Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
| Last | Change | Percent | |
| S&P Futures | 1690.5 | 1.0 | 0.06% |
| Eurostoxx Index | 2718.7 | 2.5 | 0.09% |
| Oil (WTI) | 108.5 | 0.4 | 0.37% |
| LIBOR | 0.265 | 0.000 | 0.00% |
| US Dollar Index (DXY) | 82.35 | -0.254 | -0.31% |
| 10 Year Govt Bond Yield | 2.47% | -0.01% | |
| Current Coupon Ginnie Mae TBA | 104.6 | 0.0 | |
| Current Coupon Fannie Mae TBA | 104.2 | -0.3 | |
| RPX Composite Real Estate Index | 200.7 | -0.2 | |
| BankRate 30 Year Fixed Rate Mortgage | 4.35 |
Markets are flat on no real news. Earnings season swings into full gear this week with an assortment of heavyweights. Bonds and MBS are flat.
Homebuilder NVR has released earnings. Looks like they were light on the bottom line, but there was a special charge. New orders increased 25%. Revenues increased 31%. NVR is east-coast focused, so it is lagging some of the West-Coast builders. Later this week, we will hear from Pulte, Standard Pacific, and D.R. Horton. It will be interesting to hear how traffic has been affected by the increase in rates.
Bill Gross thinks the Fed won’t raise the Fed funds rate until 2016 at the earliest.. Of course he is talking his book, but still… Interest rate cycles are very long.. This chart comes courtesy of Barry Ritholz, with long term interest rates going back to 1790. Note that from 1930 through 1960 we also had a period of exceptionally low interest rates.
While it is probably a very nichey product, you can buy a house for your elderly parents or college student and not have it treated as a garden-variety investment property. Fannie Mae has a program for people who want to purchase a home for a family member and don’t have the money for a downpayment. Just another arrow in your quiver, LOs.
Filed under: Morning Report |
All Things in Moderation 
I may be wading into a minefield here but what are the issues with the Detroit bankruptcy and who are the stakeholders? Is there a conceivable exit strategy for the city or is it just circling the drain?
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The last sentence of Krugman’s op-ed on Detroit’s bankruptcy (which I believe is the largest municipal bankruptcy in history):
“For the most part, it’s just one of those things that happens now and then in an ever-changing economy. ”
This reminds me a lot of Jamie Dimon and the other banker’s excuses for the financial crisis. It’s just something that happens, no one could have predicted it, and there’s no policy changes that could have prevented or mitigated it.
No one’s responsible. Things just happen.
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jnc:
This reminds me a lot of Jamie Dimon and the other banker’s excuses for the financial crisis.
Did Jamie Dimon really say that? Personally I don’t know many bankers that think the crisis is something that “just happened”, unrelated to government policy, and I know quite a few who think that it was the direct result of government policy. Including me.
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Yes he did. He compared it to a once in a generation natural disaster. I’ll find the link.
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Here’s one quick example:
“To hear some on Wall Street tell it, no one saw the financial crisis coming. As Jamie Dimon, the chairman and CEO of JPMorgan Chase, explained to the Financial Crisis Inquiry Commission, “In mortgage underwriting, somehow we just missed … that home prices don’t go up forever.””
http://www.pbs.org/wgbh/pages/frontline/business-economy-financial-crisis/untouchables/fraud-was-the-f-bomb/
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Here’s Lloyd Blankfein comparing it to an act of God.
Dimon takes more responsibility in that article, so my comment is probably better directed at Blankfein.
“Mr. Dimon said there had been regulatory deficiencies, but added, “I blame the management teams 100 percent, and fault no one else.”
Reflecting on the volatility that has rocked the markets, he recalled, “My daughter called me from school one day and said, ‘Dad, what’s a financial crisis?’ And, without trying to be funny, I said, ‘This type of thing happens every five to seven years.’ And she said, ‘Why is everyone so surprised?’ ””
See also:
http://articles.washingtonpost.com/2010-01-14/politics/36904710_1_angelides-shot-financial-crisis-inquiry-commission-philip-angelides
Krugman’s take is as expected, but he provides the direct citations.
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Didn’t Arkansas go bankrupt during the ’30’s?
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McWing:
Check out this article on the possibility of state bankruptcy.
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http://www.buzzfeed.com/katenocera/democratic-women-have-little-to-say-about-their-male-colleag?s=mobile
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Your link is circular back to ATiM.
