Eric Sprott On Ignoring The Obvious

Tyler Durden's picture




 

By Eric Sprott of Sprott Global

Ignoring The Obvious

Not a day goes by without hearing about the fiscal cliff, the debt ceiling or another political deadlock. We would not disagree that some of these are important issues that need resolving but, in the grand scheme of things, they are relatively superficial.

As we all know, central banks around the world have been frantically expanding their balance sheets. While exceptional times might warrant exceptional measures, Figure 1 below paints a rather troubling picture. The monetary base, the amount of money in circulation in the economy, has expanded at an incredible pace. Since the mid-80s, the U.S. monetary base had been very stable at around 5-6% of GDP. Through fractional reserve banking, this amount was sufficient to maintain annual inflation around 2-3%. With the banking system collapsing in 2008-2009, it was necessary for the Fed to increase the monetary base. However, banks are now in much better shape than they were in that period and the benefits of monetary expansion seem to be waning.

The Fed is not the solution to every economic and social woe and trying to hide real problems (eg. structurally high unemployment and rampant poverty, unsustainable income inequality and exploding government liabilities) with money printing achieves nothing constructive.

FIGURE 1: U.S. MONETARY BASE AS A % OF GDP
maag-1-2013.gif
Source: Federal Reserve Bank of St. Louis, U.S. Department of Commerce: Bureau of Economic Analysis

Employment

First, while we are supposed to be in the midst of an economic recovery, about one in five Americans are on food stamps (Figure 2). As the chart below shows, this measure of poverty has been fairly steady for the past year. We also find it hard to reconcile this data point with the headline unemployment numbers, which seem to be improving. We prefer a more comprehensive measure of unemployment, commonly referred to as U6, which includes discouraged workers and those working part time against their will. By this measure, we see that “Total Unemployment” has come down, but remains extremely elevated at around 14% of the labour force. Moreover, food stamps and “Total Unemployment” tend to move together. If food stamps users stabilize at current highs, we believe that it is a sign that the natural unemployment rate in the U.S. economy is now significantly higher than it was pre-crisis.

FIGURE 2: EMPLOYMENT IS NOT AS GOOD AS IT SEEMS
maag-1-2013-2.gif
Source: U.S. Department of Labor: Bureau of Labor Statistics

Income Inequality

Second, income inequality has been growing steadily since the mid-1980s. Figure 3 shows the share of total U.S. income earned by the middle class and the top 5% of households. As of 2011, the top 5% of households brought home over 22% of all income generated in the country, whereas the middle 20% of households (quite literally the middle class) got less than 15%. Coupled with the unemployment picture, this shows that a majority of the U.S. population has been losing ground to the most wealthy. In a society that relies on consumption for 70% of its economic activity, this certainly does not bode well for the future, since the wealthiest traditionally do not consume much of their income. To top it off, the recent “fiscal cliff deal” just reduced disposable income further by increasing payroll taxes by 2% for all those working, putting additional strain on the working class and their discretionary spending dollars. (See Figure 3).

FIGURE 3: SHARE OF AGGREGATE INCOME RECEIVED BY HOUSEHOLDS
maag-1-2013-3.gif
Source:  U.S. Census Bureau, Current Population Survey, Annual Social and Economic Supplements

Government Obligations

Another obvious problem is the liabilities of the Federal Government. The current cash reporting basis that the Department of the Treasury uses, vastly understates its deficit and future liabilities. Some estimates put the current unfunded liabilities of the Federal Government at about $222 Trillion and show an increase in the deficit from 2010 to 2011 of around $11 Trillion, which represents about 70% of the U.S. total GDP.1

Simple back of the envelope calculations can be made using the Treasury’s “Financial Report of the United States Government – 2012”, which comprises a detailed breakdown of its future financial obligations for health care, social security and other government services.2 This reporting is similar to what every corporation is mandated to calculate for the purposes of U.S. GAAP reporting.

Of course, accounting can always be “massaged” to improve one’s situation. This problem is most acute when there are many assumptions, like for pension and benefits accounting (a.k.a. social security and Medicaid/Medicare). ShadowStats makes the necessary adjustments and finds that for 2012 alone, the deficit amounts to $6.9 Trillion.3 This represents about 45% of annual GDP. While laudable, the current haggling by policy makers for a meager $2 Trillion in deficit reduction over 10 years represents only the tip of the iceberg.

