- Bill Blain: Here Is Southern Europe's Next Tipping Point
By Bill Blain of Mint Parnters
“The Braavosi have a saying too. The Iron Bank will have its due….”
One of the things that’s been niggling me for years has been the question of just how unfixed the European banking sector is.
This morning I’ve attached a note my associate Ben Stheeman and I have put together on Non-Performing Loans (NPLs) in Second Tier European Banking. It’s a simple look at the publically available numbers.
Nobody will be surprised a North/SouthWest line divides Europe into good banks and less good banks. North of the line there are a few issues. Italy remains the problem – 16 out of 19 Italian banks don’t meet European standards on NPLs! We conclude the Italian second tier banks need to raise some €32 bln of new capital just to cover their existing holes. (€32 bln isn’t a massive number any more, but it’s a very large number for what are essentially very small banks – meaning further calls on Italian tax-payers look likely!)
In recent weeks we’ve seen a gamma burst of activity across European banking: the resolution and bail-in of Banco Popular, the bailout and transfer of the Veneto banks, and a number of completed NPL sales by Italian banks. However, this morning, the FT highlights how new European Securitisation laws may kill the market for Hedge Funds and PE Funds to buy NPL and fund them via Securitisation.
That sums up much of the confused thinking on European banks.
The Eurocrats have made grand assumptions, plans and visions for European Banking Union, including a single regulator, rules and definitions. But the reality is European banks remain very national in their characteristics and outlook. They have little in common that would define a “European Bank”.
Readers may recall European banks were barely touched by the initial outbreak of banking uncertainty in 2007 and 2008. I remember being told how stupid the British banks were in comparison to the clever European names that hadn’t got involved in structured and secured debt. And then the Lehman moment changed everything and the Global Financial Crisis went critical. Then we tumbled into the European Sovereign Debt Crisis and European banks became mired in a deepening crisis. A collapse in sovereign confidence triggered worries across weaker European banking names.
Since then we’ve seen multiple rescues, bailouts, handouts, defaults, restructurings, recapitalisations and bail-ins across Europe. Regulators and politicians talk big about banks being fit to fail without recourse to taxpayers – therefore they should have lots and lots of capital.
But, it’s never a lack of capital that kills a bank. Its access to liquidity – which depends on confidence. Folk will keep depositing in a bank as long as they are confident they will get their money back. When confidence unwinds, the bank will fail. Simples.
Regulators have made the assumption you can solve the confidence problem by putting in enough capital to cover any event. Because of the importance of national banking systems, pre-2008 investors read that as a bail-out charter, correctly anticipating banks would be bailed out.
Now it’s changed – but only slightly. The Veneto and MPS events demonstrated the Italians have little choice but to continue bailing out their banks because there was no large private sector to help out.
Otherwise, the reasons confidence in banks collapses is different every time. It might be because of fears a massive mismatch on the derivative book will trigger overnight crisis (watch this space), or might be something more simple. Some of the triggers are obvious – like how certain Irish banks got sucked into unwise property games because they thought they understood the market and the politics of property better than anyone else. Or it might be German and Austrian banks overwhelmed by toxic investments. Some names were simply swept away in the Netherlands. I watched a sinking property market trigger crisis in Spain. (On the other hand, I’m still struggling to understand how the French banks seemed to skate across the thin ice largely unscathed – a story for another day perhaps..)
What became quickly apparent is that there is no such thing as a European Bank. That was particularly true before the ECB became the regulator across the Eurozone. National self-interest trumped Europe every time – still does in many countries. National Characteristics and Politics still define the way in which banks operate.
Post crisis there has not been a clean banking sweep across Europe. Some countries; notably Spain and Ireland, addressed the crisis and have come out with stronger banks. Selective names were rescued, rebuilt and rebranded. Some names were mercy-killed.
But in most cases the symptoms of chronic unwise lending and resulting undercapitalisation were treated with sugar lumps, lashings of free ECB money and a general hope banks would recover as/when/if the European economy recovered.
In the US, banks were put on diet of forced recapitalisation and clean up – it worked.
There has been much talk about European Banking Union – trying to create common rules and practice to make real the illusion European banks are homogenous group. But they aren’t – and won’t be if the rules only apply to large banks.
Years of regulation, and selective memory gives us a European Systemically Important Financial Instututions (SIFI) Banking sector of some 30 core banks that could be described as healthy(ish). They all meet the core capital tests. They are recapitalising themselves to the levels determined as appropriate by the regulators.
