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All sides joined the President at the White House, as part of his consensus building efforts, and to get aseat at the table in restructuring health care. The insurers and health care providers, including technology providers, all committed to cutting the cost of health care. New social insurance programs to cover 45 million uninsured Americans, and to make health care affordable for businesses and individuals, will be unworkable at currently projected rate of increase in health care costs of 6.2% a year for the next decade. The industry promised to reduce that by 1.5% through voluntary efforts, even though there is skepticism about whether they will deliver. The insurers are against a government sponsored health plan fearing it will drive them out of business. Insurers and health care providers are lobbying against the cuts in their Medicare payments, and insurers are fighting Obama's cuts to their private Medicare Advantage plans by a total of $176 billion over 10 years. Doctors are fighting a 21% cut in their Medicare fees scheduled to take place in January 2010. Pharmacuetical companies and makers of medical devices are concerned that new products will have to pass a cost-benefit test before being approved for coverage under Medicare. Its just that they all see the continued rise in costs as somehow unsustainable, especially in the current economic crisis, and share the feeling with business and the rest of the country that the system is broken. At the same time like the banks and bank executives, health care companies and their executives go on lobbying aggressively and doing things the old way, which raises questions about how well these systems that are broken can be put on the right path....

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Providing health insurance to the roughly 50 million people that are uninsured costs some $120 billion ayear. This will hae to be paid for through limiting the tax deduction on employer provided health insurance (something Obama campaigned against), or cost reduction in the bloated cost structure for health care in the country. But the same health care providers who committed to cost reduction in arecent conference at the White House are lobbying against some measures that reduce cost.

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Questions being addressed to get health care to the uninsured and to all Americans at an affordable level.

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Andy Grove of Intel teaches a class at Stanford- he taught aclass earlier this year- and talks about his experiences. Some see Grove's disciplined management style as areflection of his experience escaping the Nazis from Czechoslovakia. Dr Grove says it comes from his experience at the CIty COllege of New York He recounts this in one of his books, where aparticular Professor helped mentor him but who was in the beginning very tough on the young Grove. Grove says that what impressed him most in those early years at City College was the way hard work and talent were rewarded and where students challenged their Professors without any attention to rank. Interestingly this is still true at many universities, and meritocracy prevails there. The opposite is true when one thinks of this at many corporations which gradually fall into astultifying mode where senior managers are not challenged and politics prevails. GM is a good example. Grove says he experienced this at Fairchild -where he worked with computer chip pioneers Moore and Noyce -with its elitist, back-stabbing and lax corporate culture. Senior executives at Fairchild walked in whenever they felt like, and younger employees were penalized or fired for similiar behaviour. When he took charge at Intel Grove imposed a strict arrival time of 8 am with latecomers forced to sign asheet. He also did not go along with trends like flexi-time and teleworking. He became known as ablunt and demanding manager, but afairminded boss who rewarded good ideas whatever the source. Asked about the strict arrival time Grove says that people don't understand that he was never that disciplined himself and he was not even amorning person. His view is that he wanted to avoid what he saw as aoutrageous double standard at Fairchild. With a better culture he was able to attract the best talent to Intel, and he used the strong discipline to improve the lousy manufacturing at Intel. Three decisions shaped Intel. The first, is the recognition of the strategic inflection point when current strategy is no longer viable, because unanticipated external forces make an existing business strategy obsolete. This happened when Intel got clobbered by the Japanese in the memory chip field it had dominated. And at such moments there are internal forces and inhibitions to overcome that make starting over or doing something totally different extremely difficult. For Intel this was the habit forming tendencies from having done one thing so well- the companies roots and the founders and engineering staff's knowledge and preferences lay in memory chips- such that that it became an emotionally stormy thing to break from this past. Grove made a complete U turn to go in another direction which he describes so well in his book -Only the Paranoid Survive. Timing is critical, and instinct and judgement is all that you have got to rely on. Its like a group of hikers in the woods and after suspecting that they are on the wrong track one of them says, "Hey guys I think were lost." Grove even describes the scene with acomparison to a scene in the World War II movie Twelve O'Clock High, where a new commander is called in to straighten out an unruly and undisciplined squadron of fliers in sel-destruct mode. The commander on his way to take charge, stops his car, steps out smokes acigarette while gazing into the distance. Then he he throws the cigarette down, grinds it with his heel and tell his driver "Okay Sergeant, lets go." Grove says he related to this scene in this decision at Intel, with every fiber of his being experienced this crisis personally, and learned what it takes to claw your way through a strategic inflection point, inch by excruciating inch. He says it takes objectivity, the willingness to act on your convictions, and the passion mobilize people into supporting those convictions. The second and third decisions was less gruelling but also courageous. The Intel Inside advertising campaign meant building abrand with customers even though Intel had never done this before. The decision to not have secondary suppliers and press the issue of manufacturing quality within Intel till Intel got it right also had never been done before. Andy Grove's strategic inflection point is what GM missed and set the process in motion towards bankruptcy. See the links in Intelilinks. The management style is also relevant to that discussion. Grove also provides insights in the Cross-Industry Insight Mechanism. He sees strategic inflectionpoints in autos and health care industries. He says the auto industry is going to be increasingly divorced from oil and the next big company will come in the auto battery technology field. He also believes health care and the pharmaceutical industry can learn from chipmaking. The clinical trials in pharmaceuticals take way too long, are slow-moving and bureaucratic. The pharmaceutical firms can learn from the fast "knowledge turns" in chipmaking, so that cycles of learning are accelerated....

