Feeling Much Better

I've been in the USA for medical treatment and getting better each day. It's been an interesting experience. When I return to Hong Kong I'll be able to follow-up if some of the differences I wrote about earlier continue to be true. In the meantime, I found this very detailed Wikipedia link on US healthcare, with  references to all the relevant data points. http://en.wikipedia.org/wiki/Health_care_in_the_United_States


As for economic matters, Mark Steyn has this exactly right (how the US could become Greece)

http://article.nationalreview.com/426405/when-responsibility-doesnt-pay/mark-steyn

But stories like this are still depressing. How hard is it to weatherize? This problem isn't unique to the US. Japan could do a lot more too. 

http://www.popularmechanics.com/home_journal/home_improvement/4347294.html 

But this is really depressing. Is it really the case that Obama doesn't understand car insurance? Aside from the pointlessness of comparing it to health care, Obama can't be that ignorant, or stupid, or both, on national television for all to see, can he? In Wisconsin we all learned the difference between collision and liability insurance in driver education before getting a driver's license. Was that not the case in Illinois? 

http://theblogprof.blogspot.com/2010/02/video-obama-doesnt-know-what-car.html

But maybe this is the real issue. Remember Joe the Plumber? 
http://taxprof.typepad.com/taxprof_blog/2010/02/mankiw-spreading.html
Here's the key quote from the above link:

Joe was an aspiring small business owner, and he asked then-Senator Obama about his proposal to raise taxes on high-income households. The candidate responded, in part, “It's not that I want to punish your success. I just want to make sure that everybody who is behind you, that they've got a chance at success, too…. I think when you spread the wealth around, it’s good for everybody.”

"spread the wealth around, it's good for everbody"

Not feeling as good now. 

Minneapolis St. Paul Airport Satisfaction Up from 20 to 2.

This article expresses surprise that MSP airport jumped so high in a JD Power survey.


I was only surprised that it was so low last year! Here's why. I've been traveling through MSP between Asia and hometown Wisconsin for the better part of 20 years. MSP has many advantages:


1) It can handle winter weather. It has enough plows, de-icers, and the like and I've never once been delayed (unlike ORD, Denver)
2) It is right-sized for the traffic. I've never been in a holding pattern coming into MSP (unlike JFK, DTW, ORD, SFO, LAX)
3) It is among the best US immigration and customs entry point. Speedy, efficient, even for int'l visitors. It took me 30 minutes from the door opening on the flight from Tokyo to connecting gate. A similar experience in DTW on a relatively slow day took 90 minutes. Don't even get me started about JFK or LAX!
4) The terminal connections are easy to navigate, shops are friendly, food is even OK. You can even get a nice shoe-shine from some of the best shoe-shiners in the business!
5) Drive up and parking are relatively easy.
6) It is full of friendly Minnesotans!
7) You can get a drink on Christmas day (unlike Detroit)


Perhaps check-in and TSE security could perhaps be a bit better,  but you can probably say that about any airport these days.


So maybe you are all to hard on yourselves! I don't think I've been just lucky each trip (I'm not that lucky!). More likely, the criteria JD Power uses in their survey are not the true indicators of quality. Additionally there is probably too much variance in the test sample year on year.


But if you want to aim higher don't let me stop you! Singapore Changi Airport is actually far superior with Hong Kong Chep Lap Kok airport not far behind.

All You Need to Know about Climate Change

Nice summary linked above. Putting aside "Climategate," which basically requires a do-over of the underlying data, computer analysis, and theoretical underpinnings of climate science before policy recommendations affecting the planet can be re-tabled, here are the key points:

Climate Changes. Short term trends don't trump the long term trends. We need to be prepared.

We are in a 400 year warming trend, with the most recent dip being the 1860's mini-ice age. Since the industrial revolution started about the same time, this is part of the confusion why the misinformed think human activity is causing warming.

Human activity accounts for less than 0.3% of all green house gases. About 1/3 of that is CO2, with the rest being gases like methane, and various nitrous oxides. Eliminating all of it would have no impact on the other 99.7%, which is naturally occurring.

The best available data suggests that atmosphere is at a lower level of CO2 today than historical norms.

Data also suggest that temperatures were 2C higher in the Medieval Warm Period, peaking in about the year 1200. This warming period was a golden age for many cultures - end of the European Dark Ages, Peak of Angkor Wat, Pre-Columbian Americas, Mongols (though you might not think that if you were Chinese to the south!) and on and on - I'd guess due to better crop yields around the world.

Of course, we shouldn't pump more pollutants into the atmosphere. Pollutants are inefficient waste. Clean coal is better than unclean coal. Nuclear Power is better than that, so long as you can deal with nuclear waste. Solar, Tidal, Geothermal, Hydro-electric, micro-power generation all all becoming better and lower cost with technology each day. Efficiency is also good for business.

