The musings of a physician who served the community for over six decades
367 Topics
Downtown A discussion about downtown area in Philadelphia and connections from today with its historical past.
West of Broad A collection of articles about the area west of Broad Street, Philadelphia, Pennsylvania.
Delaware (State of) Originally the "lower counties" of Pennsylvania, and thus one of three Quaker colonies founded by William Penn, Delaware has developed its own set of traditions and history.
Religious Philadelphia William Penn wanted a colony with religious freedom. A considerable number, if not the majority, of American religious denominations were founded in this city. The main misconception about religious Philadelphia is that it is Quaker-dominated. But the broader misconception is that it is not Quaker-dominated.
Particular Sights to See:Center City Taxi drivers tell tourists that Center City is a "shining city on a hill". During the Industrial Era, the city almost urbanized out to the county line, and then retreated. Right now, the urban center is surrounded by a semi-deserted ring of former factories.
Philadelphia's Middle Urban Ring Philadelphia grew rapidly for seventy years after the Civil War, then gradually lost population. Skyscrapers drain population upwards, suburbs beckon outwards. The result: a ring around center city, mixed prosperous and dilapidated. Future in doubt.
Historical Motor Excursion North of Philadelphia The narrow waist of New Jersey was the upper border of William Penn's vast land holdings, and the outer edge of Quaker influence. In 1776-77, Lord Howe made this strip the main highway of his attempt to subjugate the Colonies.
Land Tour Around Delaware Bay Start in Philadelphia, take two days to tour around Delaware Bay. Down the New Jersey side to Cape May, ferry over to Lewes, tour up to Dover and New Castle, visit Winterthur, Longwood Gardens, Brandywine Battlefield and art museum, then back to Philadelphia. Try it!
Tourist Trips Around Philadelphia and the Quaker Colonies The states of Pennsylvania, Delaware, and southern New Jersey all belonged to William Penn the Quaker. He was the largest private landholder in American history. Using explicit directions, comprehensive touring of the Quaker Colonies takes seven full days. Local residents would need a couple dozen one-day trips to get up to speed.
Touring Philadelphia's Western Regions Philadelpia County had two hundred farms in 1950, but is now thickly settled in all directions. Western regions along the Schuylkill are still spread out somewhat; with many historic estates.
Up the King's High Way New Jersey has a narrow waistline, with New York harbor at one end, and Delaware Bay on the other. Traffic and history travelled the Kings Highway along this path between New York and Philadelphia.
Arch Street: from Sixth to Second When the large meeting house at Fourth and Arch was built, many Quakers moved their houses to the area. At that time, "North of Market" implied the Quaker region of town.
Up Market Street to Sixth and Walnut Millions of eye patients have been asked to read the passage from Franklin's autobiography, "I walked up Market Street, etc." which is commonly printed on eye-test cards. Here's your chance to do it.
Sixth and Walnut over to Broad and Sansom In 1751, the Pennsylvania Hospital at 8th and Spruce was 'way out in the country. Now it is in the center of a city, but the area still remains dominated by medical institutions.
Montgomery and Bucks Counties The Philadelphia metropolitan region has five Pennsylvania counties, four New Jersey counties, one northern county in the state of Delaware. Here are the four Pennsylvania suburban ones.
Northern Overland Escape Path of the Philadelphia Tories 1 of 1 (16) Grievances provoking the American Revolutionary War left many Philadelphians unprovoked. Loyalists often fled to Canada, especially Kingston, Ontario. Decades later the flow of dissidents reversed, Canadian anti-royalists taking refuge south of the border.
City Hall to Chestnut Hill There are lots of ways to go from City Hall to Chestnut Hill, including the train from Suburban Station, or from 11th and Market. This tour imagines your driving your car out the Ben Franklin Parkway to Kelly Drive, and then up the Wissahickon.
Philadelphia Reflections is a history of the area around Philadelphia, PA
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Philadelphia Revelations
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George R. Fisher, III, M.D.
Obituary
George R. Fisher, III, M.D.
Age: 97 of Philadelphia, formerly of Haddonfield
Dr. George Ross Fisher of Philadelphia died on March 9, 2023, surrounded by his loving family.
Born in 1925 in Erie, Pennsylvania, to two teachers, George and Margaret Fisher, he grew up in Pittsburgh, later attending The Lawrenceville School and Yale University (graduating early because of the war). He was very proud of the fact that he was the only person who ever graduated from Yale with a Bachelor of Science in English Literature. He attended Columbia University’s College of Physicians and Surgeons where he met the love of his life, fellow medical student, and future renowned Philadelphia radiologist Mary Stuart Blakely. While dating, they entertained themselves by dressing up in evening attire and crashing fancy Manhattan weddings. They married in 1950 and were each other’s true loves, mutual admirers, and life partners until Mary Stuart passed away in 2006. A Columbia faculty member wrote of him, “This young man’s personality is way off the beaten track, and cannot be evaluated by the customary methods.”
