Category: regulation

Federal Court Rules that Federal Reserve Cannot Be the Banksters Bitch Over Swipe Fees

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U.S. District Judge Richard Leon just ruled that the Federal Reserve’s rules on debit card swipe fees are too bank friendly and ignore the statutory requirements of Dodd-Frank:

The Federal Reserve disregarded Congress’s intent when deciding how much banks can charge merchants for debit-card transactions, a judge ruled, rejecting Dodd-Frank-imposed regulations governing “swipe” fees.

U.S. District Judge Richard Leon in Washington ruled today that the Fed didn’t have the authority to set a 21-cent cap on debit-card transactions. Leon said the rule, which has been in effect since October 2011, would remain in place pending new regulations or interim standards.

“The Board has clearly disregarded Congress’s statutory intent by inappropriately inflating all debit card transaction fees by billions of dollars and failing to provide merchants with multiple unaffiliated networks for each debit card transaction,” Leon said in his 58-page ruling.

The groups, in a lawsuit filed in November 2011, said merchants will be “substantially harmed” by the fees the Fed set under the Durbin Amendment, a provision of the Dodd-Frank legislation. The rule went into effect on Oct. 1, 2011.

“The board’s final rule permits banks to recover significantly more costs than permitted by the plain language of the Durbin Amendment and deprives plaintiffs of the benefits of the statute’s anti-exclusivity provisions,” the retailers argued in their complaint.

What?  The law is not friendly enough to the banks, and so the Fed draws up regulations ignoring the law? 

I am so (not) surprised.

Small Business Owners Are Complaining Because E-Verify Works, not Because it Doesn’t

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The Wall Street Journal writes about the problems that employers are having with E-Verify, the online worker verification system run by the INS.

The problem is not that the system is too buggy, its early problems have been ironed out, and it’s not too expensive, it’s free, no, for the small businesses interviewed, the problem is that works the way that it is supposed to:

Since January, Daniel VanLoh has turned away nine new dishwashers and one line cook from his four Atlanta, Ga., restaurants within days of hiring them.

 The reason: Not one was authorized to work in the U.S., according to background checks he ran on the job applicants using a federal verification system, known as E-Verify.

 He says he’s now struggling to fill six openings, with some job seekers simply walking away after hearing that the company uses the free, Internet-based system to check their immigration status.

This is the way that this is supposed to work.  Proper enforcement of worker verification is supposed to keep people who want to work illegally out of the job rolls.

Here is the money quote:

This month, Georgia required small employers to screen applicants with the system, a move that extended existing requirements for larger firms. At least 15 other states, including Arizona, Mississippi and South Carolina, have enacted laws in recent years requiring at least some, if not all, employers to run E-Verify checks on job applicants before hiring them. The laws don’t require employers to check existing employees.

Scott Whitehead, who operates an Atlanta landscaping service, began using E-Verify July 1. Over the past three weeks, he says he hasn’t found a single authorized worker among more than 50 applicants at his metro area firm, Unlimited Landscaping & Turf Management Inc. “Every immigrant who walks through this door is illegal” according to the online check, says Mr. Whitehead, whose firm has more than 100 employees.

He says the checks are shrinking the pool of applicants he’s able to hire. As he struggles to fill openings, existing maintenance workers, most of whom he pays about $14 an hour, are demanding higher wages.

(emphasis mine)

Gee without the possibility of easily recruiting workers who are willing to live in immigration status enforced peonage, his workers are asking for more money.

Hoocoodanode?

BTW, Whitehead’s solution is to engage in illegal discrimination:

The system is also bringing anxieties about productivity, he says. To avoid running afoul of the new Georgia law, Mr. Whitehead plans to hire only U.S. citizens who clear the system, even though, in landscaping, he has found that immigrant workers are generally more productive.

This is a violation of the civil rights law.

You cannot discriminate against legal workers on the basis of immigration status.

Unemployment is over seven percent, and if your crappy job cannot attract legal workers at a given wage, then raise the f%$#ing wage.

