Greece: Where were you Buddha?

© Am Ang Zhang 2011

I returned from Greece after a lovely cruise. Greece has been hit by more financial problems and it was clear that market forces caused much hardship to its ordinary citizens! One taxi driver told me that Greece will never pay back the EU. He may well be right.

A Chinese Story:

The Yangtze River is rising. Man is on the roof. A traditional pigskin boat rowed along: let me get you off.

“No, Buddha will protect.”

Man is now knee-high in water. Naval boat came along: old man, let’s get you off.

“No, Buddha will protect.”

Man is now up to his neck in water. Rescue helicopter came along: let’s winch you off, stubborn old man.

“No, Buddha will protect.”

Man died and saw Buddha. “Why didn’t you come when I needed you most?”

I did, I sent pigskin boat, Naval boat and even my best helicopter, but you refused!

The Greeks have their own Gods, but perhaps they should try Buddha.

So first the Gods sent in Antigone:

So Antigone had a part in this tragedy too. That's ­Antigone Loudiadis of Goldman Sachs, who ­arranged a complex ­currency swap deal that helped Greece to conceal the scale of its debt, in what the Financial Times delicately calls "an optical illusion", as the country snuck into the eurozone. 

Then God showed how it could be done in Argentina: defy the I.M.F.

When the Argentine economy collapsed in December 2001, doomsday predictions abounded. Unless it adopted orthodox economic policies and quickly cut a deal with its foreign creditors, hyperinflation would surely follow, the peso would become worthless, investment and foreign reserves would vanish and any prospect of growth would be strangled.

But three years after Argentina declared a record debt default of more than $100 billion, the largest in history, the apocalypse has not arrived. Instead, the economy has grown by 8 percent for two consecutive years, exports have zoomed, the currency is stable, investors are gradually returning and unemployment has eased from record highs - all without a debt settlement or the standard measures required by the International Monetary Fund for its approval.

He even took out the head of I.M.F. just to be on the safe side.

Then came Iceland:

Unlike other disaster economies around the European periphery – economies that are trying to rehabilitate themselves through austerity and deflation — Iceland built up so much debt and found itself in such dire straits that orthodoxy was out of the question. Instead, Iceland devalued its currency massively and imposed capital controls.

And a strange thing has happened: although Iceland is generally considered to have experienced the worst financial crisis in history, its punishment has actually been substantially less than that of other nations.

For good measure Iceland’s god huffed and puffed.

 

AP Photo/Brynjar Gauti

But no, the Greeks have not learned anything.

This was written last year:

Germany will agree to some form of eurozone bailout. However, it will only support the minimum needed to ­placate the gods, and only with the most astringent, Creon-like conditions being imposed on Greece. It is an ­important but ultimately secondary question whether this help comes in the form of bilateral loans, loans from the European Investment Bank, purchases of Greek government debt, EU ­spending transfers, jointly issued eurobonds or any of the other mechanisms ­suggested. EU leaders will deny that this is a ­bailout and everyone will know that it is a bailout.                                                           Guardian.

The Greeks will do well to go back to their own Gods and not the I.M.F.

The Cockroach Catcher: The Next Europe: Left-over Euro & Deutschmark

To Intervene Or Not: A Colossal Failure Of Common Sense.

Michael Lewis: The Big Short

NHS: Business Model? Spare Us Please!!!

Councils blamed over Iceland savings

NHS & PFI: Please do not cry!

Please, do not cry!

©2012 Am Ang Zhang

  

Margaret Hodge, M.P. did not shy away from pointing out that:

“Every single one of you has failed to do proper due diligence about this and no one has been brought to account.

“There is an issue of negligence here and one that I have not felt with a health report to this committee before.”

Who were they that failed?

Dr. David Bennett (not a medical doctor and seemed less confident for someone from McKinsey)), Una O’Brien, permanent secretary for the Department of Health, who looked the most confident of the lot she did not know that Hospital Trust Boards are not to be trusted and of course the Trust CEO (well there has been 5) and Head of the Strategic Health Authority.

MPs were also outraged at the apparent failure of trust bosses, the health regulator Monitor and the Strategic Health Authority to take responsibility for the crisis.

The PFIHospital:

This is about the 611-bed PeterboroughCityHospital was opened in November 2010 at a cost of £289 million with the funding being provided through the government-backed PFI scheme.

The solution: millions again! Not on nurses or doctors!

