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From the AP:

When U.S. Senate Republicans unveil their plan to overhaul America's healthcare system, they will face a skeptical public that already does not buy the justification for an earlier version that passed the House of Representatives, according to a Reuters/Ipsos poll released on Wednesday.

They're right to be "skeptical"; Obamacare did exactly nothing to address cost, which is where the real issue resides, and the House bill, as I analyzed, would actually make it worse (which is hard to believe, but true.)

The Senate "attempt" will do the same.

The problem is not "insurance" or "coverage" -- it's cost.

Then there's this sort of nonsense, which IMHO argues for locking up doctors en-masse as drug pushers:

Nearly one in four people on Medicaid, the U.S. health program for the poor, received powerful and addictive opioid pain medicines in 2015, according to research by a drug-benefits management firm.

One person in four?

Folks, these drugs are responsible for some 20,000 deaths due to overdoses a year which wildly outranks other means of accidental death, save one: car accidents (~35,000)

There is only one way to address health care cost: Attack the monopolist practices of the industry and you need no new laws to do it, since we have a 100+ year old body of said law which, I remind you again, drug and medical firms have tried to shoot down twice at the US Supreme Court (in the 1970s timeframe) and they lost both times.

It requires only an executive either at the state or federal level, which again I remind you has responsibility for enforcing the law, to stand up and do their ******ned job, leveling indictments against everyone involved in this industry that attempts to promote monopolies or restrain trade.

That's all it will take and the entirety of the health scam will collapse in an afternoon, crashing prices by 80% or more.

You can look right here for what this would mean, and what it would do.

You will note that there is not one hint of any of this in the House proposal, and there won't be in the Senate version either.  Nor has my phone rang despite the fact that I've been to the Hill in the past and spoken with Senate staffers on exactly this point; they know damn well what's coming, why, and how to stop it.

The US Congress and President Trump are both engaged in intentionally destroying your health and bankrupting you at the same time.  These people need to be run out of town on a rail -- all of them -- and if you cheer on either political party or any of the existing political class at either state or federal level who have all refused to enforce existing law and solve this problem you are a direct contributor to and promoter of the destruction of this nation and her people.

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2017-06-22 07:00 by Karl Denninger
in International , 192 references
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I'm all for travel.

I'm all for adventure.

But there are third-world ****holes, never mind nations with zero respect for human rights, that are flatly unsafe to travel to.  Some are unsafe for everyone.  Some are unsafe for women (e.g. majority Muslim nations) traveling alone.  Some are unsafe for particular religious or ethnic groups.  Some are unsafe for certain nationalities and since your Passport bears your nationality prominently.....

Otto Warmbier violated rule #1 by taking such a trip -- to North Korea.  Then he did something even worse, apparently -- he stole a political propaganda piece.

Look folks, even in non-third-world ****holes there is one way to get trounced and at best be seen as an "Ugly American" -- inject yourself into the local political process.  In many nations it's actually illegal for you to do so.  It should be illegal here too for someone who is not a citizen to do so, but heh, we seem to have this snowflake thing in that regard and what's worse is that we think we can shove our particular bit of sensibility down other people's throats.

This young man paid for that first with a hard labor sentence and ultimately his life.

I will note that at least as of now despite everyone and their brother claiming he was "probably" tortured there is zero physical evidence to support that, and torture usually leaves physical evidence of some sort.  The doctors have looked for it too.  But it's not even slightly surprising, however, that if he had a medical issue in said third-world ****hole, after being arrested, that he wouldn't get much of anything in the way of care.

Inhumane?  Well, what part of third-world ****hole did you miss?

Look folks there are risks when it comes to international travel.  It's simply a fact that in a very large part of the world what we consider to be basic values regarding protection of human life don't mean a damn thing.  Those nations and people look at life as disposable and people are too.  If you expect anything approaching a United States level of care and comfort in those parts of the world you're at grave risk of ending up dead.

I hate reading stories like this one, but the fact remains that if you put yourself in a third-world situation like this that is known to be hostile, particularly to Americans, then you need to be prepared to accept the consequences -- and especially to be on your best behavior so as to tilt the odds, such as you can, toward a safe exit from said territory.

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Go over on over and have a look at both my view and those of a few others..

My central point was this, which is what I've said for a long time (and made quite-clear in Leverage as well):

When you underprice a loan (or overpay for a bond -- same thing) the loss happens at that instant.  You can shift who eats the loss down the road, but you can't unbreak the egg.

As such "unwinding" QE and its unwind is an amusing exercise because it simply transfers the when and who on the bad transaction -- but doesn't "undo" it -- because it can't.

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2017-06-21 09:09 by Karl Denninger
in Company Specific , 718 references
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Yes, the CEO is gone.

That should be good, not bad, right?

Wrong, and it has nothing to do with the CEO leaving.  It in fact has everything to do with the change in their app to "allow" in-app tipping.

Why would this be bad rather than good?

Because Uber has drivers rating riders, and unlike a hailed taxi you're not anonymous; you are identified and the driver can refuse you as a customer based on previous "ratings."

