Wednesday, December 23, 2009

Congress Pinches the Oxygen Hose

As Congress moves quickly to cope with the real inconvenient truth: way too many old people claiming over-promised Medicare benefits, one can only marvel at the raw evil that infests Washington DC.

This blog isn't about the immoral behavior of the maniacally rich men who run Washington for profit, or the financially destitute congressmen who feel they must comply to slave for money, but rather, understanding what is happening so one can survive the money-making impositions made against them.

An interesting question:

Will congressional action to reduce the cost and number of elderly solve the nation's financial problems? On the surface, the answer is clearly yes. Denying reasonable quality Medicare to old people to attrit the bothersome demographic, definitely improves the dire nature of our nation's overextended financial obligations. Some $65T has been promised in Medicare alone, some of that now being pulled by Congress. So on the surface, one would expect the market to react positively to congress's abrupt default on their Medicare promise.

But things are rarely superficial. The bigger question asks what is the sum of the bill's entire impact. If Congress merely cut Medicare payments by shifting the burden to the States, the financial impact (in DC anyway) might be positive. That isn't what this bill does. The bill cuts Medicare, but it does so by socializing the system as the method of policy implementation. So one flip-side to Congress's financially lucrative idea is the loss of our current semi-private health care industry--a serious hit to the economic well being of those permitted by the government to live.

Another clear downside is that financial savings from elderly-reduction are blown twice-over on new pork to keep congressman employed. The net loss of trillions in could-have-been savings is a second serious hit.

A third hit is massive tax increases, imposed for several years before the bill takes effect. And the pork, of course, is instantaneous.

So, immoral as it may seem, the idea of slashing our elderly population makes top-notch financial sense. It makes room for indebted, able bodied workers to toil on behalf of the money power. Unfortunately, as with so many government schemes, it got screwed up by the process.

The economic impact of the government health control required to enforce a politically impossible decision, coupled with the lure of trillions illuminating the eyes of hardened DC criminals, leaves us with the worst of all worlds: dead seniors, lower economic output, and more debt.

Conclusion--our economy will increasingly suffer, even after Moneyed Vultures intentionally suffocate old people to boost their bottom line.


  1. FDR- How much longer do you think long GOOG, AMZN, AAPL, UUP, and CREE vs short TLT and GLD will work. With everything going on I figure this makes the most sense and continues to work. The dollar should get stronger and drive up high risk tech and and knock the bonds lower, steepening the yield curve. The market often does illogical things but this trade actually makes sense and has been working.

  2. has HFT saved the stock market and everyone's 401ks. GS and JPM seem to have taken control of after hours trading and are single handedly creating trillions of dollars of wealth for average Americans. Is this what Blankfien meant by " doing god's work?" It seems as though the FED and treasury have enabled them to buy up every equity in March with tax payer backing and a no loss guarantee. Now that they have paid back tarp, they continue to drive up illiquid futures with very little cash and thus mark up their equity holdings and hand it off to the HFT desk in a perfect dance to keep the bid up. The result is trillions in wealth created with only using billions in capital. How does it end? GS has shown there hand for next year in their private equity letters. It seems the game plan is to continue, as lower volume helps their cause and they are expecting lower volume and a lower VIX through 2011.

  3. "has HFT saved the stock market "

    Well, it is up almost 6 points.

  4. "How much longer do you think long GOOG, AMZN, AAPL, UUP, and CREE vs short TLT and GLD will work. "

    Subscribers have my GLD and SLV targets and short term strategy. No changes to it.

  5. When do you think interest rates will climb? It seems right now is a perfect time to own stocks until there is competition for yield. With many new millionaires being made in this market the divide between rich and poor has just gotten massively larger. Should the rich be worried? This bull market is even stronger than that of the late 90's but those that held too long got wiped out. Looking for some upside targets to know when to get out. The consensus seems to be for another 20% next year and I'm thinking of staying the course as my cost basis is so low I have really nothing to fear but some give back. I am glad I stuck with the consensus so far as it has scared a lot of people out, but the common sense trade never works, so I am inclined to keep buying. I realize we are in a bull market inside a bear market inside a bull market, time frame is everything. Technically we should test the DOW 14000 area at some time in the next 24 months, I think 8000 is probably an area we could back test, but what do you see as far as a trader. I believe that deflation will rule but that really has no effect on the equity market as we have seen over the last 6 months, cheaper prices has led to increased spending and higher profits which are reflected in a lot of stocks, mostly tech where China has stepped up purchasing. Is tech immune to deflation, it seems they can produce things at a cheaper and cheaper price, outpacing deflation and make up for it in total sales. i try to stay equally long and short so I have not done as well as the long only crowd. The bar scene is again filled with the stock market geniuses this Christmas, all claiming to have made more money in the market than they were when they were employed. It is amazing to see the dot com bubble all over again, wall street has a very short memory, but at some point the holders of all these stocks need to sell to turn those paper gains into real profits. I imagine the paperless world of currency is making it easier for the banks to actually have any money, paper currency, to have to turn over to people. They just play the shell game, knowing that a bank run of old is virtually impossible due to the imbedded paperless society they have created. As long as there is no volume in the market then equities should continue to climb higher. Do you foresee volume returning and if so would it make sense to use a volume and price indicator to determine when the crack in the levy is about to give way. So far the FED has done a masterful job of increasing the household wealth to the point where politicians can ram anything through. As long as people keep getting richer on paper they will turn a blind eye on reality...until..........? I know you like to give vague references to time frame and most of the deflation stuff is structural but waiting for reality could really waste ones life. There is money to be made and getting short based on a belief in the face of an ever increasing bubble can be lucrative one year, why not make money on both sides, that will ensure greater riches as your cash stockpile will be greater to get short with. I don't really care what anything is worth, not sure why people focus on this. If you step back and look at where the money flow is it is pretty easy to see where cash is flowing. Look at a chart of the S&P on a daily basis, it is trending up, therefore just buy until it is trending down. Whalla I use the 17-54 weekly moving average, when the 17 crosses the 54 I get on the direction of the cross. It has kept me on the right side of the market, long and short for 15 years

  6. "When do you think interest rates will climb? It seems right now is a perfect time to own stocks until there is competition for yield."

    Interest rates are market driven, just like everything else in a quasi-capitalist economy.

    When banks see strong borrower demand, they may raise rates. So until borrowers feel the urge to leverage themselves into the economy en mass, interest rates are stuck near zero.

    It is customer, not supplier driven.


  8. Merry Christmas FDR.


The USA's political-economc system is best described as:

On Nov 2, 2010, I plan to vote (FOR or AGAINST) my incumbent congressman

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