Voice of Russia: Is Obamacare a Ponzi scheme?Karl Denninger: No, because a Ponzi scheme implies that the people who get in early make money and everybody else loses whatever they put in to this system. In this case it's just simply theft, just going to steal from everybody, because Obamacare is an attempt to take a monopoly system that has been built up in our medical environment over the last 20-30 years, and find some way to continue to extract the money that it has been taking out of the people's pockets, because the growth rate has exceeded the growth of income, so people are not able to pay anymore.
Read more at the link.
Ed: The interview itself was via skype; transcription was theirs.
I sometimes get asked why I'm closing down a large part of the Tickerforum setup and reducing my writing frequency, as if there's some reason I shouldn't.
I've related why I started writing The Market Ticker before, but for those who have short memories let's do it again. The 2000 blow-up was one of the most-obvious to me, because I was in the middle of the tech industry during the 1990s. I saw, first-hand, the fraud in balance sheets, the companies hawking business models that had zero chance of working out (cough-all-the-dsl-providers-cough!) and more.
A few people went to prison for their crimes, but only a tiny percentage of those who committed crimes. Most got away with it, and more than a few got away with all the money they conned people out of at the same time.
When the crash came several people I knew pretty well were financially trashed. One, after going from having several million to a literal zero due to ridiculous margin exposure put a gun in his mouth and blew the back of his own head off. That kinda sucked to hear about, to put it mildly.
The thing is that most of this pain was self-inflicted, but few people saw it that way at the time -- even those who had been warned. And a lot of people were in fact warned, although many more were not. What was constant, however, was the lack of any sort of regulatory oversight, even where it was clearly mandated by law.
I was fortunate enough to get out of the Internet business in 1998, before it all went to Hell. Yes, I saw it coming, but there's an instructive sidebar to this -- despite my exit consummating in September of '98 and the final closing conditions being satisfied at the end of the year (my staying on for the transition) it was another full year and a few months before everything blew up in everyone's face, and in fact the Nasdaq basically doubled in 1999 and then tacked on another 25% (more or less) in the first months of 2000 before it blew up!
I sat out the whole thing.
Now you might call me foolish for having done so, but I see it differently. I slept well at night and I wasn't destroyed in what followed.
The point is, we're doing it again.
There have been many who have said that there have been "no" robosigning incidents, for example, that have actually stolen someone's house. Oh really? I've got several instances that are hard-documented, including one just sent to me the other day. Here it is:
All I need is one, by the way, because such an act is factually grand theft and forgery is, of course, a crime. Note the recording date on the top and the alleged release date; as of today not one person involved in this has been indicted or prosecuted despite diligent effort by the party harmed.
This is not a singular event; it in fact has been repeated thousands of times, and that's just one tiny piece of the scam that has become indelibly imbued into in our economy.
HFT, or "high-frequency trading", is another example. It has been repeatedly proved that trading on information ahead of the physically possible time of release has happened. Nobody has figured out how to void the laws of physics, and a demonstration of physical impossibility within the confines of the law would ordinarily be indelible proof that would lead immediately to prosecution and conviction. It no longer does because we no longer live under the rule of law.
A waitress claims she was stiffed "because she's gay" in a restaurant, and has had "donated" to her lots of money from sympathetic people. The truth appears to be that she lied; she's been fired but the restaurant has said their investigation was "inconclusive." I argue that's a lie too; having held a merchant account for decades it is flatly impossible that the restaurant could not reconcile the claimed statement charge from the patron (which shows the amount with tip) against the claim of the waitress. The books have to balance at the end of the day and if they don't then the restaurant's bank account is out of balance, so it's an impossibility that they can't figure out what actually happened. This was not a cash transaction where someone could have pocketed a $20 with nobody the wiser; it's a recorded transaction with audit trails on both ends. Why should either entity get a pass here? Further, if people sent money through the mail or by wire (e.g. PayPal) as a consequence of a knowingly false statement doesn't that constitute wire or mail fraud?
Then we have Benghazi and Fast-And-Furious, both of which resulted in the death of Americans. In the first case we don't have all the facts but what we do have is a series of proved and intentional lies that were told about the character of the original assault related by members of our government, including Hillary Clinton personally. In the latter case we have a documentary trail in the form of serial numbers on recovered firearms from a crime scene -- serial numbers that are readily traced from a manufacturer to a dealer and then to the customer who bought them as an ineligible party with full knowledge and consent of the so-called "instant background check" system intended to prevent same. This was not a mistake or problem with the system, it was intentionally overridden by members of our own government. Knowingly causing firearms to be transferred in a prohibited fashion is a felony. So where are the indictments and prosecutions -- say much less impeachment?
