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Saturday, September 17, 2005

Excessive Litigation - All or Nothing?

We seem to be moving toward a nation of exterme positions. Where's the middle ground. I don't mean the "compromise" (or compromised) position. I mean the point of balance... the point where all interests are served reasonably... the point where license and prohibition are excluded so that a reasonable accomodation can be achieved.

The following letter appeared in the Detroit Free Press:

Drug victims have no recourse in Michigan

I want to thank the 12 Americans from Texas who, with no financial stake in the outcome of the Vioxx case, determined that corporate profit at any cost is unacceptable.

Dozens of documents -- internal memos, e-mails and opinion pieces by scientists and officers -- showed Vioxx increased heart risks. Jurors witnessed statements and conduct by Merck officials that showed that -- despite problems -- Merck tried to rush federal approval of Vioxx just to beat a competitor.

In letters to doctors, Merck seriously understated the heart risks to patients taking Vioxx and told drug salesmen to play "Dodge ball" when doctors voiced concern.

In Michigan, Merck will never face a jury. The Michigan Legislature handed the drug industry a "get out of jail free" card that will allow it to keep every nickel of blood money profit from drugs that injure and kill citizens in our state.

Despite misleading claims from advocates for immunity like Lawrence Mann ("Drug lawsuits demand one national rule," Aug. 31), there is no exception to the drug industry's immunity from responsibility in Michigan. The U. S. Supreme Court has declared that Michigan victims of Vioxx and other deadly drugs cannot bring such claims, and the U.S. Court of Appeals for the Sixth Circuit has held that the drug industry's immunity is absolute. In Michigan -- unlike any other state -- there is no exception, there is no recovery and there is no justice.

Jesse M. Reiter
President-Elect
Michigan Trial Lawyers Association
Bloomfield Hills

What did the 12 Texans do?
In August 2005, Merck & Co. lost its first Vioxx trial in a Texas state court after the jury found that Vioxx was responsible for the death of Robert Ernst, and awarded his widow a verdict of $253 million.
What is the Michigan situation?

Compensatory Damages

Economic

No limit

Non-Economic: Limited in medical liability actions
  • Total noneconomic damages recoverable by all plaintiffs against all defendants in a medical liability action are limited to $280,000, adjusted annually for inflation, except in cases where the plaintiff is hemiplegic, paraplegic, or quadriplegic due to an injury to the brain or spinal cord, or where the plaintiff has permanently impaired cognitive capacity, or the plaintiff has had a permanent loss of or damage to a reproductive organ, then noneconomic damages shall not exceed $500,000.

Mich. Comp. Laws § 600.1483.

Punitive Damages

Allowed: Not permitted*

  • *Michigan permits “exemplary” damages as compensation for mental suffering consisting of a sense of insult, indignity, humiliation, or injury to feelings, but does not permit punitive damages for purposes of punishment.

Yamaha Motor Corp. v. Tri-City Motors, 429 N.W.2d 871 (Mich. Ct. App. 1988).

It seems the difference between Texas and Michigan is just under $253 million. The question is: where is the point of balance? Is it an arbitrary limit or "the sky's the limit"? The problem is that the process of deciding the range of damages is not very apparent.

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There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
It was beautiful and simple, as truly great swindles are.
- O. Henry
... The Government is on course for an embarrassing showdown with the European Union, business groups and environmental charities after refusing to guarantee that billions of pounds of revenue it stands to earn from carbon-permit trading will be spent on combating climate change.
The Independent (UK)

Tracking Interest Rates

Tracking Interest Rates

FEDERAL RESERVE & HOUSING

SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006 Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
November 28, 2007 FED VICE CHAIRMAN DONALD KOHN
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."
http://www.reuters.com/

December 11, 2007 Somehow the Fed misses the obvious.
fed_rate_moves_425_small.gif
[Image from: CNNMoney.com]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's Economy.com. "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.”
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)