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jnc:
Thanks…fixed it.
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Residential real estate bubbles are the Hurricane Katrinas of banking. They happen every few generations, and it doesn’t matter whether derivatives are involved, whether the government regulates the banks tightly or not, they bring down the banking system. Period.
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Weird, very against type, no?
http://abcnews.go.com/m/story?id=19735432&ref=http%3A%2F%2Ft.co%2FYTe8NI5OGN
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This ought to put the nail in the coffin that the current health care system (prior to and including the PPACA) can in any way be referred to as the free market:
“Unknown to most, a single committee of the AMA, the chief lobbying group for physicians, meets confidentially every year to come up with values for most of the services a doctor performs.
Those values are required under federal law to be based on the time and intensity of the procedures. The values, in turn, determine what Medicare and most private insurers pay doctors.”
http://www.washingtonpost.com/business/economy/how-a-secretive-panel-uses-data-that-distorts-doctors-pay/2013/07/20/ee134e3a-eda8-11e2-9008-61e94a7ea20d_story.html
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How to make the surveillance state acceptable, and ensure it’s continuance:
“TSA opens pre-screening to general public
By Josh Hicks, Published: July 22 at 6:00 am”
http://www.washingtonpost.com/blogs/federal-eye/wp/2013/07/22/tsa-opens-pre-screening-to-general-public/?hpid=z3
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Do yourself a favor and read the comments!
http://livewire.talkingpointsmemo.com/entry/report-george-zimmerman-rescues-man-from-overturned-truck#comment-972411162
My favorite:
Fresser • an hour ago −
What does that mean “he rescued a trapped person from an overturned truck”??
What did he do? Lift the truck with his superhuman powers and pull him out? How was he “trapped”?
There are some sicko racists there too. I wonder how closely they monitor the comments.
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Good read on the India miracle.
http://www.forbes.com/sites/kylesmith/2013/04/24/indias-economic-rise-is-a-firm-rebuke-of-joseph-stiglitz-brad-delong-and-the-world-bank/
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Why men need women. Haha, this is interesting and somewhat tangential to our discussion earlier today…………..maybe.
In a provocative new study, the researchers Michael Dahl, Cristian Dezso and David Gaddis Ross examined generosity and what inspires it in wealthy men. Rather than looking at large-scale charitable giving, they looked at why some male chief executives paid their employees more generously than others. The researchers tracked the wages that male chief executives at more than 10,000 Danish companies paid their employees over the course of a decade.
Interestingly, the chief executives paid their employees less after becoming fathers. On average, after chief executives had a child, they paid about $100 less in annual compensation per employee. To be a good provider, the researchers write, it’s all too common for a male chief executive to claim “his firm’s resources for himself and his growing family, at the expense of his employees.”
But there was a twist. When Professor Dahl’s team examined the data more closely, the changes in pay depended on the gender of the child that the chief executives fathered. They reduced wages after having a son, but not after having a daughter.
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All the Unions want is their fair advantage!
http://tpmdc.talkingpointsmemo.com/2013/07/unions-attack-obamacare-in-push-for-special-treat-under-the-law.php?m=1
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the problem with that TPM story is depicts the union problem as a technical error..
not true. it was written that way intentionally.
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NoVA –
Seton says this is a positive step. Any observations?
Back in 2011, officials at Seton Health Alliance were anxious to change the way its doctors delivered health care. The Austin-based hospital system didn’t want to get paid just for the sheer volume of surgeries and patient visits their doctors delivered.
Executives wanted to try something new: They wanted Medicare to pay them for taking better care of patients.
Seton Health also wanted to move as quickly as possible. So in December 2011, it became a Pioneer Accountable Care Organization, one of 32 health systems across the country that would — as the name implies — pioneer value-based care, and get paid for hitting certain quality metrics.
“It was appealing to us because it was the first opportunity and the first start date for one of these programs,” Greg Sheff, the group’s chief medical officer, said. “We really believed in it.”
Seton invested millions moving to a value-based system. It hired new nurse coordinators, to ensure patients got higher quality-care and installed new data systems that made it easier for doctors to talk to one another.
This all makes the next twist in Seton’s story a bit of a surprise: It has decided to leave the ACO program, switching to a separate federal program with a bit more flexibility–and no financial downsides if quality does not improve.
“We knew [signing up for the ACO program] was the right decision at that point in time, but have always thought we would continue to reevaluate,” Sheff says.
