"Passage Of The Healthcare Bill Means The Double-Dip Is Coming" - Market Insight From Permabull Jim Cramer Who Just Turned Bearish

Tyler Durden's picture

Jim Cramer may be in hot water with the SEC over his theStreet.com, and he may be a mouthpiece for the biggest ponzi enabling organization the developed world has ever seen, however, he did have some interesting and spot-on observations on the just passed health care bill. In a nutshell, and for once we agree with Cramer, if futures are not limit down right now, it is because of the same bidding hand that has kept the market going straight up at a 30 degree angle for the past year.

Obamacare Will Topple the Rickety Market By Jim Cramer RealMoney

Either the market doesn't care that the health care bill will pass --  and it will -- or it doesn't think that the proposal will cost that much -- something I think is nuts. Which brings us to a very tenuous crossroad: We have to wonder if this is one of those occasions, like in 2008, where the market doesn't see the coming catastrophe. Or perhaps the market sees any resolution as positive.

I don't. I think when the health care bill passes -- and it will pass, I believe, because Nancy Pelosi has worked diligently behind the  scenes to bend the anti-abortion foes, the key votes, to her will -- the president will get a second wind. That means the whole agenda -- cap-and-trade, Card Check for easier organizing (something that Wal-Mart's (WMT) inability to move even on its dividend boost tells you is coming) and amnesty for immigrants who are currently not citizens -- will quickly come to pass, perhaps even before the election. To pay for these items I see a dramatic increase in ordinary tax rates and perhaps capital gains and dividend tax rates in 2011 either reaching or exceeding those ordinary income rates as this current version of the Democratic Party believes that only rich people own stocks. (That's been a hallmark from Day 1 with this administration.)

Given those hurdles, which include a suicide pact with financial health for small businesses that obviously can't afford health care without risking the capital formation necessary, I think you have to put the double-dip recession back on the table.

Those who have read me here and watch "Mad Money" know that I was out there early thinking that 2010 would not produce a double-dip, despite ample commentary that it would. But if health care reform passes, I am going to revise my thinking -- and you know I think it will -- especially because immigrant amnesty will cause the health care system to be overloaded and our taxes to soar.

The stakes seem so high while the market appears so complacent, perhaps because none of the levies will pass until 2011. To me that's around the corner. It's been slightly more than a year that I have been bullish. That's hanging by a thread this week.

Obamacare cuts that thread. Even if the market doesn't seem to know it.

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johngaltfla's picture

That dork thought that Lehman was a solvent company. This is not the trigger for a down turn IMHO. Europe will lead the way. The volume and commitment by the public is too weak for a major bearish turn beyond 8 weeks.

CookieMonster's picture

If Cramer becomes bearish, does that mean the stock market is going to explode to the upside???

E pluribus unum's picture

Yes. It also means that his hedge fund friends will be buying while everyone else is selling. Cramer is a tool.

ella's picture

Rumor has it that some call him the CNBC Court Jester.  I don't know if it is true or not. Isn't he or his site the street being investigated?  

tmosley's picture

I personally think that rule only applies to his long picks.  When permabull Cramer turns bearish, then things are looking pretty bad.

Contrarian indicators only work if you look at the fundamentals, and they agree with the contrarian thesis.  In this case, the fundamentals for the US economy are pointing so far down they look like they are pointing straight up for China.  I wouldn't go long ANYTHING except gold, silver, and physically held commodities at this point.  I might go long dividend producing foreign stocks outside of the west, but the US is cooked.

dnarby's picture

Ahhh... WTF!?

Based on the CCI indicator (Cramer Contra Indicator), we should now wait a day and go long.

One thing that bothers me is that this is the first thing he's said since he described in detail how to (hypothetically) manipulate stocks that makes sense.

Arm's picture

Two words: Wells Fargo....



SWRichmond's picture

Wells services my mortgage but the beneficiary of my note is the sham corporation known as "MERS."  We're gonna have some fun.

Howard_Beale's picture

Who cares what Cramer says....The Double Dip will have nothing to do with health care.

It all goes back to the banks--wherein the truth lies, and the lies that mark to myth have created.

Careless Whisper's picture

the "double dip" is propaganda. we're in a depression.

i don't need zh to tell me what cramer thinks. if i wanted to know that, i could find it on my own.

TheGoodDoctor's picture

This is a ruse to take the gaze away from the banksters balance sheets, the programs that are being cut soon, and Greece/Europe. The health care bill is a scape goat for Cramer. Basically the excuse for them to knock down the market and create the new crisis because they aren't getting what they want.

simonyadig's picture

Hunter, I was thinking pretty much the same thing.

TheGoodDoctor's picture

Hey simonyadig, I forgot to mention the financial services bill too! I knew I was forgetting something. Probably more too. 

