Review & Outlook

The Senate Referendum

The Reid-Obama Democrats face an election reckoning.

Oct. 28, 2014 7:12 p.m. ET

             Senate Majority Leader Harry Reid with Minnesota Senator Al Franken in September. Bloomberg 

With Election Day approaching, so is the democratic day of reckoning for the Democratic Senate class of 2008. Those are the Senators who gave President Obama and Nancy Pelosi the accidental 60-vote supermajority they needed to pass the burst of liberal legislation in 2009-2010 that had been pent-up for a generation—especially ObamaCare.

Now these Senators are all again on the ballot, most of them pretending in one way or another that they have had little to do with that agenda, or want to reform it, or are really the solution to gridlock.

The truth is that they are the main Washington problem. As President Obama said last week, they “are all folks who vote with me; they have supported my agenda.”

They have also been handmaidens to Harry Reid , the Majority Leader who has devoted the last four years to protecting Mr. Obama while turning the Senate into the world’s least deliberative body. Next Tuesday’s vote is above all a referendum on whether the Senate will spend two more years in this Obama-Reid dead zone.

Start with the unlikely way some of them won election in 2008. Alaska Democrat Mark Begich barely beat Ted Stevens after Justice Department lawyers withheld exculpatory evidence in a corruption case against him. A jury found Stevens guilty eight days before the election. Mr. Begich won by 47.8% to 46.5% on false pretenses and deserves defeat now on those grounds alone.

But there’s also his record, or lack of one, including the startling fact that he has never been allowed a roll-call vote on an amendment he has offered. Not once in six years. This is because Mr. Reid has deliberately blocked the normal flow of Senate debate so Democrats won’t have a voting record that folks at home might notice.

Or take Minnesota’s Al Franken, who trailed Republican Norm Coleman on Election Day but strong-armed a legal challenge to win the recount by 312 votes. He then became the 60th vote for ObamaCare, and now he is running for re-election by claiming he wants to repeal the law’s medical devices tax that is unpopular in Minnesota. Too bad Mr. Reid has blocked a binding vote on repeal so Mr. Franken and other Democrats can claim to favor repeal without having to do it.

Then there’s Jeanne Shaheen, the New Hampshire Democrat who won in 2008 by opposing the war in Iraq and embracing all things Obama. She too was the decisive vote for ObamaCare. Now she too claims to want to fix it, not that she has succeeded in getting a vote to do so.

Amid the health-care rollout in February, Ms. Shaheen said “I think we need to fix the things that are not working, and that’s what I am committed to.” But by Oct. 22 she had backtracked to proposing merely “an independent CEO and advisory committee that would oversee the health-care website, because we saw some issues with the rollout of the website.” Translation: If she wins, she’ll do whatever Mr. Obama asks.

We could continue down the list: Kay Hagan of North Carolina, Mark Pryor of Arkansas, Mary Landrieu of Louisiana, Mark Udall of Colorado. They are all Mr. Obama’s children and Mr. Reid’s lieutenants.

In the media’s telling, gridlock in Washington is due to tea party pressure on House Republicans to resist Mr. Obama’s agenda. There is some of that, reflecting different views of government. But at least the House debates and votes in plain sight. Mr. Reid won’t allow the normal give and take of democratic voting and accountability that is the reason to have a legislature.

The Reid shutdown runs even to the core legislative function of funding the government. The House has passed seven of 12 annual appropriations bills, most with big bipartisan majorities. Chairman Barbara Mikulski has passed eight of the 12 out of her Senate Appropriations Committee, and Republicans wanted to debate. Mr. Reid blocked a floor vote on every one.

The GOP has wanted to put Democrats on record on Mr. Obama’s regulatory overreach, such as targeting coal for extinction, or on the Administration’s refusal to fast-track approval for natural gas exports that might help Europe become less dependent on Vladimir Putin . No votes allowed.

Wyoming Republican John Barrasso kept a running tally of Mr. Reid’s amendment blockade through July. In the previous 12 months Senators introduced 1,952 amendments—1,105 from Republicans and 847 from Democrats. Mr. Reid blocked all but 19.

Legislation? Mr. Reid has blocked at least 10 bills sent to him by the House that passed with notable bipartisan support. Some 35 House Democrats voted with Republicans to delay ObamaCare’s employer mandate; 46 Democrats voted to expedite the approval of liquefied natural gas exports; 130 Democrats voted for patent-reform legislation; 158 Democrats voted to expand access to charter schools; and 183 Democrats voted (in a bill that passed 406-1) to exempt certain veterans from the ObamaCare employer mandate. Mr. Reid’s response: No debate, no vote.