The results of the Accountable Care Organizations’ first year, released last year, are a bit difficult to interpret. All the hospitals did show success in improving on quality measures, rates of re-admissions and monitoring of cholesterol levels.
On the other, 14 failed to produce any cost savings – and nearly a third of them also decided to stop participating in the program. Seven switched a different, less aggressive Medicare program, while two dropped out altogether.
“It’s not perfect, obviously,” says Chas Roades, chief research officer at the Advisory Board Company, which advises hospitals. “But no one expected it would be a home run in the first innings. What we’ve heard from a lot of our members is that the first year was a bit bumpy.”
I’ve spent the past few days talking to the ACO dropouts, trying to understand what didn’t work for them and why they went a different path. I tended to hear variations on a theme: They liked the idea of value-based care and still plan to pursue it. They just didn’t see this much-touted federal program as the best way forward. With so many different experiments in the hopper right now, something had to give.
“Administratively, it was very difficult,” says David Spahlinger, executive director of University of Michigan’s Faculty Group Practice. “We had to maintain two different databases, and two different contacts at Medicare. In the end, we decided we would move out of the pioneer program.”
University of Michigan, Spahlinger explained, already had another group of doctors who were participating in the Medicare Shared Savings Program. After a year, it seemed like a waste of resources to participate in two, federal demonstrations. So, for year two, they’ll merge their ACO demonstration into the already existing MSSP.
“I take responsibility for underestimating the amount of work of doing two different programs at once,” he says.
This actually gets at a feature of the health care law that, depending on how you view it, could be a virtue or a vice. The Affordable Care Act includes 45 separate provisions meant to reduce the cost of health care. It’s a “kitchen sink” approach: Trying lots of different demonstrations and hoping that, between the 45, a few prove especially successful.
This, however, can prove an administrative nightmare for hospitals, especially when it means managing a completely new system for a relatively small number of patients.
That has proved a challenge for hospital administrators like Todd Sandman, who oversees patient engagement at Presbyterian Health Care Services in New Mexico. The hospital system left the ACO program, he says, so it could focus more of its efforts on the 400,000 Medicare beneficiaries in the Medicare Advantage plans it runs–rather than the 12,000 assigned to its ACO.
“We’d be better off putting our energy into the health plan we already have,” Sandman says. “We didn’t have the confidence, based on historical trends, that we could beat the trend. We would have been in a loss position and writing a check back to Medicare.”
Seven of the nine hospitals that left the Pioneer ACO program transitioned to the Medicare Shared Savings Program, generally seen as a smaller, less aggressive step toward reforming health payments. Most notably, the Medicare Shared Savings Program has upside risk but no downside; hospitals aren’t penalized if they don’t produce lower cost care.
By contrast, these hospitals would have faced the possibility of losing money had they stayed in the Pioneer ACO program.
“To me, it’s like dropping from the major leagues to AAA,” Erik Johnson, a senior vice president at Avalere Health, said. “They’re dropping because they want one-sided risk. Most physician groups aren’t accustomed to dealing with risk at this point.”
Seton isn’t giving up on value-based health care; it’s among the seven hospitals transitioning into the other. It’s entering into contracts with private insurers, too, that use an accountable care model. But the ACO program that the feds came up with was, after a year, too rigid for the hospital system.
“We were more comfortable moving into that program, where there would be no shared losses,” Seton Alliance’s Sheff says.
Is this a health reform success story, where a new program didn’t quite work out, but did lead a health care system into other value-based payment models? Or is this a failure of the health care law, with Seton Alliance giving up on a nascent program?
From where Sheff sits, he sees it as the former.
“It helped us get more comfortable and the other part is that it helped payers get more comfortable,” he says. “The Medicare pilots are driving changes on the commercial front. I don’t know if we’d even be having these conversations if it weren’t for the Affordable Care Act.”
KLIFF NOTES: Top health policy reads from around the Web.
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Brent:
Technical question. What does “Purchase/Resale Arm’s Length Residential Transaction” mean? The context it that that was how the house I’m renting in Baltimore was sold last time. I’m just curious.
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Not a foreclosure, Kelley.
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Thanks, Mark!
Although it must mean more than just that. 🙂
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Yes, Kelly. It means: 1]sale in the ordinary course of business;2]conducted by willing and informed parties; and 3]neither of whom were under any compulsion to deal.
