Monday, December 10, 2007

...And You Remove All Reason and Logic

The New Yorker has this analysis of the rate freeze that Secretary Paulson has brokered. It focuses on only one of the five points of why I thought this rate freeze is bad and dangerous policy. It does concur on that point, which is that this rate freeze will only marginally help those it intends to anyway.

Although the plan will provide real relief for at least some homeowners, it’s more like a Band-Aid than like the major surgery that some of the hype makes out. That’s because at this point interest-rate resets are just a small part of the mortgage-market problem. Postponing rate resets doesn’t change the fact that too many people spent far too much borrowed money on houses with prices that were far too high, and that they are now stuck in homes that they can’t really afford and can’t sell. Even with the interest-rate freeze, foreclosures will keep rising

I believe the article is largely right, and from experience I believe that most sub prime borrowers just simply overbought. They took on property they couldn't afford. I believe that the rate increase would only perpetuate not create the problem. (Please note there is a great deal of debate on this point within the industry so my view is not a given. Some people do believe that it was in fact the rate increase that started the problem).

That said, there was something else in the article that is even more concerning.

Not for everyone, though. The plan sets up a system of triage, separating borrowers into three categories: those who will be able to keep paying after the rates reset, or else refinance their loans; those who can pay now but won’t be able to when the rates go higher; and those for whom even the current rates are too high. Only the second group will get help. Also, the plan doesn’t go into effect until next year—if your loan resets on December 31st, you’re out of luck.

In other words, what this plan will do is punish responsible borrowers and reward irresponsible borrowers. Think about what this article is saying for a minute. If you happen to be holding onto a subprime loan and you can afford the new higher payment, the rate freeze doesn't apply to you and you are forced to take that higher payment. If, on the other hand, you could afford the lower payment but not the new payment, you will have your lower payment frozen for you. Does this make any sense? How could the government possibly institute a policy that rewards irresponsible borrowers and punish responsible borrowers and think this will have anything but a disastrous effect?

Furthermore, how exactly is one to determine who can and can't afford the payments? They are going to freeze rates that are going to reset in the future. We are talking about millions of loans. What are the parameters? Who will decide? How can this turn into anything but a bureaucratic nightmare? This is a process that will be ripe for fraud, manipulation, and chaos. Again, this is a textbook example of a moral hazard. Government continues to believe that they can create a moral hazard with a positive outcome, however they do it by removing all logic and reason.

This process is going to fraught with litigation. Imagine if you are one of the borrowers that is determined to be able to pay the new loan, what is the likelihood that you will look to sue to drop your rate? What if you were a borrower that was wise enough to take a higher fixed rate? What is the likelihood you will look to have your rate lowered artificially? How can anyone possibly justify rewarding the irresponsible while punishing the responsible? There is no way this would pass legal mustard. The worst part is the absurdity is spelled out in the plan itself.

News and Views from Iraq and the Rest of the GWOT

Here is the latest from Michael Totten...


Fallujah today is an impoverished ramshackle mess, but it's not a war zone anymore. In 2004 it was by far the worst place in the country. It was still a hotbed of insurgent activity as recently as the first half of 2007.

“The unit we relieved was monitoring the city, watching the city,” Corporal Koch said. “We took that over from them. Then we started our push. It was a couple of months before the regular civilians got back in the city.”

“Months after you came in?” I said.

“We came in in November, on November 6th,” he said. “It took about two or three weeks altogether. The civilians stayed out of the city for another month or month and a half after that. We were still doing operations then, but it wasn't an all out push. It was just cleaning up. It was loose ends. Weapons caches. Just basically getting this place ready for the civilians to come back in. We made sure people weren't going into their homes while they were rigged to blow.”

The latest from Omar...


Unlike previous operations, this one is different in that the troops were sent following a request submitted to the government by the department of Sunni
endowment, an entity in charge of overseeing Sunni mosques and other religious activities. The chief of the Sunni endowment, Sheikh Ahmed Abdul Ghafour Samarraie, is a moderate Sunni cleric who has renounced the insurgency and explicitly accused the association of assisting al-Qaeda by justifying their murderous attacks against Iraqis.

For four years now we’ve been waiting for this to happen. This al-Qaeda apologist, so-called association of Muslim scholars had to be dealt with and honestly it was frustrating to see them operate freely when the damage they caused was widely known, in nature if not in extent.

