Obamacare

“That was never our target number. That was a target that came from the Congressional Budget Office, and it has become an accepted number. There’s no magic to the 7 million. What there is magic to is that in the month of December a million Americans signed up for insurance.”

– White House aide Phil Schiliro, interview on MSNBC, Dec. 31, 2013

"Paper and digital markets levitate, central banks pull out all the stops of their magical reality-tweaking machine to manipulate everything, accounting fraud pervades public and private enterprise, everything is mis-priced, all official statistics are lies of one kind or another, the regulating authorities sit on their hands, lost in raptures of online pornography (or dreams of future employment at Goldman Sachs), the news media sprinkles wishful-thinking propaganda about a mythical “recovery” and the “shale gas miracle” on a credulous public desperate to believe, the routine swindles of medicine get more cruel and blatant each month, a tiny cohort of financial vampire squids suck in all the nominal wealth of society, and everybody else is left whirling down the drain of posterity in a vortex of diminishing returns and scuttled expectations."

"It's a very straightforward result," UCSD professors Joseph Engleberg calmly states, hospitalizations rise on days when shares fall, and "people are hospitalized disproportionately for mental conditions." Equity-market losses appeared to induce 3,700 market-related hospitalizations a year in California, which implies visits add roughly $650 million a year to U.S. health-care costs when data from the most-populous state are extrapolated nationally - another additional cost of QE? The findings, Bloomberg reports, show a one-day drop in equities of around 1.5% is followed by about a 0.26% increase in hospital admissions on average over the next two days.

As the New Year brings the actual implementation of Obamacare, it appears in reality things are not as great as many were promised. A recent Gallup survey found that only 7% called their Obamacare experience "very positive" with a stunning 29% seeing it "very negative." But as The Daily Mail found, from Northern Virginia hospitals turning away sick people because they can't determine whether their Obamacare insurance plans are in effect to high deductibles and long waits for authorizations; as many as one-third of the administration's claimed 2.1 million enrollees remain unsure of their coverage. The 'lie of the year' in 2013 may be even bigger in 2014.

• Heavy snowstorm hammers northeastern U.S. (Reuters)
• Coins Remain a Bright Spot for Gold (WSJ)
• Gross’s Mistake on Fed Taper Echoes Across Pimco Funds (BBG)
• China December services PMI falls to four-month low (Reuters)
• General Mills Starts Making Some Cheerios Without GMOs (WSJ)
• U.S. considers flammability risk of Bakken crude after accidents (Reuters)
• China Mobile’s Costly iPhone Deal with Apple (WSJ)
• Hezbollah Upgrades Missile Threat to Israel (WSJ)
• UK House Prices Cap Best Year Since 2006 as Mortgages Surge (BBG)
• China tells police to be loyal to party amid graft crackdown (Reuters)

The first trading session of previous years has always been a whopper for those betting on central planning and capital flows. In fact, if one adds up the S&P performance on the first trading day of each year going back to 2009 (i.e., 1/2/13: + 2.54%, 1/3/12: + 1.55%, 1/3/11: + 1.13%, 1/4/10: + 1.60%, and 1/2/09: + 3.16%), one gets a whopping 10% return just on that one trading session. Which is why the fact that futures are glowing read, if only for the moment, may be disturbing for index investors and all those others who put all their faith, not to mention money, in St. Janet. Today's red open is hardly being helped by the 10 Year which continues to drift lower with the yield now at 3.04%, even as the Spanish 10 Year yield just got a 3 handle as well. At this rate the two streams should cross some time in the next two months. Just what a higher yield in the US vs Spain would imply for fair and efficient markets, we leave up to readers to decide.

Is the U.S. consumer tapped out?  If so, how in the world will the U.S. economy possibly improve in 2014?  Most Americans know that the U.S. economy is heavily dependent on consumer spending.  If average Americans are not out there spending money, the economy tends not to do very well.  Unfortunately, retail sales during the holiday season appear to be quite disappointing and the middle class continues to deeply struggle.  And for a whole bunch of reasons things are likely going to be even tougher in 2014.  Families are going to have less money in their pockets to spend thanks to much higher health insurance premiums under Obamacare, a wide variety of tax increases, higher interest rates on debt, and cuts in government welfare programs.  The short-lived bubble of false prosperity that we have been enjoying for the last couple of years is rapidly coming to an end, and 2014 certainly promises to be a very "interesting year".

