This seems obvious.

I was listening to the Sunday Papers on WGN radio this morning and heard a fascinating segment about the lack of energy efficiency by the industrial sector, including power companies, in the U.S. The guests were a father and son whom run an energy efficiency company here is Illinois. http://www.recycled-energy.com/ In just a half hour they pointed out some of the most obvious examples of wasted energy in our system. I strongly encourage you to request a transcript or audio archive of their segment this morning. If that is not possible, they probably have all of the same information on their website. They said they took a 60 year old silicon factory in West Virginia that uses heat to melt quartz then let the heat release into the air; but instead of releasing the heat, they hooked it to an electrical generator and now they can sell the electricity to the public for less than the local utility. We need to craft the tax laws to encourage this type of behavior.

Another example I would like to point out is in our current electricity generating plants. There is a coal burning power plant in the heart of the city of Chicago, the Pilsen plant. When I lived in that neighborhood I looked out the window and saw “excess” steam coming out of the smoke stack/cooling tower when at the very same time my landlord is creating new steam in the boiler in the basement by burning natural gas. So we have one entity throwing away the exact same source of energy within blocks of another one creating it. This is lunacy! We need to capture this lost energy (steam/heat) from the power plant and sell it to the neighborhood to heat the homes and hot water. The only entity that loses out is the gas company but people will still need the gas for their dryers and stoves.

Other countries are doing this. The guys on the radio show gave a great example of a city in Europe. This helps the environment and the economy. The overall economy loses any time there is waste. Maybe one entity gains, in this case the gas company, but the overall economy loses. We need to move beyond just incentivizing windows and insulation in the homes and address the big issue of waste at the industrial level. We should be attempting to capture every bit of energy created to improve the economy as well as the environment, thereby improving the quality of life for everyone.

Upcoming crises.

Below is some info on healthcare costs in the US. Many people believe we have the best healthcare system in the world. I'm not sure why they think that but I don't think they've done much research. The only comprehensive study was done by the WHO in 2000 and the US ranked 37th just above Cuba. Our life expectancy and infant mortality numbers are terrible compared to other developed nations. And it goes without saying that our coverage in relation to the countries with "universal" healthcare is awful. The best part is that we pay a higher amount per capita and as a percentage of GDP for this terrible program than all the other countries. In fact, we almost pay double. As you will read below, most of the money is wasted on the incredible administrative costs that go into having hundreds of companies providing services and insurance. Why do companies in the same industry merge, because it saves on administrative costs. I've read that there is far less admin costs in the government run Medicare program than in virtually every private run organization. Plus the larger the organization the more it can lean on providers and vendors for lower prices. It's called economies of scale. Ask Wal-Mart if it works. I also think the system that creates and certifies the medical professionals is basically a cartel that limits supply of professionals to inflate wages which translates into higher costs. If it were a free market system then anyone could get into school and if you are smart enough to pass the fairly administered exams/boards/whatever, you would become a doctor.

My prediction is that as costs rise more companies will drop benefits (especially in a recession) causing more uninsured who will continue to show up at ERs and not pay. These costs will be passed on to the people who are insured through higher premiums which will cause more companies to cut benefits which causes more uninsured and the cycle will continue. Eventually, 10-20 years, there will be 100 million plus uninsured who will vote in reps that are friendly to the idea of "universal" healthcare. The government will buyout the private providers. Now keep in mind that no one seems to have a problem with "socialized" "national" public schools, police, fire departments, sanitation, military, etc but a basic need like healthcare is a taboo subject when it comes to nationalization. Once the government buys out the private hospitals and insurance companies comes the big question mark, can the program be run efficiently (even more so than Medicare) with the government laying off all the redundant admin personnel, lean on suppliers for lower cost services, reduce pay to doctors, do away with malpractice lawsuits, and ultimately drive costs down to about 10% of GDP where they belong? This last question is what all the righties think is impossible but the private sector has clearly shown that it is not up to the job so why not give the other option that has been shown successful in other countries a chance. It would at least be nice to have the conversation and get the real numbers out in the open for everyone to see without ridiculous amounts of spin put on them. One thing is for sure, the current path is completely unsustainable and the system will eventually collapse if nothing is done just like the financial system collapse we are experiencing now. Good luck!