After training at the Pennsylvania Hospital in Philadelphia where he was Chief Resident in Medicine, and spending a year at the NIH, he opened a practice in Endocrinology on Spruce Street where he practiced for sixty years. He also consulted regularly for the employees of Strawbridge and Clothier as well as the Hospital for the Mentally Retarded at Stockley, Delaware. He was beloved by his patients, his guiding philosophy being the adage, “Listen to your patient – he’s telling you his diagnosis.” His patients also told him their stories which gave him an education in all things Philadelphia, the city he passionately loved and which he went on to chronicle in this online blog. Many of these blogs were adapted into a history-oriented tour book, Philadelphia Revelations: Twenty Tours of the Delaware Valley.
He was a true Renaissance Man, interested in everything and everyone, remembering everything he read or heard in complete detail, and endowed with a penetrating intellect which cut to the heart of whatever was being discussed, whether it be medicine, history, literature, economics, investments, politics, science or even lawn care for his home in Haddonfield, NJ where he and his wife raised their four children. He was an “early adopter.” Memories of his children from the 1960s include being taken to visit his colleagues working on the UNIVAC computer at Penn; the air-mail version of the London Economist on the dining room table; and his work on developing a proprietary medical office software using Fortran. His dedication to patients and to his profession extended to his many years representing Pennsylvania to the American Medical Association.
After retiring from his practice in 2003, he started his pioneering “just-in-time” Ross & Perry publishing company, which printed more than 300 new and reprint titles, ranging from Flight Manual for the SR-71 Blackbird Spy Plane (his best seller!) to Terse Verse, a collection of a hundred mostly humorous haikus. He authored four books. In 2013 at age 88, he ran as a Republican for New Jersey Assemblyman for the 6th district (he lost).
A gregarious extrovert, he loved meeting his fellow Philadelphians well into his nineties at the Shakespeare Society, the Global Interdependence Center, the College of Physicians, the Right Angle Club, the Union League, the Haddonfield 65 Club, and the Franklin Inn. He faithfully attended Quaker Meeting in Haddonfield NJ for over 60 years. Later in life he was fortunate to be joined in his life, travels, and adventures by his dear friend Dr. Janice Gordon.
He passed away peacefully, held in the Light and surrounded by his family as they sang to him and read aloud the love letters that he and his wife penned throughout their courtship. In addition to his children – George, Miriam, Margaret, and Stuart – he leaves his three children-in-law, eight grandchildren, three great-grandchildren, and his younger brother, John.
A memorial service, followed by a reception, will be held at the Friends Meeting in Haddonfield New Jersey on April 1 at one in the afternoon. Memorial contributions may be sent to Haddonfield Friends Meeting, 47 Friends Avenue, Haddonfield, NJ 08033.
Just what was running through Jefferson's mind during that formative time of Senate procedure is largely left to conjecture. We hear it said that Senate debate was rambling, raucous, and sometimes physical. Since Jefferson himself was the most controversial person in the room, his rulings from the chair may well have been resisted. In any event, Jefferson proceeded to publish the first American Manual of Parliamentary Practice,
Thomas Jefferson
patterned after the rules of procedure of the British parliament. An uncut copy of this book is still on the shelves of the Philadelphia Atheneum, a block away. Its contents can be summarized as sensible elaborations of two basic rules: the deliberative body only takes up one topic at a time (discussion of anything which wanders from that topic is ruled non-germane), and the rights of the minority are to be respected. Since America had just concluded an eight-year war with England, it is a little surprising that the behavior of the English Parliament would be considered something to imitate, and by Thomas Jefferson, of all people. It is vital for any deliberative body to have a set of rules, agreed in advance, about how to conduct debate and reach a conclusion. Controversy can get pretty heated at times, and it is then too late to be making rules which might favor one side or the other. Establishing rules in advance is if anything more important than what those rules say. Jefferson was thus quite right in publishing such rules, with the intention that the first act of any newly elected group would be to adopt the rules in the book as the agreed standard for whatever happens to come up later. The uncut version at the Atheneum is symbolic; you don't have to keep discussing procedure if the procedure is agreed.
General Henry M. Robert
General Henry M. Robert wrote a revised version of Jefferson's rules in 1876, familiarly known as Robert's Rules of Order, which now govern the U.S. Congress. The main difference was to accommodate the creation of expert committees--on Ways and Means (taxes),Foreign Relations, health, etc, as the business of Congress grew more complex, and Congress met for longer and longer periods of time. Roberts Rules have thus become a special-purpose rule-book, and bodies like the American Medical Association or the American Bar Association, which meet for short periods yearly, find it more appropriate to substitute the use of "reference" committees. A reference committee is sort of a jury, intended to be a representative sample of the larger body, which is selected by the presiding officer to sort out a large amount of business and facilitate debate by the larger group as a whole. A reference committee system is better addressed by rules of order written by Mrs. Sturgis or Dr. Davis, than the more famous one by General Robert.