As the election nears, many voters are asking if a Republican Senate would make a difference. The Beltway media line is that it wouldn’t, which ignores that Mr. Reid’s tactics are an historic aberration. How could the Senate possibly be any worse? Mr. Obama would retain his veto against legislation passed by a Republican House and Senate, but at least the legislators would have to vote and be accountable. At least Congress would again resemble a democracy.

The Era of Disorder

Richard N. Haass

OCT 27, 2014

Country road storm

NEW YORK – Historical eras are difficult to recognize before they end. The Renaissance became the Renaissance only in retrospect; the same can be said for the Dark Ages that preceded it and any number of other eras. The reason is simple: It is impossible to know if some promising or troubling development stands alone or represents the start of a lasting trend.
Nonetheless, I would argue that we are witnessing the end of one era of world history and the dawn of another. It has been 25 years since the Berlin Wall was dismantled, bringing the 40-year Cold War to an end. What followed was an era of American preeminence, increased prosperity for many, the emergence of a large number of relatively open societies and political systems, and widespread peace, including considerable cooperation among the major powers.

Now that era, too, has ended, ushering in a far less orderly and peaceful epoch.
The Middle East is in the early phases of a modern-day Thirty Years’ War, in which political and religious loyalties are destined to fuel prolonged and sometimes savage conflicts within and across national borders. With its behavior in Ukraine and elsewhere, Russia has challenged what had been a mostly stable European order founded on the legal principle that territory may not be acquired by military force.
Asia, for its part, has remained mostly at peace. But it is a precarious peace, one that could come undone at any moment, owing to a large number of unresolved territorial claims, rising nationalism, and a paucity of bilateral or regional diplomatic arrangements robust enough to prevent or moderate confrontations. Meanwhile, global efforts to slow climate change, promote trade, set new rules for the digital age, and prevent or contain outbreaks of infectious diseases are inadequate.
Some of the reasons why this is happening reflect fundamental changes in the world, including the diffusion of power to an increasing number of states and non-state actors, ranging from terrorist organizations and militias to corporations and NGOs. Managing greenhouse-gas emissions and global flows of drugs, arms, terrorists, and pathogens would be no easy task under the best of circumstances; it is made more difficult by a lack of consensus on what to do and a lack of will to act even when agreement exists.
Other reasons for growing global disorder have to do with the United States. The 2003 Iraq War exacerbated Sunni-Shia tensions and removed a critical barrier to Iranian ambitions. More recently, the US called for regime change in Syria, but then did little to bring it about, even after government forces, ignoring American warnings, repeatedly used chemical weapons.

What emerged in the region was a vacuum filled by the Islamic State. In Asia, the US articulated a new policy of heightened involvement (the so-called strategic “pivot” to the region), but then did little to make it a reality.
The consequence of these and other episodes has been the emergence of widespread doubt about US credibility and reliability. As a result, a growing number of governments and others have begun to act independently.


Riksbank cuts rates to zero and mulls currency war to fight deflation

Sweden's central bank is having to pick its poison, choosing between deflation or an asset bubble

By Ambrose Evans-Pritchard, International Business Editor

7:47PM GMT 28 Oct 2014

Sweden’s Riksbank has torn up the rulebook of global central banking, cutting interest rates to zero even though the economy is in the grip of a credit boom.
The extraordinary step is intended to stave off deflation but it comes at a time when the Swedish economy is growing at almost 2pc and property prices are rising briskly. The bank has abandoned earlier efforts to curb asset bubbles by “leaning against the wind”.
The Riksbank cut the deposit rate to -0.75pc in what looks like a preparatory move to drive down the krona. Governor Stefan Ingves said the bank has a toolkit of extreme measures in reserve, including use of the exchange rate. The comment is the first hint that Sweden may follow Switzerland and the Czech Republic in imposing a currency floor through unlimited purchases of foreign bonds.
Lars Svensson, the former deputy governor and a world expert on deflation, said the Riksbank is still behind the curve may eventually have to launch quantitative easing. The bank has been caught off guard by the precipitous fall in inflation, now expected to average -0.2pc this year. The worry is that Sweden no longer has a safe margin against a 1930s deflation trap if hit by an external shock.
The Riksbank faces an acute dilemma, forced to pick between the competing poisons of deflation or an asset boom. It is a variant of the Morton's Fork faced by a growing number of central banks around the world.

