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2017-04-29 20:20 by Karl Denninger
in Personal Health , 286 references
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This is got me literally rolling on the floor in laughter.

A lot of the Silicon Valley elite are doing extreme experiments on their bodies in hopes of prolonging their lives and improving their health. The latest fad among this set is sticking to a so-called 'ketogenic' diet that's exceptionally high in fat and low in carbs and is considered an experimental treatment for diabetes. Think Atkins, but way more extreme.


Oh, and here come the people saying but you must do this under "professional" supervision..... of course.

"If you only try it for a month, you aren't reaping the benefits," says Sarah Hallberg, Virta's medical director. "And if you're not feeling well, it's probably an indication that you're not doing it right." For Virta, she said, the nutritional regimen is only one part of an overall treatment plan.

It's called carb withdrawals.

Yes, carbs are an addictive substance. Yes, your body will go through withdrawals when you stop consuming them.  Yes, it will suck, for a little while.  And yes, it goes away assuming you're doing it right.

What's "right"?

First, no excessive protein.  I bet a huge percentage of those who are having trouble, especially in silly-valley land, are eating a metric ton of protein.  That doesn't work because the body converts excess protein into glucose.

It also is hard on the kidneys which means you need to******a lot.  Guess what -- that's one of the things they are complaining about.

And finally, no PUFAs.  In other words no extracted or processed vegetable fats.

Yes, this means you eat saturated (animal) fat.  It's virtually impossible to eat this way, incidentally, if you're vegetarian, especially if you don't eat dairy (cheese has a near-perfect fat:protein balance and the fat is essentially all saturated.)

For Scholnick, ketosis is a more extreme version of a broader trend, in which those in his network are waking up to the dangers of sugar consumption. "Almost every investor I know in Silicon Valley is on some form of low-carb diet," he said.

You don't need some "company" or some "biohacking" joint to tell you how to do this.

It's simple. Read here.  And if you want to know how to quantify your results on your own, individually, then read here.

Written over a year ago, it puts in perspective what Silly Valley is now trying to monetize -- which, incidentally, is a fraud.  There's nothing to monetize -- it's simply common sense, especially if you are metabolically compromised.

If you're overweight you are metabolically compromised.  Your body knows how to regulate your food intake so as to maintain a proper body mass.  You poisoned that mechanism -- unwittingly, quite probably, but intent doesn't matter as to outcome.

Why would you eat something that then has to be "chased" with a drug unless you had no choice?

I remind you that the essential amount of dietary carbohydrate in one's diet is zero.

That's right: Your body requires exactly zero carbohydrate intake to function normally.

The "fad" is what all the ass-clowns have been shoving in your face for decades -- that if you're diabetic or metabolically compromised (but not yet diabetic) you should eat the very thing you're having trouble processing and is causing the compromise and then "chase it" with drugs.

What sort of ****ing stupidity is that and how brain-dead do you have to be to listen to people who spout that garbage?

About as dumb as you will be if you listen to these clowns.

PS: Here it is again, from 2011.  The only difference today, in 2017, is that I'm both faster (I just set PRs for both a 5k and 10k in the last month) and my hair is more-gray.


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2017-04-28 18:04 by Karl Denninger
in Editorial , 1181 references
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What if "Pajama Boy" is right?

GDP came in pretty punky this morning, and a big part of it was consumption -- consumer spending.

Much has been said, including by myself, about millennials and other young people on both sides of the millennial generation being less ambitious, living at home even well into their 20s, working part time or not at all.

What if their decision is a purely logical one?

What if those folks have decided that they're not into "rocket science" (e.g. high-grade math, computer programming, etc) and are not going to go to some college to blow $50,000 or more they don't have because older adults have jacked up the cost by 500%?

What if they see you trying to **** them up the ass, in short, and are simply refusing to play?

What if they've decided that they may as well get stoned, drunk, or just cruise on through life and accept less because they know you rigged things against them, you intend to and are trying to screw them and they see through it?

In short, what if their decision is actually logical and it's your fault because you have sat on your ass while the medical and educational systems have turned into financial rape-rooms, you allowed the FASFA to come into play, you allowed colleges and the government to define anyone unmarried under 24 as "not" independent and demanded parental income and asset reports for someone who's an actual adult?

