight. The share price of TomTom, a maker of navigation systems, has fallen by some 40 percent in the weeks since the announcement of Google’s free turn-by-turn satellite navigation service. And RightMove, Britain’s leading real-estate portal, lost 10 percent of its market value this month on the mere rumor that Google planned a real-estate search service here."

Let me tell a short story. I used Rand McNally's map service for years and paid a fee. Then they decided to change it, increased the fee, which I paid, and then destroyed all my old data. I had no reason to stay, I told them as much, went to Google, because it was better, not free, better! If Google had a bad search engine, such as in my opinion the Bing system, I would have gone elsewhere. I use Google, I like Google, I am making an economic decision.

We will watch the FCC go through the movements of being the protector of the consumer in the neutrality of everything wars. Perhaps they should try neutrality amongst religions, having Hindus, Christians, Jews, and the like all have equal footing, perhaps that would eliminate world conflict!

The rules to control net neutrality already exist in common law. They are the common law common carriage rights. We do not need some unbalanced FCC getting in the middle. The Government seems incapable of doing anything except spending money. In my experience the only competent branch of the Federal Executive is the Military, most of the time, not always. For example, just look at the three stooges from last weeks flight to Detroit. We want these minds controlling our information flow now, not really, let the market do that, please.

Tuesday, December 29, 2009

Russian Oil and the Pacific

I remember in the early 1990s after the opening of Russia having many conversations in DC with both Government officials and Halliburton folks, specifically Brown and Root, about developing strategic relationships with Russia to get the oil pipelines to the Pacific coast and having the US and Russia being in a position to strategically control key elements of the global oil markets, the US with production and distribution, Russia with extraction and distribution. Of course the answer was that Russian oil has no value and if they want anything from the US they will pay us.

Thus I was interested in the article from the Moscow Times today which states:

"Russia expanded its foothold on the Asian energy market with the click of a mouse Monday.

Prime Minister Vladimir Putin pressed a button to get Siberian oil flowing into the first tanker for delivery to an Asian customer, in Hong Kong, from Russia’s Pacific coast. In addition to China, supplies will also target Japan and South Korea.

The ceremony completed four years of work to construct the East Siberia-Pacific Ocean pipeline and the Kozmino port, worth a combined 420 billion rubles ($14 billion) to ease the industry’s reliance on the European market.

“It’s a strategic project because it allows us to enter the completely new, growing and promising markets of the Asian-Pacific region,” Putin said at the launch. “It’s a great present to Russia for the New Year.”

The foray into the Asian oil market follows Russia’s arrival as a major supplier of liquefied natural gas, or LNG, for its eastern neighbors earlier this year. The Gazprom-led Sakhalin-2 project — with Shell, Mitsui and Mitsubishi as partners — started shipping the gas, chilled to a liquid for loading into tankers, from Russia’s offshore fields in the Pacific in February.

As it expands into new markets, Russia is keeping abreast of the global trend of diversification among both energy buyers and sellers, which will make the business more competitive worldwide, said Elena Shadrina, a visiting energy researcher at the Norwegian Institute for Defense Studies.

“No supplier or consumer will have a dominant position,” she said by telephone from Oslo.

Europe is trying to offset its dependence on gas imports from Russia by looking to buy more from Africa, while Turkmenistan began exporting its gas to China earlier this month, ending Russia’s role as its only major buyer. Asia, in turn, has been seeking alternatives to supplies from the Middle East.

Russia’s progress in eastward expansion has been spectacular, defying doubts that the country has sufficient oil reserves and investment, Shadrina said."

Russia clearly has no further use for the US and the great window of opportunity was lost. Strange that both Government and industry here in the US were clueless. Putin is a shrewd and perceptive action driven leader whose return is most likely to occur soon. The expansion of these resources will further strengthen his position.

Saturday, December 26, 2009

Japan: And We Think We Are in Trouble

Yesterday we reported on the progress of China's growth. They are seeing a GDP growth rate almost at 10%. And that is with their currency pegged to the dollar. Whereas Japan seems to be faltering.

The Japan Times reports:

"The Cabinet approved a ¥92.30 trillion initial budget Friday for fiscal 2010 — the largest ever — allowing Prime Minister Yukio Hatoyama to fulfill his goal of winding down the drafting process by year's end. But the size of the general-account budget is larger than Hatoyama was hoping for, stoking long-simmering worries about Japan's fiscal health. By comparison, the initial budget for fiscal 2009 was ¥88.55 trillion and relied on unprecedented levels of fresh debt issuance and nontax receipts. The economic slump is projected to bring tax revenues down to ¥37.40 trillion, the lowest since fiscal 1984. As a result, the Cabinet will have to issue ¥44.30 trillion in new government bonds — an alarming increase of 33.1 percent on the previous initial budget. The latest amount equals the sum of the bond issuance planned by the previous government for the initial budget, and the first extra budget for fiscal 2009."

Japan seems to be rapidly sinking in its own debt. That is a harbinger for the US. Also if Japan in 2010 falls behind China in GDP, which we expect, then the US is next. We anticipate a GDP for China in 2010 of well in excess of $5.5 trillion whereas the US is at best to hist $14.5 trillion. If China continues to grow at almost 10% rate then we see the passing of the US by 2020.

China is stressing entrepreneurial growth whereas the US is destroying it under the current Administration. the coming year should prove interesting.

Friday, December 25, 2009

Seeing Out of Different Glasses

I recently reviewed the book by Cassidy on How Markets Fail. I thought it was well written but clearly biased against capitalism and rant with misconceptions of reality. Apparently many of those who read the review agreed.

Today in the NY Times the author states:

"John Cassidy, a writer for The New Yorker, knows his Minsky and he knows financial markets too. The result is a lengthy book, “How Markets Fail: The Logic of Economic Calamities,” that brilliantly dissects much of what has passed for economic wisdom, and decries the lack of humility from those whose theories helped cause the disaster."