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Thanks!
Just sent my lease off: I’ve now got an official Baltimore address as of 8/1/2013.
Now to find a moving company. . .
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Apropos of nothing, I do have to say that (having just finished watching “Rome”) I think my favorite part of the royal birth yesterday was the town crier.
The guy in “Rome” had a little bit more panache, though.
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Wonder if this will go anywhere or not.
The California Democratic Party approved a resolution over the weekend that called on President Barack Obama to halt federal raids on marijuana dispensaries.
“THEREFORE BE IT RESOLVED, that the California Democratic Party requests: President Obama to allow the newly enacted marijuana legalization laws in Colorado and Washington to go into effect with no federal interference, and BE IT FURTHER RESOLVED, that the California Democratic Party asks President Obama to end the Department of Justice interference and raids by federal agencies in states with medical marijuana laws, and a comprehensive study be immediately undertaken to produce recommendations for reform of our nation’s marijuana prohibition.”
http://www.rawstory.com/rs/2013/07/22/california-democratic-party-tells-obama-to-halt-medical-marijuana-raids/
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And the news from Delaware. Sounds like more “pie in the sky”.
This week, the state of Delaware, which has made corporate governance its regional cuisine, approved a new form of incorporation, the B-corp, or benefit corporation. These are companies explicitly charged with a dual mission: to earn profits for shareholders, the traditional business goal, and also to pursue the social good in other ways, ranging from protecting employees to safeguarding the environment – even if these goals come at the cost of short-term financial gain.
Jack Markell, Delaware’s governor, traveled to a seminar discussion in New York on the sweltering day his state signed B-corp into law. “This is a very significant public policy issue,” he said. “There is both a market need and a societal need.”
Markell admitted that “there are a lot of skeptics out there,” but he said the B-corp status was an important response to a world in which the way we do business has changed.
“When businesses first started up, they operated in the communities where they existed. This was where the executives lived,” Markell said. Because they were so deeply rooted in particular communities, they didn’t need legal structures that required them to take into account all of their stakeholders – social pressure served that role.
http://blogs.reuters.com/chrystia-freeland/2013/07/19/retooling-capitalism-for-the-social-good/
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lms (from your pie-in-the-sky link):
These are companies explicitly charged with a dual mission: to earn profits for shareholders, the traditional business goal, and also to pursue the social good in other ways, ranging from protecting employees to safeguarding the environment – even if these goals come at the cost of short-term financial gain.
Is producing food for people to eat a “social good”? How about producing clothes for people to wear? Or moving people from one place to another en masse via an airplane? I would say that most profit-making businesses are pursuing a social good.
Except, of course, bankers and lawyers. And lobbyists.
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Looks like horizontal drilling is paying dividends as far as pressuring Iran goes.
U.S. oil production has already paid foreign policy dividends in at least one vital area: It has paved the way for stronger sanctions on Iran by helping to keep the global oil market well-supplied and minimizing oil price volatility.
These developments were critical in allowing the United States to implement new, tougher sanctions in early 2012 that drove year-over-year Iranian crude exports down by nearly 15 percent in the first quarter alone. A complete European embargo, effective July 1, 2012, had a more dramatic effect — cutting Iranian crude exports by nearly 60 percent in the third quarter. All told, Iranian crude production in 2012 fell to its lowest level since 1989. For the first time, Western sanctions began to inflict real pain on Iran’s economy.
Despite the loss of up to a million barrels per day of Iranian crude in 2012, global oil prices were not damagingly volatile. Over the last five months of 2012, when significant Iranian supplies were coming off the market, prices traded in a narrow band between $107 and $116 per barrel, and the average weekly price change was just 1.6 percent.
http://blogs.reuters.com/great-debate/2013/07/19/the-oil-booms-foreign-policy-dividend/
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I’m doing my part to end global warming. We’re adding our compost that we’ve been working on since February into the garden this weekend.
Under this new paradigm, one of the most promising means of extracting atmospheric carbon dioxide is also one of the most common processes on Earth: photosynthesis.
Which is how I came to find myself plunged forearm-deep into the aforementioned mound of compost. It was a truly massive heap, nearly the length of a football field, 5 feet tall and 10 feet wide, and a second equally large pile lay nearby. It all belonged to Cornell University, one of the powerhouses of agricultural research in the United States. Michael P. Hoffmann, the associate dean of Cornell’s College of Agriculture and Life Sciences, told me it was comprised mainly of food scraps from Cornell’s dining halls and detritus from its groundskeeping operations.
