Relevant and even prescient commentary on news, politics and the economy.

Health Care thoughts: Regulatory Weirdness

by Tom aka Rusty Rustbelt

Health Care : Regulatory Weirdness

Nursing homes (SNFs and NFs) are very highly regulated, more regulated than hospitals.

Included in the regulatory regime is a minimum of one survey per year by the state, with additional state and federal surveys possible.

I’ve read hundreds of the voluminous survey reports and am occasionally asked to review a report.

The survey I read recently was quite good, not surprising being a new building with an excellent nursing staff. There were the usual nit-picky citations, and two major cites.

The first major cite was for very minor inconsistencies among nurses notes, QA reports, incident reports and infection control tracking. Emphasis on the “minor.” Dumb.

The second was on the disaster plan. The facility does not have the typical long halls but has a pod structure built around a central area, a very nice building. In the case of wind or a tornado warning each pod would move residents to the safest place in the pod.

The surveyors want everyone moved to the central area, where there are 8 foot high windows facing west overlooking the patio, a perfect source of glass shard shrapnel.

The home has two choices: agree with the surveyors or spend time and money appealing. Agreement is usually the best course of action.

The nurses already have decided – when the tornado siren sounds they will put the residents in the safest place, not the state mandated danger zone.

Never assume regulatory activity really accomplishes its goal.

Tom aka Rusty Rustbelt

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Employment situation

Given the other recent economic data that suggested the economy was improving and that the economy might actually be achieving self-sustained growth the November employment report was a major disappointment as the unemployment rate ticked up from 9.6% to 9.8%.

Non-farm employment was little changed as it only ticked up 39,000, less than half the average monthly gains so far this year. Moreover, private payroll employment only rose some 50,000.

Payroll employment continues to look much like it did in the last two recoveries that were also jobless recoveries. Since the emergence of the “Great Moderation” the nature of economic recoveries has changed drastically as this chart demonstrates.

The average workweek was unchanged at 34.3 hours so the index of aggregate hours worked barely changed. This index did move up sharply last month so the three month growth rate of hours worked is still 2.4%, about the same as it was last month.

Compared to the last two jobless recoveries the index of hours worked is doing relatively well this cycle.

But the gain in average hourly earnings only rose $0.01 so the increase in average hourly earnings continues to weaken. The year over year gain is only 1.6%. Moreover, with the weakness in the workweek last months strength in average weekly earnings reversed.

The impact of the weakness in weekly earnings can be seen in the following chart comparing the growth in real income excluding transfer payments and the rebound in real retail sales.
Several factor go into determining real retail sales including lagged monetary policy, inflation and consumer confidence. But after the initial bounce off the bottom that is normally driven by lower inflation, improved confidence and easier money the growth in real retail sales is highly dependent on solid growth in real incomes. The weakness in average weekly earnings calls into question the sustainability of the recent rebound in real retail sales. In November, for example auto and light trucks sales at 12.26 million were essentially from October. The data on real retail sales is only through October.

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Pro Publica and bailout lists

Barry Ritholtz at The Big Picture points to Pro Publica regarding Tarp and other bailout monies:

Pro Publica has been maintaining a list of bailout recipients, updating the amount lent versus what was repaid.

So far,  938 Recipients have had $607,822,512,238 dollars committed to them, with $553,918,968,267 disbursed. Of that $554b disbursed, less than half — $220,782,546,084 — has been returned.

Whenever you hear pronunciations of how much money the TARP is making, check back and look at this list. It shows the TARP is deeply underwater.


Where is the Money?
Pro Publica

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Fiscal policy delusions

My hat tip to Diane at Economistmom and her essay on the scrambling in Congress around the Bush tax cuts:

… In other words, let’s try to avoid doing something with the Bush tax cuts that seems totally crazy given what we say our fiscal policy goals are for both adequately supporting the (still fragile) short-term economy and better encouraging economic growth by reducing the deficit over the longer term.

The fiscal policymaking in this town seems totally schizophrenic right now. What a juxtaposition to have President Obama’s deficit-reduction commission release its final report while the Administration “negotiates” with Congress on whether all of the Bush tax cuts, or just most of them, should be permanently extended (and deficit financed). The media has been reporting that whether the bulk of the Bush tax cuts will be extended or not is not the issue–it is whether the upper-bracket ones benefitting only the rich will be included as well, and what constitutes “rich.”