A significant part of these deficits is caused by current and future health care spending. The Deloitte Center for Health Solutions recently published a report entitled “The hidden costs of U.S. health care: Consumer discretionary health care spending”, in which they analyze the many components of health care spending and how those expenses are underreported in official numbers. Figure 4 shows their estimates for total health care spending by age group for 2010.

FIGURE 4: TOTAL HEALTH CARE COSTS BY AGE - 2010, $ BN
maag-1-2013-4.gif
Source: The hidden costs of U.S. health care:
Consumer discretionary health care spending, Deloitte
FIGURE 5: U.S. POPULATION 65+ YEARS
maag-1-2013-4-2.gif
Source: US Census Bureau 2012 National Population Projections 

 
What is striking - but not that surprising - is the very large increase in health care costs faced by seniors. The report cites that “Seniors and Baby Boomers account for 64 percent of health care costs, but comprise only 40 percent of the U.S. population.” For seniors, total health care costs represent, on average, approximately $30,000 per person per year. Other estimates by Carnegie Mellon University professor Paul Fischbeck (although a bit dated) show that these annual costs increase dramatically as people age, reaching as much as $45,000 for 80+ year olds.4 Considering that GDP per capita was about $46,800 in 2010 and the income inequality mentioned earlier, these are figures that would put most households in dire straits.

Also, structural trends will lead to an ever greater share of the nation’s income being dedicated to health care. Figure 5 above shows the evolution of the U.S. population for the 65+ age group, as forecasted by the U.S. Census Bureau. The U.S. will end up with a steadily increasing segment of its population (from 13% in 2010 to 20% in 2030) composed of persons aged 65 and over. This matters for two important reasons. First, this means a smaller workforce contributing to GDP growth and paying taxes to support government programs. Second, and this is related to the first point, this trend will put tremendous pressure on social security and health care spending in the country, thus leading to structurally higher deficits.

These facts are by themselves troubling, but coupled with the population trends described in Figure 5, they become alarming. To illustrate the impact of overall population aging on total health care costs, we use the per capita numbers implied by the Deloitte study and apply them to the U.S. Census Bureau projections for all age groups. While we believe that those numbers fundamentally underrepresent health care inflation, we inflate per capita costs for each age group using the average “medical care” component of the U.S. Department of Labor Consumer Price Index. Finally we assume a 4% nominal GDP growth, which some might argue is overly optimistic when taking into account the smaller workforce we discussed earlier. In any case, Figure 6 shows the results of our simulation.

Only with the change in the composition of the U.S. population, total health care costs are forecasted to go from 22% of GDP in 2010 to over 30% in 2040. These are huge numbers! To put them in perspective, in 2011 total U.S. GDP was $14,500 Billion, so an increase from 22% to 30% of GDP would represent a $1.2 Trillion increase in health care spending in that year. If we increase the health care inflation rate by only 100bps, we calculate that by 2040, the share of GDP attributed to health care will jump to 40%.

FIGURE 6: HEALTH CARE SPENDING AS A % OF GDP
maag-1-2013-5.gifSource: US Census Bureau 2012 National Population Projections,U.S. Department of Commerce: Bureau of Economic Analysis, U.S. Department of Labor: Bureau of Labor Statistics & The hidden costs of U.S. health care: Consumer discretionary health care spending, Deloitte

According to the Deloitte study, about 60% of those costs are borne directly by households and the remaining 40% by the public sector (30% to Medicare and Medicaid). This means that households, of which the majority is either poor or in the declining middle class, will face an even larger squeeze in their discretionary spending.

Conclusion

To conclude, 20% of the population is on food stamps, an ever increasing gap between the wealthy and the rest and ever-increasing health care spending are all deep rooted and immensely important problems that get a ridiculous fraction of the attention that they deserve. The impact of these issues on both government finances and future economic growth are enormous.