Facts on the Cost of Health Insurance and Health Care

Introduction

By several measures, health care spending continues to rise at a rapid rate and forcing businesses and families to cut back on operations and household expenses respectively.

In 2008, total national health expenditures were expected to rise 6.9 percent -- two times the rate of inflation.¹ Total spending was $2.4 TRILLION in 2007, or $7900 per person1. Total health care spending represented 17 percent of the gross domestic product (GDP).

U.S. health care spending is expected to increase at similar levels for the next decade reaching $4.3 TRILLION in 2017, or 20 percent of GDP.¹

In 2008, employer health insurance premiums increased by 5.0 percent – two times the rate of inflation. The annual premium for an employer health plan covering a family of four averaged nearly $12,700. The annual premium for single coverage averaged over $4,700.²

Experts agree that our health care system is riddled with inefficiencies, excessive administrative expenses, inflated prices, poor management, and inappropriate care, waste and fraud. These problems significantly increase the cost of medical care and health insurance for employers and workers and affect the security of families.

National Health Care Spending

• In 2008, health care spending in the United States reached $2.4 trillion, and was projected to reach $3.1 trillion in 2012.1 Health care spending is projected to reach $4.3 trillion by 2016.¹
• Health care spending is 4.3 times the amount spent on national defense.³
• In 2008, the United States will spend 17 percent of its gross domestic product (GDP) on health care. It is projected that the percentage will reach 20 percent by 2017.¹
• Although nearly 46 million Americans are uninsured, the United States spends more on health care than other industrialized nations, and those countries provide health insurance to all their citizens.³
• Health care spending accounted for 10.9 percent of the GDP in Switzerland, 10.7 percent in Germany, 9.7 percent in Canada and 9.5 percent in France, according to the Organization for Economic Cooperation and Development.⁴

Employer and Employee Health Insurance Costs

• Premiums for employer-based health insurance rose by 5.0 percent in 2008. In 2007, small employers saw their premiums, on average, increase 5.5 percent. Firms with less than 24 workers, experienced an increase of 6.8 percent.²
• The annual premium that a health insurer charges an employer for a health plan covering a family of four averaged $12,700 in 2008. Workers contributed nearly $3,400, or 12 percent more than they did in 2007.² The annual premiums for family coverage significantly eclipsed the gross earnings for a full-time, minimum-wage worker ($10,712).
• Workers are now paying $1,600 more in premiums annually for family coverage than they did in 1999.²
• Since 1999, employment-based health insurance premiums have increased 120 percent, compared to cumulative inflation of 44 percent and cumulative wage growth of 29 percent during the same period.²
• Health insurance expenses are the fastest growing cost component for employers. Unless something changes dramatically, health insurance costs will overtake profits by the end of 2008.⁵
• According to the Kaiser Family Foundation and the Health Research and Educational Trust, premiums for employer-sponsored health insurance in the United States have been rising four times faster on average than workers’ earnings since 1999.²
• The average employee contribution to company-provided health insurance has increased more than 120 percent since 2000. Average out-of-pocket costs for deductibles, co-payments for medications, and co-insurance for physician and hospital visits rose 115 percent during the same period.⁶
• The percentage of Americans under age 65 whose family-level, out-of-pocket spending for health care, including health insurance, that exceeds $2,000 a year, rose from 37.3 percent in 1996 to 43.1 percent in 2003 – a 16 percent increase.⁷

