My first wife, Renee, died of cancer in 1995. She was 42. I returned to the Winship Cancer Center in Atlanta to see what progress has been made in diagnosis and treatment.

Dr. Carl D’Orsi, head of radiology noted that we have a cure for cancer; early detection. Big advances are being made in imaging and diagnosis.  Dr. D’Orsi demonstrated a topographical mammogram.  This experimental machine can take a remarkably clear image of a tumor too small to be detected by a traditional mammogram . This same machine can also read a section more clearly that may look suspicious in a mammogram and see that there is no tumor, effectively avoiding unnecessary biopsies.

This machine will likely be able to increase the effectiveness of treatments by catching it earlier. But it is expensive, and it is experimental. Few places have them.   I saw other imaging systems that are also experimental and offer great hope.

I also saw huge laboratories involved in new techniques of delivering chemotherapies such as nanotech  targeting systems.

They have developed genetic testing that can  determine your odds of getting certain types of cancer. This aids the patient is selecting treatments that can dramatically reduce the chances of contracting cancer even in a high risk pool.  One of these tests costs $3,000.

Because of the costs of these treatments it is used selectively only for those whose risk profiles merits the extra expense. But the underlying point is that our health care system may be expensive because it is just so damn good. Anyone who has dealt with the fear and trauma of cancer know the value of these new developments; but we also must realize it is not cheap. Otherwise we risk never making these improvements available.

While the large insurance companies are commonly demonized, the reality is that their annual profits would not cover our health care bill for 48 hours.  The far more significant costs drivers are the quality of the technologies that deliver the best treatment systems in the world.

The cancer specialists at the Emory Winship Clinic were  troubled over the new government standards restricting mammograms for younger women. The committee establishing these new standards, which will likely be adapted by the insurance companies, did not have a single radiologist or oncologist on them.  Clearly these standards should rely more on individual case histories than simple age categories.

I would much rather trust my health and the health of my family to the professionals at the Winship Center and other advanced centers than to the government data crunching agencies that know nothing.  They may not be a death squad but such irresponsible regulations accomplish the same goal.

Perhaps it is not the end of the world if our health care system is expensive. Perhaps it is worth it.

Under Bush the House introduced a resolution to bring attention to the Armenian genocide under Turkish rule nearly 100 years ago.  The timing was horrible, since Bush was courting Turkish cooperation for the war in Iraq. The Anti Defamation League got involved and it became a sloppy mess. The resolution was withdrawn, but not without damaging our Turkish relations.

Yesterday the House Foreign Affairs Committee yesterday declared that the mass deportations and massacres of Armenians by the Turks  during World War I ought to be called a genocide.  What is the purpose of this action?

I do not doubt that the Armenians were ruthlessly starved and slaughtered by the Turks. It was a black page in anyone’s history.  But is it the place of the American Congress to rectify every case of mass inhumanity in history? Is it worth straining our relations with the few Arab allies we have in the Middle East.

The Armenian genocide is real and should be taught….. in history classes.

The health care summit accomplished very little, nor did many expect it to. The ruling party has made the tragic mistake of breaking the trust of the electorate.  The Louisiana purchase, the Nelson Nebraska bribe, the failure to keep the promise of openness and transparency has destroyed the trust of the voters.

In business one can easily recover from a mistake, but it is far more difficult to recover from a betrayal of trust.

This betrayal is compounded by the arrogance that flows from the ruling party.  When the opposition is treated as devoid of intelligent thought or is treated as having questionable motives there is little room for coming together at any summit.

If the president seems to kill this disastrous health care bill a little more every time he has addressed it in the past why would he think that addressing it in a summit with the cameras rolling will now help it; especially if he has not changed his message or his style.  A note on leadership and power: If you have to state that you are the president you are stating that you have the power and control. If you have to state this, if it is not apparent and obvious from those around you, then you do not have the power nor the respect of the people in the room.