This incident, I believe, is not to be seen as abstract and it’s no coincidence that the raid on their office came amid efforts to prosecute corrupt officials from Sadr’s movement and the Fadheela Party. The list includes the former deputy minister of health, a Sadr follower who’s been accused of running sectarian death squads and the chief of the integrity committee in the parliament; a member of the Fadheela Party which is believed to be involved in massive oil smuggling operations in the south. He is now about to lose parliamentary immunity over corruption charges.


Bill Roggio gives us the latest in a battle in Afghanistan to retake a Taliban stronghold.


The battle for the Taliban stronghold of Musa Qala in the southern Afghan province of Helmand is well underway. Officially launched on December 7, international and Afghan forces have prepped the battlefield for well over a month. A British armored column launched a feint to the outskirts of the town in mid-November and leaflets have been dropped on the town warning civilians to flee the impending attack.

The final assault on Musa Qala began after the Afghan government convinced a key Taliban tribal leader to defect. Last month there were reports Mullah Abdul Salaam was seeking to negotiate a deal with the Afghan government. The Times Online reported Salaam has indeed defected to the Afghan government, and "brought with him up to one-third of the fighters who had been defending Musa Qala."

British spy chiefs have weighed in with their skepticism over the latest NIE report on Iran.


The timing of the CIA report has also provoked fury in the British Government, where officials believe it has undermined efforts to impose tough new sanctions on Iran and made an Israeli attack on its nuclear facilities more likely.

The security services in London want concrete evidence to allay concerns that the Islamic state has fed disinformation to the CIA.

The report used new evidence - including human sources, wireless intercepts and evidence from an Iranian defector - to conclude that Teheran suspended the bomb-making side of its nuclear programme in 2003. But British intelligence is concerned
that US spy chiefs were so determined to avoid giving President Bush a reason to go to war - as their reports on Saddam Hussein's weapons programmes did in Iraq - that they got it wrong this time.

The Washington Post reports today that members of Congress including Nancy Pelosi were briefed on interrogation techniques at Gitmo including waterboarding.


In September 2002, four members of Congress met in secret for a first look at a unique CIA program designed to wring vital information from reticent terrorism suspects in U.S. custody. For more than an hour, the bipartisan group, which included current House Speaker Nancy Pelosi (D-Calif.), was given a virtual tour of
the CIA's overseas detention sites and the harsh techniques interrogators had devised to try to make their prisoners talk.

Among the techniques described, said two officials present, was waterboarding, a practice that years later would be condemned as torture by Democrats and some Republicans on Capitol Hill. But on that day, no objections were raised. Instead, at least two lawmakers in the room asked the CIA to push harder, two U.S. officials said.

Gordon Brown has declared the war in Iraq over for the remaining British troops in Iraq.

The PM was cheered as he praised UK troops and revealed combat operations in Basra will end “within two weeks”.

Iraqi forces will take over as the 4,500-strong British force switches from front-line duties to a training role.

By early next year, our contingent in Southern Iraq will be cut to 2,500 – and may be withdrawn completely in March.


In a not unsurprising turn of events, the Pakistan elections are being challenged on fairness grounds.

Pakistan's election campaign began in earnest Monday, a day after former Prime Minister Nawaz Sharif dropped threats to boycott the balloting to protest the authoritarian rule of President Pervez Musharraf.

Sharif embarked on a tour of the country to stump for his Pakistan Muslim League-N party, even though election authorities have rejected his own candidacy.

The two-time prime minister was to address a rally Monday in the central city of Faisalabad and proceed to Multan, Rawalpindi, Quetta, Karachi and Peshawar in coming days, party officials said...

There you have the updated goings on from most of the hotspots of the war on terror.

the princess bride

My name is...

Rudy On Leadership, the GWOT, Healthcare and More

I had a chance to see Rudy Giuliani speak at the Italian American Sports Hall of Fame in Chicago on Friday. While I don't necessarily have too much reference point, I do believe that in most ways this was much like any campaign towhall meeting and speech. It was still quite illuminating nevertheless.

