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Marketplace with host Kai Ryssdal produced and distributed by American Public Media focuses on the latest business news both nationally and internationally, the global economy, and wider events linked to the financial markets.
The only national daily business news program originating from the West Coast, Marketplace is noted for its timely, relevant and accessible coverage of business, economics and personal finance.
Tuesday, July 29, 2014 5:29pm
It’s looking increasingly likely that Argentina will default on some of its bonds.
How could that happen and what happens next? Here's what we know:
Argentina has defaulted before. After Argentina defaulted in 2001, it told its creditors: "We’ll give you 30 cents on the dollar: take it or leave it." Back then, 93 percent of those creditors took it and 7 percent left it. A tiny percentage of those holdouts — who, incidentally, were not the original lenders, but rather funds that had purchased the distressed debt from the original creditors — sued.
They claimed they hadn't agreed to anything, telling Argentina that the terms of the contract (a term called “parity”) say 'if you pay those other guys, you have to pay us. And you have to pay us the whole amount on the dollar.' They won. Argentina now has to pay.
An Argentine default won’t cause a domino effect. Just like with people, for one country to catch another country’s economic bug, it has to be exposed to it.
Stephen Kaplan, assistant professor of political science at George Washington University explains: “In Argentina’s case, they’ve been shut out of global capital markets for quite some time.”
It could still make things difficult for other countries trying to get out of debt. There’s no such thing as bankruptcy court in the world of sovereign debt. So there’s not an orderly system when countries can’t pay up. Many countries had been working on the assumption that if they got most of their creditors to say it's OK to be paid back less than they were owed, then the matter would be settled and they could move on.
What the Argentine case means is that unless it’s spelled out in the contract, that assumption doesn’t work, and a minority creditor can squelch a deal.
“It says to all investors, 'instead of settling after a country is facing financial crisis... hold out and [don't] allow a debt restructuring to take place,'” says Eric LeCompte, executive director of Jubilee USA, a religious group that promotes international financial reform.
Argentina is damned if it defaults... Argentina has been trying hard recently to get back into the good graces of the international financial community and a default would dash those efforts.
As Henry Weisburg, a partner at law firm Shearman & Sterling who specializes in cross-border financial disputes, says “they have a large number of different kinds of bonds and instruments out there and virtually all of them are going to have cross default provisions.”
That means if the country defaults on one piece of debt, it defaults on another piece of debt, and those creditors can call in their loans. That results in a difficulty when Argentina wants to find money for financing trade and “in certain circumstances even commercial borrowers in Argentina will have a hard time raising money.” Lawyers for Argentina have suggested defaulting would allow them to restructure their debt in Europe or Argentina, and avoid the laws in the U.S. that made restructuring difficult in this situation.
...but it's also damned if it doesn’t. Argentina’s fear is that if it pays these creditors, it will encourage all the other holdout creditors to sue as well.
“The UN Conference on Trade and Development noted that if Argentina paid these holdout creditors in full, it would essentially leave them open to another $135 billion in liabilities,” says LeCompte. “The entire Argentine reserve is less than $30 billion at this point.”
Tuesday, July 29, 2014 5:29pm
This just in from the Department of Phone-Calls-You’d-Rather-Not-Get: one in three Americans with credit files had some kind of debt in collection last year, according to a new report. All told that's about 77 million consumers who were poised to get one of those inherently stressful calls from a debt collector.
The Urban Institute partnered with Encore Capital Group, the country's largest publicly traded consumer debt buyer, on the study. To understand the significance of these findings, here’s a little context:
When a debt goes in to collection, it basically means the original people you owe money to — maybe a bank or a credit card company or a doctor's office — have given up trying to get it back on their own and a third party is now involved. In some cases, the original creditor sends the debt to an internal collections department to handle it. In other cases, they hire an outside agency to collect for them. In still other cases, the debt is sold to another company altogether.
The collector is usually paid on commission, based on how much of the debt can be recovered. Meaning, if you have a debt that's sent in to collection, you basically become for the debt collector, a name on a spreadsheet.
Gustavo Montoya, an emergency room nursing assistant in San Diego, ended up on one of these debtor spread sheets a few years ago. He'd taken a loan for $3,000 from Wells Fargo to help pay for living expenses while he was in school. Then, in 2011, he was contacted by a different company, one he'd never heard of, who had bought his debt.
