Grind for August 20th, 2018
“Nothing can stop the man with the right mental attitude from achieving his goal; nothing on Earth can help the man with the wrong mental attitude.”
– Thomas Jefferson
Indian Prime Minister Narendra Modi unveils healthcare proposal
Indian Prime Minister Narendra Modi on Wednesday unveiled a healthcare proposal designed to expand quality care to India’s poorest families.
The system, dubbed “Modicare,” would provide health insurance for the poorest 40% of the population (that’s more than 500 million people).
Current data suggests only 10% of India’s population can afford quality healthcare. Everyone else depends on government-run clinics where wait times are long and care is of questionable quality.
India’s flawed healthcare system has created an environment where less than 5% of people suffering from heart problems receive treatment. Life expectancy is less than 69 years of age and the infant mortality rate is 7x higher than that of the US.
Inpatient hospitalization costs have also increased 300% over the past 10 years.
Modi’s solution to these problems is to provide low-income families with health insurance. His proposal is expected to cost less than $2 billion per year.
But as critics have pointed out, Modicare will continue to grow larger and larger until the government can no longer afford it.
“One or two billion dollars is not more than what the Indian government can afford, but these programs have a way of exploding over time. Then it can actually get to be a bigger constraint,” says Ravi Ramamurti, a Professor of International Business at Northeastern University. “These are programs you can never pull back. They can only expand over time.”
India lacks the facilities needed to support the increase in demand Modi’s program would create, and with just 1 physician per 1,300 people, it has one of the lowest doctor-to-patient ratios in the world.
SEC is investigating Tesla after shocking tweet
Tesla CEO Elon Musk shocked Wall Street last week by tweeting that he planned to take his company private at $420 a share.
That’s about 11% higher than the stock’s trading price at close on Tuesday.
In his tweet, Musk suggested he had secured funding from Saudi Arabia and was waiting on a shareholder vote to take the company private.
If true, this would be the largest corporate buyout in US history.
Tesla has $920 million in convertible bonds due next March. The conversion price is $359.87 – which means Tesla will have to spend money to redeem the bonds if its stock is below that level at the time.
Tesla shares were at $370.34 on Wednesday.
Tesla board members last week told reporters that Musk had spoken with them about taking the company private. Two days earlier, Tesla filed its quarterly report with the SEC. The report did not mention the potential buyout.
The SEC sent Tesla a subpoena this week seeking information from each of the company’s directors. The SEC typically opens an investigation of this kind when it believes a law has been broken and investors are at risk.
US law forbids companies from giving shareholders misleading information, so Musk could be in serious trouble if regulators can prove his tweet was aimed to goose his company’s share price.
As noted in The Wall Street Journal, “The development shows how Mr. Musk’s erratic behavior and seemingly unfiltered use of Twitter is a risk for Tesla, attracting unwanted drama as it tries to evolve into a more mainstream auto maker.”
US law also forbids companies from going private if they have more than 300 shareholders. It is unclear how Musk intends to sidestep this rule.
GOOD TO THE LAST DROP:
Did you know… Al Capone earned $105m per year from alcohol and rackets during the Prohibition era. Today, this would be equivalent to $1.4b per year.