Finance Blog number 1

An overhaul of U.S. financial regulations remains a priority for President Barack Obama and can be achieved this year along with a plan to fix the health- care system, White House economic adviser Lawrence Summers said.

Summers, director of the National Economic Council, said new rules are needed to prevent future financial crises that “have been too large a feature on our economic landscape.”

“This is the year, after what has happened, to overhaul the system of financial regulation,” Summers told reporters today in Washington.

One year after the collapse of Lehman Brothers Holdings Inc. paralyzed credit markets and contributed to the worst recession in more than 70 years, the Obama administration is stepping up efforts to sell a plan sent to Congress in June that rewrite the rules governing the financial system.

Obama will travel Sept. 14 to Wall Street in New York, where he will again make the case for tougher financial supervision, Summers said.

“He did not come here only to respond to crises or to repair that which had recently broken,” Summers said. “He came to address much longer standing economic issues.”

Obama has proposed new regulations overseeing the systemic risk posed by large financial institutions to the financial system, the creation of new government powers to dismantle failed companies and a new agency to oversee consumer financial products.

The financial regulatory proposal has been overshadowed on Capitol Hill by efforts to overhaul the U.S. health-care industry, which have dominated the attention of congressional leaders for much of the past few months.

Health-Care Debate

Summers said it’s possible for Congress to continue work on financial regulations during the health-care debate.

“The president famously said during the campaign that to be president you have to be able to do more than one thing at once,” Summers said. “I think that same idea applies to the 535 members of the Congress.”

The House Financial Services Committee is planning hearings over the next two months on financial regulations followed by committee consideration of legislation later this year free instant credit reports. The Senate Banking Committee has held a series of hearings on the issue and its staff is in the process of drafting legislation.

“It is very important to pass financial regulatory reform this year,” Summers said.

Obama has proposed giving more power to the Federal Reserve to oversee large financial institutions, something that faces opposition from lawmakers who blame the central bank for failing to anticipate last year’s financial crisis.

Fed’s Authority

Summers said there are discussions about how much more power to give the Fed without saying how it may interact with other regulators.

“There’s a huge amount of detail in the working-out of legislation of this kind,” Summers said. “We’ve seen the Fed as the natural place for systemic regulation.”

“Proposals are never enacted as they are first submitted,” he added.

Summers said the unemployment rate of 9.7 percent, the highest in 26 years, is “unacceptably high” and “will on all forecasts remain unacceptably high for a number of years.”

Stimulus Effects

A White House report released Sept. 10 said the $787 billion economic stimulus program has created or saved 1.1 million jobs since its implementation in February. Since the slump began in December 2008, the U.S. has lost 6.9 million jobs.

Summers said the improving economy is helping the government recoup some of the investments it has made through the Troubled Assets Relief Program, with some individual transactions yielding a profit for taxpayers.

Even so, Summers said, “on the overall uses of the TARP I don’t think it would be reasonable to expect profits, in part because some of them are directed at objectives where repayment really isn’t the objective, such as the subsidies to homeowners to avoid foreclosure.”

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Japan’s incoming government may redeploy as much as 5 trillion yen ($54 billion) in stimulus spending currently planned for “wasteful” programs, Democratic Party of Japan lawmaker Hirohisa Fujii said.

“We should cut these projects considerably,” Fujii, regarded as a contender for finance minister, said in an interview in Tokyo yesterday. The money could be diverted to spend on child care, education and support for workers, he said.

The amount is the first specific estimate provided by the DPJ, which won power for the first time this week on a promise to help households as the country struggles to emerge from its worst postwar recession. Economists have questioned whether the plans to cut public-works spending and shrink the bureaucracy will be sufficient, saying it may have to increase bond sales.

“The challenge for the DPJ is how to find the money to finance its promises,” said Mitsumaru Kumagai, senior economist at Daiwa Institute of Research Ltd. in Tokyo. “The party needs to allocate a limited amount of money efficiently without providing an adverse impact on the bond market.”

Yukio Hatoyama, the DPJ leader, asked Fujii not to retire from politics before the Aug. 30 election, sparking speculation that the 77-year-old will take the finance portfolio. Fujii was one of 308 DPJ lawmakers who won seats in the 480-member lower house. Hatoyama, 62, is scheduled to choose his Cabinet on Sept. 17.

