Former Goldman Sachs Banker Predicts “Green Bubble”

(p. R5) Sustainable investing and clean energy are hot topics, but one Danish financier is warning that people might be getting carried away.
Per Wimmer, a former Goldman Sachs banker and the founder of Wimmer Financial LLP, a London-based corporate-advisory firm specializing in natural resources, foresees a “green bubble” that could have similar consequences to the dot-com and housing bubbles.
. . .
WSJ: What are the main issues behind the so-called bubble you see forming in green energy?
MR. WIMMER: Very simply put, for green energy to be truly sustainable, it must be commercially sustainable. The reality today is that when it comes to politicians allocating subsidies, it seems like they are being allocated almost religiously across the board. As long as there is a green element, then [politicians believe] it is fine and deserves funding from tax dollars. I argue that is a little unsophisticated.
We have got to look at supporting and subsidizing the technologies that stand a chance at becoming commercially independent from subsidies within a reasonable time period–about seven to 10 years.
. . .
WSJ: In your book “The Green Bubble,” you highlight infrastructure problems involved in large-scale green-energy projects in the U.S. Tell us about those.
MR. WIMMER: There are a number of challenges that green energy faces, and one [involves] infrastructure, meaning that if you were to target, say, 20% green energy including wind farms in the U.S., you would have to build an awful lot of transmission grid, which is quite expensive.
Somebody is going to have to pay for it–the taxpayer, perhaps?

For the full interview, see:
TANZEEL AKHTAR. “Renewable Energy Is a ‘Bubble,’ Says Financier.” The Wall Street Journal (Mon., Jan. 11, 2016): R5.
(Note: bold and italics, in original; ellipses, added.)
(Note: the online version of the review has the date Jan. 12 [sic], 2016,)

The book mentioned in the interview, is:
Wimmer, Per. The Green Bubble: Our Future Energy Needs and Why Alternative Energy Is Not the Answer. London, UK: Lid Publishing, 2015.

Feds’ Regulatory Delay Supports High-Fare Trans-Atlantic Airline Oligopoly

(p. B1) In the past three years, Norwegian, one of Europe’s biggest low-cost airlines, has quietly established a beachhead in the trans-Atlantic market by offering low-fare, no-frills service on long-haul flights.
Thanks to a small but expanding fleet of fuel-efficient planes combined with deeply discounted ticket prices, Norwegian Air Shuttle has attracted a growing number of leisure travelers looking for cheap flights.
It is all part of the vision of Norwegian’s outspoken chief executive, Bjorn Kjos, who is determined to force the same kind of low-fare competition on international routes that has been so successful in domestic markets for airlines like Southwest and Spirit, and Ryanair in Europe.
. . .
But Norwegian’s expansion has been stymied by vigorous opposition. Legacy airlines on both sides of the Atlantic see a low-cost competitor on their cash-cow routes as a major threat to their long-term profitability. Labor unions object to Norwegian’s plans to hire flight crew from Thailand, a practice they have repeatedly described as “labor dumping.”
The airline has also faced lengthy delays in receiving regulatory approvals in the United States.
. . .
(p. B4) A spokeswoman for the Transportation Department did not give any reasons for the delays that have left Norwegian in bureaucratic limbo in the United States. The airline’s first request was filed more than two years ago. . . .
The long delay in approving the application “does not reflect well on the political independence of the Department of Transportation with respect to the free trade principles behind the E.U.-U.S. open skies agreement,” according to a report by analysts at the CAPA Center for Aviation. “The calculated inaction only serves to restrict competition and to deny consumer choice.”
. . .
“There is still a lot to do,” Mr. Kjos said. “We have to think about how to fly more people more cheaply. There are hundreds of millions of people that don’t have access to cheap flights.”

For the full story, see:
JAD MOUAWAD. “Norwegian Air Flies in the Face of the Trans-Atlantic Establishment.” The New York Times (Tues., FEB. 23, 2016): B1 & B4.
(Note: ellipses added.)
(Note: the online version of the story has the date FEB. 22, 2016.)