“The fact that the repo rate is now being lowered further will increase the risks associated with high household indebtedness. It is therefore even more urgent now that these risks are managed. Reducing the risks requires measures aimed directly at household demand for credit,” it said.
The ratio of household debt to disposable income has jumped from 120pc to 175pc over the past 12 years. It is expected to reach 185pc by 2017. Stockholm house prices have risen 8pc over the past year. “This trend entails a risk that the economy will develop in a way that is not sustainable in the long run,” it said.
The Riksbank has in effect washed its hands of the credit boom, leaving it to government regulators to control household debt with mortgage curbs, liquidity limits for banks and other "macro-prudential" tools as best they can.
“What the Riksbank is doing is something that a lot of central banks around the world are going to have to do: once interest rates approach zero, they are forced to think about far more radical instruments,” said Lars Christensen, from Danske Bank.
The Riksbank - arguably the world’s oldest central bank, with a tradition of bold monetary experiments – carried out a dramatic volte-face in July when it slashed rates and gave up trying to restrain asset prices. Governor Ingves was outvoted in what amounted to a policy mutiny.
The shift over recent months is a triumph for Mr Svensson, who resigned last year in a stormy dispute. He said the bank made a mistake by tightening before the economy had fully recovered, and then compounding the error by allowing itself to be distracted by the noise of asset bubbles. “Low inflation has actually increased the households’ real debt burden. Riksbank policy has been counterproductive,” he said.
“A lower than expected inflation rate increases the real debt burden. This may in turn contribute to the building up of financial risks and make it more difficult for households, firms, governments and countries to manage their balance sheets. As the experience of Japan since the 1990s has shown, such a spiral may be difficult to break out of,” he added.
Nobel Laureate Paul Krugman has compared the Riksbank’s premature tightening with the error made by the US Federal Reserve in 1937. The ECB made an even more serious mistake by raising rates twice in 2011, setting off the second leg of the EMU debt crisis.
The Riksbank is now fully aligned with the Yellen Fed in Washington, which argues that raising rates to stop asset bubbles merely destroys jobs for little useful purpose. Both are pitted against the Bank for International Settlements. The BIS says radical monetary stimulus may help invidual countries but only by displacing the problem onto others, leading to a “Pareto sob-optimal” for the world as a whole. It warns that speculative excess is reaching pre-Lehman levels, and calls on global central banks to take pre-emptive action before the bubbles becomes unmanageable.
What is far from clear is whether the Riksbank can get away with such policies. It may run into harsh criticism from rest of the world if it is seen to engage in "beggar-thy-neighbour" stealth devaluation at a time when the Swedish economy is expected to grow 2.7pc next year, and has a current account surplus above 7pc of GDP.
The institution enjoys a prestige beyond its size, a legacy of the great Swedish economists of the early 20th century: Knut Wicksell, Gustav Cassel, Bertil Ohlin and Gunnar Myrdal. It is watched closely as a pioneer in central bank theory.
The bank famously began “price targeting” in the early 1930s after breaking free from the Gold Standard. The revolutionary policy was the precursor of today’s inflation targeting. It enabled Sweden to escape deflation early in the Great Depression, suffering far less damage than countries that stuck doggedly to failed orthodoxies.


Avoiding the Global Slowdown Blues

Despite jitters about where the U.S. is headed, there are specific steps we can take to ensure even stronger growth.

By Michael J. Boskin

Oct. 27, 2014 7:01 p.m. ET        


It has been five years since the end of the Great Recession, yet President Obama and members of his administration still speak of it as if it were yesterday and play down the anemic recovery.

Despite nearly a trillion in fiscal “stimulus,” record deficits, and the Federal Reserve’s near-zero interest rates and unprecedented asset purchases, America’s economic recovery hasn’t had three consecutive quarters of 3% growth, let alone the 4%-5% average following other deep recessions.

U.S. employment and productivity growth have been painfully slow since 2008. Some argue we are in a period of secular stagnation, an era of permanent low growth. Labor-force growth is slowing due to the retirement of the baby boomers, but also because expanded government benefits make it less costly to leave the labor force.