Why Janet Yellen will not Become the Federal Reserve Chairman

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Because she has ovaries:

The favored parlor game of the political-economic complex right now is guessing who will replace Ben Bernanke as chairman of the Federal Reserve. The clear front-runner is Federal Reserve Vice Chairman Janet Yellen. But she’s by no means a sure thing.

One important reason she’s not — and I don’t know another way to say this — is sexism, as evidenced by the whispering campaign that’s emerged against her.

The message isn’t always delivered in a whisper, of course. In May, Federal Reserve Bank of Dallas President Richard Fisher suggested on CNBC that if Yellen is chosen, the pick will have been “driven by gender.” That’s more of a shouting campaign.

Fisher hastened to add that Yellen is “extremely capable.” But, he said, “there are other capable people.” Capable people, I guess, who are male, and thus whose picks wouldn’t be driven by gender.

But Fisher’s comments aren’t the sort that matter in this process. They’re too crude. The significant doubts about Yellen are transmitted with more subtlety, and for months they’ve been coursing through the cloistered, close fraternity that will drive the selection of Bernanke’s successor.

If you look at the dynamics of the Obama administration and finance, at least under the auspices of (the now thankfully in private life) Timothy Geithner was contempt against those who lacked a Y chromosome.

Notwithstanding the presence of Valerie Jarrett, the Obama administration has many of the aspects of an old boy’s club, and even if you ignore the “boys” part, it is a club, and Larry Summers is most assuredly a part of that club, and Janet Yellen isn’t.

What Yves Smith Said

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She makes a compelling case against Larry Summers being the next Chairman of the Federal Reserve.

Basically, it comes down to the fact that he is a polarizing personality who refuses to listen to others:

The big problem with Summers is not his record on deregulation (although that’s bad enough) or his foot-in-mouth remarks about women in math, or for suggesting that African countries would make for good toxic waste dumps. No, it’s his appalling record the one time he was in a leadership position, as president of Harvard. Summers was unquestionably the worst leader in Harvard’s history.

Summers, unduly impressed with his own economic credentials, overruled two successive presidents of Harvard Management Corporation (the in-house fund management operation chock full of well qualified and paid money managers that invest the Harvard endowment). Not content to let the pros have all the fun, Summers insisted on gambling with the university’s operating funds, which are the monies that come in every year (tuition and board payments, government grants, the payments out of the endowment allotted to the annual budget). His risk-taking left the University with over $2 billion in losses and unwind costs and forced wide-spread budget cuts, even down to getting rid of hot breakfasts.

………

So Summers couldn’t keep his ego out of the way, bullied the people around him, ignored the advice of not one but two presidents of Harvard Management, and left a smoldering pile of losses in his wake. And serious adults are prepared to allow someone with so little maturity and such misplaced self confidence to have major sway over much bigger economic decisions?

Summers’ second big problem is the scandal that led to his ouster at Harvard, which was NOT the “women suck at elite math and sciences” remarks. The university has conveniently let that be assumed to be the proximate cause.

In fact, it was Summers’ long-standing relationship with and protection of Andrei Schleifer, a Harvard economics professor, who was at the heart of a corruption scandal where he used his influential role on a Harvard contract advising on Russian privatization to enrich himself and his wife, his chief lieutenant Jonathan Hay, and other cronies. The US government sued Harvard for breach of contract and Shleifer and Hay for fraud and won.

And yes, he was also hip deep in the ouster of Brooksley Born for her demands that derivatives be regulated.

So, he doesn’t listen, he alienates those around him, he is deeply involved in a massive corruption scandal, and he has been wrong on basically everything outside of academe.

Given this record, I expect him to fail up into the Federal Reserve.

Back Loaded Bribery

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If you play ball with the monied people who want law and regulation structured to ensure that their wealth increases even more, then they reward you with lucrative jobs, like a high paid lobbyist, or, as in the case of Timothy “Eddie Haskell” Geithner, an absurdly lucrative speaking gig:

During his tenure as Treasury secretary, Timothy Geithner was constantly dogged by the belief that he was spawned from Wall Street. This thinking was false: If you need a refresher, Geithner had actually spent most of his career in government, and none of it at a bank. When he left office this year, Geithner said that it would be “extremely unlikely” for that to change.