Well, not really so brilliant. Again see the review. Cassidy is in my opinion an anti capitalist and his book takes certain events and in my opinion twists them to his purpose. Reading some of the comments on my review will also be helpful here. The Times article ends with:

"Mr. Cassidy asks, “What do you suppose that refers to? Builders constructing homes for which there is no demand? Mortgage lenders foisting costly subprime loans on little old ladies of limited education?” Nothing so specific, says Mr. Cassidy. Textbook economics overlooks such inconvenient realities. “In the world of Utopian economics, the latest crisis of capitalism is always a blip.”"

Well, as I note it is not capitalism, but it is the clumsy heavy handedness of Washington. A current excellent example is in Zero Hedge today recounting a Barney Frank and Maxine Walters play on our money which goes to their benefit. Cassidy clearly has is axe to grind but I all too often wonder where reason and the truth are to be found.

China and Its Economy

China continues to move forward despite the world's economic woes. Bloomberg reports:

"Gross domestic product was 31.405 trillion yuan ($4.6 trillion) last year, the statistics bureau said at a briefing in Beijing today. That compares with a previous 30.067 trillion yuan and the World Bank’s estimate of $4.9 trillion for Japan."

The People's Daily also states:

"China has revised its gross domestic product (GDP) growth rate for 2008 to 9.6 percent from 9 percent, the National Bureau of Statistics (NBS) said today. That raised GDP for 2008 to 31.4045 trillion yuan from the previous figure of 30.067 trillion yuan, NBS director Ma Jiantang told a press conference. The new figure amounted to about 4.59 trillion U.S. dollars, at the exchange rate on Dec. 31 of 2008. The revised volume for the agriculture sector was 3.3702 trillion yuan, accounting for 10.7 percent of GDP, down from 3.4 trillion yuan. The figure for the industrial sector was put at 14.9003 trillion yuan, accounting for 47.5 percent of GDP, was larger than the earlier figure of 14.6183 trillion yuan. The service sector figure was 13.1340 trillion yuan, accounting for 41.8 percent of GDP. It was up from 12.0487 trillion yuan.

The GDP for the US as of 1-1-2008 was $14.44 trillion. However China also seems to be making great strides in energy efficiency. As reported by the National Bureau of Statistics of China they state:

"In 2008, the total output of primary energy was 2.65 billion tons of standard coal equivalent, of which, the output of coal was 2.8 billion tons (in kind); that of crude oil, 195.05 million tons; natural gas, 80.3 billion cubic meters. The total energy consumption was 2.91 billion tons of standard coal equivalent. By the end of 2008, of the total industrial enterprises above designated size, 48,637 enterprises conducted science and technology activities, accounting for 11.6 percent; 27,278 enterprises conducted R&D activities, accounting for 6.5 percent; there were 3,092 thousand people engaged in science and technology activities, up by 68.2 percent over that in 2004.

The total input in science and technology activities reached 594.17 billion yuan, up by 147.4 percent over that in 2004; of this total, the input in research and development (R&D) activities which represent the independent innovative capacity of enterprises totaled 307.31 billion yuan, up by 178.2 percent over that in 2004. The intensity of the input in R&D was 0.61 percent, and it was higher than that in 2004, which stood at 0.56 percent.

Among the large and medium-sized enterprises, 37.1 percent of them were engaged in science and technology activities, and 24.9 percent were engaged in R&D activities. The total input in R&D reached 268.13 billion yuan, the intensity of input was 0.84 percent, and it was higher than that in 2004, which was 0.71 percent.

The information such as: water consumption, status of informationization, education attainments, technical titles, and skill degrees of employees, and share-holding status, jurisdiction and business birth record of enterprises were all covered by the census.

Meanwhile, according to the accounting system of and the results from the Second National Economic Census, as well as in line with international convention, the preliminary estimates of 2008 GDP have been revised. The main results are: The total GDP was 31,404.5 billion yuan in 2008, of this total, the value added of the primary industry was 3,370.2 billion yuan, accounting for 10.7 percent of the total GDP; that of the secondary industry was 14,900.3 billion yuan, accounting for 47.5 percent of total GDP; that of the tertiary industry was 13,134.0 billion yuan, accounting for 41.8 percent of total GDP.

In addition, according to the results from the economic census, the total energy consumption in the year 2008 has been revised to 2.91 billion tons of standard coal equivalent, which was 2.12 percent higher than the originally released preliminary data. Revisions have also been made accordingly to total energy consumption figures for the period of 2005 to 2007. Basing on the revised energy consumption data from 2006 to 2008 and GDP estimate of 2008, the unit energy consumption of GDP for the year of 2008 was down by 5.2 percent over that in the previous year, or 12.45 percent lower than that in the year 2005."

China stands to make great progress in the next ten years. If they continue to grow at this rate and if the US manages to destroy its entrepreneurial base, by 2020 we expect the Chinese GDP to exceed that of the US.

Merry Christmas

From Luke 2

2:1 εγενετο δε εν ταισ ημεραισ εκειναισ εξηλθεν δογμα παρα καισαροσ αυγουστου απογραφεσθαι πασαν την οικουμενην
2:2 αυτη απογραφη πρωτη εγενετο ηγεμονευοντοσ τησ συριασ κυρηνιου
2:3 και επορευοντο παντεσ απογραφεσθαι εκαστοσ εισ την εαυτου πολιν
2:4 ανεβη δε και ιωσηφ απο τησ γαλιλαιασ εκ πολεωσ ναζαρεθ εισ την ιουδαιαν εισ πολιν δαυιδ ητισ καλειται βηθλεεμ δια το ειναι αυτον εξ οικου και πατριασ δαυιδ
2:5 απογραψασθαι συν μαριαμ τη εμνηστευμενη αυτω ουση εγκυω
2:6 εγενετο δε εν τω ειναι αυτουσ εκει επλησθησαν αι ημεραι του τεκειν αυτην
2:7 και ετεκεν τον υιον αυτησ τον πρωτοτοκον και εσπαργανωσεν αυτον και ανεκλινεν αυτον εν φατνη διοτι ουκ ην αυτοισ τοποσ εν τω καταλυματι


1 And it came to pass in those days that a decree went out from Caesar Augustus that all the world should be registered.
2 This census first took place while Quirinius was governing Syria.
3 So all went to be registered, everyone to his own city.
4 Joseph also went up from Galilee, out of the city of Nazareth, into Judea, to the city of David, which is called Bethlehem, because he was of the house and lineage of David,
5 to be registered with Mary, his betrothed wife, who was with child.
6 So it was, that while they were there, the days were completed for her to be delivered.
7 And she brought forth her firstborn Son, and wrapped Him in swaddling cloths, and laid Him in a manger, because there was no room for them in the inn.

