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2020-02-13 21:35 by Karl Denninger
in Federal Government , 129 references
[Comments enabled]  

This bill sounds good.

(Or if you want the direct text, here)

It's not.  It's mealy-mouthed bull****.

Why?

Because four times previously states have been threatened with loss of Federal Highway Funds if they did not enact driver-specific constraints.

Specifically, these have included:

  • In 1984 the Federal Government demanded that all states raise the drinking age to 21.  The penalty for non-compliance was 10% of federal highway funds whacked.  All 50 states complied.

  • In 1974 Nixon set the speed limit at 55mph nationally. He enforced it by threatening to revoke highway funding.  All states complied, but some did so in "creative" ways (e.g. $5 on-the-spot fines for "speeding" under 70mph.)

  • In 1995 Congress again did so -- the other way.  Clinton signed a law in 1996 that both eliminated the 55mph speed limit and motorcycle helmet laws at a federal level and again tied compliance to highway funds.  But this time, since it was a loosening of the rules, it was more of a bribe, right?

  • In 2009 the Federal Government tried again with a threat to cut highway funds by 25% if states did not enact "texting-while-driving" laws.  The sponsor?  Chuck ****face Schumer.  The bill failed to pass but it clearly was considered constitutional, right Chucky?

All three of the successful acts were Constitutional, right?  So, presumably, was the failed bill that didn't pass.  Even Schumer can't complain that this would be "too harsh" since he was the one who last tried to use exactly that same leverage.

So Marsha and Tim, given the clear legislative record why not put some damn teeth in your bill instead of passing mealy-mouthed bullcrap?

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2020-02-13 10:42 by Karl Denninger
in Federal Government , 306 references
[Comments enabled]  

I have long put forward the basics of arithmetic: If we do not address the medical scammers and monopolists the nation will die.

We will die of our own stupidity -- and perfidy.

2024 has been my target date for things to really go to Hell.  Why 2024?  Because by that time we will try to spend more than $2 trillion a year between Medicare and Medicaid, which will guarantee deficits well beyond a trillion every year into the future, and what's worse is that they will be exponentially expanding on an obvious and irrefutable basis.

Well, I may have been too optimistic.

 

That is a 12.9% increase over last year's spending for the same four month period.  The run rate has historically been around 8%; this is more than 50% greater.

What's even worse is that the ass-raping by hospitals in the Medicare system is up nearly 17% over last year; that is a clean double of the 8% expectation.

Worse than that horrifying statistic is that drug spend is up an unbelievable 37% over last year's figures.

Read that again folks: THIRTY SEVEN PERCENT IN ONE YEAR'S TIME.

The core breach is accelerating and will destroy this nation, with certainty, if not stopped immediately.  The 400,000-odd people "employed" in health care over the last year, nearly all of whom are administrators in some form or fashion and thus contribute exactly zero to patient care, has been going on now for a decade.  Putting a stop to this will result in nearly all of those people, that is, roughly 4 million just of those hired in the last 10 years, being fired.

Not putting a stop to it is going to lead to fiscal collapse, privation and unemployment never before seen in the United States -- an outcome FAR WORSE than the 1930s -- and 2024 is looking like an optimistic estimate instead of a realistic one as for when we will go over said cliff.

There are solutions -- such as my proposal that has been on this site for several years.  But tinkering around the edges, as both parties and our President have tried to claim they want to do (e.g. "surprise" medical billing, drug negotiation, etc) will do nothing as the piece of the problem they address is simply too small to matter.  The 37% ass-rape served up in drug spend increase is horrifying but the total is only $37 billion out of more than half a trillion ($500 billion) spent in total; even if you were to cut drug spend to zero it would change nothing.

PRESIDENT TRUMP AND THE DOJ, WHO HE HEADS, MUST ACT TODAY AND INDICT ALL PRICE-FIXING AND MONOPOLISTS IN THE MEDICAL, PHARMACEUTICAL AND INSURANCE SECTOR WITHOUT EXCEPTION.  HE HAS THE AUTHORITY UNDER 100+ YEAR OLD LAW TO LOCK PEOPLE UP FOR THIS RIGHT ******N NOW AND PUT AN INSTANT STOP TO IT BY ENFORCING SAID 100+ YEAR OLD LAW.  CONGRESS MUST CUT THE CRAP AND, ALONG WITH THE DOJ, DESTROY THIS SCAM RIGHT HERE AND NOW.