Obamacare officially went live at midnight. This means that 2.1 million Americans will be given a chance to exercise their new plans at hospitals and clinics across the country. And then the real glitches will begin. We reported two weeks ago that navigating the healthcare.gov labyrinth successfully and "signing up" for Obamacare is one thing; actually activating coverage by making a payment is something totally different. We added that "if people don’t pay by Dec. 31, insurers may end up stuck with a disproportionate number of sicker and costlier customers." It is this "shock" realization that one's Obamacare plan is not active until after the healthcare service has been rendered, that may hit as many as 50% of all enrollees, which means that of the 2+ million Americans who believe they have coverage, up to 1 million is about to be served with a bill which they can't afford.

The following 8 key dynamics (from government over-reach and economic stagnation to civil discontent and beyond) will play out over the next two to three years...

As usual, in 2013, sticking to facts was a mistake in a world fueled by misinformation, propaganda, delusion and wishful thinking. Those in power have successfully held off the unavoidable collapse which will be brought about by their ravenous unbridled greed, and blatant disregard for the rule of law, the U.S. Constitution and rights and liberties of the American people.

"There is no disputing the facts. The economic situation is deteriorating for the average American, the mood of the country is darkening, and the world is awash in debt and turmoil. Every country is attempting to print their way to renewed prosperity. No one wins a race to the bottom. The oligarchs have chosen a path of currency debasement, propping up insolvent banks, propaganda and impoverishing the masses as their preferred course. They attempt to keep the masses distracted with political theater, gun control vitriol, reality TV and iGadgets. What can be said about a society where 10% of the population follows Justin Bieber and Lady Gaga on Twitter and where 50% think the National Debt is a monument in Washington D.C. The country is controlled by evil sycophants, intellectually dishonest toadies and blood sucking leeches. Their lies and deception have held sway for the last four years, but they have only delayed the final collapse of a boom brought about by credit expansion. They will not reverse course and believe their intellectual superiority will allow them to retain their control after the collapse.”

The COO of the Centers for Medicare and Medicaid Services, who supervised the disastrous rollout of Obamacare, is retiring. Michelle Snyder is the second official to depart the sinking ship CMS following CIO Tony Trenkle's resignation in November. While in charge of day-to-day activities, the allocation of resources, and “standing up new programs and activities required by the Affordable Care Act," the NY Times reminds readers that Kathleen Sebelius said "Michelle Snyder is not responsible for those debacles." We can only wonder at the retirement package this 41-year veteran will receive...

Austerity and crisis are not negative--they are the only dynamics that force smart thinking and the re-alignment of values, resources and strategic goals. Trying to fund everything to please or placate every powerful constituency ends up failing everyone in catastrophic fashion.

It was the Year of the Zombies. Not in the sense of most of humanity dying from a horrible plague and then reanimating as mindless flesh-eating ghouls. No, it was much worse than that...

With 72% of those polled believing "big Government" is more of a problem now than 4 years ago, it is hardly surprising that Ron Paul blasts "the failure of government is all around us" in this brief FOX news interview. Perhaps it is the fact that "Obamacare has been such a trasparent failure of big government," along with Keynesian economics, and the NSA debacles; that more and more of even the most liberal are realizing just what America has become. "It's really great news that people are starting to recognize this," Paul adds, because there is no way to replace the status quo "until people give up on what we have."

It is time to crank up the Looney Tunes theme song because Wall Street has officially entered crazytown territory.  Stocks just keep going higher and higher, and at this point what is happening in the stock market does not bear any resemblance to what is going on in the overall economy whatsoever.  So how long can this irrational state of affairs possibly continue?  Stocks seem to go up no matter what happens.  If there is good news, stocks go up.  If there is bad news, stocks go up.  If there is no news, stocks go up.  On Thursday, the day after Christmas, the Dow was up another 122 points to another new all-time record high.  In fact, the Dow has had an astonishing 50 record high closes this year.  This reminds me of the kind of euphoria that we witnessed during the peak of the housing bubble.  At the time, housing prices just kept going higher and higher and everyone rushed to buy before they were "priced out of the market".  But we all know how that ended, and this stock market bubble is headed for a similar ending.