Forbes CEO: Recovery Hinges on Credit Market

Published: Mon, 27 Apr 2009

Description: Unfreezing credit the key to recovery?

Automatically Generated Transcript (may not be 100% accurate)

" Welcome back to the Milken institute global conference in Los Angeles, California everybody good morning I'm Brian Sullivan thanks for joining us with a lot of heavy hitters here in business and politics certainly a lot to discuss. With the global economy housing. What the government is doing now we have GM we can -- all that. There is a lot going on we are pleased to be joined by Steve Forbes he is chairman and CEO of Forbes he's also editor in chief of Forbes the magazine Steve. Welcome -- to be a good to see you again here -- this time last year you and I talked about oil. Things have changed your panel has called financial recovery win and how some big names on it. -- we get a recovery and how -- we get it. Well the key thing right."

" Now is to get the credit system more thought out I think it was reservoir lot of water frozen patty get a thought out for the start to both of taps again. It is starting -- thought but it's not fast enough I think that that's got a nod to little more. What -- the Fed do go to -- you know 0% interest rates of imaging radiation and while they have -- not much printing since December their balance sheet is not much larger than it was four months ago. So they've been saying -- spreading money around but and a broad money measure money supply my equipment they had about Asia they'll have their balance sheet is still about two point two trillion. So I wish to be little more aggressive there expression mortgage backed securities of the housing markets moving again. Then when they start to do that then -- the big battles come the big battles come on health care attempt that myself that this administration. Cut taxes. Energy policy but where's my -- big battles had yet to come because -- we've already had some. I know political battles because they've been fairly easy to get through at least in parts of Charlotte his biggest stuff is still to -- big stuff that's coming especially in health care where they gonna. Proposing an effective new insurance company which would be their stalking -- to take over health care in the United States that's going to come this summer. Big energy taxes they want to apply. Taxes next if they want to apply and what they do things like creme hearts a lot of issues out there will determine how fast you're you're out of Iraq."

" Operating editorial in the latest issue of your magazine related to healthcare and we just had the former CEO of -- Jack -- McDowell in New York City. Your argument is basically if the government does this plan to sort of nationalized health -- there's no way companies like an Aetna or Cigna UNH are going to be able to --"

" The name's Mike stay there but they're in effect become part of the US government. They can underpriced those companies as they do Medicare and Medicaid reimbursement rates traditionally been very low. And they'll start setting standards what these companies can and cannot do they want to stay in business. So it's not the frontal assault itself from the clintons in the early ninety's as a more hideous one and that's where the big battles coming and got panels and unionization. Whole slew of things determine where this economy goes in the next three years yeah we get employee free choice as a lot of some what what is the number one thing that you think it will open up the credit markets get the economy going again if you had to pick one thing it is the most important thing we need to do. To help get us out of this recession and get job growth going again what would -- be. Aside from congress taking a five year sabbatical. That went what way they the key thing is one the Fed get more aggressive in the mortgage market. And to the Fed announcement from here on. That we get pulled back we get out of this thing. We're going to have a strong and stable dollar and no more weak dollar policy. -- do that other -- types of -- you can't -- last straw that he did I decide to -- if you have a range uncle was good as anything -- not one to one though we don't need to have one now you don't you know you don't you don't have to do that but just from range from just -- a -- now -- between 85900. Dollars -- something like that realistic though is -- enough gold in the world to do not -- nice thing about that is just look at the prices have thrown out his -- what's the the price each day. Play off of that happen all that stuff but that was from yesteryear. If you just look at the price of one when gold goes up. That tells you something's going on when it plunges that -- going on. They just look at the rain finds a way to stabilize the dollar one of them should be the number one priority right because the weak dollar. Bubble never this disaster never would have reached the size it did. We didn't have the weak dollar from the Federal Reserve thrown money what -- sprayed machine -- this year's Milken institute global conference is all about finding solutions we've talked about the problems. What are some of the answers Steve Forbes -- do -- got to tell you go to a panel thank you very much for joining us that thank you a real."

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Welcome back health insurance provider Humana -- a second quarter earnings this morning of a dollar 67 share they beat estimates of a dollar 64 so they beat by three cents. Slightly on the top line as well revenues seven point nine billion versus an expected seven point eight. We'll Humana health fellow health -- provider Aetna are right in the middle of the battle over health care overhaul. Health and Human Services Secretary Kathleen civilians will be in Connecticut the insurance capital of the world talking today about what the White House is calling. Health

a diversified into hospitals two years later the corporate name was Casey Humana than a decade later it became the largest hospital. Yes in 1984 -- enter the rapidly growing healthcare market. And it's managed healthcare business thriving in the early nineties few minutes shows the spin off its hospital unit. Today Humana closed -- market cap of five point six billion dollars and he managed health care customer base of over eleven net. These

develops and bought individualized employee benefit plans. And Bob Armstrong columnist for Dow Jones Newswires who focuses on pharmaceuticals and technology good morning gentlemen good morning right after. Mom will tell if you you you heard me the ruling denying there when I saw the price decline in Aetna over that. Basically ten year -- and the price increase over Humana what's the what's the difference your wife is substantial difference.

the commercial market so providing health insurance for companies and their employees Humana has focused on the government market particularly. There and particularly over the last five years they've really -- that business aggressively.

way around the -- Aetna has the better plan that may be Humana would be at greater risk your particularly to talk about health care reform. Why did the big divergence in performance.

other -- mention. You know their markets are very very different Humana has focused more. On the Medicare market and in some states they've really focused on ancillary lines like dental insurance and life

as you know -- that perhaps Aetna would be interested in buying Humana . And yet some suggesting that it could be at greater risk if there -- health care reform because they're being cut in Medicare Medicaid programs what do you make of that.

About changing the way Medicare private Medicare plan to reimburse goes through. Humana is going to be significantly weakened company will more than half of their earnings comes from -- business. It could be a

recession. There is no question that and is better position to. Then Humana is going to be -- again we do have to wait until after health care reform is finished you know. But I I'd probably lay my money on a company that was in national integrated companies like connect. I totally agree with rob as well that the pieces that are left over might get scooped up by somebody else from Humana . But one thing it seems clear is that Medicare Advantage plans are going to be dramatically scaled back if not eliminated. And that's a big piece of the Humana business.

less aggressive than what was. Talked about before him in those situations. Humana stock is that Iraq. Right right now Humana trades at something like five times earnings and as a free cash flow yield of well over 10%. The the stock prices in. Really aggressive reform if that doesn't happen Humana could emerge but it. The you know risky area the jury's still out and you know it's hard to make a bet

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