But as it turns out, Geithner is now being paid hundreds of thousands of dollars by massive financial organizations. It’s just that he isn’t being paid to work on Wall Street; he’s just being paid to talk every now and then.

The Financial Times reports that Geithner, like countless former public servants before him, has hit the highly lucrative speaking circuit. He’s already made about $400,000 in just three engagements. And that tab is being footed by financial institutions such as Deutsche Bank and Blackstone, which paid him about $200,000 and up to $100,000, respectively.

No one ever explicitly told Geithner that if he protected the banksters, he woud get a payoff, but this is explicit in Washington, DC’s revolving door.

He knew that he would get rewarded, and he has not been disabused of this belief.

H/t Gaius Publius.

Props to Gary Gensler………

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He’s been canned by the Obama administration for being too hard on the banksters, but on the way out, is implementing the meaningful derivatives reforms for which he was fired:

US regulators are likely to close a crucial loophole in Dodd-Frank rules in the next few weeks, in a move that will cost US banks many millions of dollars of revenues in the US$640trn derivatives market.

Several sources familiar with the internal discussions at the Commodity Futures Trading Commission say that the current exemption – which allows US banks executing derivative trades outside the country to bypass tougher capital holding and reporting requirements – will be allowed to expire on July 12.

CFTC chairman Gary Gensler, the only person with the authority to call a vote on extending the exemption, is said to oppose any extension and a spokesman confirmed that no vote had been scheduled.

“He’s determined not to extend,” said a lawyer familiar with discussions between lobbyists and the chairman. “And if it’s true that Gensler is leaving, maybe he wants this to be his final act before leaving.”

This is clearly a very large f%$# you to Barack Obama, Jack Lew, and (particularly) Timothy Geithner, and it is a well deserved f%$# you.

Obama and his and His Evil Minions™ have been determined to subvert meaningful banking regulations, and it’s nice that someone is standing up to him.

It will cost the banks some money, but I do not care:

If the exemption expires, all swaps deals involving US banks would be subject to the Dodd-Frank rules. Banks would have to set aside significantly more capital against each trade, which would eat into profits and potentially even drive clients to other banks.

Such deals would also become subject to much more onerous reporting requirements and would have to be cleared through an exchange – which could also reduce profitability and push away custom.

Figures from the US Treasury show that US financial institutions reported derivatives trading revenues of US$4.4bn in the fourth quarter of 2012, a 73% increase on the previous year.

There is an old saying about people who are inconvenient, “It’s better to have him inside the tent pissing out, than outside the tent pissing in.”

I thank Gary Gensler for pissing in.  On the matter of financial regulation, it is a very well deserved smack down.

H/T Naked Capitalism.

The Fed Speaks

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They won’t be stopping the stimulus, but the short version is that they will continue to keep their foot on accelerator, but maybe not quite so much:

The Federal Reserve, increasingly confident in the durability of economic growth, expects to start pulling back later this year from its efforts to stimulate the economy, the Fed chairman, Ben S. Bernanke, said on Wednesday.

 Mr. Bernanke, offering new details, said the central bank intends to scale down gradually its monthly purchases of Treasury securities and mortgage-backed bonds beginning later this year and ending when the unemployment rate hits 7 percent, which the Fed expects to happen by the middle of next year.

 The central bank would then take several more years to unwind the rest of its extraordinary stimulus campaign, slowly raising short-term interest rates from essentially zero to more normal levels after the jobless rate has fallen to 6.5 percent or lower.

 He emphasized, however, that the timing of the retreat depends on the health of the economy; if growth falters, the central bank would slow, or even reverse, the process. The expectations of Fed officials for the next several years, published Wednesday, are more optimistic than the consensus of private forecasters.

 Pulling back “would basically say that we’ve had a relatively decent economic outcome in terms of sustained improvement in growth and unemployment,” Mr. Bernanke said. “If things are worse, we will do more. If things are better, we will do less.”