As we discussed, the purpose of asset purchases by the Fed might no longer be improvements in the real economy, but rather a more subtle financing of U.S. government deficits. However, in the long run, expanding the money supply inevitably leads to inflationary pressures. Luckily for the Fed and the U.S. government, there is so much slack in the labour market that inflation might be years away. And, if we are right about the long run unemployment rate being structurally higher, then the Fed has all the room it needs to continue Quantitative Easing (QE) to infinity. This might allow them to continue to hide the true financial position of the government for many years to come.

Nonetheless, the rising GAAP deficit and the sheer size of the U.S. Federal Government’s liabilities to its citizens makes it clear that one day or another, services (health care, social security) will have to be cut. Financial alchemy can hide reality, but it does not provide any tangible services.

Europe’s (unresolved) experience with its debt crisis provides an insightful window into the future. Austerity measures in Ireland, Portugal, Spain and Greece have caused tremendous pain to their citizens (25% unemployment rates) and wreaked havoc in their economies (double digit retail sales declines).

Are we going to ignore the obvious?

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Sat, 01/26/2013 - 13:06 | 3187775 LawsofPhysics
LawsofPhysics's picture

The state should have a role in protecting private property and enforcing contract law,  nothing else.

Sat, 01/26/2013 - 19:01 | 3188279 are we there yet
are we there yet's picture

Never heard of Joe Stallen being called charatable.

Sat, 01/26/2013 - 22:46 | 3188621 BidnessMan
BidnessMan's picture

Maybe you have heard of Joe Stalin being called charitable? 

Sat, 01/26/2013 - 12:45 | 3187742 LawsofPhysics
LawsofPhysics's picture

You are confusing behavior with a system of governance.  Unless you are saying that governments never exhibit charitable behavior.  Is that what you are saying nmewn?  We know who the evil fucks are, yet nothing has changed.

The point you are missing is that there needs to be some real fucking consequences for bad BEHAVIOR.

Not one damn thing changes until then.  Socialism supports charitable behavior, fascism does not.

Just saw your other post, very much on the same page.  Get your tribe in order. 

Sat, 01/26/2013 - 12:49 | 3187752 nmewn
nmewn's picture

"Just saw your other post, very much on the same page. Get your tribe in order."

I think we're talking past each other.

My tribe is in order and ready for anything ;-)

Sat, 01/26/2013 - 12:59 | 3187766 LawsofPhysics
LawsofPhysics's picture

Be sure to use our ZH names on the street when/if TSHTF.

Sat, 01/26/2013 - 13:26 | 3187796 WmMcK
WmMcK's picture

"I'm the dead guy on the $500 bill".  Please let me in (to the "speakeasy").

Sat, 01/26/2013 - 11:54 | 3187669 Downtoolong
Downtoolong's picture

the purpose of asset purchases by the Fed might no longer be improvements in the real economy,

It was never about that

but rather a more subtle financing of U.S. government deficits,

and subsidization of Wall Street profits and transfer of all wealth to the richest people, who are allowed to gamble and double down indefinitely until they hit a winner. There's nothing subtle about it.

 

Sat, 01/26/2013 - 13:09 | 3187778 Barbaric relic
Barbaric relic's picture

the purpose of asset purchases by the Fed might no longer be improvements in the real economy,

 

You're right, Downtoolong, it was never about improvements in the real economy  but the financing of U.S. government deficits is only a byproduct of providing trillions in subsidies to the banks.  Eric seems to be pulling his punches a bit in the article with his downplaying of inflation -- doesn't shadowstats give a much higher estimate for inflation?

Sat, 01/26/2013 - 12:06 | 3187674 John Law Lives
John Law Lives's picture

"As we discussed, the purpose of asset purchases by the Fed might no longer be improvements in the real economy, but rather a more subtle financing of U.S. government deficits."

The Fed is not being "subtle" re. monetizing debt.  Any informed person is fully aware that is precisely what they are doing, and they will keep doing it.

 

"Luckily for the Fed and the U.S. government, there is so much slack in the labour market that inflation might be years away."

If you accept their calculation for CPI, you can claim this.  I do not accept it.  Energy costs and food costs and health care costs and tuition costs (i.e. costs that are relevant to many of us) have certainly been rising at a rapid clip.  I don't care if iPads are cheap.  I don't need one or want one.  In fact, I have never purchased any Apple gadget in the last 20 years.