Thursday, December 24, 2009

The Health Care Bill and a Thought

We now have the Christmas Eve Cecil B DeMille event of the passing of health care in the Senate. There is the high drama of ever DeMille film with the exception of the elephants. The problem I still have is a logical one.

Let me lay out some facts:

1. Let us assume for simplicity that health care costs us $2.5 trillion in 2010. Close so one should not quibble.

2. Let us look at the laws and note that anyone going to an emergency room must not be denied service, expensive as it may be.

3. ER service is very expensive, so if they went to a local physician then it should cost less.

4. We are now requiring all to have health care, and to some degree pay for it. That means that more money comes into the system to get cheaper care, going to a local physician, and also having the patient pay something for it. Somehow this means that the costs are lower and the inflow of funds from the patient are higher.

5. Thus why do we need to spend a single penny more than what we are now spending, in fact it should be less. So if this logic holds any water. just using the facts, then where is the money going?

Good question. Think about it. Then look at Nebraska, Florida, Michigan and the list goes on. The only sensible step was Bernie Sanders and Public Health Clinics, a low cost proven way to deliver health care. It's a shame, they are destroying one of the prime engines of economic growth for the 21st century. Wonder what the history books will say a hundred years from now?

Tuesday, December 22, 2009

Update on the Yield Curve

The yield curve as of today is shown above as compared to October. Note the increase at the top end and the decrease at the bottom. It is the steepest yet.

The data above depicts the key elements over the past nine months. The yield for the long term debt is increasing at the top end. The low end is still dominated by easy money from the FED.

The curve above depicts the rapid decline at the low end while sustaining the high end or long term growth.

The spread of the 10 year and 3 month rates is shown above. We see that spread peaking again.

We anticipate continued growth in the top rates as inflationary pressure grows.

Monday, December 21, 2009

Thank You to Senator Sanders

Senator Bernie Sanders got a Community Health Care Center provision in the Health Care Bill. His announcement states:

"A $10 billion investment in community health centers, expected to go to $14 billion when Congress completes work on health care reform legislation, was included in a final series of changes to the Senate bill unveiled today.

The provision, which would provide primary care for 25 million more Americans, was requested by Sen. Bernie Sanders (I-Vt.).

He said the additional resources will help bring about a revolution in primary health care in America and create new or expanded health centers in an additional 10,000 communities. The provision would also provide loan repayments and scholarships through the National Health Service Corps to create an additional 20,000 primary care doctors, dentists, nurse practitioners, physician assistants and mental health professionals.

Very importantly, Sanders also said the provision would save Medicaid tens of billions of dollars by keeping patients out of emergency rooms and hospitals by providing primary care when then needed it."

We have argued for this for the past year. Shown above is my card from the 1940s in New York City. My grandmother, the former head of the Socialist Party in New York and a Physician at the Seaview Hospital for TB patients on Staten Island in the 1920s was insistent that I get health care along with the others in a public facility. The card accounts for my weight, height, inoculations and the like. I remember the white enamel furniture, clean crisp nurses, and the starched white coat physicians.

Despite the fact that I most likely disagree with everything else Bernie believes in, I think, this is a wonderful step. It provides for child care and preventive care. Yes it is care for those who cannot afford it, but it can be good care and can prevent many of the problems we see later in life if done properly.

The problem is that those well off will still get their better care from cash up front Park Avenue physicians but the issue is so what if we can get care to those who need it when it counts the most. Frankly the cost is quite low considering what it would cost if not provided when it should have been.

So,thanks Senator, you did not get the handouts that others got, you gave to those who need a solution that many have sought. It can represent a great platform to build upon!

How Many Really Died?

The Urban Institute issued a report last year stating that hundreds of thousand were dying in the US because they had no health care. In the report they contend:

"In 2002, the Institute of Medicine (IOM) estimated that 18,000 Americans died in 2000 because they were uninsured. Since then, the number of uninsured has grown. Based on the IOM's methodology and subsequent Census Bureau estimates of insurance coverage, 137,000 people died from 2000 through 2006 because they lacked health insurance, including 22,000 people in 2006."

The essence of the Urban Report analysis was a simple formula:

DT=(PI x X) + (PU x X x 1.25)

where DT is the total deaths in some group, and X is the percent in a group dying if they were insured and PI is the number in the group insured and PU the number uninsured. The report assumes that the death rate for the uninsured is 25% greater than insured no matter what. The report then spends pages using the formula for every possible variation under the sun. The key question is where did the 25% come from?

The answer one would guess is from the Institute of Medicine Report, IOM, Care Without Coverage, 2002. That report contends that the reasons are due to:

1. Primary Prevention and Screening Services

Uninsured adults are less likely than insured adults to receive recommended health screening services (e.g., mammograms, clinical breast exams, Pap tests, colorectal screenings). And when they do receive these preventive services, it is not as often as recommended by the U.S. Preventive Services Task Force. The disparities in whether someone uses these vital services holds even after accounting for the possible influence of age, race, education or having a regular source of care.

