This Week in Bank Failures

This week, two cases of banks not being what they seem.

First: In Spain, two insolvent banks own commanding positions in the country’s olive oil industry. The banks now need to find a way to sell their olive oil interests to help pay for their banking debts.

Second: Statistics and reports have come out that paint a picture of a run on Cyprus banks that went on for a month, perhaps two months, before the EU rescue and is surely continuing now, subject to the limits of the currency controls. Much of the money taken out of Cyprus banks in March was deposited in banks in Greece. The Cyprus banks and government and the ECB managed to keep this story under wraps at the time.

Cyprus’ shell-shocked economy will need some kind of intervention to keep people from getting discouraged. This year’s big shift may be described as a move away from offshore banking and toward more subsistence farming.

In Virginia, the NCUA liquidated a credit union. Shiloh of Alexandria Federal Credit Union was a church-affiliated credit union with 624 members. At the end, it had $2 million in assets.

PC Sales Tumble

PC sales are down. Depending on who you believe, unit sales are down 10 or 15 percent from a year ago. Hewlett-Packard, by some measures the largest manufacturer, saw sales decline 25 percent from an anomalous period a year ago. High-profile product releases at the end of last year had more impact than I gave them at the time, but they were still only enough to slow the decline for a moment.

It is not that people have stopped using PCs, but the replacement cycle is shifting, from around 2 years to probably beyond 10 years. With a slower replacement cycle there is a shift in attitude about new technology, in which people studiously avoid being too far ahead of the curve. This will result in an industry that looks quite different from the one we remember from five years ago, when people were more concerned about the risk of being left behind as technology shifted.

Dark Days in Television

Recent comments by News Corp president Chase Carey and other television executives hint at how dark the U.S. television business has become. Carey suggested that the Fox network could become a pay-TV channel if current laws don’t permit the network to extract programming fees from CATV operators and similar services based on shared antennas and over-the-air TV broadcasts. People with antennas were “stealing” the networks’ valuable programming, Carey said. Carey walked back his comments the same day, saying Fox was not about to cut off its broadcast affiliates or its over-the-air viewers, but I am sure anxious TV station operators were checking with their lawyers yesterday just in case. Meanwhile, a chorus of other TV executives made similar comments about the option of canceling all over-the-air broadcasting.

These may be empty threats, but it still shows the financial stress that television is in. It’s a situation that doesn’t make any sense from the outside. Commercial television gets about $2,000 a year from nearly half of the households in the country when you combine advertising and subscription fees. It takes in a trillion dollars every few years yet still can’t make ends meet. Just like the targets of some of its more shady advertising messages, television is desperately looking for ways to make extra money. TV executives seriously think you’ll pay $4 a month to watch a pay channel on which every hour of programming comes with 24 minutes of commercials — it’s not just Fox that thinks this. Perhaps a few of them are right, but 100 TV channels can’t all charge subscription fees from all the TV households in the country — there isn’t that much household income to go around, and TV has to compete for revenue with less pricey forms of entertainment, such as books, cinema, Internet, and live music.

We are headed, then, for some kind of shakeout in the television business. I can’t say what form that may take, but if the whole television industry tries to spend more every year on content while television viewers look for ways to spend less, something has to give.

Red Meat, Carnitine, TMAO, and Cholesterol

I wrote recently about blueberries and strawberries and their link to heart health. It is thought that berries promote cholesterol cleanup. Now we find that red meat may have the opposite effect.

The specific component of red meat that creates this effect is carnitine, a chemical combination of two amino acids. Gut bacteria that thrive on carnitine produce trimethylamine N-oxide (TMAO) in huge quantities after a person eats red meat. This creates a spike in blood levels of TMAO, and in blood vessels, it appears to block cholesterol cleanup.

This is the interesting part: it is not the red meat itself that creates the TMAO spike. It is the gut bacteria. If you eat red meat almost every day you have lots of this kind of bacteria, and you are guaranteed a TMAO spike every time you eat red meat. If you eat red meat only occasionally, you don’t have the same bacteria and you don’t get a TMAO spike when you eat red meat.

This is some of the best evidence yet that it matters what kinds of digestive bacteria you have, and that what you eat largely determines what digestive bacteria you have. There are other reasons not to eat a lot of meat, but for this particular effect the key is not to eat red meat day after day.

Here is another twist: carnitine is a popular food supplement, thought to promote weight loss, reduce asthma symptoms, and ironically, prevent heart attack recurrences. There is every reason to imagine that carnitine as a supplement feeds the same gut bacteria that thrive on red meat. Many people take food supplements every day, but that seems a risky way to use carnitine. Perhaps the most problematic scenario is the combination of daily carnitine supplements and occasional large meals of red meat.

As a general rule, it is better not to have strong tendencies in the way you eat and live — if you spend much of your time trying to repeat the same things, it can turn into a rut. The carnitine-TMAO connection is just the latest illustration of why this is so.

Obstacles to Contraception as Class Warfare

Can the FDA set aside the scientific evidence on drug safety for purely political reasons? A court decision Friday specifically overturned arbitrary age restrictions on the “morning-after pill,” but the ruling also has wider implications.

In 2011 the FDA, in a bizarre directive drafted by the HHS secretary presumably on orders from the White House, ordered age restrictions on levonorgestrel. There was not the slightest evidence that the 72-hour constraceptive drug was more dangerous or less effective for one age group than for another. The age restrictions were intended to have two effects: to force purchasers of all ages to show personal identification in order to strip away their privacy in making the purchase, and to prevent sales online. Possibly a third effect was intended: to make the drug less effective by delaying its purchase. By making it more difficult for consumers to obtain levonorgestrel, the White House intended to force hundreds of thousands of the most vulnerable women in the country, but especially school-age girls, into unwanted and otherwise avoidable pregnancies.

If you are thinking, “What a terrible idea!” you are not alone. This kind of law is an example of class warfare, and it is the nature of class warfare that the majority of people are targets. When enacted, the new restrictions on levonorgestrel were hardly a surprise, as rules restricting contraception have been a staple in class warfare for at least a century. In this connection, contraceptives are no different from unemployment compensation or food safety inspections. There are multiple hidden agendas at work in the efforts to prevent family planning, but the main political objective is to keep the masses of ordinary people off balance in their personal lives, continually facing stress and other barriers to action. If the majority of people are kept powerless, the rich and powerful can continue to rule the world as they see fit. This, it is safe to assume, was what the White House had in mind when it ordered the restrictions on levonorgestrel.

I think the court recognized this hidden agenda when it ruled that the FDA’s specific restrictions on the drug were arbitrary and unreasonable. The judge wrote, correctly, that the age restriction was a burden on “the overwhelming majority of women,” not just those who directly faced obstacles in purchasing contraceptives. After all, the mere possibility of an administrative obstacle in a crisis situation presents a burden. In U.S. law, laws that are too arbitrary are considered unconstitutional precisely because there may be a hidden agenda (or an unintended consequence) that sets one class of people against another.

The decision is important in its own right, but also because the same logic could apply the next time the White House thinks about using the FDA as an agent in class warfare. Perhaps there is reason to hope that the use of drugs and their regulation to keep people from controlling their own lives may not run much longer.