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This is a big desicion by the Obama administration, and has global implications for the amount of oil consumed and the emissions discharged. The Obama administration will introduce one national standard for automile emissions and mileage standards, replacing the patchwork of standards and skipping over the challenges to the California standards by using those standards to set the national rules. The rules take effect in 2012. It will create a new national standard for a car and light truck fleet in the USA, that is 40% cleaner and more fuel efficient by 2016 than it is now, with a new average of 35.5 miles per gallon. The current national standard is 25 miles per gallon, and this standard has fallen way behind the Japanese and the Europeans. The Europeans went through their battles for fuel efficiency a few years ago with auto industry resistance, and this was finally settled with tougher standards, giving the European industry advantages in technology over the Americans. The American car industry stalled higher standards, and what standards were passed were whittled down by heavy lobbying in Congress. As a result a battle raged between those interested in conservation and the environment and the Detroit car industry, especially in a deteriorating global environment for this type of prolific oil consumption on American highways. This lack of foresight on the part of Detroit carmakers, and their management, accelerated their financial collapse in 2008 and 2009, as large car and truck sales collapsed. That this tough new standard of 40% improvement in 2016, would in fact not have been possible without this fiinancial collapse and turning to the government for a bailout - with the entire board of General Motors being replaced- is one of the ironies of this situation. This decision will almost certainly accelerate the development of smaller models, and bring the kind of attention to them that will give them the quality and features and comfort to make them command higher prices and become profitable, as is the case in Europe. For too long the American small car became synonymous with being a lesser car in many dimensions of design, quality, comfort and performance, so that it became a cheap car that you upgraded from to a larger car as you became affluent. It had been that way, but did not have to be that way after the world had changed. And the larger models like the pickup trucks and large cars are more likely to be phased out with the new regulations. This will also bring a `new sanity to oil prices, as the reduced consumption in the US will accomodate the increased consumption in India from the small cars like the Tata Nano which look set to sell in the millions, and still keep oil affordable for tight budgets worldwide. In this sense it is a victory for global good sense. For President Obama this is a personal quest, as he co-sponsored 2 bills in 2006, during this second year in the US Senate, one to raise fuel economy standards, and the other to encourage the use of alternative fuels....