The combination of these two factors will result in tips effectively becoming mandatory, especially in high-taxi-cost, high-traffic areas.

Since there is no way to prove whether a poor rating for a rider is deserved or not there is no check and balance available or possible on the coercive abuse of such ratings to extract tips from riders and the coercive implied pressure now and will forevermore exist.

Some have pointed out that while the tip is "in-app" the driver has to rate to end the trip first.  While that may blunt the impact (in that it makes blatant coercion difficult) if you think drivers won't "softly" urge tipping -- and perhaps push back against negative responses by riders -- you're nuts.

It'll take a while before this destroys the desire of customers to use the platform but it will happen and it will be unrecoverable, because since UBER has "allowed" in-app tips removing them will now engender a driver revolt.

"In-app" tips were basically a sop to drivers for Uber reducing rates and thus driver compensation.  The problem is that if Uber is reducing rates it's to increase usage and when you add tips back there goes the reduction from the user's perspective, effectively canceling it out.  This will in turn force a further reducing in rates (and thus payouts to drivers!)

When I go out to eat the "expected" tip for good service is part of the price.  A restaurant that adopts a "no tips allowed" policy can charge a bit more for their food and the hit to my wallet from eating there is the same as one that "encourages" tips but charges a bit less; all-in after tip it's the same money.  This is no different.

Pick how you want to die Uber, but die you shall.

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2017-06-21 07:00 by Karl Denninger
in Editorial , 1276 references
[Comments enabled]  

Go ahead folks, read this one.

Accordingly, I must communicate to you at this time the full extent of our dire fiscal straits and the potential disruptions that we face in addressing even our most critical core responsibilities going forward into the new fiscal year.  My Office has very serious concerns that, in the coming weeks, the State of Illinois will no longer be able to guarantee timely and predictable payments in a number of areas that we have to date managed (albeit with extreme difficulty) despite an unpaid bill backlog in excess of $15 billion and growing rapidly.

We are effectively hemorrhaging money as the state’s spending obligations have exceeded receipts by an average of over $600 million per month over the past year. (ed: That's $7.2 billion/year)

My cause for alarm is rooted in the increasing deficit spending combined with new and ongoing cash management demands stemming from decisions from state and federal courts, the latest being the class action lawsuit filed by advocates representing the Medicaid service population served by the state’s Managed Care Organizations (MCOs). As of June 15, the MCOs, and their provider networks, are owed a total of more than $2.8 billion in overdue bills at the Comptroller’s Office. There is no question that these obligations should be paid in a more timely manner and that the payment delays caused by the state’s financial condition negatively impact the state’s healthcare infrastructure. We are currently in court directed discussions to reach a workable and responsive payment schedule going forward, but any acceleration of the timing of those payments under the current circumstances will almost certainly affect the scheduling of other payments, regardless of other competing court orders and Illinois statutory mandates.

Now folks, you can call this a "one off" if you wish.

It's not.

It is also not a surprise where the problem is centered.  It's in health care.

I've only been yelling about this since the 1990s, when I saw the impact on my firm's balance sheet and cash flow statement on a year-over-year basis for a few years running.  You don't need to see it for more than a couple of years to grasp the gravity of the problem if you have a brain and are not politically poisoned to wave it off.

Anyone with a $3 WalMart calculator can figure it out, given 5 minutes and an IQ greater than their shoe size.  You merely need to run the exponential series out 5, 10, 20 years and what happens becomes obvious.

At ~9% expansion the rule of 72 gives you a close-enough approximation: Costs double every 8 years; in 24 years you spend eight times as much money as you did originally.

There isn't 8x as much money and you can't raise it.

You can't increase taxes by 800%.  You can't expand the economy by 800% over 24 years; at a 3% GDP expansion rate (which we haven't had in the last two decades for any sort of time period, I remind you) the economic output expands by 200%.  This means that you'd have to quadruple taxes compared against economic output, and if you try to do that GDP will collapse because you will consume all of the expansion in economic output and then some.

There is only one answer to this problem and that is to take the entire medical system, which is where the entire problem resides, and dismantle it.  Prosecute every single hospital administrator, owner of an imaging center, drug company executive and physician that has ever, even once, stuck his head in a hospital room and then billed someone $1,000 for a "drive by" consultation -- or anything like it, such as charging $90,000 for a drug here that's $2,000 in another nation, or billing one person $100,000 for a procedure where another is billed $5,000 or $10,000.

Bankrupt them all by imprisoning every last ******ned one of these people and fining their firms out of existence using the 100+ year old and still valid body of law found in 15 United States Code, Chapter 1.

Force every single one of these institutions out of business now.

Let the courts administer bankruptcy sales on every single ******ned hospital and diagnostic center in the nation along with every single pharma business in the United States.  Sell them all off at 2, 5 or 10 cents on the dollar and make damn sure you tell everyone who bids that any repeat of the previous owners performances over the last 30 years will lead to instant indictment and imprisonment -- period, full stop, no exceptions.

