Tesla Is Being Sued Again, For Allegedly Not Paying Workers

It wouldn’t be another day in April 2018 if there wasn’t yet another negative Tesla headline hitting the wire.

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That’s right – Tesla has once again been sued, this time as it relates to contract workers at its Fremont factory. Tesla is party to a lawsuit that was also aimed at Balance Staffing, a company responsible for staffing workers at Tesla’s Fremont factory. These workers have alleged not only that they are due additional overtime pay, but also that the service that placed them at Tesla encouraged them to accept debit cards instead of paychecks when it came time to get paid.

https://www.zerohedge.com/sites/default/files/inline-images/lawsuit_0.png?itok=HVkAlVFp

The article continues, citing the temp agency’s standards for overtime pay:

Nezbeth-Altimore points to Balance Staffing’s policy to illustrate her claims over failure to pay necessary overtime wages and provide proper rest periods. California law requires employees to be paid one-and-a-half times their regular rate of pay if they work more than eight hours a day or 40 hours total in a week. After 12 hours in a day, workers are entitled to double their pay.

In its handbook, Balance Staffing only mentions overtime pay for workers who put in more than 8 hours in a work day or 40 hours in a week, the suit says. It makes no mention of working 12 hours a day, according to the suit, something known to happen at Fremont in the past. (CEO Elon Musk said this week that Tesla will be hiring several hundred workers as part of an effort to run Fremont 24/7 to build more Model 3 sedans.) 

“During the relevant time period, Defendants willfully failed to pay all overtime wages owed to Plaintiffs and class members,” the suit says.

Finally, the article notes additional litigation that is outstanding dealing with Tesla’s working conditions, and the obligatory statement from the company, denying it has anything to do with this lawsuit, despite being named a defendant:

Tesla is facing several lawsuits from contract workers over alleged racial bias and abuse at Fremont. One of those cases is moving toward trial, Bloomberg reported last week, as the contract workers aren’t required to settle disputes through binding arbitration, customary for full-time Tesla workers.

In a statement, a Tesla spokesperson said the automaker “goes above and beyond the requirements of California and federal law in providing workers meal and rest breaks and appropriate overtime pay.”

“This is a dispute between a temporary worker and her employer staffing agency, which is responsible for payment of her wages,” the statement said. “There is no specific wrongdoing alleged against Tesla. Regardless, whether Tesla or a staffing agency, we expect employers to act ethically, lawfully and do what is right.”

Is it even possible that both the cash crunch – and the legal issues – at Tesla are getting worse instead of getting better? Regardless, as it relates the company’s finances, those on the short side are starting to smell blood. 

Late last week we did a report on Vilas Capital Management – which has a majority of its short book dedicated to Tesla – and its recent reasoning for making its Tesla short such a large percentage of its capital:

We added meaningfully to our Tesla position in the first quarter at prices in the $340 range. We continue to believe that Tesla is extremely overvalued and that it will experience significant financial difficulties over time.

All companies in a capitalistic system need to earn profits and those profits need to be attractive relative to the amount of shareholder capital employed. Tesla has never earned an annual profit. Along with digital currencies and Unicorns, Tesla appears to be caught up in a gold-rush-fever type of emotional response, both from a “they will take over the world” and a “they will save the world” combination of hopes, instead of their owners looking at the numbers.

Tesla bulls will argue that their production will rise to 5000 Model 3’s per week soon and, therefore, the stock will trade meaningfully higher. Given that the company lost $20,000 per Model S and X sold for roughly $100,000 each last year, due to the fact that it cost more to build, sell, service, charge and maintain these cars than they collected in revenue, as it is important to include all costs when evaluating a business, we predict it will impossible for Tesla to make a profit on a $35,000 to $50,000 car.

As anyone with automotive experience knows, profit margins are far higher on bigger, more expensive cars. Therefore, the faster Tesla makes Model 3’s, the more money they will lose.

Vilas continued:

Roughly five institutions make up nearly 50% of Tesla’s freely floating shares. All it will take is for one of them to realize the likely fact that the company won’t ever earn an annual profit, has been overly optimistic, at best, or quite dishonest, at worst, with their projections of cash flow and profit and Tesla’s shares should fall precipitously. We believe that the CEO’s recent tweet that the company will be profitable and will generate positive cash flow in the second half of the year are likely attempts to artificially inflate the stock and keep creditors at bay.

