The Affordable Care Act creates a new health insurance marketplace (the exchange). But because of the great uncertainty about what buyers will enter the market and who will buy what product, the law creates three vehicles to reduce insurance company risk.
Politicians and bureaucrats are notorious for manufacturing euphemisms -- clever but deceptive substitutes for what they really mean but don’t want to admit. That’s how the phrase “revenue enhancement” entered the vocabulary. Some of our courageous friends in government couldn’t bring themselves to say “tax hike.”
It’s easy to be negative about the U.S. economy these days. Find a glint of silver, and folks come running to point out all of the dark clouds looming about. This, of course, is what we got last week when the monthly jobs report was released from the U.S. Department of Labor (DOL). Folks pooh-poohed the number of jobs and whining that they’re not enough or that it’s less than a bunch of economists thought that it might be. But you know what? Stuff ’em.
Facts are easy. You can check facts. What supporters of the Affordable Care Act are doing, on the other hand, transcends factual bungling. It’s far more advanced: a warping of reality so debauched it looks like something out of a tale by H.P. Lovecraft.
The east coast and parts of the southern U.S. were to varying degrees paralyzed by blizzards a few weeks ago. The snow as expected rendered the roads treacherous, and in anticipation of slick streets, shoppers flocked to the grocery stores in advance.The rush into grocery stores, and its aftermath, offers worthwhile lessons in economics.First up, […]
The highest form of charity, argued the 12th-century Jewish philosopher Maimonides, is when the help given enables the receiver to become self-sufficient.But our systems of state charity — aka welfare — have too frequently had the opposite effect: They have actually created dependency. It is time to rethink the way we help people.I’m going to […]
Last year was quite the year for Bitcoin. We’ve seen exponential growth in Bitcoin’s exchange rate and extensive coverage in the media. Another phenomenon we have witnessed is the proliferation of alternative cryptocurrencies, five of which we’ve provided below.What all of these cryptocurrencies have in common is that they rely on a decentralized network to […]
President Obama crowed in his State of the Union speech about the economy, even mentioning “a rebounding housing market.” Maybe he was referring to friends in high places, like the seller of Penthouse One in New York, which just closed for $50.9 million, all cash. Millions of mere-mortal homeowners likely wanted to throw something at […]
The nonpartisan Congressional Budget Office is acting in a bipartisan way to cover up the biggest single threat to the bipartisan political alliance that is stripping America of its wealth: the United States Congress.There is no question that the following policy is bipartisan. Democrats and Republicans in Congress are completely agreed that the following information […]
Recent difficulties with implementing the Affordable Care Act have increased opposition to the program. A majority of Americans now oppose it. Problems with the HealthCare.gov website are in all likelihood temporary. However, there are serious long-term problems, particularly considering long-term finance and labor supply issues. Given the mounting difficulties with and growing concerns about the […]
The faces of the Detroit bankruptcy are the thousands of pensioners whose promised benefits are suddenly part of the restructure negotiation. When Motown filed for Chapter 9 last July, the city had $11.5 billion in unsecured liabilities. The vast majority of this was pension and health care benefits owed to retired city employees.The images of […]
“Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.”As the inequality gap grows, there is an ideological battle unfolding in the West.On the one hand, there are those who think government can fix things. It must do more, tax more, […]
On Feb. 7 the United States will once again reach its statutory debt limit, meaning it cannot legally borrow any more money. Since the obvious option of cutting spending to match the amount of revenue that the government collects is off the table for some inexplicable reason, Congress will have to pass a new, higher […]
The New York Times published an interminable article on health care recently. Plenty of facts — how scrupulous are these journalists! — but the article displayed absolutely no comprehension of the basics of cause and effect. I was left wondering about the whole point.The article details how the health care system rewards specialists to an […]
The Largest Company in History:“The United States Corporation of Government (USCOG)”I follow global social and commercial networks, looking for entrepreneurial opportunities.Innovation surges when industry and government models change. Buggy whips. Landline phones. Railroads. The Soviet Union. Apartheid South Africa. All marked social and commercial innovation, both bad and good.We are witnessing a new form of […]