Miles Kendig's picture

It's all just narrative.  Gives a good idea as to what kind of crumbs the political & financial folks think is needed to draw the general publics attention away from the matters at hand and return them to survivor or survival as the case may be.

AccreditedEYE's picture

I agree. This is old news anyway, he was ranting about this last week.

Now, when the hell does the market come out from manipulation and start to reflect the current economic condition?

Miles Kendig's picture

It all goes back to the banks--wherein the truth lies, and the lies that mark to myth have created.

And the whole stinking mess that has grown right along with it.  I like to call the whole thing faith based governance.

Brokenarrow's picture

cnbc says,"health care is good for equities..."


Have you ever seen a bigger bunch of lying whores in your life?

Postal's picture

Have you ever seen a bigger bunch of lying whores in your life?

Yes, at the club in Atlanta......

Lux Fiat's picture

How could you forget those two clubs up on Capitol Hill?

trillion_dollar_deficit's picture

Most phyrric political victory in the history of western civilization.

casino capitalism's picture

After the virtual annihilation of the middle class, the country needs a dose of socialism to bring it back to equilibrium.  I hate socialism but I think people have to accept that it is needed.  Besides, who can really argue that 35 million people need health insurance.  I agree the health care bill is probably garbage but that's the political system for you.

Cursive's picture

Well played, mouse, well played.

chindit13's picture


Cleared runway 18 for (hard) landing, full stop.

Lux Fiat's picture

We need people who are concerned about others, in the good sense.  However, the US political system has an abysmal record when it tries to legislate charity.  The history of public welfare and assistance efforts (read transfer payments) dating back to the 1930s depression prove true the old saying about the road to hell being paved with good intentions.

  - Social security passed to provide a very limited safety net and to quell civil unrest - politicians couldn't resist buying votes by expanding benefits well beyond fiscal prudence.

  - Ditto Medicare/medicaid

  - Look how well Congressional efforts to expand the ranks of US homeowners worked out

I pray that the massive nationalization of healthcare that is healthcare "reform" isn't the straw that breaks the camel's back.  If it isn't, I fear it brings the fiscal breaking point much, much closer.  I've seen nationalized medicine first hand in the form of the military hospital system.  I think that the changes envisioned by the legislation just passed will result in fewer doctors practicing, lower quality care, and government responses to this deterioration that only reinforce the nascent death spiral. True reform is needed without a doubt, but this legislation is a clear violation of a legislator's equivalent of a doctor's hippocratic oath.

delacroix's picture

no problem, we'll just import low paid doctors, from India, and china

Lux Fiat's picture

Perhaps.  Perhaps they will find better opportunities in their home countries, just when we need them the most.  There were some interesting comments under the open thread from 3/21 to the effect that the US' ability to attract and/or retain other countries' best and brightest, or the not so best and bright, is waning.  It dovetails with some anecdotal info that I have heard.  Given the current dysfunctional state of large swathes of our public educational system, I am concerned.

three chord sloth's picture

But hey... we can still attract a big hunk of Mexico and Central America, and an emboldened Obama will try to ram through amnesty before November's election. Since we no longer assimilate newcomers, they will keep their native lifestyles, including the roughly 50% drop-out rate, so we got that goin' for us...

repete's picture

Take a look at "Best Care Anywhere" by Phillip Longman.  This book about vereran's health care cites the VA as having the best statistically verifiable care at the most reasonable price.  What is the reason for this and why are the statistics even available? ELECTRONIC MEDICAL RECORDS!  When electronic medical records would save more than 100,000 lives a year and billions of dollars, they are rarely used because they would shine a spotlight on the shamefully inefficient and fraudulent medical system that exists today. VA electronic medical record software VistA is available for free to countries like Uganda (thats right Uganda) who have seen the benefit of actually tracking things like outcomes, mistakes and accidents, and healthcare associated infections.  They practice what is called "evidence based medicine",  and have kept their costs extremely low compared to conventional medicine.  So does the new health care bill miss the mark?  Only by a million miles.  

loki's picture

Evidence Based Medicine -  good luck with that.   Try that *and* Press-Ganey surveys.    No Go.

"I don't care if you think it's a viral infection -- *I* *want* *my* *antibiotic* *NOW*"


Can you sue the government for malpractice if you are unhappy with the outcome of your veteran's health care?  No.

I see physicians stampeding towards the exits...  

How do I know??   I am one.



Barmaher's picture

To me, the costs are irrelevent considering the amount of money we've already spent bailing out the crooks on Wall Street.  I don't understand how anybody other than an insurance executive can back the idea that citizens who have pre-existing medical conditions should be denied medical coverage unless they are 1. employed and are eligible for group coverage or 2. poor (and unproductive) making them eligible for the Cadillac of all health care plans: Medicaid. 

anony's picture


Like we need a 2000 page bill that nobody who is going to pay for it (us) knows what else is in it that has nothing to do with health insurance, including the North Dakota Bank with a Student loan program, WTF.