IF THIS IS NOT DONE -- NOW -- AMERICA WILL FISCALLY COLLAPSE.  THIS IS NOT JUST AN EXISTENTIAL THREAT, IT IS A CERTAIN OUTCOME.

PERIOD.

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2020-01-30 10:35 by Karl Denninger
in Federal Government , 162 references
[Comments enabled]  

How stupid are you America?

Answer: Very.

The data says annualized GDP was up 4%.

Ok.

But from 12/31/2018 to 12/31/2019 federal fiscal expansion was $1.227 trillion.

That is 5.87% and that is actual inflation.  That's right -- The Fed is not only lying they are knowingly and intentionally participating in a nearly 6% inflation rate right here and now, and you're taking it up the ass.

This is simple mathematics -- every dollar of deficit spending, that is, additional debt, goes directly and immediately into GDP.

You must therefore back out the growth of said debt from GDP, that is, monetary inflation, to get the actual GDP expansion rate.  4% - 5.87% is negative 1.87%, which is the definition of a recession -- that is, negative "growth."

Of course there are exactly zero people who will point this out.  Why?  Because if you do point it out then you're a "Debbie Downer" and, by the way, not only will you never be invited back to CNBS or other "business channels" you might spook a market sell-off if any percentage of the investing "public" was to recognize that they're being screwed, blued and tattooed by these policies.

So you won't hear that.  Ever.

But it is nonetheless true.

The US Economy contracted over the last 12 months by approximately 2%.

That's an irrefutable mathematical fact.

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No, that's not what the printed headline is.

But it is what the actual headline is.

At 4.6% of GDP any GDP growth rate under 4.6% is actually negative.  Ignore the so-called "real" GDP reported by the BEA; that uses their internal "deflator" which is flat-out bull****.  Again, headline GDP has not exceeded 4.6% and there is no projection it will for 2020 either; utterly nobody believes that sort of number, never mind a 5.4% one by 2030.

This means the economy is, in real terms, contracting.

CBO is also projecting that "inflation adjusted" GDP will expand by 2.2% in 2020.  This is their false deflator lie.  Remember that inflation is always a monetary phenomena; it is never anything else.  Further, the natural state of all economies absent tampering is mild deflation and that's desirable; it is the result of productivity growth and innovation.

Doing more with less is to your benefit.  It means prices fall in real terms and that in turn means an hour of effort buys more.  You, not the government, own that.  Taking it from you via fiscal deficits is theft-at-gunpoint and should result in an immediate secession by the States and The People.  Consider what your response is to a gun up your nose coincident with a demand for your wallet.  That is what fiscal deficits are, so why do you react in any other way when the government does it?

STOP BEING STUPID folks.

The problem with the CBO's analysis is that it always undershoots.  This is not because the CBO is "biased" per-se; that is, it's not their intentional act to protect either or both parties in government.  It is a result of the mandates under which they operate; the CBO is required to assume that any tax or revenue change that has a sunset in it will actually expire.

In practice they never do expire; the 900lb Gorilla in this one is the Medicare "extenders" that are passed every single year in the form of what is called the "Doc Fix"; the CBO is required to assume that this will not be passed and yet it, and all the other pieces of legislation like it, are required to be assumed to actually expire even though historical practice is that they never do.  As such the CBO always understates deficits, and it's the enabling law from Congress that makes it such.

To put this in more-blunt terms the CBO is required by law, passed by Congress, to lie to you.

Isn't that special?

In any event reality is that on the present path as I've been pointing out for more than 10 years we will not make it to 2030.  By 2024 on current paths the medical monster will collapse the Federal Budget and most State budgets as well.

