Monday, August 4, 2008

Pills or Therapy?

from http://www.theglobemail.com/ and the Aug issue of Archives of General Psychiatry
Pills taking over from psychotherapy
JULIE STEENHUYSEN
Reuters
August 4, 2008 at 4:30 PM EDT

CHICAGO — U.S. psychiatrists are trading in the analysis couch for a prescription pad, a study released on Monday says after finding that fewer psychiatrists offer psychotherapy.
The shift to briefer visits for medication management, reported in the Archives of General Psychiatry, appears to be linked to better psychiatric drugs and pressure from managed care companies, which offer richer financial incentives for brief office visits.

"Psychiatrists get more for three, 15-minute medication management visits than for one 45 minute psychotherapy visit," said Dr. Ramin Mojtabai of Johns Hopkins University in Baltimore and formerly of Beth Israel Medical Center in New York, where he did the research.

Various forms of psychotherapy, either alone or in combination with medications, are recommended to treat depression, post-traumatic stress disorder, bipolar disorder and other psychiatric illnesses.

Yet Dr. Mojtabai and colleagues, who analyzed data from national surveys of office-based psychiatrist visits from 1996 through 2005, found a significant drop in the number of office-based psychiatrists providing psychotherapy.

He said only 29 per cent of office-based visits to psychiatrists involved psychotherapy in 2004-5, down from 44 per cent in 1996-97.

One major impact is that patients who need to receive psychotherapy must obtain it from other professionals, if they can get it at all, dr. Mojtabai said in a telephone interview.

That can result in disjointed service, in which a patient sees a psychologist or social worker for therapy and a psychiatrist or a general physician for drugs.

"Whether it has any impact on the outcome of the disorder, we don't really know," Dr. Mojtabai said. "I don't think necessarily that it is harmful. It might not be as efficient."

Brain age
Dr. Eric Plakun, who leads an American Psychiatric Association committee on psychotherapy, said he noticed a shift away from psychotherapy beginning about 10 years ago, when more psychiatrists began to embrace "the age of the brain."

He said medical schools began to focus more on the biology of mental illness than on traditional psychotherapy and that is now reflected in practices across the United States.

Dr. Plakun said in a telephone interview that it is not clear if patients are getting therapy from other providers, or not at all.

"Either way, I'm worried about our patients," he said. "Patients need the best help we can give them."

For Dr. Plakun, that means offering a range of services, including psychotherapy, and not just medication.

"If all you have is a hammer, everything looks like a nail," he said.

Dr. Mojtabai thinks patients are getting therapy from others, but he said the focus probably is different from the analysis that psychiatrists have traditionally offered.

"Psychologists and social workers are more likely to provide short-term cognitive behavioural therapy," which focuses on changing harmful behaviours, he said.

As for the type of analysis featured in movies, particularly in Woody Allen films, it is available – to a very few.

"If you have some hard feelings about your childhood and you live in New York and have a lot of money, you can still find psychiatrists who provide long-term psychotherapy," Dr. Mojtabai said.

I was discussing this very topic recently in an interesting discussion with someone who had been a recipient of pills (speed, yes speed - yeah I know its called Ritalin - (http://www.pbs.org/merrow/repository/Television/Past/_attn/guide.html), for ADD in increasing doses and an antidepressant that killed her sex drive) from a psychiatrist. Now completely pill free, she had to literally fight to get her life and her mind back from those lost years. This article is just confirming what is already fairly well known in the general public. See a pyschologist first and only see a psychiatrist if what you have is truly a mental condition that can ONLY be treated by drugs.

Honey, Inflation ate my rebate check


from nytimes.com
August 5, 2008
Higher Prices Outpace June Spending by Consumers
By CATHERINE RAMPELL

Consumer spending increased in June, but those gains were outpaced by rising prices, the Bureau of Economic Analysis reported Monday.

The increase in spending was $57.1 billion, or 0.6 percent, from May, but prices rose 0.8 percent in the month. It was the highest inflation level in the monthly report since September 2005.