But this summit did succeed is highlighting two significant differences between the two parties. For one party health care is a right, and for the other it is a responsibility.  There is a distinct difference between a right such as free speech which requires no transfer of wealth to bestow and a right to an expensive service which must be paid for by another party.  The former is made available equally to all citizens; the latter requires the force of government to rob one citizen to give to another. The former empowers all citizens; the latter fosters dependency.

The second highlighted difference is the emphasis on the emotional verses the rational.  Trillion dollar policy should not hinge on emotionally laden anecdotes. “I’ve seen grown men cry,” noted Pelosi.  We have to have a clear understanding of the issue supported by accurate numbers.  Numbers are thrown around so loosely nobody believes them. The 46 million uninsured has now been dropped to 30 million and some estimates have at a much lower number.  And uninsured is not synonymous with  being without coverage.  Ask any doctor.

The numbers may not paint a complete picture but they cannot be ignored.  It is better to have an imperfect system that is sustainable that a better system that is not.

Finally there is the comprehensive trap; the belief that a big problem can only be approached with a big solution.  Big systemic solutions are fraught with unpredictable consequences, hidden costs, uncontrolled bureaucracies and endless expensive patchworks adjustments.  Most less complicated and ambitious reforms have far outstripped their cost estimates.

There are real health care problems and real health care solutions, but the big systemic solutions that focus on the fundamental philosophical differences between the two parties was doomed to fail from the beginning . No summit could change that.

The best cell phones are not nearly as clear as a land line. I hate talking on a cell phone. I have to ask people to repeat themselves due to poor connections, wind noise and the positioning of their mouth.

In my office I have no distracting noise and I can concentrate on the call and the other party.

While on the subject,  cell phones in the car are dangerous. Texting while driving is as dangerous as drunk driving.  In the time to enter a single character you can go 160 feet. But even talking, even hands free, is more distracting than you realize. It is not the same as listening to the radio. On the phone you are engaged in something other than driving and safety.

Constant attention to your Blackberry or iPhone while you are meeting or dining with others is just plain rude.

Another  phone thing that bugs me-  If you do not have time to talk, then don’t answer the phone.

Some people are engaged in business that requires one to be constantly in touch. But most just labor under the delusion that they are indispensible.  There is a lot to be said for calling from a quiet distraction free office.

(this was published previously in the Macon Telegraph)

Being in the middle of a record economic crisis presents a rare learning opportunity.  Several books are worthwhile for those seeking to understand what just happened.

Too Big to Fail by Andrew Ross Sorkin details the action of the Fed under Benanke and Treasury under Paulson during the crisis period between August and December.  While Geitner as head of the New York Fed was also featured the central player of this crisis was Hank Paulson.

Monumental decisions involving billions of dollars of assets were made in days, sometimes hours.  Both Paulson and Geitner had a sense that the market was due for a correction long before the crisis hit, but they probably did not see it coming as fast and as broad as it did. Bernanke noted that just as there are no atheists in foxholes there are no ideologues in economic crisis either. Neither Republicans or Democrats wanted to bail out Wall Street , but the crisis dictated actions that were against the grain of capitalists of both parties.

Paulson worked tirelessly to find appropriate merger partners for weak players like Merrill Lynch, Wachovia, and Lehman.  He almost had Barclays ready to buy Lehman when the British Financial Services Authority ( FSA) refused to approve the acquisition/merger because of the risk it brought to the British financial system.

Lehman was singular in the fact that it was not acquired or bailed out and thus had to go bankrupt.  Part of this was timing; Congress was just in no mood to bail out a Wall Street player.  Part of the reason was George Bush’s cousin who worked for Lehman and his brother Jeb’s association with the firm. Such close political relations probably worked against the interests of the firm.

In retrospect bailing our Lehman’s may have forestalled the panic that engulfed the rest of the system. With Bear Sterns gone and now Lehman’s gone, depositors wondered who was next and there began a run of the other banks like J.P Morgan and Morgan Stanley.

