Posts Tagged ‘safety’

Big Pharma: Even Worse Than Used Cars as a Market for Lemons?

Big Pharma: Even Worse Than Used Cars as a Market for Lemons?

Courtesy of Yves Smith at Naked Capitalism 

Fruit at market

Some readers have wondered why this blog from time to time runs posts on the US health care system. Aside from the fact that it’s a major public policy problem in America, it is also a prime example of bad incentives, information asymmetry, and corporate predatory behavior. It thus makes for an important object lesson.

Reader Francois T pointed to an example, a commentary on a paper presented by Donald Light at the annual meeting of the American Sociological Association, “Pharmaceuticals: A Two-Tiered Market for Producing ‘Lemons’ and Serious Harm.” It still appears to be embargoed, but Howard Brody provides an extensive summary on his blog.

Light uses George Akerlof “market for lemons” as a point of departure. For those not familiar with the famed Akerlof paper, a “market for lemons” can occur when consumers are unable to distinguish product quality. The used car market is the paradigm, since the dealer has a much better idea than the buyer of whether a particular car is any good. Unscrupulous operators can stick a lot of hapless chump customers with overpriced clunkers. However, as crooked vendors become more common, buyers wise up a tad and are not longer to pay as much for cars they cannot evaluate. So while the prices buyers are now willing to pay are probably still too high for rattletraps, they are too low for decent cars. People with good merchandise start to look for other channels. Akerlof posits that the market eventually falls apart.

Note that used cars dealers did not set out to create lemons; the cars were bad deals by being overpriced (presumably, if they had been presented, warts and all, they still would have found purchasers, presumably people who thought they could repair them and those who wanted them for parts and scrap). Light contends, by contrast, that major pharmaceutical companies create bad products:

[T]he pharmaceutical market for ‘lemons,’ differs from other markets for lemons in that companies develop and produce the lemons. Evidence in this paper indicates that the production of lemon-drugs with hidden dangers is widespread and results from the systematic exploitation of monopoly rights and the production of partial, biased information about the efficacy and safety of new drugs…Companies will design and run their clinical


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Another Safety Issue: Can Toyota Ever Bounce Back?

Another Safety Issue: Can Toyota Ever Bounce Back?

By Joseph R. Szczesny, courtesy of TIME 

A Toyota dealership advertises a 0% interest rate on the windshield of an unsold 2010 Toyota Matrix in Lakewood, Colo.

David Zalubowski / AP

The flood of recalls — nearly 9 million vehicles in the past 12 months — and reams of nasty publicity involving runaway cars and unintended acceleration seemed finally to have abated for the beleaguered automaker Toyota. Then, on Tuesday, the National Highway Traffic and Safety Administration (NHTSA) said it was intensifying its investigation into another potential Toyota safety issue: sudden-stalling problems on its Corolla and Matrix models.

This new NHTSA move, a formal engineering investigation of the Matrixes and Corollas from model years 2005 to ’07, stems from more than 1,000 complaints that have been received by Toyota and the NHTSA. It could possibly lead to another major round of recalls if mechanical or electrical problems are found. (See the 50 worst cars of all time.)

The investigation is just the latest in a barrage of challenges — and heavy damage — to the once gilt-edged reputation of the world’s top automaker. While solidly profitable during the first quarter of fiscal year 2011, the company still has a way to go before it can repair that reputation. "They are still a successful company, they just aren’t on a pedestal anymore," says Rebecca Lindland, an analyst with IHS Global Insight.

"This controversy has damaged our reputation," acknowledges Toyota spokesman John Hanson, referring to the sudden-acceleration issue. But it’s about more than just reputation: Toyota faces liability claims over incidents that have been blamed for 79 deaths and hundreds of crashes.

