End-of-life care

How to have a better death

Death is inevitable. A bad death is not

IN 1662 a London haberdasher with an eye for numbers published the first quantitative account of death. John Graunt tallied causes such as “the King’s Evil”, a tubercular disease believed to be cured by the monarch’s touch. Others seem uncanny, even poetic. In 1632, 15 Londoners “made away themselves”, 11 died of “grief” and a pair fell to “lethargy”.

Graunt’s book is a glimpse of the suddenness and terror of death before modern medicine. It came early, too: until the 20th century the average human lived about as long as a chimpanzee.

Today science and economic growth mean that no land mammal lives longer. Yet an unintended consequence has been to turn dying into a medical experience.
How, when and where death happens has changed over the past century. As late as 1990 half of deaths worldwide were caused by chronic diseases; in 2015 the share was two-thirds. Most deaths in rich countries follow years of uneven deterioration. Roughly two-thirds happen in a hospital or nursing home. They often come after a crescendo of desperate treatment. Nearly a third of Americans who die after 65 will have spent time in an intensive-care unit in their final three months of life. Almost a fifth undergo surgery in their last month.

Such zealous intervention can be agonising for all concerned. Cancer patients who die in hospital typically experience more pain, stress and depression than similar patients who die in a hospice or at home. Their families are more likely to argue with doctors and each other, to suffer from post-traumatic stress disorder and to feel prolonged grief.

What matters
Most important, these medicalised deaths do not seem to be what people want. Polls, including one carried out in four large countries by the Kaiser Family Foundation, an American think-tank, and The Economist, find that most people in good health hope that, when the time comes, they will die at home. And few, when asked about their hopes for their final days, say that their priority is to live as long as possible. Rather, they want to die free from pain, at peace, and surrounded by loved ones for whom they are not a burden.

Some deaths are unavoidably miserable. Not everyone will be in a condition to toast death’s imminence with champagne, as Anton Chekhov did. What people say they will want while they are well may change as the end nears (one reason why doctors are sceptical about the instructions set out in “living wills”). Dying at home is less appealing if all the medical kit is at the hospital. A treatment that is unbearable in the imagination can seem like the lesser of two evils when the alternative is death. Some patients will want to fight until all hope is lost.
But too often patients receive drastic treatment in spite of their dying wishes—by default, when doctors do “everything possible”, as they have been trained to, without talking through people’s preferences or ensuring that the prognosis is clearly understood. Just a third of American patients with terminal cancer are asked about their goals at the end of life, for example whether they wish to attend a special event, such as a grandchild’s wedding, even if that means leaving hospital and risking an earlier death. In many other countries, the share is even lower. Most oncologists, who see a lot of dying patients, say that they have never been taught how to talk to them.

This newspaper has called for the legalisation of doctor-assisted dying, so that mentally fit, terminally ill patients can be helped to end their lives if that is their wish. But the right to die is just one part of better care at the end of life. The evidence suggests that most people want this option, but that few would, in the end, choose to exercise it. To give people the death they say they want, medicine should take some simple steps.

More palliative care is needed. This neglected branch of medicine deals with the relief of pain and other symptoms, such as breathlessness, as well as counselling for the terminally ill. Until recently it was often dismissed as barely medicine at all: mere tea and sympathy when all hope has gone. Even in Britain, where the hospice movement began, access to palliative care is patchy. Recent studies have shown how wrongheaded that is. Providing it earlier in the course of advanced cancer alongside the usual treatments turns out not only to reduce suffering, but to prolong life, too.

Most doctors enter medicine to help people delay death, not to talk about its inevitability. But talk they must. A good start would be the wider use of the “Serious Illness Conversation Guide” drawn up by Atul Gawande, a surgeon and author. It is a short questionnaire designed to find out what terminally ill patients know about their condition and to understand what their goals are as the end nears. Early research suggests it encourages more, earlier conversations and reduces suffering.

These changes should be part of a broad shift in the way health-care systems deal with serious illness.

Much care for the chronically ill needs to move out of hospitals altogether. That would mean some health-care funding being diverted to social support. The financial incentives for doctors and hospitals need to change, too. They are typically paid by insurers and governments to do things to patients, not to try to prevent disease or to make patients comfortable. Medicare, America’s public health scheme for the over-65s, has recently started paying doctors for in-depth conversations with terminally ill patients; other national health-care systems, and insurers, should follow. Cost is not an obstacle, since informed, engaged patients will be less likely to want pointless procedures. Fewer doctors may be sued, as poor communication is a common theme in malpractice claims.