While Paulson’s association with Goldman was suspect the fact was he had to severe his tie and sell his stock ($485 million worth) in order to take his job at Treasury. Since his actions were so scrutinized he was careful to avoid even conversations that would indicate favoritism toward his old firm.

The most difficult decision was to bail out AIG whose credit default swaps acted as insurance against many of the cdo’s (collateralized debt obligations) that infected the financial markets. As the underlying assets plummeted in value AIG was downgraded and had to put up more capital that it could not provide.

Having to make such massive changes and decision in such short time meant that perfection was not obtainable. Barney Frank justifiably wanted some assurance that compensation to the executives would suffer from their misdeeds, but there simply was not enough time to rule of thousands of contracts during the time period that decisions had to be made.

Wall Street clearly engaged in risks it did not understand, but neither did the regulators such as Greenspan and his successor Bernanke. Complicated risk models gave the CEO’s delusional certainty, but eventually the party came crashing down for the same reason all bubbles burst;  lack of trust and confidence.

But Sorkin spends little space getting into the detail of the causes of the crash and suitably stays focused on the urgency and the actions required in response. 

For more information on the background that caused the crisis I recommend The Housing Boom and Bust by Thomas Sowell,  Financial Fiasco by Johan Norberg, most of all After the Fall: saving Capitalism from Wall Street - and Washington by Nicole Gelinas.

Sowell and Norberg focus more on the misguided Government fiscal and monetary policies that inflated the housing bubble, but Nicole Gelinas also analyzes which good regulations were unfortunately removed (and by who) and which bad ones were inappropriately applied.

A crisis of this nature required the perfect storm of many great errors to all focus their retribution at the same time. Unfortunately the media large engages in partisanship and demonization and few people will take the time to understand what happened and why.  It is complicated but engaging the problem reveals basic principles of sound policy that were violated as they were in previous bubbles.

History repeats itself but never the same way.

While I share the great concern about her destructive economic policies of this administration, I am getting a contrarian tick about the dollar and gold.

Every right wing talk show and business TV show is flooded with adds selling gold to consumers.  “The dollar decline is inevitable” the pitchmen warn, “Gold is the only safe money.”

When there is this much noise and whenever anything is inevitable it is time to be cautious.

I remember during the seventies when inflation seemed inevitable. The doomsday newsletters like Harry Brown and Howard Ruff had middle class investors buying gold coins, opening us accounts in Swiss banks and investing in Swiss Franc CDs.  Gold reached over 800 dollars an ounce.

And then the inevitable did not happen.

Volcker and Reagan wrestled inflation out of the system, the dollar soared and gold plummeted. Silver which ran as high as $50 an ounce came crashing down to under $5. The real reason for its rise and spectacular bubble was not the desire for sound money but the manipulations of the notorious Hunt brothers.

Middle class investors who bought into the fear and invested heavily in foreign currencies and gold were badly damaged.

It is challenging enough to get accurate information about domestic stocks. Understanding the factors affecting currency values and foreign markets are far beyond the scope of middle class investors (and most professional investors as well.)

Interest rates are near zero. They cannot go down any further, and given the deficit will likely go up.  When interest rates go up the costs of holding a non interest bearing asset like gold goes up, and this puts down ward pressure on the price of the metal.

While the dollar may seem vulnerable its value on world markets are relative to other currencies. As we see the Dubai fantasy teetering on the brink of bankruptcy and countries like Greece nearing default, the dollar may start looking better if for no other reason than other countries are looking worse.

The amount of uncertainty multiplies greatly when you leave our borders. If you are concerned and want some gold limit your exposure to 10% of  your assets and even dollar average that to avoid buying at a top. Consider gold stocks like Newmont or Goldcorp that you can sell easily and quickly if the market turns against you.

Do not put gold in your 401k or retirement account. The tax protection is better suited to income investments, even low yielding but secure Treasuries. If you think interest rates are going up (I do) avoid long term bonds of any nature. Bond face values drop as interest rate rise.