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Bernanke's plan to address the deep downturn is very aggressive and he is pulling out all the stops. This includes the purchase of mortgage backed securities, Fannie Mae and Freddie Mac corporate debt and other assets, Since it stated its intention in late November to buy such securities, the 30 year mortgage rates have fallen to 5.2% from 6%, and refinance applications have tripled. Now the purchases will be greatly expanded. See the related link to this in Hubbard and Mayer article based on their research paper, in the WSJ, that shows that at a mortgage rate of 4.5% the housing market prices could stabilize. Next step the Fed will, starting early 2009, pump money into markets for student, auto, credit card ansd small business loans in hoping to bring life to those markets. How much money is involved? Quite a bit. All told the Fed's assets could add up to $5 trillion says Ed Yardeni of Yardeni Research, up from $2.2 trillion now. Its these sweeping moves and decisions that have overshadowed the December 16 announcement cutting the target federal funds rate to a range from zero to 0.25%, the lowest in its history. Whats the thinking behind this? Coy of BW points to Bernanke's research on the depression years and the lost decade years in Japan. In 1999, in a book he contributed to, Bernanke referred to Japan's monetary policy and passive approach as a self induced paralysis, including all the zombie loans that were allowed to continue on company books and no effort to clear up the bad assets quickly. He always thought highly of the aggressive approach taken by Franklin Delano Roosevelt, and felt that more tools available and a better understanding of the market system since FDR's day enabled a lot more actions to be taken to reverse the kind of steep global downturn that might occur. Yardeni's view is that even though this huge asset buildup could lead to inflation down the road, the economy in the medium term faces a deflationary environment, and the only way to cope with this series of bubbles bursting is to create another bubble, rather than risk anything going seriously wrong. Basically Bernanke is making an assessment of the current situation, and he sees bad credit situation getting worse, bad unemployment situation getting worse, consumer spending falling off and getting worse, continued home foreclosures and falling prices, the transition between administrations and lack of policy direction for a few critical months complicating things, and he sees the economies of all trading partners in Asia and Europe weakening in great speed, and sees very tough years for 2009 and 2010 no matter what the administration and the Fed do. Not enough aggressive actions to forestall the worst is as bad as inaction in Bernanke's view. And with all the aggressive moves, including the $1 trillion stimulus and infrastructure spending to create 2.5 million jobs that Obama administration plans, the US and global picture for the next 24 months will still be a long uphill climb. So the risks for Bernanke are all in the region of not doing enough and not doing it vigorously and speedily to get the best results. ...

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Osborn and Gauthier Villars describe how Russian president Putin and his former Dresden KGB associate Chemezov executed their strategy for Avtovaz to create a Russian state owned autombile industry in alliance with Renault. Troika Dialog and state banks put in hundreds of millions of dollars, and Renault put up $1 billion with more of it in cash up front, to get the necessary restructuring and financial setup to obtain state ownership and control of all of Avtovaz's assets. This had to be done because the company had descended into control by gangs and criminal elements by 2005 when Putin put Chemezov in charge with help of state police and prosecutors. And Putin conceded only 25% ownership to Renault as the Russians have gradually reasserted control of their companies and driven out gangs and elements that have grabbed assets in the lawless environment that prevailed with the collapse of communism. What is happening is that the state is then attracting capital and technology from foreign companies by selling them a stake at the best price possible. In the case of Avtovaz because of the highly deteriorated lawless situation, the state will use some of the Renault money to take financial ownership of Avtovaz in addition to loans from state banks. Putin says he has attracted $80 billion in foreign capital in 2007. During the Brezhnev years Fiat invested in Russian automobile factories which became part of Avtovaz. In 1993 it was privatized, but by 2005 it had fallen into Mafia type gangs hands and the state had only about 2% control of ownership. From this low level Avtovaz has recovered, and now is where it was before privatization, with the added infusion of technology and capital and part ownership by foreign companies interested in expanding in a fast growing Russian market. Note that its location is Southern Russia, and its employment base is huge employing 104,000 people. The company is now back on its feet and improving its prospects with newer models to replace the old Lada, of which 736,000 are turned out each year. With the help of Renault, Russians hope to create a large automobile industry of their own. Compared to 2004 when 24% of companies were state owned, now 40% are stateowned as the Putin strategy continues. By getting much better deals and selling off stakes at higher prices, keeping state control of the bulk of the assets, and seeing that capital and technology infusions occur as technology moves forward, this strategy is proving to be a winning proposition for Russia. For foreign companies the growing attractiveness of the Russian market, and the probability that even at the higher prices these assets might be worth much more in the future, makes it a win-win proposition. This is the direction Russia will increasingly take under the Putin-Medvedev administration. Note that Chemezov may take up Aviation industry reorganization next....

