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Farrell: Are the Greek Gods Really That Crazy?

I read in the paper Wednesday that Athens is going to hire a bunch of high level advisors to help it with its privatization program. The stuff done so far has been partial privatizations with minority stakes in state owned companies offered domestically and sold on the Athens stock exchange.

There has been only one strategic investment by an outside firm which was a 30% stake in Hellenic Telecom taken by Deutsche Telecom. And that was a while ago before the roof caved in.

One (and only one of many) of the reasons for the roof caving in was the revelation that the Greeks and a major investment had contrived a derivative trade so complex it made the world's head spin. What it did was move debt forward without really moving anything except the bank accounts of the investment advisors.

When pealed back it showed the disastrous state of Greek finances. You woulda thunk the Greek Gods would interfere and come down from Mt. Olympus and say "no more". The country's most powerful trade union is saying 'no way' and will block any attempt to sell, as the Financial Times puts it, the "family silver".

Pieces of the silver include, says the FT, "Odie, a state organization that runs Greece's only commercial horse-race track ..and the state controlled gaming operation." I thought all of Greece was a gaming operation! Also, the loss ridden state railways, a nickel manufacturer, and the "state controlled gas and electricity utilities" will be up for bid.

All this is planned to raise some 50 billion Euros the next few years. Right. First, who is going to buy into this when the powerful union class is vehemently opposed. Would you really need the headaches? The businesses are losing money and the work force is hostile. Second, even if you could sell, knowing it's a forced sale by a desperate government just might effect the price.

That won't stop the investment bankers from pitching the merits of the deal so where are the Gods to protect the mere mortals being rolled. Or, at least, where are the adults to see the absurdity of this plan.

Absurdity doesn't stop at the Adriatic shoreline. Politicos are up in arms at the cruelty of Paul Ryan's proposal to pitch Medicare as we know it for a voucher system. The beef is that the cost of health care will rise at a much faster pace then the value of the voucher which will be pegged to the inflation rate. Seniors would then be unable to afford a full measure of health care. This is undoubtedly correct as health care costs have risen faster than inflation for like forever.

But the Obamacare program for Medicare passed into law and due to take effect in 2014 is just as crazy. When proposed it was demonized by political opponents as advocating 'death panels' to decide health care issues. If bullied about by politicians, you know that's not right.

But what will be created is a panel of 15 people to be called the Independent Payment Advisory Board (IPAB). They will have the task of dictating specific Medicare payment rates. They also will be tasked with holding Medicare spending to certain limits. At first, the limit will be a measure of inflation.

After 2018, the measure will be nominal per capita growth of the overall economy, plus one percent. President Obama has said he wants to change that to GDP plus a half of a percent.

But Medicare costs grew over 2% more than GDP plus a half since 1985. A 2% spread for twenty years will create the same sort of gulf the Ryan plan would. How are they any different?

As I understand it, the IPAB can't restrict treatments or ask seniors to pay more. I guess what will happen is providers will drop out and not offer the service in that they won't be paid (according to them ) the cost of providing the service. Hey, just take a page from Wall Street - lose money on every trade but make up for it with volume??!!

Both programs seem to think that the potential baby-boom-generation-now-becoming-a-senior-citizen-market will be so large and so lucrative a target that someone will find a way to deliver health care at affordable rates.

That could well be. But it ain't guaranteed and if the Ryan plan is unconscionable, as many feel, then we sure as hell shouldn't have listened to Nancy Pelosi when she advised to "just pass the (Obama) health care bill and then we'll find out what's in it." I wonder if the 'denizens of the beltway' (I love that phrase) have any idea how to figure a 2% differential over 25 years and what that would add up to?

I need a break. Maybe Lola Jane will let me hunt Easter eggs with her.

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