I would prefer that they target a higher inflation rate until unemployment falls before 6%, but who listens to me.

When the Spys Have Lost John le Carré………

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He actually makes a point that has been missed in the whole NSA revelations controversy,

Carré gets to the heart of the matter when he notes that much of the problem is that our government is increasingly serving the state security apparatus when it should be the other way around:

In my recent novel A Delicate Truth, a retired and patently decent British foreign servant accuses his old employers of being party to a Whitehall coverup, and for his pains is promptly threatened with the secret courts. Yet amid all the comment that my novel briefly provoked, this particular episode attracted no attention.

What are secret courts? Why do we need them? To protect Britain’s special relationship with the United States, we are officially told; to protect the credibility and integrity of our intelligence services. Never mind that for decades we have handled security-sensitive cases by clearing the court whenever necessary, and allowing our secret servants to withhold their names and testify from behind screens, real or virtual: now, all of a sudden, the credibility and integrity of our intelligence services are at stake, and need urgent and draconian protection.

Never mind the credibility and integrity of parliament and centuries of British justice: our spies come first. And remember, these aren’t criminal courts. These are civil courts where anyone attempting to obtain redress for a real or perceived injustice perpetrated against him by British or American secret agencies must have his claims heard and dealt with in secret.

This is the core of the problem.

Our intelligence agencies are driving national policy on the basis of their own self interests, and the interests of the rest of society suffer as a result.

It’s a Week for Good Court Rulings

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This one is a ruling that an unpaid internship must be an educational experience for the benefit of the intern, not an unpaid job:

Yesterday, a federal judge issued the first major ruling on the illegality of unpaid internships in recent years, challenging a rise in corporate reliance on uncompensated workers.

Judge William H. Pauley III ruled that Fox Searchlight Pictures violated U.S. and New York minimum wage laws by not paying two production interns for work done on the set of the movie “Black Swan.”

Pauley ruled that the interns had essentially completed the work of paid employees – organizing filing cabinets, making photocopies, taking lunch orders, answering phones – and derived little educational benefit from the program, one of the criteria for unpaid internships under federal law. Pauley also ruled that the plaintiffs were employees and thus protected by minimum wage laws.

“I hope this sends a shockwave through employers who think, ‘If I call someone an intern, I don’t have to pay them,’” Eric Glatt, one of the plaintiffs, told ProPublica. “Secondarily, it should send a signal to colleges and universities who are rubber-stamping this flow of free labor into the marketplace.”

It should also be noted that unpaid internships serve to keep poor people out numerous professions, because they cannot afford to work for free.

Our IP Regulatory Regime Does Not Work

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Case in point, Internet music streaming service Pandora has bought an FM radio station in South Dakota to reduce its royalty payments:

Pandora is angry about the royalties it’s paying to music publishers, so the company is making a bold move: It’s buying a terrestrial radio station in South Dakota mainly to score lower rates.

The radio station buy is the latest salvo in Pandora’s ongoing legal fight with the performance-rights group American Society of Composers, Authors and Publishers (ASCAP). Pandora says ASCAP discriminates against the company by charging it higher royalty rates, as well as letting publishers pull their song catalogs from Pandora while keeping them available for competitors.

“Certain powerful music incumbents see Internet radio as a threat to the status quo,” Christopher Harrison, Pandora’s assistant general counsel, wrote in a blog post published on The Hill.

To combat that alleged discrimination, Pandora bought the Rapid City, South Dakota, station KXMZ-FM for an undisclosed amount.

Terrestrial radio stations and the Internet properties that own them “were given preferential treatment” through an ASCAP agreement with the Radio Licensing Marketing Committee (RMLC) last year, according Harrison’s blog post.

Pandora says the KXMZ acquisition will let the company qualify for the lower-fee RMLC license. According to Pandora, ClearChannel-owned rival iHeartRadio has such a license because it also owns a terrestrial station.

I’m on Pandora’s side in all this.

Our current IP regime encourages this sort of regulatory arbitrage, and this does little to encourage the production or more music.