Tell all the remaining doctors and medical centers of any sort that (1) they will publish a price on everything, (2) they will charge everyone the same price for the same good or service and (3) any attempt to cheat or perform any anti-competitive act will lead to immediate indictment, trial and imprisonment of everyone involved using perfectly-valid 100+ year old law that has twice been confirmed as valid in the US Supreme Court during the last 30 years.

No bail, no kidding, no mansion, no Porsche, no exceptions -- and no bull****.

At the same time tell the AMA and all the Colleges that if they collude to (1) drive up the cost of learning to be a doctor or (2) limit the number of people who can go through school to be a doctor in an attempt to fix prices and restrain trade, including attempting to continue or enforce state-specific licensing you will lock all of them up too and give the people the controls of CAT D8 bulldozers so they can take out their frustration on the ivory towers of said schools -- after we chain the administrators and AMA board members to the columns.

After all, a D8 beats the destruction of our cities and state governments, along with 100+ million dead Americans, which is exactly where we're headed over the next couple of decades if we don't cut this crap out right now.

Go ahead and believe if you wish that "owning" property in one of these cities -- any of them -- is real.  Go right ahead.  You have a nice piece of land and house there.  It's maybe worth what -- $500,000?  If it carries a property tax levy of $12,500 a year you paid for it again in 40 years but got nothing of value for the money spent the second time.

By the way, how do you afford that $12,500 property tax bill on a middle-class -- or even upper middle-class income, say $80,000 or $100,000 a  year?  You can't.

It would be bad enough if it stopped there but it won't.  My former house near Chicago has seen its property tax levy double in 10 years time.  What makes you think yours won't have the same thing happen?  It not only will it has; I've seen it on other properties I've been watching including property my family members own in such places.

Why would I provide services to the state of Illinois if they can't pay my invoices Net 30?  I would not -- period.  I saw a tiny bit of this with Chicago in the 1990s when they started trying to "stretch" my invoices.  I went into the computer room and yanked the line card out of the cage that fed the Washington Public Library and tagged it off with a warning that any tech that put the card back in would be fired.  The caterwauling could be heard all the way to Waukegan (and came within minutes of my action) but that card didn't go back in the cage until I had a check in-hand.  I don't get to pay my parking ticket when I feel like it and thus neither does the city -- or state get to pull that crap on me.  That was the end of the discussion.

Will someone "factor" their invoice and thus allow people to provide services to the state?  Probably, for a while, but the factoring cost will get added to the bill. That'll work right up until the credit risk gets to the point that the discount rate on those factored invoices is 20% or more at which point there's no chlorine for the water plant that keeps your drinking water safe.

How far are we from that folks?  How long does Chicago, Milwaukee, Detroit, St. Louis, Atlanta, New York, Newark or Philadelphia remain standing upright and operating when there is no sanitary water to drink, the pumps don't work at the sewage plant so there is literal **** coming up out of the sewer manholes, the cops and firefighters don't get paid and there's no food distribution in the city either because the city and state try to tax the businesses at a rate they cannot pay and a pound of coffee winds up costing $20 and a gallon of milk is $10, which nobody can afford on a welfare check?

You think this is a joke or hyperbole eh?

It's not.

This was much-more easily resolved 20 years ago when I started raising hell about it.

It was rationally resolvable in the 2007/2009 time frame when I started writing The Market Ticker.

Now it's a real bitch, but we still have to do it.

I've laid it all out here, on the air multiple times, and in Leverage.

I've been to Washington DC in the 2011 timeframe and spoke to Senate staffers who confirmed they understand the math and what will happen if this crap doesn't stop.

But they also told me they're unwilling to act because you are more-concerned about abortion, gays, boys pissing in the girl's room and how much you can get in welfare checks than whether your state and ultimately the federal government is going to be bankrupted by a bunch of jackasses in white coats who first told you to eat **** that makes you sick with government sanction, prescribed pills that gave you diabetes, loved the trillions of dollars they stole to treat the diseases they caused at mark-ups of 1,000% or more against a market price -- and all of that after they tossed your health in the ****ter on purpose.

Exactly when you do pull your head out of your ass, America?

Is it before or after our cities lay in ruin and a third of you are dead?

Oh, and if you're dumb enough to think that Trump gives a flying **** about any of this?

You're wrong.

He knows good and ******ned well exactly what's going on.  He has to since he's run a company in this very environment for the last 30 years and he's seen all of it and knows the math, just as I do.  I'm not the smartest man in the room by a wide margin but I sure as hell can use a ******ned calculator and so can both Trump and you, if you choose to.

The very day Trump was elected every bit of the bullet points on "health care" found on his campaign site that actually bore on the real issues disappeared from public view and not one word of it has been seen since anywhere -- not on his transition site and not in a single policy pronouncement since.  There were multiple entreaties made to his transition team on this exact point during those months including by people I've cited here and who were "supposedly" part of the group he was going to consult with.  Those meetings were canceled folks and they have not been rescheduled six months later.

Trump is an actual, willing and intentional co-conspirator in all of this -- and that's a FACT

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