The Impact of Rising Health Care Costs

• National surveys show that the primary reason people are uninsured is the high cost of health insurance coverage.²
• Economists have found that rising health care costs correlate to drops in health insurance coverage.⁸
• A recent study by Harvard University researchers found that the average out-of-pocket medical debt for those who filed for bankruptcy was $12,000. The study noted that 68 percent of those who filed for bankruptcy had health insurance. In addition, the study found that 50 percent of all bankruptcy filings were partly the result of medical expenses.⁹ Every 30 seconds in the United States someone files for bankruptcy in the aftermath of a serious health problem.
• A new survey shows that more than 25 percent said that housing problems resulted from medical debt, including the inability to make rent or mortgage payments and the development of bad credit ratings.¹⁰
• About 1.5 million families lose their homes to foreclosure every year due to unaffordable medical costs. ¹¹
• A survey of Iowa consumers found that in order to cope with rising health insurance costs, 86 percent said they had cut back on how much they could save, and 44 percent said that they have cut back on food and heating expenses.¹²
• Retiring elderly couples will need $250,000 in savings just to pay for the most basic medical coverage.¹³ Many experts believe that this figure is conservative and that $300,000 may be a more realistic number.
• According to a recent report, the United States has $480 billion in excess spending each year in comparison to Western European nations that have universal health insurance coverage. The costs are mainly associated with excess administrative costs and poorer quality of care.¹⁴
• The United States spends six times more per capita on the administration of the health care system than its peer Western European nations.¹⁴

Time for Action on Reining in Health Care Costs

Policymakers and government officials agree that health care costs must be controlled. But they disagree on the best ways to address rapidly escalating health spending and health insurance premiums. Some favor price controls and imposing strict budgets on health care spending. Others believe free market competition is the best way to solve the problems. Public health advocates believe that if all Americans adopted healthy lifestyles, health care costs would decrease as people required less medical care.

There appears to be no agreement on a single solution to health care’s high price tag. Many approaches may be used to control costs. What we do know is if the rate of escalation in health care spending and health insurance premiums continues at current trends, the cost of inaction will severely affect employer’s bottom lines and consumer’s pocketbooks.

Good short about the problems of our economy.

http://www.youtube.com/watch?v=woPGroHWdmg&feature=related

Pics from Outside the Obama Election Night Rally

These are some pictures I took outside of the Obama rally. I didn't get tickets to go into the main rally and I didn't want to watch on the jumbotron at the other rally so I took in the atmosphere and got the hell out. After he won Ohio the people started streaming into the park like Union Station at the end of a work day. I'm usually fine with crowds but this one was a little too much for me.

Now this is some serious debt.

This is a great eye-opening explanation of the level of debt our country has accumulated over the past couple decades. Talk about bubbles. Deleveraging is just a fancy way of saying that we are and need to continue to burst this bubble. The speed with which we do it will determine the length & depth of our recession. If people are paying off debt, they can't be using that money to buy goods. Less goods being bought, less profits, less need for employees, less income, less spending, and the cycle continues. Eventually only the well run, profitable businesses will be left and things will level off and then begin to rise but it will be a long ugly road. Make sure to watch the video and look at the chart at the bottom of the article.

http://finance.yahoo.com/tech-ticker/article/104704/What-Does-%27Deleveraging%27-Really-Mean-Cutting-Our-Addiction-to-Debt?tickers=^dji,^gspc,tlt,PTTAX,SHY,IEI

We need something.

I may not have liked the proposed bailout package but to vote it down and not have a back-up plan is like going to war and not having an exit strategy. Nobody wins. The down vote today cost the taxpayers more in market losses, though unrealized for the smart ones, than the damn "bailout" would cost. I don't think the general public understands 1) how expensive the plan truly will turn out to be (less than $750 bil.) and 2) the repercussions for doing nothing. It has been a long time since our country has had a financial system crisis like this. I don't believe these people who are calling on their Reps to vote against these "rescue" plans realize that helping the stupid firms (I emphasize stupid because they did screw up big) will help them. Most people can't pay cash for their homes, college tution, cars, small business ventures, etc. If we don't help the banks spending will dry up and the economy will shrink significantly more than it is already going to. I fully believe that if we just let the free market work itself out, we will see double digit unemployment. People think it hurts now and we are only at 6.1%! Passing this bill or something similar is necessary to stop the momentum of a bad situation getting worse. The whole system is so interconnected that now each failure inevitably leads to another. Putting the money into the system won't prevent all future losses but it will at least give us a chance to stabilize for the short-term (6 months) and possibly start growing again later next year. I just don't know how this fragile system will fair if everyone runs on all the banks.