Earlier in August, Toyota executives were heartened to receive a report from the NHTSA that the agency hadn’t found any evidence that faulty electronics played a role in sudden-acceleration accidents, and instead suggested driver error…
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Corporate Rotten Eggs

Robert Reich suggests creating a "national database of corporate crimes and settlements" to help regulators keep track of corporations that have a history of disregarding safety concerns.  As long as the fines for individual violations is less than the profits realized in the course of business, there is no incentive for these corporations to clean up their act.  To do that, the penalties need to be exceed the rewards and inflict some real pain on the corporation, owners, managers and shareholders. This is particularly important with serial offenders because the culture of the company does not change as a result of minor fines, just as the sociopathic nature of hard core criminals does not get cured by a three month stay in prision. – Ilene 

Corporate Rotten Eggs

PICTURED IS A CRACKED, UNCOOKED EGG, SHOWING THE YOLK AND THE WHITE, OR ALBUMEN, OF THE HEN'S EGG. CRACKED UNCOOKED EGG SHOWING YOLK AND WHITE

Courtesy of Robert Reich 

There are rotten apples in every industry. Or perhaps I should say rotten eggs.

One especially rotten egg is Jack DeCoster, whose commercial egg agribusiness, which goes under the homey title “Wright County Egg,” headquartered in Galt, Iowa, sends eggs all over the country under many different brands. Those eggs have now laid low thousands of Americans with salmonella poisoning, and may well infect thousands more.

DeCoster is recalling 380 million eggs sold since mid-May. Another commercial egg company, also headquartered in Iowa, and in which DeCoster is a major investor, is recalling hundreds millions more.

It’s not clear how rotten eggs are recalled. They’re not like Toyotas. They’re already in our food supply. 

But this is only the beginning of the story.  

Thirteen years ago when I was Secretary of Labor, DeCoster agreed to pay a $2 million penalty (the most we could throw at him) for some of the most heinous workplace violations I’d seen. His workers had been forced to live in trailers infested with rats and handle manure and dead chickens with their bare hands. It was an agricultural sweatshop.

Several people in Maine told me the fine wouldn’t stop DeCoster. He’d just consider it a cost of doing business. Evidently they were right. DeCoster’s commercial egg business has a record that would make a repeat offender blush.

In 2003, DeCoster pleaded guilty to knowingly hiring undocumented immigrants (who don’t complain about unsafe working conditions, below-minimum-wage pay, and unsanitary facilities). DeCoster paid a record $2.1 million penalty for that one.

In the 1990s he was charged by…
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BP Pressured Worker, 30-Year Old Playbook Response

BP Pressured Rig Worker to Hurry Before Disaster, Father Says

Oiled Guillimot after Empress oil spill,West Wales

By Joe Carroll and Laurel Brubaker Calkins, Bloomberg

May 28 (Bloomberg) — The highest-ranking crew member to perish aboard the Deepwater Horizon drilling rig warned his family that BP Plc was pressuring him to sacrifice safety for the sake of time and money, his father said.

Jason Anderson, one of 11 rig workers presumed dead after an April 20 explosion and fire sank the Deepwater Horizon and triggered the worst oil spill in U.S. history, told relatives in February and March that BP was urging him to accelerate work on the Macondo well off the Louisiana coast, said his father, Billy Anderson.

On previous wells drilled with the same rig, Jason Anderson, a 35-year-old employee of vessel owner Transocean Ltd., had been able to convince BP representatives to eschew shortcuts that he believed would compromise safety, his father said. But in the eight weeks preceding the disaster, BP stepped up the pressure and overruled safety objections, Billy Anderson, 66, said.

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BP Using 30 Year-Old Playbook in Responding to Oil Spill? 

Washington’s Blog

Preface for my conservative readers: Yes, I know … Maddow is very liberal. But her claims are either true or they are not true. Let’s focus on her claims. If anyone can refute them, let me know, and I’ll post a retraction.

Rachel Maddow claims that a top kill type maneuver – pumping in cement and saltwater – was tried during the giant 1979 Ixtoc oil spill, but didn’t work.