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The 2011 State of the Union address by President Obama. A calculated effort to move the debates that will frame the future election to a different place. He emphasizes the importance of investing in the future, in global competitiveness, through spending on education, infrastructure, alternative energy and other projects. But there was little in the way of specifics for reducing the high jobless rate which stands at 9.4%. And little in the way of specifics of how the investments in the future for global competitiveness and infrastructure spending are to be achieved. Especially when the fiscal imbalances are growing after the compromise on the Bush tax cuts and the passage of health care legislation. The Washington Post says that a majority of Americans approve of his overall performance, yet they are generally negative in their evaluation of how the Obama administration and President Obama has handled key issues relating to the economy. And this is more so among independent voters who will be crucial in the 2012 elections....

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Supreme Court Justice, Elena Kagan, after her first year at the U.S. Supreme Court. Kagan was appointed by President Obama in 2010. Kagan talked about her experience at the Supreme Court at an Aspen Institute event. Kagan replaced Justice John Paul Stevens. Stevens says Kagan has voted very similiar to how he would have voted on most of the cases. And Justice Ginsberg says about Kagan: "she has already shown her talent as an incisive questioner at oral argument and a writer of eminently readable opinions." Kagan takes writing opinions for the Court very seriously. She described her style at the Aspen Institute event as figuring out how to communicate difficult ideas to people who know little about the subject. An additional aspect of Kagan's writing is that she strives to put things using vivid and colorful language that sticks with people. She has used expressions such as "loosey-goosey," for instance. In her dissent on the campaign finance case she described the supposedly smoking gun found by her colleagues, as: "the only smoking gun here is the majority's, and it is the kind that goes with mirrors." The media tends to compare Roberts with Kagan, the two youngest chief justices on the court, both articulate and vigorous in their opinions, with similiar intellectual backgrounds but taking different positions. Kagan says the most valuable experience to prepare for her new position, was the year she spent as Solicitor General, where she was trying to persuade nine chief justices of the court why they should take a particular position. The difference now being that she must persuade eight justices. The most striking aspect of the two appointments by George W. Bush and Obama, with the absence of a retirement age for the U.S. Supreme Court- as in other democracies such as India- is that both Roberts and Kagan may well be on the Court for 25 years or longer. ...

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Epic Systems of Verona, Wisconsin, is one of the companies engaged in digitizing health records. It has helped develop records for 40 million patients in hospital systems such as Cedars-Sinai Medical Center in Los Angeles, Kaiser Permanente, the Cleveland Clinic, and John Hopkins Medicine in Baltimore and the Weill Cornell Physicians Organization of New York. Epic provides the software, the IT systems, the training and support. Epic is one of the pioneers in this, having been in the business for 30 years. About 40% of primary care doctors in the U.S. and 25% of hospitals use electronic patient records. The Federal government has provided $2.7 billion in funding from $27 billion of Stimulus funds assigned for the purpose of conversion to electronic medical records. This is likely to speed up the conversion. Other providers are Cerner, Allscripts, Meditech, Siemens Healthcare, G.E. Healthcare, and IBM. Epic Systems is considered the defacto standard in the industry for medical schools and some of the major hospital systems in the country. New contracts are leading to a major expansion of Epic Systems which employs 5100 people. Epic plans to hire an additional 1000 people. Revenue for the privately owned company are estimated at $1.2 billion, a 45% increase over the prior year. Epic is expected to have 127 million patients under medical records by mid 2013. To get the feedback essential for such a large conversion, CEO Faulkner relies on feedback from 250,000 doctors who use the Epic systems software, and on nurses and doctors from Epic who visit customer's sites to see first hand how it works and what needs improvement. Judith Faulkner started Epic more than 30 years ago. A project for the Psychiatry department led to other projects after she graduated in computer science from the University of Wisconsin. Epic continues to attract programmers to Wisconsin by making the Epic campus a fun environment and a great place to work. ...

