70% Of Calfornia's Doctors Expected To Boycott Obamacare

We need some recognition that we’re doing a service to the community. But we can’t do it for free. And we can’t do it at a loss. No other business would do that,” exclaims the president of the California Medical Association, as The Washington Examiner reports, independent insurance brokers estimate 70% of California’s 104,000 licensed doctors are boycotting the exchange. “The Covered California board says we have plenty of doctors, and they allege they have 85 percent of doctors participating, but they’ve shown no numbers,” and if a large number of doctors either balk at participating in the exchange or retire, the state’s medical system could be overwhelmed. “Enrollment doesn’t mean access, because there aren’t enough doctors to take the low rates of Medicaid,” warns one health director. “There aren’t enough primary care physicians, period.”

 

Via The Washington Examiner,

An estimated seven out of every 10 physicians in deep-blue California are rebelling against the state’s Obamacare health insurance exchange and won’t participate, the head of the state’s largest medical association said.

 

“It doesn’t surprise me that there’s a high rate of nonparticipation,” said Dr. Richard Thorp, president of the California Medical Association.

 

 

California offers one of the lowest government reimbursement rates in the country — 30 percent lower than federal Medicare payments. And reimbursement rates for some procedures are even lower.

 

 

“Some physicians have been put in the network and they were included basically without their permission,” Lisa Folberg said. She is a CMA’s vice president of medical and regulatory Policy.

 

“They may be listed as actually participating, but not of their own volition,”

 

 

This is a dirty little secret that is not really talked about as they promote Covered California,” Waters said. He called the exchange’s doctors list a “shell game” because “the vast majority” of his doctors are not participating

 

 

“The Covered California board says we have plenty of doctors, and they allege they have 85 percent of doctors participating,” notes Mazer. “But they’ve shown no numbers.”

 

 

Enrollment doesn’t mean access, because there aren’t enough doctors to take the low rates of Medicaid,” he said. “There aren’t enough primary care physicians, period.”

 

 

Briscoe professed not to be surprised by the refusal of doctors to participate in Covered California. “It rings true. I’ve been kind of wondering in my head, ‘How are they offering such low premiums?’ ”


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Az8945iqcdw/story01.htm Tyler Durden

Guest Post: Does the FDA Think You’re Stupid?

Submitted by Chris Wood via Casey Research,

Does the FDA think you're too stupid to have access to your own genetic information?

It sure seems so.

The Food and Drug Administration, which bills itself as "the oldest comprehensive consumer protection agency in the US federal government," probably stirs up more emotion among citizens than any other federal agency (save perhaps for the IRS). For good reason. The range of activities into which the FDA is "mandated" to poke its supervisory fingers is vast and includes most prominently the regulation of most types of foods, dietary supplements, medical devices, human and veterinary drugs, vaccines and other biological products, and cosmetics.

And this time it's really gone too far.

On November 22, 2013, the FDA sent a warning letter to the well-known consumer genomics company 23andMe, ordering it to "immediately discontinue marketing" its only product.

For those of you who are not familiar with 23andMe, the company provides a "DNA Spit Kit" and "Personal Genome Service" (PGS) that supposedly reports on 240+ health conditions and traits and helps clients track their ancestral lineage. Basically, you send a saliva sample in via the "Spit Kit," and the company analyzes the sample using a DNA sequencing machine.

It doesn't give you a full readout of your genome, but tests for a custom panel of what are called single nucleotide polymorphisms in order to determine, for instance, if you're a carrier for certain disease-linked mutations like cystic fibrosis or sickle cell anemia. The panel also tests for the three most common BRCA1 and 2 mutations that are associated with breast cancer, among many other mutations associated with other diseases.

So what we're talking about here with 23andMe is information, not a medical device. It's your personal genetic information. And the FDA wants to put the kibosh on one of the only companies providing this service inexpensively—you get your Spit Kit and readout for just $99—to consumers.

This is really a first amendment issue, and the FDA should not be in the business of regulating freedom of speech and information. But considering what the FDA thinks of your intelligence, I'm not surprised they're trying to reach this far.

Consider some of the language from the FDA's warning letter to 23andMe.

