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Commentary on The Capital Markets
2017-01-14 12:55 by Karl Denninger
in Editorial , 5941 references
[Comments enabled]  

This is the reason I'm giving up folks:

A new Rasmussen Reports national telephone and online survey finds that 88% of Likely U.S. Voters say it’s important for Congress and the president to have some sort of replacement program in place if they repeal Obamacare, with 69% who say it's Very Important. Eleven percent (11%) don’t think it’s important for them to have a replacement plan ready, but that includes just three percent (3%) who say it’s Not At All Important. (To see survey question wording, click here.)

Let me start from the beginning when it comes to insurance of any sort.

The cost of insurance is determined by the following arithmetic formula:

$ = p(event) * cost(event) + profit(insurance company)

This is not my opinion it is a mathematical fact.

Those who deny mathematics are idiots, frauds, thieves or all three at once.

Now let's ask a question: If you have just totaled your car what is the price of collision insurance on your car?

p(event) is 1.0 (probability of a collision) since the wreck already happened.

Therefore the price of said insurance will be the cost to replace your (now-totaled) vehicle plus a profit for the insurance company (without which it will not stay in business.)

In other words it is always cheaper in that instance for you to just go buy another car because you are paying the insurance company a profit for no reason at all.

It is usually not all that hard to figure out what the cost of an event is; given enough of a data set it's actually quite easy since an insurance company cares only about the average cost of the event across all of those people it insures of like sort and with like limits.  The hard part is the p(event) piece, and if you get that wrong as an insurance company in the wrong direction you will go bankrupt fast.  For this reason insurance companies pay actuaries quite a lot of money to get as close to the true value of p(event) as is humanly (and, with all the computers we have now, analytically and computationally) possible.

For this reason those who argue for "health insurance" for pre-existing conditions are either ignorant or worse, they are actual thieves who deserve to all be thrown in prison because what they are demanding is the ability to steal from everyone else.

That sounds harsh, and it is.

It's also absolutely true and if you actually adovcate and try to get enacted into law anything that forces such a paradigm on the public then you are personally a liar, a fraud and you deserve to go to prison as well for the crime of being an accessory both before and after the fact to their theft.

There is only one way that such a person, arguing for such a thing, can have a position that makes any sense at all.

He or she must argue for rationality in the cost of the treatment of such a condition.

Further, if such is achieved then "insurance" that covers same would be stupid since you then would simply be paying more for the treatment of said condition with the involvement of said insurance company than if you just paid for it yourself.

Let's take birth control.  Most women want birth control options available to them at least some of the time during their life.  The exceptions are (1) when you're too young to have children, (2) when you're too old to have children (you've gone through menopause), (3) you're not in or contemplating a relationship where having children is possible (e.g. you aren't dating anyone, don't intend to, or are in a lesbian relationship) or (4) if you desire to have children at the present time.  Any other woman would logically want to use some form of birth control.

But by mandating that "health insurance" provide such birth control as a "benefit" we now take p(birth control) and make it  [1 - ([number in options 1-4] / all women)]  If 20% of women are in 1-4 then p = 0.8 (instead of 1.0).  The problem is that you are now stealing from the women in groups 1-4 as you're insisting they pay in part for your birth control.  In addition, and much worse, you now have created an incentive to obfuscate the cost of said birth control and ratchet it up since you only get part of the bill.  That is exactly what has happened -- the cost of birth control in the United States is now five to ten times or more what it would be under capitalism and that 500+% increase is literally being stolen from everyone.

Birth control pills are extremely inexpensive where available over-the-counter -- under $15/month.  They typically cost double that or more here in the United States -- for the same drug.  Depo-Povera, the three-month hormonal birth control "shot", costs about  $1.50/vial wholesale in other nations and yet the "routine" cost for said shot here in the US for those without "insurance" runs around $60!

Are you really telling me that even poor people can't come up with less than $20 a month?

More to the point why isn't Depo-Povera $13.00 for three months, or about $4/month -- a 100% profit margin over wholesale cost for the drug + $10 for the 5 minutes to pay a nurse to stick you with the needle?  That's roughly a third of the cost of birth control pills and yet it requires no daily attention.

Yes, I understand Depo isn't for everyone just as birth control pills aren't.  But the fact remains that they work and are the choice of birth control that millions of women make.  By doing so under the "current system" those millions of women are getting screwed out of billions of dollars and forcibly screwing everyone else at the same time.

What all those arguing for such "mandatory" coverage are saying is that you think the drug companies and doctors should be able to charge your "insurance" $100 for something you can buy for somewhere between $13 and $25!  And guess what -- that makes your "insurance" cost more than the difference if you had just paid cash because $100 is more than $25 and the insurance company has to make money or it will go out of business -- so the price to you, through "insurance", when one includes premium, deductibles and similar, is more than $100.

Fact: Birth control pills, in a capitalist system, should cost less than 50 cents/day.  A Depo shot, in a capitalist system, should easily be able to be delivered for $13, or about 14 cents/day.  Even extremely-poor people can afford 14 cents, and if by some chance there are those who truly cannot we can almost-certainly transparently, through voluntary charity, manage to find that 14 cents in change laying around on the ground to provide it for them.