Any of the above does not require any global treaties, Co2 carbon credits, cap and trade, UN committees, IPCC, nor even regulation on whether to use mercury-laden light bulbs vs. incandescent ones. Free market profit incentives, including your own utility bill, have done more to drive down emissions than any committee. Even better gas mileage cars (with all those electronics that make it possible that everyone is so worried about now) are driven mainly by consumers looking to economize - not government mandated fleet mileage requirements.

Human-caused global arming hysteria and fear mongering is completely unnecessary. Any attempt to impose change that take away individual freedoms due to such hysteria is morally reprehensible. Worse than carrying out the death penalty on someone who has an iron-clad DNA-based alibi.

2-degrees of Separation from Wasilla

I met a woman from Wasilla in, of all places, a coin laundry at the hotel I'm staying in. She knows Sarah Palin personally. Her comment? Sarah is the genuine article. She is highly respected as former mayor and for her work as governor by a significant majority in Alaska. No surprise really, but interesting to hear it from someone with first hand knowledge.

Krauthammer Right Again

I can't really say it any better and won't even try!

There is no substitute for executive experience. Clinton and Reagan both had it.

I know from my own career that academic smarts aren't enough but that real experience with real people is a great teacher. You make a lot of mistakes along the way but that's life!

And if you can't do something yourself, find the people who can. It is guaranteed there is always someone better at something than you are.

Why are Health Care Costs more in Minnesota than in Hong Kong?

I am personally receiving some significant medical treatment and anecdotally I'm seeing costs in the USA as much as 20% to 3 times higher than for the very same thing in Hong Kong. To be fair, I am at one of the best medical centers in the USA and I came precisely to get the very best treatment. I don't begrudge the doctors a premium for that. But I also was in Hong Kong's very best hospitals being attended to by some of the leading doctors there as well, with the first doctor diagnosing my condition within 15 minutes, even though there are less than 5 such cases in HK per year and it is not his specialty.

But here are some comparisons from actual invoices:

Item USA Hong Kong

Lipid Blood Test $102 $64

Chest CT Scan w read $486 $450

Heart ECG $140 $80

Generalist Visit $200 $100

Specialist Consult $400-600 $200

Specialist report MRI   $794 $400

A full 7 day inpatient stay at one of HK's leading hospitals cost me about $8200. A similar experience in US, on an outpatient basis will cost about $2000 more plus my hotel/lodging costs. I'm also told that in Hong Kong costs can be even less at other clinics and hospitals.

There does seem to be more duplication and additional testing in the US. I had one consultation that will cost me about $400 that was perhaps not necessary as it didn't tell me anything that the other doctors didn't already have in hand.

Another difference is that when I ask the doctors in USA about the costs of the tests, they don't typically know. In Hong Kong all the doctors and nurses know the costs and will tell you up front.

Assuming about 15% of the US economy is health care ($2 Trillion), a productivity gain of just 10% would save something like $200 Billion a year. That would pay for all of ObamaCare with money left over and no tax increases for anyone. It seems to me that malpractice reform, incentives to lower costs of drugs, and perhaps even work to improve administrative efficiency at clinics and hospitals could achieve this. Market forces require the private sector to drive efficiency (think Lasik). Why not health care?

Here's the view from my room at the hospital in Hong Kong. Not bad!

The Road to Serfdom

Hayek's writings are getting attention again - although you'd think the following would be obvious:

"We have a basic choice to make: either each of us chooses for ourselves (classical liberalism) or government chooses for us (or to put it otherwise, we all choose for each other)."

If the latter, the historical experience observed by Hayek in the 1930s is:

"Government allocation of economic resources led in the short run to budget deficits, in the medium run to inflation and monetizing the debt, and in the long run dictatorship that imposed a standard of values on society (and totalitarian impulses designed to brainwash people into to subordinating their own preferences to the preferences of the collective). A corollary is that when government allocates resources, rent-seeking and influence peddling become endemic to the system of trying to get your needs met rather than someone else’s."

We are seeing the problem now. The solution must be a trend to smaller government that is less likely to take away your choice.

Happy Chinese New Year!

Gung Hei Fat Choy as they say in Hong Kong! Time to pass out red packets for good luck, have some oranges, and look forward to the year of the Tiger!

Also a good time for some thoughts on various topics for the new year:

Whatever you say about Obama, he's cool. The concert the other night at the White House just oozed it. I like that.

Obama should meet with Dalai Lama and continue to support Taiwan's legitimate defense. US should be vocal about the reasons why. Perhaps tie it too lack of trust in China's support for a non-nuclear Iran. PRC will not respect US weakness. Only strength.

It's the policy stupid! American's are smarter than some people think. The problem with lefty policies isn't that they aren't explained well. The problem is that they stink. Intelligent, thinking Americans - like the majority of the Tea Party movement are wise to it.

Good luck to Bill Clinton. Good thing US health care and health care innovation is the best in the world.

Did you catch the news about Ms. Kissel the murderess in HK? She gets a re-trial but no sympathy. She had it all but murdered her banker husband anyway. She admitted to it as well. She is not a victim. She is a killer.