2. Cancer Care and Outcomes

Uninsured cancer patients generally have poorer outcomes and die sooner than persons with insurance. Without timely preventive screenings, diagnosis is delayed. As a result, when cancer is found, it is relatively advanced and more often fatal than it is in persons with health insurance coverage. For example, uninsured women with breast cancer have a 30 to 50 percent higher risk of dying than women with private health insurance. Furthermore, once diagnosed, treatment
disparities persist. For example, uninsured women are less likely to receive breast-conserving surgery.

3. Chronic Disease Care and Outcomes

Uninsured adults are less likely to have regular checkups and a usual source of care to help manage their disease than is a person with coverage. For the five chronic conditions that the Committee examined (diabetes, cardiovascular disease, end-stage renal disease, HIV infection and mental illness), uninsured patients have worse clinical outcomes than insured patients.

3.1 Diabetes: Uninsured adults with diabetes are less likely than those insured to receive the professionally recommended standard of care for monitoring blood glucose levels and other complications. Uncontrolled blood glucose levels puts persons with diabetes at increased risk of hospitalization and additional complications

3.2 Cardiovascular Disease: Despite the fact that having a usual source of care improves medical management, 19 percent of uninsured adults diagnosed with heart disease and 13 percent with hypertension lack this ongoing relationship

3.3 End-Stage Renal Disease (ESRD): The clinical goals for treatment of kidney disease are to slow the progression of renal failure, and prevent or manage complications and co-existing diseases

3.4 Human Immunodeficiency Virus (HIV) Infection: One positive effect of health
insurance for HIV-infected adults is obtaining a regular source of care. Without health insurance, many wait more than three months after diagnosis to have their first office visit.

3.5 Mental Illness: Mental illness represents a major but often underestimated source of disability. It contributes as much to disability as does cancer or heart disease. As is the case with other diseases, the uninsured are less likely than those with coverage to receive the desirable level of mental health care.

Let us examine these causes.

First, preventive screening does help. One of the problems with those having no insurance is also a reluctance to seek medical advice and the primary reason often is fear of finding out that one is ill. Frequently there is the hiding effect, namely if I do not check out the problem it will go away. It may not be the problem of there being no care available. Many clinics provide mammograms for example, yet the fear is if it is positive then what? There are also significant cultural fears as well. In effect fear and cultural predispositions may dominate on the outcome and not just lack of insurance.

Second the cancer care outcomes seems highly unjustified. True those with resources will seek out say Memorial Sloan Kettering rather than just their local surgeon. That is a resource driven solution as well as a family support one. On the other extreme one often sees in lower income families the demand to keep a person alive at all costs where in more well off families there are advance directives! In effect there are many forces at play and the blank assertion made is problematic at best!

Third, the chronic diseases are for the most part self inflicted. Diabetes and its sequellae, including renal failure, caused mainly by Type 2 Diabetes, are personal choices. As reported this week in Science:

"Nation of Flab

Obesity is edging ahead of smoking as a health hazard in the United States, say researchers at the National Bureau of Economic Research in Cambridge, Massachusetts. A team led by Susan Stewart, a researcher who studies aging, has come up with some hard numbers on the skyrocketing problem: In the past 15 years, smoking has decreased by 20%, but the number of fat Americans has increased by 48%. By 2020, the team calculates that obesity will rob an 18-year-old of 0.7 years of life on average and 0.9 years of "quality of life." The average gain for an individual from not smoking—0.3 years—is more than offset by the loss of more than a year from weight gain, the authors reported last week in The New England Journal of Medicine. Even if obesity increases level off to as little as 0.15% per year, they'll swamp overall gains from nonsmoking by 2020."

And yes, the obesity problem is highest in the lowest income groups and in the uninsured. Thus this self inflicted disease and resulting costs are due to choice and not failure to have insurance. It is in fact the providing of food stamps used for the purchase of high carb food which drives this effect.

Thus the problems in 3.1 through 3.4 are for the most part self inflicted. As for mental illness, it is often covered by Medicaid and its problems are the result of the changes to health care since the 1960s when most mentally ill were released to live on their own. I am not objecting to that but stating that the decision had costs.

Thus the IOM report has I believe many deficiencies. It failed to look at the totality of causality. It looked at best at some data and jumped to a conclusion. It did not holistically look at a complex system which has problems and at people who have responsibilities. For example should we have to pay for the costs of a three pack a day smoker? Probably not. How does an economy solve that? Tax the cigarettes and keep the money separate for payment of resulting costs. Simple, but Congress would never do that. They would spend the money and then complain.

The problem with IOM type reports, having been on many such a committee, is that all too often they are written by staff with minor input by the group. The group at best meets periodically and all have "day jobs". This is a systems problem and it will become a more costly problem as we expand health care. It demands s systematic study with facts not just assertions.

Hockey Stick, Karhunen-Loeve, and If and If and If

The above is the now well quoted and often questioned hockey stick from Mann et al from Nature in 1998. Simply stated Mann et al made the following calculations:

1. They took data from a variety of sources that they contend reflects the temperature at some time.

2. These data sets then had an inferred T at some time t and at some location x.

3. Now each of these data sets had some variability due to several factors:

a. The inference of temperature from say tree ring size may not be one to one
b. the actual measurement may have an error
c. there may be other factors driving tree ring size
d. and on and on

4. They then used what is called the Karhunen-Loeve approach to obtain a single curve by weighting each of the multiple inferred curves. For example if they had ice cores, tree rings, and water height, then they could infer the temperature in say 1492 as:

T(1492)= a Tree (1492) + b Ice Core (1492) + c Water Height (1492)

This is quite simplified but one can get the idea. A good reference is the book by Fukunaga on Pattern Recognition.

5. Then they selectively smoothed the data and as with the Karhunen-Loeve approach they used the series with the largest "eigen values" or the series which would give the smallest statistical error.