Government Regulations Protect Health-Care Incumbents Against Innovation

(p. A15) As people age, the main valve controlling the flow of blood out of the heart can narrow, causing heart failure, and sometimes death. In the past the only way to repair the damage was risky open-heart surgery. But an ingenious medical device now allows the heart to be repaired using a catheter that introduces a replacement valve through a main artery in the leg–another miracle of modern medicine.
In 2011, more than four years after they hit the European market, the Food and Drug Administration finally approved aortic heart valves for use in the U.S. The total cost of the new procedure is about the same as open-heart surgery. But government bureaucrats feared that the new replacement valve’s lower risks and easier administration would mean that many more elderly patients would seek to fix their failing heart valves, pushing up Medicare’s total spending. To limit their use, regulators created coverage rules based on a set of strained medical criteria. It was a budget prerogative masquerading as clinical reasoning.
This episode is a vivid example of the government’s increasing practice to regulate medicine and ration care. A series of landmark studies published earlier this month in the Lancet and the New England Journal of Medicine, and presented at the annual meeting of the American College of Cardiology in Chicago, makes clear how contrived the original Medicare guidelines were.
For a patient to be qualified for the aortic valve device, Medicare required two cardiac surgeons to certify first that a patient wasn’t a candidate for the open-heart repair. Also mandated was the presence of a cardiothoracic surgeon and an interventional cardiologist in the operating room during the procedure.

For the full commentary, see:
SCOTT GOTTLIEB. “Warning: Medicare May Be Bad for Your Heart; Aortic valve replacements are superior to open-heart surgery and less risky. So why are they hard to get?” The Wall Street Journal (Tues., April 12, 2016): A15.
(Note: the online version of the commentary has the date April 11, 2016.)

The Lancet article mentioned above, is:
Thourani, Vinod H., Susheel Kodali, Raj R. Makkar, Howard C. Herrmann, Mathew Williams, Vasilis Babaliaros, Richard Smalling, Scott Lim, S. Chris Malaisrie, Samir Kapadia, Wilson Y. Szeto, Kevin L. Greason, Dean Kereiakes, Gorav Ailawadi, Brian K. Whisenant, Chandan Devireddy, Jonathon Leipsic, Rebecca T. Hahn, Philippe Pibarot, Neil J. Weissman, Wael A. Jaber, David J. Cohen, Rakesh Suri, E. Murat Tuzcu, Lars G. Svensson, John G. Webb, Jeffrey W. Moses, Michael J. Mack, D. Craig Miller, Craig R. Smith, Maria C. Alu, Rupa Parvataneni, Ralph B. D’Agostino, Jr., and Martin B. Leon. “Transcatheter Aortic Valve Replacement Versus Surgical Valve Replacement in Intermediate-Risk Patients: A Propensity Score Analysis.” The Lancet (April 3, 2016), DOI: 10.1016/S0140-6736(16)30073-3.

The New England Journal of Medicine article mentioned above, is:
Leon, Martin B., Craig R. Smith, Michael J. Mack, Raj R. Makkar, Lars G. Svensson, Susheel K. Kodali, Vinod H. Thourani, E. Murat Tuzcu, D. Craig Miller, Howard C. Herrmann, Darshan Doshi, David J. Cohen, Augusto D. Pichard, Samir Kapadia, Todd Dewey, Vasilis Babaliaros, Wilson Y. Szeto, Mathew R. Williams, Dean Kereiakes, Alan Zajarias, Kevin L. Greason, Brian K. Whisenant, Robert W. Hodson, Jeffrey W. Moses, Alfredo Trento, David L. Brown, William F. Fearon, Philippe Pibarot, Rebecca T. Hahn, Wael A. Jaber, William N. Anderson, Maria C. Alu, and John G. Webb. “Transcatheter or Surgical Aortic-Valve Replacement in Intermediate-Risk Patients.” New England Journal of Medicine (April 2, 2016), DOI: 10.1056/NEJMoa1514616.