The decrease in consumer spending after accounting for inflation reversed the trend in May, when stimulus checks from the federal government helped produce a real increase in spending.
“This is a kind of ‘Honey, inflation ate my rebate check’ story,” said Jared Bernstein, senior economist at the Economist Policy Institute.

Inflation was driven primarily by food and energy prices. Excluding food and energy, prices rose 0.3 percent in June, compared with 0.2 percent in May. The prices of nondurable goods — propelled mostly by food and energy, but also including things like clothing and toiletries — were up 7.3 percent year over year, the highest level since July 1981.

Markets fell this morning in response to the news before recovering in midday, largely on news of a sharp one-day decline in oil prices.

Monday’s announcement followed a tepid report last week on economic growth, which showed a mild positive annual growth rate of 1.9 percent for the second quarter in gross domestic product.
While the numbers in the spending report were not as dire as many had forecast, they still indicate months of challenges to come.

“That real consumer spending is down two-tenths in June is not a good thing in and of itself, but it also is a bad thing for what it means for third-quarter consumption,” said Michael Feroli, an economist at JPMorgan Chase. “To get positive consumption growth in the third quarter is going to be very challenging, especially with things like auto sales down as much as they are.”

The real drop in spending from May could also be due to the dwindling effects of the Economic Stimulus Act of 2008, which rolled tax rebates in consumers’ pockets starting in April. Real consumer spending had risen 0.3 percent in May, according to revised estimates. Dean Maki, chief United States economist at Barclays, said he expects that rebates will continue to pump a minor boost for several months, however.

The decreasing effect of rebates also resulted in personal income and disposable personal income numbers heading in opposite directions.

Personal income increased in June by only 0.1 percent, and disposable personal income — which is personal income less taxes — decreased 1.9 percent. Adjusted for inflation, disposable personal income decreased 2.6 percent in June.

“What you had in the way rebates got counted was, for most people, a reduction in taxes,” Mr. Feroli said. “That reduction was bigger in May than in June. Effectively, that increased taxes, and was a negative on disposable income.” The federal government issued rebate payments of $1.9 billion in April, $48.1 billion in May, and $27.9 billion in June.

Say Wha homie? Hoocoodanode?

We're all subprime now...

from nytimes.com
August 4, 2008
Housing Lenders Fear Bigger Wave of Loan Defaults
By VIKAS BAJAJ

The first wave of Americans to default on their home mortgages appears to be cresting, but a second, far larger one is quickly building.

Homeowners with good credit are falling behind on their payments in growing numbers, even as the problems with mortgages made to people with weak, or subprime, credit are showing their first, tentative signs of leveling off after two years of spiraling defaults.
The percentage of mortgages in arrears in the category of loans one rung above subprime, so-called alternative-A mortgages, quadrupled to 12 percent in April from a year earlier. Delinquencies among prime loans, which account for most of the $12 trillion market, doubled to 2.7 percent in that time.

The mortgage troubles have been exacerbated by an economy that is still struggling. Reports last week showed another drop in home prices, slower-than-expected economic growth and a huge loss at General Motors. On Friday, the Labor Department reported that the unemployment rate in July climbed to a four-year high.

While it is difficult to draw precise parallels among various segments of the mortgage market, the arc of the crisis in subprime loans suggests that the problems in the broader market may not peak for another year or two, analysts said.

Defaults are likely to accelerate because many homeowners’ monthly payments are rising rapidly. The higher bills come as home prices continue to decline and banks tighten their lending standards, making it harder for people to refinance loans or sell their homes. Of particular concern are “alt-A” loans, many of which were made to people with good credit scores without proof of their income or assets.

“Subprime was the tip of the iceberg,” said Thomas H. Atteberry, president of First Pacific Advisors, a investment firm in Los Angeles that trades mortgage securities. “Prime will be far bigger in its impact.”

In a conference call with analysts last month, James Dimon, the chairman and chief executive of JPMorgan Chase, said he expected losses on prime loans at his bank to triple in the coming months and described the outlook for them as “terrible.”