There are of course many more, far-more-devious devices used to steal your wealth and freedom. One of the most-onerous and outrageous is the recent Obamacare crap. One of the (many) outrages associated with this is the fact that you can't sue the government for releasing your personal information improperly, nor can the people responsible be prosecuted. HIPPA makes unlawful the release of medical records and information by private parties but government can do whatever the hell it wants.
There were those of us (myself included) that warned early on that allowing the government to get its hands on these records would instantly destroy the already-vestigal privacy rights you had in them, and now it's happening -- and is documented to have happened. And we're not talking just about crap design, non-existent security and thus crime and accident either -- we're now talking about intentional transfer of your data without your permission.
The California health exchange has admitted it has been divulging contact information for tens of thousands of consumers to insurance agents without their permission or knowledge in an effort to hit deadlines for coverage.
Speaking of California the exchange plans there are claiming that they have "in network" doctors who never consented to same and who have said they will not consent. They're lying, in short, and yet again there's nothing you can do about it. Both in California and Florida you are very likely to find that if you enroll in an Obamacare plan you will pay for "insurance" that is factually worthless because there are statistically zero doctors who will accept it. Think I'm kidding? There is a region in Florida reported to have seven pediatricians with over 250,000 kids under age 18. And Obamacare, by preventing you from buying health insurance outside your county, traps you in this fashion -- if you go to a doctor outside that county your coverage is void and it pays nothing. How can those children even receive as little as one annual physical per person when that would be about 100 physicals per day, per doctor, including weekends and holidays! That is of course impossible and as such this "program" is knowingly taking money from people with no ability and thus no intent to provide service.
Taking money under such a pretense is an intentional and outrageous fraud -- and if performed by any other business would be considered a felony for which people would go to prison.
The purpose of writing on all these outrageous events and widely exposing them (in the form of ~7,600 articles since 2007, or more than three per calendar day on average) is to get them in front of people so that properly-focused outrage can be brought to bear on those who commit these offenses and thus they will be stopped.
There is no other public purpose for doing it, and if you, dear reader, are not going to give a damn or do anything more than point a finger and chuckle then I'm wasting a lot of brainpower and electrons in both writing and publishing.
I will effort nearly forever if I think there's a purpose in it and movement from it.
But I do not -- and will not -- tilt at windmills.
The facts are that I'm coming up on seven years into documenting these scams and frauds, from financial ripoffs all the way up to grand theft and murder while there has been exactly no movement from the public at-large.
Well, folks, as I have often commented: The sole difference between******and sex is consent.
I'll add to that here: It's not a felony if there is nobody that claims injury occurred.
The people of this nation have, over the last six+ years, defined for me which of those events is actually taking place.
I may be a slow learner, especially when I find it incredulous what is apparent and even documented via hard, physical evidence, but I'm not that slow.
Streaming music gets one thing right. Services like Pandora, Rdio and Spotify are amazing for the consumer, and in that singular way, the music industry hasn’t been better in … probably ever.
At long last, we have the celestial jukebox we dreamed of a decade and a half ago. Nearly any song is at our fingertips in seconds and that privilege costs far less than what an album used to, if it costs anything at all.
This bubble of end-user bliss comes at the expense of almost everyone else, from artists right down to the people who pioneered the idea of renting music over the Web to begin with. How long can it last?
Renting music over the web.... who thought that was a good idea?
You know there's a basic problem with the music industry in the broad sense -- it has always exploited fools, and fools often come with guitars, drums or other musical instruments.
A bit of history is probably in order. The old system of payola was in fact a scam, and one that eventually got prosecuted. In the 1950s, mind you.
Now it's not illegal to pay someone to air your material. It's only illegal if you don't disclose it, because you're then trying to distort the market. The claim that some piece of music is "popular" when the popularity is the size of the envelope containing $100 bills given to the DJ or station is fraud, just like so many other things are fraud. This one, however, eventually got people in trouble.
But what never got fixed is exploitation in the music industry in the general sense. There are many young people who have stars in their eyes and a decent sound with a musical instrument. It's not hard to rook them into what amounts to peonage while the promoters and record labels make all the money.
You'd think that after all this time and the so-called democratization of the Web that this would be well behind us. You'd be wrong.
Today the average musician still sees a percentage indistinguishable from zero when one looks at all the various people who siphon off profit from he or she playing a guitar or singing in front of a microphone. Oh sure, there are exceptions -- but they're few, far between and even among so-called "superstars" many if not nearly all collect a single-digit percentage -- if that -- of the total "take" that is dispersed around as a consequence of their talent.