Bond Sales

Fujii reiterated Hatoyama’s intention to keep new bond sales in the next fiscal year within the 44.1 trillion yen allocated for the year ending March 2010. The DPJ needs to find 7.1 trillion yen to fund its election pledges in the year starting April 1, according to its election manifesto.

“We can do it,” Fujii said in the interview in his office near Japan’s parliamentary Diet building. “We need to follow that line, while monitoring various things such as how much tax revenue we’ll actually receive.”

Japanese government bonds have remained little changed since the election, with benchmark 10-year notes yielding 1.31 percent at the close yesterday, from 1.315 percent before the Aug. 30 vote.

Parliament passed a 13.9 trillion yen supplementary budget in May to fund Prime Minister Taro Aso’s stimulus. The election defeat of Aso’s Liberal Democratic Party leaves money unspent from that budget available for reallocation by the incoming administration.

Comic Books

About half of that total was “wasteful,” Fujii said. Some 4.3 trillion yen was funneled to government-related agencies without any specific purpose, and 2.9 trillion yen was set aside for construction projects such as a “manga” comic-book museum, he said. About 4 trillion yen to 5 trillion yen can be redirected from those areas, he added.

The new government could use the money in the current fiscal year, or next year to help fund the pledges to provide child care benefits and free high school tuition, Fujii said. Any cash left over could be used to trim government debt, he added. Japan’s public borrowings, the world’s largest, are approaching 200 percent of the size of the economy.

Fujii, who worked at the Finance Ministry for 21 years, said the DPJ should set targets for restoring fiscal health, such as reducing the ratio of debt to gross domestic product and balancing the budget — goals that were set by the LDP.

Debt Target

A fiscal overhaul “is something we’ll have to do,” and targets could be laid out as early as January, he said. Fujii added that the party is confident it will be able to pass the budget before the next fiscal year begins April 1.

Fujii was an LDP lawmaker from 1977 until he left the party in 1993 to participate in a coalition government of other groups. He served as finance minister in that administration, which lasted only 10 months.

While the DPJ wants to shift power to elected politicians from the bureaucracy, Fujii’s background may help minimize clashes with the Finance Ministry should he take that post, analysts said.

“Fujii is well balanced — he’s likely to avoid being overly confrontational or overly conciliatory toward the bureaucrats,” said Kumagai at Daiwa Research.

The DPJ respects the Bank of Japan’s autonomy and evidence that the recession is over won’t compel policy makers to raise the benchmark interest rate from 0.1 percent, Fujii said.

“I think the BOJ’s independence is important,” he said. “I don’t think they’ll raise rates just because we’re seeing a slight improvement in the economy.”

Fujii separately said the government should only step into the foreign-exchange market “when speculative funds cause abnormal movements.” Currency intervention “shouldn’t be abused,” he said, while declining to comment on the level of the yen.

He said the recovery may lose momentum this year as the job market deteriorates and wages decline. The unemployment rate climbed to an unprecedented 5.7 percent in July.

One challenge for the DPJ is to rebalance the economy away from a dependence on exports that has made urban regions richer than rural areas, Fujii said. That wealth disparity “will never be good for consumer spending,” he said.

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European consumer prices dropped less than economists forecast in August as the economy recovered from the deepest slump in six decades.

Prices in the 16-member euro region fell 0.2 percent from the year-earlier month after declining a record 0.7 percent in July, the European Union statistics office in Luxembourg said today. Economists predicted a 0.3 percent decrease, according to the median of 36 estimates in a Bloomberg News survey.

Inflation may accelerate as the global economy emerges from the worst recession since World War II, stoking demand and driving up the cost of crude oil and other commodities. The European Central Bank has warned that the recovery may face obstacles as rising unemployment curbs consumer spending and helps keep a lid on prices.

“It’s certainly a shorter period of negative inflation rates than most people thought and could be over next month,” said Nick Kounis, chief European economist at Fortis Bank NV in Amsterdam. “This latest piece of data puts the final nail in the coffin of the idea that the ECB will do more. At the same time, they don’t really have to worry about inflation pressures until 2011 or 2012.”

Consumer prices in Italy, the euro region’s third-largest economy, unexpectedly increased 0.2 percent in August from a year earlier, the Italian Statistics Institute in Rome said today. Economists forecast a 0.1 percent drop, according to the median forecast of 15 projections in a Bloomberg survey. Italian retail sales unexpectedly fell 0.4 percent in June from May, according to a separate report.