We either fix that -- not put band-aids on it, or attack an 8% slice of it with a 10% reduction (which would be less than a one percent change in spending) but take a sledge-hammer to the entire thing and start locking people up under 100+ year old law if they refuseright here and now, or we're looking at something materially worse than the 1930s within the next few years.  You can bet The Fed and Congress will try to evade that outcome, of course, but unless the root cause is addressed any attempt to do so will make it worse rather than better.

Time's up.

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2019-02-13 14:50 by Karl Denninger
in Federal Government , 440 references
[Comments enabled]  

There's simply no other way to express this....

 

These numbers are for only three months, so for the full year multiply by four.

Again, the total "social insurance and retirement" tax grab is $274 billion.  Social Security is a 12.3% tax (up to the cap) and Medicare is 2.9% (no cap.)  The split is thus roughly-speaking ~19% Medicare, the rest (81%) Social Security.

If you want to get down into the detailed numbers they don't "quite" add there because there is both spending and tax revenue that gets bucketed in each from the various line items.  But it's not off by much; the "line item" (without the bucketing) comes up as 74/26 -- not materially different.

81% of $274 billion is $222 billion.  Social Security spent $251 billion.  That's a ~29 billion shortfall.  Not good but there are a lot of Treasuries held against that requirement, and by 2026 the budget impact as a percentage starts to fall because the boomers start to die, statistically speaking.  In other words Social Security had a ~12% shortfall over the first three months, indistinguishable from my last look (12% .vs. 13%.)  This is easily fixable on a forward basis without much economic pain.

Medicare, on the other hand, spent $153 billion but took in just $52 billion.  That's a shortfall of 66%; that is, two thirds of it is unfunded.  You would have to more than triple the Medicare Tax Rate in order to bring it to parity.

That's an "improvement" over the nearly 75% deficit in the first month but we are in fact talking about bleeding out in two minutes rather than three; the outcome does not change.

Add to that "Health" (Medicaid, mostly) and it's much worse; now you take in $52 billion but pay out nearly $300 billion.

Note that the deficit thus far is $319 billion.  If you were to get rid of the deficit between Medicare and Medicaid .vs. tax receipts you would almost close the deficit to zero.  If you also increased the FICA tax rate by 13% (to just under 7% for "each half"), increased the income cap where it stops being collected or some combination that wounds up in the same place as well the deficit would be effectively zero.

$319 billion over three months equals roughly $1,300 billion, or close to $1.3 trillion in deficit for the entire fiscal year.  The only good news is that April is usually a strongly positive month (as a result of taxes being due) but either way the deficit is almost-certain to be in the neighborhood of $1.1 trillion this year.

You cannot fix this with either taxation or cost-shifting. It is mathematically impossible to do so.

For example you'd have to nearly double the individual income tax rate on everyone, including the middle class; to close the gap by increasing the corporate tax rate you would have to raise it by more than an insane and utterly impossible 600%.  Any claim that we can solve this by making people pay "their fair share" is a flat-out lie.

You cannot get there by "cutting spending" on other than these programs either; if you cut all "other spending" to zero along with transportation and education you'd only cover 30% of the deficit.  Cutting military spending to zero (which is obviously impossible) wouldn't get there either.

There is only one way to solve this problem and that is to collapse Medicare and Health spending by 80%.  You can only resolve the problem by collapsing the medical and health insurance monopoliesforcing everyone to publish a price for everything and charge everyone the same price, where said price must be handed out before service is provided, along with telling everyone involved that for any and all conditions in which a lifestyle change will remove the need for treatment government will pay zero unless the person in question makes that change.

The trend is not improving and it is not "The Next Generation" that will have to deal with this.

This has to stop right damn now or it will blow up before we get through the next Presidential term -- and no, you cannot tax your way out of it either.  The people in Washington DC -- Congress and the President -- must be held personally and politically responsible for their refusal to deal with the only way to put a stop to it, which is to destroy the medical monopolists using existing, 100+ year old law, and to do it right damn now.

And if they refuse we the people must enforce our demand for them to do so.  They will refuse, I remind you, unless forced by the people -- and there are peaceful and lawful means to do exactly that (e.g. a general strike.)

Nothing less than the literal existence of this nation as a Constitutional Republic is at stake.

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