Resolving these problems will be difficult. But at many times in U.S. history a similar list of allegedly insurmountable problems could be compiled. In the 1960s, automation was going to lead to huge permanent structural unemployment. In the 1970s and early 1980s, the U.S. suffered a ruinous combination of high inflation and recession. In the 1980s and early 1990s, the threat was competition from Japan. Nonetheless, America’s dynamic market economy managed not only to weather each of these storms, but to adapt and thrive. There’s no reason the same can’t happen this time.

Among the world’s 10 largest economies, only the U.S. and the U.K. have recently posted improving economic growth and employment trends. Five—Japan, Germany, Italy, France and Brazil—contracted at last report. Three others—Russia, China and India—have slowed substantially. All of these factors, plus weak retail sales in the U.S., recently sent the Dow reeling and Europe’s markets close to bear territory before rebounding. 

Getty Images 

But this doesn’t mean we’re headed for another downturn, as implied by the adage that the stock market called nine of the last five recessions. The Fed ending its quantitative-easing program and preparing to raise interest rates next year has caused jitters on Wall Street and a rise in the dollar. That will lower earnings of U.S. multinationals and decrease exports and GDP by about a quarter-point, twice the gain from lower oil prices. But the higher dollar also signals more confidence in U.S. growth and helps contain any currently unforeseen inflation pressure.
Despite the slowdown in global growth, the U.S. has many strengths: the best higher-education system in the world; a highly productive workforce; the deepest, most liquid capital markets; the most dynamic and innovative companies, as witnessed in the “fracking” revolution and booming U.S. oil and gas industry; and, despite recent demagoguery, a diverse population supportive of earned success. But these advantages are not immutable. And, as has happened with our K-12 education, anticompetitive forces and poor policy can throw sand in the gears of these great contributors to American success.
President John F. Kennedy, whose economic strategy emphasized tax cuts and trade liberalization, opined that “A rising tide lifts all boats.” That was overstated. But it lifts by far the most boats and leaves by far the fewest stranded or sunk. That is why President Obama promoting redistribution at the expense of growth is a tragic mistake, for the nation and especially for those hoping to climb the economic ladder.
Our highest priority is a strategy that removes obstacles to growth and re-incentivizes the supply side of the economy. The U.S. must gradually phase in stronger controls on budgets, especially entitlement reform, and lower tax rates on a broader base of activity and people. Europe must raise retirement ages, lower taxes and improve labor-market flexibility.
A new direction following the midterm elections may be possible. Examples of pro-growth policy reforms enacted by divided government include President Ronald Reagan ’s 1986 tax reform; President George H.W. Bush ’s fast track to Nafta and the Uruguay Round of multilateral trade negotiations; and President Bill Clinton ’s balanced budgets and welfare reform.
Mr. Obama would be wise to work with Republicans in three areas with low-hanging bipartisan fruit: 1) lower the anticompetitive U.S. corporate tax rate; 2) liberalize trade with the Trans-Atlantic Trade and Investment Partnership, Trans-Pacific Partnership and the Doha Round of multilateral trade; 3) promote North American energy by approving the Keystone XL Pipeline, more LNG export terminals, and more oil-exploration permits in the Gulf of Mexico.
Even these small steps would start to rebuild confidence that growth is a priority. If Mr. Obama won’t do so, and Republicans control the House and Senate, they should send him such bills to sign or veto, a strategy that worked with President Clinton on welfare reform.
Major tax and entitlement reforms may have to wait until the 2016 presidential election. A period of sustained prosperity requires a firmer policy foundation based on proven principles: the lowest possible tax rates on the broadest base, target-effective and cost-conscious spending; incentive-compatible regulation; free, rules-based trade; and predictable, rules-based monetary policy.
Possible? A generation ago, amid fears of endless “stagflation” and dire forecasts of “American decline,” President Reagan did precisely that.

Mr. Boskin, a professor of economics at Stanford University and senior fellow at the Hoover Institution, was chairman of the Council of Economic Advisers under President George H.W. Bush.