Increased Discounting

Germany’s Puma AG, the second-largest sporting-goods maker in Europe, on Aug. 7 reported a 16 percent drop in quarterly profit because of increased discounting. Unilever, the world’s second-biggest consumer-goods company, will distribute 50 million discount coupons in Germany to lure shoppers, following the example of Nivea skin-cream maker Beiersdorf AG, which offered consumers a three-euro ($4.28) rebate last month.

Consumers in Europe anticipate prices will decline more steeply in the next year than they did in July, while companies’ projections are less negative than a month ago, a European Commission report showed on Aug. 28. A gauge of consumers’ price expectations over the next 12 months fell to minus 16, the lowest since the data were first compiled in 1990.

While oil prices are down about 40 percent from this time last year, they have more than doubled from a February low of $34 a barrel. In Germany, Europe’s largest economy, energy prices increased in August from July and helped to boost the annual inflation rate, which unexpectedly rose to zero.

Stimulus Spending

Evidence is increasing that the worst of the global recession is passed. In India, Asia’s third-largest economy, economic growth accelerated in the second quarter for the first time since 2007, data showed today. India joins China, Japan and Indonesia in rebounding as Asian economies benefit from $950 billion of stimulus spending and lower borrowing costs.

The euro-area economy contracted 0.1 percent in the second quarter after shrinking 2.5 percent in the previous three months, while Germany and France returned to growth. European economic confidence jumped twice as much as economists forecast this month, with the European Commission’s index of executive and consumer sentiment rising to the highest since October.

Even as the economy recovers, rising unemployment may restrain consumer spending. The euro-area jobless rate increased to 9.4 percent in June, the highest in a decade, and may reach 11.5 percent next year, according to EU forecasts. Retail sales fell for a 15th month in August, the Bloomberg purchasing managers’ index showed.

Steady Course

“A weak labor market will prevent companies from raising prices too much, so subdued inflation will prompt the ECB to hold a steady course for now,” said Nick Matthews, an economist at Royal Bank of Scotland Group Plc in London.

The ECB, which aims to keep inflation just under 2 percent, has cut its benchmark rate to a record low of 1 percent and started buying covered bonds to stimulate lending. The bank will publish a new set of quarterly growth and inflation forecasts at its next rate meeting on Sept. 3 in Frankfurt.

“It looks ever more likely that the ECB’s key interest rate has bottomed out at 1%; however, any tightening of monetary policy by the ECB still looks highly improbable until well into 2010,” said Howard Archer, an economist at IHS Global Insight in London, “Underlying inflationary pressures are still very weak and there remains a very serious risk that euro-zone economic recovery could falter.”

European stocks were on speculation the market’s six-month rally has outpaced prospects for earnings growth. The Dow Jones Stoxx 600 Index down 0.5 percent at 236.24 at 2:46 p.m. in London. The euro traded at $1.4289, down 0.1 percent on the day.

The inflation report released today is an estimate. The statistics office will publish a detailed breakdown of the consumer-price data, including energy-price inflation as well as the core rate, on Sept. 16.

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The Philippine central bank could cut the benchmark interest rate to a record low this year as economic growth weakens and inflation heads to the slowest in two decades, central bank Governor Amando Tetangco said.

“We’re in a good position because we have remaining ammunition or bullets, unlike in other countries where rates are already very low and they have little room to move down further,” Tetangco said in an interview at his office in Manila yesterday. “This gives us more flexibility.”

The central bank has cut borrowing costs by a total 1.75 percentage points since mid-December to 4.25 percent, in its longest easing cycle since at least 2002. Economic growth slowed to a decade low last quarter as the global recession hurt exports, adding pressure for further reductions in the key rate, which is higher than that of Malaysia, Thailand and South Korea.

“There is a lot of room to cut relative to the U.S. and other countries we benchmark with,” said Ces Tanchoco, an economist at Bank of the Philippine Islands in Manila. Still, “there’s a reversal in the oil price scenario already. They really have to look at how growth is emerging. I think they’ll be a little more cautious.”

The Philippines imports almost all of its oil.

Inflation will ease to 1 percent in the third quarter, damped by softer commodity prices, an improving exchange rate and an economy that grew the least in a decade in the first quarter, Tetangco said. That would be the slowest pace since April 1987.

