First is this article about the extent to which the Chinese banks need to recapitalize and which banks have done what toward that end. The China theme has a lot of meat on the bone but it is complicated and as I have been saying all along (with no claim to originality) there will be bumps along the way.
If you have exposure to China through some sort of narrow fund or individual stock then you should know a little something about the loan growth in the last couple of years, their stimulus plan and the concerns that surround both. China may be showing signs of rolling over and if that is the case I would expect the banks, and maybe the insurance companies too, to feel it the most.
The concerns about lending in China and the newer news about Dubai should make you open to the possibility that the financial crisis may not be over, an opinion I have had all along, if you weren't already. I think going heavy in financials still offers a lot of the wrong kind of volatility and so I continue with simpler banks from Australia, Canada and Chile.
To the extent that this line of thinking makes sense to you then you probably want to avoid accessing China with most of the China ETFs or at least the most actively traded China ETFs like iShares China 25 (FXI) which is 46% financials, SPDR China ETF (GXC) and Claymore China All Share (YAO) each with 34%. A little more promising, in terms of being light in financial stocks might be the PowerSharers Dragon ETF (PGJ) at 7% financials and the Claymore China Small Cap ETF (HAO) with 14% in financials. I think a better way to go with ETFs though is with global industry funds with heavy China exposure, presuming you like the given industry or theme.
The other item was an article in Barron's about the healthcare mess currently underway. The article recaps a book about a guy who went to numerous countries for treatment for a bad shoulder. He got different suggestions in different countries ranging from big surgery in the US to "learn to live with it, mate" in the UK. Many other countries (the article made it seem like most countries) have the government involved with healthcare one way or another. It is my understanding that many of these countries also have private healthcare so that those with the financial means can bypass the public system when things take on an urgency that won't wait.My biggest beef with all of this has been the belief that the numbers being kicked around, in terms of dollars and number of people, will not work. I also fear they may be trying to fix what they think is a 30 something million people problem but may in fact only be a 20 million people problem. Re-working something that might, I say might, only affect 6-8% of the population could merit different tactics versus something affecting 12-13% of the population.
But something else has been bugging me and I wasn't sure what it was. The arguments about free market and doctors making as much as the market can bare certainly makes some sense but the criticisms about over-testing and over-litigating are valid too and again many other countries have some sort of government something or other and they are no worse off than the US even though they do have financial problems.
I am convinced that the math doesn't work but undecided about the stuff in the previous paragraph but the breakthrough I had on this, the thing that has been bugging me that I finally put my finger on is the period of transition from what we have now to what we appear to be headed toward. There would be an adjustment period and I think a lot of mistakes could be made and a lot of things botched logistically resulting in sick people falling through the cracks and dying while all the kinks get worked out.
As part of this transition period a person could get sick and it not be clear how the person is covered. Yes preexisting condition and no one canceled, yeah yeah I get it but some sort of mistake... I may have this all wrong but expecting a massive overhaul from one wildly flawed system to another to go smoothly is not a bet I would make.
11 comments:
The Innovator's Prescription by Clayton Christensen is a must read to cure health care. Govt must be a facilitator to change. For those uninsured today, we have medicare and the Vet Admin that could be extended. We need to expand high deductible plans with Health Savings Accounts, enable plans like Kaiser Permanente to grow, hospital to specialize care instead of serving everyone,
You are worried about people falling through the cracks as we transition to a new system and no doubt you are correct that there will be mistakes during the transition. However, how is that any different than today where people also fall through the cracks? Also, as a percent of GDP, the U.S. spends more than many developed countries, yet our life expectancy is not as long. Doesn't this imply that our system is not as efficient at the objective of extending healthy life spans as other countries? Finally, standing still while looking for the perfect option is not progress.
it is my contention that the falling through the cracks would be worse during a transition period than now. The current system is not brand new to everyone. Also I don't view moving to potentially the wrong solution as progress either.
Yes, the global financial system remains vulnerable and it's not the kind of volatility an investor should be looking for from a top down perspective. Some individual names continue to be interesting from a survivorship standpoint: They were beaten down but appear likely to not only recover but acquire more market share from their weaker peers.