There were many solutions to the problem you mention and the uninsured. Instead of focusing on those the democrats have just taken over more of our personal choices while saddling a country growing to 500,000,000 people with a back breaking debt.  I hope they choke on it in November and the republicans overturn the whole damned thing and do what is possible instead of this monstrosity. 

Catullus's picture

I don't understand how anyone but an insurance executive could think that forcing the entire country to purchase a dervative contract on their own health is a good idea. Burn this concept into your head "HEALTH INSURANCE IS NOT HEALTH CARE".  This bill had nothing to do with health care.  It just forced everyone in the country to consume a minimum amount of health INSURANCE. It's like mandating that everyone purchase put options on JPM.

glenlloyd's picture

Someone posted somewhere else that this was a new dawn for America. I would tend to agree except I see it as a red dawn.

politicians stand around like nothing's wrong while the empire crumbles in front of them.

Master Bates's picture

If Cramer is bearish, I'd start buying calls tomorrow!

Why didn't anybody care about the costs of say, the war... which did nothing productive to help America?

Now, it's "oh my god!  We're going to give health care to people for 100B a year!"

I don't know that the health care bill was the right answer, but I sure know that the old system was a problem.

Anonymouse's picture

How about:

- Health care is a good, not a right

- The federal government has no constitutional authority to "give health care to people"

- Unfunded liabilties of the US are between $50T and $100T (depending on who you ask), and this will make it worse by far

- The accounting gimmickery in the bill would make Charles Ponzi blush

- Federal programs like this typically cost about 3x the amount advertised

Think maybe that is why people are concerned.  Agree with the target or the strategy of WoT, at least national defense is a federal responsibility.  You may not agree it is necessary, you may not agree with the strategy or the tactics, you may even think it is a scam, but at least it is arguably in the federal government's purview (after ObL might actually be a bad guy after all).

But that's beside the point.  Really your argument ("The Health Care bill may be bad, but look at what Bush and Cheney did!") is no different than when I punish one of my boys and he immediately points to his brother and tattles.  It may be true, or it may not, but it does not change the situation at hand.

Master Bates's picture

No, what I'm saying is that health care costs 1 T over ten years.  The WoT cost much more than that.

Health care actually has a benefit for people in America. 
Building schools for Iraqi children didn't do a goddamn thing but put me in debt.

I don't know that the health care bill is the right answer to the problem in the health care system, but nobody should be allowed to raise insurance premiums by 20% in one year, year after year.

All I'm saying is that I'd rather have my money going to help Americans than Iraqis.  Helping Iraqis didn't help me one bit.  At least this way, I won't have to pay 1000 bucks every time I have pink eye or some shit.

Anonymouse's picture

"At least this way, I won't have to pay 1000 bucks every time I have pink eye or some shit."

You're right, now you will pay $2000 (plus interest on federal debt) every time some other person goes to the ER to treat their pink eye.

Just stay away from the worcestershire sauce.

Master Bates's picture

Not if they have insurance!

Anonymouse's picture

Old habits die hard.  ERs are open all night.  For many it is a matter of convenience more than cost.  I used to work in an ER.  I've seen it first hand

Besides, who do you think will pay for that insurance?

Master Bates's picture

Rich people!  (LOL.  I'm just being a smart ass for the sake of being a smart ass)
Health insurance companies, actually.

Still, it's better than nobody paying for it, and the government paying for it through subsidies anyway!

dnarby's picture

Oh come one.  It's common knowledge worcestershire sauce is only dangerous if used in IV's during end of life treatment.

BS Inc.'s picture

I don't know that the health care bill is the right answer to the problem in the health care system, but nobody should be allowed to raise insurance premiums by 20% in one year, year after year.


You do realize that there is a very stringent process at the state level to figure out what the allowable premium increase is, right? Companies don't just say, "Oh, let's raise prices by 20%". They have to apply for the increase to the state insurance commissioner and the state legislature can also get involved. Typically, whatever increase there is is simply to maintain the prior year's profit margins, all things being equal. So, what does that tell you? It tells you that costs went up 20% on the service side and/or insurers were forced to cover more items in their policies and that drove up the number of claims they'd have to pay, which justified the premium increase.

Nowhere in that process is "excessive" profiteering being done.


Master Bates's picture

I'll believe that when CEOs aren't making hundreds of millions to billions of dollars to deny my 150 dollar claim!

BS Inc.'s picture

Look at the largest health insurers revenues then calculate the amount of that revenue the CEO's salary represents. It's less than 1%, I assure you.

As for the facts about the process I detailed, it's of no consequence whether your "believe" them or not. They are simply the facts about the process.