Underlying these seemingly dry technical issues is the struggle of an overburdened large group
AMA
to learn what its own collective opinion is, and to see that it is properly stated. As the agenda grows, it is necessary to designate smaller reference committees to hear testimony and present it fairly to the full convention when it assembles later. The referenced committee makes recommendations, but the full body reserves the decision to itself. In this way, the American Medical Association can make several hundred complex decisions in a week, almost universally recognized as representing the current opinion of the whole Association. Every few years, a decision is reversed, but remarkably seldom .
Eventually, a complex agenda grows to the size where a deliberative body must delegate a certain amount of power to experts, and the
U.S. Congress
U.S. Congress is well past that point already. It must consider an average of 25,000 bills per session. The typical state legislature considers an average of 10,000 bills; without a set of rules, nothing can be accomplished within such an overburdened agenda. No one surrenders power easily, and Congressmen are correct to insist that a republic elects the specific people it wants to see making the decisions, and lets them organize their own process. Therefore, General Robert describes the intentionally obscure rules which have evolved to govern the delegation by the elected members, of specific matters to specific committees of its own members. To put it bluntly, some handsome extrovert who happens to have got himself elected to Congress can be assigned to some unfamiliar topic and expected to learn what it is all about, with his power constrained until he does. Rule by seniority makes a lot of sense in such a situation, although obviously, some learn faster than others. Accordingly, the deliberative body must have rules which assist the process of weeding out chairmen who acquire seniority faster than they acquire expertise, while at the same time sympathizing with the difficulties all members regularly experience, publicly thrust into unfamiliar topics. Most smaller deliberative bodies do not need the rules which Robert's have evolved to manage seniority difficulties without opening the gates to ruthless power manipulators, unfortunately, but commonly an over-represented group in politics.
made himself a student of these arcane matters, and approved of the idea that, "Congress in Committee, is Congress at work" In recent decades, he would surely have been upset to see the degree to which the power of unelected experts has grown, at the expense of the power of home-made experts who none the less have been elected to exercise power in a general sense. The elected but amateur experts are in a constant struggle with experts provided by special- interest lobbyists, and experts in the bureaucracy who are provided by politicians in the executive branch. Lately, the executive branch is winning, and Congress had better look to its rules.
In this way, we begin to see how Parliamentary rules are different from Parliamentary procedure, although each influences the other. Parliamentary procedure is now a highly stylized, fast-moving game, greatly enjoyed by practiced players. Quick shots are applauded, and bumbling by presiding officers provokes instant indignation. Failure to call for votes in the negative was outlawed in 1604, there's no excuse for doing it this afternoon. Failure to call for debate of a proposal is an oversight too gauche to endure. Raucous"calling for the question" is as rude a form of behavior as taking off your shoe and pounding it on the table. Don't expect to get anywhere if you do things like this within an experienced group of players.
Now, modifying Parliamentary rules is something else. Changing or deliberately violating the rules of an organization is something only experts attempt, and usually with evil intent. Politicians sometimes can't be trusted with their own rules. The citizenry will be very sorry if, at a bare minimum, at least members of newsmedia editorial boards don't get more sophisticated about parliamentary rules, instantly sensing that something is up when someone wants to "modernize" them. The most egregious proposals of all are the ones which blandly propose to "bring the rules into conformity with current practice." Reflecting on such purring argument for a moment, it emerges that someone has been violating the rules for some time, and wishes to be condoned for it.
In one very important respect, Parliamentary procedure is accidentally mismatched to our legislative system. We elect a President or a Governor or a Mayor for a set period of time, and only remove him from office for egregious misbehavior, and in the case of Presidents only once in our history. In a Parliamentary system of government, by contrast, every Prime Minister expects to be removed by a vote of lack of confidence, which is a possibility every single day he is in office. The strategy of springing a trap could well underlie every proposal or budget measure; every move by the opposition could turn out to be a move in a chess game whose goal is to overturn the government. Consequently, Parliamentary debates are remarkably snide and uncivil in a Parliamentary system; no one dares to give an inch. In the American system, disorderly and mean-spirited remarks by the opposition are simply a nuisance, best ignored by the party in control. After two hundred years, our own legislative bodies have been slipping back a little into the savage reckless language heard in Parliaments abroad. Since the most important unwritten word in the Constitution is "compromise", one looks forward to the day when the voting public inflicts an unmistakable punishment for legislative intransigence. As Winston Churchill once growled, it's "Half foreign, and thoroughly reprehensible."