Given that our calculations show that Tesla needs to raise at least $5 billion of equity, if not closer to $8 billion, to stay solvent in the next 14 months, the company needs to find at least another dozen Ron Baron sized investors.

We do not believe that this will be possible given their expected future losses, working capital and capital expenditure needs, lousy execution with the Model 3, falling demand for their somewhat stale Model S and Model X, tax rebates of $7,500 per car that will start going away shortly, impending competition from Jaguar, Mercedes, Porsche, BMW, Audi, etc., the credit rating downgrade by Moody’s to Caa+ while leaving the credit on watch for further downgrades (Caa+ is basically defined as impending default), the NTSB investigation into the accident caused by the “Full Self Driving” option that they collected $3000 for (which may create a class action lawsuit, fines and the disabling of the feature), the fact that they have had 85 letters and investigations back and forth with the SEC (a very unusual pattern), the fact that their three top finance executives (CFO, Chief Accounting Officer, and Director of Finance) have left the company over the last 18 months leaving huge amounts of awarded by unvested shares on the table, a highly suspicious pattern, and the fact that the company owes suppliers roughly $3 billion of unsecured payments, which could be “called” at any time, similar to a run on a bank.

If Tesla’s suppliers simply asked for their past invoices to be paid and to be paid in cash at the time of their next parts delivery, a likely outcome the worse Tesla’s balance sheet gets, it is clear that Tesla would need to file for protection from creditors. Further, the banks lending Tesla money cannot ignore the balance sheet. They have strict rules that regulators enforce about lending to companies with increasingly negative working capital.

The company’s story about further drawing down lines of credit to finance operating losses and capital expenditure needs may seem plausible to novice investors but, in our opinion, not to suppliers and regulated lenders. In a game of financial musical chairs, it is important to sit down quickly.

Who in their right mind would continue to finance this money losing operation? Up to this point, it has been from growth investors who have likely never owned an auto stock before. Once they figure out the industry and the truth about Tesla’s future, we doubt it will continue.

This second lawsuit and continued scrutiny comes at a time when Tesla is publicly under some of the worst pressure its been under since its founding. The media narrative on the company has certainly has certainly become slightly more skeptical and this has, in turn, triggered Elon Musk to set bigger goals and larger milestones for the future.

The tally of bad press, lawsuits and investigations of recent relating to Tesla is starting to pile up.

  1. NTSB investigation that put the company at a public feud with the NTSB
  2. An initial workplace safety investigation by the state of California
  3. A second reported workplace safety investigation, reported on Friday
  4. A securities fraud class action lawsuit against Musk claiming he knew he was going to miss Model 3 targets for 2017
  5. This contract worker lawsuit
  6. CNBC article detailing poor vetting of suppliers, leading to a pile up of malfunctioned parts
  7. Reports of the company cutting corners as it relates to their pre-owned vehicles
  8. Reveal article alleging the company is under reporting its safety incidents at its Fremont factory
  9. Recent massive recall of 125k Model S sedans

Despite this, we’ve been promised by Elon himself that Tesla:

  1. Will be cash flow positive in Q3 and Q4 of this year
  2. Will not need to do another capital raise in 2018
  3. Will produce 6,000 Model 3’s per week, starting this summer

Critics of the company believe that Elon Musk should be a target by the SEC if these goals – once again, easy to promise, not as easy to deliver – aren’t met. They have been the only thing that has kept Tesla’s stock price from falling well below the $300 mark over the last couple of weeks, despite all of the negative press. This new lawsuit is just another negative to add to that pile. 

Source: ZeroHedge

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California’s Most Controversial Housing Bill In Years Just Died With A Thud

Listen to an excellent podcast at the end of this article.https://calmatters.org/wp-content/uploads/ThinkstockPhotos-468601463-1280x800.jpg?x74105Dense housing makes San Francisco one of the most compact cities in America. Photo via Thinkstock

The most controversial state housing bill in recent memory died with a pretty resounding thud.