Go Go Goldman Sachs - great company in an important industry. Make no mistake: Investment Banks are part of the infrastructure that allocates capital efficiently. This is a pre-requisite for jobs and innovation. If Goldman's investors or customers have a problem with that, they can take their money elsewhere. Regulators need to ensure fairness without killing the engines prosperity.

When will unions start caring about the customers they serve? I've had to deal with unions in the New York recently and what a bunch of selfish cry babies. The best solution is simply to go where there are no unions. I can get stuff done at a fair price and timely fashion. This is good for everyone.

You know what? I support Michelle Obama's latest project American's are too fat. It's not healthy and it is bad for society as a whole. I wouldn't have branded it about child obesity - childhood nutrition is a better label I think - but the concept is good.

America needs to stop thinking we're so superior. I know a generation of Indian and Chinese students who will kick your ass academically and with hard work. Better still let them all immigrate to the US and become steeped in American values - a lot of them would help us kick global ass (in a good way too).

No Joe Biden you did not win Iraq. First of all, Iraqi's won it. Second it was Bush administration policy. The most you can say is that Obama kept Sec Def Gates.

An increase in jobless claims is not a reduction, even if the rate of increase of claims was lower.

Climate change is not the same as weather. Even if we don't know for certain if temperatures are going up or down or the degree of change caused by human activity, what we know for certain is that climate will change. Warming is probably better than cooling, since it leads to higher crop yields, more biomass, and has been the source of improvements in the human condition every time. But how to deal with change? One tried and true method is free-market capitalism. Works every time and doesn't require involuntary massive wealth changes. As for island nations such as the Maldives that might be under water? Well where were humans the last time the Maldives were underwater? Not there anyway. Or if you want to build where there is land below sea-level, hire some Dutch guys. They have 500 years experience.

Chavez, Mugabe, Stumpy in Iran, and all the apologists for same - I have no time for you. Your incompetence speaks for itself.

As for Greece. What were you thinking? Nobody else in the Euro zone owes you anything. Issue some bonds, cut spending, and raise the retirement age.

Does anyone know what 5th amendment (i.e. Miranda) rights exist prior to entering the USA, i.e. before you get past the immigration officer? Is it different for US citizens vs. visitors? I suspect there aren't any such rights until after you get through to baggage claim, although while on a US flag carrier (e.g. the flight) you might have such rights.

Sarah Palin: nice notes. At least you don't need a teleprompter to talk! No different than David Letterman's little blue note cards.

And what evidence that Obama and team are so "smart"? Articulate doesn't equal smart. Inability to deliver is evidence of not being very smart, well at least not very clever.

There you have it! Happy year of the Tiger everyone

So What Are My Qualifications To Comment Anyway?

I occasionally am asked what are my qualifications to pontificate on these various topics anyway? Well OK, here they are:

1) I have a PhD from UC Berkeley in Electrical Engineering, 1991

2) I have over a dozen peer reviewed articles in topics that include computer simulation, related physics, and comparison of simulation and experimental data (this has some relevance to climate change modeling for example). I have also authored several book chapters on working in a Japanese company, nanotechnology public policy and other topics.

3) I have worked for over 15 years in information technology for the financial sector. This provides insight for both fields and how they intersect.

4) I have lived in Japan for 16 years and now Hong Kong for nearly 2 and have travelled extensively throughout the region, including China and India.

5) I have run organizations with over 500 employees and budgets exceeding $200M

6) I have also worked in the pharmaceutical industry, consulting on IT as well as set up a a joint venture venture-capital funded research laboratory for a major global firm. I have some related experience as a free lance consultant and entrepreneur.

7) I have helped produce underground music parties in the depths of Shibuya and Roppongi, Japan. I have consulted for fashion industry in Japan as well (!)

7) I pay a s***load of taxes.

I am not: a lawyer, a practicing academic, nor am I particular good as a entrepreneur. There is a lot I don't know, but at least I am willing to admit that!

A Few Thoughts on Toyota

As a 17 year resident of Japan, I can see clearly the problem. Japanese culture is not good at transparency. It is the land of nuance and the unsaid. But that's no excuse. Japanese multinationals should know better when operating outside their backward. I've been telling this to Japanese leaders for a good part of that 17 years and I'm not the only one. The Japanese people are beginning to demand the same transparency as well.

Indeed in the financial sector in Japan regulators require immediate disclosure of issues. I've been there and the FSA doesn't tolerate even 24 hours delay. So why would Japanese car maker expect any differently in the USA.

In any case here's what should have happened:

1) immediate disclosure and recalls as soon as issue identified.

2) disclosure to appropriate regulators as soon as possible.

3) autonomy to the US corporate leadership to get the word out quickly. If you don't have the right person in the job or can't trust him (or her) - then get someone else?

But let's also keep things in perspective. Other car companies have also had these problems. Remember exploding gas tanks on the Pinto and accelerator problems on Audi's? There was a joke about not wanting to be between the two!

