Tuesday, November 18, 2008

Five bucks with change to spare

Five dollars. That's not much money. You can barely get a good lunch these days for $5. But, do you know what you can get? One share each of GM and Ford stock, and you'd have 23 cents left over. It's unbelievable. The CEOs of the 3 U.S. automakers were on Capitol Hill today and took a grilling from the Senate. They stammered on their defense of why they need a $25 billion dollar bail-out. Chris Dodd pretty much summarized the sentiment many including myself are feeling about this issue:

The industry is "seeking treatments for wounds that I believe to a large extent were self-inflicted, but at a time like this, when our economic future is so tenuous, we must do all we can to ensure stability."

I watched some of the testimony. They had a PhD economist, Peter Morici, testify as well, and it was somewhat amusing to watch him directly rebut the promises that the CEOs were making in regards in becoming profitable in the very near future and being able to pay back the "loan". He cited that only Chrysler was even close to meeting the quality and efficiency standards that Honda and Toyota have in place, as rated by an independent quality assessment firm. Plus, he stated even with major job cuts in an attempt to improve their bottom line, the amount in pension benefits (about $105,000 per employee) that would need to be paid out will cripple their profit margins.

I don't have the annual balance sheets of these automakers (nor do I want them), but I will say that during the whole bull market run from 2003-2007, Ford and GM shares were flat/declining throughout. That implies terrible management. Here's what I would do: While these companies dug their own graves, the ripple effects throughout the whole economy would be horrific if they went under. Therefore, I would give the companies the $25 billion, with the conditions that all 3 CEOs are fired, and new CEOs are hired with proven track records of running profitable companies that produced quality products.

Our economy, bailout or no bailout, is in big trouble. Even Harvard's endowment investments are getting pummeled, as their account has lost 30% of its value this year.

At least health care is safe right?


Read this article: Twenty percent of primary care doctors said they will cut back on patients seen, 10% said they will work only part-time, 11% plan to retire, and 13% are planning on finding jobs that don't involve patient care. Why is this bad? Because there is already a shortage of primary care doctors, and 67% of physicians surveys said they are working at full capacity or are overextended and overworked as it is. Oh, and 60% said they would not recommend medicine as a career. This is troubling, but understandable given what is going on in medicine these days. The demands for keeping up on the latest medical information, trying to manage elderly patients with multiple comorbidities, doing paperwork and fighting claims with insurance companies, and so on are just too much to handle for primary care physicians. That's why a job at a VA hospital is the way to go!

At least rich people in Santa Barbara are doing well. WRONG! More than 210 homes, including many multi-million dollar mansions have been destroyed by the wildfires. Worse yet, evidence is pointing to a bonfire started by 10 college students as the culprit. It's ashame, not only for the homeowners who probably lost priceless memorabilia in the fires, but also because of the added economic stress. California has already spent $305 million on emergency firefighting since July 1st, only $236 million more than was budgeted, and the state has a deficit of $11.2 billion.

Ok, that's enough of this Debbie Downer session. Have a good night!


Jeanette said...

Not only are primary care physicians leaving primary care but medical students are not going into primary care. National numbers are down by over 50% of students choosing a career in Internal Medicine. At a Yale, the Chair of the Dept of Medicine hosts all the people going into medicine over to his house for dinner. There were only 22 people there out of over 150 people. Additionally, Chase clinic, one of only three clinics in Waterbury that accepts state insurance and payment plans, is no longer accepting new patients for an indefinate period of time. This is a crisis and something needs to be done about it. There was even a recent NY times article that said even vets are having trouble getting PC docs at the VA because of incredibly long wait times.

kath said...

Health care is too hefty a topic for me to tackle, esp since I didn't choose primary care. Although, I will say that even in a subspecialty clinic, you take on more of the primary care responsibilities b/c patients can't get to see their PC docs for so long at the VA

As for the bailouts upon bailouts, I don't understand where we draw the line. It's true, this economic crisis is global and far-reaching. But with so many of these large corporations running into trouble, we can't help them all. And frankly, this is the realm where the free markets only judge the fate of these companies. I am very disappointed for all these bailouts. I'm sorry for the employees who would be punished by their employers' poor mgmt but I don't see how we can cont to bail them all out...esp the US automakers. They have been greedy and short-sighted for decades with no vision for the future. We should allow economic Darwinism play itself out.

Cocameister said...

In general, I agree with the economic Darwinism concept, and we should just let it play out. Everything you said is correct (i.e., we can't help everybody and it was their fault). The only reason why I even suggest a bailout/loan is for the greater good and possible net effect. And those companies and CEOs should be punished for their follies.

However, in reality, $25 billion is a drop in the bucket compared to what we have spent fighting in Iraq! Imagine if we still had those trillions of dollars so we could tackle more domestic issues!

Will said...

Part of the primary care solution may be that people don't need pimary care 'docs' and can do fine w/ an NP or PA. Some patients feel like they're being short-changed, some don't care and some might prefer a 'mid-level' if it meant quicker referral to specialty care. Because we all know those nephrologists can fix anything.

Don said...

I prefer phrenologists, myself.

kath said...

I'm sure noone cares about this but I can't help myself...In the words of a very eloquent colleague, OH MY F$#!ING SH*T! THE NEW GNR IS COMING OUT ON SUNDAY, SUNDAY, SUNDAY! I've heard 10 songs from it already. Took a while to warm up to it but it's grown on me. Axl alone does not GNR make, sadly.

So I doubt anyone on the blog does care about it, but in the spirit of easing economic hardship, you can get a free Dr. Pepper b/c the album is actually coming out this year! Apparantly Dr. Pepper promised this and you can get a voucher thru their website for those first 24h.


Jeanette said...

I know this has nothing to do with GNR but for those of you interested in the healthcare crisis...
Here is Senator Baucus' white paper calling for healthcare reform released last week and a white paper released by the ACP (which is very much in line with Senator Baucus' sentiments). Both very interesting if you ask me.

Baucus: http://finance.senate.gov/healthreform2009/home.html

ACP: http://www.acponline.org/advocacy/where_we_stand/policy/primary_shortage.pdf