Senate Bill 827, which would have forced cities to allow taller, denser development around public transit, got only four votes on the 13-member Senate Committee on Transportation and Housing. Both Democrat and Republican lawmakers voted against the bill.

Authored by state Sen. Scott Wiener, Democrat from San Francisco, the bill would have allowed developers to build five-story apartment buildings near major public transit stops, including neighborhoods previously zoned for single family homes. The bill received a ton of media attention, including a fairly flattering write-up on the front page of the New York Times.

The most controversial state housing bill in recent memory died with a pretty resounding thud.

Senate Bill 827, which would have forced cities to allow taller, denser development around public transit, got only four votes on the 13-member Senate Committee on Transportation and Housing. Both Democrat and Republican lawmakers voted against the bill.

Authored by state Sen. Scott Wiener, Democrat from San Francisco, the bill would have allowed developers to build five-story apartment buildings near major public transit stops, including neighborhoods previously zoned for single family homes. The bill received a ton of media att

Urbanist “Yes In My Backyard” (YIMBY) groups mourned the bill’s death as yet another roadblock to building the new housing the state so desperately needs. Cities and anti-gentrification groups cheered the demise of what they viewed as an unprecedented inroad on local control.

What to make of all the hubbub? Some key takeaways:

Enemies, enemies, got a lot of enemies

It’s tough for anyone to take on cities and counties, who wield enormous power in Sacramento and to whom state legislators often give considerable deference. It’s tough for anyone to take on the construction trades’ union, a major source of campaign contributions for Democratic lawmakers. It’s tough for anyone to take on equity and social justice groups, who can bend the ear of progressive legislators.

It’s really tough to take on all three at the same time. That likely wasn’t Sen. Wiener’s strategy when he first introduced SB 827, but that’s ultimately what helped doom the bill. The support of realtors, developers, YIMBYs and a handful of affordable housing advocates couldn’t muster the votes he needed.

Supporters of the bill arguably made a misstep in not courting social justice groups early enough. A flurry of amendments to protect renters from being displaced and to force developers to include units reserved for lower-income tenants failed to calm their concerns.

Last year, Wiener was able to push through a bill that stripped local control over some housing developments by getting labor and affordability advocates on his side. That bill was also part of a larger package of housing legislation that had something for everyone, including a new revenue source. Gov. Jerry Brown was a driving force behind that package.

None of that that happened this time.

The bill did spark a statewide debate on whether to up density to help remedy our housing crisis

https://calmatters.org/wp-content/uploads/IMG_0577-600x357.jpg?x74105Opponents came from San Francisco and its environs to lobby against the bill—and the gentrification they feared it would bring. Photo by Matt Levin for CALmatters

What Wiener was attempting was truly revolutionary. You can debate how dramatically the character of a city would change by building a five-story apartment building next to a single family home. But taking away the power of local governments to block those types of developments was a pretty radical step—a step that a growing number of Californians think is necessary to prevent cities from obstructing new housing.

The bill received a ton of media attention, both in California and nationally. It garnered support from prominent urban planners, environmentalists and civil rights advocates. It’s both cliche and premature to say it shifted the needle on the housing debate. But it certainly framed the conversation squarely around the state’s role in compelling cities to build.

Expect something like this to come back soon.  

Nearly every Democratic legislator who voted against SB 827 caveated their opposition by praising the bill’s vision and audacity. Sen. Jim Beall, Democrat from San Jose and chair of the housing committee, said at the hearing that while he couldn’t support the bill in its current form, he was eager to work on something like it in the months ahead.

Could SB 827 ever rise from the dead? Well for his part, Wiener has vowed to re-introduce something like it in the future. Combining his push for density around transit stations with a broader mix of tenant protections and new funding for affordable housing could make it more palatable to the interest groups Wiener needs to succeed.

Source: By Matt Levin | Cal Matters

 

No Relief In Sight: Housing affordability is weakening at the fastest pace in a quarter century

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  • Rising home prices, rising mortgage rates and rising demand are colliding with a critical shortage of homes for sale. And all of that is slamming housing affordability.
  • This year, affordability — based on the amount of the monthly mortgage payment will weaken at the fastest pace in a quarter century, according to researchers at Arch Mortgage Insurance.
  • Other studies that factor in median income also show decreasing affordability because home prices are rising far faster than income growth.