In short what if they saw you treat them like children in colleges, in government and in everyday life, they can do the math and realize you voted to spend the money more than once and thus your pensions are all broke, you sat on your ass while health care went from 3% of the economy to 19.x% doing nothing to stop it and you also colluded with their High School teachers and counselors to remove any sort of encouragement or curricular support for anything but a university at $20,000+ a year even if where said student's interest lies simply isn't in a field that makes $100k+ a year for decades, if ever, and said in response:

"Ok, you want to financially******me that way?  **** you."

What if I'm right, even a little?

What if I'm right a lot?

What are you going to do about it?  You can't force people to work, you know. You can't force them to strive.  You can't force them to innovate.

It appears that those who are a bit older have a choice to make: We either put a stop the financial rape-room games in our economy aimed at young people -- right damn now -- or the rot that is building will ultimately destroy us when the government funding assumptions collapse.

Still think you can sit and swill beer over the weekend eh?

Better think again.

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2017-04-27 08:27 by Karl Denninger
in Federal Government , 392 references
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Let's look at it through the lens, darkly, since we have few details but just "principles":

First, the standard deduction is doubled.  This means $12,000 earned without income tax for a single person and $24,000 for a married couple

Second, as stated all deductions other than mortgage interest and charity are gone.  This is paired with deleting the AMT, which would be nonsensical to keep without the deductions.  Left unsaid is whether municipal bond interest remains untaxed (I'll assume "yes".)

So what disappears?  Plenty.

Many have bleated that "state and local tax deductions" are gone in this plan.  Today you can allegedly deduct your state property taxes, for example.  But this is only worth something to you if you itemize.  That's because if you itemize you do not get the standard deduction at all.  You can choose either to itemize or take the standard deduction (and presumably still will be able to) but until you get into the $100,000+ income range it is almost never to your advantage to itemize.  Therefore, for those in the middle class mortgage interest + property taxes are less than the standard deduction.  This will be doubly true with a doubled standard deduction; ergo, this "going away" will not hurt the middle class person at all, but it will cause those who have big, expensive houses (and the income to pay for them) to lose the deduction on a decent part of their property tax -- which they currently can take.

This is arguably good as it stops rewarding states and local governments for inefficient use of money and ridiculously high property taxes in the first place.  It's not that hard to find places with a $20,000+ annual property tax burden on a $750,000 house at all, which is flat-out nuts.  Many of these places have seen property taxes double or more over the last decade.

But where this plan is going to run into huge problems is in the following classes of deductible expenses which, it appears, are all going away:

  • EITC.  This is a refundable tax credit for both having kids and making a relatively small amount of money and it's huge because it's refundable.  In other words you can get it back even if you owe no tax, which results in the government literally paying you to live.  Good luck killing this one as it is a literal riot-starter in the big cities.  Keeping it blows up the plan instantly.

  • Personal health care expenses.  This is subject to a minimum of 10% of your AGI (in other words you have to spend more than 10% of your adjusted gross income before you can use it, and can only deduct the excess) but for those who run into huge medical expenses it's pretty big.  The number of people who get hammered by this in the middle class is relatively small, but the impact for those who do will be large.

  • Traditional IRAs.  This appears to be gone too.  The Roth will be untouched because ROTH IRAs are paid into with after tax money.  This one I really don't like for the simple reason that there is nothing to prevent the government from reneging on the "promise" not to tax earnings and withdrawals in a ROTH.  They can and probably will break that promise in the future; a "traditional" IRA evades this risk because you pay into it with pre-tax money, but pay taxes when you take the money out -- and thus it is not exposed to the government taxing you twice.

  • What happens to small-business SEPs/SIMPLEs?  If SEP and SIMPLE deductability on pass-throughs disappears (and you must assume it will) that will have a major impact on single-member LLC retirement planning as those plans allow tax deferral of a huge amount of otherwise-earned income.  This would be seriously bad for retirement planning for those with six-figure+ incomes; it is a feature of the current code that I've used and so have millions of other small business owners.  Losing it would be offset by putting the corporate rate on pass-through income (e.g. LLCs.)  The ugly side of such a change is that after-tax accounts get hammered on reinvested dividends (you have to pay taxes in the current time on reinvested funds and thus must withdraw the funds to pay the tax, reducing what you can reinvest) where deferred accounts get to reinvest the entire dividend or distributed amount.