So why do those talented individuals put up with it? In days gone by the response to trying to go around that system was being blackballed, unable to book a venue or sell anything because all the record pressing lines and similar were owned by a few companies -- and they all colluded up and down the line including with the record stores.
You'd think that technology and the dramatic increase in the ease of distribution would make things different today.
You'd be wrong.
Take a listen to your local radio station. Write down the first 20 artists and songs you hear. Now get on the web and find one that isn't being hawked by a "large, commercial" production studio. Or look up a dozen concerts and tell me how many ticket companies you find handling tickets for the events, and thus who controls the ticketing and order flow. You only need one finger for the latter count, for the most part.
Why is that? It's for the same reason it was in the 50s -- despite the fact that studio time is pretty cheap all-in and nowdays the equipment and software to produce music, especially in digital format, is available for a couple thousand dollars instead of tens or hundreds of thousands (or more) the same sort of scam continues to be rife through the industry.
If you think it's bad when it comes to music it's 100x worse in the film business. But that's ok -- we all love our Disney, our Lion's Gate and similar, right?
What does this mean for you as a consumer? That not much has changed, despite the so-called "technology revolution." You're still paying a ridiculous amount of money for a CD or other music source and virtually none of it (in many cases factually none) is going to the artists themselves.
For the people with talent it has changed even less.
But when it comes to so-called "upstarts" in the industry like Pandora, Spotify and even firms like Netflix, it means trouble.
I have long had an issue with the business models of many of these companies, in that it is my contention that they are basically stealing from the bandwidth providers, none of whom get compensated by them in a meaningful way for the load they present. The counterpoint is that their customer pays for the access so there is no harm or foul, but this is too simplistic -- if you drive cost higher then someone gets the check, and whether the consumer sees it directly in the subscription fee paid to Netflix or whether their Comcast cable service goes up 300% in cost instead it doesn't matter as the total amount spent is the same.
The idea that you can have something for nothing is not new. One of the challenges that I had when running MCSNet was identifying those "pain points" and staying away from them in some fashion unless I could be compensated for the additional costs that were being imposed on me, despite the fact that people wanted them.
It's not an easy task, but what is now starting to show up is recognition that in fact there is no such thing as a free lunch, and the squeeze is coming from both ends on these "middlemen", just as it has for decades on the artists themselves.
There has been plenty of ink spilled on Pope Francis and his Apostolic Exhortation Evangelii Guadium presented recently to the world. I will leave the evangelical and other religious elements to others to comment on, but Pope Francis included a sizable treatise on economics as well.
By doing so, however, the Pope displayed either outrageous ignorance or worse, intentional malfeasance aimed directly at the people the Church claims to want to help.
53. Just as the commandment “Thou shalt not kill” sets a clear limit in order to safeguard the value of human life, today we also have to say “thou shalt not” to an economy of exclusion and inequality. Such an economy kills. How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points? This is a case of exclusion. Can we continue to stand by when food is thrown away while people are starving? This is a case of inequality. Today everything comes under the laws of competition and the survival of the fittest, where the powerful feed upon the powerless.
Utter nonsense. The so-called "laws" of competition are natural laws, exactly as are the other areas that the Pope (and others) have pontificated upon for centuries. Indeed, if one is a believer (in God) then you are by your faith confirming the natural system of survival of the fittest, for you believe that God designed that which we have on this earth -- a system that clearly and provably contains precisely these elements.
Indeed, it is through these elements that progress is made, both in the animal and human realm. An animal that is slightly taller than the others in a time of famine can reach further into the trees, and thus may obtain food where other, shorter members of the species may not. He or she thus may survive and reproduce where the others do not, and over time this selects for the genetic traits that improve outcomes.
We may like to believe that we are somehow better than this, but in point of fact we cannot be if we wish to improve outcomes.
As a consequence, masses of people find themselves excluded and marginalized: without work, without possibilities, without any means of escape.
Human beings are themselves considered consumer goods to be used and then discarded. We have created a “throw away” culture which is now spreading. It is no longer simply about exploitation and oppression, but something new. Exclusion ultimately has to do with what it means to be a part of the society in which we live; those excluded are no longer society’s underside or its fringes or its disenfranchised – they are no longer even a part of it. The excluded are not the “exploited” but the outcast, the “leftovers”.
Utter nonsense, even among animals -- but most-particularly, among humans.
The "outcast" is free to go upon the earth and find his or her own niche. To organize with others of like mind. To invent, to further oneself, to strive. Many of these attempts will fail, but failure is not a bad thing, it is an essential thing for it provides feedback to the person who has failed that their steps were in vain and foolish and thus should be changed in a further attempt to find success.