So far so good. Yet there are many ifs here. For example take tree rings. As with the old Karhunen-Loeve approach which I know and have used extensively over the years, I also know a bit about growth in plants having spent the last twenty five years measuring and modelling that effect. You see there is not a one to one relationship between temperature and growth. Rain, soil conditions, insects, fires, drought, and the like play an equal if not more dominant effect. I have tried to find the underlying physiological models but they are still not well worked out yet. Thus if you rely upon a dendrologist to give you reasonable accuracy on tree ring width and annual temperature you are "shingling the roof in the fog" as I am fond to say.

The along comes McKitrick and McIntyre. They start the critiques by actually looking at the data. They state:

The database used by MBH98 contains the errors and defects listed below. We detail each of these points in this section, then in Section 3 we show how correcting these errors and defects affects the calculation of the Northern Hemisphere average temperature index using MBH98 methodology.

(a) unjustified truncation of 3 series;

(b) copying 1980 values from one series onto other series, resulting in incorrect values in at least 13 series;

(c) displacement of 18 series to one year earlier than apparently intended;

(d) unjustified extrapolations or interpolations to cover missing entries in 19 series;

(e) geographical mislocations and missing identifiers of location;

(f) inconsistent use of seasonal temperature data where annual data are available;

(g) obsolete data in at least 24 series, some of which may have been already obsolete at the time of the MBH98 calculations;

(h) listing of unused proxies;

(i) incorrect calculation of all 28 tree ring principal components.

And they conclude:

"The MBH98 hockey stick-shaped NH temperature reconstruction discussed here has been extremely influential in discussions of 20th century global warming. Together with a pre-1400 extension derived in Mann et. al. (1999) and a spliced instrumental temperature series, this index figured prominently in the IPCC Third Assessment Report (IPCC 2001) and numerous other publications. However, the dataset used to make this construction contained collation errors, unjustified truncation or extrapolation of source data, obsolete data, incorrect principal component calculations, geographical mislocations and other serious defects. These errors and defects substantially affect the temperature index."

Their work upon review has substantial merit. The work of Mann becomes highly questionable Mann makes the types of assumptions as:

If a tree ring can be accurately measured
If the ring width is a one to one mapping to the annual temperature in a year
If the other data can be similarly represented
If one can then select the sole single largest eigen value for the series

Then.....a hockey stick.

McKitrick then continues, and clearly starts to dismantle the Mann report as follows:

"The hockey stick debate is about two things. At a technical level it concerns a well-known study that characterized the state of the Earth’s climate over the past thousand years and seemed to prove a recent and unprecedented global warming. I will explain how the study got the results it did, examine some key flaws in the methodology and explain why the conclusions are unsupported by the data. At the political level the emerging debate is about whether the enormous international trust that has been placed in the IPCC was betrayed. The hockey stick story reveals that the IPCC allowed a deeply flawed study to dominate the Third Assessment Report, which suggests the possibility of bias in the Report-writing process. In view of the massive global influence of IPCC Reports, there is an urgent need to bias-proof future assessments in order to put climate policy onto a new foundation that will better serve the public interest."

Thus the whole basis of the Copenhagen meeting and the need for the Cap and Trade becomes problematic at best. So as my snow piles up before Christmas and my little squirrel friends hunker down from the cold, one may still question the Mann data and wonder what all the fuss is about.

I really can't wait till Spring!

Sunday, December 20, 2009

The FED and Excess Reserves

We have been discussing the excess reserve issue for almost 9 months. Banks are holding massive amounts in excess reserves. The FED has just issued a report to try and calm fears that these reserves are on the one hand not delaying the recovery by not being lent out and on the other hand not being stored up and when let loose create a massive amount of inflation.

The report starts by saying:

"The buildup of reserves in the U.S. banking system during the financial crisis has fueled concerns that the Federal Reserve’s policies may have failed to stimulate the fl ow of credit in the economy: banks, it appears, are amassing funds rather than lending them out. However, a careful examination of the balance sheet effects of central bank actions shows that the high level of reserves is simply a by-product of the Fed’s new lending facilities and asset purchase programs. The total quantity of reserves in the banking system reflects the scale of the Fed’s policy initiatives, but conveys no information about the initiatives’ effects on bank lending or on the economy more broadly."

They then show the balance sheet of the FED graphically which we reproduce below:

The above really shows the "junk" that the FED loaded onto its public balance sheet. It fails to show all of the off balance sheet junk as detailed by Prins.

They continue:

"Some commentators see the surge in excess reserves as a troubling development— evidence that banks are hoarding funds rather than lending them out to households, firms, and other banks. Edlin and Jaffee (2009, p. 2), for example, identify the high level of excess reserves as the “problem” behind the continuing credit crunch—or, “if not the problem, one heckuva symptom.” Other observers see the large increase in excess reserves as a sign that many of the steps taken by the Federal Reserve during the crisis have been ineffective. Instead of restoring the fl ow of credit to firms and households, they argue, the money the Fed has lent to banks and other financial intermediaries since September 2008 is sitting idle in banks’ reserve accounts."

They conclude:

"We began this article by asking, Why are banks holding so many excess reserves? We then used a series of simple examples to answer this question in two steps.

First, we showed that the liquidity facilities and other credit programs introduced by the Federal Reserve in response to the crisis have created, as a by-product, a large quantity of reserves in the banking system.

Second, we showed that while the lending decisions and other activities of banks may result in small changes in the level of required reserves, the vast majority of the newly created reserves will end up being held as excess reserves.

The dramatic buildup of excess reserves reflects the large scale of the Federal Reserve’s policy initiatives; it conveys no information about the effects of these initiatives on bank lending or on the level of economic activity.

We also discussed the importance of paying interest on reserves when the level of excess reserves is unusually high, as the Federal Reserve began to do in October 2008. Paying interest on reserves allows a central bank to maintain its influence over market interest rates irrespective of the quantity of reserves in the banking system. The central bank can then scale its policy initiatives according to conditions in the financial sector, while setting its target for the short-term interest rate in response to macroeconomic conditions.