Maddow also says:

  • The precursor to the same company operating the Deepwater Horizon drilling well – Transocean – operated the Ixtoc rig
  • The cause of both oil spills was the same: a malfunctioning blowout preventer
  • The location of the spill was the same: the Gulf
  • The sizes of both spills were massive
  • A "top hat" operation was attempted unsuccessfully. During the Ixtoc spill, it was named


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Zero Hedge

Bitcoin Nears $11,500 - Almost Double The 'Mystery Dip-Buyer' Lows

Courtesy of ZeroHedge. View original post here.

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Phil's Favorites

How Amazon could lose its health-care bid while drug distributor stocks win

 

How Amazon could lose its health-care bid while drug distributor stocks win

Courtesy of Vitaliy Katsenelson, Contrarian Edge

Amazon.com has been one of the most innovative and disruptive companies of this century, with incredible success in areas that lie outside of what has been historically perceived as its core business (book selling).

Thus every announcement or speculation that Amazon will enter into a particular industry sends stocks of that industry into a tailspin. Investors sell first and ask questions later. When Amazon announced its purchase of Whole Foods, grocery stores declined as much as 30%. Even Tesco separated by an ocean from Whole Foods, was down on that news.

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Warren Buffett's Advice for Small Business 2018

By joniferdingcong. Originally published at ValueWalk.

The Master Investor gives top tips for budding entrepreneurs, startups, and small businesses.

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Digital Currencies

As Bitcoin Nears $11,000, Here's A History Of Its Biggest Ups And Downs

Courtesy of ZeroHedge. View original post here.

The cryptocurrency rebound off Feb 5th's bloodbath lows (below $6,000 for Bitcoin) has been impressive, as a 'mysterious' massive buyer 'bought the dip' and momentum took care of the rest.

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Insider Scoop

Walmart, Target Are Susquehanna's Top Picks Ahead Of Retail Earnings Season

Courtesy of Benzinga.

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Biotech

What is 'right to try,' and could it help?

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

 

What is 'right to try,' and could it help?

In this March 18, 2011 photo, Cassidy Hempel waved at hospital staff as she was being treated for a rare disorder. Her mother Chris, left, fought to gain permission for an experimental drug. AP Photo/Marcio Jose Sanchez

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Mapping The Market

The tricks propagandists use to beat science

Via Jean-Luc

How propagandist beat science – they did it for the tobacco industry and now it's in favor of the energy companies:

The tricks propagandists use to beat science

The original tobacco strategy involved several lines of attack. One of these was to fund research that supported the industry and then publish only the results that fit the required narrative. “For instance, in 1954 the TIRC distributed a pamphlet entitled ‘A Scientific Perspective on the Cigarette Controversy’ to nearly 200,000 doctors, journalists, and policy-makers, in which they emphasized favorable research and questioned results supporting the contrary view,” say Weatherall and co, who call this approach biased production.

A second approach promoted independent research that happened to support ...



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Members' Corner

An Interview with David Brin

Our guest David Brin is an astrophysicist, technology consultant, and best-selling author who speaks, writes, and advises on a range of topics including national defense, creativity, and space exploration. He is also a well-known and influential futurist (one of four “World's Best Futurists,” according to The Urban Developer), and it is his ideas on the future, specifically the future of civilization, that I hope to learn about here.   

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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

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Kimble Charting Solutions

Brazil; Waterfall in prices starting? Impact U.S.?

Courtesy of Chris Kimble.

Below looks at the Brazil ETF (EWZ) over the last decade. The rally over the past year has it facing a critical level, from a Power of the Pattern perspective.

CLICK ON CHART TO ENLARGE

EWZ is facing dual resistance at (1), while in a 9-year down trend of lower highs and lower lows. The counter trend rally over the past 17-months has it testing key falling resistance. Did the counter trend reflation rally just end at dual resistance???

If EWZ b...



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All About Trends

Mid-Day Update

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