Delinquencies on mortgages tend to peak three to five years after loans are made, said Mark Fleming, the chief economist at First American CoreLogic, a research firm. Not surprisingly, subprime loans from 2005 appear closer to the end of defaults than those made in 2007, for which default rates continue to rise steeply.

“We will hit those points in a few years, and that will help in many ways,” Mr. Fleming said, referring to the loans made later in the housing boom. “We just have to survive through this part of the cycle.”

Data on securities backed by subprime mortgages show that 8.41 percent of loans from 2005 were delinquent by 90 days or more or in foreclosure in June, up from 8.35 percent in May, according to CreditSights, a research firm with offices in New York and London. By contrast, 16.6 percent of 2007 loans were troubled in June, up from 15.8 percent.

Some of that reflects basic math. Over the years, some loans will be paid off as homeowners sell or refinance, and some homes will be foreclosed upon and sold. That reduces the number of loans from those earlier years that could default. Also, since the credit market seized up last year, lenders have become much more conservative and have stopped making most subprime loans and cut back on many other popular mortgages.

The resetting of rates on adjustable mortgages, which was a big fear of many analysts in 2006 and 2007, has become less problematic because the short-term interest rates to which many of those loans are tied have fallen significantly as the Federal Reserve has lowered rates. The recent federal tax rebates and efforts to modify more loans have also helped somewhat, analysts say.

What will sting borrowers more than rising interest rates, analysts say, is having to pay interest and principal every month after spending several years paying only interest or sometimes even less than that. Such loan terms were popular during the boom with alt-A and prime borrowers and appeared appealing while home prices were rising and interest rates were low.
But now, some borrowers could see their payments jump 50 percent or more, and they may not be able to sell their properties for as much as they owe.

Prime and alt-A borrowers typically had a five- or seven-year grace period before payments toward principal were required. By contrast, subprime loans had a two-to-three-year introductory period. That difference partly explains the lag in delinquencies between the two types of loans, said David Watts, an analyst with CreditSights.

“More delinquencies look like they are on the horizon because so few of them have reset,” Mr. Watts said about alt-A mortgages.

The wave of foreclosures is still rising in states like California, where many homeowners turned to creative mortgages during the boom. From April to June, mortgage companies filed 121,000 notices of default in California, up nearly 7 percent from the first quarter and more than twice as many as in the second quarter of 2007, according to DataQuick, a real estate data firm based in La Jolla, Calif. The firm said the median age of the loans increased to 26 months from 16 months a year earlier.

The mortgage giants Freddie Mac and Fannie Mae, which own or guarantee nearly half of all mortgages, are trying to stem that tide. Last week, they said they would pay more to the mortgage servicing companies that they hire to modify delinquent loans and avoid foreclosures.
Delinquencies in prime and alt-A loans are particularly challenging for banks because they hold more such loans on their books than they do subprime mortgages. Downey Financial, which owns a savings bank that operates in California and Arizona, recently reported that 11.2 percent of its loans were delinquent at the end of June, a big increase from the 6.1 percent that were past due at the end of last year.

The bank’s troubles stem from its $6.2 billion portfolio of so-called option adjustable-rate mortgages, which allow borrowers to pay less than the interest owed on their mortgage in the early years. The unpaid interest is added to the principal due on the loan, so over time borrowers can owe more than the initial loan amount. Eventually, when loans grow by 10 percent or 15 percent, the borrowers are required to start paying both the interest and principal due.

Many borrowers who got these loans during the boom had good credit scores, but many of them owe more than their homes are worth. Analysts believe that many will not be able to or want to make higher payments.

“The wave on the prime side has lagged the wave on the subprime side,” said Rod Dubitsky, head of asset-backed research at Credit Suisse. “The reset of option ARM loans is a big event that will drive the timing of delinquencies.”

and from calculatedrisk.com on this article.
-- By Calculated Risk
I think the second wave of foreclosures will be smaller in numbers, as compared to the largely subprime first wave, but the price of each home will be much higher. And the second wave will impact prices in the mid-to-high end areas, as opposed to the subprime foreclosures impacting prices in the low end areas.

No area is immune.