sábado, noviembre 01, 2014



Belindia Has Spoken

Andrés Velasco

OCT 29, 2014

Dilma Rousseff solo

SANTIAGO – Forty years ago, the Brazilian economist Edmar Bacha named his country Belindia: a combination of prosperous and modern Belgium and poor and backward India. In last Sunday’s presidential election, according to many observers, the Indian part of Brazil voted for the incumbent, President Dilma Rousseff, and the Belgian part voted for the social democrat Aécio Neves. India is larger, so Rousseff won.
This is fast becoming the standard account of Brazil’s election, the most acrimonious and hotly contested in recent memory. And it is easy to see why. In Brazil’s underdeveloped Nordeste, Dilma (in Brazil, politicians, like footballers, go by their first name) swept the vote.
In the relatively rich South, which accounts for 70% of Brazil’s economic output, Aécio won handily. Similar divisions appear when voters are classified according to dependence on government handouts (high in the Northeast) or years of schooling (high in the South).
Yet there is more to this election than this broad-brush picture suggests. In 1974, when Bacha coined his term, it went without saying that the prosperous and modern Brazil was just a tiny sliver of the total. In 2014, Neves, the candidate of “Belgian” Brazil, won more than 48% of the vote.
That reveals how much the country has changed in the last four decades, and how large and influential its middle class has become. It was precisely that middle class, fed up with allegations of corruption and a sluggish economy, that turned against the ruling Workers’ Party (PT) and voted for change.
But it is also striking that despite the weak economy – growth will barely average 1.5% during Rousseff’s first term, and the economy is now in a technical recession, having contracted in two consecutive quarters – Dilma and the PT managed to retain the support of Brazil’s tens of millions of poor and excluded citizens. This is partly because the recession has not made a big dent in employment, which means that many households have yet to feel the impact.
Dilma was also helped by the commodity super-cycle, which filled Brazil’s coffers and made it possible to run ambitious cash-transfer programs that helped pull countless families out of poverty.
These policies were actually launched by former President Fernando Henrique Cardoso of Neves’s Party of Brazilian Social Democracy (PSDB), but are associated in the popular imagination with Dilma’s political mentor and predecessor, Luiz Inácio Lula da Silva, also of the PT. By claiming (with no evidence) that Aécio would cut these popular programs, Dilma dealt the PSDB a sharp electoral blow.
Using commodity revenues to obtain political support is not a strategy unique to Brazil. In Argentina, Bolivia, Ecuador, and Venezuela, populists have tried the same trick. So have the vastly different governments of the conservative Sebastián Piñera and the socialist Michelle Bachelet in Chile. And the similarities do not end there.
Now that the commodity boom is ending, all of these countries face the challenge of building a new economic engine to sustain growth and create jobs. Without the commodity windfall, they must develop new sectors that can produce new goods and services, requiring new sets of skills and new types of infrastructure.
This is a tall order, especially for Brazil. The structural deficiencies of its economy have long been understood, but little has been done to correct them. Brazil has South America’s biggest government (with a tax take exceeding one-third of GDP), yet the authorities save and invest too little, which creates both micro- and macroeconomic problems.

ECB: 25 banks not strong enough to withstand another crisis

Twenty-five of 130 European banks have failed the ECB and EBA's financial healthcheck - but all British banks pass

By , , James Quinn and Ben Martin
9:30AM GMT 27 Oct 2014.

This is the first time the ECB is running the tests Photo: REUTERS
A total of 25 lenders failed the European Central Bank's (ECB's) "stress tests", which were billed by Brussels as "most intense scrutiny that banks have ever undergone in Europe". The scenarios simulated how banks would fare if Europe collapsed back into recession, unemployment rose and house prices collapsed.
The ECB identified a €25bn (£19.7bn) black hole in the balance sheets of these lenders.

