Tag Archives: Malpractice

Has Obama’s buddy Jon Corzine misplaced $1.2 billion of customer funds?

From the Washington Times.


The facts are that on Oct. 25, Jon Corzine, a former New Jersey governor, stated he was confident that MF Global would successfully manage its $6.3 billion exposure to European debt (Spain, Portugal, Belgium and Italy). Yet a week after a failed attempt to sell the company, MF Global filed for Chapter 11 bankruptcy on Oct. 31.

Now let’s discuss the failure of management at MF Global. Mr. Corzine who is considered by many one of the smartest fixed-income minds in the business took immeasurable risk with the capital of his firm. It was revealed that the company was leveraged 40-1. In summary, the company only had 2.5 percent equity invested against risk positions. Note: Even in the height of the subprime crisis a 40-1 leverage would have been considered extremely risky, where small movements in underlying positions could represent deleterious outcomes for investors.

Did the great Jon Corzine not learn from the greatest financial meltdown seen in the U.S. economy? The answer is simple, here is another example to the entrusted “gambling with other people’s money.” The irony of this is that in the August 2011 bond deal there is a key clause that states if Mr. Corzine departs as MF Global’s full-time chief executive officer prior to July 1, 2013, because of an appointment to a federal position by the president and confirmation of that appointment by the U.S. Senate, investors would get an additional 1 percent coupon on their existing 6.250 percent bonds. I beg to differ in that the “clause” should have said if Mr. Corzine decides to increase the risk-taking at MF Global similar to previous risk positions at Goldman Sachs, investors should be redeemed their money at 100 cents on the dollar. We will find out more but another concern, there is approximately $600 million of unaccounted for customer funds.

UPDATE: The figure is now $1.2 billion.


The court-appointed trustee overseeing MF Global’s bankruptcy says up to $1.2 billion is missing from customer accounts, double what the firm had reported to regulators last month.

Obama is the Solyndra president. He’s been raiding the public coffers to reward his billionaire campaign fundraisers from day 1 with from his “stimulus” funding – running 1.3 trillion deficits to pay off all the people who got him elected. The young people who will have to pay off this debt still keep voting for him like lemmings – they have no idea about his connections to rich Wall Street bankers. They buy the rhetoric. And the Obama-media has no interest of informing anyone about his connections to dodgy people and organizations.

Look for Corzine to get a presidential pardon in 2012, when Obama leaves office.

How lawsuit abuse hurts businesses and raises unemployment

Consdier this paper from the Heritage Foundation, featuring a variety of views on lawsuit abuse.


LAWRENCE J. McQUILLAN, Ph.D.: I am an economist. I focus on this issue as an economic issue, an economic problem. I have been working on this issue for about four years as a full-time project, and the first study that we did in 2006 was Jackpot Justice, which Hans mentioned earlier.

In this study, what we set out to do is measure the total cost of the U.S. tort liability system and put that cost in perspective. Hans mentioned a figure of $252 billion a year. That is the direct cost of the tort liability system, but what we wanted to do in this study is also measure the indirect cost. When we crunched the numbers, we arrived at a total of $865 billion annually as the cost.

It is a lawsuit industry. That’s really the way to look at it. It truly is an industry in terms of the size, scope, and amount of resources devoted to it. To put it in perspective, it’s roughly the size of the U.S. restaurant industry: About 6.5 percent of GDP would be the equivalent. It is about 30 times what the National Institutes of Health spends each year on finding cures for deadly diseases. It’s a huge amount of resources that are diverted toward, basically, a transfer system.

The Costs of Lawsuit Abuse

Every year, lawsuit abuse costs each American about $2,000. That is the cost that is factored into all the goods and services that we buy, from ladders to lawnmowers. Built into every price is a component to pay for liability insurance and lawsuit defense.

We estimated the wasteful part of that $865 billion to be about $589 billion a year. In other words, you could remove that part from this total cost and not change manufacturers’ incentives to produce safe products. You could still fully compensate truly injured individuals.

Here is one of the ways that lawsuit abuse changes the free market:

Indirect Costs: Defensive Medicine[…]The first one that gets talked about a lot these days is defensive medicine. Ninety-three percent of all physicians report practicing defensive medicine. These are basically unnecessary tests, procedures, referrals that they know are not really medically necessary to protect the patient, but they do them anyway to protect themselves from litigation. About 25 percent of all procedures, according to a survey last year by the Massachusetts Medical Society, are deemed by the physicians themselves to be unnecessary defensive medicine procedures.

We crunched the numbers in terms of how much this defensive medicine costs the economy. We arrived, in 2007, at $124 billion a year, which is about 8 percent of total health care expenditures. Today, that number would be roughly about $191 billion a year.