“You don’t want to leave your hand in there too long,” Hoffmann cautioned as I felt around inside the steaming mass of brown. Sure enough, although it was a cool, cloudy day, my forearm soon felt almost uncomfortably warm. “The microbes in there generate a fair amount of heat as they break down the organic materials,” he explained.
Compost is but one of the materials that can be used to produce biochar, a substance that a small but growing number of scientists and private companies believe could enable extraction of carbon dioxide from the atmosphere at a meaningful scale. Biochar, which is basically a fancy scientific name for charcoal, is produced when plant matter—tree leaves, branches and roots, cornstalks, rice husks, peanut shells—or other organic material is heated in a low-oxygen environment (so it doesn’t catch fire). Like compost, all of these materials contain carbon: The plants inhaled it, as carbon dioxide, in the process of photosynthesis. Inserting biochar in soil therefore has the effect of removing carbon dioxide from the atmosphere and storing it underground, where it will not contribute to global warming for hundreds of years.
http://www.motherjones.com/environment/2013/07/photosynthesis-biochar-climate-change?page=1
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Here a piece I can’t get to because I’m too cheap, but it sounds interesting. The housing recovery may be more difficult than we think.
http://online.wsj.com/article/SB10001424127887324144304578621784045469540.html?mod=WSJ_hps_LEFTTopStories
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Scott, most businesses provide goods and services that people need or want (even bankers and lawyers) so if you consider that a social good, then yes. I think the piece is talking about above and beyond that sort of business model. I called it “pie in the sky” for a reason.
Our daughter works for the company ranked best in Denver and third in the nation as rated by their employees. They’re not only taking care of their employees they’re making money hand over fist. Not sure which came first but they’ve garnered a huge loyalty factor and compared to the three other professional jobs she’s had the people work their butts off for them.
Also, for an energy company they have a very high ranking with the local environmental groups and do a lot of local charity and investment. I think they might be following the business model highlighted above or something similar.
We talked about some of this stuff years ago. My father was heavily involved in employee satisfaction and customer service models for the company he worked for and so he might have even approved of the “pie in the sky” proposals they’re going after. He was very conservative but traveled across the country speaking to these very issues.
Anyway, I thought it was an interesting commitment for businesses to make.
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lms:
I think the piece is talking about above and beyond that sort of business model.
See, I wouldn’t ever use the phrase “above and beyond” in this context. Is “safeguarding the environment” somehow a higher “social good” than providing people with affordable food to eat? I don’t think it is.
To be honest I’m not even sure the term “social good” even has any objective meaning. I think its meaning is largely political.
BTW, I was being facetious about bankers and lobbyists. (But not lawyers. :))
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“Michigoose, on July 23, 2013 at 2:43 am said:
Apropos of nothing, I do have to say that (having just finished watching “Rome”) I think my favorite part of the royal birth yesterday was the town crier.
The guy in “Rome” had a little bit more panache, though.”
The ads were funny. Glad you liked the series. I assume you got through both seasons.
My favorite part was probably Caesar’s Triumph with Vercingetorix.
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jnc: Yep, finished the second season Friday night after getting back.
I think my favorite part was Cassius’ and Brutus’ final battle, although from what I remember it isn’t actually historically correct.
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Creating profit for shareholders is the most important do i good of all.
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Mark
I think the key part of that story is:
“With so many different experiments in the hopper right now, something had to give.”
There’s are whole lot mandated and then there’s these voluntary programs. how the work together is kind of up in the air. also, there’s been a lot of turnover in the CMS office that’s supposed to be running the ACOs. so there’s some hesitation to sign up when you don’t know who is in charge.
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“Michigoose, on July 23, 2013 at 8:57 am said:
jnc: Yep, finished the second season Friday night after getting back.
I think my favorite part was Cassius’ and Brutus’ final battle, although from what I remember it isn’t actually historically correct.”
Second favorite part was the princeps senatus trying to remember all the precedents on the tribunician veto and basically setting up a do over of the Senate session.
Where upon our heroes get into a street brawl and bring down the Republic.
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Where upon our heroes get into a street brawl and bring down the Republic
Ain’t fake history great sometimes! That was fabulous.
Now I’m watching “Boardwalk Empire”. Haven’t quite gotten into it yet, but it has promise.
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