This ability to separate short-term interest rates from the quantity of reserves is particularly important during the recovery from a financial crisis. If inflationary pressures begin to appear while the crisis-related programs are still in place, the central bank can use its interest-on-reserves policy to raise interest rates without necessarily removing all of the newly created reserves."

I still believe that this is necessary but highly risky. It does argue that Bernake should stay since he is balancing these balls. Another FED head would have to relearn this magic and the potential for error would be massive.

The problem is less the Reserves than the FED Balance Sheet. Further it is the off Balance Sheet contingencies which are massive. As we have already noted the talk of inflation becoming a positive policy to manage the debt is growing. That will be deadly to the economy.

This report is worth the reading. It details the views of the FED and that is important. It also shows the downside and it is that potential which is worrisome.

Using Inflation: Economists now Chime In

In a posting on Vox by Aizenman and Marion, the two economists, one from my favorite strongholds of intellectual fortitude, Dartmouth, remember who comes from there folks. The article states( see also NBER Working Paper 15562) :

"As the US debt-to-GDP ratio rises towards 100%, policymakers will be tempted to inflate away the debt. This column examines that option and suggests that it is not far-fetched. US inflation of 6% for four years would reduce the debt-to-GDP ratio by 20%, a scenario similar to what happened following WWII."

It then continues:

"Many observers worry that the debt-to-GDP ratios projected over the next ten years are unsustainable. Assuming deficits can be reined in, how might the debt/GDP ratio be reduced? There are four basic mechanisms:

  1. GDP can grow rapidly enough to reduce the ratio. This scenario requires a robust economic recovery from the financial crisis.
  2. Inflation can rise, eroding the real value of the debt held by creditors and the effective debt ratio. With foreign creditors holding a significant share of the dollar-denominated US federal debt, they will share the burden of any higher US inflation along with domestic creditors.
  3. The government can use tax revenue to redeem some of the debt.
  4. The government can default on some of its debt obligations.

Over its history, the US has relied on each of these mechanisms to reduce its debt/GDP ratio. In a recent paper (Aizenman and Marion 2009), we examine the role of inflation in reducing the Federal government’s debt burden. We conclude that an inflation of 6% over four years could reduce the debt/GDP ratio by a significant 20%."

They then look at the statistics we have looked at over the past year. The debt of the Government falls into three categories. Namely:

1. Debt held by public, like China. This is $7 trillion and growing.

2. Debt held by itself, like the Medicare funds it purloined. This is $6 trillion and growing.

3. Contingent debt it most likely may have to incur due to guarantees. Nomi Prins in her work It Takes a Pillage has provided fantastic documentation on this issue. There is about $12 trillion or more! See Prins web site.

Thus we are at $25 trillion and growing at about $1.5 trilion a year! The GDP is about $14 trillion so just right now we are at 179%. We beat Greece!

So when these wizards of academe present their scheme from the days of Jimmy Carter, they are clueless as to the consequences. It will cause a collapse on all those retiring on fixed incomes, and with the Baby Boomers at that stage, it will destroy a whole generation. Fortunately I am older and planned a bit better but these characters just seem not to understand the problem of inflation. It is destructive in ways which can never be recovered. It would destroy the US as a power.

They conclude:

"The current period shares two features with the immediate post-World War II period. It starts with a large debt overhang and low inflation. Both factors increase the temptation to erode the debt burden through inflation. Even so, there are two important differences between the periods. Today, a much greater share of the public debt is held by foreign creditors – 48% instead of zero. This large foreign share increases the temptation to inflate away some of the debt. Another important difference is that today’s debt maturity is less than half what it was in 1946 –3.9 years instead of 9. Shorter maturities reduce the temptation to inflate. These two competing factors appear to offset each other, and the net result in a simple optimising model is a projected inflation rate slightly higher than that experienced after World War II, but for a shorter duration.

The temptation to inflate is frankly reduced by the holding of foreign debt. Mainly due to the fact that one will not have future borrowers if they feel you are diluting their investment. Or they will drive the interest rates well above inflation. The short term nature is in and of itself a hedge again any longer term inflation. Finally all borrowers of note are anticipating a substantial inflation and are positioning themselves. As we noted two days ago the CPI and PPI rates were at 5.6% and when you adjusted for the increases in productivity and reduction in hourly wages ten at the employee level they were already seeing a 7-9% inflation now!

In the simulations, we raise a concern about the stability of some model parameters across periods, particularly the parameters that capture the cost of inflation. It may be that the cost of inflation is higher today because globalisation and the greater ease of foreign direct investment provide new options for producers to move activities away from countries with greater uncertainty. Inflation above some threshold could generate this uncertainty, reducing further the attractiveness of using inflation to erode the debt.

Again this is somewhat of an understatement. If we were to start an inflationary trend, and frankly the current Administration has done just that, then we would see loss of our markets abroad and imports being the last stand of low prices would then inflate. China would drop the dollar so quickly that it would shatter the US economy.

Moreover, history suggests that modest inflation may increase the risk of an unintended inflation acceleration to double-digit levels, as happened in 1947 and in 1979-1981. Such an outcome often results in an abrupt and costly adjustment down the road. Accelerating inflation had limited global implications at a time when the public debt was held domestically and the US was the undisputed global economic leader. In contrast, unintended acceleration of inflation to double-digit levels in the future may have unintended adverse effects, including growing tensions with global creditors and less reliance on the dollar."

Yes, the unintended consequences would be catastrophic. But, they have already begun!

One Year Ago Today

Well it was a year ago today that I started writing this blog. I had no idea where it would take me but it was an interesting trip. In a sense it is a chronicle of the current Administration and it meanderings about the fields of our society. It has focused o health care and economics, broadband and foreign affairs, and a few general comments and observations.

