October 30, 2008 – 10:37 pm
It is a well known fact that most if not all asset bubbles are characterized by significant speculative investment activity (and by this I mean investors with very short investment timeframes and expectations). And this was certainly true of the US housing market (and other overinflated housing markets globally) over the last few years. It’s impossible to know exactly how much of the housing market was driven by speculation, as no agency tracks this issue…and even if they tried, it’s impossible to verify someone’s intent. But I sit back and wonder if our society has gotten too lax on “personal accountability”.
I remember a top Los Angeles real estate agent telling me earlier this year about taking a client to go see a home about to go into foreclosure (the home had been an investment property) and being surprised when the owner’s assistant drove up in an expensive Mercedes with the home keys.
I wondered: if the loan is secured only by the home, it sounds like the owner may be “getting away with something wrong”. He handed his keys to the Bank since the home didn’t make investment sense anymore…but it sounds like he has more than enough money (likely profits from earlier more successful investments) put away for himself…so he will be fine even if his credit gets hit for a while.
And then today, a successful female executive told me what she had viewed as a ‘sign’ of the bubble: a few years ago her maid had purchased a 2nd home for investment purposes!
I’m not an expert on foreclosure law. But it does seem like a lot of people including many walking down Main Street, were unrealistic/foolish with their investments. And I’m not sure our laws and regulations have kept up….so that there is fairness and accountability in the system.
October 27, 2008 – 10:38 pm
2 women walk into a hospital with acute stomach pain. One is a highly paid lawyer at a top law firm who is covered by her company’s health insurance plan and the other is a working class American without health insurance. Both women get the exact same diagnostic tests and medical care, and both stay in the hospital for the exact same number of nights. Do the two women pay the same amount for the health care they consume (in total, including payments made by the insurance company on behalf of the lawyer who has health insurance)? Likely not, if the above happens in the USA.
Does this make any sense? I believe the answer is clearly no….and yet this unfair practice has been allowed to go on for decades….and is still going on today. The reason for this is that insurance companies in America directly negotiate “bulk pricing” directly with hospitals and other healthcare providers. This pricing is usually significantly lower than the “list price” of a product or service. However, when an individual (e.g., uninsured worker, foreign national, etc.) who is paying for their health care expenses out of pocket walks into a health care provider, they pay the “list price”. It’s ironic that this leads to price discrimination against the same (generally poorer) individuals who couldn’t afford health insurance in the first place.
So here’s a simple solution for ending health care price discrimination in America: Mandate that every hospital or health service provider can only charge uninsured individuals the average of the pricing they have negotiated with their health insurance companies. This would eliminate much pain and suffering….and right a basic wrong in our health care system today.
November 1, 2008 Update:
Today, I received an “Explanation of Benefits” Statement from my health insurance provider which I think proves my point above:
Service Date: October 16, 2008
Type of Service: Outpatient Services (a generic term to say this is for a minor outpatient procedure performed about 2 weeks ago)
Total Billed (to health insurance company): $5,665
Patient Savings: $4,767
Coinsurance Copayment Amount: $89.80
Claims Payment: $808.20
In other words, the total cost to the insured party (in this case me) and the insurance company was $898…or 16% of the amount billed. So we saved $4,767 for only one reason: we had the insurance company negotiating with the provider, auditing the bill etc.
October 24, 2008 – 10:40 pm
One of the fatal flaws of the Bush approach/policy framework that I would love to see Barack Obama change…is this idea that it is America’s job to spread Democracy around the world. As a student of Democracy and child of the largest Democracy in the world (India), I do believe in and love Democracy. However, just like Capitalism….Democracy, too, is a flawed, chaotic, and imperfect system and I just don’t think it’s America’s job to tell other countries what political system is best for them.
In fact from a purely theoretical standpoint, I believe a ‘benevolent autocracy’ is likely the best political system to help efficiently/quickly advance a society economically and socially. The only issue is, those benevolent/enlightened autocrats are really difficult (virtually impossible) to come by….and power corrupts, so this too is a slippery slope.
In any event, to get back to the original point of this blog….I believe America needs to officially change this stated policy of spreading Democracy….and focus primarily on spreading/ensuring basic human rights for every human being. Even if you disagree with my point on Democracy….I think most should agree safety comes before politics…and the problems the people of the world face in so many countries (including the Middle East) are still about safety.
Let’s work on the basics, and get to politics later.
October 21, 2008 – 10:45 pm
I was trying last night to have a mellow evening at home after a full day of work. The full day of work was quite an experience after spending 3 blissful months ‘Exploring my Zen’ (as I like to call it) following the collapse of Indymac during the Summer. So here I was…cuddling with my 2 freshly bathed (and good smelling) Great Dane’s Lara and Tank…watching TV. But what I saw on CNN shocked me.
It looked (from the multiple clips they showed) like many people (definitely way more than a handful) at Palin/McCain rallies were screaming rascist comments and the crowd was supporting them. This included statements like “Obama bin Ladin”, “Mohammed Husein Obama”, “Them Commies”…etc.
Could this really be going on in America, without bipartisan public denunciation? As I recall, McCain actually defended the people attending their rallies during the final presidential debate. Is this new, or do these conversations go on in this rough tone more regularly? I sure hope I see McCain or Palin step up and call this nastiness what it is – unacceptable in America.
On a broader note: We take things like equal protection under the law and non-discrimination so much for granted at least all the places I’ve lived in America which includes Universities (New Jersey), Cities (Los Angeles, Chicago), Companies (McKinsey, Indymac, and many Fortune 1000 clients served while at McKinsey), or just plain walking around (anywhere….from San Francisco to Michigan to Oregon to Dallas to Seattle to Arizona…the list goes on).
But none of these “now so obvious” modern principles of equality so clearly embodied in the US constitution came naturally to Americans, or really to most societies around the world. They (for the most part) had to be inflicted on the majority by the righteous/enlightened minority or the founders of the modern day states.
October 13, 2008 – 10:47 pm
One of the fundamental reforms that is nowhere to be seen on the horizon…that I believe is absolutely critical to addressing one of the key root causes of the current crisis of confidence in the global financial markets is the lack of any significant education on the topic of personal finances and money management in middle/high school and college curriculums worldwide, including in the US.
So here’s my idea Mr. Paulson and (hopefully future) President Obama: add a mandatory requirement that every middle school, high school, and college student in America get a basic education in how to think about personal finances (budgeting, money management, borrowing, net worth, financial ethics etc.). The long term benefits of such an addition to educational standards in the US and other countries would be invaluable.
I am regularly amazed by how little formal or informal education any of us receive (unless we have very diligent and focused parents with good personal financial habits…a rarity) on the topic of money. Yet, understanding money and making/managing it (in whatever quantities “work” for each individual) is critical for the achievement of personal success and happiness.
