A reduction in retirees' disposable income coupled with a global rise in the price of oil could crimp the assumptions underpinning RV Nation.
As the Congressional hearing, to apportion blame for the farce that Obamacare has already become, gathers steam the overwhelming theme from the four witnesses is "it's not our fault," and as much as the Congressmen dive deeply into the process, the more it is clear that the left hand had no idea what the right hand was doing in yet another government-funded SNAFU. The entire discussion can be summed up by CGI's comments that "our portion of the application worked as designed." Indeed, all of the contractors point the finger back at the government's Centers for Medicare and Medicaid as responsible for "end to end testing," and ultimately the #fail.
Druckenmiller Blasts Obama: "Show Me When You Initiated Budget Discussions Without A Gun At Your Head"Submitted by Tyler Durden on 10/20/2013 22:45 -0400
One of the great ironies of the Obama presidency is that it has been a disaster for the young people who form the core of his political coalition. High unemployment is paired with exploding debt that they will have to finance whenever they eventually find jobs, and as Stan Druckenmiller explains in his WSJ interview, the "rat through the python theory," (that fiscal disaster will only be temporary while the baby-boom generation moves through the benefit pipeline and then entitlement costs will become bearable) is simply wrong; since, by then Druck exclaims, "you have so much debt on the books that it's too late." Unfortunately for taxpayers, "the debt accumulates while the rat's going through the python." The hedge fund billionaire adds that he "did not think it would be nutty to tie entitlements to the debt ceiling because there's a massive long-term problem. And this president, despite what he says, has shown time and time again that he needs a gun at his head to negotiate in good faith." The interview goes much, much further...
The most important question we should be asking is not the one that Stewart repeated several times while grilling Sebelius: “Businesses were given a delay of a year, but individuals were not given that option, why is that?” The bigger question is: “If the administration messed up so badly on the seemingly mundane task of building a website, how much will Obamacare damage the broader economy and the nation’s long-term fiscal health?” The Stewart-Sebelius interview drew attention to the second question only briefly, when Stewart mentioned that employers were converting full-time workers to part-time due to the ACA. But he failed to challenge Sebelius’ weak response that “economists – not the anecdotal folks – but economists say there’s absolutely no evidence that part-time work is going up.” This is exactly where an informed and unbiased interviewer would have dug further to expose the truth.
Dispassionate discussion of some of the vexing issues.
Today there is a great sense of relief that has swept the nation as news flowed through the media that the government shutdown had come to an end. After all, during the 16 days of the shutdown, there was great hardship inflicted on the average American as the stock market rose by 2.4%, government workers that were furloughed received a 2+ week paid vacation and interest rates fell from a peak of 2.65% on October 1st to 2.59% on October 17th. Outside of the financial markets, which were never concerned of a "default," the reality is that the government shutdown did likely clip up to 0.5% off of 4th quarter's GDP. While that clip to economic growth created by the government standoff is temporary - the ongoing persistant weakness of economic growth is another issue entirely. This is the focus of this discussion. The most disturbing sentence uttered during the debt ceiling debate/government shut down, that should raise some concerns by both political parties, is: "We must increase our debt limit so that we can pay our bills."
Obamacare's health exchanges opened on October 1. Hopefully you weren't one of the unlucky guinea pigs who attempted to sign up with a system so crummy that even the Washington Post is calling it a disaster. It's been clear to anyone paying attention that the October "rollout" of Obamacare has been a turbulent, confusing mess. Sloppy IT systems and technological failures combined to cripple Obamacare's sign-up systems. Security flaws put Americans at risk for identity theft. Like a parasite taking over its host, Obamacare will commandeer almost 20% of our economy, crowding out private options. With 2014 fast approaching, what should we expect in its next phase?
Doug Casey first met Ron Paul 30 years ago. In this wide-ranging interview, Casey discusses how the "born libertarian's" ideas have changed in that time...
If we look at the foundations of retirement--Social Security, stocks, bonds and real estate--it seems we may have reached Peak Retirement.