All it does is keep record company executives’ brothers-in-law in cocaine.

And While We Are On the Subject of Obama and Subverting Regulation………

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Gary Gensler surprised everyone when, as head of the CFTC, he actually enforced sensible rules.

So it it comes no surprise that Obama is firing him and replacing him with a corporate drone from the Vampire Squid:

Obama is no longer bothering to pretend that he is anything other than a stooge for banks and other big money interests.

 The president is effectively dismissing Gary Gensler, the ex-Goldman partner who headed the Commodities Futures Trading Commission. Gensler used his post at a secondary financial regulator to push for reforms. It was his office that blew the Libor scandal wide open by taking referrals from British regulators seriously (by contrast, Geithner, who heard about widespread, deliberate mismarking in 2008, passed the buck to the Bank of England). Gensler has also been making himself unpopular by taking the view that swap dealers, which includes foreign branches of US banks and parties that conduct business with US parties, must comply with Dodd Frank. ………

 Shahien Nasiripour at the Huffington Post describes how Gensler is being ousted for his position on swaps regulation, which was coming to a head in international meetings starting June 20, with a July 12 deadline looming. The industry was pushing for the usual “race to the bottom” approach, since the Dodd Frank provisions are more stringent than overseas requirments (the spin, of course, was that Gensler was acting unilaterally, as opposed to implementing what Congress mandated). Gensler faces varying degrees of resistance from three of his four fellow commissioners. International regulators were apparently also unhappy with Gensler’s tough stand, to the point where they were complaining to Treasury Secretary Jack Lew.

 Even if Obama fails in fast-tracking his chosen replacement, Amanda Renteria, Gensler’s lame-duck status will considerably weaken his ability to arm-twist the fence-sitters among his colleagues.

 And Renteria is a simply pathetic choice. Oh, she’s got a very appealing personal story, having worked her way up from a very disadvantaged background, a child of migrant workers who made her way to Stanford and later Harvard Business School. But there’s nothing in her background that qualifies her to act either as a senior regulator or as the head of a large operation (the CFTC has over 400 employees). This leap in responsibilities is tantamount to taking a promising law firm associate and making them the head of a large law practice. You’d never do that if you cared about the health of the firm. A move like this looks an awful lot like an effort not just to sideline Gensler’s push on swaps regulation, but to render the CFTC incompetent over time.

 Renteria’s knowledge of finance appears to consist of having worked right after college for a few years at Goldman. ………

And to this we add the bonus story that Barack Obama has nominated Walmart’s biggest fan to head his council of economic advisors:

On June 10, 2013, President Obama announced his intention to nominate Jason Furman to become the next chairman of the Council of Economic Advisers. This is a big-time, highly influential post. So what kind of economist is Furman?

One who thinks Walmart is the best thing since sliced bread.

For Furman, Walmart is nothing short of a miracle for America’s poor and working-class folks. For him, progressives should be cheering the firm: he even wrote a 16-page paper titled, “Wal-Mart: A Progressive Success Story,” which was posted on the Center for American Progress website. ………

In Furman’s view, “the US productivity miracle and the emergence of Wal-Mart-style retailing are virtually synonymous.”

For the man who will have President Obama’s ear on vital matters like jobs, the evidence of whether Walmart’s wages and benefits are substandard is “murky.” And he doesn’t much care for those who question Walmart’s approach: In the 2006 dialogue with Ehrenreich on Slate, he upbraided activists who had pushed the firm to increase wages and offer better benefits:………

To complete the finger in the eye, the American Enterprise Institute has issued effusive praise on the choice.

I’m not surprised.  I’m disappointed, but not surprised.

Obama loves hippie punching.

Hope & Change ……… Not!!! Environment Edition………

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The White House is slow walking major environmental regulations:

The White House has blocked several Department of Energy regulations that would require appliances, lighting and buildings to use less energy and create less global-warming pollution, as part of a broader slowdown of new antipollution rules issued by the Obama administration.