WRT China I've put a bit into HAO to help me analyze it (guarantees I'm alerted to all reports, etc.) and, so far, it seems to be tracking well. No major surprises IAC. I may do the same for its new mid/big-cap companion, TAO
As far as health reform goes, skepticism regarding CBO budgetary projections appears to largely be a function of world view but as an empirical matter there is no standard medical record form in the US and very few domestic medical providers have digitized their records much less made them electronically transmissable to other providers so the number of screwed up "transitions" here is already legendary; e.g., generating a whole new series of tests and records (and costs) after moving to a different provider is not uncommon.
AFAIK all the reform bills under debate attempt to standardize medical records but, whatever happens, it is going to generate screwups of some kind (no bet there). Unfortunately we are passed the point where the screwups we know are better than the screwups we don't know: As Bob Dole commented awhile back, killing the Clinton health reform bill was a mistake (http://tinyurl.com/lc3xqp); instead of being fifteen years down the road to ironing out the worst wrinkles of an existing system we're once again speculating and arguing about wrinkles that might or might not appear in a program that doesn't exist yet.
Ever have one of those dreams where you are running, running from something bad and not getting anywhere? Yeah, me too.
Under the present system the lawyers say that we need to have the ability to sue in order to keep the doctors from making mistakes.
Under a government controlled system what recourse will we have ?
Wouldn't it be better to put limitations on legal lawsuit awards and keep the present system with some tweaks added with the resulting money saved ?
A recent study found that a major reason why the medical system is not computerized is that it would lead to more lawsuits because every step and decision could be easily second guessed in hindsight.
"expecting a massive overhaul from one wildly flawed system to another to go smoothly is not a bet I would make." = Absolutely agreed. Unfortunately, it is a matter of life and death.
SA2
Geeze. How in hell did our forefathers ever survive without all of the never-to-be-paid-for social welfare expectations our current generation expects?
As my 100 year-old mother says, while eating her butter for desert, before she takes her only med, a water pill,"what do these crybabies want - to have everything paid for?"
Apparently, yes.
"A recent study found that a major reason why the medical system is not computerized is that it would lead to more lawsuits ..."
Got a credible reference for that? A source other than an industry funded "Institute" such as Manhattan or Heartland?
Folks I know in the IT biz tell me the major reason the medical system is not fully computerized is the same as it is for other industries: Cost and the lack of widely accepted standards.
FWIW, and not because I think it will persuade anyone who's mind is made up, a 2004 report by the Congressional Budget Office assessed medical malpractice costs as less than 2% of U.S. health spending and stated that "even significant reductions" would do little to reduce the growth of health-care expenses; i.e., tort reform, while undoubtedly desirable for many reasons, is a minor issue (AKA red herring) in the debate over controlling health care costs.
If tort reform is problem why not attempt to solve it ? The only cost if it is not the problem would be possible increase in doctors making more mistakes. It can't be any worse than having an unresponsive government system.
According to recent survey over 90% of doctors want tort reform. Sure this survey was paid by a healthcare organization but who else is going to pay for a survey. Not the lawyers or the government.
Amidst the usual health-care reform rigamarole I almost forgot to add that I am in no hurry to expand exposure to China or, for that matter, Asia generally: Industrial overcapacity is a major and still growing problem there (http://tinyurl.com/ydmlreq) and more lucrative opportunities will appear after this is recognized by the various markets: Shorter version, keep it tactical, things could get really hairy at any time; this is no more a cyclical bull market than my grandmother's aortic aneurism was a hitch in her giddyup.
PS: Those who pay and have no ethic beyond payment get what they pay for or they don't publish; that's the way markets work. This is why a real democracy cannot allow markets to guide all inquiry much less rule every decision. Got it? [eom]
"Folks I know in the IT biz tell me the major reason the medical system is not fully computerized is the same as it is for other industries: Cost and the lack of widely accepted standards."
RW is correct here. Drawing again from my medical record and dictation past work experience, the lack of standards is ridiculous.
Some hospitals used social security numbers as unique identifiers for each patient. Others used just the number of the head of household or the primary insurance holder and then a -2 at the end for the spouse, -3 for kids etc. Still others made up their own numbering system for fear of HIPPA rules. You can't just add on zeros at the end until you hit the 9 digits of a social security number. You run the chance of duplication. You cant add leading zeroes because not all software will recognize them.
A lot of hospitals would have to redo their entire medical records system and software storage going back decades or more.
And that is just one number.
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