What's even worse is that since insurance is a regulated business and the states typically set the maximum allowable profit for an insurance company at 10% the only way for an insurance company to make more money is for whatever it "covers" to go up in price.

They thus have every possible financial incentive to get involved in business models that make the cost of medical care go up -- and no financial incentive whatsoever, ever for the cost to go down.

We have the mess we are in today in health care because the American public believes in and demands the mathematically impossible and nobody in the political class is willing to stand up and tell them that what they're demanding is impossible and, if they don't stop, our national economy, markets and all asset classes including all government support and assistance of any sort will be ruined.

Roughly one dollar in five spent today in the United States goes toward health care.  This is double what other developed, industrial nations spend and virtually all of them have socialist health care systems. Capitalism always beats socialism because capitalism adds the motive to undercut your competitor(s) on price along with developing new means of efficiency that lower your cost, allowing you to earn the same margin while charging less money.  It is this motivation that has led to $200 TVs that weight 25% as much, use a fifth of the energy and have four times the resolution of a TV set 20 years ago that cost $800.  It is this motivation that has led to the development of $35 computers the size of a pack of cigarettes that are 200 times faster and have more than 1,000 times the memory of a $2,500 computer sold in the 1980s.  It is this motivation that has led to the development of $50 cellphones you can hold in your hand, have a $30/month "all you can talk" bill and run a week on a charge with 30 minutes of talking a day.  The same capability used to require a device the size of a small briefcase that cost $1,000, it weighed 20 pounds, had a battery that was good for an hour of talk time and cost $2/minute to send or receive a call.

I personally have owned all of the predecessor devices I mention in the above paragraph, and many of you have as well.  Medical care and technology should follow the same cost:benefit curve but it has not.  The reason is not because it is different than anything else.

It has not because the companies in the business of providing that care have colluded, they have fixed prices and they have otherwise employed tactics that have driven up the cost of care by a factor of six in terms of the percentage of our economy devoted to same while our actual health in objective terms lags our western peers over the last 40 years instead of that cost plummeting while quality and results skyrocket just as occurred in every other technologically-focused endeavor.

Why do people steal? Because it is easier to steal than to create -- or innovate.

Why do firms collude and lobby for the ability to use force to rip you off?  Because it is easier to grow your top-line revenue by doing so than to innovate and create, and it also has a more-certain outcome.

Capitalism only works when it actually exists. For an economic system to be capitalism you must have (1) the risk of failure, (2) the pressure of competition and (3) a level playing field in which anyone who wishes to can enter your line of business if they perceive that they can do whatever you do better, faster, cheaper -- or all three.  As soon as you can force someone to buy your product instead of someone else's (or you can prevent them from refusing to buy at all), you can price-fix, you can refuse to provide a price at all before someone is obligated to pay or refuse to honor a price you quote, you can form cartels and discriminate against buyers of like kind and quantity based on some third-party affiliation or status or you can deny potential competing entrants the ability to compete with you and any or all of those acts are not met with prosecution and imprisonment you do not have capitalism -- you have racketeering.

It is for this reason that 15 United States Code exists -- to protect capitalism by making illegal the formation of cartels, price-fixing and similar acts -- in other words, to make cheating and using force to block competing business entrants instead of innovating illegal.

For those ignorant of history 15 United States Code was passed in 1890 because multiple firms, including Standard Oil and Chesapeake & Ohio Fuel, among others, were engaged in the above set of acts and were screwing people who were dependent on their products.  The Clayton Act, passed in 1914, closed several loopholes that certain firms tried to exploit.  Robinson-Patman was passed in 1936 to explicitly outlaw price discrimination against buyers of like kind and quantity of goods.

To those who say that Health Care providers "aren't" engaging in acts that are rank and outrageous violations of 15 United States Code (Sherman, Clayton and Robinson-Patman, respectively) let's take health care and transplant it into the sale of, oh, cars and see if you still agree with your position.

Let's assume that a car dealer decides to sell poor people a Frobozz Max (we'll use a made-up make and model) for $3,000.  He decides to charge rich people $50,000 for the same vehicle.  He posts the $50,000 price as his "chargemaster" price for the car, but some people will get it for a lot less.  To figure out exactly how much you will pay you must tell him what sort of insurance you have and you must also sign a piece of paper allowing him to bill you anything up to and including the $50,000 before you can have the vehicle -- you'll find out how much it is only after you leave the lot.  The "middle class" guy will probably, provided he has the "right" insurance, pay somewhere around $8,000 for that car.  But, if he doesn't, he might get swatted for the entire $50k.

It would be very easy to sell that "model" of car sales to more than half the country -- everyone upper middle class and below -- wouldn't it?  It would be very easy to get elected running on that platform, right?  Here's a middle-class guy who is going to pay $8,000 for $24,000 worth of car!  That's a hell of a deal and only the "rich" will get soaked -- they can afford it, right?  That's exactly the model you have been sold and voted for and then once it was in place the medical industry ramped up the price so that instead of $8,000 you're paying $20,000 and the so-called "market" price is $300k instead of $50k -- but you're still getting "a deal" even as they expanded the "base price" by a factor of six!

But are you really getting a deal as "Joe Average"?

Think for a moment about how long this dealer will stay in business unless he colludes with all the other dealers -- or gets the government to force you to work with this model of car sales and force you to buy said insurance. Unless he does one of those two things someone will open up a car lot next door and sell a comparable vehicle for $25,000!