One last thing before I go
Most people feel dread when they contemplate their mortality. As death has been hidden away in hospitals and nursing homes, it has become less familiar and harder to talk about. Politicians are scared to bring up end-of-life care in case they are accused of setting up “death panels”. But honest and open conversations with the dying should be as much a part of modern medicine as prescribing drugs or fixing broken bones. A better death means a better life, right until the end.



The End of Reflation? Implications for Gold


In the previous editions of the Market Overview, we wrote about the reflation trade. We analyzed the important signals of the uptick in economic activity and inflation all over the world, arguing that the upcoming reflation does not look encouraging for the gold bulls. However, we now see signs that reflation is weakening. What happened and what are the implications for the gold market?
As a reminder, reflation started to attract the attention of investors at the end of 2016 and was based on two pillars: 1) Trump’s rally, i.e. rising expectations about the fiscal stimulus provided by the new administration, and 2) accelerating global inflation and economic growth. As a result, interest rates surged, while the price of gold plunged.
The problem is that both drivers of reflation trade have weakened recently. The failure of Trump to repeal and replace Obamacare undermined markets’ confidence in quick and smooth implementation of the new administration’s pro-growth agenda. Some pundits argue that the Trumpcare’s failure is actually a good thing, because now the administration will quickly shift to the subject of tax reform. However, such a line of argument is totally wrong as it overlooks significant divisions among Republicans and the fact that healthcare reform was supposed to reduce government expenditures, enabling or at least facilitating the tax cuts. This is something we warned against in the February edition of the Market Overview“the faith in Trump’s beneficial economic policies may be too optimistic.”
Of course, the reflation trade is something bigger than Trump’s rally, as the uptick in economic activity started significantly before the U.S. presidential election. For example, the U.S. annual inflation rate has risen from 0 percent in September 2015 to 2.8 percent in February 2017. However, it slowed down to 2.4 percent in March. We have seen similar dynamics in the Eurozone where the harmonized annual consumer inflation rate slowed down from 2 percent in February to 1.5 percent in March, as one can see in the chart below.
(Click to enlarge)
Chart 1: The CPI rate year-over-year for the U.S. (blue line) and the euro area (red line) over the last ten years.
It does not falsify the reflation narrative (the recent pullback may be temporary), but it shows that some investors had inflationary expectations which were too high. As a consequence, U.S. interest rates have declined recently. For example, the 10-year Treasury yield dropped below key 2.3 percent level on April 12, while the yields at 10-year inflation-indexed Treasuries have decreased below 0.40 percent, as the chart below shows.
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Chart 2: The price of gold (left axis, yellow line, London P.M. Fix), the U.S. nominal interest rates (green line, right axis, as the 10-year nominal treasury yield, in %) and the real interest rates (red line, right axis, as 10-year inflation-indexed treasury yield, in %) from January 2016 to April 2017.
Given the negative correlation between the real interest rates and the gold prices, the recent pullback strengthens the bullish outlook for the price of gold. Moreover, the bond market is more liquid than stock market, so treasuries are often ahead of equities. It implies that we may see some spring corrections on Wall Street, which should be positive for the yellow metal.
Let’s check other key gold price drivers, which are less bullish. As one can see in the chart below, credit spreads are very low. It indicates high economic confidence, which is bearish for gold. There was a pullback in the U.S. dollar in 2017, but greenback remains in the upward long-term trend – partially because the divergence in monetary policies between the Fed and other major central banks has been widening – which is also negative for the price of gold.
(Click to enlarge)
Chart 3: The Trade Weighted Broad U.S. Dollar Index (green line, left scale) and the BofA Merrill Lynch US High Yield Master II Option-Adjusted Spread (red line, right scale, in %) from January 2015 to April 2017.
Therefore, gold drivers send mixed signals. The U.S. dollar and credit spreads remain bearish, while the real interest rates have turned to be bullish recently, as the Trump rally has definitely softened. To be clear: it’s too early to herald the end of reflation, as the improving manufacturing sector in China should be enough to support the reflation trade in the medium term. There will be ups and downs, but the trend should be higher. What we are saying is that the macroeconomic outlook for gold has recently improved on the margin, as the reflation trade lost Trump’s leg.