Record Low

“The inflation forecast shows we will be within the target range in 2009 and 2010,” he said. “In each of these years, the forecast is below the mid-point of the target range. That would indicate that there is further room to maneuver.”

A further reduction in the key rate to 4.125, which would be a smaller cut than the last move, would bring the benchmark to the lowest level since central bank data started in 1990.

The central bank may lower its overnight borrowing rate by a quarter of a percentage point in July and then “see how the second quarter is looking,” Bank of the Philippine Islands’ Tanchoco said.

The central bank’s rate cuts will ease pressure on government bond yields that have been rising on concern the budget deficit will widen, Tetangco said payday loans.

The growing deficit will have to be seen in the context “that it’s temporary” and due to higher public spending to boost the economy, the governor said. “If the market is convinced that government is still on a fiscal consolidation path in the medium term, it may even be positive because it signals that government is ready to sustain economic growth.”

Public Spending

Public spending needs to complement monetary policy to stimulate the economy, and the government needs to ensure that money allocated for projects is “actually used,” Tetangco said.

The Philippines may cut its 2009 economic target and widen the budget-deficit estimate a third time this year as it increases public spending amid faltering revenue, Budget Secretary Rolando Andaya said June 1. The government is “committed” to boosting spending to support the $144 billion economy, Finance Secretary Gary Teves said the same day.

The government “has room” to increase borrowings from the overseas and domestic markets to fund its budget deficit, Tetangco said. The central bank’s easing stance will have to be calibrated, he added.

“At this point in time, the stance of policy is still towards easing but at the same time we remain cognizant of the fact we’ve been easing since the fourth quarter,” Tetangco said.

Inflation Risk

There are “upside risks” to inflation with oil prices rising again, he said. “We also need to look at the medium term because if there’s a need to change the stance of monetary policy at some point in the future, that change or shift should be done in a smooth adjustment.”

The local currency has strengthened 0.3 percent this year, lagging behind a 6.2 percent gain in Indonesia’s rupiah and a 1.7 percent increase in the Thai baht.

Sustained inflows from overseas Filipinos sending money home and returning appetite for the nation’s stocks and bonds will boost the nation’s balance of payments and support the peso, Tetangco said. International reserves will climb to $39.5 billion in May from $39.3 billion in April, he said.

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Former Bank of England policy maker David Blanchflower said there will be “big increases” in unemployment and Britain must brace itself for the shock.

Jobless claims may rise by an average of 100,000 a month “for the next year or so, and this will be a shock for people,” he said in an interview on BBC Radio 4 today. “People are going to have to get used to these very large numbers. I don’t think people have thought what it would mean to have a million people under 25 unemployed by September.”

He said it’s “early days” to gauge whether the central bank’s policies are helping to counter the recession. The Bank of England may decide this week to leave the benchmark interest rate at 0.5 percent and to continue its plan to buy bonds with newly printed money, economists say.

“There are risks to the downside,” he said faxless payday loan. “We’ve seen over-exuberance in lending and borrowing that’s been a problem. People have had to come back to reality.”

Blanchflower spoke the day after he stepped down from a three-year term on the Monetary Policy Committee, where he said as early as November 2007 that the U.K. may face a recession, before any of his colleagues.

Policy makers, due to meet on June 4, will refrain from expanding their money-printing plan from the current 125 billion pounds ($204 billion), according to all but two of 39 forecasts in a Bloomberg News survey of economists. A separate survey also showed they will leave the key interest rate unchanged.

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Some fear that the protectionist trend spreading across the globe could escalate into a growth killing global trade war.

The "buy American" provision that Congress slipped into the stimulus bill last month is just one of several protectionist measures governments are calling for during this unprecedented economic crunch.

The buy American provision requires contractors who get U.S. stimulus money to buy U.S.-made steel, iron and other manufactured goods.

Granted, the provision is considerably weaker than initially proposed. It exempts companies from 20 developed nations, such as Canada, Japan and members of the European Union. It also allows contractors to buy foreign materials if buying equivalent U.S. goods would increase project costs by at least 25%.

Still, it applies to China, Brazil, India and Russia, among others, and it is part of a growing herd of protectionist measures. Governments, spending billions to prop up their economies, are under voter pressure to devote national money to help national industries.

But whether nursing domestic industry is good, bad, or simply hasn’t gone far enough to matter is up for debate.