It is the perfect storm: Rising home prices, rising mortgage rates and rising demand are colliding with a critical shortage of homes for sale.

And all of that is slamming housing affordability, which is causing more of today’s buyers to overstretch their budgets. This year, affordability — a metric based solely on the amount of the monthly mortgage payment — will weaken at the fastest pace in a quarter century, according to researchers at Arch Mortgage Insurance.

The average mortgage payment, based on the median-priced home, increased by 5 percent in the first quarter of 2018 nationally and could go up another 10 to 15 percent by the end of the year, according to their report.

Researchers looked at the median-priced home, now $250,000, and estimated price gains this year of 5 percent in addition to mortgage rates going from 4 percent to 5 percent on the 30-year fixed. Other studies that factor in median income also show decreasing affordability because home prices are rising far faster than income growth.

That is a national picture – but all real estate is local, and some markets will see affordability weaken more dramatically. The average monthly payment in Tacoma, Washington, is estimated to increase 25 percent this year, given sharply rising prices. In Baltimore and Boston, it could rise 21 percent in each. Philadelphia, Detroit and Las Vegas could all see 20 percent increases in the average monthly payment.

“If mortgage rates and home prices continue to rise as expected, affordability will get hammered by year-end as demand continues to outstrip supply,” said Ralph DeFranco, global chief economist-mortgage services at Arch Capital Services. “A strong U.S. economy combined with a housing shortage in many markets means that there is little hope of any price drop for buyers. Whether someone is looking to upgrade or purchase their first home, the window to buy before rates jump again is probably closing fast.”

Barely a decade after home values crashed especially, they are now hovering near their historical peak, accounting for inflation. Prices are being driven by record low inventory of homes for sale. Home builders are still producing well below historical norms, and demand for housing is very hot. The economy is stronger, which is giving younger buyers the incentive and the means to buy homes.

Stretching budgets and pushing limits

Maryland real estate agent Theresa Taylor said the supply shortage is hitting buyers hard. She is seeing more clients stretch their budgets to win a deal amid multiple offers.

“People are having to escalate offers on top of rates going up. I’m seeing it in all price ranges,” said Taylor, an agent at Keller Williams. “I am seeing it when I’m getting five offers, and people are trying to package up an offer where they’re pushing their limits.”

Buyers are taking on much higher debt levels today to be able to afford a home. In fact, the share of mortgage borrowers with more than 45 percent of their monthly gross income going to debt payments more than tripled in the second half of last year. Part of that was because Fannie Mae raised that debt-to-income threshold to 50 percent, but clearly there was demand waiting.

“Family income is rising more slowly than home prices and mortgage rates, meaning that the mortgage payment takes a bigger bite out of income for new home buyers,” said Frank Martell, president and CEO of CoreLogic. “CoreLogic’s Market Conditions Indicator has identified nearly one-half of the 50 largest metropolitan areas as overvalued. Often buyers are lulled into thinking these high-priced markets will continue, but we find that overvalued markets will tend to have a slowdown in price growth.”

CoreLogic considers a market overvalued when home prices are at least 10 percent higher than the long-term, sustainable level. High demand makes the likelihood of a national home price decline very slim, but certain markets could see prices cool if supply grows or if there is a hit to the local economy and local employment.

In any case, the more home buyers stretch, the more house-poor they become, and the less money they have to spend in the rest of the economy.

With no relief in either inventory or home price appreciation in sight, the housing market is likely to become even more competitive this year.

At some point, however, there will come a breaking point when sales slow, which is already beginning to happen in some cities. Home prices usually lag sales, so if history holds true, price gains should start to ease next year.

(video interview)

Source: By Diana Olick | CNBC

Wells Fargo Just Reported Their Worst Mortgage Numbers In Five Years

When ZH reported Wells Fargo’s Q4 earnings back in January, they drew readers’ attention to one specific line of business, the one they dubbed the bank’s “bread and butter“, namely mortgage lending, and which as they then reported was “the biggest alarm” because “as a result of rising rates, Wells’ residential mortgage applications and pipelines both tumbled. Specifically in Q4 Wells’ mortgage applications plunged by $10bn from the prior quarter, or 16% Y/Y, to just $63bn, while the mortgage origination pipeline dropped to just $23 billion”, and just shy of the post-crisis lows recorded in late 2013.

