By Claus Vistesen, on June 25th, 2012
One of the extraordinary effects of the euro zone debt crisis has been the manner in which the market and media have taken the notion of safe haven investment to heart. Consider for example the fact that the situation we are currently in largely comes down to too much debt tied to real estate, mortgages, and property development. Consider then Denmark with the largest ratio of mortgage and private household debt to income in the world and you wonder why international money is pouring into the Danist mortgage backed securities to such an extent that interest rates are now negative. I mean, wasn’t this the very products that got us here in the first place?
The same reverse logic can be applied to the UK where yields on Gilts are heading for new lows even as we learn from the most recent McKinsey study on global deleveraging that the UK is now the most indebted economy in the world even surpassing Japan.
Ben Davies and his team at Hinde Capital have also been wondering about the UK and the result is a timely and very detailed report on the UK economy, its challenges and how to solve them. The report has been published in two parts, with the first part coming out earlier this week causing a flurry of debate as it was picked up by Izabella over at FT Alphaville.
You can get part 1 here and part 2 here.
It is well worth reading, preferebly before you stuff yourself with more Gilts.
By Simon Grey, on June 7th, 2011
The United Kingdom, where, on average, people live longer than in the U.S., spends only about 9 percent of gross domestic product on medicine, compared with our 18 percent. The British control costs in part by having the will to empower a hard-nosed agency, the National Institute for Health and Clinical Excellence, to study treatments and declare some ineffective. Some hope the United States will create a similar agency, but I fear it would be hopelessly politicized and declawed.
My solution: admit we are cost-control wimps, and outsource our treatment evaluation to the U.K. Pass a simple law saying Medicare (and Medicaid) won’t cover treatments considered but not positively appraised by the Britain’s national health institute.
Even better, use clinical evidence evaluations of the British Medical Journal. They’ve classified more than 3,000 treatments as either unknown effectiveness (51 percent), beneficial (11 percent), likely to be beneficial (23 percent), trade-off between benefits and harms (7 percent), unlikely to be beneficial (5 percent) and likely to be ineffective or harmful (3 percent). Let’s at least stop paying for these last two categories of treatments! And to put pressure on doctors to collect evidence, let’s stop paying for “unknown effectiveness” treatments after 10 years of use.
As I’ve said before, and will continue to say until everyone in this world understands, universal health care plans will never work. Resources are limited, and no amount of political posturing will change that fact. As Robin Hanson notes, there will come a point where the government must cut back on providing health care, and that’s because there are simply not enough resources available to make sure that everyone is always in perfect health. Anyone who says otherwise is stupid, ignorant, or lying.
By Ajay Shah, on November 6th, 2009
Jerry Caprio and Ila Patnaik, at two ends of the world, on the same subject.
The UK Special Resolution Regime has excellent documentation on the web.
There is a lot of talk in India about financial stability, where basic ideas are distorted to defend the status quo. Financial stability is, sadly, not interesting to the establishment when achieving it requires undertaking economic reform. One example of this is the problems of closing down failed banks or other financial firms: few things are more important to financial stability than the machinery of the bankruptcy process for financial firms. The best thinking on how to build deposit insurance is found in Chapter 6 of Raghuram Rajan’s report. In the mid 1990s I was member of an RBI committee on reforming deposit insurance. There hasn’t been any movement on this in decades.
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