Arguing for more protectionism

Supporters in the United States say protecting domestic industries, no matter what other nations do in retaliation, is vital if we are to maintain our manufacturing capability and the high paying jobs that go with it.

"The manufacturing base here is totally inadequate to support first-world living standards," said Alan Tonelson, a research fellow at the U.S. Business and Industry Council, which represents small- and mid-size manufacturers.

A lack of manufacturing "is how we got here in the first place," said Tonelson, referring to the recession.

"The country isn’t going to import its way out, spend its way out or borrow its way out," he added."It’s got to produce its way out."

Although some U.S. trading partners reacted strongly against the original buy American rule - especially Canada and Brazil, the latter of which threatened a lawsuit - Tonelson sees little downside to more government support.

Many of our trading partners, he said, already have their own protectionist measures in place, whether they are explicit or hidden in the form of government bureaucracies that favor their own firms.

"[U.S. manufacturers] are already shut out of many procurement contracts," Tonelson said. "How much more harm could these provisions do?"

Although the buy American clause was watered down, Tonelson sees it as a springboard for further protections.

He named renewable energy as one sector deserving more government support. That support would go above and beyond the 30% tax break the stimulus plan offered to manufacturers of things like wind turbines and solar cells, and might require direct cash payments from the government.

"We’ve got this important precedent that’s been set," he said. "We’re going to try to beat this as far as we can."

Supporters of the free market

It’s precisely that line of thinking that’s got the free traders so worried.

Buy American, in its watered down form, isn’t seen as particularly restrictive. But there’s a fear it could grow. To free traders - including former Presidents George Bush and Bill Clinton - that means perpetuating inefficient industries at home, driving the cost of goods up and the quality down, and hampering a global economic recovery.

A host of other countries have enacted or are pushing for various forms of government protection for their domestic industries same day payday loans.

For the last year or so England’s Prime Minister Gordon Brown has touted a "British jobs for British workers" campaign as the country attempts its own form of stimulus - a campaign that drew fire for being illegal and maybe even racist.

China recently expanded a tax break to cover exporters, a move many saw as protectionist. Turkey, Indonesia, India and Russia are just a few of the countries that have raised tariffs or placed other restrictions on imports. All this comes on top of the auto bailout in the United States, Europe and maybe soon Japan.

"That’s already getting big, and we’re just at the start," said Jeffrey Schott, a senior fellow with the Peterson Institute for International Economics.

The steel industry is sometimes held up as an example of why protectionism doesn’t work. Facing stiff foreign competition in the early 1980s, the U.S. steel business fought for - and won - protective tariffs on imported products from their overseas competitors.

Yet many went out of business anyway, relying on protectionism instead of making the painful yet necessary reforms that may have kept them in business.

Schott certainly wants domestic manufacturing jobs; he just doesn’t think trade protections are the way to get them.

"Politicians are getting pressed, they are concerned about money going abroad, but that’s the short view," he said. "If you impose restrictions, you’re just going to raise the cost of goods being produced. The sustainability of the recovery will be put in jeopardy."

There is another danger, too. Firms that gain government protection may be forced by the government to cater more to the domestic market.

This is already happening in banking, according to Paul Donovan, global economist at the Swiss bank UBS.

Donovan said the British government is requiring banks it bailed out to restrict lending abroad and free up money for the home front.

"It’s making it more difficult to be truly global," said Donovan.

In a global economy, having banks looking inward is just as dangerous as governments looking inward.

"You had a series of national responses to a global crisis," he said, "We need consistent, global regulation, not inconsistent national regulation."

Nowhere near the 1930s

The most extreme example of protectionism gone awry is the Smoot-Hawley Act of 1930. In an attempt to protect domestic manufacturers, the law put a tariff on a broad range of imports coming into America. Many now say it played a key role in turning a recession into a depression as other nations retaliated with their own tariffs and global trade ground to a halt.

No one says we’re anywhere near that.

Some say even the measures we’ve seen so far, buy American among them, are merely politically motivated blips, installed to placate the voting public but then quietly eased by the trade negotiators.

"Obama’s trade policy makes clear that the administration will pursue open trade," said Sean West, a U.S. policy and trade strategist at Eurasia Group, a political consultancy. "Despite minor distortionary acts, fears of real U.S. protectionism leading to a trade war are overblown."  