You also have to remember that these defensive medicine expenditures get passed along to all of us. We all end up paying for this in terms of our insurance. So insurance premiums go up, which then crowds out a lot of people from being able to afford insurance that they normally would be able to afford. We wanted to estimate what that costs. After crunching the numbers, we estimate that about 3.4 million Americans would have insurance today but do not because of the higher premiums due to just defensive medicine: today about $191 billion.

I think yesterday there was a report that came out that showed something like 14,000 people a year die because they do not have health insurance. It would not surprise me if a lot of these 14,000 people that die every year are part of those 3.4 million people.

And one more:

Indirect Costs: Research and Development

Another indirect cost of the excessive tort liability system is R&D impact. Of course, businesses have to spend a lot more money on legal defense that would otherwise go to product research and development, new product innovation, and new products being introduced. We estimated that total at about $367 billion a year of lost sales of new products that would otherwise come to market but do not because of the diversion of resources basically away from R&D and new product development toward legal defense: again, another huge indirect cost where it is hard to measure what would have been but is not.

Basically, the vaccine industry has fled the country. It is hard to find a manufacturer anymore in the U.S. that does vaccine development and manufacturing, primarily because of liability concerns. It was reported that the FDA granted the H1N1 virus vaccine to four companies to be manufactured, and without much of a surprise, three of the four companies are actually located outside the U.S.: Swiss, Australian, and French companies were all awarded the vaccine licenses.

There is one company in the U.S in Maryland, but I think it got the license to manufacture only because they have a technological advantage. They are going to produce an inhalable version of the vaccine rather than the standard injectable version. I think that is probably why they got a license. Otherwise, I think all of the manufacturers would have come from Europe or Australia.

That is a great example of how it really does impact U.S. business and how the liability system is forcing more and more business overseas. As a result, it hurts us in terms of the economy and job growth.

As another example, Volkswagen was going to introduce a three-wheel vehicle, very green technology, that gets about 49 miles per gallon. They were going to sell it in the U.S. for about $17,000 a vehicle. Probably most people in this room would not want to drive this vehicle, but I can tell you that where I come from in California, it would have sold well. It would have had a big market. It actually got qualified, too, to use the HOV lanes in California.

At the last minute, Volkswagen decided to pull it from the U.S. and not market it here because of liability concerns, but it is available in Europe. So once again, another example where European markets are perceived to be more favorable in terms of liability than the U.S.

I do not think it is any accident, too, that they tend not to have punitive damages in Europe and, also, that they have the loser pay system. This is another example of the indirect costs, fewer products available in the U.S. A lot of people probably would have loved to buy this car, but it is not available.

In terms of how expensive the U.S. system is compared to other countries of comparable standards of living, the estimate is that we have about 59 percent higher tort costs. These are direct costs. These are awards, attorneys’ fees, and administrative expenses. This does not include the indirect costs that I just talked about, but it gives you a good indication of our system compared to other systems in the world. It is just much more expensive for compensating injured individuals.

That is just one of the perspectives provided in this excellent article.

If we expect to have jobs in the future, then we should be thinking about who we expect to hire us. Tacking on frivolous costs onto business owners who develop products and services that we need means that there will be fewer businesses to hire us when we are looking for jobs and less choice and competition when we make purchases.

Keep in mind that trial lawyers are one of the pillars of the Democrat party, and they fight against any regulation of lawsuit abuse.

I noticed that Hans Bader published an article here talking about how the Supreme Court has been attacking businesses. This is one of the reasons why we are bleeding jobs to other countries. Judicial activism is hostile to business and the free market.

MUST-READ: The definitive catalog of left-wing media bias

This American Spectator essay is required reading. (H/T ECM)

It is basically a list of the most egregious examples of media bias in recent memory. I am not old enough to remember some of these, especially the JFK ones. So this was a real eye-opener to me.

Here’s a summary of the points raised:

What’s particularly interesting is that the stories not reported about JFK were in the early 1960s, the effort to not report the story about President Clinton was in 1998, the story on John Edwards was hushed through the time it counted most, in the election cycle of 2008 when he was a serious presidential candidate, and the decision not to report on Van Jones was — well — two weeks ago, and ACORN but last week. Which is to say, September of 2009.

In other words, across five decades of American journalistic history, the instinct of many Old Media institutions — specifically including NBC and the New York Times — has been to deliberately withhold the truth. To quite deliberately use their journalism skills and tools to misrepresent those whose politics they do not favor.

Were this, say, the field of medicine, practitioners of this kind of thing would lose their license to practice, sued for and surely convicted of malpractice. As it is, the examples listed here are what might be termed “media malpractice,” evidencing a clear and convincing pattern of deceit.

The mainstream media is totally untrustworthy.