I think most Americans who are paying attention to today’s fiscal policy news are probably shaking their heads and/or cussing and/or laughing in a dark-humor sort of way. It seems both ridiculous and tragic that our leaders can proclaim their intent to get our fiscal house in order out of one side of their mouths, while arguing to keep (forever) their favorite piece of the fiscally-reckless and economically-ineffective Bush tax cuts out the other. They are so busy screaming at each other from their (sticky, embedded) corners that they can’t see the common ground between them.

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Economic hitman

by Mike Kimel

Cross posted at the Presimetrics blog.

I guess when you’re a very not famous (co-)author like yours truly, people start contacting you with information about their books. I got an e-mail today from another currently very not famous author plugging his book, and I found it to be an interesting concept.

The book is called The Economics of Ego Surplus by Paul McDonnold, and it is a “novel of economic terrorism.” This website allows you to read the first 54 pages of the novel. I personally read about ten or so, and decided to order the rest of the book. (Note – I don’t know Paul McDonnold, never heard of him before he sent me an e-mail, and am getting nothing out of this. He did want to send me, maven that I am, a free copy of the book but I am sending him a check.) FWIW, its not so polished that it doesn’t come across as a first novel, but on the other hand, it smoothly blends in some economics/finance with a Dan Brown-style conspiracy. Put another way – it reads like the bestseller I picked up at the airport a couple of weeks ago before getting on a plane with the added benefit of dealing with a field I find interesting. Put yet another way, it reads like books by Paul Erdman, who I used to read for fun back in college and grad school. For those of us who like our economics/finance, and enjoy the occasional (for me, time is a major constraint these days, and thus we’re mostly talking when I travel) thriller its nice to see another example of the two combined.

Can you think of other examples from this genre?

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Wealthy people hire people? I didn’t know that

by Beverly Mann

Wealthy people hire people? I didn’t know that.
Crossposted with the Annarborist

“Unemployed people hire people? Really? I didn’t know that. The truth is the unemployed will spend as little of that money as they possibly can.”(here)
Rep. John Shadegg of Arizona and Economics Nobel Prize laureate

Actually, of course, since Shadegg is right that the unemployed will spend as little of that money as they possibly can, and since as little of that money as they possibly can is, for most of the unemployed, all of the unemployment compensation they receive, unemployed people who receive unemployment compensation, unlike unemployed people who don’t, do hire people. Or at least prevent the layoffs of people.
Shadegg might want to consult the waitress at the coffee shop he stops at in the morning. Or better yet, the real estate agent who’s trying to sell that house down the street from his that isn’t quite yet in foreclosure.
Shadegg’s economics theory, of course, would make a perfect subject for our president to use as an object lesson for the public about the Republicans—and as a call to action, or rather anger, by the public. But then, he’d have to actually speak to the public about policy. And since that’s not in his repertoire of things he thinks a president should do, or is not in his repertoire of things he’ll trouble himself to do, Shadegg & Friends will win, on the policy itself and politically; when the economy begins to collapse again, no one will know why, and even then Obama won’t explain or remind them.
I would so love to see a Howard Dean-type Dem come out of the blue and challenge Obama for the 2012 nomination—and start now to educate the public and vociferously push back against the Republicans by turning the tide of public opinion. This Dem also could make the Afghanistan-war bottomless money-and-lives pit a hot topic, too.
This uninterrupted rightwing monologue we’ve endured throughout the last 20 months or so will continue uninterrupted until a countervailing force of that sort emerges.
Any takers?
Oh, and as for wealthy people: They hire people? I didn’t know that.

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TARP Cost estimate lowered again

LA Times (via John Chait).

The projected cost of the $700-billion financial bailout fund — initially feared to be a huge hit to taxpayers — continues to drop, with the nonpartisan Congressional Budget Office estimating Monday that losses would amount to just $25 billion.

That’s a sharp drop from the CBO’s last estimate, in August, of a $66-billion loss for the Troubled Asset Relief Program, known as TARP. Going back to March, the budget office estimated that the program would cost taxpayers $109 billion.

No one could have predicted.
And no I don’t get tired of being right all the time.

Rude intrusion:Ken here. For a perspective closer to mine than Robert’s, Donald Marron—who also drank the CBO kool-aid initially—looks at the wider picture of “TARP cost” here.

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Steve Randy Waldman Explains It All to You

Not certain this link will work, but at Interfluidity, SRW replies to Karl Smith, closing with a sentiment with which I am very much in sympathy:

It is not technocratic economists who will win the day and pull us out of our cul-de-sac, but angry Irishmen and Spaniards who challenge, on moral terms, the right of German bankers to impose vast deadweight costs on current activity because they lent greedily into what might easily have been recognized as a property and credit bubble.

Read the whole thing, even if this link doesn’t work.

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