Sunday, November 6, 2011

Ads about Illinois’ pension battle are emotional and poignant, but are they true?

By Mike Riopell

Yet, none of the ads tells the full story, and the fierce tone doesn’t necessarily foster an atmosphere for compromise on an issue that could come to a head as the legislature reconvenes this week,

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State declines to investigate vast majority of hospital complaints

Illinois officials didn't look into 85 percent of the 560 hospital complaints received last year, even when the reports alleged violations such as patient abuse

By Megan Twohey, Chicago Tribune reporter


The Illinois Department of Public Health declined to investigate 85 percent of the 560 hospital complaints it received last year, even when the reports alleged violations such as patient abuse and inadequate infection control, records show. Some allegations of serious harm or death were not pursued even though federal law requires that such claims be investigated within 48 hours.

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What caused the financial crisis? The Big Lie goes viral.

Barry Ritholtz

Barry Ritholtz

Following is an excerpt from:  These are causes according to the columnist.

And what about those facts? To be clear, no single issue was the cause. Our economy is a complex and intricate system. What caused the crisis? Look:

●Fed Chair Alan Greenspan dropped rates to 1 percent — levels not seen for half a century — and kept them there for an unprecedentedly long period. This caused a spiral in anything priced in dollars (i.e., oil, gold) or credit (i.e., housing) or liquidity driven (i.e., stocks).

●Low rates meant asset managers could no longer get decent yields from municipal bonds or Treasurys. Instead, they turned to high-yield mortgage-backed securities. Nearly all of them failed to do adequate due diligence before buying them, did not understand these instruments or the risk involved. They violated one of the most important rules of investing: Know what you own.

●Fund managers made this error because they relied on the credit ratings agencies — Moody’s, S&P and Fitch. They had placed an AAA rating on these junk securities, claiming they were as safe as U.S. Treasurys.

4 Derivatives had become a uniquely unregulated financial instrument. They are exempt from all oversight, counter-party disclosure, exchange listing requirements, state insurance supervision and, most important, reserve requirements. This allowed AIG to write $3 trillion in derivatives while reserving precisely zero dollars against future claims.

5 The Securities and Exchange Commission changed the leverage rules for just five Wall Street banks in 2004. The “Bear Stearns exemption” replaced the 1977 net capitalization rule’s 12-to-1 leverage limit. In its place, it allowed unlimited leverage for Goldman Sachs, Morgan Stanley, Merrill Lynch, Lehman Brothers and Bear Stearns. These banks ramped leverage to 20-, 30-, even 40-to-1. Extreme leverage leaves very little room for error.

6Wall Street’s compensation system was skewed toward short-term performance. It gives traders lots of upside and none of the downside. This creates incentives to take excessive risks.

7 The demand for higher-yielding paper led Wall Street to begin bundling mortgages. The highest yielding were subprime mortgages. This market was dominated by non-bank originators exempt from most regulations. The Fed could have supervised them, but Greenspan did not.

8 These mortgage originators’ lend-to-sell-to-securitizers model had them holding mortgages for a very short period. This allowed them to get creative with underwriting standards, abdicating traditional lending metrics such as income, credit rating, debt-service history and loan-to-value.

9 “Innovative” mortgage products were developed to reach more subprime borrowers. These include 2/28 adjustable-rate mortgages, interest-only loans, piggy-bank mortgages (simultaneous underlying mortgage and home-equity lines) and the notorious negative amortization loans (borrower’s indebtedness goes up each month). These mortgages defaulted in vastly disproportionate numbers to traditional 30-year fixed mortgages.

Boone County Health Department Problems back in the News

The following story and editorial is taken from the October 4, 2011, Boone County Journal which is available free of cost at a merchant near you or on line at:

Click on the photocopy to enlarge:

Health 11-4-2011

Health 11-4-2011--2

Health 11-4-2011--3