MPs were also told that over the last few years, some £14 million has been spent on a range of consultants as well as five chief executives, to try and resolve the crisis.

A further £3 million is to be spent on setting up a new team of consultants, which was announced by Monitor today, and which will go into the hospital next year also in a bid find a solution to the trust’s woes.

Free advice from Bloggers etc: why not just buy the companies that own the PFI shares and if necessary by compulsory purchase?

Allyson Pollock:
How PFI is crippling the NHS

Last year the NHS underspent its budget by £900m, returning much of it to the Treasury. This raises serious questions about stewardship of public funds, at a time when hospitals with PFI-associated deficits, such as Hinchingbrooke, have been franchised out to companies such as Circle, and other PFI hospitals in south London and elsewhere are under "special measures". Before 1990 any hospital overspending would have been managed without recourse to closure, and failing hospitals were unheard of.

Failure is a product of successive governments' policies since 1990: Kenneth Clarke's introduction of capital charges and trusts, New Labour's PFI policy, foundation trusts and payment by results, and now Lansley's new funding regime and policies.

Since the policy was launched in 1992, report after report over almost two decades has shown how each wave of PFI has been associated with trust mergers, leading to 30% reductions in beds; staff lay-offs; and closures of hospitals, accident and emergency departments and an untold number of community services – all because of lack of affordability. PFI, once trumpeted as the largest hospital-building programme, was in fact the largest NHS hospital and bed closure programme.

Metronet calls in administrators: Cost to Taxpayers £410 million

Allyson Pollock again:

The debt is toxic.

However, the government will not allow hospitals to default on the debt (it would threaten all the other PFI schemes and result in the banks taking legal action). Moreover, PFI is a Treasury policy for the whole of the public sector and it is a policy that the Treasury is exporting abroad. The Treasury and health department signed off all the PFI deals in the full knowledge that affordability had been an issue from the very beginning. The Treasury stuck to the line that there was no alternative.

This is what the public needs to know and is not being told.

First, the high costs of PFI debt charges means that the NHS can only operate anything from a third to half as many services and staff as it would have done had the scheme been funded through conventional procurement. In other words, for every PFI hospital up and running, equity investors and bankers are charging as if for two. Edward Leigh, the chair of a Treasury committee report into PFI, called investor returns the unacceptable face of capitalism.

Second, we can still afford to pay for universal healthcare – but only if we stop using NHS funds to prop up banks and equity investors.

Third, it is PFI deficits that are driving service closures, not patient demand or an ageing population. Service closures have nothing to do with service redesign.

Fourth, the government has now embarked on a new path, bringing in an Act that effectively abolishes the NHS, and which allows hospitals both to enter into more joint ventures with industry and to raise up to half their income from private patients. Two monsters are now unleashed – PFI and Lansley's Health and Social Care Act 2012.

Colin Douglas

Here in The BMJ, he reviewed Allyson Pollock’s Book, NHS plc.

"Since it was Pollock's views on the PFI that so upset its proponents, it is worth summarising them briefly. Costs are now intrinsically higher, because of capital borrowing at higher rates than those available to government, because of cash hungry consultancies and the vast transactional and monitoring costs of countless contracts, and because—for the first time on a large scale in the NHS—commercial profits must be made. To accommodate all these new costs clinical services have been scaled down, while matching assumptions about increased efficiency are only variably delivered. All this, along with the rigidity of a trust based strategy for building hospitals and the locking in effect of contracts fixed for decades, seems to Pollock and many others at best a bad bargain, at worst a naive betrayal that opens the NHS to piecemeal destruction and the eventual abandonment of its founding principles. And all over the country PFIs—greedy, noisy, alien cuckoos in the NHS nest—gobble up its finances and will do so for the next 30 years.”

Next 30 years!

PFI: 

PFI deals will cost taxpayers £209bn over next 35 years

The private finance initiative was devised to get schools, hospitals and roads built without swelling the government's overdraft. Critics discerned a conjuring trick. Instead of the state borrowing, private consortiums did, and then the public paid – at a premium rate. It has often been likened to sticking a mortgage on a credit card; but Whitehall always resisted that charge.

It was just too important to flatter the books, especially to Gordon Brown. His twin obsessions were constructing temples to New Labour's social policies and establishing his prudence: PFI appeared to further both. But the trickery was too flagrant. Friendly thinktanks were tasked with devising a rationale couched in the language of public-private partnerships. It was said that City expertise would somehow foster efficiency. Henceforth PFI was all about improving the allocation of risk. Beautifying the books had nothing to do with it.     