  • It's a MONSTROUS windfall for MLPs.  MLPs are one of the things that today are pretty-badly disadvantaged due to them issuing K1s and the tax treatment of that income to the person who owns them.  This disadvantage will go away at the same time the passthrough provisions work for small business turning their distributions into, effectively, corporate earnings even though they go to you as an individual.  Expect a significant move in the share price of these companies, most of which are pipeline operators and similar, if this provision looks to survive. If you want an actionable gamble ("trade") on the plan as-spoken yesterday this is where you find it but you have to gamble before it becomes apparent that the plan will actually pass since the minute that becomes known in the market the price will step-shift upward on these shares.

  • The repatriation "holiday" on corporate funds will do nothing to help economic output.  Sorry, that's the facts folks.  Trump will get a big fat zero out of this because they money will go to buybacks, which produce nothing.  That's the history on this sort of "holiday" provision and there's utterly no reason to believe it will be different this time.  Money is fungible; you cannot prevent this from happening.  For another example of why this is inevitable look at the so-called "benefit" for education out of state-run lotteries; yes, the funds go there but nothing prevents the state from taking other funds they would have spent on schools and reallocating them -- which they do.

All-in, when you get down to it I think Trump's "proposal" has roughly the odds of passage as a snowball does of survival in Hell for more than a few minutes.  The issue simply that the tax "giveaways" in the current code for lower-income people are really big, especially the EITC, and killing them will mean the "negative tax rate mommies" in the cities will have their effective tax rate go to zero from often as much as -30% which is literally taking candy from a baby.  Do not underestimate this; for many of these tax-farm producing women (and poor families) we're talking about anywhere from $3,000-6,000 a year they literally get paid just for being alive and having pumped out the kids.  Those adult children are likely to react very poorly to this, and I suspect you might even get real, no-nonsense riots and mass civil unrest -- never mind the vomit that will come out of the Democrats when they figure this out (and they will.)

All-in I suspect the reality of this "plan" is that it's DOA before it even left Mnuchin's and Trump's lips, although it will certainly be interesting to see how it gets spun and "negotiated" in the coming months.

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2017-04-26 07:48 by Karl Denninger
in Federal Government , 464 references
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You cannot deficit spend your way to prosperity, nor can you print growth.

You can print money.  Deficit spending is printing money.

You cannot print value.

The premise that you will get 3% growth if you deficit spend is the same premise that Obama ran after 2008.  He and his advisers believed that if the government spent trillions that it did not have that we would see higher economic growth and over the space of a decade or so this would pay for the deficit through increased tax revenues.

It didn't happen.

It didn't happen because it can't happen; it was nothing more than a scheme to "print value", which is always and forever a fraud.

Now Trump and Mnuchin are going to attempt the same thing from the other side of the aisle.

It won't work any better coming from this side than it did coming from the other and what's worse is that it will meaningfully accelerate the wall that we are headed for at 90mph when it comes to Medicare and Medicaid spending.

GDP "growth" in nominal terms can be whatever you wish but in real terms it will be negative within three to four years and when it is along with the Medicare and Medicaid spend going up by another $600 billion a year the government's funding capacity and the economy will both collapse.

Obama was a piker compared against this garbage.

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2017-04-23 08:20 by Karl Denninger
in Health Reform , 641 references
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Note the nostrum here....

One of Donald Trump’s few universally welcomed campaign promises was to do something about the prices of pharmaceutical drugs. Most Americans recognize that prices are too high, and are bothered by the rise of pharmaceutical price gouging.....

The key power is found in the “import relief” law — an important yet unused provision of the Medicare Modernization Act of 2003 that empowers the Food and Drug Administration to allow drug imports whenever they are deemed safe and capable of saving Americans money. The savings in the price-gouging cases would be significant. Daraprim, the antiparasitic drug whose price was raised by Mr. Shkreli to nearly $750 per pill, sells for a little more than $2 overseas. The cancer drug Cosmegen is priced at $1,400 or more per injection here, as opposed to about $20 to $30 overseas.

The remedy is simple: The government can create a means for pharmacies to get supplies from trusted nations overseas at much lower prices.

In other words Trump has the ability to administratively put a stop to the drug-price rape.

But let me point out that while this article is informative and points out a means by which Trump can irrespective of Congressional interference put a stop to the scam in one area of the medical system it ignores -- intentionally -- a much-larger and more-powerful hammer that every President has had available to them for the last 30 years and yet has refused to use.

The Executive has the power and duty to enforce the law.  15 USC Chapter 1, which is where The Sherman, Clayton and Robinson-Patman acts reside, is an extremely powerful body of law bearing on exactly the sort of conduct the entire medical system engages in daily.