Fast forward one quarter when what was already a grim situation for Warren Buffett’s favorite bank, has gotten as bad as it has been since the financial crisis for America’s largest mortgage lender, because buried deep in its presentation accompanying otherwise unremarkable Q1 results (modest EPS and revenue beats), Wells just reported that its ‘bread and butter’ is virtually gone, and in Q1 2018 the amount in the all-important Wells Fargo Mortgage Application pipeline failed to rebound, and remained at $24 billion, the lowest level since the financial crisis.

Yet while the mortgage pipeline has not been worse since in a decade despite the so-called recovery, at least it has bottomed. What was more troubling is that it was Wells’ actual mortgage applications, a forward-looking indicator on the state of the broader housing market and how it is impacted by rising rates, that was even more dire, slumping from $63BN in Q4 to $58BN in Q1, down 2% Y/Y and the the lowest since the financial crisis (incidentally, a topic we covered just two days ago in “Mortgage Refis Tumble To Lowest Since The Financial Crisis, Leaving Banks Scrambling“).

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Meanwhile, Wells’ mortgage originations number, which usually trails the pipeline by 3-4 quarters, was nearly as bad, plunging $10BN sequentially from $53 billion to just $43 billion, the second lowest number since the financial crisis. Since this number lags the mortgage applications, we expect it to continue posting fresh post-crisis lows in the coming quarter especially if rates continue to rise.

https://www.zerohedge.com/sites/default/files/inline-images/wells%20mortgage%20originations%20Q1%202.jpg?itok=_jVai7KX

Adding insult to injury, as one would expect with the yield curve flattening to 10 year lows just this week, Wells’ Net Interest margin – the source of its interest income – failed to rebound from one year lows, and missed consensus expectations yet again. This is what Wells said about that: “NIM of 2.84% was a stable LQ as the impact of hedge ineffectiveness accounting and lower loan swap income was offset by the repricing benefit of higher interest rates.” But we’re not sure one would call this trend “stable” as shown visually below:

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There was another problem facing Buffett’s favorite bank: while NIM fails to increase, deposits costs are rising fast, and in Q1, the bank was charged an average deposit cost of 0.34% on $938MM in interest-bearing deposits, exactly double what its deposit costs were a year ago.

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And finally, there was the chart showing the bank’s consumer loan trends: these reveal that the troubling broad decline in credit demand continues, as consumer loans were down a total of $9.5BN sequentially across all product groups, far more than the $1.7BN decline last quarter.

https://www.zerohedge.com/sites/default/files/inline-images/wells%20consumer%20loan%20trends%20q1%202018.jpg?itok=Wdae5yxL

What these numbers reveal, is that the average US consumer can not afford to take out mortgages at a time when rates rise by as little as 1% or so from all time lows. It also means that if the Fed is truly intent in engineering a parallel shift in the curve of 2-3%, the US can kiss its domestic housing market goodbye.

***
Wells Fargo Advisors continues to bleed reps

In the latest quarter, the broker-dealer suffered a net loss of 145 brokers

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Source: Zero Hedge | Wells Fargo Earnings Supplement

 

US Budget Deficit Hits $600 Billion In 6 Months, As .Gov Spending On Interest Explodes

The US is starting to admit they have a terminal spending problem.

According to the latest Monthly Treasury Statement, in March, the US collected $210.8BN in receipts – consisting of $88BN in individual income tax, $98BN in social security and payroll tax, $5BN in corporate tax and $20BN in other taxes and duties- a drop of 2.7% from the $216.6BN collected last March and a clear reversal from the recent increasing trend…

https://www.zerohedge.com/sites/default/files/inline-images/receipts.jpg?itok=wXopHgAK

… even as Federal spending surged, rising 7% from $392.8BN last March to $420BN last month, the second highest monthly government outlay on record

https://www.zerohedge.com/sites/default/files/inline-images/outlays.jpg?itok=k4bcxNEK

… where the money was spent on social security ($85BN), defense ($58BN), Medicare ($75BN), Interest on Debt ($33BN), and Other ($170BN).

https://www.zerohedge.com/sites/default/files/inline-images/govt%20spending%20outlays.jpg?itok=Ki61K6ob(click for larger image)

The resulting surge in spending led to a March budget deficit of $208.7 billion, far above the consensus estimate of $186BN, and over 18% higher than $176.2BN deficit recorded a year ago. This was the biggest March budget deficit in US history.