- Spot the pattern: Senate Leaders Nearing a Deal (Politico), Senators say debt, shutdown deal is near (USA Today), Senate Leaders in Striking Distance of a Deal (WSJ), U.S. senators hint at possible fiscal deal on Tuesday (Reuters), Senate Debt-Limit Deal Emerging (BBG)
- U.S. debt ceiling crisis would start quiet, go downhill fast (Reuters)
- Uneasy Investors Sell Billions in Treasurys (WSJ)
- BOE’s Cunliffe Says U.K. Is Not in Grip of Housing-Market Bubble (BBG)
- Letta Mixes Tax Cut With Rigor in Post-Berlusconi Italian Budget (BBG)
- Japan Seeks to Export More High-End Food (WSJ)
- Burberry names Bailey CEO as Ahrendts quits for Apple (Reuters)
- China’s Biggest Reserves Jump Since 2011 Shows Inflow (BBG)
- Headline of the day: U.S. Risks Joining 1933 Germany in Pantheon of Deadbeat Defaults (BBG)
- As Senate wrestles over debt ceiling, Obama stays out of sight (Reuters)
- The "Truckers Ride for the Constitution" that threatened to gum up traffic in the capital was a dud as of Friday afternoon (WSJ)
- China New Yuan Loans Top Estimates as Money-Supply Growth Slows (BBG)
- Vegetable prices fuel Chinese inflation (FT)
- China Slowing Power Use Growth Points To Weaker Output Data (MNI)
- London Wealthy Leave for Country Life as Prices Rise (BBG)
- Gulf oil production hits record (FT)
- Every year like clockwork, analysts start out bizarrely optimistic about future results, then “walk down” their forecasts (WSJ)
- Weak Exports Show Limits of China’s Growth Model (WSJ)
Government spending has long been believed to have a multiplier effect in the economy. However, as the chart above shows, the reality is quite shocking. Each dollar in debt only increased GDP by roughly $0.15. In other words each $1 in government spending actually has a negative multiplier effect of 85% in the real economy. The leaders in Washington need to start focusing on the real issues at hand. While we toss around $100 billion here and there, as if it is left pocket change, the reality is that the rising debt levels will continue to drag on economic growth going forward. Of course, the continued shenanigans in Washington, inept leadership and lack of fiscal responsibility is why there is a continuing increase in the number of individuals who perceive the need for a third political party. Change was promised. Change is wanted. Change will happen. Unfortunately, history shows that REAL change, politically and otherwise, has only occurred under the worst possible conditions.
There is no way an economy that grows by 75% every 25 years can fund entitlement programs expanding by 500% or more over the same time period. If we are not yet at Peak Entitlements, we are getting close. Short of the Federal Reserve printing $1 trillion a year and distributing it to entitlement beneficiaries directly (with all the unintended consequences of such blatant money-printing), there is no way an economy with stagnant employment and modest productivity growth (roughly 60% in 25 years) can fund entitlement programs expanding by 500% or more over the same time period.
It would appear, judging by the market's response and the headlines, that Obama's "unconditional surrender or default" negiotiating tactic has worked... According to AP, the Republicans look to have folded once again:
- *HOUSE REPUBLICANS SAID TO OFFER PLAN ON SHUTDOWN, DEBT LIMIT
- *REPUBLICANS SAID TO SEEK TALKS ON REDUCING U.S. SPENDING
The House Republicans are apparently waiting to hear back from the White House on this latest proposal - which amounts to - our translation - "Ok, you can have your government re-opened, and we'll let you raise the debt ceiling... as long as you really really promise to talk about spending cuts at some point in the future maybe possible please."
Nearly exactly five years after Hank Paulson appeared before Congress dangling a 3 page term sheet ultimatum warning it was his way or the apocalypse, it is time for the sequel. Since we all love the smell of a good Mutually Assured Destruction spectacle in the morning. Which is why we can't wait for Treasury Secretary Jack Lew's presentation before the Senate Finance Committee discussing the Debt Limit, in which he will rain fire and brimstone on anyone who suggests that the Treasury can enter the X-Date without a debt ceiling deal in place, and will most certainly seek to crucify anyone who points out the logical, namely that payments can be prioritized and interest expense is a fraction the revenue the Treasury brings in, and that the end of the world would be nigh should the US actually be forced to live within its means.