Also what if GM had a similar problem. Doesn't US ownership of GM present a conflict of interest with US regulators? Would the Dept. of Transportation response be as robust? Just asking!

Why Smaller Government is the Solution

The linked posts makes the good point that voters on both sides of the political spectrum are often ignorant of the issues, or more likely refuse to entertain data that doesn't support their preconceived notions. The solution is simple - don't allow bad decisions to cause harm - through smaller government with less power.

Let's expand on that though by working backwards:

Corruption leads to bad things - like shoddy construction and support services that result in a death toll in an earthquake that is much worse than it should have been - like Haiti.

Power Corrupts. The mad pursuit of power also leads to oppression, lies, and all kinds of things that are by definition evil. People suffer, live in poverty and die.

Big Governments are by definition more powerful than smaller ones. Quite simply, that's because a big government covers more and thus has a bigger impact on your life.

Big governments might be well intended: Here's a problem! Let's fix it by getting a bunch of people together to work on it! Good luck for us, we have a government of people all ready to help!

So what started off innocent leads to corruption and bad things.

So what's the alternative?

Let's keep it small - government should do only what is proven cannot be done by any other means.

Small government can't corrupt as easily.

Let's be careful something else doesn't get too big. Small government can set laws to ensure other things don't get too big - e.g. anti-trust in companies

Less power = less corruption = less evil. Don't be Evil means not being too big.

Now how are you going to vote next election? For Evil or not Evil? Here's a guide:

Not Evil requires a government that:

a) takes less taxes from everyone (including you)

b) passes less laws affecting you

c) can't give you something for nothing (because otherwise it took it from someone else)

d) doesn't tell you what to do so long as you're not hurting someone else.

By the way this isn't about political party. It is about whether you are contributing to evil or not. So are you going to vote for big government, higher taxes, nationalization of large sectors of the economy (e.g. ObamaCare) or not?

Actually ditto for companies - more companies competing with each other is better. Wal-Mart might be a counter example (bigger purchasing power to drive lower prices for more people) but Wal-Mart needs competition too. So do big pharma and large banks.

Less is More!

Air Travel - Can We All Just Chill Out?

I like flying. I really do. I like the sense of going somewhere. I marvel that just over a hundred years ago it wasn't possible at all. Less than 50 years ago it was out of reach of most. Now it is routine.

But it is amusing to watch people in airports. First of all, everyone can you please relax a bit? You will most likely get where you want to go with a minimum of fuss. The simple rules.

Yes the TSA and security check points are a hassle. I saw a guy who seemed a normal businessman try to take a bottle of water onto the plane. He complained to the screener who told him he couldn't. First of all, the screener isn't going to change his mind, and second - where have you been? If you want to complain find some terrorist and have a go at him. We can all help each other get through the line faster:

a) don't wear metal - you'll get through the metal detector faster (obvious right?)

b) put your liquids in the little plastic bags just like they tell you to do (obvious right?)

c) have your laptop computer out or don't bring one (obvious right?)

d) wear coat and shoes that are easy to take on and off (obvious right?)

e) have your documents, ID and boarding pass ready (obvious right?)

It's really not that hard - but you'd be surprised how many people can't get this right!

Airport staff have seen it all before. Remember they are in airports almost every day and have probably seen every possible passenger. You are not special.

The weather is not anyone's fault. Well if you believe in man-made global climate change, then actually maybe it is your fault for traveling and spreading that carbon footprint around in the first place, so double-no-complaining for you!

Do you really think you deserve an upgrade to business class? Business class fares pay for the rest of us in coach to fly cheaper. if you want business class well pony up and pay. These days the seat assignment is so good that there aren't many spare seats anyway. If you do get in-voluntarily upgraded enjoy it, but don't expect it!

If you can't read your seat assignment and line up when it is called, well I really feel sorry for you. But if you can, then why not just line up when asked? there will be room in the overhead bin for your carry-on and it'll go smoother for everyone if we all just board in order by row number. How hard is that? You can sit down until called.

And why the rush to get up at the gate before the seat belt sign goes off? The door doesn't open any sooner.

Parents - I feel for you, but now is the time to control your kids. For all those good parents out. Thank you! We appreciate it!

Couples who are fighting - get it together at least for the flight. Please for the rest of us?

And here are a few for the airlines:

If there is an entertainment system, could you please turn it on sooner? Why the huge wait between announcements and starting the system?

Do mobile phones really interfere with the airplane's sensitive electronics? If they did then planes would be falling out of the sky because I'm sure people forget all the time. No system that relies on all of us silly passengers doing the right thing all the time will ever work - but you knew that. Of course I'm thankful that nobody is yapping all the time so perhaps we can work out a compromise here.

If things do mess up, just give us some options. I know you can (and generally you do).

And here's a shout-out to everyone at Minneapolis/St.Paul Int'l Airport: Great Job! The other day I landed from Tokyo and from door opening to being at my connecting gate to a flight to Madison, Wisconsin took only 30 minutes! Immigration, Customs, Delta/Northwest agents - everyone was great. I've been flying to/from MSP for over 20 years and it's just about as efficient and friendly every time in all kinds of weather. The agents at gate F2 the day I was there were also very professional and good with passengers.

