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Home > Medical Professionals > Vascular Specialist newspaper > Vascular Specialist Online Volume 5 Number 4 > Vascular Specialist Online Volume 5 Number 4

Every day brings additional bad news about the worsening economic melt-down in our country and elsewhere. The disaster has grown to impact negatively on virtually all segments of our society including the health care industry.  Experts inside and outside government seem woefully unable to explain fully what is happening. More importantly they seem not to know what to do to interrupt the financial free-fall. It is, therefore, reasonable for a vascular surgeon, who is non-expert in economic matters, to offer some thoughts on the collapse and what might be done to interrupt it and restore confidence and prosperity.

Most of us understand that the collapse had something to do with bad loans and mortgages to individuals who might be unable to repay them. We also know that the problem was compounded by the greed of bankers and others who sought quick personal gains without exercising responsibility or good judgment, and that it was further exacerbated by congressmen from both parties who sought political gain by legislation which weakened regulation and promoted easy credit and “affordable housing for all.” Finally many parts of our banking and financial system, known collectively as “Wall Street” –  again driven by greed,  created ingenious vehicles or instruments that packaged or securitized mortgages and other loans so that they could be resold widely throughout various segments of society. These vehicles  gave  the sellers more money to increase their lending power and profits, while tempting the buyers with easy sure interest income. Regulation of these instruments was limited or non-existent, and none of those involved  considered the risks of what might happen if inflated real estate prices, the collateral for the unwise loans, stopped rising or worse tanked. Everyone was too busy counting their gains.

When payments on some high-risk loans could not be made, foreclosure occurred dumping excess housing on the market, lowering housing prices. This decreased the value of the securitized loan vehicles – the so-called toxic assets.  Banks and others involved in the mortgage business or its widely held derivative instruments were threatened as their assets melted away. They stopped lending. As credit froze, confidence fell. Consumer and business spending decreased sharply. The stock market crashed.  Job losses followed, and the vicious cycle of a recession/depression began to impact every American’s life in many direct and indirect ways. What is particularly frightening is that all the efforts of government to stop this run-a–way train by various measures, all of which involved the assumption of huge future public debt, seem to have done little to break this self-potentiating financial free-fall.

An apt analogy for a vascular surgeon would be a patient who suffers an aortic wound with massive bleeding. The bleeding produces circulatory collapse and, as blood flow with oxygen and nutrients ceases, ultimately multi-organ failure occurs. The potentially fatal wound in the case of our economy is the fall in the value of real estate backed securities. The economic circulatory failure is the collapse of lending, credit and confidence at many levels. This leads to failure of other parts of our economy (the organs) such as retail sales, business spending, the auto industry, our stock market, and even the endowments of our universities and hospitals. The latter will ultimately cause income declines and job losses within the health care industry. Vascular surgeons and other physicians, although in a relatively favorable position, are not immune to this serious financial melt-down.

What can be done to stop and reverse this vicious cycle? First the hole in the aorta must be plugged and the lost blood replaced so that circulation to parts of the body will be maintained. The toxic securities must be taken out of the system so that banks and other lenders will survive and credit will begin again to be available. This preservation of banks and the banking system must occur even though their greedy and poor leaders have contributed substantially to the economic collapse. Credit is the life blood of our financial system. Access to it must be restored. Only the federal government can assume the toxic assets; only the government can keep the banks functioning. Those who think otherwise on moral or ethical grounds are wrong. They would allow the organism to bleed to death, and the consequences to our society would be catastrophic. So the banks and our financial system must be salvaged. The greedy and guilty parties can be identified and punished later. The consequences of the enormous debt burden that all this will require, although grave, can also be dealt with later.

Assuming the U.S. citizenry though its government does all these things so that the hole in the aorta is plugged and blood (credit) is again flowing, will that be enough? Probably not. Consumers and businesses, lacking confidence, will need a psychological boost to spend or buy. Job losses will likely continue. The economy will be stabilized but at a depressed level. 

What can vascular surgeons, other physicians, and others who still have relatively stable jobs do to help? Even though we now have over 8% unemployment – and this may rise, over 90% of our work force will continue to work and earn.  Even if we eliminate those who are worried about losing their jobs or are saddled with credit card or other debts, the vast majority of Americans – vascular surgeons among them – still have secure jobs and incomes. These individuals must make it their patriotic duty to spend money in a normal non-excessive fashion. This will help to get the circulation of commerce and money going again. The confidence of business leaders and other consumers will be restored.  The vicious downward cycle will be broken, and the American economy will begin to grow again.

Finally what can be learned from this economic collapse? For one thing we need government regulation to offset the greed and self-serving behavior that are part of human nature. Such regulation is absolutely necessary to provide openness in our banking system and to prevent excessive compensation to those in our financial industry for developing slight-of-hand means to reward themselves without making a contribution to society. Next we must all learn to live within our means. Living beyond our means on borrowed money that we may not be able to pay back is a dangerous practice. Borrowers and lenders must both learn to act responsibly, and there should be penalties for doing otherwise. If our life-style suffers, so be it.  It is better than going through the pain of the current economic collapse. An improvement in our standard of living can only come from improved productivity and hard work. As we are learning so painfully, there is no free lunch.

Contact the Editor at vascularspecialist@vascularsociety.org.