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Stanford Financial Group’s Chief Financial Officer James Davis, accused with the company’s founder Allen Stanford of carrying out a $8 billion Ponzi scheme, has refused to cooperate in the investigation.

Davis asserted his Fifth-Amendment right, declining “to testify or provide an accounting … or produce any documents related to the matters set forth in the Commission’s complaint,” according to a filing with a federal court in Dallas on Friday.

The Securities and Exchange Commission has charged both Davis and Texas billionaire Stanford, former Baylor University roommates, with carrying out a Ponzi scheme in which early investors are paid with the money of new clients.

Davis’ lawyer was not immediately available to comment.

Davis and Stanford, who have not been charged with criminal wrongdoing, face allegations of misappropriating “billions of dollars of investor funds” and falsifying financial statements issued by Antigua-based Stanford International Bank, according to filings with the Dallas court on Friday instant payday loans.

Meanwhile on Friday, the company’s chief investment officer Laura Pendergest-Holt, walked free on bail after posting a $300,000 bond.

FBI agents had arrested her at Stanford’s Houston-based headquarters and accused her of obstructing a probe into what the SEC called “massive ongoing fraud” by Stanford and his companies.

Stanford’s assets — pegged at $50 billion by the company — are under the control of a court-appointed receiver, Dallas attorney Ralph Janvey. A Dallas judge is expected to rule Monday on whether to extend the temporary restraining order that gives Janvey control of the assets.

The receiver thus far has identified only about $90 million in actual assets, an FBI agent told a court hearing in Pendergest-Holt’s case.

(Reporting by Elinor Comlay; Editing by Bernard Orr)

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Instead of calling his office, Dr. Elie Azrak’s cardiology patients can hop online to request prescription refills, check portions of their medical records or send questions about their conditions.

Dr. Azrak and his fellow physicians at St. Louis Cardiology Consultants opened the Web portal to a segment of patients late last month, part of a systemwide rollout of electronic medical records across SSM Health Care.

Within a few years, the interventional cardiologist expects to be trading e-mails with patients and possibly holding real-time Web chats.

"If we can use technology to communicate with our patients and make it easier, why not?" asked Azrak, who is also vice president of the St. Louis Metropolitan Medical Society. "I’m sure this is coming."

In fact, it’s already here.

Technological advances rapidly are changing the way patients and doctors communicate. Video-conferencing with other physicians, remote patient monitoring and e-mail already are standard tools for many physicians across the country.

One of the newest innovations, a platform that allows insurers to provide patients with real-time access to their doctors via webcam, launched in Hawaii in mid-January.

Proponents say "e-care" will help broaden access to health care, create savings for employer-sponsored health plans and help fight a growing shortage of physicians nationwide.

Others welcome technology but worry about reimbursement for e-care and the effectiveness of digital diagnoses.

"I don’t see tele-health as ever replacing a personal relationship and direct one-on-one contact with your physician," said Dr. Michael Wulfers, president of the Missouri Academy of Family Physicians. "I just don’t see how you’re going to be able to ever accurately do a physical exam over the Internet."

CONSULTATIONS ONLINE

Dr. Roy Schoenberg is working on that.

The Boston physician’s health tech company, American Well, has developed a secure communication platform that connects doctors and patients for real-time consultations.

American Well’s first customer, Hawaii’s Blue-Cross-Blue Shield licensee, took the system live on Jan. 15. Consumers access the service by logging on through the insurer’s website.

Patients can search for specific physicians or seek out specialists for 10-minute consultations through webcams or text chats. The sessions can be extended for a fee.

"Online care is a technology that allows us to extend the reach of the existing health care system so that it is much more available and in a way much more financially reachable," said Schoenberg, the company’s president and chief executive. "It has tremendous promise."

The company did not release preliminary utilization figures from Hawaii.

Doctors can search through a patient’s electronic medical records and write prescriptions. Health plan members pay $10 to access the platform. The uninsured or those on other plans pay $45 per session.

American Well receives transaction and licensing fees through its deal with the Hawaii Medical Service Association guaranteed online personal loans. Only physicians licensed in Hawaii can provide care, and they’re covered under a blanket medical malpractice policy from AIG. Doctors are reimbursed automatically and electronically.

Schoenberg declined to discuss the company’s plans to expand outside of Hawaii. However, he said a number of health plans across the country are expected to implement the platform this year.