But, there still isn’t any standard definition of European capital, and there is still no single Pan-European banking champions! The German banks seem to be retreating into their home market. The Dutch are focused on their domestic markets. Only the French show any real ambition – and even they have learnt caution from just how doomed they would have been if Greece, Portugal or Ireland had actually exploded! (Now I wonder how large French exposures to Turkey might play out…)
I could ramble on for paragraphs about how national banks reflect national outlook – The UK banks as mercantile commercial funders and mortgage providers, the German banks as instruments of regional economic policy, French banks as lending conduits for the State’s industrial policy, or Italian banks as SME lenders.. Too simplistic – but bear with..
Let’s not worry about the big banks. Sure there is a chance the next European financial crisis might be spawned within one of them.. but, it’s far more likely we’ll continue to see a series of smaller crisis gestate in lower down the European banking food chain. There are simply far too many of them..
We’ve looked at European banks with a balance sheet of €10bln plus. We didn’t worry about subsidiaries. Most of Europe’s second and third tier banks are perfectly fine. But a worrying number aren’t – they have flashing red signal lights screaming Danger, Danger! I suspect many depositors (including investors in their bond issues) to these second tier banks continue to lend because, contrary to the evidence, they think they are safe. Maybe it’s national interest, politics or implied government support – but a significant number of Southern European banks still look in crisis, but still attract deposits.
After looking at capital, management, and focused on NPLs, guess what? The bulk of Europe’s smaller banking problems are bound up in Southern Europe – Italy in particular. Surprised? Thought not.
We’d be interested in any feedback on the attached file.
- Raw Sugar (SB) Testing Weekly Chart Descending Wedge Resistance
Raw Sugar (ICE SB Oct17) Weekly/Daily/4hr/Hourly
Raw Sugar (SB) surged almost 3% yesterday, completing 3 days of consolidation (just above the daily chart’s downchannel resistance) and resuming a 3 week plus bounce off just below 1300. SB is firmly above downchannel resistance (on the 4hr chart) as well, and is now testing descending wedge resistance (on the weekly chart). Due to the significant gap between this wedge’s support and resistance, there’s a decent chance for SB to be rejected and pushed lower towards wedge support. Nevertheless, with weekly, daily and 4hr RSI, Stochastics and MACD rallying or bottomish, odds favour SB breaking above this wedge resistance. I am looking to enter long in the green zone (of the daily chart), targeting the red zone for Friday. The amber/yellow zone is where I might place a stop if I was a swing trader (although in my personal account with which I seldom hold overnight I set my stops tighter).
Click here for today’s technical analysis on Cocoa, Ethereum
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- Judge Halts Shkreli Trial
The trial of former Turing Pharmaceuticals CEO Martin Shkreli has been temporarily halted by Judge Kiyo Matsumoto after Shkreli’s lawyer objected emphatically as the prosecution planned to show jurors documents it claims are evidence of fraud committed by Shkreli, without calling witnesses to back them up, according to CNBC.
The documents allegedly detail payments that Shkreli's drug company made to investors in two hedge funds he ran, as well as supposedly bogus consulting agreements he signed with some of his former investors entitling them to a salary and shares in Retrophin, a pharmaceutical company he co-founded and briefly led, according to CNBC. Jurors were given the rest of Wednesday off, as well as Thursday, to allow both the defense and prosecution time to file legal briefs on their arguments for and against requiring witnesses for the relevant documents. Testimony is expected to resume Friday, CNBC reported.
Benjamin Brafman, the celebrity defense attorney representing Shkreli, said denying him the opportunity to cross examine people involved with the documents would be tantamount to denying Shkreli his constitutional right to confront witnesses against him.
The documents included settlement agreements that Shkreli reached with investors at two of his hedge funds, as well as consulting agreements with some of those investors. Among the settlement agreements in dispute Wednesday included the terms of what investors received from Retrophin in exchange for dropping any claims against Shkreli and his hedge funds.
Shkreli is facing eight counts of wire and securities fraud stemming from his brief stint as a hedge-fund manager. Specifically, the prosecution is examining communications between Shkreli and several former investors in his fund for evidence Shkreli misled them about his qualifications, investment returns and other details like his investing track record and the amount of money he managed. The prosecution also alleges that Shkreli falsified documents and backdated payments to corroborate his lies. Finally, prosecutors claim Shkreli defrauded Retrophin, which he founded in late 2012 just as his career as a money manager, CNBC reported.
Many of the witnesses called by the prosecution so far have described feeling betrayed by Shkreli. Some described Shkreli’s repeated evasions – he allegedly told one witness that he was “too busy” to give him his money back after starting Retrophin. Judging by the witnesses who’ve testified so far, it appears that many of Shkreli’s investors were small business owners who had invested between $100,000 and $300,000. After several investors threatened to sue, Shkreli allegedly offered to repay them using Retrophin’s resources. In addition to criticizing Shkreli for his dishonesty and strange behavior, many of the witnesses also admitted that they ultimately made money investing with Shkreli.