I believe you can tell a lot about a candidate's agenda by what they focus on during such a meeting. The first policy that Rudy spoke about was illegal immigration and how important it is to finally get a handle on it. His newfound commitment towards combatting illegal immigration will no doubt be met with skepticism and controversy by many of my conservative colleagues. Unfortunately, it is one of those debates that is in many ways pointless. There will be plenty that will look at his prior New York City record and concluded based on past performance that he isn't serious. There will be those like me that will look at his current plan for illegal immigration and say he always gets accomplished what he sets his mind on. His plan involves beefing up the border patrol, building a fence technological and real, and creating a tamper proof ID card. Thus, take it for what it is worth.

His thoughts on the GWOT were no doubt general. His first thought vis a vis the GWOT is that we must stay on offense. This has became his calling cry with regards to this issue. He believes in victory in Iraq and he defined that as an Iraq that is an ally not an enemy in the GWOT. He believes that it is NOT an option to allow Iran to get nuclear weapons. He also mentioned that Pakistan must be worked on though frankly besides vague ideas his plan was short on specifics. Some might take this as a sign that he may not be the right person however I would humbly disagree. Rudy has a long and very successful history in confronting and beating bad guys. As U.S. Attorney, he took on and defeated the mafia in his district. As Mayor of New York City, he took on the criminals and beat them lowering crime dramatically. He has a history of taking on bad guys. He has a history of beating them. While the terrorists may not be a perfect comparison to the bad guys he has a history of beating, his prior accomplishments can't be ignored when determining the best terror warrior.

The most fascinating portion of the meeting, for me, came in his answer regarding health insurance. Rudy's plan to revolutionize health care is entirely conservative. The hallmarks are lower taxes, health savings accounts, and market principles. He believes that much of the problem comes in the fact that people don't usually choose their own health insurance. Since most get it through work, it is essentially chosen for them. As such, when it comes to health insurance, people aren't the dutiful consumers that they are towards other products and services. Through credits, tax breaks, and health savings accounts, Rudy believes that individuals will be able to not only buy their own health insurance but at a lower cost than they normally do. In many ways, Rudy's vision of health care mirrors that of John Stossel's. Consumers drive down the price of everything and drive up the quality, and we must give the consumer choice back to the individual. He does it through health savings accounts, credits, and tax breaks. He also pointed out that our litigious society has created an environment of defensive medicine and higher costs. He proposed that the loser of any lawsuit must pay for the costs of both parties to limit many of the more egregious lawsuits.

On taxes and spending, Rudy tried to wake up the echos of Ronald Reagan. He stressed over and over his commitment to limiting the size of government. It was his solution to a whole host of economic related problems. He pointed out that limiting the size of government is largely done through leadership. He pointed out that none of his deputies in New York City ever came to him asking to make the budget for their respective department smaller. Thus, it was ultimately up to him, the Mayor, to stand firm in limiting the size of government even if he had to take on his own administration to do it.

He spoke about productive and unproductive taxes. An unproductive tax is one that is among the most extreme when compared to the civilized world. For instance, he pointed out that our corporate income tax is one of the highest in the entire civilized world. He said that if we merely lowered our tax so that is closer to the middle not at the top that it would keep a lot of the business we lose. He said his tax policy would focus on identifying and lowering those taxes that he determined to be unproductive.

He ended the meeting with an answer to something dear to my heart, the mortgage crisis. He said that he thought Paulson's plan to freeze rates was a good idea. I was quite put off by this question, and and if you want to know why please read this. He also said something very interesting right afterwards. He said that he believed that it was a good idea especially in light of pending Congressional action. I took this to mean that this was the least of two evils. If freezing rates means halting action on such things as H.R. 3915, then while it is still not a good idea it might be better than the alternative.

He was asked how he would confront the mortgage crisis, and this he answered perfectly. He pointed out that the duty of the President is NOT to focus on any given segment of the market but rather to be a proper momentum builder for the economy as a whole. He believed that shrinking government and waste would not only strengthen the economy but the housing market. One can take this as a canned answer, and to some extent it is, however I personally find it a positive that a Presidential candidate doesn't feel the uncontrollable urge to tinker with every portion of the economy that may be going wrong at any given time.

The meeting was revealing not only for what he said but what he didn't say. There was absolutely nothing about any social issues. Clearly, Rudy is trying to downplay his socially liberal record as much as possible and frankly his supporters didn't much care because there were no questions. I was surprised that he didn't touch at all on judges as well, though I assume his public unabashed support for strict constructionists holds. He also said nothing about guns or the environment as well. Rudy took out a lamenated card that had his twelve commitments. That is where I believe his focus will be in his administration. If you are worried about Rudy's position on any matter, check the twelve commitments. If that position isn't on there that, it is unlikely his administration will spend much time on the issue anyway.