If both dealers cost of the car is actually $24,000 the first dealer with his differential pricing scheme and ramped-up cost model at six times what it should be will immediately go bankrupt.  Everyone who would be charged more than $25,000 will go to the second dealer and buy his or her car there, paying less.  The only people left at the original dealer's lot will be those who are getting the "poor person's price" which is below his cost.

If he can't make someone else pay the difference for all those "poor people" then he will be out of business in a day.

This is true for any line of work -- including medicine.  That such a billing system exists -- where different people are charged different amounts for the same thing not based on the quantity of their purchase (everyone who needs a given procedure only needs one, right?  Likewise anyone who needs a month's supply of a given drug) but rather based on what sort of "insurance" they have or how rich they are is proof beyond any doubt of collusion, restraint of trade and anti-competitive activity.

It is impossible for such a system to survive for a single day without such acts of illegal collusion or the use of force for the simple reason that if just one non-colluding entity in the market offers the same good or service but doesn't do that sort of thing then everyone who is being forced to pay above cost to subsidize those getting below cost will do business with the non-colluding entity and the party trying to use such a billing model will instantly go bankrupt.

Now let me remind you that all of these acts are against the law.  They are not just civilly against the law -- in many cases they're felonies and carry prison sentences.

If you enforce the law then the cost of health care, all-in, will drop by approximately 85% and that assumes no technological innovations have occurred in the interim 30+ years that would make it even cheaper!  Of course such innovations have occurred -- in medicine as elsewhere.

Let me give you one simple example of this outrageous behavior that is trumpeted in public statements and even advertisements on TV and elsewhere: So-called "patient assistance programs" from drug companies. Robinson-Patman (federal anti-trust law) says the following:

It shall be unlawful for any person engaged in commerce, in the course of such commerce, either directly or indirectly, to discriminate in price between different purchasers of commodities of like grade and quality, where either or any of the purchases involved in such discrimination are in commerce, where such commodities are sold for use, consumption, or resale within the United States or any Territory thereof or the District of Columbia or any insular possession or other place under the jurisdiction of the United States, and where the effect of such discrimination may be substantially to lessen competition or tend to create a monopoly in any line of commerce, or to injure, destroy, or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them: Provided, That nothing herein contained shall prevent differentials which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which such commodities are to such purchasers sold or delivered

It does not say "it's ok to discriminate for someone in pricing if they're poor."  It does not say "you may soak the rich."  It does not say "you can charge $5/gallon for gasoline to someone who has a lot of money, and $1 to someone who does not."

Note that the law does say you can offer a quantity discount, provided that the discount rationally relates to the difference in cost of delivery of X .vs. X+Y.  So if I buy 1,000 of a given thing in a package you can charge me less per item than if I buy 10 of the same thing if the difference in price rationally reflects the difference in packaging and distribution costs.  This is why if I buy 5lbs of coffee from a particular supplier I can be charged $8.50/lb (for green coffee) and if I buy 10-25 lbs the price is $7.95/lb, and so on.

But you cannot charge customer X who needs 30 pills a month $20 and customer Y who also needs 30 pills a month $500 based on their income or the insurance they choose to buy (or not.)

Doing so is black-letter illegal.

For those who say that "insurance companies can do this" no they cannot.  That went up before the United States Supreme Court in 1979 when insurance companies tried to claim that under Mccarran-Ferguson (which allows limited anti-trust immunity to insurance firms -- and is the reason they can have and use things such as the CLUE database in their underwriting) a differential-pricing scheme was exempt from anti-trust law and they lost.

There is only one way to prevent the escalation of cost in the federal budget related to Medicare and Medicaid, not to mention the outrageous pricing decisions such as charging $2,000 for a course of treatment of a drug in one country and $80,000 here in the United States -- and that is to enforce the law and break all of these monopolies.

Every medical provider of any good or service, whether it be a doctor's visit, a drug, a procedure, a device or anything else must be required to have one price that is charged to every person equally, irrespective of how they pay or what sort of insurance (if any) they carry and irrespective of where such a product or service is sold, absent a reasonable difference related to the cost of delivery or manufacture in a given locale.  Such prices for each and every service, procedure, drug, device or anything else must be published and maintained where the public can verify that each person who receives like kind and quantity of same is charged the same price exactly as the local gas station is required to post a price and charge the same to each person who wishes to buy gas.

Any entity that colludes with any other to fix prices must be indicted, prosecuted and imprisoned in accordance with 100+ year old law found in 15 United States Code.

The customer, that is the person seeking care, is then free to compare price and quality of service, along with whatever their "insurance" will cover (if any of it) and decide which facility to utilize.  State anti-gouging statutes must be fully enforced for those instances where someone is unable to decide (e.g. they just got in a car wreck and are unconscious, they are having a heart attack, etc) while various EMS and other services that are caught "steering" people in such circumstances to higher-cost treatment options must be criminally and civilly charged.

Drugs are slightly more-difficult. Unlike the other components of anti-trust law (which explicitly include international commerce) Robinson-Patman could be construed to not apply across national borders.  However, should drug companies wish to continue the practice of differential pricing in different nations they remain exposed under the other elements of Sherman and Clayton until Congress repeals the reimportation ban or extends Robinson-Patman by adding "international" to "interstate", never mind existing case law where book publishers tried to prevent the resale of books bought overseas in the United States (and lost in the USSC.)