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Greenberg of AIG asks why Goldman got paid in full while AIG suffered and languished? Questions he raises about the way Goldman Sachs acted during and before the crisis, with its actions helping precipitate the crisis, and the need for investigative reporting to uncover the facts. Serious questions raised by Greenberg.

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The Tappan Zee bridge with 140,000 cars crossing each day. The number is expected to go up to 200,000. The bridge is structurally deficient. The cost for a new bridge is up to $16 billion. The needs throughout the New York area are shown.

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Inflation was a little above the eurozone average of 0.7% for Jan. 2014 in Germany and below the average in Portugal, Spain, and Ireland.

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The Fed acts to stabilize the credit markets till the current administration and Congress or its successor can think of the best way to inject money into the USA banking system and in helping homeowners in the housing crisis. One fact remains between 2000 and 2006 Americans took on about 3 tillion dollars of additional debt than if they had followed the earlier trajectory of spending, so they owe $3 trillion dollars more than they would have if they followed earlier spending patterns, accordingto Business Week estimate. It is this debt that will depress consumption spending for 3 to 4 years according to BW estimates till this debt can be worked down. The other estimate by BW in Street of Fear in the same issue is for $285 billion in total amount of subprime writedowns expected with only $150 billon accounted for so far in early April 2008. This means another $135 billion in writedowns will come probably this year. One anlayst Meridian of Keefe, Bruyette & Woodsfor example points outan additional $15 billion of subprime writedowns expected for Citigroup on top of the $21 billn already taken and in the worst case the writedowns could reach $60 billion. So clearly we are only half way through these writedowns. With consumption spending due for a big hit, and more big hits in the credit markets, the worst may still be ahead in 2008. ...

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With 5.7 million jobs lost since December 2007 fewer people are paying payroll taxes to support Medicare and Social Security says Labor Secretary Solis. As aresult Medicare will run out of funds by 2017, 2 years earlier than predicted last year. Medicare and Social Security issued their annual report yesterday, suggesting the nation cannot afford the cost of Medicare at the rate of current expenditure growth. Social Security will run out of money by 2037 four years earlier than predicited before. The only way to keep Medicare solvent says Mr Geithner is to reduce the rate of growth of health care costs.

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U.S. House Speaker Paul Ryan, wins by 84% to his challenger's 16% of the vote in the Republican primary for his House seat of Janesville, Wisconsin. The challenger Nehlen, an executive at a water filtration company, adopted many of Trump's positions including building a wall and had the support of the group Tea Party Patriots. Trump lost to Ted Cruz in Wisconsin and lost in the 1st congressional district covering Janesville by 19 percentage points. Janesville, is a former industrial working class town that has lost many factory jobs over the years, and this election shows the trade issue is not the only issue on people's minds when they vote. That it is easy for a candidate to use it as wedge even when they do not mean what they say by outsourcing themselves, or have few real solutions- especially as public opinion in both parties is opposed to a shift of jobs overseas for the last decade. Ryan said about his win- "I'm a local guy, people know who I am, they know what I believe in and they know I mean what I say and I say what I mean and I don't do it in a mean way." Some Republican experts say Ryan's job of winning his seat very easily, protecting the congressional majority of Republicans, and dealing with Trump as the nominee, is the hardest job in politics. ...

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Senator Patrick Toomey (Pa.) and Rep. Jeb Hensarling (Tex.) are lobbying Republican party members in Congress behind the scenes to accept $300 billion in taxes as the only way to get an agreement on debt reduction in the Supercommittee. This would be part of a plan that addresses entitlements, and changes the tax code to lower rates and reduce tax expenditures by closing deductions and loopholes. This is leading to an intense debate in the Republican party about the wisdom of a purely ideological position on taxes that does not take into account current realities, and risks letting markets take control of the nation's future.