The administration has spent as long as two years reviewing some of the energy efficiency rules proposed by the Energy Department, bypassing a 1993 executive order that in most instances requires the White House to act on proposed regulations within 90 days. Regulatory review times at the White House Office of Management and Budget are now the longest in 20 years, having spiked sharply since 2011.

………

The proposed rules would require that refrigerators, light bulbs and electrical equipment use less energy, much as the Obama administration in its first term required automakers to commit to make cars more energy efficient.

With a sweeping climate bill having died in the Senate in Mr. Obama’s first term, his only options for major action on the issue in the second term appear to involve executive action. In one of the signature moments of his 2013 State of the Union address, he vowed that if Congress failed to act on energy and climate change, he would use his executive powers to do so.

What it comes down to is that Barack Obama does not believe in regulation. That’s why he had Cass Sunstein as the head of the Office of Information and Regulatory Affairs.

The slowdown stems from a combination of factors, including high-level vacancies and election-year politics. Analysts and former administration officials said the White House, sensitive to Republican charges that it was threatening the economy by pushing out dozens of so-called job-killing regulations, reined in the process last year, leaving many major rules awaiting action for months beyond legal deadlines.

Some administration officials are also concerned that regulations have the potential to do more harm than good. “If we make refrigerators lousy, that’s a big problem,” Cass R. Sunstein wrote in “Simpler: The Future of Government,” a book published this year about his time running the Office of Information and Regulatory Affairs, a small unit of the budget office responsible for reviewing regulations.

………

Lisa Heinzerling, a professor of law at Georgetown University and a former top Environmental Protection Agency official who tangled with Mr. Sunstein over a number of environmental regulations in Mr. Obama’s first term, said in a recent article that such demands for detailed analysis become “a regulatory game of Whac-A-Mole: every time the agency meets one demand for a piece of information about the costs or benefits of a rule, it finds itself met with a new and different demand.”

She said the decision of how quickly to move now rested with Mr. Obama. “The cabinet does not need a presidential directive telling the agencies to do their work,” she said, “rather, it needs presidential support for the work they are trying to do.”

I think that Ms. Heinzerling is missing the point: If Obama wanted regulations to progress with alacrity, they would be.

Regulations are stalled because that is what he wants. 

Cass Sunstein was head of the OIRA, QED.

It’s Bank Failure Friday!!!

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And here they are, ordered, and numbered for the year so far.

  1. 1st Commerce Bank, North Las Vegas, NV  <= This is a Thursday closing.
  2. Mountain National Bank, Sevierville, TN

Full FDIC list

Since I’ve started following this, I think that there have been 4 non Friday closings (not counting Friday holidays) over the last 4 years, and 2 of these have been in the past month.

Hmmmm…….

So, here is the graph pr0n with last years numbers for comparison (FDIC only):

Appeals Court Slaps Down Obama on Contraception Restrictions

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They sided with the lower court, and ordered the Obama administration to make emergency contraception (AKA Plan B) over the counter:

The Obama administration has in part lost its push to sustain age limits on over-the-counter sale of Plan B One-Step, commonly known as the morning-after pill.

After a lower court recently slapped down all age limits, the Second Circuit Court of Appeals on Wednesday granted the Justice Department’s request for a stay on one-pill variants of emergency contraceptives but denied it for two-pill variants, declaring that the appellants have “failed to meet the requisite standard.”

This is a very well deserved smackdown.

The Obama administration’s behavior in this mater has been craven, dishonest, and hypocritical. They have taken what should be a core value, and used it as a political football.

Canada Says “Nothing” is Not an Appropriate Response to an Oil Spill

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No, seriously, the government of British Columbia just denied a permit to build a tar sands pipeline to a company that refused to offer remediation plans for a potential spill”

Oil spill cleanup concerns have led the British Columbia Government to reject a proposed multi-billion dollar tar sands oil pipeline that the Canadian company Enbridge wants to construct across the province.

 In its final submission Friday to the federally-appointed Northern Gateway Pipeline Joint Review Panel, the province states that it cannot support the Enbridge Northern Gateway project because the company “has been unable to address British Columbians’ environmental concerns.”