It will take about one day if these changes are adopted for the cost of medical care to collapse to a tiny fraction of what it is now.  With that collapse it will be unnecessary and undesirable for you to buy "insurance" against already-existing conditions because it will be cheaper for you to simply pay in cash.  For nearly everything you will be able to pay.

For those possible catastrophic situations that haven't happened yet you will be able to buy reasonably-inexpensive insurance because the product of p(event) + cost(event) + profit will be small enough that the premiums will be affordable to virtually everyone, even those of very modest means.

Finally, for the truly indigent we can certainly keep Medicaid and, since this cost reduction will occur across the board we can also keep the promises made for Medicare both for today's Seniors and tomorrow's.  The cost of those programs will fall like a stone -- a more than 50% immediate reduction is assured, and instead of going up in cost every year as technology and productivity improvement will no longer be able to be stolen by said medical providers (since the price is the price for everyone including those in Medicare and Medicaid!) the cost of these programs will go down every year instead.

This is the only way out folks and it's one we must take now.  It cannot wait, it cannot be done tomorrow, we cannot "repeal and replace" with yet another scheme to try to keep the ponzi-based fraud and felony-laced medical system we have in the United States afloat.

If we do not do this now then the federal budget and all state budgets will collapse within the next 5 years.

Attempts to "negotiate" out of this may be able to buy another couple of years of time, but will not change the outcome.  That's the math, like it or not, and we have repeatedly squandered the opportunity to address the issue when it would have been far less disruptive (in terms of the short-term economic recession that will occur) all the way back to the passing of EMTALA in 1986.

We either do this now, and we demand as citizens that it happen without exception and backed by whatever action(s) are both necessary and possible to enforce that demand with both Donald Trump and Congress, up to and including a full general strike called across the nation, or we lose the financial stability of our federal government, our state governments and our way of life in America.

We are doomed to collapse as a nation because the fact is that you won't do it, your neighbor won't do it and as a result Trump won't do it and Congress definitely won't get behind him in doing it either because the medical and pharma lobbies will be completely destroyed if it happens and they know it.

Yet there is literally no other issue that matters to any material degree if we don't take care of this one -- right here, right now.

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2017-01-12 09:20 by Karl Denninger
in Health Reform , 1053 references
[Comments enabled]  

That goes for the rest of the so-called "analysts" as well.

Everyone is entitled to their opinion.

You are not entitled to your own made-up claims which you present as fact.

Again, the facts:

Last year the Federal Government spent $1,417 billion dollars out of $3,854 billion, or 37% of every dollar it spent, on Medicare and Medicaid.  This was a 9.3% increase over last year's expenditure of $1,296,731 (million), all-in.

But inside this figure are even-more damning numbers.

Payments to the health care trust funds were up 13.4% (!)

Spending on CHIP, the plan for poor kids, rose last year by an astounding 56%.  While the total spent was only $14.3 billion that rate of rise is utterly astronomical by anyone's measure.

Don't believe for a second that administrative expenses are under control, which is a claim often made for Medicare and Medicaid: They were up 32% last year for the primary hospital insurance trust fund.  No, that's not a misprint.

Hospital benefit payments for Medicare?  Up 8.4% -- the bright spot, believe it or not.

Medicare Part "D" (drugs)?  Sit down: Up 26.2% to a total of $95.2 billion.

Folks, at this rate of change within the next four years Medicare and Medicaid will consume just over $2,000 billion a year, or $2 trillion -- an increase of $600 billion a year in spending.  

No, it won't rise to consume that amount.

If it is attempted, and absent actual resolution that will be attempted, the federal budget and economy will detonate.

No, "bidding for drugs", as Trump said, will not fix the problem.  Last year Medicare Part "D" (drugs) spent $95.2 billion.  Yes, that was up 26% from the previous year, but the fact of the matter is that even if you cut that acceleration rate to zero the rest of the $1,417 billion would continue to accelerate, with hospital payments up by 8.4% last year.

You have to put a stop to all of the medical pricing games, the collusion and the rank violations of long-existing law found in the Sherman, Clayton and Robinson-Patman acts.

You cannot simply "negotiate" on the government side.  I remind you that outside of prescription drugs the federal government already mandates "reimbursement rates" for medical procedures including hospital charges on both the Medicare and Medicaid programs and yet that spending went up 8.4% last year anyway.

8.4% is wildly beyond even the most-optimistic view of economic expansion under a Trump administration -- and those optimistic views are unlikely to be met.  Some improvement is likely due to tax and regulatory reform but there is no way it's going to eclipse an 8.4% acceleration in spending.

Further, any attempt to do so on the "government" side for Medicare and Medicaid without forcing the private-sector side to adhere to the very same set of laws will simply cause the medical firms to shift the expense to those not on the government dole.

That's probably you.

If Trump does that then you get butt*****d.  If Price manages to get balance billing into Medicare (which he has formerly advocated for and in fact tried to get passed!) then every Senior will get butt*****d and as they get older and sicker, after being forced into Medicare, they will all have their entire net worth stolen.