PFI: The Enron of the NHS

“PFI makes me particularly angry. It is a guaranteed loan to property investors, where high-rate mortgage payments are kept off-balance to reduce the country’s declared debt. In other words, it’s the Enron of the NHS. This is money the NHS has committed to leave frontline healthcare for the next 35 years.”

Dr Helena McKeown

NHS & Banks: Regulation & Failures

Lehman Brothers Building New York now Barclays Capital ©2009 Am Ang Zhang

As Barclays was singled out amongst a number of UK banks in the so called Libor price fixing scandal, heads might indeed fall on the side of Bank of England.

Is it a failure of the regulators? Only time will tell. At least Mr Bob Diamond is handing the government a neat £290 million. Nobody dies as a result.

In Health Care, regulatory failure tells a different story. Failure of regulation often means death, and unnecessary death at that. Worst if you have an organisation such as NICE that actually set up protocols and made recommendations for treatment instead of leaving it to doctors, the deaths are in-excusable.

In my book The Cockroach Catcher:             

.....The trust between the doctor and the patient has been responsible for, as long as medicine is in existence, that mysterious force that brings about healing and often cures. That is all but gone. Now doctors have to act according to guidelines, protocols and rules, written or otherwise. Interestingly there is as yet no guideline for guideline writers. Two of the most commonly used drugs recommended by NICE for diabetes, which were taken by hundreds of thousands of mostly overweight people in the U.K. last year, were shown to cause widespread heart failure[1]. The embarrassing alarm was raised by a “maverick” doctor[2]. 

When I last visited Costa Rica, I met a fellow traveler form the US. When he realized that I was a child psychiatrist cornered me to ask if I used Paxil. Luckily for me, I was not converted to it. He then went on to tell me his sad story. His only son suffered depression of sorts and was prescribed Paxil. Within six weeks or so he had a call from his son’s College: he hanged himself.

Well, GlaxoSmithKleine has just been fined $3 Billion for Avandia, Paxil & Wellbutin.

The Guardian:

GlaxoSmithKline fined $3bn for healthcare fraud

GSK targeted the antidepressant Paxil (Paroxetine) at patients under age 18 when it was approved only for adults, and promoted the drug Wellbutrin for uses it was not approved for, including weight loss and treatment of sexual dysfunction, according to a US justice department investigation.

The company went to extreme lengths to promote the drugs, such as distributing a misleading medical journal article and providing doctors with meals and spa treatments that amounted to illegal kickbacks, prosecutors said.

"The sales force bribed physicians to prescribe GSK products using every imaginable form of high-priced entertainment, from Hawaiian vacations [and] paying doctors millions of dollars to go on speaking tours, to tickets to Madonna concerts," said US attorney Carmin Ortiz.

In a third case, GSK failed to give the US Food and Drug Administration safety data about its diabetes drug Avandia, in violation of US law, prosecutors said.

The misconduct began in the late 1990s and continued, in the case of Avandia's safety data, through to 2007. GSK agreed to plead guilty to three misdemeanour criminal counts, one each related to the three drugs.

Guilty pleas in cases of alleged corporate misconduct are exceedingly rare, making GSK's agreement especially unusual.

Remember my post in 2008:

Seroxat and Ribena

Now the story of Ribena has to be one of those sweet (sorry) stories one remembers for a long, long time. Nobody died either.

In Health Care, death unfortunately is irreversible.

GSK: Paroxetine: in the UK marketed as Seroxat and in the US as Paxil.

Business Insider: See the GSK documents here >

---

[1] Diabetes drugs recommended by National Institute for Health and Clinical Excellence (NICE)  were linked by scientists to heart failure.  Last year 1.8m prescriptions were written across the UK, which scientists say equates to several hundred thousand patients taking the drugs which are  recommended for use across the NHS by NICE.  But researchers today call on NICE to think again, revealing that as many as one in every 50 patients taking the drugs Avandia (rosiglitazone) and Actos (pioglitazone) over a period of 26 months will have to be hospitalised for heart failure.

http://business.guardian.co.uk/story/0,,2136076,00.html

[2] Dr Steven E. Nissen - Drug Safety Critic Hurls Darts From the Inside

     Dr. Nissen is shaking up the nation’s pharmaceutical industry.  His questioning of the safety of the Avandia diabetes medication in late May, for example, prompted a federal safety alert and led to a sales decline of about 30 percent for the drug, which brought in $3.2 billion for GlaxoSmithKline last year. Now, with a federal panel soon to decide whether it can remain on the market, Avandia’s future is uncertain.