We are about to look at a remarkable
a fourteen-block stretch of street, with several unifying historical
themes, but there is one notable feature which stands by itself. The PSFS
building is now the site of a luxury hotel, but it once
housed the Philadelphia
Savings Fund Society, the oldest savings bank in the country,
having been founded in 1816. Setting aside the place of this
the institution in American finance, and passing quickly by the deplorable
end of it with swashbuckling corsairs in three-piece suits, 1929
the building itself remains so remarkable that the hotel still displays the
PSFS sign on its top. The imagination of the architects was so advanced
that a building constructed seventy-five years ago looks as though it
might have been completed yesterday. The Smithsonian Institution
conducts annual five-day tours of Chicago to look at a skyscraper
architecture, but hardly anything on that tour compares with the PSFS
building. From time to time, someone digs up old newspaper clippings
from the 1930s to show how the PSFS was ridiculed for its odd-looking
the building, but anyhow this is certainly one example of how the Avante
the guard got it right.
At the far Eastern end of Market Street, right in the middle of the
street once stood a head house, which in this case was called the
market terminal building
. In those days, street markets were mostly a line
of sheds and carts down the middle of a wide street, but usually there
was a substantial masonry building at the head of the market, where
money was counted and more easily guarded. An example of a restored
ahead house can today be found at Second and Pine, although that market
("Newmarket") was less for groceries than for upscale shops. The market
on Market Street started at the river and worked West with the
advancing city limits, making it understandable that buildings which
lined that broad avenue gradually converted to shops, and then stores.
The grandest of the department stores on Market Street was, of course, John Wanamaker's,
all the way to City Hall, built on the site of Pennsylvania
Railroad's freight terminal (the passenger terminal was on the West
side of City Hall). In the late Nineteenth Century, the Pennsylvania
Railroad and the Reading Railroads terminated at this point, so
rail traffic flowing east merged with ocean and river traffic flowing
west. Well into the Twentieth Century, a dozen major department stores
and hundreds of specialty stores lined the street, with trolley cars,
buses, and subway traffic taking over for horse-drawn drainage. The
the pinnacle of this process was the corner of Eighth and Market, where
four department stores stood, one on each corner, and underneath them
three subway systems intersected. The Reading terminal market is
Philadelphia's last remnant of this almost medieval shopping concept,
although the Italian street markets of South Philadelphia display a
more authentic chaos. Street markets, followed by shops, overwhelmed by
department stores showed a regular succession up Market Street, and
when commerce disappeared, it all turned into a wide avenue from City
Hall to River, leaving few colonial traces.
The history of Market Street is the history of the Reading Terminal
Market. Farmers and local artisans thronged to sell their wares in
sheds put up in the middle of the wide street, traditionally called
"shambles" after the similar areas in York, England. Gradually, elegant
stores were built on the street, and upscale competitors began to be
uncomfortable with the mess and disorder of the shambles down the
center of the street. By 1859 the power structure had changed, and the
upscale merchants on the sidewalks got a law passed, forbidding
shambles. After the expected uproar, the farmers and other shambles
merchants got organized, and built a Farmers Market on the North side
of 12th and Market Relative peace and commercial
tranquility then prevailed until the Reading Railroad employed power
politics and the right of eminent domain to displace the Farmer's
Marketplace with a downtown railroad terminal that was an architectural
marvel for its time, with the farmers displaced to the rear in the
Reading Terminal Market, opening in 1893. Bassett's, the ice cream
maker, is the only merchant continuously in business there since it
opened, but several other vendors are nearly as old. The farmers market
persisted in that form for a century until the City built a convention
center next door. As a result, the quaint old farmers market became a
tourist attraction, with over 90,000 visitors a week. That's fine if
you are selling sandwiches and souvenirs, but it crowds out meat and
produces and thereby creates a problem. If the tourist attraction gets
too popular, it drives out everything which made it a tourist
attraction; so rules had to be made and enforced, limiting the number
of restaurants, but encouraging Pennsylvania Dutch farmers. Competition
and innovation are the lifeblood of commercial real estate, but they
are always noisy processes. The history of the street is the history of
clamor and jostling, eventually dying out to the point where everyone
is regretful and nostalgic for a revival of clamor.
The Franklin Inn Club was pleased to hear a talk about pipe organs the other evening, by one of its members, Wesley Parrott. Wesley has degrees in the subject from the Curtis Institute and Eastman and was accompanied by Riyehee Hong, who has a Ph.D. degree on the subject from the Moore College. Wesley is now the organist at St. Mary's Church on Cathedral Avenue.
l'Orge de Valere
The flute is just about the oldest musical instrument if you regard a pipe organ to be essentially a large collection of flutes with a single mechanical air blower, controlled by a console. Bagpipes almost fit that description, too, except a bagpiper first fills the bag with air he blows in by himself, and fingers the holes in the pipes for individual notes, whereas the pipe organist has mechanical assistance to supply the air and control the pipes.