Matsumoto, the judge, indicated that she was sympathetic to the defense's argument that settlement and consulting agreements should only be shown to jurors if a person who received those agreements takes the witness stand.
"I do think the fundamental right to confront the witnesses and question the witnesses is important," Matsumoto said.
If prosecutors are allowed to introduce the documents to jurors without calling related witnesses, they could rest their case soon. The trial began late last month, and is expected to last as long as six weeks. But if Matsumoto bars that method, prosecutors could be forced to call additional witness stand, meaning they would be unlikely to rest their case until next week sometime.
- Don't Be Fooled – The Federal Reserve Will Continue Rate Hikes Despite Crisis
Authored by Brandon Smith via Alt-Market.com,
Though stock markets in general are meaningless and indicate nothing in terms of the health of the economy they still function as a form of hypnosis, or a kind of Pavlovian mechanism; a tool that central bankers can use to keep a population servile and salivating at the ring of a bell. As I have mentioned in the past, the only two elements of the economy that the average person pays attention to in the slightest are the unemployment rate and the Dow. As long as the first is down and the second is up, they aren't going to take a second look at the health of our financial system.
Historians and economists often wonder after the fact how it was possible for so many "experts" and others to miss the flashing red lights leading into market implosions like that which occurred in 2008. Well, this is exactly how; within any casino there is an inherent bias towards false hope. Meaning, many people will invariably ignore all negative factors and past experience because positivism is more pleasant. Central bankers are keen to take advantage of this condition.
When observing from the outside-in, this attitude rings of desperation. Investors, with no positive fundamental data to turn to in the economy, have now been relegated to scouring press releases and speeches for ANY indication that the central bank might not take the punch bowl away as they have been doing slowly over the past few years. In fact, in most cases negative data has actually triggered spikes in equities because the assumption on the part of investors is that bad data will cause the Fed to second-guess its stimulus reduction policies. In this way, central bankers can, at least for now, fake-out investors with a simple word or phrase released in a strategic manner.
An example of this occurred last week as Fed Chair Janet Yellen threw investors and aglo-trading computers a bone with an admission (finally) that inflation (as the Fed measures it) may not be as strong as the Fed had hoped. Investors cheered. Their assumption now is that the Fed will not continue with its steady interest rate increases. But, if one examines the central bank's past behavior this is a foolish assumption.
The Fed will indeed continue its interest rate hikes unabated, and here's why…
The tone set by the central bank on interest rates has been overwhelmingly "hawkish" over the past six months. Minutes from the Fed's June meeting mention a concern over stocks being "too high," and the potential for "market risks." Fed officials also cite concerns that markets have been ignoring rate hikes with blind exuberance. The Fed has continued rate hikes through 2017 despite a constant barrage of negative data, causing confusion in the financial world.
I covered elements of this deluge of bad data in my article 'Peak Economic Delusion Signals Coming Crisis'.
First, it is important to understand that everything the Fed does and says publicly is highly calculated. When there is confusion surrounding Fed rhetoric, it is often strategic, not random. Yellen's admission to the U.S. House Financial Services Committee that low inflation is a concern conflicts with numerous Fed statements made previously.
For example, last month Yellen surprised analysts with her claim that she "expects no new crisis in our lifetimes." This is an extremely confident and hawkish sentiment on top of numerous other arguments in favor of interest rate hikes regardless of low inflation. Only weeks later, inflation is suddenly a concern?
Investors immediately interpreted Yellen's mention of low inflation to mean that the Fed was backing away from its hard stance on rate hikes, as well as its pursuit of reductions in its balance sheet. What they completely ignored was the fact that Yellen also reiterated to the same Financial Services Committee the Fed's intention to CONTINUE rate increases at the current pace.
The Fed has used this method of mixed messages before. During the lead up to the taper of quantitative easing, central bankers sent mixed messages to the investment world leading everyone to believe that the taper was a no-go. Investors, of course, celebrated, while many alternative analysts were patting themselves on the back for their prediction that the Fed would "never" taper QE.
In the midst of rising potential for interest rate increases, the Fed pulled a fast one on analysts once again. Citing growth concerns, Yellen bamboozled mainstream economists and alternative economists alike, sowing the seeds of assumption that rate hikes were going to fall by the wayside.