If Medicaid is block-granted to the states then the states will have a fixed pile of money "given" to them but the mandate for Medicaid will continue and with a ~9% acceleration in cost not matched by the block grant every single state budget will detonate within five to ten years.

Medical spending is approximately 19% of total GDP today and 37% of federal spending last fiscal year.

The only solution to the problem is to take the ~$3.5 trillion "medical industry" and make it a $1 trillion a year industry by enforcing the Sherman, Clayton and Robinson-Patman acts against each and every actor in same.

Robinson-Patman, for example, states that any commodity (physical, standardized good) that travels in interstate or international commerce cannot have discriminatory pricing applied to it between buyers of like kind and quantity.  This quite-clearly applies to drugs and supplies used in medical care.

Whether you have "health insurance" does not change who the actual buyer of said drug is -- the actual consumer is you.  It is therefore quite-clear that to charge one person $20 for a month's supply of a drug and someone else $500 for the same one-month supply is an obvious and blatant violation.

So-called patient assistance programs are also rank violations of Robinson-Patman.

Those programs, which are often-cited by pharama companies, discriminate against some people and for others based on their income and insurance status for a buyer of like kind and quantity of a commodity -- in this case a drug.  Try charging one person $3,000 for a car and the next person $30,000 based on their car insurance company and/or income and see how long you stay out of prison.  Ditto if you were to try to charge a poor person $20 to change the oil in their car and the next person, who has a $100,000 income, $200.

Likewise, Sherman and Clayton make collusive practices of any sort that intend to or do lessen competitive pressure illegal.  The refusal to post a price, refusal to honor a claimed price or discriminating between consumers based on their health insurance carrier or status is quite-clearly intended to prevent meaningful shopping -- competition -- between providers of medical services (such as hospital services.)

To those who claim there is an exemption in these laws for such goods and services I challenge you to provide a citation to the law you claim exists.  Mccarran-Ferguson is not a valid example of same as regards drugs, incidentally, as that has already been litigated at the US Supreme Court and it was found that "pharmacy agreements" (to fix prices and charge differential rates based on "insurance") are not "the business of insurance."

Never mind that Mccarran-Ferguson provides no shield from state anti-trust statutes (only federal) and in fact the law explicit allows for said state laws by deferring to same!

We don't need new laws -- we need vigorous enforcement of existing, 100+ year old law.

Folks, it is this issue that Trump either must address now, in the first 100 days, or the rest doesn't matter.

If you're a Trump supporter then you need to be 100% on board with this and make damn sure he is held accountable to it because if he doesn't address this specific issue in this specific fashion then the rest of his agenda literally does not matter.  The federal budget will collapse and attempts to stave it off will at best buy a couple of years while forcing said collapse down on the states as well.

Again, there is no "halfway" measure that will work.  The only answer is to break up all of the medical monopolies and enforce all of federal (and state) anti-trust, anti-competitive and deceptive practice laws against every medical provider, whether it be a drug company, a pharmacy, a hospital, a practice, diagnostic centers and even individual doctors.

We either do this and return health care to a $1 trillion a year industry from a $3.5+ trillion industry or this nation dies fiscally, and if you currently suffer from a chronic condition that requires ongoing medical care or pharmaceuticals there is a good chance you will die physically as well.

This is not politics.

It's math.

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2017-01-09 05:00 by Karl Denninger
in Editorial , 588 references
[Comments enabled]  

The other day I was compelled to do something that made me rather sad -- I formally told someone who has been an associate of mine for many years to remove me from his distribution and contact lists.

The triggering event was a public, social-media statement that was predicated on (and included) a knowingly false statement of fact related to me -- which was in reply to my going after Trump and his appointment of Price for HHS.

Folks, we are where we are in this country when it comes to the impending destruction of our nation, our economy and our political system along with the federal budget and all programs funded by same as a direct result of people in this country on both sides of the aisle being willing to anoint their particular favored candidate God when he or she wins.

This in turn has allowed multiple politicians over the last couple of decades from both parties to engage in the literal******of the American people's pocketbook, wealth and future both in the areas of education, which is horribly bad, and worse in Health Care which, due to its size and government involvement threatens the future of this nation and our way of life.

We watched this with Obama, who came into office with great fanfare and expectation by half of the nation (and dislike by the other half) who then rammed Obamacare through a Congress he controlled in its entirety.  Now Trump is President and he also has a Congress he controls in its entirety.

On the educational side both parties have participated in turning college into an asset-stripping festival for both schools and lenders, destroying the personal value of an education for almost everyone -- and both parties have been equal participants.  Both parties, among other things, were involved in making student loan debt not dischargable in bankruptcy, both propped up Sallie Mae and ultimately bailed it out with even more policy changes and neither has done a thing to reverse either of those steps or the never-ending federal support of the cost-spiral and debt that has made post-secondary education a bad deal for the vast majority of young adults where it was formerly a good deal for virtually everyone.

It is one thing for an individual with no particular influence beyond their own personal friends to refuse to look at the arithmetic of a matter like this and act on it, or to dismiss one politician or party's malfeasance while aggressively disliking the other.  That's why we're in this mess but if you do that as an individual it is only through the collective acts of everyone like you that the harm occurs.