It seems to have been Emperor Charlemagne who decreed the pipe organ would contribute the main music of churches, and to fit this role, pipe organs in France and Italy evolved in the direction of elaborating the overtones and color characteristics of the organ as sort of a soloist in a church. Organs from this distant era are still playable but seem tiny in comparison with later examples. German music, in general, has always emphasized melody over elaborate overtones, and German organs evolved in the direction of distinctive notes in counterpoint. That has been true for centuries, but it was the missionary surgeon Albert Schweitzer who most recently made great steps away from French influences back toward melody and counterpoint, both in musical composition and in mechanical modifications of the instrument to suit that baroque goal. The mechanical underpinning of this distinction lies in the immediacy of response and shortening of tone decay, making the notes crisper. The older French version tends to smear the notes together, like a young person who talks too fast. The whole French language shares that characteristic of slurring words together, and speakers thus seem to be talking a little too fast to be understood. The German language is more staccato, with distinct separate words. In general, pipe organs tend to be either of the French or the German style, but there is a great deal of individual variation, resulting in subtle distinctions lost on most audiences. The design and construction of organs remained essentially unchanged from 1390 when l' Orge de
Valere" was published by Guy Bovet, until 1876, when the great modern innovation of the electric organ was displayed in Philadelphia.
Pipe Organ Sketch
In fact, two modern changes were heavily American-influenced. The most important change in the mechanics after five hundred years was introduced at the 1876 Centennial Exposition in Philadelphia, by Hilborne L. Roosevelt, a cousin of Teddy, and son of S. Weir Roosevelt. The organ on display was the main organ of the main exposition building and created a sensation. Although he was only 37 years old when he died ten years later, Roosevelt became one of the largest organ manufacturers in America, a friend of Thomas Edison, and was recognized for a number of electrical inventions. Electrical control of the blower and valves greatly expanded the potential for size and complexity of the keyboard console. Up until that time, the keys were pounded with the organist's fists, and organists therefore somewhat resembled blacksmiths, both in musculature and temperament. The application of electricity greatly expanded the complexity and artistic potential of both the German and French styles. Meanwhile, the symphony orchestra was evolving throughout the 19th Century, and now the organ was able to imitate the whole orchestra. This evolution soon developed a mass market in the huge silent movie theaters of the early 20th Century, which in turn generated a pressure to evolve orchestra-like characteristics in the organs installed in the theaters, adding extra pipes and tones to suit that taste, which was exuberant. The advent of sound movies would soon eliminate the need for pipe organs in movie houses, but the instruments were durable and built into the walls. A few of them therefore still remain, largely unused, and probably unusable. The Philadelphia region is unusually rich in pipe organs of various sizes and complexity; students of the subject come here to tour them.
Philadelphia's Kimmel Center has a new pipe organ, with two consoles to suit the two main styles of organ music, solo of the Charlemagne sort, and orchestral music. Wesley feels too much emphasis was placed on maximizing the seating capacity of the Kimmel auditorium, causing the organ to be fitted into a narrow tunnel-like enclosure. The resulting sound of the organ has a uni-directional quality which is unrelated to the organ itself; some people criticize the overall result as "assaulting" the audience, but whether for better or worse the Kimmel Center distinctively has a Kimmel sound.
The electronic organ, as distinguished from the electric organ, doesn't use pipes, it synthesizes sound. It is far cheaper to manufacture, but is undergoing such rapid change in so many directions nowadays that it resembles the home computer; you have to go to the expense of getting a new one every few years. The electronic organ is clearly catching up with the range and quality of pipe organs but has not yet reached parity except in specialized situations. But its rapid and relatively inexpensive adaptability gives it a great advantage when musical tastes are changing. Modern music places much more emphasis on percussion, and modern society is much less attracted to great big hollow churches. Electronic organs thus change direction faster than multimillion dollar organs of the traditional sort, and slowly, slowly, the quality is catching up, too.
The Chairman of the Federal Reserve from 2005-2014, Ben Bernanke, spent much of his time explaining current economic tangles to committees of Congress. At a hearing, his suffering audience asked for some homework. "Please suggest a few articles you think we should be reading." Two of his four resulting suggestions were written by Markus K. Brunnermeier, Professor of Economics at Princeton. Some of what Brunnermeier said was already known, some of it was novel. Of greater significance was that Bernanke, a scholar of economic collapses, and then vested with the power to investigate just about any lead, would make a public endorsement of Brunnermeier's analysis to Congressmen who actually held the power to implement laws. They weren't talking to an audience of helpless college students. Congressmen knew less about the minutia of the topic, but they had the power to act on their beliefs.
No doubt, further investigation will uncover more kinks in the hose, and subtleties will prove particularly arcane, or particularly blameworthy. Nevertheless, we seem to have probably reached the point to assume the main features of the catastrophe were on the table, articulated to people not easily deceived. Moreover, Congressmen had already adopted one 2000 page law that almost none of them had read; this must not be permitted to keep happening. So among other things, let's hope they have at least learned to be careful. If Brunnermeier and Bernanke have given us a list, let's expose it to public discussion. What's usually important is what they do, not what motives they claim.