 Environment Minister Terry Lake said, “British Columbia thoroughly reviewed all of the evidence and submissions made to the panel and asked substantive questions about the project including its route, spill response capacity and financial structure to handle any incidents. Our questions were not satisfactorily answered during these hearings.”

 “Northern Gateway has said that they would provide effective spill response in all cases. However, they have presented little evidence as to how they will respond,” Lake said. “For that reason, our government cannot support the issuance of a certificate for the pipeline as it was presented to the Joint Review Panel.”

 ………

 “It shows that Northern Gateway would have comprehensive oil spill response plans for all Project components and would substantially improve existing emergency response on Canada’s pacific coast – something unprecedented for a pipeline project. It shows that the Project has been developed with a comprehensive public and Aboriginal engagement program that would continue throughout Project construction and operation,” the company said in its submission.

 But the B.C. government’s submission points out that the company’s proposal indicates that “doing nothing is a possible response to a spill.”

(Emphasis mine)

<snark> Are they Communists in Canada or something?   Don’t they know this is supposed to work?

Silly Rabbit, the profits go to the energy companies, and the taxpayer pays for the cleanup! </snark>

H/t Americablog

Medicare Trust Fund Lifetime Extended

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Score another one for Obamacare, the exhaustion date for the exhaustion of the Medicare trust fund has been pushed back:

Falling health-care costs are brightening the financial outlook for Medicare, extending the life of the trust fund that supports the program until 2026 — two years later than previously forecast.

The new projections, released Friday by the program’s trustees, credit President Obama’s Affordable Care Act in part for the improvement in the finances of the federal health insurance program for the elderly. The act’s limits on Medicare Advantage, a more expensive form of Medicare run by private insurers, are proving more effective than previously forecast, the report said.

The trustees also cited lower-than-expected spending in “most . . . service categories — especially skilled nursing facilities,” a development that is not well understood. Costs have been slowing throughout the health-care industry, partly because of the recent recession, economists say, but also because of what appear to be more fundamental changes aimed at reducing waste and improving health outcomes.

This is particularly interesting when juxtaposed against the New York Times article on the pricing of colonoscopies:

A major factor behind the high costs is that the United States, unique among industrialized nations, does not generally regulate or intervene in medical pricing, aside from setting payment rates for Medicare and Medicaid, the government programs for older people and the poor. Many other countries deliver health care on a private fee-for-service basis, as does much of the American health care system, but they set rates as if health care were a public utility or negotiate fees with providers and insurers nationwide, for example.

………

But she noted that gastroenterologists in Austria do have their financial concerns. They are complaining to the government and insurers that they cannot afford to do the 30-minute procedure, with prep time, maintenance of equipment and anesthesia, for the current approved rate — between $200 and $300, all included. “I think the cheapest colonoscopy in the U.S. is about $950,” Dr. Ferlitsch said. “We’d love to get half of that.”

Dr. Cesare Hassan, an Italian gastroenterologist who is the chairman of the Guidelines Committee of the European Society of Gastrointestinal Endoscopy, noted that studies in Europe had estimated that the procedure cost about $400 to $800 to perform, including biopsies and sedation. “The U.S. is paying way too much for too little — it leads to opportunistic colonoscopies,” done for profit rather than health, he said.

The real problem here is that prices are are not transparent, and they are excessive to boot, being many times for routine procedures compared to the rest of the industrialized world.

The idea of market driven healthcare does not work, because there is no transparency in pricing, and even if there were, much of the time there is no opportunity to engage the market as a rational actor (auto accident, gun show wound, etc.).

It’s why, even with its apparent benefits, Obamacare, does not address the core of the problem, which is that healthcare in the US is tremendously overpriced.

How Worship of the Unbridled Market is Taking the United States to 3rd World Nation Status

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Premature babies are dieing of starvation because feeding babies is not profitable enough for sufficient stocks to be maintained:

Because of nationwide shortages, Washington hospitals are rationing, hoarding, and bartering critical nutrients premature babies and other patients need to survive. Doctors are reporting conditions normally seen only in developing countries, and there have been deaths. How could this be allowed to happen?