For two years, the new company called him every day, until another one started calling instead. Montoya, who was unemployed at the time, says he tried to explain his situation to the collectors that called him. “The economy was still bad," Montoya said, "I was finding difficulty getting employment. It was really stressful."
Beyond the stress, falling into collection can have big repercussions, says Suzanne Martindale, a staff attorney with Consumers Union. It can affect your credit score, your ability to get a loan in the future, even your ability to get a job. And the growing practice of passing debt from one collector to another, or selling it to another debt buyer, means that in a matter of months there can be several different people from different companies claiming you owe debt to them.
“Many consumers I’ve spoken with are just utterly confused—who’s telling me the truth here, what are my rights, and how can I resolve the problem and just get on with my life?”
Mark Schiffman, with the Association of Credit and Collection Professionals, an industry group, says the collections process can be stressful. But that it can also be an important step in keeping the economy moving.
“Businesses use those moneys to pay their bills, to pay rent, to keep operational costs, to pay salaries.”
But even once the original creditor has written off a debt as a loss, and sold it to a third party, the act of debt collection itself can be big business too.
Tuesday, July 29, 2014 4:42pm
During these hot summer days, lots of kids are taking advantage of the closest swimming pool, but only a few are diving in for the local swim team. That’s why USA Swimming has kicked off an aggressive campaign to remind kids that swimming is, in their words, “the funnest sport there is.”
One of the ads in the Swim Today campaign shows a girl wearing goggles, dropping into a pool of blue water in slow motion. Then, you hear a voice saying, “Basketball... softball... cannonball... Which sounds the most fun to you?”
Matt Farrell is Chief Marketing Officer of USA Swimming. He says he wants kids to know there are other sports to consider. Farrell says their survey shows parents are one major problem when it comes to getting kids in the pool - 80 percent of parents overlook swimming as an organized sport.
“It was as if parents said, 'I’ve taught my kid to swim, I’ve checked the box, I’m a good parent, I’ve made them safe. Now let’s go play soccer, let’s play basketball,'” says Farrell.
Misha Neal, 15, of Durham, North Carolina swims for her high school team and for the YMCA. She remembers when it was time to make that big decision.
“I was doing a lot of sports at the time... I was also in gymnastics and track, and I had to pick. I remember Daddy telling me that I was better at swimming,” she says.
Misha has thrived, often coming in number one in the 50 Freestyle. USA Swimming is working to remind more kids of all the positives the sport has to offer, like teamwork, confidence, health and fitness.
Mark Anthony Neal, Misha’s dad, says Misha adores her teammates and has overcome the obstacles of swimming competitively.
Even the hair issue: "We knew that our daughter was serious about swimming, you know, when she was told matter of factly she wouldn’t be able to get a perm, she wouldn’t be able to put any chemicals in her hair, [and] she said 'That’s fine.'”
Tuesday, July 29, 2014 4:02pm
In the early '90s, only one Chinese family in ten owned a refrigerator. Today, 90 percent of urban Chinese households have one. This mass move toward refrigeration had a huge effect on the country’s economy, culture and environment.
Refrigeration is a multi-billion dollar industry in China, heavily subsidized by the government.
China is “refrigerating for the exact same reasons we did” says Nicola Twilley, who wrote about refrigeration in China for New York Times Magazine. “You can’t really feed an urban population of consumers without refrigeration.”
In her article, Twilley visits a factory that belongs to Sanquan, one of the largest frozen dumpling manufacturers in China. Many freezers in Chinese homes are filled with these dumplings, much the way you’d find TV dinners in American freezers.
Listen to the full conversation in the audio player above.
Tuesday, July 29, 2014 3:27pm
One of the arguments in favor of the Affordable Care Act was that it would reduce dependency on emergency rooms by covering more people with basic preventive care. Now, millions of people are newly covered by Obamacare. So are emergency departments seeing a slowdown?
Not so much.
On the street in downtown Dayton, Ohio, Rebekah Jacobsen says before the Affordable Care Act, she racked up thousands in medical bills.