Happy flying!

More Unoriginal Health Care Thoughts

It strikes me that the health care debate is focused on entirely the wrong thing. Let's start with the goal: The best possible health care for everyone at an affordable price . What would achieve that? Here's some ideas in no particular order:

Drug innovation: It is only fair that inventors get compensated for their work to bring new ideas. In today's world, inventors aren't just individuals toiling away in solitude. Invention is often the collaboration of hundreds working together. In many cases this is a research lab: it might be a company, a university, a government institution or a combination of all of that. In all cases the scientists, engineers, and support need to get paid. Usually (mostly?) this is from the results of the innovation being sold to those who benefit. No difference for drugs. The innovation is protected through patents.

But here's the problem. In the current patent scheme in the US, a new chemical idea (a compound) must be protected from the time the inventor determines it might produce a drug, not when it actually is one. Once the patent is issued, it is valid for 17 years and the clock starts ticking. The rub is that it may take 10 or more years for the drug to pass the appropriate testing, clinical trials, and safety checks before it can be released to market. The inventory then has only a few years to make all the money back. What does this mean? higher costs in the short run.

So what if the patent protection were fixed (say 12 years from FDA approval?). I can see these benefits:

1) predictable time frame to recoup the investment in developing and testing the drug.

2) no incentive to rush clinical trials or any other part of the research needed for safety.

3) longer period to amortize the cost, which could result in lower cost even before the drug becomes generic.

Some simple rules could be put in place to prevent the discoverers from sitting on a compound too long, but the natural incentive of anyone I've ever worked with in pharma industry is to save lives. If the idea works, the researches want it out there.

Legal Reforms. Much has been said about the high cost of malpractice insurance and disincentives that it creates for doctors, especially in oby/gyn. How about limitations on liability that are clear and well understood by all? When you get on an airplane the contract for loss of life or limb is clear. Why not when you go to a doctor? How about this: if malpractice does happen the limitation is:

1) what you paid, plus court costs, plus

2) the cost of all future treatment resulting from the malpractice

3) if you can't work, reimbursement of you current wage for the rest of your natural working life (until the current Social Security standard retirement age).

4) plus punitive damages in case of negligence - some multiple - let's say 5 time the amount of (1) plus (2) above.

Incentives for improved process. What is the worst thing about health care for many people? Having to wait around is certainly up there. How do we fix that? Free markets by nature create efficiency. How about posting prices for everything up front. Ever ask a doctor about the fees? The doctor might not know! Now, if you get a better deal, you get something in return - perhaps points that you can redeem for lower cost insurance - i.e. you still get covered, you don't have to do anything, but if you can you benefit directly! what if everyone did that?

Care for those who cannot pay. Well the first thing would be a simple means test, but basically if the vast majority are covered it becomes easier to afford overheads to cover the rest. How to do this without people taking advantage? Well first, if you can't pay you wait if your condition is same as others. If it is really bad, OK maybe you go first - but if someday you are able to pay, you pay back that first. Charities cover people all the time at no cost to the taxpayer. . .I'm sure people have good ideas. If you want want to be a do-gooder softie at the rest of us taxpayers? Well let's say there are 15M in the US who really don't have insurance - this is based on data that of the 45M uninsured in the US, 15M don't want it (because they can afford it) and 15M are already eligible for Medicare so let's assume they get that. Just give the rest one time $2000 each of insurance for a year. That's $30B a year. Put a program in place to wean them off that over time. . .that's a lot less than $1.4T and doesn't change anything for anyone else.

How hard would it be to legislate this? Less than 100 pages? Would people understand it? Worth a try right?

How about the analogy: We offer food stamps to those who need them without changing how other people buy food.

If that's not good enough, well just look up alternative GOP proposals that have been out there over a year now. That's what the GOP means by start over. Obama should listen like he said he would.

A Look Back on My Jan 2009 Forecast

Every good prognosticator should go back once and a while and see how he did. At least if you have the guts! So here's what I said on the New Year's Day 2009 marked with ">" and in-line comments in "[]"

>Will 2009 be worse than 2008? I'll go out on a limb and say no it won't. Here are my reasons:

>1) As core commodity prices drop, especially energy, suddenly a lot of unprofitable businesses become profitable again. For example, airlines.

[Thing stayed low for a bit but not anymore as the China and other emerging markets continue to grow.]

>2) As much as the main-stream press wanted a recession on Bush's watch, the press is not going to let Obama and a Democratic congress suffer the same fate. There will be more economic cheerleading the minute there is any good news that can somehow be linked to an Obama policy (whether true or not).

[Well things have gotten worse, but certainly there was a lot of economic cheerleading initially. How many headlines have you seen that say something unexpectedly got worse, or where the lead of the article is an effort to find the silver lining in bad economic news. . .any positive that can be spun to say things will be better next week? more on that later]

>3) Obama's economic team isn't going to be as radical as some (including I) fear, and the Republican filibuster capability in the Senate as well as public disdain for bailouts, will throttle back some of what could have been excesses.