In every case, the Fed insinuated it had "doubts", while at the same time stating that the removal of stimulus will march onward. This time will be no different. Interest rates are going up up up, and the only question is, how long will it take before market investors accept this as reality and equities crash in response?
I believe that Yellen's latest pronouncement of "no new crisis within our lifetimes" is a signal that this reversal in the stock bubble will take place very soon. I am reminded immediately of these quotes from prominent names in the economic world just prior to the crash of 1929:
John Maynard Keynes in 1927: "We will not have any more crashes in our time."
H.H. Simmons, president of the New York Stock Exchange, Jan. 12, 1928: "I cannot help but raise a dissenting voice to statements that we are living in a fool’s paradise, and that prosperity in this country must necessarily diminish and recede in the near future."
Irving Fisher, leading U.S. economist, The New York Times, Sept. 5, 1929: "There may be a recession in stock prices, but not anything in the nature of a crash." And on Sept. 17, 1929: "Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months."
McNeel, market analyst, as quoted in the New York Herald Tribune, Oct. 30, 1929: "This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan… that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years."
Harvard Economic Society, Nov. 10, 1929: "… a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall."
Yellen seems to be echoing the bewildering rhetoric of past economic catastrophe; offering prophecies which she knows are false while purposely increasing instability through interest rate hikes. As I have noted many times, this is the classic modus operandi of the Fed. The Fed raises rates into economic decline and ignores all evidence that they are bursting a bubble they engineered — this is what they do.
During recessionary conditions in 1927, the Fed increased the money supply exponentially through open market purchases and a reduced discount rate, which many economists argue was a primary catalyst for the artificial liquidity that created the stock market bubble of 1929. Once the crash occurred and the depression set in, the Fed RAISED RATES and made matters worse (as openly admitted by Ben Bernanke decades later in 2002). The Fed thus prolonged the depression for years beyond the normal deflationary cycle.
Using history as our guide, central bankers like to conjure an environment of fiscal dangers, then they warn of those danger too little too late, and then claim ignorance of their own activities after the crash.
This is nothing new in our era. Former Fed chairman Alan Greenspan publicly admitted in an interview that the central bank knew an irrational bubble had formed, but claims they assumed the negative factors would "wash out."
Once they are ready to allow their planned implosion to occur, the central bankers are more than happy to throw investors to the wolves. That is to say, the investment world's optimism is only useful to the Fed for a time. If rhetoric and behaviors previous to the crash of 1929 are any measure, today we are only meager months away from a similar event. For further explanation, I outline in detail the reasons why the globalists would instigate a fiscal crisis in my article 'The Federal Reserve Is A Saboteur — And The "Experts" Are Oblivious.'
I suspect that the central banks and the globalists that control them are hoping to bide their time in terms a complete equities crash in preparation for a geopolitical event — a distraction massive enough to draw attention away from the bankers and their culpability for any economic disaster. They certainly will not allow stocks to crash in a vacuum.
In conclusion, I would like to leave readers with a quote from Great Depression era Federal Reserve chairman Roy Young. Perhaps investors should consider that they are being duped by central bank ploys, and that they are useful idiots in a game designed to keep the public under control with fraudulent markets until the Fed is ready to pull the plug. When the crash takes place, the Fed will find a way to remove itself from any blame. In the meantime, make no mistake, the interest rate hikes will continue into next year and the Fed's balance sheet will be reduced.
Addressing the Indiana Bankers Association, before the Stock Market Crash of 1929, Fed Chairman Roy Young had this to say:
"Many people in America seem to be more concerned about the present situation than the Federal Reserve System is. If unsound credit practices have developed, these practices will in time correct themselves, and if some of the overindulgent get 'burnt' during the period of correction, they will have to shoulder the blame themselves and not attempt to shift it to someone else."
- Purchases Of US Real Estate By Foreigners Hit All-Time High In 2016
In a testament to Chinese oligarchs, criminals, money launderers and pretty much anyone who is desperate to park their cash as far away from the mainland as possible, purchases of US real estate by foreign buyers surged to an all-time high in 2016, according to data from the National Association of Realtors via CNBC.
Foreign purchases of US residential real estate surged to the highest level ever in terms of number of homes sold and dollar volume last year, with Chinese buyers leading the pack, followed by buyers from Canada, the United Kingdom, Mexico and India. Meanwhile, Russian buyers made up barely 1 percent of the purchases.
Foreign buyers closed on $153 billion worth of US residential properties between April 2016 and March 2017, a 49 percent jump from the period a year earlier, according to the NAR. That surpasses the previous high, set in 2015. Foreign sales accounted for 10 percent of all existing home sales by dollar volume and 5 percent by number of properties. In total, foreign buyers purchased 284,455 homes, up 32 percent from the previous year.