"For instance, if the BRCA-related risk assessment for breast or ovarian cancer reports a false positive, it could lead a patient to undergo prophylactic surgery, chemoprevention, intensive screening, or other morbidity-inducing actions, while a false negative could result in a failure to recognize an actual risk that may exist."

Really? You think that if a woman receives news from a $99 test that she may be at a higher risk for breast cancer due to a genetic mutation that she's going to run out and somehow acquire chemo drugs and start dosing herself, or that she's going to go to some back-alley clinic to have her breasts lopped off? Not to be crude or make light of a very serious situation and condition, but the FDA's implication is insulting, to say the least.

What would actually happen in the real world is that she'd go to a doctor to get herself checked out, perhaps sooner rather than later, which isn't a bad thing even if the 23andMe test showed a false positive. Now, if the test showed a positive for the mutation and she is in fact positive—which would have to be confirmed by a separate test from a doctor anyway before a mastectomy—it is her right to undergo such surgery whether or not it is determined to be "medically necessary." This is precisely what Angelina Jolie recently did.

The false negative argument is maybe a little more plausible, but despite what the FDA might believe, people who are proactive enough about their genetic makeup to seek out a service like the PGS from 23andMe are smart. They know that no test is foolproof or 100% accurate. People receive false negative tests from federally regulated labs and physicians all the time. It's unfortunate, but that's the way these things work. You don't see anybody making a stink that these tests shouldn't be run just because there's a small chance of delivering a patient a false negative result.

In response to the FDA's warning letter, 23andMe has stopped all TV, radio, and online advertising for its PGS, although the service is still being sold on the website. The situation is still unfolding, so whether or not the FDA decides that the company is now in compliance because it's no longer "marketing" the PGS remains to be seen. It could determine that just having the website active is a form of "marketing," which could be the nail in the coffin for the company. We'll have to see. According to the FDA, 23andMe had 15 working days (starting November 22) to notify it of the specific actions the company has taken to address all of the issues raised in the letter.

As expected, an additional consequence of the FDA's warning letter is a class action lawsuit that was filed just five days after the letter was sent. The lawsuit alleges that the test results are "meaningless," and that 23andMe uses false and misleading advertising to promote its services to US consumers. The lawsuit seeks at least $5 million under various California state laws and estimates "tens or hundreds of thousands" of US customers are entitled to damages from the company.

Look, I get that many of you probably think the FDA had every right to do what it did. And I'll admit that its actions probably were legally justified, since 23andMe's advertising campaign did seem to market the PGS "for use in the diagnosis of disease or other conditions or in the cure, mitigation, treatment, or prevention of disease," which falls under the FDA's purview.

I also understand why detractors of consumer genomics companies think the FDA should shut down 23andMe and all its peers/competitors—because people engaging the services of these companies don't get the full picture, and what's going on is much more complex. Only part of a person's DNA is tested, and how to properly interpret the results is still uncertain, since many factors other than a mutation in isolation contribute to disease.

But when do we ever get the full picture? Even a readout of our entire genome is only a small part of the story. A key takeaway from what's known as the ENCODE Project is that much of what was previously thought of as "junk DNA" actually performs regulatory functions—which can be thought of as regions that act like switches attached to a particular gene that determine whether or not they'll be expressed. There are millions of such regions throughout the genome, and they're linked to each other (and to the protein-coding genes) in an extremely complicated hierarchical network.

What's more, the linear ordering of the genome provides a further source of confusion: the three-dimensional folding of the chromosomes inside the nucleus allows promoter regions to maintain a close connection to genes that apparently lie far away on the linear sequence. This explains why so much biochemical activity can be found even deep in the deserts of the alleged "junk DNA."

Many of these promoter regions manifest themselves in the cell as "functional RNA" molecules—types of RNA that are an end product in themselves, rather than merely an intermediate step on the way to becoming a protein, and tha
t play a key role in switching genes on and off.

In truth, we never get the full story, no matter whom we turn to, and there's nothing wrong with bits and pieces of information to help us make decisions along the way (or just to satisfy our curious nature).

And that's really the whole point here. I don't really care if what the FDA did was technically legal or that some people think it makes sense in order to keep others from harming themselves in some way. What matters is that this ultimately boils down to information—personal genetic information. And whether 23andMe does a good job of providing that or not, it's our right to seek out such a service and use it if we so desire.