 Misunderstanding GDXJ: Why It’s Actually Great News For Junior Miners  

Something extraordinarily good for junior precious metals miners just happened. But for some reason it’s being misinterpreted as a bad thing. Here’s the general story:

A Small-Cap Gold Mining ETF Streaks Lower As Big Index Change Looms
(Investors.com) – Mining stocks blazed a bright trail of returns since the start of 2016 as gold saw a renaissance and geopolitical uncertainties rose. That popularity has been double-edged for one gold mining ETF, which is now streaking lower.
VanEck Vectors Junior Gold Miners (GDXJ) is set for a major revamp of the underlying index, which will broaden the exchange traded fund’s market-cap range and raise the average size of its stocks. 
Torrid asset growth has led to concerns that GDXJ is too big for its index, with massive stakes in some stock holdings making the overhaul necessary, as ETF.com first reported. 
For investors in this popular and heavily traded ETF, the changes may mean less small-cap exposure than they have come to expect. 
Under the new indexing method, the ETF’s largest company by market cap could be $2.9 billion — vs. $1.8 billion under the current method — putting it over the traditional $2.5 billion limit for small caps.  
The index change is set to take effect June 17, but the Junior Gold Miners ETF already has started buying stocks not in the underlying index. 
The new names include Alamos Gold (AGI), B2Gold (BTG), Iamgold (IAG), Pretium Resources (PVG), Real Gold Mining and Patagonia Gold, besides a hefty stake in its large-cap sibling, VanEck Vectors Gold Miners (GDX). 
They now constitute the ETF’s top holdings and account for more than a quarter of portfolio assets combined. 
Asset Haul 
Assets in GDXJ have ballooned 270% from $1.3 billion at the start of 2016, making it a $5 billion ETF “attempting to invest in (an approximately) 30 billion gold universe,” as one analyst told ETF.com. As money flowed in, GDXJ ended up owning more than 18% of some Canadian stocks. 
That called into question its adherence to diversification rules. 
Both tax and securities laws provide diversification standards for funds registered under the Investment Company Act. They limit, in part, the amount of a company’s outstanding shares that a fund may own — no more than 10%, in the case of securities law.

When this story broke, a couple of things happened. First, GDXJ plunged as investors concluded that it’s now a lot less exciting.



Second, the stocks it was forced to sell to get back below statutory ownership limits plunged. Here’s Klondex Mines, a representative example:



This has understandably dismayed the owners of these shares, and led to a lot of handwringing about dark times for junior miners.

But the truth is very different. To understand why, pretend you’re running a company that creates and markets ETFs. From your point of view, is the GDXJ saga a cautionary tale of a mismanaged fund?

Nope. What you see is massive investor interest in a segment where you’re not represented.

Then you look at the precious metals ETFs now on the market (the following chart is from the above investors.com article) and notice that GDXJ is the only one focused on junior gold miners.




You also notice that the best performing ETF on the list holds junior silver miners. Since your job is to attract investors’ money, how do you respond to this multi-billion-dollar unfilled need?

You fill it, of course, by bringing out copycat funds.

In years to come there will be a wave of GDXJ and SILJ wanna-be ETFs. They’ll be smaller than the incumbent funds so initially at least won’t have to worry about owing too much of any one stock. But in the aggregate they’ll end up being bigger than GDXJ, which means they’ll swamp the junior mining sector — which is, as noted above, tiny and illiquid.

The result: a serious, ongoing tailwind for a sector that’s already seeing increased interest from both investors and speculators. Going forward, the juniors will be the hottest part of what should be a very hot precious metals market.


Russia’s Neo-Feudal Capitalism

Anders Åslund
. Putin corruption

 

WASHINGTON, DC – Vladimir Putin’s Russia is looking more and more like the sclerotic and stagnant Soviet Union of the Leonid Brezhnev era. But in one area, Putin’s regime remains an innovator: corruption. Indeed, in this, the 18th year of Putin’s rule, a new form of crony capitalism has been taking hold.
 
Over the last decade, Putin has overseen a major renationalization of the Russian economy.

The state sector expanded from 35% of GDP in 2005 to 70% in 2015. It would seem that, in Lenin’s words, the state had regained control of the “commanding heights” of the economy.
 