Markus K. Brunnermeiere
1. Following the dot-com collapse in 2001, the Federal Reserve held interest rates abnormally low, claiming fear of even more severe deflation from the bubble bursting uncontrolled. By this description, the housing bubble was really the second dip of a double bubble. Within endless successions of bubbles, a futile issue is which tooth of the buzz saw cut off your finger. What determines your conclusion is the point where you chose to start. In this case, the preceding seventeen year period of "Great Calming" may perhaps make routine stress-test analysis possible. For contrary example, was a seventeen year quiet period without a major recession actually a coiled spring? If you can guard against such exceptions, perhaps correct conclusions may be reached.
2. The emergence of the developing world, especially China, from extreme poverty into relative affluence generated huge wealth surpluses which no economy was ready to absorb without danger of inflation. There is a feeling that China should have allowed its currency to rise. However, the same was said of Japan two decades earlier, and in any event, we may not have had the power to change it.
In summary, then, the emerging problem was one of too much cheap credit. Because of related uncertainties, this was a storm we probably could not prevent.
3. For decades, America has sought the goal of universal home ownership. Borrowing to buy a home has been encouraged by tax-favored mortgages, loosened credit, and bankruptcy standards, and weak borrowers have been supported by government guarantees in the form of FHA, Fannie Mae, Ginny Mae, and Freddie Mac. The Savings and Loan crisis can be viewed as another variation on the theme of wider home ownership. Meanwhile, renting has been discouraged by low returns for the landlord, with the additional hazard of reducing the mobility of the workforce, particularly in a recession.
4. Home mortgages have traditionally been issued by local lenders. However, cheap credit was primarily available from China, so new conduits needed to be constructed. The process of securitization of mortgages through aggregation and packaging as marketable bonds was a swift and effective way to put the cheap Chinese credit to work, serving the acknowledged national desire to promote home ownership.
In a second summary, cheap credit from the Orient pushed us toward some sort of bubble. Our own encouragement of home ownership assured the bubble would be a housing bubble. Perhaps some other form of a bubble would be preferable; if that is the case, our government is at fault.
The first four bullets in this analysis constitute conventional argument why we had the collapse of a housing bubble in August 2007, and this collapse in some way is supposed to have led to a recession. In his recent memoir, Tony Blair of England reduced the argument to a politician's catchy phrase. "We didn't have a market failure, we had a failure of one sub-segment of one portion of the market." But that is not exactly true. In August 2007 the markets experienced a sudden liquidity crisis, a lack of ready cash to pay immediate bills. A sudden worldwide shortage of cash caused a halt to the trading of just about everything. People could not collect their bills so they could not pay their bills. Survival in this environment depended less on how wealthy you were than on how much loose unemployed cash you happened to have when the music suddenly stopped. Possibly because of the real estate bubble, and possibly for other reasons, the whole world was in a trading frenzy, and cash was king. At this point, Brunnermeier is surely right that the comparatively small amount of real estate defaults was tiny in comparison with the trillions of dollars lost in the crash. He searches for "amplifiers". The possibility exists however that panic and hysteria resulted in bizarre losses, simply because everything uses money, so a shortage of money paralyzes everything. Consider the following issues:
5. It is said that 70% of stock market trades are now conducted between two unattended computers. The finest mathematicians in the world are probably programming those computers, but transaction speeds are now measured in nanoseconds. There is no time to evaluate events; it is inconceivable that every event has been anticipated. Imposing sudden pauses in trading, even for five or fifteen minutes, has proven to be remarkably effective in combating false rumors. However, the shift in trading from deposit banks to investment banks has created a whole host of unexpected advantages for the first trader who ducks out of the market. A traditional "run on the bank" is essentially based on first-mover advantage. But when short-term loans must be turned over in a day or two, simply pulling out for a day amounts to a run on the bank of a slightly different sort. It's the exploitation of the first-mover advantage in commercial credit, money market funds, repo's, daily auctions and many other nooks and crannies. A liquidity crunch makes many people into first-movers who didn't intend to be one.
6. Globalization has tended to externalize transactions within an international corporation into many sales steps between suppliers and assemblers all over the world. While this transformation has been accomplished with remarkable ease, it still vastly increases the volume of short-term loans, subject to the new form of a bank run, by hesitation whenever liquidity dries up.
Boom times and inexperience with new techniques created unsuspected instabilities. Major examples are found in computerization, globalization, derivatives, and -- curiously -- diversification.
7. For fifty years, diversification has been regarded as a safeguard, particularly when the various components are in independent environments. A liquidity crunch wipes out the advantages of diversification, however, because every sale involves money. Just as important is the hidden risk that failure in one area may drag down another. The most drastic example in the recent crisis was in the "Monoline" insurers, who insured only municipal bonds until recently when they diversified into insuring mortgage-backed securities. And of course, when subprime mortgages collapsed, they took down municipal bonds, with many more ripple effects after that. Diversification improves safety, but only if the entities which fail are inconsequential to the whole portfolio. Innovative bundling and tranching of securities can create hidden aggregates with the power to spread contagion if they injure the credit rating, or bond rating, or reputation rating of a company. Advanced mathematics could probably establish guidelines for the danger points, but then other advanced mathematics will find ways to evade the analysis.
