Livinglies's Weblog

1. When I was a defense attorney for traveler’s insurance, I learned that insurance companies have a vested interest in keeping verdicts high. Even I  found this incomprehensible. But once explained, it was clear: higher verdict meant two things: higher demand for insurance and higher prices for premiums. The decision to let a case go to trial, knowing that it will result in a negative verdict of notable size, means that the press will carry it and scare the hell out of anyone in the line of that activity or work.
   1. The solution of course would be a return to the actual realities that were discovered and utilized by two Scotsmen for pension benefits in the early 1800’s.
   2. But we are way passed that because the government has been so unwilling or incapable of enforcing the basic rules of fairness in the marketplace.
   3. The current practice of paying off innovators to stay out of the marketplace is another example of the failure of government regulation to address anti-competitive strategies.
   4. And remember that anti-competitive strategies equals anti-consumer practices. In these issues, The European Union seems to be far ahead of the United States, although still not as effective as necessary to level the playing field to allow free market forces to do their work as the invisible hand governing the supply and demand.
2. Both drug cartels and those who support law enforcement and prisons make a lot of money because of the illegality of the product. If we were to learn the lesson of prohibition, we would do far better by regulating the industry rather than “banning” it without effect.
   1. This is opposed by drug cartels because such action would drop the price of what are now illegal drugs to nearly zero. There would be no business to conduct.
   2. It is equally opposed by law enforcement who want to keep their jobs and vendors in the money. If nobody is arrested, the whole thing collapses.
   3. Meanwhile, the public would save hundreds of billions of dollars and thousands of lives if the product was shifted from criminal to regulated.
   4. People could still be placed in prison for violating regulation, but the marketplace for illicit drugs would cease it exist. In turn, this fuels violence which in turn makes people flee for their lives in the form of migration and specifically immigration to the U.S.
3. Everyone except consumers wants high drug prices in order for thousands of middlemen and insurance companies, to make fortunes on top of the revenue paid to the manufacturer and fee paid to the pharmacist for dispensing the product.
   1. Mark Cuban, a billionaire disrupter, is changing that and is having a partially beneficial effect. The price of CostPlus drugs is about 1/10th that at a pharmacy.
   2. People continue to die and go to the ER where the prices of services and health care are at a premium because they cannot afford the “retail” price of the drug. This is because of an inversion.
   3. The wholesale price now accounts for 65%-75% of the cost of every medication. Wholesale is more expensive than retail as Mark Cuban is demonstrating on a daily basis. But the response is that for those insured, the co-pay is around the same price that Cuban’s company will charge. You would think that the point of drug manufacturing was to get needed medication to people who require it. But the real business of drug manufacturing is the distribution with increasing layers of revenue and profit and jobs such that a $0.50 drug will cost $300 or $3000 or even $30,000.
4. Lastly, just because I don’t want to make this article too long, is the fact that foreclosures are not seeking resolution for an unpaid debt.
   1. The original transaction and the ending foreclosure are both counterintuitive schemes. In foreclosures, nobody seeks to make a creditor “whole.”
   2. The entire purpose of foreclosures can be summed up like this: foreclosures stimulate and foster the myth that “loans” are being created and sold to bona fide purchasers for value.
   3. But in fact, foreclosures ONLY provide extra revenue to the magicians who made it look like a loan. If you look at the general ledger of any of the participants, there will be no evidence of a loan account — the key component of an unpaid loan.
   4. The government is once again complicit. By adopting the attitude that what is good for business is good for the country (i.e., the general welfare and consumer demographics), the government is expressly abandoning the general welfare, consumers and homeowners in particular.
   5. It is also undermining free markets, competition, and prices for everything that would be lower. In a free market, this could not happen. The fact that it does happen is a testament to the conclusion that no such free market is operating.
   6. Rather than being “capitalism,” this behavior is anti-capitalism.

Filed under: foreclosure |