Welfare System Hurts Those It Is Intended to Help

I saw part of a C-SPAN 2 presentation, originally broadcast on 3/28/16, of a new book by Harvey and Conyers that appears to argue persuasively that the current American welfare system makes it harder for welfare recipients to transition to employment. It further argues that work is an important part of the good life, usually an important contributor to happiness. As a result, the current welfare system hurts the very people that it is intended to help.

The book discussed above, is:
Harvey, Phil, and Lisa Conyers. The Human Cost of Welfare: How the System Hurts the People It’s Supposed to Help. Santa Barbara, CA: Praeger, 2016.

Today Is 16th Anniversary of Our Betrayal of Elián González

GonzalezElianSeizedOn2000-04-22.jpg“In this April 22, 2000 file photo, Elian Gonzalez is held in a closet by Donato Dalrymple, one of the two men who rescued the boy from the ocean, right, as government officials search the home of Lazaro Gonzalez, early Saturday morning, April 22, 2000, in Miami. Armed federal agents seized Elian Gonzalez from the home of his Miami relatives before dawn Saturday, firing tear gas into an angry crowd as they left the scene with the weeping 6-year-old boy.” Source of caption and photo: online version of JENNIFER KAY and MATT SEDENSKY. “10 years later, few stirred by Elian Gonzalez saga.” Omaha World-Herald (Thurs., April 22, 2010): 7A. (Note: the online version of the article is dated April 21, 2010 and has the title “10 years after Elian, US players mum or moving on.”)

Today (April 22, 2016) is the 16th anniversary of the day when the Clinton Administration seized a six year old child in order to force him back into the slavery that his mother had died trying to escape.

Government Limits Hospital Competition

(p. A9) When the 124-bed StoneSprings Hospital Center opened in December, it became the first new hospital in Loudoun County, Va., in more than a century. That’s more remarkable than it might at first seem: In the past two decades, Loudoun County, which abuts the Potomac River and includes growing Washington suburbs, has tripled in population. Yet not a single new hospital had opened. Why? One big reason is that StoneSprings had to fight through years of regulatory reviews and court challenges before laying the first brick.
County officials and the Hospital Corporation of America, or HCA, began talking about building a new hospital in 2001. But Virginia is one of the 36 states with a “certificate of need” law, which requires health-care providers to obtain a state license before opening a new facility. Getting a license is supposed to take about nine months, according to the state Health Department. HCA first submitted an application in July 2002 but didn’t win approval for a new facility until early 2004.
Then the plan faced a series of legal challenges from the Inova Health System, an entrenched, multibillion-dollar competitor. Over decades Inova has become the dominant player in the Virginia suburbs.
. . .
It’s not hard to understand why Inova might fight so hard to keep out challengers: There’s a direct correlation between prices and competition. In a paper released in December, economists with Yale, Carnegie Mellon and the London School of Economics evaluated claims data from Aetna, Humana and UnitedHealth. They found that rates were 15.3% higher, on average, in areas with one hospital, compared with those serviced by four or more. In markets with a two-hospital duopoly, prices were 6.4% higher. Where only three hospitals compete they were 4.8% higher.
Research by Chris Koopman of the free-market Mercatus Center suggests that Virginia could have 10,000 more hospital beds and 40 more hospitals offering MRIs if the certificate of need restrictions did not exist. “In many instances, they create a quasi-monopoly,” he says. “In essence, it’s a government guarantee that no one will compete with you, until you get notice and an opportunity to challenge that person’s entry into that market.”

For the full commentary, see:
ERIC BOEHM. “CROSS COUNTRY; For Hospital Chains, Competition Is a Bitter Pill; Building a new medical center in Virginia can take a decade, because state laws favor entrenched players.” The Wall Street Journal (Sat., Jan. 30, 2016): A9.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Jan. 29, 2016.)

The academic paper mentioned above that relates hospital charges to the number of hospitals in the area, is:
Cooper, Zack, Stuart V. Craig, Martin Gaynor, and John Van Reenen. “The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured.” NBER Working Paper # 21815. National Bureau of Economic Research, Inc., 2015.

Chris Koopman’s research, mentioned above, can be found in:
Koopman, Christopher, and Thomas Stratmann. “Certificate-of-Need Laws: Implications for Virginia.” In Mercatus on Policy: Mercatus Center, George Mason University, 2015.

