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S3T Jan 16: Bears, Hawks, Moral Hazard Vectors, Hospital Capacity, IBWO...

S3T Jan 16: Bears, Hawks, Moral Hazard Vectors, Hospital Capacity, IBWO...
Seaglass City - Mixed media 2021

Whether or not you think the crypto bear market is a cub on its way out, or a monster here to stay, change continues and along with it, rethinking of key concepts like moral hazard. This issue highlights some recommended reads for change leaders focused on solving complex issues rooted in our commonly accepted economics.

Crypto Finance

Momma bear and her cubs
Photo by Delaney Van / Unsplash

Sizing the Bear

BTC finally had a positive week in 2022, after weeks of sliding downward. Is this the start of a longer bear market? or the end of a mini bear? What root causes are in play and how might they help us "size the bear"?  

If you want to believe this is a mini-bear and its just about over  - you could argue that these were the main causes:

  • Christmas gift giving - Crypto investors had a good year and decided to splurge a little.
  • End of year portfolio rebalancing - investors check asset performance, keep and cull accordingly.
  • We didn't have the Grayscale Trust NAV boost we had in Dec 2020.  

If you think its a bigger bear that's going to stick around for a while, here are some supporting arguments:

  • Taxes: Investors are digesting the evolving tax code. (See also American Institute of CPAs tax note). Clarity and confusion alike can impact behaviors and ultimately prices.
  • Inflation Hawks and Doves: Hawkish Fed notes and related uncertainty about inflation: if inflation continues to rise, and if larger institutional investors see BTC, ETH etc as safe havens then crypto prices could rise dramatically. If inflation appears to be tamed, then large investor accumulation of crypto might proceed at a more measured pace.

In either scenario we will continue to have Growing Pains: highly visible events that cause doubt or confusion.    

Add all that up and what do you get? Non-stop surprises. But those surprises offer new opportunities.  

Decentralized Retail: Not so smooth Operator

Speaking of surprises, this tweet seen on Jan 8: "23 days til we kill Amazon". Apparently this got Operator banned. But they're back with more tweets. Operator's web site says they are building "a decentralized store where anyone can participate and everyone governs together."

I’ve noted in this newsletter how much legal and regulatory uncertainty hangs over this space and the need for informed consideration of the risks and issues . The Global Blockchain Business Council recently launched a new journal the Blockchain Law Journal that will probably become a valuable contributor to clarity - read the inaugural issue here!


Found this graffitied brick wall in the beautiful LxMarket. An old industrial complex now turned to an array of artists shops, cafés and restaurants. It was very nice to walk around there on the Saturday afternoon and have a great lunch at the Cantina LX.
Photo by Ehud Neuhaus / Unsplash

Moral Hazard Part II

Last week we noted that  Healthcare is very tangled up in the "moral hazard" logic of the 18th century, and that its probably time to realize that this construct does not serve us.

In 2005, Malcom Gladwell published this essay which provides a good history of how moral hazard found a home in the health policy logic in the US, but interestingly not in other western nations.

The Moral-Hazard Myth
The bad idea behind our failed health-care system.

The moral hazard section starts about 1/3 way thru - highly recommended read for healthcare leaders.  

This paper offers a different take, and a window into the interestingly selective way moral hazard is applied to the players in US healthcare system.

The paper acknowledges dissenting opinions, but asserts that moral hazard does exist in health insurance:

"Just like almost any other good, individuals increase their healthcare utilization when the price they have to pay for it is lower."

But healthcare is not just "like any other good." The purchase and selection process is very different. Patients aren't selecting and making purchase decisions the same way they are when they are shopping for rice or apples.

In "normal" retail there are a range of options with clear differences and clear pricing. All of the options are functional and typically backed by a return policy. One brand of rice might be more expensive than another, but I can make dinner with either one. I might like one better than the other. If the rice has bugs in it, I can return it for a refund. Whatever the scenario, I can manage to get some rice and not go hungry. This, as you know, is not how healthcare works.

  • Significant portions of healthcare purchases are not discretionary. They are forced by life threatening events, and fear of harm to self or a loved one. This is not the difference between "nice rice" and "cheap rice". This is the difference between getting what you need or not making it.
  • Patients rarely have a full understanding of the price at the time they are making their purchase decisions. Neither does anyone else for that matter.  
  • A very small percentage of patients drive a very large percentage of the spending.
  • Patients are not really agents capable of controlling their spending. They have no view into how pricing is calculated, or how it aggregates. In other words, they are not really in a position to be incentivized by price manipulation.

Curiously, these realities are acknowledged directly or indirectly throughout the paper, but never crystallized into actionable information. The concluding paragraphs for dissolve into hazy statements surrounding one premise: demand responds to pricing, so if we just make patients pay more, then demand will subside.    

In the face of national crisis of healthcare affordability its an incredibly obtuse position to take.

How many times have you heard, "We didn't go to the doctor because we had no idea what it would cost"? Vague unclear pricing causes people to avoid care. Delayed utilization forces a more expensive form of utilization later.

Plot twist: I am inclined to agree with the writers that moral hazard may exist in healthcare. But perhaps the vector for moral hazard is not the patient. Will dig into this next week!

Current Status: 1 in 5 hospitals critically understaffed  

Look up your state here. NC faring better than most, thanks to stronger than average healthcare community and infrastructure.

Outdoor Notes

Ivory Billed Woodpecker Specimens, Carnegie Mellon Museum of Natural History


This beautifully illustrated story map provides a excellent overview of the known history of the Ivory Billed Woodpecker as well as locations of sightings (with nice color mapping of where the most frequent sightings occurred). This, our largest woodpecker was pronounced extinct in 2021, but a new search "Mission Ivorybill" is being organized with plans to start Feb 1, 2022 in Lousiana. February is not a bad time to search for an elusive species, since the leaves are off the trees.

Personally, I worry that the bird is extinct, but would be thrilled to be proven wrong. Declaring the bird extinct allows precious funds to be focused on saving other species whose survival could have a higher postive impact to our ecosystems. And, I've known folks who devoted a lot of time to trying to find this bird, only to run out of time and money.

A perhaps more accessible dream: If you're passing through Siloam Springs, Arkansas, stop in for a drink or a burger at the Ivory Bill Brewing Company.

Have a great week! Feel free to forward this to a friend or team member! You may have to move this email from your "promotions" to your "primary" folder (in Gmail) or otherwise mark it important in other email clients.


Opinions mine. Not financial advice. I may hold assets discussed.