According to CNBC, the increase in home sales comes as a surprise, given the dollar’s relatively expensive valuation versus both developed and emerging-market currencies. Half of all foreign sales were in just three states: Florida, California and Texas.
Aging Canadians buying property in Florida and other warmer climates were responsible for the largest increase of buying activity from any one country.
“But the biggest overall surge in sales in the last year came from Canadian buyers, who scooped up $19 billion worth of properties, mostly in Florida. They are also spending more, with the average price of a Canadian-bought home nearly doubling to $561,000.
‘There are more [baby] boomers now than ever before. It's the demographic,’ said Elli Davis, a real estate agent in Toronto who said she is seeing more older buyers downsize their primary home and purchase a second or third home in Florida. ‘The real estate here is worth so much more money. They all have more money. They're selling the big city houses that are now $2 million-plus, where they went up so much in the last 10 to 15 years, so they're cashing in.’”
Mexican buyers nearly doubled their purchases by dollar volume from a year earlier, coming in third behind China and Canada. Though Adam DeSanctis, economic issues media manager at the National Association of Realtors, said "you could easily make the point that perhaps their uptick was wanting to buy now before new immigration policy was in place.”
In general, though, Mexicans have been buying less expensive homes.
“The average purchase price of buyers from Mexico came in at about $327,000, compared with the $782,000 average among Chinese buyers and $522,000 for Indian buyers. Mexicans overwhelmingly favored homes in Texas, while Chinese buyers opted more for California and, increasingly, Texas.
‘The environment is much more Asian-friendly than it used to be with churches, grocery stores and schools that cater to their tastes,’ said Laura Barnett, a Dallas-Fort Worth area Re/Max agent. ‘I have been told they target good schools and newer homes. Yards are not a high priority, but rather community parks.’”
In a sign that home valuations in America’s most populous state might be nearing a peak, some Chinese are being priced out of California, forcing them to buy property in…Texas.
“It's also possible that Chinese buyers are being priced out of California. The average price of a home purchased by a buyer from China fell from about $937,000 to $782,000, even as the number of properties purchased jumped to nearly 41,000 from 29,000. The drop in purchasing power likely stems from tightened regulations in China with regards to capital outflow.”
As we’ve reported, Chinese authorities trying to stem the capital flooding out of their country adopted new currency controls specifically aimed at stopping Chinese nationals from illegally repurposing money to buy real estate. Those took effect early this year. Because of the new restrictions, CNBC says Chinese demand is beginning to wane – which could be catastrophic for home prices. Luxury markets in cities like New York City are already struggling with high vacancy rates. The recovery in home prices since the crisis has been uneven, but expensive coastal markets like New York and San Francisco experienced massive home-price inflation as younger Americans flocked to urban areas. However, if foreign demand weakens, these markets could be poised for a crash as fewer residents can afford to own their homes.
And of course, there’s the Trump factor…
"Stricter foreign government regulations and the current uncertainty on policy surrounding U.S. immigration and international trade policy could very well lead to a slowdown in foreign investment," said Lawrence Yun, chief economist for the NAR.
But if Chinese oligarchs are now out of the US real-estate game, who’s going to pay $150 million for this 14-acre parcel of beachfront property in the Hamptons?
- How Government Helped Create The Coming Doctor Shortage
Authored by Logan Albright via The Mises Institute,
For the last five years, attempts to reform America’s health care system have focused primarily on the demand side of the market, and specifically on the market for insurance. Yet, these reforms have not achieved significant improvements in health care outcomes, nor reductions in cost. As health care specialist John C. Goodman has pointed out in Forbes, the slowed growth of health care spending in the United States is a trend that correlates most closely with supply side reforms such as the availability of health savings accounts. Reductions in spending or costs are certainly not an effect of the Affordable Care Act.
One of the most critical supply side issues in health care is the supply of qualified doctors. The Wall Street Journal has reported that the number of doctors per capita is in decline for the first time in two generations, and the American Association of Medical Colleges has predicted a shortage of 45,000 primary care physicians and 46,000 specialists by 2020.
In light of these statistics, it would seem prudent to adopt policies that streamline entry into the health care market, while keeping regulatory costs to a minimum. Regrettably, this is far from the case, with states erecting numerous barriers to would-be health care providers that contribute to the high prices and limited access currently set to cripple the American market. While some of these are familiar and even seem natural to most people, some of the ways in which governments act to restrict doctor supply will come as a surprise to many.