Why is that body of law far more-powerful than any threat to legislate?  Because those laws not only provide for ruinously-large fines they include prison time for the executives involved and since they already exist they cannot be blocked by Congressional inaction.

Fines are something that we know businesses simply incorporate into their cost of business and thus ignore.  Witness Wells Fargo, which got caught breaking the law by adding on services that customers never ordered.  That's a serious violation of consumer protection statutes and yet nobody went to prison.  In fact nobody was even indicted in that regard, but the company was fined.  Did it matter?  Not really.  Sure, a few people lost their jobs including some executives but the fact of the matter is that measured objectively the company was unharmed and the people who were involved got away with what amounted to robbery by deception.

Why will this article go unanswered?  It's rather simple, really: If you simply enforce the law then you would cause health care spending to contract from it's near-20% of GDP down to something approaching its historical average, which was 3%.

Let's assume that we get 4%.  That's a 15%, roughly, contraction in GDP!

At the same time a whole lot of people who currently are employed but provide not one single minute of actual care to an actual person would either see their salaries drop precipitously or lose their job entirely.  Here's looking at you, medical coders, although certainly that's not the beginning or end of it.

And what do we call that sort of economic contraction, even though it would be short-lived and soon reallocated into other areas of the economy?

A Depression.

I remind you the formal economic definition of "Depression" is a 10% decline in GDP from top to bottom.  We would hit that metric in about an hour after the law began being enforced.

The challenge before both the Executive and the people, along with Congress, is that the path we are on not only is unsustainable (which has been pointed out by many, myself included, for decades) with regard to this spending we are out of time to deal with it.  Like most areas of unsustainable things government's inertia and lack of desire to do something that might (in this case, will) upset asset prices is to kick the can or simply ignore the problem entirely.

That's popular but when the wall comes into view around the last corner if you still have your foot mashed on the accelerator with spending growth around 9% when tax receipts are flat to actually down you are asking for a crack-up of devastating impact.

The obvious bleating is that all these levered hospitals (nearly all of them; you don't think they paid cash for all those nice glistening buildings, do you?) will go bankrupt.  My answer is so what?

Do you really think there will be no doctors and no hospitals?

No, what will happen is that that nice empty hospital that goes bankrupt and shuts down is still sitting there with perfectly-functional operating rooms and beds.  Someone will come along and buy it at 10 cents on the dollar.  A week, or a month later, if the sign read Frobozz Hospital the word "Frobozz" will be gone but the "Hospital" part will be lit up and there will be doctors performing procedures and nurses caring for customers.

With the facility being bought for ten cents on the dollar and 95% of the administrators fired said hospital will operate at a fifth of the former cost, and thus price.  With the law being enforced you'll have a nice price list on the Internet and that hospital will have to compete for business, which it will do quite well at with its much-lower cost structure.

The hospital across town or across the county that didn't go bankrupt will have to figure out how to gets its cost structure down to where that one is or it will go bankrupt too.

Is that bad?  No, it's good!

See, if that one goes bankrupt then the same process happens again.  Once again someone will buy the bankrupt facility for pennies on the dollar and shortly there will again be doctors and nurses -- but not many administrators -- providing care to customers.

This is how markets are supposed to work and it is how they do work when you put a stop to the illegal monopolist and price-fixing games.

I love a good bankruptcy sale.  Buying things at pennies on the dollar with the blessing of judicial oversight in such a process, or just before a forced-eviction is about to happen (because someone didn't pay the rent!) is an awesome competitive thing.  It drives down price and drives up quality for the dollar paid.  It powers innovation.  It powers productivity which is defined as doing more with less.

And it brings down price for customers which is good for everyone except the monopolists.

Its a process that plays out in markets every single day when the government actually enforces anti-monopoly laws and throws handcuffs on colluders, forcing their outrageous mob-like behavior to be met with well-deserved criminal sanction.

And best of all, despite all the lobbying dollars spent in Congress there is exactly zero Congress can do to stop it since the laws required to bring about these changes are already on the books, have already been challenged and found valid all the way to the US Supreme Court and thus merely need to be enforced.

So Mr. President, as with the last several Presidents, I ask you once again:

Are you going to enforce the law and demand real reform of the payment system for medicine, which I remind you is required by your oath of office, or are you going to continue to allow the medical industry to financially gang***** the American people on a daily basis until it bankrupts not only all of America but the government as well and define yourself, along with the entire body of federal and state law enforcement, as a Racketeer unworthy of anything more than a blob of spit aimed at your shoes?

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