………

 Except for a mind-boggling problem that Atticus’s [A child born 4 months early, and currently in the NICU] hospital—one of the most prominent in the country—has been powerless to solve: Atticus isn’t receiving some of the critical nutrients he needs to survive.

 Doctors and pharmacists say that because of nationwide shortages caused by a combination of factors—manufacturing problems, a market with few incentives for companies to produce low-profit drugs, and the government’s delayed and inadequate action—thousands of patients are being malnourished.

 ………

 Experts call the nutrient shortage a public-health crisis and a national emergency—and are astounded that the government and manufacturers have let the situation become so dire.

 “Children are dying,” says Steve Plogsted, a clinical pharmacist who chairs the drug-shortage task force of the American Society for Parenteral and Enteral Nutrition (ASPEN). “They’re not getting any calcium or any zinc. Or they’re not getting any phosphorous, and that can lead to heart standstill. I know of a neonate who had seven days without phosphorous, and her little heart stopped.”

 “I’ve never seen anything like this in my entire career, and I’ve been a pharmacist for 40-some years,” says Michael Cohen, president of the nonprofit Institute for Safe Medication Practices (ISMP) and a 2005 MacArthur Foundation fellow. “This should never be allowed to happen.”

 There are 300 drug, vitamin, and trace-element shortages in the US, the highest number ever recorded by the University of Utah Drug Information Service, which began tracking national shortages in 2001. Approximately 80 percent of these are generic injectables, or drugs given intravenously.

 ………

 The nutrients in shortage aren’t rare. “We’re talking about zinc, phosphorous, calcium—trace elements,” says CHA president Mark Wietecha. “These aren’t the latest genetically modified drugs or something coming out of modern high-tech environments. These have been around for decades.”

………

 Some hospitals have resorted to bartering with one another to secure even a small supply of nutrients, and many are rationing.

 At least one NICU in the District is administering some trace elements only three days a week instead of seven. At Atticus’s hospital, no patients heavier than 2½ kilograms (5½ pounds), including NICU babies, are getting intravenous phosphorous. “You could have a brand-new, full-term baby and they don’t qualify,” a staff member says. “There are really sick babies and one-, two-, three-year-olds that don’t get anything at all because we’re rationing it for our tiniest preemies.”

 ………

 When Miguel Sáenz de Pipaón, a neonatologist at a prominent hospital in Madrid, arrived in the US for a research visit, he was stunned by the nutrition shortages.

 “It’s crazy,” he says. “That doesn’t happen in Europe.” He noted that the US relies on a 25-year-old lipid emulsion, which is in shortage, while European hospitals use a newer version that’s readily available. Rather than import the newer emulsion, the US has left many patients without any lipids at all.

 The only shortage Sáenz de Pipaón could recall in Spain occurred two years ago when a Canadian factory stopped making trace elements. His hospital pharmacy immediately secured the product from a Swedish manufacturer and had it for patients within two days.

 Hospital staff wonder why the FDA hasn’t already put a process in place to streamline foreign inspections and certifications so that labs abroad can manufacture emergency supplies on short notice.

 Jensen says the FDA is working on it and that imported nutrients will be shipped soon: “It took a long time to find companies willing to do it, mainly because they couldn’t meet US needs and didn’t have the ability to ramp up for the US. The good news is we’ve got different firms willing to do this for phosphates, zinc, and trace elements. We moved as quickly as we could.”

Yes, moved as quickly as they could. (Not)

You can be certain that a (castrated over the past few decades) FDA is consulting with the manufacturers, so as to avoid hurting their business models.

“The FDA has repeatedly told us that the shortages are short-term and that they don’t need to import yet,” says neonatologist Steve Abrams of Texas Children’s Hospital. “There’s been a general sense that this problem will go away if we just wait until next Tuesday, and next Tuesday just hasn’t come for the last 2½ years.

They keep kicking the can down the road, because they, and the congressmen who vote on their budget, ahve been captured by pharma.