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The March deficit brought the cumulative 2018F budget deficit to over $600bn during the first six month of the fiscal year, or roughly $100 billion per month; as a reminder the deficit is expect to rise further amid the tax and spending measures, and rise above $1 trillion, although at the current run rate it is expected to hit $1.2 trillion. As we showed In a recent report, CBO has also significantly raised its deficit projection over the 2018-2028 period.

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But while out of control government spending is clearly a concern, an even bigger problem is what happens to not only the US debt, which recently surpassed $21 trillion, but to the interest on that debt, in a time of rising interest rates.

As the following chart shows, US government Interest Payments are already rising rapidly, and just hit an all time high in Q4 2017. That’s when Fed Funds was still in the low 1%’s. What happens when it reaches 3% as the Fed’s dot plot suggests it will?

https://www.zerohedge.com/sites/default/files/inline-images/interest%20payments.jpg?itok=eiIWpM6S

In a note released by Goldman after the blowout in the deficit was revealed, the bank once again revised its 2018 deficit forecast higher, and now expect the federal deficit to reach $825bn (4.1% of GDP) in FY2018 and to continue to rise, reaching $1050bn (5.0%) in FY2019, $1125bn (5.4%) in FY2020, and $1250bn (5.5%) in FY2021.

Revising Our Deficit and Debt Forecasts

https://www.zerohedge.com/sites/default/files/inline-images/exhibit_1.img%20%284%29.png?itok=IJpTHVaa

Goldman also notes that it expects that on its current financing schedule the Treasury still faces a financing gap of around $300bn in FY2019, rising to around $750bn by FY2021, and will thus need to raise auction sizes substantially over the next couple of years to accommodate higher deficits.

https://www.zerohedge.com/sites/default/files/inline-images/exhibit_3.img%20%283%29.png?itok=8PKwva3S

What does this mean for interest rates? The bank’s economic team explains:

The increase in Treasury issuance and the ongoing unwind of QE should put upward pressure on long-term interest rates. On issuance, the economic research literature suggests as a rule-of-thumb that a 1pp increase in the deficit/GDP ratio raises 10-year Treasury yields by 10-25bp. Multiplying the midpoint of this range by the roughly 1.5pp increase in the deficit due to the recent tax and spending bills implies a 25bp increase in the 10-year yield. On the Fed’s balance sheet reduction, our estimates suggest that about 40-45bp of upward pressure on the 10-year term premium remains.

And here a problem emerges, because while Goldman claims that “the deficit path is known to markets, but academic research suggests these effects might not be fully priced immediately… the balance sheet normalization plan is known too, but portfolio balance effect models imply that its impact should be gradual” the bank also admits that “the precise timing of these effects is uncertain.”

What this means is that it is quite likely that Treasurys fail to slide until well after they should only to plunge orders of magnitude more than they are expected to, in the process launching the biggest VaR shock in world history, because as a reminder, as of mid-2016, a 1% increase in rates would result in an estimated $2.1 trillion loss to government bond P&L.

https://www.zerohedge.com/sites/default/files/images/user5/imageroot/2016/06/04/bond%20market%20exposure_0.png

Meanwhile, as rates blow out, US debt is expected to keep rising, and somehow hit $30 trillion by 2028

https://www.zerohedge.com/sites/default/files/inline-images/debt%20budget%20trump%202019.jpg

… all without launching a debt crisis in the process.

Source: ZeroHedge

California Bill Would Create Health Care Price Controls

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But, but…I thought Obamacare was suppose to reduce the cost of health care?

From Sacramento Bee: California’s government would set prices for hospital stays, doctor visits and other health care services under legislation introduced Monday, vastly remaking the industry in a bid to lower health care costs.