But if you are in any way involved in public life -- you're a member of the media ("organized" or "independent", doesn't matter), you've run for office or are now running for office or are in any other way in the public eye your acts are no longer simply the singular acts of an individual -- they now are intended to, and do influence others on a larger scale.  This is particularly true if you make any part of your living from those activities, and if it's your sole source of work-related funds then literally everything you gain from society is being gained due to a lie -- a lie that is screwing every American blind.

I can't sit for that nor associate with people who knowingly participate in it.  I didn't when Obama was President and I won't now that Trump will be.  I lost a bet during the campaign which I willingly and voluntarily paid off (I bet that Hillary would not be nominated, likely because she would get indicted first) and at no time did I believe she'd win (in fact I published my own expectations for the electoral college map shortly after the conventions) nor did I in any way support her personally or her candidacy.

But that does not mean that Trump gets a pass from me on this issue, which is one that has no partisan boundary to it and if not attended to will destroy our nation.  Trump's nomination of Price for HHS is proof that he has zero intention of fixing anything related to the health care mess and in fact will enable the medical industry to screw you longer and harder, giving that screwing the force of law for Seniors through what is known as "Balance Billing" -- a practice Price has not only endorsed he previously tried to get it passed into law for Medicare recipients.

I remind you that Obama managed to buy two whole years of much-slower Medicare and Medicaid spending growth with his massive changes to the medical system including trying to force everyone into the scam via Obamacare.  Two years folks -- that's all -- and in doing so he made resolution of the problem much harder.

Trump's pick for HHS, Price, has previously declared an intent to try to stave off the collapse by literally raiding the entire net worth of every Senior citizen.  I don't believe he will get more than two (additional) years out of that stunt but if he was to pull it off that might delay the detonation until Trump leaves office -- eight years hence.

The Senate is well-aware of the issue.  A few years ago I was invited to a meeting of a handful of top aides to Senators to talk about the budget trajectory and its impact.  I pointed out that on the math there was only one area of the budget that mattered -- this one.  It is clear on the basis of simple arithmetic that we are screwed unless this issue is addressed and there is only one way to do it.  The people in the room did "get it" but bemoaned the political ramifications of taking it on and they have done nothing effective since, allowing politics to win over math -- for now.  This was during the time of the "debt ceiling" debacle -- several years ago -- an event that ultimately led me to tell McMorris-Rodgers to perform an anatomically-impossible act.

Listen to what they're saying today:

"I don't think we can just repeal Obamacare and say we're going to get an answer two years from now," he said Thursday on MSNBC.

"We haven't coalesced around a solution for six years, in part because it is so complicated,” he also said. “Kicking the can down the road for a year or two years isn't going to make it any easier to solve."

With Trump as president and fellow Republicans controlling Congress, the GOP indeed finally has an opportunity to repeal the law.

But nothing about revamping the nation's $3 trillion-a-year health care system will come easy, with congressional Democrats vowing the stop Republicans at essentially every step.  

The solution is to take that $3 trillion a year system and make it a $1 trillion a year system.  Doing that will resolve the entire federal budget deficit and debt problem, it will resolve all of the state and local pension issues related to retiree health expenses (that's most of it) and it will permanently end the depreciation of our currency, which screws everyone.  It will also make America far more competitive as a place to do business and thus attract jobs and firms here from other nations, going a long way toward addressing both offshoring of labor and our trade balance.

It is not only possible to do this it can be done, for the most part, using existing law.

There has been zero discussion or statements made about doing the one thing that will actually fix the problem: Enforcing 15 United States Code against all medical and health-insurance related firms.  We could start by enforcing Robinson-Patman, which federally bans price discrimination for buyers of like kind and quantity, against pharma firms and hospitals.  We could enforce the anti-collusion components of Sherman and Clayton against everyone, and indicting anyone who won't post a price and charge the same price to everyone without regard to how they pay. In short we could take the monopolists in both insurance and medicine out back behind the woodshed and offer them a choice -- either cut it out, right now, or go to prison under 100+ year old already-existing law and have your corporation ruined with $100 million per-count fines, and remind them that we will tally every person that gets screwed as a separate and unique count.

I remind you that Obama doesn't care that Obamacare is detonating because it is happening after he leaves office and likewise Trump will not give a good damn what happens after he leaves office -- even if it's only by a month or two!  I correctly forecast, on the math, that Obamacare would detonate and it is no surprise to me whatsoever that it is doing so now as he is on the verge of leaving office.

Why hasn't anyone from the Senate, including so-called "libertarian" Rand Paul, raised and pressed this?  Because doing so will mightily***** off a whole bunch of K-street lobbyists and people in the "industry" that have been running federally-enforced financial******rooms for everyone in this country for the last 30 years.  Dismantling the screwing they have forced Americans into will mean many of those people lose their jobs, many more will see their incomes cut to a monstrous degree and in the short term a 12-15% hit to GDP will take place.  It won't last long because that output will be redirected into other, more-productive pursuits, but the short-term pain and blaring of "Recession!" in all the major media, along with a massive downward stroke in the stock price of every firm related to this scheme carries political risk that none of these people will take -- even if not doing so will destroy America financially and they all know damn well that it will with absolute mathematical certainty.