Virtually everyone who has been successful in a market economy, imperfect though they are, has first failed. Many have failed several times, myself among them. Success without failure breeds mediocrity or worse, self-delusion and destruction.
Witness all those who have found it "easy" in some way -- the "child prodigy" who is "found" by the entertainment or sports industries, for example. They never experience failure, they never risk sleeping under a bridge in a box. They find "success" early and easy, and a huge percentage of those individuals, not being forged in the crucible of failure, never develop any respect for what they achieved.
What comes from that? Foolish choices and frequently self-destruction.
How many examples would you like -- they're all around you. As an aside this is a useful warning to parents, educators, governments and others: A hand up (or a "helping hand") must within a reasonable amount of time be turned to show the back of said hand, or you wind up with someone who never reaches independence and finds their own way. Whether that back of the hand occurs through circumstance (e.g. someone getting in trouble and realizing that one more bad choice will lead to ruin) or choice the only way good outcomes are manifest in the main is when the price of bad ones becomes evident to the person involved.
54. In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system.
Again, utter crap.
"Trickle down" is nothing more than a scam, but calling people crude or naive doesn't resolve anything.
We all wield economic power -- the question is why you, Pope Francis, don't want to talk about where the imbalance in that power comes from.
Perhaps that's because the Church and Vatican are deeply involved in creating and promulgating it.
Meanwhile, the excluded are still waiting. To sustain a lifestyle which excludes others, or to sustain enthusiasm for that selfish ideal, a globalization of indifference has developed. Almost without being aware of it, we end up being incapable of feeling compassion at the outcry of the poor, weeping for other people’s pain, and feeling a need to help them, as though all this were someone else’s responsibility and not our own. The culture of prosperity deadens us; we are thrilled if the market offers us something new to purchase. In the meantime all those lives stunted for lack of opportunity seem a mere spectacle; they fail to move us.
Purchase with what? Economic surplus or debt?
They spend the same but they're not the same.
56. While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by those happy few. This imbalance is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation. Consequently, they reject the right of states, charged with vigilance for the common good, to exercise any form of control. A new tyranny is thus born, invisible and often virtual, which unilaterally and relentlessly imposes its own laws and rules. Debt and the accumulation of interest also make it difficult for countries to realize the potential of their own economies and keep citizens from enjoying their real purchasing power. To all this we can add widespread corruption and self-serving tax evasion, which have taken on worldwide dimensions. The thirst for power and possessions knows no limits. In this system, which tends to devour everything which stands in the way of increased profits, whatever is fragile, like the environment, is defenseless before the interests of a deified market, which become the only rule.
The facts are that the inequality you complain about is caused by unbacked credit creation in all of its forms. In the most-recent years that form has come from government deficit spending undertaken to cover for private unbacked creation that went bad, an outrageous abuse that amounts to involuntary servitude -- otherwise known as slavery.
Worse, that was the Church's and now your allegedly-demanded response to the previous private unbacked credit creation that blew up in the rich man's face!
At its root this problem came about by trying to shift off ahe apostolic command for people of faith to do good works -- personally and with their own hands -- to the state, transforming a voluntary act taken with a view toward grace to that of one enforced at literal gunpoint.
This is the history of the Catholic Church over the last 50 years. The Church and its Pontiffs have repeatedly, deliberately and with malice aforethought transferred its responsibility for feeding and clothing the poor, as just one example, from itself and the voluntary tithing of the faithful to gun-toting governments that extract via taxation that which is not donated, and when that proves insufficient they then emit unbacked credit to hand out to said persons of their choosing, literally robbing the population at large.
These actions are in fact exactly identical in effect to coming into your home with a rifle and shoving it up your ass until you hand over the demanded sum -- whether that theft takes place via direct taxation or indirectly via destruction of one's purchasing power.
No prelate has the right to pontificate on the extraction of labor via the barrel of a gun, yet this is exactly what is being preached.
Indeed, the Church has participated, supported and demanded the very acts you claim should not be undertaken.
You are a hypocrite Francis.
60. Today’s economic mechanisms promote inordinate consumption, yet it is evident that unbridled consumerism combined with inequality proves doubly damaging to the social fabric. Inequality eventually engenders a violence which recourse to arms cannot and never will be able to resolve.
Then why is it that the government demands recourse to said arms after creating the very inequality that you decry? Where is your demand that nation states stop that crap and most-particularly put a stop to the unbacked emission of credit -- both by private entities and themselves?
See, without that inequality becomes very difficult to sustain. Without the ability to initiate force the laborer can walk off, leaving the job undone and the owner of capital has nothing.