Read all about the latest news and best strategies relevant to investors in our free e-letter, Casey Daily Dispatch. Five days a week, it informs readers on breakthrough technologies… metals and mining… energy… big-picture investing and trends. Sign up here to get it free.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ysBR8dQNlSk/story01.htm Tyler Durden

John K. Ross on Stupid Laws that Cause Dangerous Hospital Shortages

This week, the American Civil Liberties Union
(ACLU) filed a federal lawsuit alleging mistreatment of a woman in
the days leading up to her miscarriage at a Catholic hospital in
Michigan. The ACLU accuses Mercy Health Partners of negligence for,
among other things, failing to direct Tamesha Means to a hospital
that could have safely terminated her nonviable pregnancy after her
water broke at only 18 weeks gestation. John K. Ross points out
that Means could not have easily gone to another hospital, perhaps
one offering the full range of women’s health services, because
there is no such hospital, thanks to a stupid law preventing
competing facilities from opening.

View this article.

from Hit & Run http://reason.com/blog/2013/12/07/john-k-ross-on-stupid-laws-that-cause-da
via IFTTT

Chart Of The Day: US Labor Force Declines By 25,000 In Past Year Despite 2.4 Million Rise In Employable Americans

A few days ago, one of the winners of the 2013 Nobel prize for economics, Robert Shiller, warned that stocks are in a bubble, voicing what most people, except for conflicted asset managers for whom spinning the truth and increasing their AUM means a greater paycheck, and the monetary misfits in the Marriner Eccles building of course, know: that stocks are in a bubble. Today, it was the turn of the other Nobel prize winner, Eugene Fama, whose expertise in markets may be a tad more questionable (he still believes in efficient markets in a world in which the Fed exists), to warn about something else – the risk of global recession.

Via Reuters:

“There may come a point where the financial markets say none of their debt is credible anymore and they can’t finance themselves,” he told Reuters in the snow-covered Swedish capital, where he will receive his prize on Tuesday.

 

“If there is another recession, it is going to be worldwide.”

 

Fama, who has been called the father of modern finance and shared the economics prize for research into market prices and asset bubbles, played down this week’s strong U.S. labor market data.

 

“I am not reassured at all,” he said.

 

The U.S. jobless rate fell to a five-year low of 7.0 percent in November, and employers hired more workers than expected.

 

“The jobs recovery has been awful. The only reason the unemployment rate is 7 percent, which is high by historical standards in the U.S., is that people gave up looking for jobs,” he said.

 

“I just don’t think we have come out of (recession) very well,” he said.

But we sure have stayed in the depression quite well. And to illustrate just what Fama means, here is a chart showing the US labor force “change” between November of 2012, when the unemployment rate was 7.8%, and the just released November 2013 numbers, according to which unemployment fell to just 7.0%.

As today’s chart of the day shows, while the civilian noninstitutional population (i.e. employable Americans over the age of 16) grew by 2.4 million in the past year (from 244.2 million to 246.6 million), the US labor force somehow, very mysteriously, declined.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Y9239iOWV0g/story01.htm Tyler Durden

Why Japan May Matter More Than Tapering

The traditionally quiet period for markets in December is turning out to be not-so-quiet, thanks to a key meeting of the U.S. Federal Reserve starting December 17. The meeting will decide on whether a reduction in quantitative easing (QE) is necessary. Consequently, every economic data point up to the meeting is being analysed and over-analysed. But it does appear that the Fed seems committed to so-called tapering at some point soon and the odds are 50:50 that it’ll pull the trigger in December.

A few weeks ago, I was asked for my 2014 global outlook by a large precious metals website and I told the editor that while tapering will be a key theme, Japan is likely to prove equally important if not more so. The editor was taken aback by this and I can understand why. But let me explain…

The Fed has been flagging tapering for some time and markets appear to have gotten used to the fact that it’ll happen soon. In May, when Bernanke first hinted of tapering, markets freaked out as they assumed a rise in interest rates would come simultaneously. Since then, the Fed has been at pains to say that interest rates will stay low for several years to come while a wind down in QE occurs. Markets appear to have bought this line. They may continue to buy the line through 2014 and even 2015.