If my refusal to shut up about this issue and "give Trump a pass" means I wind up being labeled Deplorable, Irredeemable and all the Trump schwantz-gobblers attack me as well because I will not fall to my knees and take a turn on the Presidential knob then I guess I'll have to settle for a purring cat, my (now adult) kid and leaves on trees in the woods as my list of "friends."

So be it.

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2017-01-07 10:50 by Karl Denninger
in Editorial , 1388 references
[Comments enabled]  

So here we have the "full" declassified "intelligence assessment."

In the "wow, you really think this is news?" category we have statements like this:

The Russian leadership invests significant resources in both foreign and domestic propaganda and places a premium on transmitting what it views as consistent, self-reinforcing narratives regarding its desires and redlines, whether on Ukraine, Syria, or relations with the United States.

"What is Voice of America for $500, Alex?"

Really?  This belongs in an "intelligence assessment"?

Then we get into the "Holier than thou and thus we are entitled to meddle while they are not" horse****.  For example:

Putin most likely wanted to discredit Secretary Clinton because he has publicly blamed her since 2011 for inciting mass protests against his regime in late 2011 and early 2012, and because he holds a grudge for comments he almost certainly saw as disparaging him.

In other words our government can incite mass protests against a foreign leader, which goes far beyond crap-posting on the Internet or running "news broadcasts" that are slanted, but if they do it then they're the bad guys and we need to seize property sold to their government and eject 30 of their diplomats.

Uh huh.

Moscow also saw the election of President elect Trump as a way to achieve an international counterterrorism coalition against the Islamic State in Iraq and the Levant (ISIL).

Excuse me, that's good, right?  Especially when it appears to be the case that Obama, and Clinton as his Secretary of State, not only armed Daesh indirectly there is some evidence they acted with knowledge that said arms would likely reach them.  This, incidentally, is the backstory on Benghazi that I have written on repeatedly and in point of fact both Hillary and Obama knew their claimed "Youtube video incitement" for the Benghazi attack was false at the time the claim was made.

If in fact the CIA outpost in Benghazi was part of an arms-smuggling operation into Libya that went wrong and wound up with some of the weapons going to Daesh, and Ambassador Stevens was murdered in no small part because the CIA and he tried to reverse some of the damage, then it certainly appears quite logical that Russia, which has no interest in Daesh causing problems for them (terrorism is bad even if the targets are Russian, right?) would have a logical reason to not want the person who, in their judgment ARMED Daesh on purpose, in the White House!

Maybe you can explain to this little American peon exactly how that, and expressing that preference, is bad?

I wonder if your explanation would include a discussion into the reasons why Secretary Clinton has never faced an actual inquest as to whether her actions, those of Obama and others (including those in the CIA) violated US law by quite-effectively providing material aid and comfort to terrorists?  You know, an act for which you or I would (quite properly so) do hard felony prison time?

Moscow’s use of disclosures during the US election was unprecedented, but its influence campaign otherwise followed a longstanding Russian messaging strategy that blends covert intelligence operations—such as cyber activity—with overt efforts by Russian Government agencies, state funded media, third-party intermediaries, and paid social media users or “trolls.”

smiley

So "****posting" on the Internet -- that is, "paid social media trolls" -- constitutes "election interference"?

smiley

Isn't it funny how the principle of Free Speech only applies to certain people and only some of the time?

RT’s coverage of Secretary Clinton throughout the US presidential campaign was consistently negative and focused on her leaked e-mails and accused her of corruption, poor physical and mental health, and ties to Islamic extremism.

So making truthful statements (in many cases so-documented so by the DNC's own emails) constitutes propaganda?  That said resulted in a DNC official resigning because she was caught rigging a debate constitutes "propaganda"?  I thought propaganda had, as one of its elements, stretching the truth or outright lying?  There was no lying involved here nor any forgery of content; the emails, while stolen and released (much to the DNC's chagrin) were factual.

Some Russian officials echoed Russian lines for the influence campaign that Secretary Clinton’s election could lead to a war between the United States and Russia.

Quite possible, ranging to more-probable if, for example, some of Clinton's "mistakes" in arming Daesh wound up being used to shoot down a Russian aircraft -- as just one possible and very bad outcome.  The possibility of such an event getting out of control and leading to war is real but the use of the word "could" is, in fact, exactly appropriate -- it denotes an opinion, and once again, I thought we honored this thing called free speech?

You have to be a truly special brand of stupid to have any desire for a war between Russia and the United States, or to support any candidate for public office that has demonstrated through their previous actions that they might incite one.

I find the entirety of the reporting on "RT" to be highly-amusing. Of course RT has ties to Russian interests. Duh! For the record I've appeared on RT in their Washington DC studio and it was certainly not lost on me who probably was funding them in some form or fashion.  I means, RT does stand for "Russia Today." Hello Captain Obvious.

Do they slant their coverage? Yes. All media does. One of the things I like about RT, however, is that unlike nearly all American media they'll let you finish your sentence which means when you detect them trying to slant a point you're making you can effectively respond and get the other half of your sentence out on the air.

That almost-never happens on an "American" media channel.  As soon as you try to counter their obvious slant, whatever it may be you, get shouted down, shouted over or they simply cut away from you entirely.

To the charge that RT is "slanted" I reply "so what?"  Our media has ties to US interests, it intentionally slats coverage toward Democrat candidates and policies, spikes stories favorable to Conservatives and in fact refuses to cover many of them at all.