[Well got the filibuster bit wrong! I didn't think Franken had a chance! And it's not the Obama economic team that's matters at the moment but everyone else in the Obama administration who do seem to be fairly far left]

>4) Things weren't actually that bad - even jobless claims slumped much more than expected - 492,000 new unemployment claims last month vs. 586,000 the month before.

[Well that was true at the time, but it has gotten worse!]

>5) If so many think things will be bad in 2009, then chances are the opposite will happen.

[Got that wrong!]

>Will things be dicey? Sure. I'm not jumping in to buy stocks now. But soon there will be many buying opportunities. It could still go all pear-shaped, if for example Obama and Congress raise taxes, or print money to bailout UAW fat-cats. But here's hoping Obama actually wants a 2nd term. If he doesn't blow it, he might actually get that!

[Well that's the money quote! I was right about the stock market. You'd have made out like a bandit if you got in on the multiple buying opportunities. I also got it that if Obama and Congress pursue anti-growth policies, exactly as has happened, that the economy would go badly!]

Well there it is. I was too optimistic that Obama and Democrats in Congress wouldn't be complete economic illiterates. That'll teach me.

Health Care in Hong Kong

I happen to be undergoing some medical treatment in Hong Kong, which is an opportunity to share some observations.

Health care here is expensive, on par with the US. Equally, the quality is good. There are some 50 public hospitals and another dozen private institutions as well as many clinics serving this city of 7M people. Doctors are educated to international standards.

Service is remarkably efficient. Waits are short to non-existent. I had an appointment in days, and some follow-up tests on the weekend - most clinics are open Saturday morning and I have some further tests at a hospital on Sunday. Every single visit has been a clockwork of on-time efficiency. Even the waiting room magazines are new - not that I had time to read them!

It's also easy to pay. My insurance is based on reimbursement for initial visits. I know exactly what it costs, and can pay by credit card immediately after the visit. Equally, if you have an insurance card, you know exactly what is accepted at any clinic or hospital and they'll take that. This is a contrast from every clinic I've been in the US, even small ones, where they don't even know what the bill is after your visit.

Pharmacies are abundant, well stocked, and efficient.

The public health system also seems to be pretty good. Flu shots are widely available and there are public add campaigns for H1N1 prevention, in addition to all manner of general hygiene and the like. This is after all, a city that dealt with SARs not too long ago.

For fans of traditional medicine: Chinese medicine abounds. Of course that's not proven by double-blind clinical studies, but 5000 years of accumulated trial-and-error is worth at least a little bit.

There are criticisms of course. Is drug safety sufficient? Are hospital operational controls where they need to be? But from what I can see, it isn't much different than the same criticisms elsewhere, and it seems better than average - although it would be interesting to look at some hard data in this regard.

On balance there are reasons life expectancy here is in the 80 year range and among the best in the world. Quality health care must certainly be one of them.

One more thing: The system is nothing like nationalized health care Europe nor is it anything like Obamacare. It is arguably far superior.

Japan Fiscal Crisis?

Here is another doom and gloom article about how Japan is poised or a big crisis: Deflation to give way to hyper-inflation.

As a resident of Japan for 17 years before moving to Hong Kong, I find the story missing a few important points.

Despite Japan's high government debt to GDP ratio, there is still a lot of cash in Japan. Moreover, consumer debt is not nearly as high as other countries. In fact, it is quite difficult to get consumer debt. Housing prices have also risen to the point where market value and mortgages are now back to about where they should be.

Much has also been said about whether the DPJ, who wrested power away from the LDP last year will change anything. Probably not, but there are glimmers of differences. For one, a scandal involving kickbacks to the tune of $400k to an assistant to one of the party leaders isn't taking him down. Not long ago, a few thousand bucks of graft was enough to cause chaos, at least in the press reports. But now it seems everyone is wise to the fact that everyone who was anyone in power was set up with some issue just so that the power brokers had something to use to take down the unruly. The voter isn't buying it anymore. That doesn't excuse what the assistant did, but it certainly isn't causing the government to cave.

(Update: DPJ is denying that there is any issue at all and going after the prosecutors to produce real evidence. Again, more challenge to the traditional powers by the new government. Government popularity has dropped from 71% to 48%, but that's still way better than LDP last several years. . .)

But here's the real point: Japan, Inc. remains terribly inefficient. All it has to do to muddle through (yet again) is to generate that much more productivity or efficiency gain in one a year to keep it all going. In other words, it isn't hard to free up the capital to get through the current fiscal problems. Taxes can stay roughly the same. Unemployment goes up or down a little bit. Civil servants keep their jobs. Salarymen for the most part go to work the next day. Students find work somehow. . .and everybody is happy.