Monopolistic Medical Boards
We are generally brought up to believe that monopolies are bad. The very word conjures up images of tight-fisted tycoons in top hats and monocles squeezing employees and consumers alike for all they are worth. While natural monopolies resulting from superior business models get an unfairly bad rap, people’s capacity for critical thought seems to inexplicably switch off when confronted with those monopolies which are created and supported by government.
The case of health care regulations is an interesting one, as state governments have empowered private medical boards with unilateral authority to set the rules for the medical profession, including the issuing and revoking of medical licenses. These boards effectively function like government regulatory agencies, with the important difference that they lack the opportunity for public comments, and thus are immune from any political pressure from citizens.
If the EPA or the IRS implements a regulation that the public doesn’t like, there is a political process by which they can voice their discontent and theoretically make an impact on the decision. In fact, this happens rather frequently, and although there is still too little accountability for regulatory czars, at least the opportunity exists for political action.
With state medical boards, no such process exists, and there is little transparency in the rule-making process that determines how doctors must operate. If a particular regulation is harmful, doctors and patients have no real alternative other than moving to a different state with different requirements, an impractical solution to say the least.
The fact that these medical boards are private rather than public entities is supposed to make us feel more free, but in fact, most members of these boards are appointed by state governors. When state laws forbid competition among regulators, and signal that the government will regard as binding anything the medical board decides to do, the distinction between public and private becomes meaningless.
For example, the California Business and Professions Code (Section 2220.5) states that “The Medical Board of California is the only licensing board that is authorized to investigate or commence disciplinary actions relating to physicians or surgeons” and charges the board with investigating any and all complaints from the public, other doctors, or health care facilities, or from the board itself. Although the board is technically private, the government sanctioned monopoly on enforcement stands as a barrier to entrants of the medical profession, who are forced to comply with a monolithic set of “take ‘em or leave ‘em rules,” with which they have no choice but to comply, or risk being barred from practicing their trade.
Limits on Nurse Practitioners
Nurse practitioners represent a less expensive alternative to fully licensed doctors for patients with minor, day-to-day complaints. Frequently operating out of walk-in clinics or pharmacies, these health care providers offer convenience, competition, and innovation in a market in desperate need of all three. In response to the Affordable Care Act, many states have been loosening regulations on nurse practitioners, which is a step in the right direction, but more needs to be done if we are to truly encourage competition and increase supply.
Midwives, physicians’ assistants, and other alternative practitioners also have a key role to play in medical care, and should be permitted to practice without physician supervision. Midwifery in particular was once a vibrant industry, that has since been crippled by costly regulations.
Restrictions on Retail Clinics
Retail clinics, pharmacies, and even supermarkets are capable of offering routine medical services to patients with a convenience and regularity impossible in traditional physicians’ offices. Unfortunately, the American Medical Association (AMA) has aggressively lobbied against the availability of this type of facility.
In this, the AMA has been mostly successful. While pharmacists are permitted to administer injections to patients in Louisiana, the vast majority of states still have strict prohibitions on this sort of thing. Still, where retail clinics are permitted to operate, the effects have been dramatic. Wal-Mart has recently begun opening a series of in store clinics in a handful of states. The big-box store is boasting charges of just $40 for an office visit, about half of the industry standard, and has expanded its services to treat chronic conditions as well as the acute complaints in which most retail clinics have exclusively specialized. Additionally, the company has driven the cost of generic prescription drugs down to just $4.
Wal-Mart is leading the way in this area, by offering primary care services in fairly rural locations, where access to quality medical care can be particularly problematic. Retail clinics simply offer another option to patients, and restricting those options will always result in higher costs. Wal-Mart’s efforts offer only a glimpse at the potential for cheaper, more available medical care if states would relax their restrictions on retail clinics.
Licensing Requirements
Every student wishing to practice medicine must pass the United States Medical License Examination, and all states impose additional requirements from state licensing boards. These are frequently lengthy and expensive procedures. Medical organizations such as the AMA have an incentive to limit the number of licensed doctors practicing in the marketplace, in order to protect high wages for established incumbents.
Just as the system of taxi medallions has long hindered the transportation industry, burdensome licensing requirements are still another barrier standing in the way of expanding the doctor supply.
There is an argument to be made that stricter licensing requirements result in higher quality doctors. Whether or not this is true is debatable, depending on which studies you read, but regardless of what the answer is, there is no reason not to allow various gradations of quality in the health care market. A system, or multiple systems, of voluntary certification instead of, or in addition to, traditional licensing would offer consumers a broad array of services with corresponding differences in price.