Indeed the Washington Post was just recently caught claiming that the power grid was "hacked by Russia" when in fact no such thing took place. A few days later a "partial correction" was issued (and which remains on the original story) but in point of fact there was no code, there was no malware and there was no penetration.

In other words the entire story was a lie; not only was the original "reporting" defective the update they now have up was and remains a lie as the alleged event never actually happened.

Oh, and by the way, what motive might have existed for this?  Gee, you don't think the intent was to amplify another (maybe false) claim about Russia hacking the US election, do you?  What accountability has been attached to the Washington Post for running a completely false story claiming that a serious breach of our power grid's security took place when nothing of the sort happened at all -- in fact even the originally-revised claim of a compromised disconnected company-owned laptop was false!

Hmmmm..... now about that propaganda charge in the so-called "ICA".... perhaps you'd like to distinguish RT and what it does from what the Washington Post has now been proved to have done.

What does the DNI/ICA report amount to?

Simply this: The Russians preferred Trump as a candidate.  They believed, for what may or may not have been good cause, that Hillary Clinton might have incited a war with Russia, and deemed this undesirable.  In response they ****-posted on social media to this effect and ran slanted news stores on RT.  This makes them evil, where all those who ****-posted on social media and ran slanted news stores on other media for Clinton, including media here in the United States who not only slurred Donald Trump they also intentionally ignored the DNC's rigging of an actual election (the Democrat primary) are good and holy people who should be deified while the Russians should have sanctions applied, their diplomats expelled and property seized.

Yeah, that's about the size of it.

The media is now in a tizzy that Trump hasn't "accepted" the idea that Russia ought to be (further) punished for this "outrage" of exercising free speech and in addition that Russia's government should be convicted (and punished) for "hacking" the DNC despite the utter lack of proof that they in fact did it and a full-throttle claim otherwise by Wikileaks itself.  This despite the fact that what was released (by whoever, even if Russia) was true and none of it was forged, it documented actual cheating in the Democrat primary and debates, and that such malfeasance by DNC officials was probably one of the actual causes of their election loss.  In other words they got caught robbing the bank and while the means of catching them was illegal (and thus if it was a criminal trial the evidence would be suppressed) that the public decided to disavow the Democrat party is not only legal it was and is a rational response.  After all, would you employ someone as a bank teller you knew factually robbed a bank even if the means of discovery of same was unlawful and thus precluded them from being sent to prison?

I didn't think so.

PS: The intelligence "community" (e.g. DNI in all of its components) work for the President, not the other way around.  If this "report" is demonstrative of the quality of their "work" the entire lot of them deserve to have their next assignment to be shoveling dog**** at the local pound.

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2017-01-06 07:59 by Karl Denninger
in Employment , 221 references
[Comments enabled]  

The immediate snark on CNBS -- complete with claims that the survey is "flawed", maybe even politically-biased -- showed up with the release of this number.

Total nonfarm payroll employment rose by 156,000 in December, and the unemployment rate was little changed at 4.7 percent, the U.S. Bureau of Labor Statistics reported today. Job growth occurred in health care and social assistance.

Or did it?

Not according to the household survey it didn't.

By the household survey, unadjusted, employment fell by 587,000 jobs!

Now let's be fair -- this month (December) usually has a decline.  Why?  Seasonal hiring is over and seasonal firing has begun.  In fact, don't be surprised if next month's number (January figures) show a much larger negative print in the household survey.

The employment:population ratio turned down; that is not uncommon for this time of year either.  We'll see if that's the usual seasonal dip or if we've topped out.

The annualized figures show that against population growth in the last year the economy lost 711,000 jobs.  That is, the number of working-age people grew 711,000 more than the number of employed people increased.

The more-troubling figure in this report is that NILF -- "not in labor force" -- ticked up quite substantially (by 685,000) and in fact is up by about 3 million people since July.  That's not a good number at all as those are people who have left the workforce but are able to work -- either they have given up or gone on the dole intentionally.

The average workweek was mostly unchanged and hourly earnings were up 2.9% for the year.  That would sound good if the inflation figures actually met reality, but they don't.  If we use monetary inflation instead then once again the American Worker lost ground; with an actual federal debt increase of $1.4 trillion last fiscal year the monetary inflation in the system attributable to the Federal Government was 7.5% last year, so the average worker lost 4.5% of their purchasing power.

The employment-population ratio ticked down for all educational groups last month.  You got hurt more if you have less than a high school diploma but every other quartile got hit by three tenths of a point.  So much for the "wonderful value" in a college degree that our youth (and their families) have peddled to them, complete with ever-escalating cost and debt.

Sold to you.

The market didn't seem to mind any of this; it usually doesn't, even though the documented (by our own government's statistics!) purchasing power destruction ought to be good for a 2,000 point DOW sell-off.  Then again I suppose as long as the government runs the "educational debt" card up and as long as the population continues to buy more crap than they can afford with credit they can't pay back from a government that continues to destroy their standard of living, well, the stock market will continue to cheer.  Thank a bankster the next time you see one for however long it lasts.

Remember that next month the usual distortions in the form of annual adjustments will be made, so it may be difficult to factor those out -- we'll see.  Some years it turns the January report into mush, and others it doesn't.

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