While the U.S. cuts back on stimulus, Japan is likely to move in the opposite direction, increasing its own stimulus very soon. That’ll be on top of Japan’s existing QE which is the equivalent of 3x that of the U.S. when compared to GDP. The reason for even more QE is that the grand experiment known as Abenomics, almost one year old, has been a failure. It hasn’t lifted key components such as core inflation, wages or business spending.

Increased Japanese QE will mean a lower yen, potentially much lower. If right, that’ll have significant consequences. Among other things, it’ll increase the risks of exporting rivals fighting back by depreciating their own currencies and embracing a currency/trade war. Second, it’s likely to raise the ire of exporting competitor, China, and raise already high tensions in the South China Sea. If more stimulus fails to lift the Japanese economy, Abe will be desperate to maintain his credibility and a fight with China could just suit his ends. Hence why Japan matters. Perhaps more than tapering.

To taper or not to taper?

It may be the time when the Fed stops with all the flirting and finally starts to cut bond purchases. Bond whiz, Bill Gross of Pimco, suggests there’s a 50:50 chance, or even greater, of tapering this month. And he’s probably right given the many hints from the Fed that it’s ready to go down that path. If tapering does occur, markets will be assessing the potential time frame for a full wind-down of QE and the economic targets set by the Fed for that to happen.

To understand the potential consequences of tapering, let’s do a quick recap of what QE is and what it’s been trying to achieve. The Fed has put in place two key policies since the financial crisis:

  1. Lower short-term interest rates towards zero.
  2. Implement QE, involving the purchase of longer term bonds.

The Fed and other central banks have done this to achieve several ends:

  • Suppress bond yields and thereby interest rates (check).
  • Buying the bonds from banks and other institutions who can use that money to lend out and therefore stimulate the economy (hasn’t happened).
  • The printed money also helping banks to repair their balance sheets, devastated by 2008 (check, at least in the U.S.)
  • Keeping short-term rates near zero means pitiful bank deposit rates and tempting depositors into higher yielding but higher risk investments (check).
  • Rising asset prices inducing the wealth effect, where people feel wealthier and start to spend again (minimal success, but let’s wait and see).
  • Keeping interest rates below GDP rates, thereby reducing the developed world’s large debt to GDP ratios (slow progress given sluggish GDP).

The Fed is now contemplating tapering as it sees a recovering economy and is worried about QE’s stimulatory effects on asset prices. Tapering involves cutting back on the purchase of long-term bonds while keeping short-term interest rates near zero.

In essence, the Fed is saying: “Look everyone, we’re going to keep short-term interest rates near zero for a very long time. We’re resolute with this and hoping that cutting back on the buying of long-term bonds won’t lead to a spike in long-term bond yields. Please, market, cooperate with us in achieving this aim.”

The Fed knows markets largely control the long-term bond. It can’t afford to lose control of the bond market as higher long-term bond yields would result in increased mortgage rates and rising government interest expenses. That outcome would be a disaster as consumers and governments simply wouldn’t be able to cope with even a small spike in rates. And any hoped-for economic recovery would be over.

Key risks to the tapering strategy include a stronger-than-expected economic recovery or higher future inflation expectations, and the Fed moving too late to raise short-term rates. Alternatively, an economic recovery doesn’t take place and more QE is needed to maintain current growth. Here, the Fed would lose immense credibility and may eventually lose control of the bond market as investors start to demand higher yields on government debt.

But these risks may not be short-term story if investors believe that tapering and rising rates don’t go hand-in-hand.

Increased Japanese QE coming soon

On December 16 last year, Shinzo Abe came to power and promised the most audacious economic reforms in Japan since the 1930s in order to arrest a 23-year deflationary slump. Almost a year on, the reforms now known as Abenomics can be judged a failure. This failure may soon result in policies which could have a greater impact on markets in 2014 than the much talked about taper.

Initially Abenomics involved a strategy with the so-called three arrows. The first arrow was a dramatic expansion in the central bank’s balance sheet to lift inflation to a 2% target rate. The second arrow involved a temporary fiscal support program. While the third was structural reform to the economy.

