Voodoo Health Economics
Elizabeth Edwards has cancer. John McCain has had cancer in the past. Last weekend, Mrs. Edwards bluntly pointed out that neither of them would be able to get insurance under Mr. McCain’s health care plan.
It’s about time someone said that and, more generally, made the case that Mr. McCain’s approach to health care is based on voodoo economics — not the supply-side voodoo that claims that cutting taxes increases revenues (though Mr. McCain says that, too), but the equally foolish claim, refuted by all available evidence, that the magic of the marketplace can produce cheap health care for everyone.
noun [U] 一譯"巫毒"
1 a type of religion involving magic and the worship of spirits (= beings which cannot be seen), especially common in Haiti
2 INFORMAL bad luck:
They felt as if there was some sort of voodoo on the band, because everything just went wrong.
━━ n. ゾンビ ((魔力によって生き返らされた死体)); 〔話〕 のろま, 変人; ラム・果汁などで作る飲物の一種.
zom・bi・f ━━ vt. ゾンビに変える.
Wall Street Voodoo
Old-fashioned voodoo economics — the belief in tax-cut magic — has been banished from civilized discourse. The supply-side cult has shrunk to the point that it contains only cranks, charlatans, and Republicans.
To explain the issue, let me describe the position of a hypothetical bank that I’ll call Gothamgroup, or Gotham for short.
On paper, Gotham has $2 trillion in assets and $1.9 trillion in liabilities, so that it has a net worth of $100 billion. But a substantial fraction of its assets — say, $400 billion worth — are mortgage-backed securities and other toxic waste. If the bank tried to sell these assets, it would get no more than $200 billion.
So Gotham is a zombie bank: it’s still operating, but the reality is that it has already gone bust. Its stock isn’t totally worthless — it still has a market capitalization of $20 billion — but that value is entirely based on the hope that shareholders will be rescued by a government bailout.
Why would the government bail Gotham out? Because it plays a central role in the financial system. When Lehman was allowed to fail, financial markets froze, and for a few weeks the world economy teetered on the edge of collapse. Since we don’t want a repeat performance, Gotham has to be kept functioning. But how can that be done?
Well, the government could simply give Gotham a couple of hundred billion dollars, enough to make it solvent again. But this would, of course, be a huge gift to Gotham’s current shareholders — and it would also encourage excessive risk-taking in the future. Still, the possibility of such a gift is what’s now supporting Gotham’s stock price.
A better approach would be to do what the government did with zombie savings and loans at the end of the 1980s: it seized the defunct banks, cleaning out the shareholders. Then it transferred their bad assets to a special institution, the Resolution Trust Corporation; paid off enough of the banks’ debts to make them solvent; and sold the fixed-up banks to new owners.
The current buzz suggests, however, that policy makers aren’t willing to take either of these approaches. Instead, they’re reportedly gravitating toward a compromise approach: moving toxic waste from private banks’ balance sheets to a publicly owned “bad bank” or “aggregator bank” that would resemble the Resolution Trust Corporation, but without seizing the banks first.
Sheila Bair, the chairwoman of the Federal Deposit Insurance Corporation, recently tried to describe how this would work: “The aggregator bank would buy the assets at fair value.” But what does “fair value” mean?
In my example, Gothamgroup is insolvent because the alleged $400 billion of toxic waste on its books is actually worth only $200 billion. The only way a government purchase of that toxic waste can make Gotham solvent again is if the government pays much more than private buyers are willing to offer.
Now, maybe private buyers aren’t willing to pay what toxic waste is really worth: “We don’t have really any rational pricing right now for some of these asset categories,” Ms. Bair says. But should the government be in the business of declaring that it knows better than the market what assets are worth? And is it really likely that paying “fair value,” whatever that means, would be enough to make Gotham solvent again?
What I suspect is that policy makers — possibly without realizing it — are gearing up to attempt a bait-and-switch: a policy that looks like the cleanup of the savings and loans, but in practice amounts to making huge gifts to bank shareholders at taxpayer expense, disguised as “fair value” purchases of toxic assets.
Why go through these contortions? The answer seems to be that Washington remains deathly afraid of the N-word — nationalization. The truth is that Gothamgroup and its sister institutions are already wards of the state, utterly dependent on taxpayer support; but nobody wants to recognize that fact and implement the obvious solution: an explicit, though temporary, government takeover. Hence the popularity of the new voodoo, which claims, as I said, that elaborate financial rituals can reanimate dead banks.
Unfortunately, the price of this retreat into superstition may be high. I hope I’m wrong, but I suspect that taxpayers are about to get another raw deal — and that we’re about to get another financial rescue plan that fails to do the job.
More Articles in Opinion » A version of this article appeared in print on January 19, 2009, on page A25 of the New York edition.
帳面上，高譚有2兆美元資產和1.9兆美元負債，它的淨值是1000 億美元。但它的資產有很大部分，比如說房貸抵押債券和其他毒資產值4000億美元，假使這家銀行設法出售這些資產，可能賣不了2000 億美元。
Kakinuma told him, "If humans pollute the seas as if they owned them, jellyfish become weakened because they risk their lives cleaning up after the humans." In fact, experts call jellyfish the scavengers of the sea.
Chinese soldiers here are demolishing building after building, blowing up teetering structures with explosives. Soon bulldozers will clear away all the rubble, leaving no chance to salvage the past. Survivors are venturing back to scavenge while they can.
Twilight was coming, and rain clouds had drifted in. The wind picked up. Soldiers warned the salvagers that another building would be demolished with explosives in a few minutes. Ms. Zheng came back to collect her last batch of firewood for the day.
Industrial fish farming has destroyed mangrove forests in Thailand, Vietnam and China, heavily polluted waterways and radically altered the ecological balance of coastal areas, mostly through the discharge of wastewater. Aquaculture waste contains fish feces, rotting fish feed and residues of pesticides and veterinary drugs as well as other pollutants that were already mixed into the poor quality water supplied to farmers.
a mangrove swamp
[Probably Portuguese mangue (from Taino) + GROVE.]
n. - 紅樹林
n. - マングローブ
1 to save goods from damage or destruction, especially from a ship that has sunk or been damaged or a building that has been damaged by fire or flooding:
gold coins salvaged from a shipwreck
After the fire, there wasn't much furniture left worth salvaging.
2 to try to make a bad situation better:
It was a desperate attempt to salvage the situation.
After the fraud scandal he had to make great efforts to salvage his reputation.
They mounted a salvage operation after the fire.
There is nothing that is salvageable in the building - we have lost everything.
verb [I or T]
1 to look for or obtain food or other objects in other people's rubbish:
The flood has left villagers and animals desperately scavenging for food.
We managed to scavenge a lot of furniture from the local rubbish dump.
2 If a wild animal scavenges, it feeds on the flesh of dead decaying animals.
a bird or animal which feeds on dead animals which it has not killed itself