A year ago we were in a mess. Today it is just messy but getting worse. A set of contradictions. So what will the next year bring? Always a good question. We just finished the Copenhagen meeting. I remember Copenhagen well since when I lived in Prague and commuted to New Jersey I almost always took the last flight from Europe to NJ via Copenhagen. I have a fondness for the airport and an amazement for the volumes of liquor consumed by the Scandinavians on that flight. But I digress, for as I sit in my globally warmed home at 20 F and with 18" of snow to clear in the next few hours, I always wonder.

As to the economy, I wonder how this economy will ever recover with the wild people driving it into long term debt. My poor grandchildren! Perhaps they may read through this in the future and see that a few were concerned for them.

As for health care, it appears as if they will pass something, yet something which we have been arguing all year has many fatal flaws. Politics is a mess. So too is health care today. But you cannot expect one mess to fix another, can you?

So we begin the second year. Where will we go this time? Stay on for the ride to the many thousands who have tuned in over time.

Saturday, December 19, 2009

Latest CBO On Senate Plan

The CBO Report on the latest Senate Plan has been released. We make some observations here.

"Provisions Regarding Insurance Coverage

The legislation would take several steps designed to increase the number of legal U.S. residents who have health insurance. Starting in 2014, the legislation would establish a requirement for such residents to obtain insurance and would in many cases impose a financial penalty on people who did not do so. The bill also would establish new insurance exchanges and would subsidize the purchase of health insurance through those exchanges for individuals and families with income between 133 percent and 400 percent of the federal poverty level (FPL). Policies purchased through the exchanges (or directly from insurers) would have to meet several requirements: In particular, insurers would have to accept all applicants, could not limit coverage for preexisting medical conditions, and could not vary premiums to reflect differences in enrollees’ health. The options available in the insurance exchanges would include private health insurance plans andcould include two national or multi-state plans operated under contract with OPM."

It continues:

"Starting in 2014, most nonelderly people with income below 133 percent of the FPL would be made eligible for Medicaid. The federal government would pay all of the costs of covering newly eligible enrollees through 2016; in subsequent years, the federal share of spending would vary somewhat from year to year but would average about 90 percent by 2019. (Under current rules, the federal government usually pays about 57 percent, on average, of the costs of Medicaid benefits.) In addition, states would be required to maintain current coverage levels for all Medicaid beneficiaries until the exchanges were fully operational; coverage levels for children under Medicaid and CHIP would have to be maintained through 2019. Beginning in 2014, states would receive higher federal reimbursement for CHIP beneficiaries, increasing from an average of 70 percent to 93 percent. The legislation would also provide states with additional CHIP funding in 2014 and 2015."

This is a massive expansion of Medicaid:

Now as for Medicare:

"Provisions Affecting Medicare, Medicaid, and Other Programs

Other components of the legislation would alter spending under Medicare, Medicaid, and other federal programs. The legislation would make numerous changes to payment rates and payment rules in those programs ...those provisions would reduce net direct spending by $483 billion over the 2010–2019 period.

Permanent reductions in the annual updates to Medicare’s payment rates for most services in the fee-for-service sector...

Setting payment rates in the Medicare Advantage program on the basis of the average of the bids submitted by Medicare Advantage plans in each market...

Reducing Medicaid and Medicare payments to hospitals that serve a large number of low-income patients...

The legislation also would establish an Independent Payment Advisory Board, which would be required, under certain circumstances, to recommend changes to the Medicare program to limit the rate of growth in that program’s spending...

Reductions in subsidies for non-Medicare benefits offered by Medicare
Advantage plans

Changes to payment rates or methodologies for services furnished in the fee-for service sector by providers other than hospitals, physicians, hospices, and suppliers of durable medical equipment that is offered through competitive bidding..."

Friday, December 18, 2009

More on PPI and CPI

The economy seems to be stabilizing, yet there is the uncertain look forward due to the massive societal changes being made in Congress. We look here are a few current statistics which may assist in determining where we may be going in the short term.

The first chart below is the combined PI and CPI data.

The PPI is now increasing at a more rapid rate than the CPI. The annualized rates are now back to 5.8% for both and the pre and post bust periods have appeared to have gone by. Both seem to be tracking back to the common trend lines. The problem is that both are at a 5.8% increase while the Fed holds interest rates at the all time lows. This is a dangerous trend.

Now we show the rates of change for both below:

The polynomial trend lines show the increasing rates again. The drops in the economy are clearly shown and the pull out is also obvious. The concern again is the rapid upswing of both indices.

The next is the productivity indices as shown below. They are at all time highs which means the workers are working at maximum and when they get "exhausted" and new hiring occurs then we can expect now money to flow, demand to build, CPI and PPI to grow more rapidly and then inflation to occur.

The following chart is the pay indices.

As we would expect they are dropping, even as productivity rises. The recession has put downward pressure on salaries and yet the costs are moving upward. This double direction causes a substantially greater effective inflation. With prices rising and compensation dropping and unemployment rising, there is an effective real current inflation rate well in excess of 7%. When the economy makes the turn in employment we expect to see this in the actual price index numbers as well.

Tuesday, December 15, 2009

PPI and Inflation

The PPI today showed an annualized rate of increase in excess of 16%. In the above data, through November, we see the growing increases over the last two quarters in the PPI despite the downward pressure on the consumer. The PPI is a leading indicator of inflation and portends latent inflation which we have been anticipating on the other side of this recession due to the actions of the current Administration.

The Financial Times states:

"US stocks failed to break into positive territory after a surprise jump in the producer price index sparked inflation concerns. Disappointing manufacturing data from the state of New York also gave investors another reason to pause after Monday’s rally."

This we believe will be the first step in seeing a potential inflationary trend moving into 2010 creating a stagflation situation reminiscent of the past.

A Need for a Little Bit of Logic

I was listening to Senator Bernie Sanders yesterday bemoaning the fact that health care was increasing because, and I assume only because, insurance companies were raising their rates. That statement is akin to saying that coffee is increasing in price because and only because the local super markets were raising their prices. Perhaps they raised their rates because the coffee suppliers increased their rates and this due to the fact that the growers increased their rates and so forth.