The first arrow came with much fanfare and resulted in a large depreciation of the yen. Yen devaluation wasn’t a stated aim but was certainly a target given a lower currency is needed to lift inflation. The big problem is that inflation has risen for the wrong reasons via higher import costs. Core inflation is flat as wages have barely moved.

Japan CPI & balance sheet

The second arrow was implemented while the third arrow largely hasn’t been fired. The market has been disappointed with the latter as it knows economic reform is needed for stronger and sustainable growth. Abe has resisted change on this front given the entrenched interests against reform.

A fourth arrow has been fired, though, in the form of an increased consumption tax. The tax will increase from 5% to 8% in April next year. This is necessary to raise government revenues given Japan’s unsustainable budgetary position where government debt is 20x government revenues. The problem is that the tax will depress spending and cut GDP growth by an estimated 2% next year. To partially compensate for this, Abe has promised corporate tax relief and infrastructure spending of 5 trillion yen, equivalent to 1% of GDP. In other words, more stimulus to partially offset the impact from rising taxes.

Given the failure of Abenomics to lift core inflation or wages, you can soon expect even more stimulus on top of the 290 trillion yen already planned between now and end-2014. And this is likely to result in a much weaker yen, for the following reasons:

  • To reach a targeted 2% annual inflation rate requires the yen to depreciate by around 15% per year. That translates into a +115 yen/dollar rate by the end of next year.
  • If U.S. tapering occurs, that will widen the yield differentials between U.S. and Japanese bonds even further. Those yield differentials currently point to fair value of 115-120 yen/dollar rate.

Japan US yield differentials

  • More QE should result in more money heading offshore and a subsequent weakening of the yen.
Impact on the rest of the world

If a much lower yen is on the cards, it’ll have the following consequences:

  • Japan will export even more deflation to the world when it least needs it. By this I mean that a lower yen allows Japanese exporters to price their products more competitively vis-vis other exporters. This would raise already heightened global deflationary risks.
  • It’ll put other exporting powerhouses, such as Germany, China and South Korea, in a less competitive position, increasing the odds of a backlash via currency war. The yen at 115 or 120/dollar would change the ballgame and increase the risks of this occurring.
  • Any currency war risks a trade war. Historically, trade wars reduce global trade, sometimes significantly.
  • Putting China in a weakened exporting position will possibly increase tensions in the South China Sea. Tensions are already high and a lower yen won’t help the cause.
  • You don’t have to have a wild imagination to see that if Japan’s experiment doesn’t help lift inflation and the economy, a desperate, nationalist Prime Minister may just be more inclined to take the fight up to China.

The above analysis could well turn out to be incorrect. Perhaps Japan holds off on stimulus. Or it increases QE but combines it with meaningful structural reform.

Maybe. Whichever way Asia Confidential looks at it though, a substantially lower yen would seem to be something you can almost take to the bank. And the implications of that being the case are worth thinking about as we head into 2014.

This post was originally published at Asia Confidential:
http://asiaconf.com/2013/12/07/japan-matters-more-than-taper/


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/9hanJXvIzMQ/story01.htm Asia Confidential

Ex Greek FinMin Warns “Europe’s North-South Divide Has Become A Time Bomb”

Authored by Yannos Papantoniou (Greece's Economy & Finance Minister 1994 to 2001), originally posted at Project Syndicate,

As the eurozone debt crisis has steadily widened the divide between Europe’s stronger northern economies and the weaker, more debt-laden economies in the south (with France a kind of no man’s land economy in between), one question is on everyone’s mind: Can Europe’s monetary union – indeed, the European Union itself – survive?

While the eurozone’s northern members enjoy low borrowing costs and stable growth, its southern members face high borrowing costs, recession, and deep cuts in incomes and social spending. They have also suffered substantial output losses, and have far higher unemployment rates than their northern counterparts. Unemployment in the eurozone as a whole averages about 12%, compared to more than 25% in Spain and Greece (where youth unemployment now stands at 60%). Indeed, while aggregate per capita income in the eurozone remains at 2007 levels, Greece has been pushed back to 2000 levels, and Italy today finds itself somewhere in 1997.