Successful investing requires controlling your emotions.  Anger and fear over this administration’s policies can easily influence your investment decisions.  Rarely does such emotional influence lead to better decisions.

The following was a reader’s comment to my article in American Thinker, “Why Elitists Fail“

Human beings can exist in one of only two modes: by controlling nature, or by controlling those who control nature. Those in the first category survive by acting in accordance with the facts of reality. Those in the second survive by manipulating the perceptions of other men. The method of thinking required for one is the opposite of that required for the other, and cannot coexist in the same man. Those most successful at manipulating the perceptions of other men (the political elite) will always be those least connected to reality.

We are ruled by parasites, who must constantly evade the knowledge of their own dependency, and who have no conception of their hosts’ limits. They will suck us dry, while neither knowing–nor caring if they did know–that their own deaths must necessarily follow.

David Broder writes a great piece in the New York Times, The Populist Addiction

excerpt:

It’s easy to see why politicians would be drawn to the populist pose. First, it makes everything so simple. The economic crisis was caused by a complex web of factors, including global imbalances caused by the rise of China. But with the populist narrative, you can just blame Goldman Sachs.

Second, it absolves voters of responsibility for their problems. Over the past few years, many investment bankers behaved like idiots, but so did average Americans, racking up unprecedented levels of personal debt. With the populist narrative, you can accuse the former and absolve the latter.

Third, populism is popular with the ruling class. Ever since I started covering politics, the Democratic ruling class has been driven by one fantasy: that voters will get so furious at people with M.B.A.’s that they will hand power to people with Ph.D.’s. The Republican ruling class has been driven by the fantasy that voters will get so furious at people with Ph.D.’s that they will hand power to people with M.B.A.’s. Members of the ruling class love populism because they think it will help their section of the elite gain power.

So it’s easy to see the seductiveness of populism. Nonetheless, it nearly always fails. The history of populism, going back to William Jennings Bryan, is generally a history of defeat.

That’s because voters aren’t as stupid as the populists imagine. Voters are capable of holding two ideas in their heads at one time: First, that the rich and the powerful do rig the game in their own favor; and second, that simply bashing the rich and the powerful will still not solve the country’s problems.

Science is a realm of discovery, skepticism, understanding, confirmation and challenge. But throughout history science has been polluted by political considerations.  In the Middle Ages the church considered any theory of the universe without the earth at the center heresy.

More currently science has been polluted by attempts to attach the certainty of science to the unknowable and the uncertain.  When science is hijacked to support political causes  skepticism and confirmation are treated as heresy the same as  the church condemned the heliocentric theories of the Middle Ages.

Wall Street bankers deluded themselves into thinking that the vastly complicated uncertainty of global markets and risk could be made certain with complicated mathematical formulas.  Blinded by vast sums of money they believed the ridiculous because they so wanted to. A philosophical understanding of risk was replaced with delusional mathematical certainty.

A political push to control wealth is served by the global warming/ climate change hysteria; credentialism and intelligence offers no more clarity to the future than the Gaussian Cupola Formula offered Wall Street.

That anyone could purport to know the future climate of the earth decades out with any degree of certainty defies common sense. The models offered to support such “science” are no more credible than the formulas created by the PhD quants on Wall Street who proposed to turn junk mortgages into AAA securities.

From “Why Elitists Fail” in American Thinker, January 30, 2010

Even the brightest minds cannot escape emotional impediments to a rational conclusion. Combining such emotional rationalism with a focus on theories detached from the verification of practical experience can be downright dangerous. This is why it concerns so many that Obama’s administration has the lowest number of appointees from the private sector in his cabinet of any president in history.

The average American knows that taking a dollar from one person and giving it to another does not create a stimulus. The average parent knows that protecting one from the consequences of bad decisions does not teach one to make good decisions. The individual citizen knows that the government will not make better health care decisions or better investment decisions because they will never know as much as all the citizens. The voter who knows the consequences of too much debt on his household does not find it more acceptable when a lot of zeros are added to the balance and the loan account is moved to Washington, D.C.