“I didn’t have health care. I didn’t have anything,” she says. Now, she’s on Medicaid, the health insurance program for low-income people. Ohio’s one of the 27 states that expanded their program with federal funds available under the new law. But Jacobsen was in the emergency room just last month—admittedly not for the most serious problem.
“I thought I had lice, and I didn’t,” she says. Her head was itching, and it turned out to be dandruff.
An ER visit for dandruff is just the kind of situation some people will point to as burdening the whole system. Jacobsen says she would have gone to a regular doctor to see if she had lice, but it was the middle of the night. With her new insurance, the ER trip didn’t cost her anything.
Up the road at Miami Valley Hospital, Dr. Darin Pangalangan, an emergency doctor and head of the Emergency and Trauma Institute for Premier Health, says he thinks people should be able to use the ER when they need to - or even just think they need to.
“You cannot go to your family doctor at midnight. They’re not open at midnight,” he says. He says it’s not an abuse of the system to access an ER if you think you may have a problem, and you can’t get in to see a regular doctor. What’s more, emergency doctors are bound by law to help anyone who comes in the door— regardless of their ability to pay —to at least investigate to see if they have a serious problem. Most people who walk through the doors come in with problems that need immediate attention.
The still-looming Obamacare question though, is this: Will people actually depend on ERs less for basic care once they’re insured, driving costs down for everyone? Or will more people, like Rebekah Jacobsen, go to the ER because, well, now they can?
“The cost of going to the emergency department might be a major deterrent for the uninsured,” says Katherine Baicker, a Harvard health economist who worked on a study of new Medicaid recipients in Oregon. She found that people who got on Medicaid then went to the ER more. “Once they have access to insurance, they can go to the emergency department without being concerned about being presented with an enormous bill at the end.”
“Most emergency departments have actually seen an increase in the amount of people coming through the door,” Mell says. “It’s not a huge increase, but it’s certainly noticeable.”
But the experts don’t all agree: another study in Massachusetts found expanding to near-universal health coverage led to fewer people using emergency rooms in cases when it wasn’t really an emergency. And still another study looking at Medicaid recipients in Ohio found that expanded Medicaid coverage could help reduce ER visits and increase the use of primary care. Doctors at MetroHealth, the county hospital at the center of that study, say integrating patients into a “patient-centered medical home” model of care helps keep people focused on primary and preventive care, and makes them less likely to show up at an ER when they don't need to.
Overall, the jury is still out—some 13 million people are just now settling into having health insurance, either through Medicaid or the ACA exchanges. It’s not clear yet how all those people might use the ER differently, and what strategies providers might use to cut costs to the overall system. Regardless, one recent study found emergency rooms in the United States are generally profitable, and predicted a rise in revenues and profit margins for ERs as more people get covered.
Still, emergency care is an expensive way to get help to people who don’t have immediate, severe conditions, which is why health networks like Premier in Dayton are trying to offer alternatives. Kathryn Lorenz is a doctor at what’s called an "after hours clinic" in Troy, Ohio—they’re open from 5 to 9 p.m. weekdays, and offer weekend hours.
“You can walk in up to the last minute and we would see you,” says Lorenz. The clinic helps folks who can’t get a quick appointment with a family doctor for something acute like back pain, poison ivy or lice. It’s a less costly option than an ER, but Lorenz also says there are things she can’t do for patients here. “A lot of times I’m wrestling them to go to the ER, and telling them, 'yes, you must pay your co-pay and get in there because you have a life-threatening illness.'”
It’s not like most people are in a huge rush to go to an emergency room. Take Dayton resident Roberta Gilliam. She says she recently got Medicaid, and she’s been taking advantage of it by getting preventive care, not by going to the ER.
“I’ve had my pap smear, I’ve had my mammograms, I’ve had my dentures, my X-rays, I’m getting ready to get a partial,” she says. “It’s been a blessing.”
It’s the safety net she’s grateful for.
“When anybody can get insurance, you know they’re happy to have insurance,” she says. “Especially the ones that can’t afford insurance.”
Emergency care is really just one small piece of the puzzle: more people getting coverage is likely to mean more use of all kinds of health services. The basic economic principle is, when something becomes cheaper for people, they use more of it.
December 17, 2013