Europe’s southern economies owe their deteriorating circumstances largely to excessive austerity and the absence of measures to compensate for demand losses. Currency devaluation – which would boost the competitiveness of domestic industry by lowering export prices – obviously is not an option in a monetary union.

But Europe’s stronger economies have resisted pressure to undertake more expansionary fiscal policies, which would lift demand for its weaker economies’ exports. The European Central Bank did not follow the lead of other advanced-country central banks, such as the US Federal Reserve, in pursuing a more aggressive monetary policy to cut borrowing costs. And no financing has been offered for public-investment projects in the southern countries.

Moreover, fiscal and financial measures aimed at strengthening eurozone governance have been inadequate to restore confidence in the euro. And Europe’s troubled economies have been slow to undertake structural reforms; improvements in competitiveness reflect wage and salary cuts, rather than productivity gains.

While these policies – or lack thereof – have impeded recovery in the southern countries, they have yielded reasonable growth and very low unemployment rates for the northern economies. In fact, by maintaining large trade surpluses, Germany is exporting unemployment and recession to its weaker neighbors.

As Europe’s north-south divide widens, so will interest-rate differentials; as a result, conducting a single monetary policy will become increasingly difficult. In the recession-afflicted south, continued fiscal consolidation will demand new austerity measures – a prospect that citizens will reject. Such impasses will lead to social tension and political crisis, or to new requests for financial assistance, which the northern countries are certain to resist. Either way, financial and political instability could lead to the common currency’s collapse.

As long as the eurozone establishes a kind of wary equilibrium, with the weaker economies stabilizing at low growth rates, current policies are unlikely to change. Incremental intergovernmental solutions will continue to prevail, and Europe’s economy will soldier on, steadily losing ground to the US and emerging economies like China and India.

For now, Germany is satisfied with the status quo, enjoying stable growth and retaining control over domestic economic policy, while the ECB’s limited powers and strict mandate to maintain price stability ease fears of inflation.

But how will Germany react when the north-south divide becomes large enough to threaten the euro’s survival? The answer depends on how Germans perceive their long-term interests, and on the choices of Chancellor Angela Merkel. Her recent election to a third term offers room for bolder policy choices, while forcing her to focus more on her legacy – specifically, whether she wishes to be associated with the euro’s collapse or with its revival.

Two outcomes now seem possible. One scenario is that the economic and political crisis in the southern countries spreads, inciting fears in Germany that the country faces a long-term threat. This could drive Germany to withdraw from the eurozone and form a smaller currency union with other northern countries.

The second possibility is that the crisis remains relatively contained, leading Germany to pursue closer economic and fiscal union. This would entail the mutualization of some national debt and the transfer of economic-policy sovereignty to supranational European institutions.

Of course, such a move would carry considerable political costs in Germany, where many taxpayers recoil at the notion of assuming the debts of the fiscally profligate southern countries, without considering how much Germany would benefit from a stable and dynamic monetary union. But a new grand coalition between Merkel and the Social Democrats could be sufficient to make this shift possible.

Even so, there could be victims. Indeed, the continued failure of smaller countries like Greece and Cyprus to fulfill their commitments reinforces the impression that they will forever be dependent on financial assistance. The exit of one or two of these “undisciplined” countries could be a requirement for the German public to agree to such a policy shift.

Europe’s north-south divide has become a time bomb lying at the foundations of the currency union. Defusing it will require less austerity, more demand stimulus, greater investment support, deeper reforms, and meaningful progress toward economic and political union. One hopes that modest recovery in the south, aided by strong German leadership in the north, will steer Europe in the right direction.
 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/hMPbVa-PN4w/story01.htm Tyler Durden

Ex Greek FinMin Warns "Europe's North-South Divide Has Become A Time Bomb"

Authored by Yannos Papantoniou (Greece's Economy & Finance Minister 1994 to 2001), originally posted at Project Syndicate,

As the eurozone debt crisis has steadily widened the divide between Europe’s stronger northern economies and the weaker, more debt-laden economies in the south (with France a kind of no man’s land economy in between), one question is on everyone’s mind: Can Europe’s monetary union – indeed, the European Union itself – survive?

