Sunday, 13 June 2010

BP

The economic dimwitted nature of politicians amazes me at times. This week....several senators and representatives came out and said that BP's dividend pool....needs to be shut down and utilized for the Gulf disaster. The President came out and suggested the same thing.

Typically....dividends are never used for screw-up of a company. A company will take the necessary funds out of its structure and pay. The dividend for the next quarter or two might be affected....sometimes by a vast amount and sometimes by a minor amount. The key here is that you as a company pay out of the big pot and keep moving forward.

If the government is successful in this dividend concept....then why bother owning stock because you can't depend on the dividend?

Why are the big-wig's acting this way? Well....I'm guessing most have no vision on economics or how businesses really work...so they rely on special interest groups or lobbyists to get them smart. In this case...the experts are pleading a case that goes against business ethics and common history.

What will happen to BP? This morning....the British government hinted pretty strongly that the dividend won't be detached and used as some folks have suggested. When a court has assessed the fine...then the company will pay. I suspect that there is a limit to what a court might asses....and that the final amount will be less than the experts think it should be. Life will go on for BP.

A Pill or Two

Sometimes, you come across a rare gem in the news....but you realize it's never going to be in ninety-nine percent of the papers.

The Germans are up to pick the next chief of the German medicines assessment body. The guy slated to win? Well...he has this interesting philosophy about drugs. He thinks that nine out of ten drugs currently being prescribed....are worthless. He doesn't want the government even covering them by the German national health care plan.

This guy? J├╝rgen Windeler.

The curious thing is that the German government has spent some time criticizing the drug industry over the past year....and bringing this guy onboard....might be the sure hint that their profit margin will start to take a hit.

Right now...the German plan covers around 50,000 drugs....this vision by Windeler hints of fewer than 10,000 when the smoke has cleared...by his own words.

This brings you around to the US....and our love of drugs of all shapes and sizes. We've gone from a society that simply took laxative and aspirin (the 1950s)...to a society today that takes twelve drugs a week. We are trying to squeeze two more years out of our life....with the help of these drugs...or we believe we might be able to do it.

We are all guilty of this....plus our doctor is helping us....and the ad's on TV help too.

Lobbyists have limited power to influence political folks in Germany....and I'm thinking this downsizing of authorized drugs will really take its toll within a year or two. We could use the same logic here in America.