Of course, American Well doesn’t bill itself as a cure-all. Patients experiencing chest pains or flare-ups of complex conditions should head straight to an emergency room, Schoenberg said.

Some physicians, including Wulfers, have raised concern about the potential hazards. Doctors can’t feel a patient’s abdomen or conduct a cavity exam through the screen.

"It seems to be just another (idea) along with urgent care or minute clinics, which will in the end lead to more fragmentation of care … and lower quality of health care," said Wulfers, a longtime family physician in Cape Girardeau. "It seems to me like it’s a walk-in clinic over the Internet."

Still, many patients couldn’t take advantage of "virtual house calls" if this service was suddenly available everywhere.

Only about 11 percent of U.S. Internet users have webcams connected to home computers, according to a recent study conducted for the California Healthcare Foundation. Meanwhile, about 65 percent of adult Americans have broadband or dial-up service, providing access to e-mail and the Web, according to a recent study by the Pew Internet & American Life Project.

Despite skepticism of the virtual house call, Wulfers e-mails some patients, adding that "in the future, I could do a lot of things by e-mail."

A survey by the California Healthcare Foundation also found increased use of e-mail between physicians and patients in the Golden State: 13 percent of Californians using the Internet reported getting medical advice via e-mail in 2007, up from 8 percent in 2004.

Starting March 1, Mercy Medical Group in St. Louis will test an online pilot program that gives secure Web access to a select group of patients. The patients will be able see lab results, get information about X-rays and schedule appointments through an interactive calendar.

Patients can take a picture of a suspicious rash and send the image in an e-mail. Doctors can respond to an e-mail question about high cholesterol with links to health-related websites.

Mercy plans to offer the Web portal to all patients by January, said Dr. Thomas H. Hale, president and chief executive.

Excited about the possibilities of the "electronic stethoscope," as he called the Internet, Hale also sounded a note of caution.

"What we don’t want to do is to take that opportunity and say, ‘Everything we’ve done in the past we need to throw away,’" Hale said.

"It has to be a clinical tool in the (arsenal) of physicians and caregivers."

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European leaders meeting in Berlin on Sunday backed oversight of the world’s financial markets and products, including hedge funds, and urged that sanctions be drawn up to punish tax havens.

A copy of the “chair’s summary” from a summit hosted by Chancellor Angela Merkel and seen by Reuters describes the situation in financial markets as “fraught” and says structural reforms and a focus on public spending are needed to emerge stronger from the global crisis.

“We have today underscored once again our conviction that all financial markets, products and participants must be subject to appropriate oversight or regulation, without exception and regardless of their country of domicile,” the statement says.

“This is especially true for those private pools of capital, including hedge funds, that may present a systemic risk.”

The statement also urges definitive actions against tax havens and uncooperative jurisdictions.

“According to objective criteria to be based on ongoing work in relevant international institutions, a list of uncooperative jurisdictions and a toolbox of sanctions must be devised as soon as possible,” the statement says.

Merkel invited the leaders of Britain, France, Italy, Spain, the Netherlands, Czech Republic and Luxembourg, as well as the European Commission president, finance ministers and European central bankers to prepare a common stance ahead of a full G20 meeting in London on April 2.

DISTORTION

Since a first G20 summit on reforming the global financial architecture was held in Washington late last year, recessions in Europe and the United States have deepened, forcing governments to push through massive stimulus packages 500 payday loans.

The Berlin meeting takes place after a week of accusations of protectionism between European nations, with some of France’s partners objecting to its plans to offer 6 billion euros ($7.6 billion) in state loans to domestic carmakers.

In the final statement, the leaders commit to implementing stimulus measures and financial rescue plans in a manner that “limits distortions to competition to an absolute minimum.”

New tensions within the single currency bloc and the financial woes of European Union members to the east have cast a cloud over the meeting in the German capital.

Ahead of the gathering, the IMF threw its weight behind the idea of a common European bond to alleviate pressure on euro states such as Ireland and Greece that are being forced to pay hefty premiums over stronger bloc members to finance their debt.

In eastern Europe, the currencies of countries such as Poland, the Czech Republic and Hungary have come under severe pressure, hitting millions across the region who borrowed in foreign currencies such as the euro.

Germany, Europe’s benchmark issuer of debt, has rejected the idea of a euro-zone bond.