8. Credit default swaps are merely short-term insurance policies against definable risks, and they have greatly increased the willingness of international commerce to take risks they would otherwise avoid. However, they are also hidden over-the-counter transactions; when they grew in a couple of years to be several times the size of the entire stock exchange, they frightened the regulators. When the crunch came, regulators were not reassured to be told that most of these swaps were in opposing directions, which would surely "net out" to a comfortable equilibrium. As matters turned out, credit default swaps did not apparently cause many financial failures. But when it was learned that it would take nearly three years to untangle all the paper at AIG, it was highly unsettling. Innovators and mathematical quantitative traders will always outwit regulators because they have a far greater incentive to get ahead of the curve. But more midnight accusation sessions at the time of a crash simply cannot be tolerated. If clearing credit default swaps through an exchange does not improve transparency, something else must be suggested and tried. The issue here is the huge volume of transactions. It should not be impossible to devise volume standards, above which all future innovations must develop transparency mechanisms.
In the fourth summary, the default of subprime mortgages was fairly serious, perhaps amounting to two or three hundred billion dollars. However, the liquidity crunch was much more serious, requiring $850 billion just to get the markets open, and leading to stock market losses in the trillions. More research is needed to decide how much of the difference is explainable by the existence of amplification mechanisms, as Brunnermeier believes, or whether a more substantial explanation for the recession lies in world-wide leveraging and deleveraging. The size of the mortgage defaults was clearly not large enough to explain the crash, but it may have been large enough to destabilize key elements of the system into a domino effect of some sort. The distinction is somewhat semantic, with its main value in moderating political opinion about the issue of "too big to fail". That is, the general public perception of the role of huge economic forces, as opposed to blunders by a few key firms.{ILQ-End}
9. The liquidity crisis of the summer of 2007 was a brief, almost total, lock-up. This is not to imply that worldwide cash shortages had necessarily been building up for months until the system crumpled; simple miscommunication could explain a brief lock-up just as well. But there can be little doubt that chaos convinced major decision-makers they would be wise to conserve their own cash more carefully. The instantaneous main conclusion was that certain interest rates had been too low, and would soon go up. A rise in interest rates forces a decline in the value of the loan, the bond, or the guarantee. If interest rates double, the principle will be worth only half as much for the duration of the loan; even refusing to sell the asset leads to an opportunity loss throughout the duration to maturity. For a while, there was uncertainty just how many roles the subprime mortgages were playing, but it scarcely mattered. Alan Greenspan had famously remarked that low long-term interest rates were a "conundrum". If they went back up to conventional levels, it would not so much matter that foreclosures would rise from 5% to 10% or even 20%. What would matter was that the 80-95% of un-foreclosed mortgages would become 5% bonds in a 10% bond environment, and hence destroy many times as much wealth. Since that cat was out of the bag, it might be a long time before it got stuffed back. Looking back for causes, it was suddenly clear that we had created a situation where everyone was terrified interest rates would become normal. If they became normal suddenly, bankruptcies would be wide-spread. If they went back slowly, fearful paralysis might last a long time. The Federal Reserve had already lowered short-term rates to nearly zero, so their efforts to ease the pressure on deposit institutions led to the purchase of long-term bonds. It was not reassuring to see that if long rates went up later, the lender of last resort would then likewise be in the position of losing money.
10. At a time when commercial liquidity was weak, the public started to draw down its cash reserves. The protracted experience of low short-term rates was particularly hard on unemployed people, especially retirees, who tend to live on the interest on money market funds and CDs because of a concern for the safety of principal. When ready cash is depleted, such people invade their long term securities; when times are precarious, even the affluent ones decline to invest and limit discretionary consumption. The nation thus begins to use up its cash reserves, and the consumer goods segment of the economy starts to weaken. In a primitive country, this sort of response soon leads to famine; in more affluent America, it is less obvious that cars are getting older, clothes are getting worn out. Meanwhile, businesses are declining to expand or to hire, and cash reserves are possibly even expanding, waiting for a more suitable time to invest. If the subprime mortgages and similar toxic debts can be cleaned up before the nation really exhausts its hidden cash reserves, the recession will pass. If cash reserves ever do get depleted beyond a tipping point, industrial growth will slow, and a twenty-year recession such as the Japanese are suffering, cannot be completely dismissed.