Zimbabwe Government Would Rather Starve Citizens than Allow GMO Food

(p. A15) Chikombedzi, Zimbabwe
My country’s government would rather see people starve than let them eat genetically modified food.
That’s the only conclusion to draw from the announcement in February that Zimbabwe will reject any food aid that includes a genetically-modified-organism ingredient–such as grains, corn and other crops made more vigorous or fruitful through GMO breeding. The ban comes just as Zimbabweans are suffering from our worst drought in two decades and up to three million people need emergency relief.
“The position of the government is very clear,” said Joseph Made, the minister of agriculture. “We do not accept GMO as we are protecting the environment from the grain point of view.”
In other words, my country–which can’t feed itself–will refuse what millions around the world eat safely every day in their breakfasts, lunches and dinners as a conventional source of calories. It doesn’t matter whether the aid arrives as food for people or feed for animals. Our customs inspectors will make sure that no food with GMOs reaches a single hungry mouth.

For the full commentary, see:
NYASHA MUDUKUTI. “We May Starve, but at Least We’ll Be GMO-Free; Unlike the Europeans we copied, Zimbabwe can’t afford such an unscientific ideological luxury.” The Wall Street Journal (Fri., March 11, 2016): A15.
(Note: italics in original.)
(Note: the online version of the commentary has the date March 10, 2016.)

“China Has Blindly Constructed So Many Homes and Wasted So Much Resources”

(p. C6) In November [2015], President Xi Jinping told a meeting of officials that China must resolve the housing inventory situation and ensure the health of the property sector.
Since then, Meishan, a city of 3.5 million people, has become a showcase for efforts to lure rural dwellers to cities to buy homes as part of so-called destocking efforts to reduce the glut.
. . .
. . ., some analysts and local government officials warn the rural strategy isn’t a cure-all. Banks typically hesitate to extend mortgages to rural migrants, whose homestead land doesn’t typically qualify as collateral.
“Now with bad loans growing in China, banks are reluctant to lend to farmers. Farmers don’t have assets and lending to them is risky,” said Wang Fei, an official at Hubei Province’s department of housing and urban-rural development.
. . .
Housing inventory in the city rose to 22.5 months last April, an alarmingly high level compared with a healthier rate of 12 months or lower. There were also cases where cash-strapped property firms defaulted on their loans, leaving behind unfinished apartments.
Buyers of Purple Cloud Golden World housing project are now stranded after Yang Jinhao, who controlled Sichuan Xinrui Property Development, got involved in a dispute with a shadow lender early last year.
“China has blindly constructed so many homes and wasted so much resources. I can’t stand it!” said Yu Jianmin, a 70-year-old caretaker of the stalled project who said the construction firm he works for is still awaiting payment from Mr. Yang. Mr. Yang couldn’t be reached.

For the full story, see:
ESTHER FUNG. “Discounts Help China Ease Home Glut.” The Wall Street Journal (Weds., March 2, 2016): C6.
(Note: ellipses, and bracketed year, added.)
(Note: the online version of the story has the date March 1, 2016, and has the title “China Sweetens Home-Ownership Deals for Rural Dwellers.”)

Electricity from Cow Manure Failing Despite Administration Support

(p. B1) Wisconsin dairy farmer Art Thelen was full of optimism a decade ago when he joined a growing group of U.S. farmers investing in technology that turns livestock manure into electricity.
The systems promised to curb air pollution from agriculture, generate extra revenue and–in no small feat–curtail odors that waft for miles in much of farm country.
“It was a great idea, and when it worked well, it was wonderful,” Mr. Thelen said.
Now the 61-year-old is among a group of farmers who recently have shut down their manure-to-energy systems–known as anaerobic digesters–or scrapped plans to build them because of the prolonged slump in natural-gas prices and higher-than-expected maintenance costs that made the systems less economical.