We’d like to give the banks in Australia some credit. They’ve finally gone and done it. They have caught up with 1960s technology. They’ve figured out how to use PIN numbers.How to only use PIN numbers, that is. They’re considering scrapping signatures on credit cards to cut down on fraud. Apparently, having to verify your […]
We put in a good-citizen call to the SEC the other day.“There’s a massive scheme to manipulate stock prices,” we told the friendly agent.“I have to tell you that your call is being monitored so that we can better serve the public,” he replied.“Oh, don’t worry about that. The NSA is tapping our call anyway.”“Are […]
Dr. William C. Padgett is a retired optometrist who has been trying to bring an elderly care facility to Beaufort County, North Carolina, for over a decade.“Our senior citizens,” he laments, “are finding that it is difficult and in many cases impossible to find an appropriate long-term care facility locally.” Though he has received several […]
If you don’t have the angst out of your system concerning Wall Street banksters, Government Sachs, and the Affordable Care Act, settle in with Matt Taibbi’s Griftopia to make your blood boil one more time.Investors should be reminded of 2008 as they shrug their shoulders and put their money back in the stock market. The […]
What do 8 of the 10 wealthiest people in the U.S. have in common?Aside from being able to fly in private jets, the common thread is that each of them has made their fortune thanks to a start-up.Let me explain…From tech titans like Bill Gates and Larry Ellison (founders of Microsoft and Oracle, respectively), to […]
“Inequality is the defining challenge of our time,” according to President Obama. It’s certainly the topic of the day for Paul Krugman, Joe Stiglitz and a whole raft of liberal pundits.But have you noticed that hardly anyone else is talking about it? When is the last time you heard a shoeshine person or a taxi […]
In December of last year, I left my career to travel the world for one year.My plan was to visit as many countries as possible on my Star Alliance Around-the-World ticket in the first nine months, then, for the remaining three months, return back to the country that most caught my eye and my curiosity.Nine […]
Economic history is primed to repeat in the nastiest of ways unless the government stops distorting the price of something we use every day.Every product, good, or service has a price, which is essential to rational decision-making. We use prices every day as vital data that guide us. Without true prices, prices not distorted by […]
A new survey from Harvard University found a large majority of young Americans do not believe the law will save them money, do not believe it will improve their health, and do not intend to sign up for insurance through the new exchanges.
Uh-oh!The new pope, Francis from the Pampas, has just warned us to beware the “tyranny” of capitalism.Each man worships his own gods. Some worship at the altar of Jesus of Nazareth. Some at the altar of the Almighty Dollar. The capitalists don’t bad-mouth Francis’ god. You’d think he would cut them the same slack.Bad-mouthing Catholicism […]
The market has selected different things as money throughout history. Some of these items have served as money in isolated places for specific periods of time — for instance, cigarettes in prisoner-of-war camps. Cigarettes continue to be a currency in prisons if allowed, but if not, according to Wikipedia, “postage stamps have become a more […]
A president stands disgraced. Congress is scattering. Bureaucrats are baffled. Pundits are reaching. Industry is scared. Politicians are scrambling to do something, anything, to make it better. One political party is in meltdown and the other loving every minute of it, hoping to ride the calamity to electoral gains.The so-called Patient Protection and Affordable Care […]
Our “Crash Alert” flag warns of a crash in U.S. stocks. Readers are advised to proceed with caution.
But since the start of September, the news for stocks has not been bad. If you want to buy stocks, the financial press and Wall Street can give you plenty of reasons to do so.
There is hope, they will tell you, for the Empire of Debt… and its capital structure.
Yes — reporters, analysts and commentators are back at work. They’re finding problems. Risks. Worries. And reasons to be bullish too.
Fracking, for example, will add $1,200 to the average U.S. household income.
“Surging oil and natural gas production brought on by hydraulic fracturing is lifting the U.S. economy by lowering energy costs for consumers and manufacturers, according an industry-funded report.
“In 2012, the energy boom supported 2.1 million jobs, added almost $75 billion in federal and state revenues, contributed $283 billion to the gross domestic product and lifted household income by more than $1,200, according to the report released today from IHS CERA.”
Maybe Bloomberg is right. Maybe fracking will give the American Empire of Debt a new lease on life… much like how Imperial Rome limped on 200 years after the Crisis of the Third Century.