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Mark Hulbert lists the quality stocks with low P/E ratios, little debt, high return on equity, and long records of earnings growth spanning long periods that limit volatility after the emerging markets crisis of 2014. He adds a cautionary note on the idea of quality stocks by saying P/E ratios matter, that quality stocks at a high price are a bad investment and at extraordinary prices are a extraodinarily bad investment, citing the Nifty Fifty stocks of quality in 1972 that lost value in the stock market slide in 1973. He takes quality stocks Disney, Procter & Gamble, Johnson & Johnson off the list of quality stocks because of high P/E ratios, a critical criteria. Hulbert's list for financial quality companies and their P/E ratios in Jan. 2014: AT&T telecom 9.4, Aflac insurance 9.1, Allstate insurance 10.9, Apple computer and telecom 12.7, Bank of Nova Scotia 11.0, Chevron oil 10.0, Cisco computer hardware 12.2, IBM technology 11.7, Royal Bank of Canada 11.5, Wells Fargo banking 11.5. These P/E ratios compare with the S&P 500 P/E of 17.3....

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All sides had to make concessions to reach a new agreement on a restructuring of Greece's debt, and new terms for loans to Ireland and Portugal. The agreement was reached after negotiations between France, Germany, the ECB, and eurozone countries with a declaration issued on July 21, 2011. The powers and financing of the European Financial Stability Facility (EFSF) were expanded to be the main mechanism for channeling EU funding to reduce the burden of Greece's debt. Germany will provide new funding and be open to additional commitments, something German chancellor Angela Merkel had resisted since the beginning of the crisis in 2010. Earlier funding had come with high interest rates and only when the situation had reached a crisis, with Germany insisting on the punitive rates and conditions as a way to discourage countries from taking advantage of cheap borrowing. In exchange for commitment of German funds Ms Merkel had insisted that banks and private creditors share in the losses. Private bondholders resisted but finally agreed to take a loss of 20% of principal on a small portion of the bonds. Their larger concession was to take lower interest rates and extend the maturities to 15 years and 30 years on new bonds which are guaranteed by the EU. The specific terms of the agreement are as follows: The EFSF and the IMF will lend Greece 109 billion euros over 3 years at 3.5%. Private creditors including German and French banks will "voluntarily" turn in their old bonds for new ones that mature over 15-30 year periods. These new bonds include 15 and 30 year Greek bonds with varying coupons. Some of the bonds would have a 20% discount on principal. EU leaders say the private sector contribution amounts to 37 billion euros through 2014 and 106 billion euros through 2019. Another part of the program is for the EFSF to buy back some of the Greek bonds on the secondary markets, which would mean Greece would now owe a smaller amount to the EFSF on these bonds. The EFSF will now have additional financial support from Germany and other EU countries and be authorized to provide aid to countries before a crisis situation arises. It would also have power to buy Greek bonds at prices on secondary markets to reduce the Greek debt burden. Ireland and Portugal are also assisted in the agreement. The interest rate for EU aid to Ireland and Portugal is taken down to 3.5%. Ireland is paying about 6% on the EU portion of its 67.5 billon euros bailout and efforts to reduce the rate were resisted earlier. The main theme behind these concessions and provisions is to give Greece, (and Ireland and Portugal) a chance to grow. High interest rates came under strong criticism because it only increased the size of the debt burden of these countries with a shrinking economy and high unemployment. The failure to come together behind a broad and sensible agreement with all parties making serious concessions, the EU, the ECB and the political leadership in these countries especially Greece, was undermining confidence in the euro and the eurozone itself. By mid-July Italy and Spain were feeling the effects of contagion in the financial markets, U.S. debt ceiling negotiations were unsettling global financial markets, the pressure was intense to come up with the workable agreement achieved on July 21, 2011. ...