While the eurozone’s northern members enjoy low borrowing costs and stable growth, its southern members face high borrowing costs, recession, and deep cuts in incomes and social spending. They have also suffered substantial output losses, and have far higher unemployment rates than their northern counterparts. Unemployment in the eurozone as a whole averages about 12%, compared to more than 25% in Spain and Greece (where youth unemployment now stands at 60%). Indeed, while aggregate per capita income in the eurozone remains at 2007 levels, Greece has been pushed back to 2000 levels, and Italy today finds itself somewhere in 1997.

Europe’s southern economies owe their deteriorating circumstances largely to excessive austerity and the absence of measures to compensate for demand losses. Currency devaluation – which would boost the competitiveness of domestic industry by lowering export prices – obviously is not an option in a monetary union.

But Europe’s stronger economies have resisted pressure to undertake more expansionary fiscal policies, which would lift demand for its weaker economies’ exports. The European Central Bank did not follow the lead of other advanced-country central banks, such as the US Federal Reserve, in pursuing a more aggressive monetary policy to cut borrowing costs. And no financing has been offered for public-investment projects in the southern countries.

Moreover, fiscal and financial measures aimed at strengthening eurozone governance have been inadequate to restore confidence in the euro. And Europe’s troubled economies have been slow to undertake structural reforms; improvements in competitiveness reflect wage and salary cuts, rather than productivity gains.

While these policies – or lack thereof – have impeded recovery in the southern countries, they have yielded reasonable growth and very low unemployment rates for the northern economies. In fact, by maintaining large trade surpluses, Germany is exporting unemployment and recession to its weaker neighbors.

As Europe’s north-south divide widens, so will interest-rate differentials; as a result, conducting a single monetary policy will become increasingly difficult. In the recession-afflicted south, continued fiscal consolidation will demand new austerity measures – a prospect that citizens will reject. Such impasses will lead to social tension and political crisis, or to new requests for financial assistance, which the northern countries are certain to resist. Either way, financial and political instability could lead to the common currency’s collapse.

As long as the eurozone establishes a kind of wary equilibrium, with the weaker economies stabilizing at low growth rates, current policies are unlikely to change. Incremental intergovernmental solutions will continue to prevail, and Europe’s economy will soldier on, steadily losing ground to the US and emerging economies like China and India.

For now, Germany is satisfied with the status quo, enjoying stable growth and retaining control over domestic economic policy, while the ECB’s limited powers and strict mandate to maintain price stability ease fears of inflation.

But how will Germany react when the north-south divide becomes large enough to threaten the euro’s survival? The answer depends on how Germans perceive their long-term interests, and on the choices of Chancellor Angela Merkel. Her recent election to a third term offers room for bolder policy choices, while forcing her to focus more on her legacy – specifically, whether she wishes to be associated with the euro’s collapse or with its revival.

Two outcomes now seem possible. One scenario is that the economic and political crisis in the southern countries spreads, inciting fears in Germany that the country faces a long-term threat. This could drive Germany to withdraw from the eurozone and form a smaller currency union with other northern countries.

The second possibility is that the crisis remains relatively contained, leading Germany to pursue closer economic and fiscal union. This would entail the mutualization of some national debt and the transfer of economic-policy sovereignty to supranational European institutions.

Of course, such a move would carry considerable political costs in Germany, where many taxpayers recoil at the notion of assuming the debts of the fiscally profligate southern countries, without considering how much Germany would benefit from a stable and dynamic monetary union. But a new grand coalition between Merkel and the Social Democrats could be sufficient to make this shift possible.

Even so, there could be victims. Indeed, the continued failure of smaller countries like Greece and Cyprus to fulfill their commitments reinforces the impression that they will forever be dependent on financial assistance. The exit of one or two of these “undisciplined” countries could be a requirement for the German public to agree to such a policy shift.

Europe’s north-south divide has become a time bomb lying at the foundations of the currency union. Defusing it will require less austerity, more demand stimulus, greater investment support, deeper reforms, and meaningful progress toward economic and political union. One hopes that modest recovery in the south, aided by strong German leadership in the north, will steer Europe in the right direction.
 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/hMPbVa-PN4w/story01.htm Tyler Durden

Where Else You Gonna See Treme’s and The Wire’s David Simon Engaging Libertarians? One More Reason to Give to Reason

So we’re
a few days into Reason’s annual webathon and we’re asking readers
of this site to pony up $150,000 in
support
of our fearless libertarian journalism in Reason print,
online, and video editions.