In virtually every other market, from food, to clothing, shelter, to transportation, consumers are permitted to select a level of quality appropriate for their budget constraints. If every car was mandated to be of Cadillac quality, a lot fewer people would have the means to drive. The availability of beat up old jalopies allows consumers to trade quality for affordability and expands access to transportation for everyone. There is no reason why medical access shouldn’t work the same way.
Importing Doctors
Many nations other than the United States turn out qualified physicians, but American Licensing Boards do not fully recognize the credentials of doctors immigrating from abroad. This means that a fully capable physician from the United Kingdom or Germany will still have to serve a four year residency and go through the onerous licensing procedures.
About 15 percent of residency positions go to foreign medical graduates. If there were an alternative method of recognizing existing credentials, these slots could be filled by domestic medical students, resulting in more practicing doctors.
The Length of Schooling and the Small Number of Medical Schools
There are currently only 129 accredited medical schools in the United States, too few to turn out enough doctors to meet the demand. In order to gain accreditation, a school must undergo an eight-year process overseen by the U.S. Department of Education.
The number of residency positions available is only 110,000, a number which is determined by the way Congress chooses to fund Medicare. But directly tying the number of available residencies to Medicare funding ignores the economic realities of the health care market, and fails to provide any measure of adaptability to changing conditions.
The deficit of residency slots also contributes to the length of time it takes to become a doctor. It can take as many as ten years from the time someone begins studying medicine to when they are allowed to practice. The result of this is a remarkable lack of flexibility for the health care market to adapt to changes in demand.
Conclusion
All of these supply side restrictions make it more difficult for the labor market for medical providers to respond to consumers’ needs. When a change in demographics occurs, such as the Baby Boomer generation entering retirement, or when legal reforms such as the Affordable Care Act alter incentives, it can take decades for supply to catch up to demand.
By reducing the regulatory burden on physicians, providing more competition among medical boards, and permitting more autonomy for alternative practitioners, patients could see both relief from the coming doctor shortage, as well as lower prices across the board for medical care.
- Drowning Our Sorrows: These Are Americans' Favorite Alcoholic Beverages
Americans are increasingly choosing healthier food options like quinoa, kale and avocado over chicken wings, chips and other unhealthy snacks. But when it comes to alcohol, a longstanding favorite continues to dominate, despite new, low-cal options: Beer.
According to a recent Gallup poll, Americans who drink alcohol continue to prefer beer (40%) over wine (30%) and liquor (26%) – a trend that has persisted since Gallup started taking the survey 25 years ago.
Unsurprisingly, beer is particularly popular among men, with 62% of male drinkers saying they prefer beer, compared with 19% of female drinkers. Less-educated and middle-income Americans also tend to choose beer.
However, Americans aren’t the world’s heaviest beer drinkers – not even close. Another report released earlier this month shows the average European consumes between one and four drinks a day, enough to notably increase the risk of colorectal and esophageal cancers. Americans drink 20 percent less alcohol each year than Europeans.
Here’s a quick summary of Gallup’s findings:
- Four in 10 alcohol consumers say they most often drink beer
- 30% prefer wine, while 26% opt for liquor
- 62% of Americans drink alcohol, consistent with historical trend
Beer has been Americans’ alcoholic beverage of choice for decades, Gallup said.
"For the past two decades, at least three in 10 drinkers have said they prefer wine, peaking at 39% in 2005. Wine was slightly less popular in the early to mid-1990s. Women are significantly more likely than men to prefer wine, at 50% vs. 11%, respectively. This beverage is also preferred more among college-educated adults."
However, liquor is rising in Americans’ estimation. The number of Americans saying they prefer liquor reaching its highest level in the 25 years since Gallup started taking the survey.
The percentage of those surveyed who selected liquor as their drink of choice ticked higher to 26%, the highest level in the poll’s history. However, the increase over the past 13 years – up from 24% in 2004 – is negligible. The 26% of drinkers who named liquor as their beverage of choice is the highest in Gallup's 25-year trend, but similar with the 24% recorded in 2004. The percentage naming liquor has typically been closer to 20%. Future measurements will help determine whether the current figure marks the beginning of a trend toward an increased preference for liquor.
A solid majority of Americans say they drink alcohol at least occasionally.
“The majority of American adults consume alcohol at least occasionally, with the current 62% figure nearly matching the 63% historical average in Gallup's trend dating back to 1939. The percentage of Americans who drink has been fairly steady over nearly eight decades, with a few exceptions. The drinking percentage held near 70% in the late 1970s and early 1980s. The figure dipped below 60% at several points between the 1930s and 1950s, as well as in select polls from 1989 to 1996.”
Though the number of Americans who are willfully abstinent is perhaps the most surprising data point from the survey was the number of Americans who say they don’t drink.