The proposal, which drew swift opposition from the health care industry, comes amid a fierce debate in California as activists on the left push aggressively for a system that would provide government-funded insurance for everyone in the state.

Across the country, rising health care costs have put the industry, lawmaker and employers and consumers at odds.

The proposal in California would affect private health plans, including those offered by employers and purchased by individuals. A nine-member commission appointed by the governor and legislative leaders would set prices for everything from a physical exam to an allergy test to heart bypass surgery. No other state has such a requirement.

“If we do not act now, I’m concerned that health care prices will become unsustainable,” Assemblyman Ash Kalra, a freshman Democrat from San Jose who wrote the legislation, said in a news conference in Sacramento.

The measure faces an uphill battle in the Legislature, where lawmakers are generally cautious about making drastic changes to the health care system and are already juggling a wide range of ambitious proposals.

The proposal is backed by influential unions including the Service Employees International Union, Unite Here and the Teamsters. The unions are frustrated that health care costs are gobbling an increasing share of employee compensation.

“Every dollar that we spend on rising health care prices is a dollar that comes out of a worker’s pocket,” said Sara Flocks, policy coordinator for the California Labor Federation, a union coalition. “This is something that is eating up our wages and it is increasing income inequality. This is a fundamental question of fairness.

Health care providers say price controls would encourage doctors to move out of state or retire, making it harder for people to see a physician when they’re sick, and force hospitals to lay off staff or, in some cases, close their doors.

The California Medical Association, which represents physicians, called the proposal “radical” and warned that it would reduce choices for consumers.

“No state in America has ever attempted such an unproven policy of inflexible, government-managed price caps across every health care service,” Dr. Theodore Mazer, the CMA president, said in a statement.

Under Kalra’s bill, prices would be tied to Medicare’s rate for a particular service or procedure, with that price as a floor. There would be a process for doctors or hospitals to argue that their unique circumstances warrant payments higher than the state’s standard rate.

Paying hospitals 125 percent of Medicare’s rate would cut $18 billion in revenue and force them to trim nurses and other support staff, said Dietmar Grellman, senior vice president of the California Hospital Association. Private insurers make up for the low payments from government-funded health care, which doesn’t cover the full cost of care, he said.

“That’s why their bill is such an empty promise,” Grellman said. “They take money out of the system with rate regulation, but then they don’t address the huge gaping hole that’s created by Medicare and Medicaid.”

In recent decades health care spending has risen faster than inflation and wages while employers and health plans have shifted more of the costs onto consumers through higher premiums, deductibles and co-pays. Americans spend more per capita on health care than other developed countries.

Meanwhile, a wave of consolidation by hospitals, physician groups and insurance companies has given industry players more power to demand higher rates.

Source: Fellowship Of The Minds

JPMorgan Busted Over Bitcoin Fraud… Seriously!

Oh, the irony…

https://s16-us2.ixquick.com/cgi-bin/serveimage?url=http%3A%2F%2Fmedia.salon.com%2F2013%2F02%2Fjamie_dimon.jpg&sp=0b75c357def09705e3b7052650b2dcb9Jamie Dimon has come a long way in seven months…

From “Bitcoin is a fraud” in September to “Busted for Bitcoin fraud” in April.

Reuters reports that JPMorgan Chase & Co has been hit with a lawsuit in Manhattan federal court accusing it of charging surprise fees when it stopped letting customers buy cryptocurrency with credit cards in late January and began treating the purchases as cash advances.

Simply put, the bank switched from charging regular interest rates to charging, higher, cash advance rates on purchases of cryptocurrencies without notice to customers about the change.

The named plaintiff in the lawsuit, Idaho resident Brady Tucker, was hit with $143.30 in fees and $20.61 in surprise interest charges by Chase for five cryptocurrency transactions between Jan. 27 and Feb. 2, his lawsuit said.

With no advance warning, Chase “stuck the plaintiff with the bill, after the fact of his transactions, and insisted that he pay it,” the lawsuit said.

Hundreds or possibly thousands of other Chase customers were hit with the charges, Tucker said.

The lawsuit is asking for actual damages and statutory damages of $1 million.

Full Docket below…

Source: ZeroHedge