Fracking will reduce the trade deficit, goes the logic… turn the U.S. into an even greater manufacturer… and beef up household incomes.
But we wouldn’t rush out to spend that money, if we were you…
It would be nice if the U.S. were entering a new golden age… like the time between the end of World War II and the end of the 20th century. But that brought the seeds of its own destruction, remember.
The first part of that boom was genuine — with rising wages and improving standards of living. The second part — in the 1980s and 1990s — was largely fraudulent, funded almost entirely with borrowed money.
People spent more… they lived better… but they went further into debt. Now they are faced with years of debt reduction and lower living standards.
The Age of Granite Countertops
So far, the 21st century has been no golden age either. It is more like an Age of Granite Countertops. It is an age where appearances count for more than reality.
First, most Americans who are improving their standards of living are doing so by spending money they don’t have on things they don’t need. They buy bigger houses and fancier cars.
Second, when the credit bubble pops the feds try to engineer a “recovery” by unleashing even more cheap credit.
The things that really matter — savings, investment, peace and prosperity — haven’t happened.
The things that have happened have been big disasters — pointless wars and jackass economic policies that encouraged spending and zombieism.
One of those policies is in the news again: student loans. It is another corrupt government program bearing another bitter fruit. From Reuters on what we don’t know about the $1.2 trillion student loan problem:
“$1.2 trillion — the estimated amount in outstanding student debt.
“$260 billion — what that amount was in 2004.
“37 million — Americans with student loan debt outstanding, according to estimates from the New York Fed.
“$28,000 — The typical 2012 college graduate’s debt load upon Graduation Day, according to Hamilton Place Strategies.
“$9,000 — That debt load in 1993.
“$810 billion and $670 billion – The total outstanding auto and credit card debt held by Americans, respectively, putting student debt into a clear lead.
“The default rates:
“13.4% — the national default rate for borrowers whose loans entered repayment from fall 2009 to fall 2010. (This is the first year for which the government has released three-year default data.)
“22.7% — defaults in the first three years for graduates from for-profit colleges. ‘For-profit institutions had the highest average three-year default rates at 22.7%, with public institutions following at 11% and private non-profit institutions at 7.5%,’ according to the Department of Education.
“Nearly 47% of all defaults were from for-profit colleges, the Institute for College Access & Success said, even though those institutions have just a 13% share of college enrollment.
“7 million — Number of student loan borrowers in default, out of an estimated 37 million total. That includes public and private loans, according to the CFPB.”
Everyone Wants to Be an Insider
Student loans are only a small part of a big tableau. But everywhere you look the scene is the same. The insiders are taking more and more wealth from the outsiders.
Everyone wants to be an insider. And in a democracy especially, over time, more and more people find ways to game the system and join the insiders.
Finally, everyone seems to have an angle.
And soon civilization is on the road to decline and ruin. This happens when there are more parasites than producers… and more voters with their hands in the cookie jar than there are people making cookies!
Thanks to Richard Russell at Dow Theory Letters, we can pass along this picture of a zombified America. From The Week:
“In America, 7 out of 10 people are on the dole, said Michael Tanner. That’s the percentage of people who receive more in government benefits than they pay in taxes, according to a new Tax Foundation study.
“Some of these beneficiaries of Uncle Sam’s largesse are the poor; another new study, by the Cato Foundation, found that families collecting various welfare benefits, including food stamps, ‘temporary’ cash assistance, and Medicaid, could bring in the equivalent of $35,000 a year — more than someone would earn in a $20-an-hour job.
“But it’s not just the poor who feed at the trough of our vast welfare state. Most seniors get far more from Social Security and Medicare than they contribute in payroll taxes.
“Giant corporations get $100 billion in direct payments and subsidies from the government, in the form of farm and ‘green’ energy subsidies, and Export-Import bank loan guarantees. The military squanders billions on weapons systems it doesn’t need, to fund jobs in key lawmakers’ districts.”
Yes, dear reader. A little democracy — restrained, say, by a Bill of Rights and a Constitution — may be a good thing. But sooner or later, the zombies take over.
Then it is best understood by the old definition. Democracy: a political system in which two wolves and one sheep vote on what to have for dinner.
Hark… is that the dinner bell we hear?
– Bill Bonner
Article originally appeared here.