 

"This might allow them to continue to hide the true financial position of the government for many years to come."

They may attempt to obfuscate the true position to uninformed nimrods, but they can't hide it from informed people.  ZH informs whose who want to be informed.

 

Sat, 01/26/2013 - 12:09 | 3187696 yogibear
yogibear's picture

"If you accept their calculation for CPI, you can claim this.  I do not accept it. "

Look around you and at grocery bills, gasoline, services (oil Changes,dinning, transportation fares) etc. All have gone up.

The Federal Reserve and the government play this game of see no evil, speak no evil and everyone will believe.

 


Sat, 01/26/2013 - 13:51 | 3187838 KTV Escort
KTV Escort's picture

Finally, on page 2 of the comments section, a well-reasoned response to Sprott's conclusion. Thank you John Law Lives.

Interesting Sprott is so cautionary, as opposed to the over the top noise found on KWN these days.

Sat, 01/26/2013 - 14:26 | 3187893 Temporalist
Temporalist's picture

At the top of the page, below each article, you will see "X comments per page" which allows you to fit many more comments on page one (and all pages thereafter) so you don't have to get to the next page.  The point is what is page two for you is still page one for me as I have 200 comments per page.

Sat, 01/26/2013 - 12:01 | 3187682 Catullus
Catullus's picture

Sprott still speaks like a "respectable" central banker. Slack in the labor market has nothing to do with it.

Play a counterfactual in your mind: if gasoline had been a dollar a gallon more expensive over the past 3 years, where would unemployment be? More to the point: at what price of fuel does it no longer make sense for the average person to no longer go to work? There are plenty of discretionary things Americans can give up, but a $1 more would probably wipe $100 a month from most people's net. Knowing that most people save nothing, there would be a significant quality of life downgrade for most. And that's when you put upward pricing pressure on labor, because the supplyof labor at the current prices begins to dry up.

The "slack" in the labor market is a non-sequitur to price inflation.

Sat, 01/26/2013 - 12:45 | 3187738 dwdollar
dwdollar's picture

"More to the point: at what price of fuel does it no longer make sense for the average person to no longer go to work?"

Yes, but more importantly... If the USD has zero risk (apparently) for investors, there is a point where it doesn't make sense for the average American worker to work, regardless of the price of gas. Why work when Uncle Scam can just print a welfare check (without consequence) for anyone who doesn't want to work?

Sat, 01/26/2013 - 13:34 | 3187813 WmMcK
WmMcK's picture

RE: (A)t what price of fuel does it no longer make sense for the average person to no longer go to work?
Depends -- I used to take mass transit to the WTC. Motivation matters more than the price of gas.

Sat, 01/26/2013 - 12:01 | 3187683 Atomizer
Atomizer's picture

 

 

Double talk interpretation of IMF lingo..

We must restore confidence by reform, acceptance thru paper shuffling monetary growth instruments must become the new collective norm.

- Managing Director Christine Lagarde

 IMF's New Financial Data Query Tool - Jan 23, 2013. Now you can become a critic like myself, always challenging the IMF bullshit loans.

Sat, 01/26/2013 - 12:10 | 3187697 nmewn
nmewn's picture

Tim Geithner:
None of those 19 banks are at risk for insolvency. Now, again, these banks, they bear the biggest responsibility for making sure that they can reassure investors that they're going to be strong and viable in the future. We'll indeed help them do that if that's necessary, but they bear the responsibility for making sure they can convince their investors and their creditors that they can get through this with a strong, viable franchise, and I think they're going to be able to do that.

Charlie Rose:
All right, so you're confident that these banks will be able to go raise this capital over a six month period.

Tim Geithner:
Reasonable confident, and --

Charlie Rose:
And if they don't?

Tim Geithner:
If they don't, they can come to us and we'll provide it.

Charlie Rose:
The government will provide. And this is additional TARP money?

Tim Geithner:
That's right.

Sat, 01/26/2013 - 14:53 | 3187918 Temporalist
Temporalist's picture

Charlie Rose is a suckass dispicable statist elitist shill. 

