Mr. Dwyer is a Silicon Valley, California lawyer who was former Associate Editor of the Stanford Law Review (1988-1989), with a A.B. in Economics from Stanford University (1986). He follows technology, gambling and emerging markets. Visit: Keeping It Free (http://keepingitfree.blogspot.com/)... More
Remember the movie, "The Titanic" where the rich passengers got access to the lifeboats? Remember the poorer passengers being prevented from vying for those lifeboats, given their scarcity?
Anytime there is more demand for things like lifeboats than supply, there will be a system for deciding who gets the lifeboat. We can call the system by whatever name we want -- rationing, "highest bidder" , "free market" , "women and children first" -- but it is a system to decide who gets the limited resources. Calling it one name or another is simply semantics.
In America, we have a finite amount of healthcare "lifeboats" -- doctors, nurses, hospitals -- with more demand than supply. By necessity, we need a system to distribute these limited resources. As the demand exceeds the supply, any system we come up with will require decisions on who receives the supply and who does not.
So we'll necessarily have to decide what measuring stick to use to determine "who gets what." Are we going to give the "rich passengers" priority as they did on the Titanic? Are we going to give "women and children" priority? What about the elderly? The terminally ill? These are the questions that should be discussed and must be answered.
But while we are having the discussion, none of us should bemoan the fact that such decisions will necessarily have to be made. With more passengers than lifeboats, it is what it is.
He now predicts that the recession might already be "over."
Here are reasons to question this latest prognostication:
According to Noble Prize winning economist Robert Stiglitz, the banking sector's problems are worse now than they were in 2007. See Bloomberg's Stiglitz interview at www.calculatedriskblog.com/2009/09/stigl...; In the interview, Stiglitz opines that the U.S. will “grow but not enough to offset the increase in the population,” he said, adding that “if workers do not have income, it’s very hard to see how the U.S. will generate the demand that the world economy needs.”
According to Robert Bauman, former Member of the United States House of Representatives from Maryland, (1973-1981) and editor of The Sovereign Society Offshore A-Letter, "the government is financing 9 out of 10 new U.S. mortgages." See http://baumanblog.sovereignsociety.com/2009/09/america-is-insolvent.html .
According to Dick Bove, Rochdale Securities' banking analyst, 150 to 200 more US banks will fail and will pinch 25% of the earnings from the healthy banks left standing. See http://www.cnbc.com/id/32540897 . As is evident from these seasoned opinions, Bernanke's opinion that the recession is likely over is far from unanimous. Wise investors should proceed with caution.
WYNN recent rise deserves notice. As recently as July 9, 2009, WYNN sat at $29.91 a share. Today, the stock is at $58.00, a near double. The rise is startling given the choppiness of the gaming sector. Wedbush Morgan Securities downgraded the stock just last week from outperform to neutral and gave the stock a target price of $47. Wedbush estimates that 2010 Ebitda will be $748.6 MM, reflecting a 9.5 multiple on the company's Las Vegas operation and a 12.5 multiple on its Macau operation. (Seehttp://online.barrons.com/article/SB124898954766995047.html ).
Nonetheless, investors are undeterred. The share price has risen $8 a share since the Wedbush downgrade. The rise is noteworthy given the lack of consensus on the direction of the sector. As recently as late July, Merrill Lynch cut its investment rating on MGM, a Wynn competitor, from Buy to Neutral and further cut its price target from $11 to $8. (Seehttp://online.wsj.com/article/BT-CO-20090731-716420.html).
WYNN's Chief Operating Officer Mark Schorr recently sold shares worth $7.35 million last week according to the Wall Street Journal. (See http://online.wsj.com/article/SB124943637091406207.html). He sold 149,000 shares at $49 each, some $9 per share below the current share price. WYNN'S recent second quarter earnings report showed a 91% drop in profit. The casino has dropped its room rates, and currently has rooms at $159. (See https://reservations.wynnlasvegas.com/index.html?hid=wlv#).
The stock's recent rise may augur good things to come. But it is not for the faint of heart.
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The Myth of "Healthcare Rationing"
Anytime there is more demand for things like lifeboats than supply, there will be a system for deciding who gets the lifeboat. We can call the system by whatever name we want -- rationing, "highest bidder" , "free market" , "women and children first" -- but it is a system to decide who gets the limited resources. Calling it one name or another is simply semantics.
In America, we have a finite amount of healthcare "lifeboats" -- doctors, nurses, hospitals -- with more demand than supply. By necessity, we need a system to distribute these limited resources. As the demand exceeds the supply, any system we come up with will require decisions on who receives the supply and who does not.
So we'll necessarily have to decide what measuring stick to use to determine "who gets what." Are we going to give the "rich passengers" priority as they did on the Titanic? Are we going to give "women and children" priority? What about the elderly? The terminally ill? These are the questions that should be discussed and must be answered.
But while we are having the discussion, none of us should bemoan the fact that such decisions will necessarily have to be made. With more passengers than lifeboats, it is what it is.
Ben Bernanke Might Be Wrong
He now predicts that the recession might already be "over."
Here are reasons to question this latest prognostication:
As is evident from these seasoned opinions, Bernanke's opinion that the recession is likely over is far from unanimous. Wise investors should proceed with caution.
California Unemployment Rate At Post War High of 11.9%
Reasons To Doubt Housing Recovery
Disclosure: Author does not own TOL, BZH, PHM, BJZ, KBH, HOV
WYNN On The Rise by Richard Dwyer
Nonetheless, investors are undeterred. The share price has risen $8 a share since the Wedbush downgrade. The rise is noteworthy given the lack of consensus on the direction of the sector. As recently as late July, Merrill Lynch cut its investment rating on MGM, a Wynn competitor, from Buy to Neutral and further cut its price target from $11 to $8. (Seehttp://online.wsj.com/article/BT-CO-20090731-716420.html).
The cut further comes on the heels of Las Vegas Sands reporting a loss of $222.2 MM for the quarter. (Seehttp://www.lvrj.com/news/breaking_news/52205307.html).
WYNN's Chief Operating Officer Mark Schorr recently sold shares worth $7.35 million last week according to the Wall Street Journal. (See http://online.wsj.com/article/SB124943637091406207.html). He sold 149,000 shares at $49 each, some $9 per share below the current share price. WYNN'S recent second quarter earnings report showed a 91% drop in profit. The casino has dropped its room rates, and currently has rooms at $159. (See https://reservations.wynnlasvegas.com/index.html?hid=wlv#).
The stock's recent rise may augur good things to come. But it is not for the faint of heart.