All in all, I found Rudy to be quite charismatic and charming, still maybe not quite Mike Huckabee, but charismatica and charming nonetheless. At one point, a voter revealed that not only was he a supporter but also a registered Democrat. Rudy, spontaneously, came over and gave the man a big bear hug. I continue to maintain my support for him, and all reasons stand. He is a proven leader. He has a proven track record. He has a proven history of shrinking government, cutting waste, cutting taxes, expanding choice, and confronting bad guys. In this day and age, I believe that is exactly what we need.

Sunday, December 9, 2007

Pulp Fiction Breakfast Scene

The Changing Political Dynamics Surrounding Grady Hospital

From a purely political junkie level the current dynamics surrounding Grady Hospital are absolutely fascinating. Here is a quick run down. Late last month, the board at Grady Hospital approved a plan to go quasi private and asked, or demanded depending on your perspective, for roughly half a billion dollars in order to stay solvent. Then, not two weeks later, the JCAHO threatened to cut off Grady's national accreditation. Now, let's take each one at a time and then look at them together.

I believe the board is playing a huge political game of chicken with the Georgia legislature. I believe this plan does NOT have the best interest of the hospital in mind whatsoever. While that is certainly important, it is unfortunately a side issue in this political battle. As a friend of mine once put it

Grady can't shut down because who would take care of all the poor folks then

Without the money called for in this plan, Grady WILL shut down. The powers that be know this, and I have said as much. While Grady Hospital has had a long history of corruption and mismanagement, much of the power structure has continued to boldly and brazenly manage it in much the same way that has landed it in its current state. The reason for this is of course quite complicated, however it is due in no small part to Grady's vital role in Georgia health care system and society at large. Remember, Grady Hospital is among the largest in the world and is overwhelmingly responsible for taking care of most Georgia's poor folks. Without it all of the many "nice" hospitals in the area would have to take care of those folks.

I have fallen in love with the Latin phrase, Res Ipsa Loquitur. (The facts speak for themselves) Given Grady's long and sordid history with corruption and mismanagement, the fact that most of the power structure in Georgia never tried to really stop it tells me that most people don't much care as long as some other entity was taking care of those that no one else wanted to take care of, THE POOR. I believe the powers that be are counting on the exact same dynamic now. I believe the only thing most of the power players in Georgia want to avoid is for the poor folks to be dropped on the rest of the health care system. As long as they are Grady's problem, in my opinion, most everyone else turns a blind eye.

Thus, we have this game of chicken. The legislature doesn't want to hand Grady Hospital anymore money. They must know that the systemic problems currently going on at Grady aren't going to be solved with this plan, however without an infusion of cash, Grady shuts down. The powers that be at Grady are counting on the legislature blinking first. The legislature meets again in January so, for now, that part of the story is on hold.

Enter the JCAHO. Just last week they publicly threatened to revoke the accreditation of Grady Hospital. To put this move in perspective only one hospital, King Hospital in California, has ever actually lost their accreditation. Many of allies on this story have extolled this move as pivotal. I am a lot more skeptical. There must have been the same kind of excitement when State Senator Charles Walker was convicted of 127 felonies at Grady and beyond. Yet, he, along with his daughter and the companies they ran, were the only ones that were convicted, and of course he got the absurd sentence of ten years. In 2004, the department of Health and Human Services conducted an investigation that concluded this...

the conditions at Grady Hospital pose a serious and immediate threat to the health and safety of the patients

That was pretty damning however besides the then CEO, Dr. Andrew Agwunobi, no one lost their job as a result of this report and the power structure stayed in place despite its damning findings.

Even in the late 1990's, Georgia Attorney General found Grady Hospital guilty of Medicare fraud. All of these were opportunities lost to clean up the corruption at Grady Hospital. The reason it didn't happen is also quite complicated, however I believe much of the blame goes to the media in Atlanta, headed by the Atlanta Journal Constitution.