Watch the video with Sir James Goldsmith where CR clearly is taking a feed in his ear about what to say to side with the statist keynesian witch Laura Tyson (I warn that listening to the witch can cause severe vomitting and diarrhea).  One can see the testing of talking points that they try to attack with such as "protectionism" is what people agianst globalism are really about.  Also many of the comments under the videos are worth reading for their comic value.

http://www.youtube.com/watch?v=4PQrz8F0dBI

http://www.youtube.com/watch?v=SZTzPmn-87w (about 1:50 in to this one it gets really good about the divorce between corporations and their marriage to government)

http://www.youtube.com/watch?v=A_hiEvTNV5k

http://www.youtube.com/watch?v=yonUgZ2Y6Qs

http://www.youtube.com/watch?v=YW6KkF6aa_A

http://www.youtube.com/watch?v=IDxufaKZLjc

 

Sat, 01/26/2013 - 12:03 | 3187687 yogibear
yogibear's picture

Bernanke should go down as the great debt enabler.

Sat, 01/26/2013 - 12:37 | 3187735 tsx500
tsx500's picture

how about the great traitor ?!

Sat, 01/26/2013 - 12:04 | 3187688 Inthemix96
Inthemix96's picture

I have tried and better tried to come up with a better and more succinct word to describe the shenanigans of these theiving swines, and it all keeps coming back to "Cunts".

So there for, from now on they are all Cunts, each and every one of them, no exceptions.

Cunts.

Sat, 01/26/2013 - 12:18 | 3187699 Atomizer
Atomizer's picture

Yes. Now wrap your mind around this message from long ago. Winks

Kuntz

Sat, 01/26/2013 - 12:30 | 3187724 Inthemix96
Inthemix96's picture

Nice one atomizer,

Never a better soundtrack to follow the deeds of the fuckers and cunts running the show.

Cunts

Sun, 01/27/2013 - 19:49 | 3189733 Boozer
Boozer's picture

I do love that word.

Mon, 01/28/2013 - 17:25 | 3192667 Ludwig Van
Ludwig Van's picture

*Cunt* singular or *Cunts* plural are precisely the terms I've come to land on over the last few years, due I think to style of action: A guy can't just honestly and forthrightly *steal* a thing; he has to connive and collaborate with other sneaky pussies to keep up appearances of legitimacy. Fucking cunt.

Sat, 01/26/2013 - 12:26 | 3187718 moneybots
moneybots's picture

"Austerity measures in Ireland, Portugal, Spain and Greece have caused tremendous pain to their citizens (25% unemployment rates)"

 

Booms cause busts.  Austerity measures are not the problem and are not what has caused the pain.

 

Weimar Germany skipped austerity measures and what happened in 1923?

Sat, 01/26/2013 - 12:39 | 3187740 the grateful un...
the grateful unemployed's picture

the VA now provides long term nursing care benefits. so one government agency pays for services to another. VA to Medicare? what that does is give government control over the level of services.

food stamps will move into medicaid, so that usage will imply indebtedness, just like that guy who goes to jail for two years, has to pay back the welfare money his wife and kids received while he was doing time for growing a pot plant in his garage. welfare on the cuff.

the real trick for bernanke is to transfer the debt on his balance sheet, and UST, to the american consumer, in exchange for what?

dropping IOUs out of helicopters. we all know that money represents a liability, its only a matter of making it real.

 

 

Sat, 01/26/2013 - 12:52 | 3187758 valkir
valkir's picture

OT but this could spark biggest fire

http://www.afp.com/en/news/topstories/death-toll-port-said-clashes-now-22-egypt-ministry

20,000 police and military forces defend the court,the mob start to attack government buildings.