The contributions are tax-deductible and you can pay in Bitcoin
if you got ’em.

Why should you help us out? Click on the interview above. It’s
with David Simon, the man behind The Wire, widely recognized as one
of the very best TV shows of all time, and Treme, which
begins its final season this week on HBO . Despite many areas of
agreement, it’s a contentious interview and it sparked
a hostile response from Simon
that led to our posting of the
full audio version of our conversation.

Let me suggest that this sort of interaction is one of the
unique things we do: We engage the world – and the people we admire
– in a way that is not only rare but invaluable. Across all of our
platforms, Reason journalists are testing the world, probing,
kicking the tires and finding out what’s what. And we’re also
always constantly trying to interrogate the limits of the
libertarian perspective so that we’re presenting the best arguments
and visions for a better world. Finally, we also try to do all this
with a sense of fun and adventure and brio rather than out of grim
duty or terror and apprehension about what might come next.

If you like reading and watching Reason – if you find our
content stimulating, provocative, infuriating, inspiring, valuable
– please consider helping us reach our target goal for the 2013
webathon
.

And give the final season of
Treme a shot
. Set in post-Katrina New Orleans, the show is a
fascinating meditation on the tension between a reverence for the
past and “authenticity” and the absolute need to change and
progress into the future. The trick – and I’m sure the final season
will explore this in a way that only a master like Simon can do –
is how to respect and learn from the past without becoming
hopelessly stuck in it.

from Hit & Run http://reason.com/blog/2013/12/07/where-else-you-gonna-see-tremes-and-the
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Where Else You Gonna See Treme's and The Wire's David Simon Engaging Libertarians? One More Reason to Give to Reason

So we’re
a few days into Reason’s annual webathon and we’re asking readers
of this site to pony up $150,000 in
support
of our fearless libertarian journalism in Reason print,
online, and video editions.

The contributions are tax-deductible and you can pay in Bitcoin
if you got ’em.

Why should you help us out? Click on the interview above. It’s
with David Simon, the man behind The Wire, widely recognized as one
of the very best TV shows of all time, and Treme, which
begins its final season this week on HBO . Despite many areas of
agreement, it’s a contentious interview and it sparked
a hostile response from Simon
that led to our posting of the
full audio version of our conversation.

Let me suggest that this sort of interaction is one of the
unique things we do: We engage the world – and the people we admire
– in a way that is not only rare but invaluable. Across all of our
platforms, Reason journalists are testing the world, probing,
kicking the tires and finding out what’s what. And we’re also
always constantly trying to interrogate the limits of the
libertarian perspective so that we’re presenting the best arguments
and visions for a better world. Finally, we also try to do all this
with a sense of fun and adventure and brio rather than out of grim
duty or terror and apprehension about what might come next.

If you like reading and watching Reason – if you find our
content stimulating, provocative, infuriating, inspiring, valuable
– please consider helping us reach our target goal for the 2013
webathon
.

And give the final season of
Treme a shot
. Set in post-Katrina New Orleans, the show is a
fascinating meditation on the tension between a reverence for the
past and “authenticity” and the absolute need to change and
progress into the future. The trick – and I’m sure the final season
will explore this in a way that only a master like Simon can do –
is how to respect and learn from the past without becoming
hopelessly stuck in it.

from Hit & Run http://reason.com/blog/2013/12/07/where-else-you-gonna-see-tremes-and-the
via IFTTT

Tom Bell on a World Without Copyrights

What would happen if
authors and publishers could not count on copyright to protect them
from piracy? History hints at the answer, Tom Bell writes. From the
founding of the United States until well into the 20th century,
domestic copyright laws generally denied foreign authors any form
of legal redress. Yet as the legal scholar Robert Spoo explains
in Without Copyrights, they developed other
stratagems to recoup the costs of writing, producing, and marketing
their works.

View this article.

from Hit & Run http://reason.com/blog/2013/12/07/tom-bell-on-a-world-without-copyrights
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