“Meanwhile, 38% of U.S. adults totally abstain from alcohol. That figure has remained below 40% since 1997.”
As Gallup notes, many of the Founding Fathers enjoyed beer, and it remains the most popular alcoholic beverage in the US today. Meanwhile, the brewing industry has seen tremendous growth in recent decades. Americans have thousands of breweries to choose from in 2017, compared with fewer than 100 in the early 1980s.
And, judging by Americans' insatiable appetite for craft beer, those numbers will likely continue to climb.
- LEFTISTS ONLY: You're Cordially Invited to This Post — Tea and Crumpets Will Be Served
Content originally published at iBankCoin.com
Courtesy of the Philadelphia Tea Society, I give thee a generous serving of tea and crumpets. Enjoy them with my compliments.
Tea and CrumpetsNow that you’re comfortably situated, I’d like you to take a peek through this aperture, into the hideous minds of the leftist elite.
Oh, it’s plain to see that she’s mentally ill. You only need to view her Twitter timeline for a few seconds to realize that. But the former member of the British parliament and homewrecker, is a hero on the left these days. After being outed in the Wikileaks for working for the Hillary campaign, all the while pretending to be a conservative at Heat St., she’s gone ape.
But it’s not just her. In my entire life, I’ve never seen so many democrats beholden, genuflecting even, to the deep state and American intelligence services. The left has been ardently anti-CIA for decades. Yet, now, because it’s politically advantageous for them — they love them.
How sweet.
Tucker Carlson superbly documents the hysteria on the left — showing grown adults fat shame Trump — calling into question his physical condition — ringing alarm bells for having discussions with Putin because an eavesdropper wasn’t present to take notes and leak them to the media.
There are enemies amongst us, a great many of them. Look around, maybe in the mirror, and you will find them.
- 10 Things You Never Knew About Orwell's 1984
Authored by Anna Matthews via The Foundation for Economic Education,
George Orwell’s novel 1984 was incredibly popular at the time it was published, and it remains incredibly popular to this day. With multiple stars citing the book as one of their favorites – including Stephen King, David Bowie, Mel Gibson, and Kit Harrington – 1984 has been growing in popularity in recent years. The book reappeared on best-seller lists in early 2017, as some argued Orwell’s dystopian vision had finally arrived.
Below are 10 facts you might not know about Orwell’s dark novel.
1. Before he wrote 1984, Orwell worked for the British government during World War II as a propagandist at the BBC. (Perhaps seeing the propaganda industry up close led to his critical portrait in 1984.)
2. Orwell initially named the novel 1980, and then 1982 before settling on 1984. Since it was written in 1948, some think that Orwell devised the title by inverting the year the book was written. Additionally, he thought about naming the novel The Last Man in Europe.
3. While writing the novel, Orwell fought tuberculosis. The disease ultimately consumed him and he died seven months after 1984 was published, with tuberculosis as the sole cause of death.
4. In addition to fighting tuberculosis, Orwell almost died while writing the novel. On a recreational boating trip with his children, he went overboard. Fortunately, neither this episode nor the tuberculosis prevented him from finishing his novel.
5. On an ironic note, Orwell himself was under government surveillance while writing his novel warning about government surveillance. The British government was watching Orwell because they believed he held socialist opinions. This surveillance started after he published The Road to Wigan Pier, a true story about poverty and the lower class in England.
6. The slogan “2 + 2 = 5” originated from Russia, where the Communist regime used it as a motto of sorts in an effort to help them accomplish the goals of their five-year plan in only four years. Though the slogan is still used to point out the ills of totalitarian brainwashing today, it was not coined by Orwell.
7. In addition to borrowing a piece of Russian propaganda, Orwell also borrowed some Japanese propaganda for his novel. The “Thought Police” are based on the Japanese wartime secret police who literally arrested Japanese citizens for having “unpatriotic thoughts.” Their official name was the Kempeitai, and they officially named their pursuit the “Thought War.”
8. When Orwell worked as a propagandist for the BBC, there was a conference room there numbered 101. This room was the room of which he based the location for some of his more horrifying scenes, making the scenes themselves all the more horrifying.
9. According to Orwell’s friends and families, his second wife Sonia Brownell was the model off of which he based the love interest (Julia) of the book’s main character, Winston Smith.
10. Though his book may be popular, Orwell’s novel also makes the list of the world’s top ten most frequently banned books. Some ban it for what they claim are pro-communist points of view, and others have banned it because it is anti-communist. Regardless, it is ironic that a book warning against totalitarianism is often an item for censorship.
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