Employer-based Health Insurance. From an employer's viewpoint, a sick employee is an expensive employee, but there are special employer twists to employee illness. The most effective comment a former employer can volunteer in a letter of recommendation is to say that over several years, the employee was "never late and never missed a day of work". It's hard to predict medical costs in advance, but the identification of someone as "accident prone" is the kiss of death for hiring or promotion, because the difference between a devastating injury and a trivial one, is about half an inch. Disabled persons are identified as being unable to do the job, and may include less visible issues, such as being so attached to local health providers they become unwilling to accept a transfer to another city. Some of this affects health insurance premiums, some may not. But the large employers are largely self-insured, so they have more access to individual health cost information, and can longitudinally assess whether their Human Resources departments are doing what is vaguely stated to be a "good job." Some of this is no more than shrewd selection of an agent for administrative services-only. Large self-insured employers almost always have lower health insurance costs, which in the aggregate is likely to mean healthier employees, the cream of the crop.
New or small businesses generally do not have a large enough employee group to justify basing next year's budget on last year's health cost experience. So "small group" insurance tends to reflect the overall higher costs of small-group employees in the whole geographic region, and "individual policies" are the most expensive of all, because they generally have a good idea what they need and want in an insurance policy -- and seek it out. Add to that factor the preferential enjoyment of tax exemption, and the system has gravitated into one which could not have been designed by experts to be so preferential to certain types of business models.
For the sake of economy of effort, let's first see what we can do about portability and privacy, indirectly, by getting rid of the tax preference.
It appears that employers seldom drive their health information advantage to the extremes which would seem within their abilities. Generally, they look for a "Cadillac" plan for important officers and professionals, lower-paid employees generally receiving the "Chevrolet" plan, and that's about as far as it goes. Psychiatrists as a group are much more passionate about patient privacy than other doctors are. Certain employers in Madison Avenue businesses are thus more likely to be dealing with the bills and complaints of psychiatrists, that those who run farmers' co-ops in Nebraska. Probably that reflects some highly charged experiences with a few psychiatric patients, much more likely to give the lurid responses of a trial lawyer than of the tired and bored primary physician. Or of the dressing-room attendants in the fashion business, who are more or less constantly bumping into naked women in a big hurry to change into a new costume. Standards of modesty vary quite a lot across the country, and this probably parallels similar regional variations in the rest of patient privacy concerns. There seems to be a steady trend toward indifference about privacy, however. Even Bill Clinton waited until his last day in office to sign the HIPAA regulations, knowing how unpopular they would be.
Participants in sports where a great deal of betting goes on about game outcomes and career records have good reason to fear careless gossip about injuries, illicit drug use or even cataracts. Aging actresses fear their younger competition; almost everyone is uncomfortable about addictions and deviant behavior. The decline of primogeniture and the rise of antibiotics have even undermined the devastating consequences of suspicions about true paternity. Whether the resulting business models are going to lead to a decline in concern about patient privacy in any forum, could well be argued at length. What's more likely is that most people will tire of the subject.
Nevertheless, no one can dispute that employees in a favorable health insurance arrangement are quite reasonably reluctant to change employment to a situation which loses them a tax deduction on 30% of their salaries. The situation is called "Job lock". Portability is a real problem, while privacy is much less consequential, except to some very vocal groups. Even though it seems unrelated, the manifestly unfair design of this tax preference is one of the reasons American politics have become so restless about seemingly unrelated matters. The freedom to go somewhere else has become impaired. For the sake of economy of effort, let's first see what we can do about portability and privacy, indirectly, by getting rid of the tax preference.
109 Volumes
Philadephia: America's Capital, 1774-1800 The Continental Congress met in Philadelphia from 1774 to 1788. Next, the new republic had its capital here from 1790 to 1800. Thoroughly Quaker Philadelphia was in the center of the founding twenty-five years when, and where, the enduring political institutions of America emerged.
Philadelphia: Decline and Fall (1900-2060) The world's richest industrial city in 1900, was defeated and dejected by 1950. Why? Digby Baltzell blamed it on the Quakers. Others blame the Erie Canal, and Andrew Jackson, or maybe Martin van Buren. Some say the city-county consolidation of 1858. Others blame the unions. We rather favor the decline of family business and the rise of the modern corporation in its place.
Originally the "lower counties" of Pennsylvania, and thus one of three Quaker colonies founded by William Penn, Delaware has developed its own set of traditions and history.
Start in Philadelphia, take two days to tour around Delaware Bay. Down the New Jersey side to Cape May, ferry over to Lewes, tour up to Dover and New Castle, visit Winterthur, Longwood Gardens, Brandywine Battlefield and art museum, then back to Philadelphia. Try it!
Millions of eye patients have been asked to read the passage from Franklin's autobiography, "I walked up Market Street, etc." which is commonly printed on eye-test cards. Here's your chance to do it.
In 1751, the Pennsylvania Hospital at 8th and Spruce was 'way out in the country. Now it is in the center of a city, but the area still remains dominated by medical institutions.
Grievances provoking the American Revolutionary War left many Philadelphians unprovoked. Loyalists often fled to Canada, especially Kingston, Ontario. Decades later the flow of dissidents reversed, Canadian anti-royalists taking refuge south of the border.