However, as they covered the banks' positions at the end of last year, and many had taken subsequent steps to shore up their capital buffers, the central bank said just 13 banks would need to raise an additional €9.5bn in capital. This is well below the €30 to €50bn shortfall expected by some analysts.
Vitor Constancio, vice president of the ECB said the tests would help to unlock more lending in Europe and boost economic growth. "This unprecedented in-depth review of the largest banks' positions will boost public confidence in the banking sector," he said.
The banks still facing a shortfall now have two weeks to outline to the ECB and European Banking Authority (EBA) - which also supervised the stress tests - how they will find the extra capital. Italian lender Banca Monte dei Paschi di Siena, the world's oldest bank, faces the biggest shortfall.  
Regulators said it must find €2.1bn of extra capital despite already raising a similar amount this year. Investors took fright at the news on Monday and sent shares in the Italian lender plunging more than 17pc before the stock was suspended from trading.
The Italian market regulator, Consob, also banned short-selling of the bank's shares.
Meanwhile, fellow Italian lenders Banca Carige and Banca Popolare di Milano, which also failed the stress tests, both fell heavily in early trade.
Britain's four biggest banks all passed the EBA's latest round of stress tests, which requires banks to have common equity tier one ratios of more than 5.5pc even under the most “adverse” scenario. 
However, Lloyds was left with the weakest capital position. Under the adverse scenario, the EBA said its capital base would be eroded to 6.2pc, from a starting point of 10.2pc. RBS was the next weakest, with capital of 6.7pc under stressed conditions, down from 8.6pc. HSBC was judged to be the most resilient of the four banks.
A Lloyds spokesman welcomed the results of the test. "This strong position reflects the steps taken by the group's management over the last three years to return its balance sheet to a robust position, and we will continue to use this strong basis to help Britain prosper," they said.
Nevertheless, shares in the bank were among the heaviest fallers in the FTSE 100 in early trade on Monday, sliding as much as 2.7pc. RBS stock lost as much as 2.2pc.
Several banks that failed the test said they had already raised enough capital to meet any shortfall. Portuguese lender Banco Comercial Portugues said it had raised €2.24bn of Tier 1 eligible capital by the end of September, enough to cover a €1.14b shortfall based on last year’s accounts.
The ECB also identified €136bn in new troubled assets, known as non-performing loans, on Sunday, mainly stemming from the property and corporate sector.
Andrea Leadsom, economic secretary to the Treasury, welcomed the results. "A key part of our long term economic plan is to strengthen UK banks so that they can support the economy, help businesses, and serve customers," she said. "I’m pleased to see that the UK banks have passed the EBA stress tests. This shows our robust reforms to build a more resilient banking sector are working."

Colin Brereton, economic crisis response lead partner at accouning giant PwC, said: "Although this should restore some confidence and stability to the market, we are still far from a solution to the banking crisis and the challenges facing the banking sector.
"The Comprehensive Assessment was only a one-off test of solvency, not of ongoing viability. The test of long-term viability is whether banks can generate sufficient returns to cover all their costs, including capital costs."

All four big UK banks plus another four banks and building societies are facing much sterner stress tests from the Bank of England. The Bank will release the results of its own tests in December. 
The EBA's previous stress test in 2011 was criticised for being too soft and not taking into account the possibility of a sovereign default.

- IN FULL: the 25 banks to fail the ECB test
Monte dei Paschi di Siena
National Bank of Greece
Banca Carige
Cooperative Central Bank
Banco Comercial Português
Bank of Cyprus
Oesterreichischer Volksbanken-Verbund
permanent tsb
Veneto Banca
Banco Popolare
Banca Popolare di Milano
Banca Popolare di Vicenza
Piraeus Bank
Credito Valtellinese
Banca Popolare di Sondrio
Hellenic Bank
Münchener Hypothekenbank
AXA Bank Europe
C.R.H. - Caisse de Refinancement de l’Habitat
Banca Popolare dell'Emilia Romagna
Nova Ljubljanska banka
Nova Kreditna Banka Maribor

Health Journal

In Men’s Fight Against Aging, How Much Risk to Take?

The FDA is weighing whether testosterone-replacement therapy is safe

By Melinda Beck

Oct. 27, 2014 4:51 p.m. ET

Aging brings less energy, strength and sex drive for most men. The Food and Drug Administration is trying to decide whether taking hormone supplements, which promise to battle that natural decline, is safe.

More than 2.3 million American men used testosterone gels, patches, pellets and injections last year—twice the number as in 2008. Some experts say these men may be increasing their chances of having a heart attack.

An FDA advisory panel in September urged the agency to require testosterone-product manufacturers to study if there are cardiovascular risks. The panel also recommended new labeling to say testosterone drugs, which were first approved in the 1950s to treat severe hormonal deficiencies, haven’t been shown to be safe and effective for boosting age-related drops in testosterone. Only about half of men filling testosterone prescriptions have been formally diagnosed as deficient in the hormone, according to an FDA review.

It isn’t clear what the FDA will do. But whatever the agency decides, doctors will still be able to prescribe the drugs “off-label.” And for many men, the benefits of boosting testosterone levels, a condition often referred to as low-T, are worth the risk.

Touch of Gray

Lower testosterone comes with age. Here are some symptoms:
  • Decreased energy
  • Reduced sex drive
  • Increased fat
  • Decreased muscle mass
Some possible risks of testosterone-replacement therapy:
  • Heart attack
  • Stroke
  • Coronary artery disease
  • Blood clots
“Men all want to feel younger and more virile, and they somehow have come to believe that low-T medication is the fountain of youth. But we don’t know whether it’s safe,” says Steven Nissen, chairman of cardiovascular medicine at the Cleveland Clinic.