Sat, 01/26/2013 - 13:28 | 3187800 Bunga Bunga
Bunga Bunga's picture

Anti-government protest already errupted on Friday and had nothing to do with the death sentence against the soccer rioters. The protesters showed their disappointment about the Mursi government due to lack of social and democratic reforms. The government deployed tanks and troops against the protesters and 7  people were shot dead. The harsh verdict came on Friday, triggered the violent protests on Saturday. Most media all over the soccer rioters and seem to ignore the political protests, which started on Friday peacefully. 

http://www.france24.com/en/20130126-army-deployed-suez-clashes-egypt-morsi

Sat, 01/26/2013 - 13:08 | 3187776 TrulyStupid
TrulyStupid's picture

The root cause of the financial malaise is malinvestment, public and private. The social spending on foreign wars is the biggest boondioggle of the lot. Money spent here produces no return whatsoever to the investors and only guarantees the clamour for more wars. The main source of private malinvestment is in the derivative markest (weapons of financial mass destruction)... the losses from which would have brought down the whole banking ponzi if not for huge government subsidies and artificially low interest rates. Although welfare spending is excessive, it does produce a return (local and state government taxes are paid) and in some case prefunded (Social Security). Eliminating only welfare spending in this environment will have no effect on the ongoing deficits and will in fact result in only in creating more unemployment and less consumer spending.  There is no free lunch in all of this... we need to eliminate NON-Productive spending (malinvestment) and keep the pump priming spending going.

 

 

Sat, 01/26/2013 - 14:13 | 3187879 the grateful un...
the grateful unemployed's picture

i'd take it a step further and say the whole capital investment scheme is broken and has been for years. wall street funds only new companies with the shortest window to profitability.

the faux financial collapse of 2008 did not mean the end of money for small businesses, that was going on before the bankers took all the TARP money and ran. SB has been pissing up a rope for a long time, a problem which could be fixed any number of ways, (but Congress gets campaign money from wall street, and not Dad's Lawn Mower Shop.) its also possible that the CU's could do some business lending, but the BANKSTAS hate them more than they hate small business.

not that the corruption ends with the beltway, and the great white way, it runs all the way down to mayors of towns like mine, which were taking redevelopment money to build corporate franchise zones, because they pay their taxes and they never go out of business.  (not true but if you were mayor would you want a new MCD or Dad's Lawn Mower Shop?) corporate franchises kick back the RD money to them (we have a brand new City Hall, offices for rent, mostly empty)

so no joke the two best small businesses to start, are a food truck or a marijuana dispensary. subsidies for bricks and mortars go to corporate types, and they can't figure out how to regulate either one. ( i think there's a ref to a Cheech and Chong movie in here)

Sat, 01/26/2013 - 14:16 | 3187851 AgAu_man
AgAu_man's picture

Don't think anyone called Sprott out on his flawed logic. When everyone is looking in one direction (rising health care costs), no one seems to be looking in the other direction: Value Chain Analysis of said costs.

That's because most people -- including 'analysts' -- are clueless on basics of what most Supply Chain managers do regularly: Analyse the line-item cost parameters and their drivers.  But that would be too deep and would involve some real heavy lifting of research and deeper Excel work. Most people & analysts would rather copy/paste high-level data and conjure rabbits to the applause of a gullible and amazed audience (of simpletons).

Put simply, Mr. Sprott, when costs are (too) high, one does NOT just proclaim (the Neocon mantra) to "Cut services!"  While that might be a part of the solution, one looks to cut COSTS in the entire value chain!   Real companies, especially consumer electronics companies that live on free-market dynamics, do this ALL the time. But I guess that the middle-men of health service industry -- and it IS an 'industry' -- i.e. the little-value-add Insurance Companies don't want you or us looking in their direction.  They, like you, seem to want to conjure the rabbit by only cutting services -- this leaving their lifestyles intact.

Nice bit of sophistry, Mr. Sprott!  We need more scientists, engineers and other lucid thinkers & doers, fewer lawyers, bankers and shill-ass analysts.

Sat, 01/26/2013 - 16:38 | 3188045 Michelle
Michelle's picture

Health care costs are out of control and have been for decades and there are many reasons why, but how do we pull the plug on these rising costs and get them back to an affordable level where most everyone can pay CASH for services without insurance? Insurance seems to be the common denominator and now that ObamaCare is set to hit are we going to see just a short-term rise or are costs going up into perpetuity?

I was talking to my uncle a few months ago about the cost of his last child's hospital birth in Oregon in about 1960. $25 for a 3 day hospital stay and $35 for the doctor. He paid CASH.