For the full story, see:
DAVID KESMODEL. “Energy Prices Steer Farmers Away From Manure Power.” The Wall Street Journal (Fri., Feb. 19, 2016): B1-B2.
(Note: the online version of the story has the date Feb. 18, 2016, and has the title “F.D.A. Regulator, Widowed by Cancer, Helps Speed Drug Approval.”)

Obama Says Stimulus Worked at Battery Plant Where CEO Remains “Frustrated” at Losses

(p. A12) JACKSONVILLE, Fla. — President Obama on Friday [February 26, 2016] used a visit to a high-technology battery plant in Florida to argue that the hundreds of billions of dollars in federal subsidies he signed into law during his first days in office had bolstered the economy, transformed the nation’s energy sector, and positioned the United States for a strong rebound.
But Mr. Obama’s trip to the Saft America factory here, opened in 2011 with a $95.5 million investment from the Department of Energy, also highlighted the challenges that have tempered the economic recovery and the difficulty that the president has had in claiming credit for it.
. . .
After touring the facility and watching a large robot named Wall-E assembling one of the batteries, the president called the factory “tangible evidence” that his stimulus package had worked and said that the economy was better off for it. “We took an empty swamp and turned it into an engine of innovation,” he said.
That engine, though, has sputtered as it has struggled to start here. Saft, based in Paris, announced last week that it was reducing the factory’s value because it had still not gained profitability in the competitive lithium-ion battery market. Saying he was “frustrated,” the company’s chief executive projected the plant might not be profitable for a few more years.

For the full story, see:
JULIE HIRSCHFELD DAVIS. “Obama Praises Stimulus at Battery Plant.” The New York Times (Sat., FEB. 27, 2016): A12.
(Note: ellipsis, and bracketed date, added.)
(Note: the online version of the story has the date FEB. 26, 2016, and has the title “Obama Points to Florida Factory as Evidence That Stimulus Worked.”)

After Wife’s Cancer, F.D.A. Regulator Cuts Decision Time from Six to Five Months (Beyond Years Spent Testing)

(p. 1) BETHESDA, Md. — Mary Pazdur had exhausted the usual drugs for ovarian cancer, and with her tumors growing and her condition deteriorating, her last hope seemed to be an experimental compound that had yet to be approved by federal regulators.
So she appealed to the Food and Drug Administration, whose oncology chief for the last 16 years, Dr. Richard Pazdur, has been a man denounced by many cancer patient advocates as a slow, obstructionist bureaucrat.
He was also Mary’s husband.
In her struggle with cancer and ultimately her death in November, Ms. Pazdur had a part, her husband and a number of cancer specialists now say, in a profound change at the F.D.A.: a speeding up of the drug approval process. Ms. Pazdur’s three-year battle with cancer was a factor, they say, in Dr. Pazdur’s willingness to swiftly approve risky new treatments and passion to fight the disease that patient advocates thought he lacked.
. . .
(p. 13) Certainly there has been a change at the powerful agency. Since Ms. Pazdur learned she had ovarian cancer in 2012, approvals for drugs have been faster than at any time in the F.D.A.’s modern history. Although companies go through a yearslong discovery and testing process with new drugs before filing a formal application with the F.D.A., the average decision time on drugs by Dr. Pazdur’s oncology group has come down to five months from six months. That is a major acceleration in a pharmaceutical industry where every month’s delay can mean thousands of lives lost and sometimes hundreds of millions of dollars in sales that, given limited patent times, can never be recovered.
When asked specifically how his wife’s illness had changed his work at the F.D.A., Dr. Pazdur said he was intent on making decisions more quickly.
“I have a much greater sense of urgency these days,” Dr. Pazdur, 63, said in an interview. “I have been on a jihad to streamline the review process and get things out the door faster. I have evolved from regulator to regulator-advocate.”

For the full story, see:
GARDINER HARRIS. “A Wife’s Cancer Prods the F.D.A.” The New York Times, First Section (Sun., JAN. 3, 2016): 1 & 13.
(Note: ellipsis added.)
(Note: the online version of the story has the date JAN. 2, 2016, and has the title “F.D.A. Regulator, Widowed by Cancer, Helps Speed Drug Approval.”)