Testosterone is a male steroid hormone that rises sharply when boys hit puberty. It affects the entire body—voices deepen, shoulders broaden, sperm production begins, and height, strength and sex drive all increase. Levels peak in the early 30s and decline gradually, about 1% a year, as men age.

(Estrogen levels drop off much more sharply in women at menopause. So does the small amount of testosterone women make in their ovaries that affects energy, mood and sex drive.)

Besides lower energy, declines in testosterone also are associated with more fat, depression and memory problems. Such changes occur at different rates in different men. They also can be symptoms of thyroid problems, obesity, alcoholism and other conditions.

“Aging is associated with a lot of other conditions—poor eyesight, poor hearing, bad joints, bad blood vessels, cancer—yet we treat them because it improves quality of life and longevity. Why not low testosterone?” says Abraham Morgentaler, a Harvard Medical School urologist and director of a men’s health clinic in Boston.
Men all want to feel younger and more virile, and they somehow have come to believe that low-T medication is the fountain of youth. But we don’t know whether it’s safe.
—Steven Nissen, chairman of cardiovascular medicine at the Cleveland Clinic
There is little agreement on what level of testosterone constitutes “low” in older men. Some doctors say a total testosterone level of below 325 nanograms per deciliter, at any age, indicates hypogonadism, the official term for low-T.

Some doctors apparently aren’t checking patients’ testosterone levels. An FDA analysis of insurance claims found that for 21% of men who filled testosterone prescriptions, there was no record of a lab test, either before or afterward.

Safety concerns have dogged testosterone products for decades. Large doses, which some bodybuilders take to bulk up, have been linked to aggression. Testosterone isn’t recommended for men with a history of prostate cancer, although studies show it doesn’t raise the risk for developing prostate cancer, as was once thought.

The cardiovascular concerns flared this past November when a widely publicized study in the Journal of the American Medical Association of nearly 9,000 veterans being evaluated for coronary artery disease found that those who used testosterone had a 29% higher risk of heart attack and stroke than those who didn’t.

Testosterone prescriptions dropped from about 600,000 a month before the JAMA study was published to about 500,000 a month currently.

The study sparked fierce debate and some criticism from physicians who advocate testosterone therapy. Other studies on cardiovascular risks from testosterone have had mixed results.
In July, Canada’s drug regulatory agency said its review had found “a growing body of evidence” associated with testosterone use of “heart attack, stroke, blood clots and increased or irregular heart beat.” The agency ordered makers of the products to add a warning to their labels.

A day later, the FDA rejected a petition from a nonprofit, consumer-watchdog organization, Public Citizen Health Research Group, for stronger warnings in the U.S., saying there was insufficient evidence of a risk. Currently, the products’ U.S. labels cite the potential for sleep apnea, congestive heart failure and low sperm counts, and warn that women or children exposed to testosterone could develop male characteristics like chest hair.

Some testosterone-treatment proponents acknowledge the drugs could increase cardiovascular risks because they boost levels of red blood cells, which make blood thicker. But they say donating a pint of blood every few months can keep these levels within normal ranges. “If a patient is carefully monitored, it’s not a concern,” says Mark Rosenbloom, who runs a clinic in Northbrook, Ill., specializing in testosterone- and other hormone-replacement therapy.

The FDA advisory panel, after two days of hearing expert testimony, voted overwhelmingly that more data was needed to assess the heart risks of testosterone products. The panel also recommended that labels should be changed to discourage the drugs’ use for “age-related” declines of the hormone.

Testosterone treatment can cost as much as $300 a month. Some men might have a harder time getting insurance coverage for the drugs if the FDA decides to require changes in product labeling.

Testosterone-product makers, in their own comments to the panel, said the lack of large, controlled studies makes it “difficult to interpret” the long-term impact of the treatment.

For some men, testosterone treatment has changed their lives. Bob Mattioli, managing partner of a medical-device training company in Braintree, Mass., started getting hormone injections about 15 years ago, when he turned 50 and started feeling “dragged out, fatigued and general malaise,” he says.

Now he exercises vigorously, with push-ups, crunches, planks and brisk walks every day. “Is testosterone doing that for me? I don’t know,” he says. “I’m doing that for me, and I think it’s a good combination.”