Logic would dictate that at least Senator Sanders would articulate that if the prime and sole cause of increasing health care was the insurance companies and their single handed rate increases, then why is Medicare increasing, no insurance company there. The insurance companies are merely reflecting their costs. Just look at the profit margins, they are not banks.

That is the problem with this whole discussion. Bending the curve is complex and it becomes more complex when those in Congress make inane statements that have no logical basis, happens on both sides, just picking on Bernie this time!

The Polar Bear: Top of the Food Chain

The Christian Science Monitor has a photo of Oxfam demonstrators in Copenhagen dressed as "friendly" polar bears. They want to save the polar bear. Well let me relate a tale of the polar bear.

In February, I believe, 1968, while at MIT, we were doing some work on measuring the aerosols in the upper atmosphere. We were using as vehicles the X 15 and the SR 71, if available. In addition there were sounding rockets launched, from amongst other places, Churchill in the North West Territories, in northern Canada, by Hudson Bay, the western side.

In 1968 this was still an outpost, reached only by RCAF flights from Ottawa. Thus upon landing, the props blowing the snow in a blizzard like fashion, the doors opened and one could see the Quonset huts, World War II artifacts, lights aglow, and the crew chief shouted across the running props:

"Jump and run like hell for the door!"

Accustomed to following orders I promptly ran like hell into the open and welcoming hut. After settling down I asked the crew chief why the running. Then he said, as any old crew chief would:

"The bears, sonny, the bears."

I probed a bit more and found out that the polar bears had become accustomed to "eating" the nice morsels running off the incoming flights. They had lost a few in the past month. I had trouble believing this but I felt what the heck, I will act accordingly. I never saw a polar bear, yet at night you could hear them, like giant black bears, rummaging thru the trash. I knew they were there.

Then some 30 years later I was to find that indeed the polar bear was the largest cause of death in Churchill by far! Thus the legend seemed to be true. It was then that I realized that PETA notwithstanding we humans were not at the top of the food chain, the polar bear was. They can come to like humans, not as fatty as seals, yet we are accommodating their tastes as we get a bit more rotund as a species, yet tasty none the less.

Thus why cry over a loss one step above us in the carnivore food chain. Does Oxfam even know. Why does PETA not protest the polar bear?

Rembering Mrs. Kahn

The first Head Nurse I remember, one that molded my thinking for a lifetime, was Mrs. Kahn. I never knew if she had a first name. She wore the starched white nurses "dress" with the super starched nurses cap, with a deep blue band and a small medallion from whatever school she attended. She struck fear in the hearts of all who came near her for the first time, medical students notwithstanding. It was always "Yes, Mrs. Kahn" or "No, Mrs. Kahn". That was the way everyone spoke to her, even the Chiefs.

She knew Medicine better than any seasoned physician and her role was to protect the patient, from students, and even from physicians from time to time. Mrs. Kahn was God's personal agent on earth ensuring that health care was provided properly.

That is why today in reading the NY Times article by Dr. Valinoti I was somewhat pleased to see that there is a vestige of concern for the patient. In some offices from time to time the assistant comes out and screams "Terrence". Now for those of you of a certain ethnic background, the calling of you by your first formal name, "Terrence", "Richard", "Jonathan", and the like is generally done by one's mother, and when one's mother was seeking to invoke some form of guilt therapy for failure on the part of the son in complying with some unspoken but to be understood rule of behavior. Otherwise it would have been "Terry", "Dick", "Jon" and the like. Safe and secure names showing acceptance and not pending doom. Thus when the appellation from some office assistant is in the tone of a maternal reprobation one responds poorly.

Now back to the good Dr. Valinoti. She states:

"This got me thinking of how, in my own career, I have always been addressed as “Dr. Valinoti.” Freshly minted M.D.’s, some as young as 25, get a title of respect while seasoned nurses in the hospital are Betty, Kaye or Nancy.

I remembered the absurdity of this situation when, as an intern, I was addressing critical care nurses with decades of experience by their first names while they deferentially called me “Doctor.” These were women who had started their careers when I was still playing with Barbie dolls, yet where were their professional titles? Like most things in medical training, I got used to it, and it became second nature"

Well Mrs. Kahn would have never allowed that. It was not that Mrs. Kahn ever said a thing. Her presence, her aura, demanded it. She stood bolt upright, shaming any Marine in her stature, and her visage as well as dress just exuded authority. In those days even the physicians white coats were starched. No one would ever think of wearing scrubs and looking as if they had just jumped out of bed. In addition the attire was proper and the contact with the patient was correct. I remember in an old copy of Harrison's 5th Edition a whole section on how to properly address the patient, as Mr., Mrs, or Dr. or Rev. Now many office personnel speak as if they were still in high school. Thus one can see the change even in Dr. Vallinoti.

Valinoti continues:

"Regardless of whether I am “Anne Marie” or “Dr. Valinoti” to a patient, I rarely call a patient by his or her first name. As a rule, patients who are my senior are always “Mr./Ms./Dr.” Patients I meet for the first time are always addressed by their title, even teenagers (it seems silly, I know). Although many patients introduce themselves by their first name, I would never presume to address them as such without their specific permission. And even then, frankly, I find it hard to call a man old enough to be my father “Frank” or “Jim.” It is akin to my habit of still addressing old friends of my parents by their formal titles....But doctors do this at their own peril. A physician friend of mine experienced this firsthand when he made the mistake of calling a woman of a certain age by her first name during a visit. “That’s Mrs. White, thank you,” she told him, icily."

Yes, good for Mrs. White. If one is paying for a service then one deserves respect. This is not an oil change. In many cases it is one's very life. Perhaps the Senators should put a section in the new Bill to deal respectfully with patients, like customers! We should call it "Mrs. Kahn's Law: The Patient's Respect Act of 2010"!