    The drug is the latest example of why Dr. Nissen, 58, whose day job is chairman of cardiovascular medicine at the Cleveland Clinic, has emerged as a Naderesque figure and the nation’s unofficial arbiter of drug safety.

http://www.nytimes.com/2007/07/22/business/22nissen.html?adxnnl=1&adxnnlx=1185550813-HvntBJ4JOPGWXK5iwVC0/A

Torrontes: IMF, Tango & Sovereign Currency

Well, regular readers will recognise this wine as I have blogged about it before. That was when I was chatting with my friend on the state of our NHS.

We may indeed be thankful that Argentina defied the might of the IMF, unpegged its currency which initially devalued to 25% of its original US$ value and even today it is still hovering around the 33% mark, thereby averting major internal unrest. It may indeed be a good object lesson for Greece and perhaps soon enough, Spain, Italy and Portugal.

I won’t even go into Iceland.

For wine drinkers, that we can be enjoying such a wonderful white wine at a mere $8 in Central America or $12 in the US and £8 in the UK must be an object lesson in the need to keep your own sovereign currency. Do you think I would be writing this if it is £32: the white burgundy territory!

By all accounts, Argentina is doing very nicely, Mr IMF or is it Ms IMF now. Thank, but no thanks.

We have our Tango, our Malbec and now Torrontes.

 © 2010 Am Ang Zhang

Well, if you come across Crios, give it a go.

Peach, melon, citrus and full body for a wine with such fragrance and still dry and goes well with crab, shrimp and most Chinese dishes.

Last year alone over a quarter million cases were exported to the US alone.

I have tasted a few and Crios is by far the best.

Twitter:
Crios Wine ‏@CriosWine 

@Argentineanwine RT @croachcatcher: Good drink anyone? Torrontes: IMF, Tango & Sovereign Currency

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The Next Europe: Left-over Euro & Deutschmark

 

Dominique Faget/Agence France-Presse — Getty Images

Historian Hans-Joachim Voth gives the euro only another five years unless the euro zone is transformed into a full transfer union with massive redistribution. The continent is too culturally different to warrant a single currency, he says, adding that it would be best if Germany and other stronger economies left the euro zone.

SPIEGEL: Professor Voth, how much longer do you think the euro will survive?

Voth: Five years. The euro can't survive in its current form. We could, of course, make a full-fledged transfer union out of the euro-zone countries, complete with euro bonds and massive fiscal redistribution. In that case, we would have a different euro than the one that was originally conceived and promised to German voters. In the end, if the heads of state and government don't want that, it's likely that the euro will have to be dissolved.

SPIEGEL: You give the euro another five years -- what will Europe look like then, in your opinion?

Voth: I can imagine a world where there will a left-over euro: with France, Italy, the Mediterranean countries, perhaps Belgium as well. Apart from that the old Deutschmark zone will return, comprising Germany, Austria and the Netherlands, perhaps Denmark as well, perhaps Finland, which have no problems conducting the same monetary policy as Germany. We had a similar system during the European Exchange Rate Mechanism ERM. That was the optimal system, and then we gave it up for the euro.                                        Der Spiegel

See also Money Week

Der Spiegel:

• The Ticking Euro Bomb: What Options Are Left for the Common Currency? - SPIEGEL ONLINE - http://t.co/7xU5RGw4 
• Contagion!!! Dexia Rescue: Belgium Nationalizes Troubled Bank - SPIEGEL ONLINE - http://t.co/oPNn7FkR 
• Berlin, Paris Deny Rift Rumors: EU Postpones Summit on Debt Crisis - SPIEGEL ONLINE - http://t.co/tUmeLN3t 
• The Financial Crisis Returns: Europe's Attention Shifts to Its Ailing Banks - SPIEGEL ONLINE - http://t.co/H4Bs0vxP 
• 
  

Latest: 

Euro Zone on the Brink

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Warren Buffett has invested $5bn in Bank of America Photo: AP

WSJ: 24 September, 2008

Goldman Sachs Group Inc. said it will get a $5 billion investment from billionaire Warren Buffett's company, marking one of the biggest expressions of confidence in the financial system since the credit crisis intensified early this month.

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