But if the owner of capital can destroy the saved equity that labor has accumulated through the emission of unbacked credit he can compel the performance of labor by threatening to destroy labor's accumulated economic surplus.
This is exactly where the problem lies and on top of refusing to raise hell about the root cause you then want people to lay down the only effective means of resistance ever invented -- force multiplication -- when they finally figure out who's been screwing them and how.
Of course you don't, at the same time, call for the police and government generally to also disarm, or even better, to disarm first, do you?
No, Pope Francis, you simply wish to make sure you and others in various States are the only ones with arms, so that when the people figure out that you've been financially buggering them for a century they are unable to offer effective resistance.
One more point:
66. The family is experiencing a profound cultural crisis, as are all communities and social bonds. In the case of the family, the weakening of these bonds is particularly serious because the family is the fundamental cell of society, where we learn to live with others despite our differences and to belong to one another; it is also the place where parents pass on the faith to their children. Marriage now tends to be viewed as a form of mere emotional satisfaction that can be constructed in any way or modified at will. But the indispensible contribution of marriage to society transcends the feelings and momentary needs of the couple. As the French bishops have taught, it is not born “of loving sentiment, ephemeral by definition, but from the depth of the obligation assumed by the spouses who accept to enter a total communion of life”.
Then why does the Church accept and ratify that which it claims is corrupt -- secular marriage?
There is no legal requirement to do so; the Church could conduct sacramental marriages, refusing to place its seal upon documents issued by nations and states that do not conform to the norms and mores that it pronounces as valid.
But it hasn't and won't -- because once again, the Church refuses to stand for what it preaches, instead pontificating not a message of hope and Gospel, say much less equality and reason, but rather one of subjugation -- not to God or Christ, but to itself.
As a Catholic, Pope Francis, I have a single-word response to that: NO.
I've been sent about a dozen emails in the last couple of days telling me that I should call for a boycott of the NFL because it refused to run an ad from Daniel Defense, a firearms manufacturer.
I think you should watch the ad at the linked article -- it's good, and there are no guns displayed. Anywhere. It simply makes the point that we, the people, have primary responsibility for the defense of our families, and that responsibility is certainly something that we should (and many do) take very seriously.
I also don't doubt for a second that the NFL refused the ad. After all, they're the most-rank of hypocrites, celebrating men bashing each other's brains out on the gridiron (a grand American tradition) while at the same time demanding that women carry transparent purses and otherwise insulting their fans. I haven't set foot at an NFL game for decades for exactly this sort of reason -- not only are the tickets grossly overpriced and the stadiums gross rapes of the taxpayer but I refuse to be insulted by people who then ask me to spend my hard-earned money with them.
That people put up with that crap says everything I need to know about idiocracy among Americans -- there should not be one person in any NFL stadium -- ever.
That our nation is stupid enough to pay really good money (and lots of it) only to be abused by the people taking the funds is an outrage. We do the same thing in airports, by the way, and it's equally stupid there. I fly when I must, but I sure don't do it if I have other rational alternatives -- and I usually do. Indeed, I've put something close to 6,000 miles on my car in the last 45 days precisely because I took three 14-hour each-way trips (and they were round trips) in my vehicle because I refuse to spend my hard-earned money with people that flip me off if I have a rational alternative.
But heh, if you're a ****ing idiot it's not my place to stop you from being stupid beyond words. You're entitled to be stupid, and to reap the rewards.
But it is for this reason that I bring up this alleged commercial.
You see, Daniel Defense is a little company. How little? Not much larger than MCSNet was in its hayday -- best estimates are that it has about $12 million in annual revenue.
So with a 30-second Superbowl commercial costing about $4 million, exactly how was this company going to pay for it?
That's easy -- they weren't because they couldn't. They most-certainly weren't going to put ~30% of their annual revenues into one 30 second commercial.
No way, no how.
But by "submitting" the ad (if they did) and getting it "denied" (if they did) they got for free what they couldn't afford to pay for -- an association with the NFL and professional football.
Well-played Mr. Daniel. If I need firearms or parts that you produce in the future, I will definitely consider your firm's products. I've heard they're very high-quality, you make 'em in the good old USA (in Georgia) and from what I can see your prices are reasonable as well.
But as for boycotting the NFL? For what? Being dumb enough to fall for Mr. Daniel's foil and give him millions worth of advertising for free? That's good for a chuckle, not a boycott.
What I will do is look askance at all the people who took this "story" at face value and called for said boycott -- because they have shown that they lack the basic level of discernment necessary to intelligently process common daily events.
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