Category Archives: Economy

UPDATED: Production Depends On Pressing Flesh In Washington (Big Biz Was Once Small, Dah!)

Business, Democracy, Economy, Healthcare, Political Economy, Regulation, Science, Technology

As discussed over these pixelated pages, the effects of the Obama healthscare are percolating down. Now the EETimes reports that, “As many as three-quarters of venture capitalists are exiting the health care field as the total pool of venture capital decreases and regulatory hurdles increase.”

Medical electronics companies face increasing hurdles getting funding and regulatory approval to bring new technologies to market, according to executives at a medical device event here.

“We’re in a bit of a perfect storm right now with some of the worst things I’ve seen in 30 years,” said Eamonn Hobbs, chief executive of DelCath Systems and chairman of the Medical Device Manufacturers Association (MDMA), host of the event.

As many as three-quarters of venture capitalists are exiting the health care field as the total pool of venture capital decreases and regulatory hurdles increase, said Kevin Wasserstein, managing director of Versant Ventures (Menlo Park, Calif.) which focuses on health care.

“Even entrepreneurs have started to retreat from pursing big ideas [in health care], and we risk as an industry evolving to incrementalism and safer projects,” said Wasserstein.

Some of the about 100 medical devices executives gathered here complained about what they said was an increasingly conservative and slow-moving U.S. Food and Drug Administration. The chief executive of one medical device company said his product is approved for sale in Europe, but is still waiting on an FDA OK to begin clinical trials.

UPDATED: (Sept. 21): Big Biz Was Once Small, Dah! What do you know, Bernie Marcus, Home Depot co-founder, was once the owner of a small business. How can that be? (Yeah, Obama … and the Republicans are idiots).

Yes, big business was once small. Through the democratic vote of the consumer, a small concern grows and grows to become a big, invariably, bad business. (Irony alert.)

Democracy practiced in the free market is the only democracy worth a dime. Let’s destroy the only honest democracy we have: the free market.

The Blair Third-Way Blur

Britain, Conservatism, Economy, Europe, Republicans, Socialism, The State

How serious are Republican boosters about liberty? Tony Blair serious. Sean Hannity interviews Mr. Blair, and tries to get this consummate Third-Way politician to repeat the Hannity inanities, among which are the following catch phrases: We want a small government (translation: you call the state behemoth small when a Republican is at the helm), and a strong national defense (translated: defend the indefensible invasions so long as they are started by Republicans).

Republican economics: condemn the Keynesian voodoo, as you grope obscenely for the “stimulus packages,” and while rudely wanking your business buddies in full view of disgusted onlookers.

Blair is way cleverer. He re-branded “the Keynesian model” as a Third Way sort of kosher statism about which your host (support her, please!) wrote way back in … 2000, in the Calgary Herald column, “Third Way is Socialism’s New Bandwagon.”

To the request that he make a token grumble against Sean Hannity’s ostensible peeve, Blair replied:

“I happen to think in this case there’s a third way, which is a state that is strategic and empowering, where your welfare and public service policies are reformed and modernized from the 1940s.”

What a sweet molester is our Uncle Sam and his cousin across the pond.

The Dynamics Of US Government Debt (& Bankruptcy)

Debt, Economy, Inflation

$120 Trillion: That’s a reoccurring figure in my writings on the economy. It’s, plus/minus, the sum total of the American government’s debt, including unfunded obligations and promises. According to Princeton’s Garry Becker and Richard Posner of the University of Chicago Law School, “evaluating a nation’s economic condition” involves comparing not the “public debt (government bonds) to Gross Domestic Product,” but comparing “assets and liabilities.”

“The major asset of any government is its taxing power, which of course cannot be equated to the entire GDP, or the entire value of the nation’s human and physical capital; for both economic and political reasons, the taxing power is limited to a percentage of GDP well below 100 percent. And, realistically, the liability side of the national ledger includes not only government bonds but also other contractual obligations, entitlements, and at least strongly anchored expectations concerning government services (we’re not about to eliminate our armed forces). In addition … the national balance sheet must be reckoned in dynamic terms, with due regard for likely increases both in GDP and in liabilities, especially increases in entitlement spending that are likely to result from the continued ageing (sic) of the population.”

“Because American tax rates are low by international standards and resistance to increasing them is fierce, … the ratio of current U.S. public debt to realistically realizable tax revenues is 3.58 to 1, which is the highest by a large margin of the countries in the report’s list.”

If you’re looking for the usual pacifier—European countries are way worse off than us in terms of profligacy—DON’T. Only Greece comes close to the Us’s “ratio of current public debt to realistically realizable tax revenues. … because of the uncertainty of the future), America’s net worth is negative, and this negative net worth is eight times larger than our GDP. This means that the net present value of the government’s liabilities, minus assets, is approximately $120 trillion.”

Another theme on these websites of mine: The political resistance from the oink sectors is too intense to effect change (were it not already too late).

The Becker-Posner blog reckons that “the bondholders and holders of other contractual rights against the government have to start worrying about the prospects for outright default or default through inflation. These are possibilities in our future, just as in the future of Greece.”

But if you were reading this space (including the regular posters in the Comments Section), you already knew that.

Goose-Stepping Stupid

Bush, Debt, Economy, Labor, Media

My favorite analogy in describing the random, rudderless veering of the political and economic “minds” that bedevil us on the idiot’s lantern is Brownian motion—microscopic particles (the minds in question) in motion, suspended in gas. Peter Schiff likens the flurry to a “flock of pigeons that stays in tight formation, flies feverishly, while refusing to stick to any particular direction for very long”:

“Today’s weak GDP numbers have finally caused the mass of economists to revise downward their formerly optimistic recovery forecasts, with many finally entertaining the possibility of a ‘double dip’ recession. It should be obvious by now that these economists only have the capacity to describe where the economy is moving in the short-term…they have no ability to explain the reasons behind the macro trends or make predictions that go beyond the next data release. But economics is not dart throwing. It can be understood and properly forecast.

The major mental block is that most economists believe that an economy grows as a result of spending. Any policy that encourages spending and discourages savings and investment is considered beneficial. Unfortunately, these policies, which only succeed in growing debt and government, act more as an economic sedative than a stimulant.”

[SNIP]

What do you know, the geese described above have news: it’s all good. TIME magazine wants you to know: Rising unemployment is good.

The Department of Labor reported August job numbers on Friday, and the numbers appeared to be another bad sign for the recovery. The economy lost 54,000 positions in the last full month of summer. Worse, the unemployment rate rose for the first time in four months to 9.6%, from a rate of 9.5% the month before.
So is this jobs report the latest sign that we are headed for a double dip? Probably not. Actually it’s the opposite. Despite what it looks like, today’s jobs numbers are good news for the economy. Mark Zandi, a closely watched economist, had this to say on CNBC when the job report was announced, “It solidifies the idea the economic recovery is going to remain intact.”

For a moment I was worried (actually, I began to worry—and warned of hyperinflation—in 2003, when “W” began the deficit spending in earnest).

The fig leaf of a “jobless recovery” is being used a bit less, but substitutes are coming fast and furious.