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COMMENTARY:

Thinking about Recoveries

by Fred Cederholm

Does anyone really believe that it is the Dr’s and hospitals which are in the driver’s seat and NOT the insurance companies? Can a national health care reform result without Uncle $ugar taking on the role of the “sole” underwriter or coverage provider? Will the medical insurance industry yield without a fight?

I’ve been thinking about recoveries. Actually I’ve been thinking about my post-operative return to normal, my recovery goals, the status of the US recovery, and the US recovery goals. My open heart surgery will be a scant three weeks in the past on Wednesday. My recovery is progressing exceptionally well. To all who have thought of me and prayed for me, a most heartfelt THANK YOU! I am now back home, I have progressed from sponge baths to hand-held (sit down) showers, I can comfortably walk up and down 14 steps, and I can now walk around my entire block unassisted (with only one brief pause at the halfway point and with the company of a neighbor— just in case ). Monday, I retrieved my Scottie, Mac II, from the kennel. I wish I could say that things are going as well for the US and the economy.

You see, for the past two plus weeks, I was offline and out of the loop as far as what was going on economically, financially, domestically and internationally. We are still in the opening phases as what has been billed as the worst economic downturn since the Great “D” of the 1930’s. Given the serious “dead in the water” status of the entire real estate sector – both residential and commercial, it seems a tad premature to blow off any further looming RE negatives. By my estimations on the housing side, only one third of the bad mortgages, the sub-prime loans, are now in our rear-view mirrors. A surge of the alternative A loans will hit late his summer and fall. The tsunami of interest-only adjustable rate ARMs will reset and unravel starting early next spring. Add to that the defaults and delinquencies for conventional RE financings which are surfacing because of job losses and downsizings, and the RE drag on the economic recovery is far from over.

The unemployment/underemployment front has not turned the corner yet, either. The DC spinmeisters have made gold from straw in their interpretation of the most recent declines in new claims and cumulative individuals drawing unemployment benefits. The job losses, however, have been so consistently large for so long now, that sooner or later, you will reach a point whereby the pool of those who are working has diminished; so, while the percentage of job losses remains unchanged (and high), the absolute number of recently terminated persons seems smaller. Then too, even with extended payment timeframes for the unemployed, the clock runs out eventually on benefits, and fewer “appear” to be drawing them. Nobody wants to proffer these more-than-likely explanations. Not one sector appears at even the beginning of a hiring surge. Recent college grads are facing perhaps the worst spring/summer hiring cycle in more than a generation.

I find it particularly interesting that somehow during the past couple of weeks, the MEGA (too big to fail) banks and investment banks have not only turned the corner, they want to pay back Uncle $ugar any bailout monies received and TARP monies accessed—thereby returning to a pre-crisis state. Could it be that they do NOT want to deal with the new regulatory restrictions being currently put forth by Treasury Secretary Geithner? Or, closer to home, could it be that they absolutely do NOT relish any restrictions on the bonuses and perks traditionally lavished on the performing stars, the mediocre players, and the managerial “turkeys” in their organizations?

The US Government continues to expand its ownership of what had been private enterprises and industries. While the bankers may want to eject Uncle from their boards of directors, the auto industry is proving a nice temporary distraction for the economic and financial headlines. It now looks like the auto debacle will shortly give way to the unfolding debate, finger-pointing, and mud-slinging focused around health care reform! Does anyone really believe that it is the Dr’s and hospitals which are in the driver’s seat and NOT the insurance companies? Can a national health care reform (make that a major medical insurance coverage fix) result without Uncle $ugar taking on the role of the “sole” underwriter or coverage provider? Will the medical insurance industry yield without a fight? They do want a highly public debate – full of sound and fury, signifying nothing. But.... their dream conclusion is for Washington to mandate coverage for everyone, with all that coverage being purchased from them!

This June of 2009, I at least seem to be in control of my own recovery. I can see progress each day. Some days I can see progress in the afternoon from just what I did in the morning. I wish I could say the same for the status of the US recovery, and the US recovery goals. My low point was when the surgeons cracked open my chest and began to task of repairing my defective mitral valve and partially clogged arteries. We won’t know the US economic/financial low point for at least two quarters after it has passed.

I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.


Copyright 2009 Questions, Inc. All rights reserved. Fred Cederholm is a CPA/CFE, a forensic accountant, and writer. He is a graduate of the University of Illinois (B.A., M.A. and M.A.S.). He can be reached at asklet@rochelle.net.


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This story was published on June 22, 2009.