(Additional reporting by Paul Carrel, Matt Falloon, Francesca Piscioneri, Dave Graham, Yann Le Guernigou; Writing by Noah Barkin)

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Economists who support legislation to stimulate growth say the version passed in the House of Representatives would create at least half a million more jobs than the bill the Senate votes on today.

The key difference: The Senate version provides less money than the House measure for public works and aid to state and local governments. While the two measures have similar price tags, the Senate’s includes bigger tax cuts and adds tax breaks for auto and home buyers, part of a compromise to win some Republican votes.

“The House bill will create more jobs and a stronger economy than the Senate bill,” said Mark Zandi, chief economist at Moody’s Economy.com, who was a campaign adviser to Republican presidential candidate John McCain. Zandi estimates that the $838 billion Senate package would create about 625,000 fewer jobs than the $819 billion House version over the next two years.

The U.S. economy has lost 3.5 million jobs since the beginning of the recession in December 2007. President Barack Obama has pledged to save or create as many as 4 million jobs over two years through stimulus and other economic measures.

The Senate plan was hammered out last week between Democrats and moderate Republicans. While providing more generous tax breaks than the House version, the Senate agreement pared $40 billion targeted at helping state and city governments avoid layoffs, $19.5 billion for school construction, $7 billion for health care and about $1 billion for early education programs.

Stimulus Blunted

Excising or reducing funds to those programs significantly blunts the stimulative effects of the Senate package, economists say.

“The things that have been cut in the Senate compromise are some of the best job creating provisions in the House bill,” said Ross Eisenbrey, vice president of the Economic Policy Institute, a Washington-based research organization affiliated with organized labor. “It’s clear that the House bill is better.”

Not much of the spending trimmed from the Senate plan is likely to be restored in the final bill Congress sends to the president, said Pete Davis, president of Davis Capital Investment Ideas in Washington, which provides analysis of Congress to investors. He said moderate Republicans, including Senator Susan Collins of Maine, won’t vote for a final bill much larger than the one negotiated in the Senate.

“I don’t think Senator Collins can swallow another $5 or $10 billion, and they’re going to need her vote,” Davis said.

Tax Cuts

In addition, the Senate agreement adds or boosts several tax cuts, including a $15,000 tax break for homebuyers that’s expected to cost $35.5 billion and a credit for new car buyers, at a price of $11 billion no faxing payday loan.

“Those measures have some stimulative value, but nothing like the effect of a construction project or help for those most affected by the crisis,” said Will Straw, associate director for economic growth at the Center for American Progress.

The Senate also reserved $70 billion in its bill to prevent additional taxpayers from having to pay the Alternative Minimum Tax. Because the benefit will go mostly to upper income Americans who are less likely to spend it, the measure has very little value in boosting sagging consumer demand.

The Tax Policy Center in Washington gives it a D-minus grade for stimulative effect. It is “neither timely nor targeted,” and “makes no sense as economic stimulus,” according to a recent report from the TPC, a joint project of the Urban Institute and the Brookings Institution.

Apples-to-Apples

Not counting the AMT fix, which Congress probably would have passed this year anyway, the price tag of the Senate package is closer to $750 billion, Zandi said: “That’s the apples-to-apples comparison.”

Viewed that way, “the House bill is just bigger, and that matters,” said Dean Baker, co-director of the Center for Economic and Policy Research in Washington.

Not every economist agrees. Harvard University economics professor Martin Feldstein, who was a top economic adviser to former President Ronald Reagan, said both bills simply “add a tremendous amount to the national debt and add less to GDP spending.”

“We’re just not getting the bang in terms of increased economic activity,” Feldstein, a member of Obama’s Economic Recovery Advisory Board, said yesterday in a Bloomberg Television interview. Feldstein didn’t discuss the job creation effect of the legislation in the interview.

While Feldstein says a stimulus package is still necessary, other economists reject the idea altogether.

“There’s basically no historical evidence since World War II that stimulus bills help,” said William Niskanen, chairman of the free-market Cato Institution in Washington. His organization ran an advertisement in national newspapers today, signed by 243 academic economists, registering their dissent.

Still, the focus of the Washington debate remains on the composition of a package that is almost certain to be enacted.

“Economies to some extent are self healing, but often need government assistance. This is the time for that,” said Allen Sinai, chief global economist at Decision Economics Inc. in New York. “To do nothing is a big mistake.”

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