And yet it would also seem that state-owned firms like the energy giants Gazprom and Rosneft operate like modern businesses. After all, they have corporate-governance rules and policies, supervisory and management boards, and annual shareholders’ meetings. They undergo independent international audits, publish annual reports, and maintain boards with independent directors.
 
But appearances can deceive. Major state-owned companies’ rules and policies are mere formalities.
 
They are not even really run by the state. Instead, they are controlled by a small group of cronies – former KGB officers, ministers, and senior officials in the president’s administration – who act as Putin’s personal representatives.
 
The system carries the hallmarks of the ancient feudal model described by Harvard’s Richard Pipes in his classic Russia under the Old Regime: it affords a maximum of freedom to the ruler, who delegates tasks to the feudal lords. In effect, Russia’s state-owned companies have transformed public property into a new model of czarist ownership.
 
International investors have caught on. They buy Russian stocks, but only for the sizeable dividend yields – not for shareholder influence. No surprise, then, that Gazprom’s market capitalization has collapsed from a peak of $369 billion in May 2008 to some $55 billion today.
 
The operations of the so-called state corporations are particularly problematic. Legally, these firms, which include Vnesheconombank (VEB) and Russian Technologies (Rostec), are independent nongovernmental organizations. But they are established through the donation of state funds or property: when six such corporations were created in 2007, some $80 billion of assets and $36 billion of fresh state funds were transferred to them. This puts them under Putin’s direct control.
 
State capitalism is usually associated with publicly directed strategies for investment and technological development. And, indeed, Russia’s state corporations are supposedly focused on advancing the public interest or creating public goods. In reality, managers do whatever they want, such as favoring friends through discretionary procurement or selling assets at submarket prices.
 
Loyal chief executives of Russia’s big state companies enjoy long tenures, regardless of whether they meet ordinary standards of efficiency, profit, or innovation. No CEO has destroyed more value than Gazprom’s Alexei Miller, yet he has been at the company’s helm for 16 years and counting. In 2013, Miller’s official salary totaled $25 million. Today, there is no telling what he earns, as state executives’ remuneration is no longer published.
 
In exchange for their outsize paychecks and ritzy fiefdoms, Putin’s lords must advance his interests – particularly when geopolitical issues emerge that threaten the regime’s survival. For example, Gazprom has obediently cut off gas flows to recalcitrant neighbors whom the Kremlin wants to punish, at major commercial cost, while supplying all of Russia, regardless of whether it gets paid.
 
Rosneft has loaned billions to Venezuela’s state oil company – with the Venezuelan-owned US refiner Citgo as collateral – in a clear bid to exploit the country’s dire economic situation to gain access to its oil fields.
 
Of course, Russia’s economy is not at its strongest, either. Yet Putin’s system seems equipped to survive even the disappearance of oil rents. Putin has allowed the “systemic liberals” in his administration to impose hard budget constraints even on the large state companies. Rosneft, for example, has been forced to abandon its most value-destroying investments, such as petrochemicals.
 
As a result, financial stability is likely to be maintained. In any case, if the oil price remains at around $50 per barrel, Russian oil rents will remain substantial.
 
Nonetheless, new challenges to this system are emerging – beginning with nepotism. Russia’s crony capitalism has bred a small class of incredibly wealthy individuals, whose children are given top state positions by the time they turn 30. Unsurprisingly, this breeds resentment among the young, able, and ambitious.
 
For example, Petr Fradkov, the son of former Prime Minister Mikhail Fradkov, became first deputy chairman of VEB at the age of 29. Sergei Ivanov, the son of Putin’s former chief of staff of the same name, became first vice president of Gazprombank at 25 (and president of Alrosa, Russia’s state diamond company, at 36). Rosneft CEO Igor Sechin’s son Ivan became deputy director of a Rosneft department at 25.
 
Russia’s new model of crony capitalism seems to be a deliberate effort to emulate the success of Russia’s ancient feudal system – a system that, after all, lasted for centuries. But times have changed, along with incomes, education levels, and exposure to outside ideas. In today’s world, such a system poses a genuine threat to Russia’s social and political stability.
 
When opposition leader Alexei Navalny made a documentary about Prime Minister Dmitri Medvedev’s alleged corruption, more than 20 million people viewed it. Last month, tens of thousands of people in 90 Russian cities took to the streets to protest against corruption. The foundations of Putin’s neo-feudal regime, one suspects, may be cracking, even if the palace has yet to tremble.