 

Sat, 01/26/2013 - 14:31 | 3187897 jplotinus
jplotinus's picture

Dear Eric Sprout,

You say:

"Nonetheless, the rising GAAP deficit and the sheer size of the U.S. Federal Government’s liabilities to its citizens makes it clear that one day or another, services (health care, social security) will have to be cut."

That observation does not follow from anything else you wrote. Your conclusion is arbitrary and capricious. It reflects nothing more than a personal priority statement. One could just have easily, and more validly have stated:

"Nonetheless, the rising GAAP deficit and the sheer size of the U.S. Federal Government’s liabilities to its citizens makes it clear that one day or another, military spending (weapons, pretextual wars) will have to be cut."

Get your priorities straight.

Sat, 01/26/2013 - 14:53 | 3187905 spooz
spooz's picture

I took issue with that statement as well.  Cutting the COST of services is not cutting services.  Providing health care in a more cost effective manner is in our power, but steps on too many crony toes. There are plenty of models out there for providing cheaper, more efficient health care, primarily through some sort of universal health plan.  Commenter "John Lynch" had this to say about the map in the link below:

"These comparisons with other countries only stir up ideological animus. We don't have to look abroad to compare health care systems. We have an excellent point of comparison right here in the good old US of A. 

It's called the Veteran's Health administration (VHA). It, too, is far from perfect - and gets probably more negative publicity about it's gaps and gaffes in care than it deserves, while our private health care system doesn't get nearly enough.

But here's the bottom line: the VHA serves an older and generally sicker patient population than the general US population, yet has far better treatment outcomes at lower costs - even for tertiary care services like open heart surgeries. That's because it's actually managed, unlike our fragmented private health care "system".  And it's managed better because it's doctors are generally VHA employees whose incomes aren't increased by doing more surgeries and procedures than are necessary.

The VHA budget benefits when they prevent type 2 diabetics from progressing to the complications of diabetes, whereas in the private system the opposite is true - less disease, less income.

A friend who's a right wing ideologue was shocked when I informed him that the VHA health care he loves so much - are you sitting, righties? - is the only form of actual socialized medicine in America. Not just socialized health insurance like Medicare, but honest-to-goodness socialized medicine that controls both the financing AND the delivery of medical care (which Medicare does not, of course).

And it works. Patient satisfaction scores for the VHA average over 85%, while those for private sector hospitals in America are in the 50-75% range.

Imagine that."

http://www.theatlantic.com/international/archive/2012/06/heres-a-map-of-...

Sat, 01/26/2013 - 15:53 | 3188003 the grateful un...
the grateful unemployed's picture

you're like that curmugeon who says, "more money does make a teacher any better.."

no, but less money for teachers will make things worse....

Sat, 01/26/2013 - 16:02 | 3188011 spooz
spooz's picture

That simple minded comparison is supposed to address the fact that VHA "government" health care does better than the private system for less money? Because the fact is that doctors earning less at VHA hospitals does not translate to worse outcomes.

Sat, 01/26/2013 - 16:21 | 3188028 LongOfTooth
LongOfTooth's picture

The FY 2012 DOD budget was something on the order of $535B.

The U.S. has something like 726 bases on foreign soil.

For what purpose?  To project power and influence worldwide.  

For whom, the American people?  More like for the banksters, multinationals and the new world order crowd.

By letting this sort of crap go on, imo, the American people have pissed away a good thing.

Humpty Dumpty sat on a wall...........

And nobody could put the pieces back together again.

 

 

 

Sat, 01/26/2013 - 16:10 | 3188017 Pseudolus
Pseudolus's picture

All worthy stuff.

Lets heed Cromwell; "Consider ye may wrong"

Rather than pillory the concept that "deficits don't matter" etc - why don't we consider what would have to be the case for someone to say this and for none of the above to matter

Put oneself in the psychpath's shoes, so to speak

The system is perhaps somewhat other than economic science would have us think

Sat, 01/26/2013 - 18:02 | 3188019 devo
devo's picture

It's 15% on food stamps, actually. This number compares with soup kitchens (i.e. before food stamps) during the Great Depression. Food stamps hide the poverty, which is better for morale.