Luckily, I believe that Congress will get together on Thursday and hopefully pass some smaller, potentially less expensive measures to help shore things up on a piecemeal basis. They can start with an idea I've heard about increasing FDIC insurance caps to at least $200k per person. This will help offset the huge problem of money flowing out of banks and into T-bills and money market funds. We need banks to make the system work and banks need deposits/capital to operate. Since the government now guarantees money market funds, any person or business over the FDIC limit who has cash in a poor performing bank will pull out their cash and put it in a money market fund. And justifiably so. So increasing the limit will certainly help to some degree. Probably most important of all, if banks don't have the money they need to make mortgage loans than prices of homes will continue to drop and our economy will absolutely not turn around until housing prices stabilize. It is a tall order but it is possible to get out of this mess without falling into recession of greater than a year but it will take smart and bold moves by Congress at this point to make it happen. The Fed and Treasury have done pretty much all they can without a new law being passed.

Enough.

I have to say that I'm getting sick of these Republican entitlement programs. Every time you turn around these yahoos are giving away taxpayer money to people who are lazy and just don't want to work hard to make a go of it. And of course these actions have the negative consequence of reinforcing such poor behavior. I'm speaking of course about the bailouts that the government is handing to these banks because of the greed and stupidity of their managements. Or are they just greedy and not stupid at all? After all, most of the top management made enough money during the boom times of the past 5 years so that even if their companies get taken over or out and they get canned, they will have enough money in good investments (not their own stock) to live the rest of their lives on the investment income. Because as we all know, once they've made it they don't have to give it back just because their actions caused the company to go under. It's a one way street.

Obviously, my first statement was sort of tongue in cheek reversing the typical shots at Democratic sponsored entitlements but the extent of this bailout is ridiculous and it reeks of politics. Now I'm not one of these crazy pure capitalist Larry Kudlow types but there are serious and long lasting ramifications of bailouts of this size. What was wrong with bailouts on a case by case basis? Now all of the big banks are likely going to survive. The only message the government is sending is that public companies should do everything in their power to grow their business to get to the ultimate goal of earning the label "too big to fail." Once that happens you're gold. You get all the profits without the worry of catastrophic loss. So what incentive is there now to stop the current management practice of maximizing profits for the short-term to benefit current management at the expense of future profits and long-term shareholders? The fear of institutional investors voting out current board members? That happens so infrequently that it is news every time it does happen. Some of us have seen the voting processes for mutual funds and know it is a joke.

The system is so broken right now I wouldn't even know where to start to fix it. The basic idea of capitalism is outstanding but somewhere along the line the incentive structure fell apart. Especially for firms in the financial services industry. Virtually no management of a large public company has a meaningful ownership interest in the company they manage. The only incentive is to maximize their own compensation which is in direct conflict of the owners' goal of maximum profit. It is actually very similar to how the government operates. Ultimately the problem needs to be addressed by the owners' of the firms or at least those who control the voting rights of the owners, which are usually institutional money managers. But again there is no incentive structure for that person to make decisions based on long-term results because they are rewarded on short-term metrics as well.

It is clear that pure capitalism (with little or no regulation) doesn't work for our society. We love the boom times it produces when everybody is doing anything possible to make that next dime but nobody seems to have the stomach for the inevitable bust that comes from the overzealous pursuit of riches. And the financial system clearly cannot handle such extreme boom/bust volatility as demonstrated by these new bailouts. Why is there such bi-partisan support for this huge bailout but not for pre-emptive regulation to tamper the boom periods? I have an idea and it has something to do with buying votes and trying to save face in this current instance. And where the hell is this "invisible hand of the market" that is suppose to reward good behavior and punish bad to prevent market participants from repeating past failures? The government performed virtually the exact same type of bailout during the Savings & Loan Crisis less than 20 years ago. I guess the invisible hand disappeared. (C'mon, that was funny.) It is a shame that the government has to step in to create regulation to force people to make good choices but it is clear that the supposed "best and brightest" on Wall Street are incapable of doing it themselves.