The GDP doesn't grow. Japan doesn't become the #1 economy in the world. But then, nobody really wanted that anyway. If you really want to understand Japan, understand that basically they just want to be left alone.

Take a bath. Have some sake. Mind your manners. And all will be fine.

Mike Mayo Testimony On the Banking Crisis

CLSA Analyst and Managing Director Michael Mayo gives a brilliant 10 minute presentation to Congress on the root causes of the banking crises. He pulls no punches and takes on all sides.

The industry was "on steroids" with consumers, government and regulators all guilty. His list of 10 issues, with root causes going back at least 10 years:

1) Excessive Loan Growth (more than 2x GDP)

2) Higher yielding assets (too good to be true?)

3) Too many eggs in one basket (real estate)

4) High balance sheet leverage (10x to 40x over the last 20 years)

5) Risky exotic banking products (like a bad Sangria - you don't know what's in it even after the hangover)

6) Consumers went along (false illusion or prosperity leading to risky borrowing)

7) Accounting changes that allowed reserves to fall (1.8% to 1.2%)

8) Regulators allowing FDIC deposit insurance without premium payments (like paying your life insurance only after you die)

9) Government facilitated allocation of capital to risky borrowers (Fannie and Freddie anyone?)

10) Incentives (compensation is consistent with revenue but not with risk)

At the end Mr. Mayo commented that the crisis was primarily one of not enough capitalism, correctly regulated. Hear Hear. While liquidity must be preserved, bad choices must be met with the consequences - i.e. companies must be allowed to fail.

Even if you disagree with what he said, you have to respect the presentation. Beyond that, you have to respect the decade of research Mr. Mayo has presented. There is a reason he is ranked #1 in his field.

Sure Pat Robinson is wrong - but the FT is just lazy

The FT article is just lazy. Others have highlighted that Pat Robertson is both wrong on history and on what the Bible says about God's will on earth. But the FT reporter failed to check that at the very same time Pat Robertson was also appealing for donations for Haiti.

As for Rush Limbaugh - just check his website and transcript for the full context. At no time did he say not to donate to Haiti. Indeed, other of Rush's comments were about how if the US takes away the tax deduction for charitable donations the ability of American's to contribute will be diminished.

As for the basket case that is Haiti? Predictably there are those who will try to blame everything but the real issues (e.g. Bush, capitalism, the UN, the US generally. . .and even the failure of the Copenhagen climate summit).

The main problem is corruption. Haiti remains one of the most corrupt countries in the world.

Should wealthy nations help? Yes. Should the US do what it can to get aid to those who need it? Of course.

Should the US right be blamed for trying to block such assistance? Of course not. At least not based on the facts of what conservative opinion leaders are actually saying and doing.

Latest US Unemployment - Not Good

Ed Morrissey at HotAir has the details (linked to title), but bottom line is that US employment picture is not improving and even the AP finally has to admit it. The 10% rate is only part of the picture. Hundreds of thousands are taking themselves out of the work force. The actual number of jobs has dropped by 10 million in the last year. The average time out of work is now 29 weeks. That's more than 6 months. And that's the AVERAGE. How long can you go with no income?

Here's even worse news: The only job growth has been in government and to a lesser extent healthcare. That means the private sector, the true engine of growth, is NOT improving.

That's just the data - now to assign blame: Democrats in US government and ANYONE who supported them in any election in at least the last 3 years. Why? With control of Congress for the last 3 years, and now the White House and a filibuster proof majority in the Senate, the political buck stops there.

To recap the failed policies and policy direction:

1) Community Reinvestment Act and failure to reign in Fannie Mae and Freddy Mac policies: These lead to irresponsible lending practices, translated as lending to people, for political reasons, who are unlikely to repay. This is the true root cause of the sum-prime debacle.

2) Stimulus package that was politically driven (pork) not economically driven (get money in the economy quickly)

3) Failure to consider further tax cuts: Even worse, taxes will increase soon as the AMT has not be re-adjusted, the Bush tax cuts will expire, and as various US States scramble for revenue to stay afloat.

4) Flawed health care "reform" program and opaque political process: The key issue here is that the broad private sector has no choice but to assume this will raise both costs and taxes. This results in a "hunker-down" mentality, meaning no hiring.

5) Take overs instead of letting markets run: Case in point GM. For a good counter-example, Ford is doing much better.

6) Failure to take the War on Terror seriously (and yes that's what it is): Why is this important? It goes to whether the private sector and Americans generally view government as competent. Without a sense that things are going in the right direction, consumers are less likely to open their wallets and private sector employers are again less likely to hire.

7) Focus on Climate Change: Guess what? The vast majority do not believe this is a priority issue, and certainly do not think that the act of breathing (by which I mean expelling CO2 into the air) cause it. Again, Failure of government to focus on economic fundamentals is a root cause of the problem.

To put an Asia view on this, the total number of jobs lost in the US since January is nearly the total population of Hong Kong and Singapore combined! As for the rest of Asia, China is growing at 8%, India nearly as much. Again, those governments are moving as quickly as they can to far more free market and transparent approaches as possible. Even China, with all its command and control mindset at least had a stimulus program that put money into the economy quickly!