Does ZH want people to starve and/or believes charities would feed all these people?

Sounds like another Koch brothers propaganda piece.

Article is a good example of focusing on the symptom of disease rather than the cause. Making citizens angry with one another rather than those who caused the misery. Also, how about action rather than talk? Tell people where to organize so they can hold the people responsible for the poverty accountable. "Organize at xyz where we will lynch Jamie Dimon and Bernake". That's better than this crap where you try to turn citizens/victims against one another over the internet. The State and status quo love this; it takes blame off them. Can you imagine Trotsky or Che Guevara writing blogs instead of taking action? Amount of anger unaccompanied by action comes off as ZH wanting a certain bearish outcome so they can profit without hard work (hypocritical imo). 

Also, fuck Bernanke and short Amazon.

Sat, 01/26/2013 - 16:33 | 3188041 QQQBall
QQQBall's picture

Good Article. Had to laugh about health care spending - discretionary chart... closer to my monthly spending

Sat, 01/26/2013 - 17:25 | 3188117 cognus
cognus's picture

To Answer the Author's Question:  Yes. Of course the official USA will ignore the obvious.  Can anyone name a western developed nation that has preceded us over the edge of the curve, which did not deliberately ignore?  it doesn't pay politicians to "go austere".

For how long now has Japan kicked the proverbial can down the road?  that's the 'gold standard'.... just keep on a'kickin'

 

Sat, 01/26/2013 - 21:12 | 3188464 Radical Marijuana
Radical Marijuana's picture

"... structural trends will lead to an ever greater share of the nation’s income being dedicated to health care."

USA does NOT have a "health care" system!

The USA has "profit from disease" systems.

"Are we going to ignore the obvious?"

Yes, obviously, of course, WE SHALL!

The fundamental ways that we think and talk about all these topics is backwards. Therefore, everything we end up actually doing is backwards. Everything is surely going to keep on going backwards.

The basic paradox with respect to human problems is that when people could not agree and ended up in conflicts, then those who were the best at deceits, and backing that up with destruction, were the ones that prevailed through those conflicts. Thus, the entire history that made War King, then made Fraud King.

Everything that the USA does is based on huge lies, backed up with lots of violence. Since the violence cannot make those lies become true, the country just keeps on getting more insane! Are we going to continue to ignore the ways that we have become insane? The answer is obviously yes, because we ARE insane!

We are taught to understand everything by using various kinds of false fundamental dichotomies, as the basis of our thinking, and we are taught to go to the wrong pole of those false dichotomies as the way to establish unity! The USA has totally become a system of debt slavery, backed by wars based on deceits, which are runaways towards debt insanity, and even more insane wars.

Every aspect of our culture is inside of militarism, and every aspect of that is expressed and understood through the maximum deceits possible. Thus, every possible way that we operate our society is done by professional liars, and immaculate hypocrites. Those who are the best at that are those who rise in the ranks to become the most successful, and therefore, most able to make the decisions that control other people's lives.

Not underless we went through a series of political miracles to understand militarism, would we be able to understand anything else. Everything in our society is illustrated by our society changing the Department of War to become the Department of Defence. "National security" has become runaway psychotic bullshit, in a classic, over the top, Orwellian fashion. The USA is systematically destroying itself, due to believing too much in its own bullshit. In every way, the USA is controlled by huge lies, backed up with lots of violence, and that especially includes the ways that we deal with its problems. War Kings became Fraud Kings, and the language of the Fraud Kings almost totally dominates the society that they rule over. Of course, I WISH it was not that bad. However, it is actually so bad that it would be impossible for me to overstate how bad that is! Are we going to continue to deliberately ignore that, and go even more insane? Absolutely, indubitably YES!

Sun, 01/27/2013 - 01:01 | 3188736 silverdragon
silverdragon's picture

The Americans and Canadians are both out of Silver, so the spot price goes down?

Are you f*ckin kiddin me?

You couldn't make this sh*t up!

Sun, 01/27/2013 - 01:12 | 3188742 silverdragon
silverdragon's picture

Great comment AgAu_man.

Call it like it is!

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