In each of these stories, the truth is quite complicated and it was never fully explained to the citizens of Georgia. For instance, in the case of the HHS report, the report itself was damning, however how many people know the specifics of the report? Four departments were singled out: oncology, cardiology, General Surgery, and obgyn, in the report. Each of these departments had heads. None of these people lost their jobs because the specifics of the report weren't ever reported properly in the media. Furthermore, the heads of these departments had one boss, the Chief Medical Officer. His name is William Casarella and he has since been promoted within Emory University. This also happened because the media didn't properly report the specifics of the case. All people knew, if anything, about the investigation was the conclusion. While that was damning enough blame was impossible for a layman to determine without understanding the specifics as I now explain them.

In the case of Medicare fraud in the late 1990's, three departments were also identified: cardiology, obgyn, and oncology. Again, these departments have heads and a Chief Medical Officer above them. All of them including the CMO should have been and would have been fired if the media had properly exposed that case. As you can see the same departments are now coming up in multiple reports. No one outside the Grady structure knows this because the media, either through incompetence or worse, doesn't report the specifics of each case.

There is one other case that the media did an atrocious job of reporting. That is the case of Dr. Sam Newcom. He was for about a year, the head of Oncology at Grady Hospital and Emory University Professor. He tried to speak out about the corruption and poor patient care at Grady Hospital and he was fired and ultimately paid off and silenced, but before that he wrote an article entitled Fighting Class Cleansing at Grady Memorial Hospital. You won't find this article in any mainstream Atlanta publication. As head of Oncology, you would be right in concluding that much of his indictment centered on his own department. In other words, oncology is the subject of a great deal of indictment from people of varying motivations and knowledge.

Nothing much has happened to clean up the oncology department and that is because the media has been asleep in reporting the specifics of what is going on at Grady.

Then, there is Emory University. When the heat gets hot on Grady, Emory does a great job of distancing itself. In fact, they are doing their own disappearing act now. The truth is that they are for all intents and purposes one and the same. Each of these departments indicted by several different groups was run and almost fully staffed by staff at Emory University. The Chief Medical Officer, Dr. William Casarella, during much of this malfeasance has since been promoted within Emory. In other words, when there is sytemic problems at Grady Hospital, the blame must be laid at Emory University since it is staffed overwhelmingly by Emory professors and students. When Dr. Newcom indicted oncology, he was indicting his own colleagues since oncology is overwhelmingly staffed, like most of Grady Hospital, by Emory University personnel.

Now, what about the JCAHO findings? We know they are threatening to cut off accreditation however why? That, we don't know because for reasons unknown (I plan on calling the JCAHO on Monday for further explanation) the specifics of the findings aren't known. We can assume that multiple specific departments are the cause of it. It might be oncology, General Surgery, obgyn, cardiology, etc. The heads of any of the departments involved must be removed. If your department contributed to an investigation that ultimately lead to the accreditation of your hospital being threatened, THAT IS GROUNDS FOR REMOVAL, in my opinion at least. The current chief medical officer, Curtis Lewis, must be removed. If you are overseeing a hospital and the hospital is threatened with the removal of its accreditation, THAT IS GROUNDS FOR REMOVAL. The Current CEO of Grady Hospital is Otis Story, Sr. He must be removed for the same reasons. In fact, the entire board ought to be removed, however the board is overseen by Vernon Jones, and anyone that knows anything about Jones knows not to expect that to happen. Of course, how many Georgia folks know the real story behind Vernon Jones? That would require the media in Georgia to actually competently report the whole truth.

This whole case proves why the first amendment, the free press, is first not second or tenth. I hope everyone sees what happens when the media itself cedes its own freedoms and doesn't bother to report the whole truth. In order for this cycle to stop, the whole truth of the JCAHO findings must be reported by the media in Georgia. The media must keep the pressure on until all parties are held responsible. That is what has to happen.

Here is what will probably happen. There will be no more then a few more articles in the AJC about this report. Anymore reporting will be on the eventual deal made between Grady and the JCAHO, a deal that will no doubt be made in some back room. The major media in Georgia will NOT reveal the specific departments responsible for this latest investigation. They won't name names and they won't demand for heads to roll. Finally, they won't call Emory out when they distance themselves. Emory University will throw its significant weight around the Georgia Legislature and no one will report it. Grady will be given a golden parachute and none of the obvious systemic problems I have pointed out will ever be reported on or addressed. I hope I am wrong and I will be watching.

For more information on this case, please read this article. Also, please read the recommendations that my colleagues have come up with and compare them to the current plan.