Now as for all you who voted for Democrats. WHAT WERE YOU THINKING? Did you honestly believe the people you voted for have policies that are good for the economy? Do you still think that? What facts do you base those views on? I'm not saying you have to believe Republicans or anyone else for that matter. But please. Free markets, lower taxes, smaller government, less (but balanced) regulation, works every time. It'll also keep the government out of your bedroom, your church, and other things you deserve the right to control yourself.

Don't tread on me.

Happy 2010 (?)

So it remains to be seen whether 2010 will be better than 2009. This will depend a lot on how you define "better". But let's start with our economic stats:

Item                Jan07  4Oct08 31Dec08 31Jul09  31Dec09
Unemployment        4.5%    6.1%   6.7%    9.5%     10.0%
CPI (with energy)   2.0%    5.5%   -1.7%   0.7%     1.8%
Gasoline cost/gal.  $2.25   $3.60  $1.66   $2.60    $2.61
Dow Jones           12,500  10,325 8,776   9,171    10,365
S&P500              1,450   1,099  903     987      1,110
Nasdaq              2,500   1,947  1,577   1,978    1,858

The only bright spot is that the equity markets are back to where they were in October 2008. If you had the stomach for it, and the cash on hand, you could have done quite will from the lows last March with many US markets having their best run since the 30s. You'd have done even better if you put your money in the Hong Kong Hang Seng index, which is up over 80% this year (and has no currency risk vs. the USD by the way). You'd have done even better if you held on to Credit Suisse stock (a former employer of mine), which is up over 100%!

But that doesn't help if you are unemployed. Jobless recovery anyone? Some 21.2M Americans were out of work at some point during 2009. There are also indications that a lot of job seekers simply gave up and are not in the statistics.

So what happened to all that stimulus, cash for clunkers, etc.? TARP arguably had a positive impact on liquidity that is essential for the banking system. Keynesian stimulus, however, did what it always does, which is hardly anything. First of all, it was badly executed: most of the money is not yet in the economy! Second, the initiatives that did proceed created nothing sustainable. Cash for clunkers was a blip. Bailouts of GM have done nothing except line union wallets and generate more requests for money (another $3.9B just this week).

What should have been done? How about immediate tax breaks or deferrals to get the money directly into the hands of consumers, who will first pay down debt, and then start shopping a bit. I'd even go so far as to suggest that activity would generate new tax revenue - at least more than is being generated now!

So what hope for 2010? The economy will no doubt pick up a bit, but I don't see anyone suggesting it will roar back. If anything there is a bit of a bubble in the stock market. Certainly trends towards higher taxes don't help, which brings me to the health care debacle.

How can anyone believe that the health care legislation in congress now will help anything? By all accounts (and it is hard to know exactly what is in these bills) ObamaCare will reduce quality, increase costs, and most certainly raise taxes. How does this help anyone? It drives the cynical view that it isn't about health care, but rather increasing government power over individual choice. For that reason it must be stopped.

At least ClimateGate, defined as the willful falsification of climate data and coordinated suppression of contradictory research by "scientists" with a political agenda in favor of anthropogenic climate change, has slowed down the rush to crush the global economy with bad economics. Even if we agree that climate is changing, the best way to deal with it is not massive wealth transfers controlled by bureaucrats at trans-national agencies. The only tried, true and tested method of adapting to change on a massive scale is the power of free markets, free trade supported by property rights and rule of law. If we had more of that in Zimbabwe, Venezuela, North Korea, most of the rest of the mid-east and Africa - there wouldn't be any problem. China and India get this, as evidenced by their actions at Copenhagen.

By the way, China's economy is growing at about 8%. The stimulus implemented there actually seems to work, but most of the activity is driven by trade and entrepreneurship. Ditto India!

And how about Obama's performance? Well certainly no better than my last post. Most would say worse (just look at the polls). And why not. Obama is the least qualified US president of my lifetime. Even Carter had been a state governor and had military experience. It's not even clear that Obama is that smart. After all, has anyone seen his college grades? Are his books any better than say Palin's (and any less ghostwritten)? B+ isn't even close. D- is more like it, even by the criteria set by the left wing of his own party (Gitmo anyone?) - as for the things that matter to most Americans like jobs, security, and how about choice in health care - well again the polls speak for themselves.

As for foreign policy - the US is now officially a laughing stock. Nobody takes the US seriously. Obama is not seen as credible nor consistent. This leads to perceptions of weakness. At best Obama can be ignored. Worse, the US can be sidelined from the discussion. Is there really anything more to say other than where is Hillary?

At least Iraq is a win! Bummer Afghanistan though. At least the dithering on that decision is over.

So what's this all mean for 2010? Probably not a Republican sweep in Congress. . .but it doesn't create cause for optimism. Best I can wish everyone is that personally things go well and that the undy-bombers are not on your flight. So happy 2010, such as you can!