Obamacare

After witnessing the fighting of undeclared never ending wars, passage of freedom destroying legislation like the Patriot Act & NDAA, approval of pork barrel spending to the tune of hundreds of billions, rule by Executive Order, using ZIRP to extract hundreds of billions from senior citizen savers and give it to criminal Wall Street banks, forcing the American people at gunpoint to replenish the Wall Street banks with $700 billion after they had committed the greatest financial fraud in history, and a continuing trampling of the U.S. Constitution, the American people continue to remain willfully ignorant of the truth. The American Dream is dead. We’ve allowed a rich, privileged, elite few to achieve hegemony over our economic and political system with their control of the media and manipulation of our financial markets. They will collapse the country because they will never be satisfied with the amount of wealth and power they’ve accumulated. Their voracious greed will be their downfall.

Some discoveries are exciting, joyful, and exhilarating, while others can be quite painful.  Stumbling upon the fact that you do not necessarily have a competent grasp of reality, that you have in fact been duped for most of your life, is not a pleasant experience. I came to see a dark side to the Democratic Party that had always been there but which I had refused to acknowledge.  During the rise of any despotic governmental structure, there is always a section of the population that is given special treatment, and made to feel as though they are “on the winning team”.  For now, it would appear that the “Left” side of the political spectrum has been chosen by the establishment as the favored sons and daughters of the restructured centralized U.S.  However, before those of you on the Left get too comfortable in your new position as the hand of globalization, I would like to appeal to you for a moment of unbiased consideration.  I know from personal experience that there are Democrats out there who are actually far more like we constitutionalists and “right wing extremists” than they may realize.  I ask that you take the following points into account, regardless of what the system decides to label us...

As 1.4 million people have been kicked off the 99 week unemployment rolls, the number of people applying for SSDI skyrocketed. Just because the scumbags on Wall Street and in the rest of corporate America commit fraud on a massive scale does not mean we should look the other way when lowlifes in our community do the same thing on a smaller scale. The working middle class pays the bill for the cost of both frauds. More than 90% of all the people who go onto SSDI never go back to work. This program was supposed to be short term until people could recover and go back to work. There are now 8.83 million people so disabled, they supposedly can’t work. There are only 12 million officially unemployed people in the country. The government is so incompetent, they barely check the applications for SSDI. Anyone with an ounce of brain power (this disqualifies anyone on MSNBC) knows that at least 50% of the people on SSDI are capable of some form of employment.

With the Notre Dame vs Alabama game a complete one-sided demolition, the night was in desperate need of some entertainment... until Piers Morgan and Alex Jones stepped in. While the headline topic was "guns", it was 13 minutes of unbridled spitting, stuttering, and screaming, which achieves nothing in converting anyone on the fence on either side of the "gun control" argument, but certainly helps with CNN's sagging Nielsen ratings, which after having become disinformation central following the Obamacare "rejection" and the NYSE floor "flooding", is now slowly but surely converting itself into the Jerry Springer show for Gen Y. If nothing else, this is far more fun than watching the all too controlled Notre Dame implosion.

The only way to finance a big European-style state is to have it paid for by massive taxation of everyone, mostly the middle class. Right now, we are avoiding honest debate on this fact. The central issue of our time is the debate over the size and scope of government. Two unpleasant but undeniable mathematical truths limit the feasible policy choices. The first truth is that the current tax rates cannot support the promises made to middle-class Americans. The second truth is that you cannot pay for the Life of Julia, or any vision of a cradle-to-grave welfare state, without massive and increasingly regressive middle-class taxes. Not only that, it's easy to tax middle-class assets and transactions but soaking the rich means taxing investments, and problematically, investments are the lifeblood of economic growth. The choice the country faces is simple. What we cannot have is the Life of Julia at no additional burden to 99 out of 100 of us. The way to boil the frog of freedom is slowly.

In money management long term success lies not in garnering short term returns but avoiding the pitfalls that lead to large losses of invested capital.  While it is not popular in the media to point out the headwinds that face investors in the months ahead - it is also naive to only focus on the positives.  While it is true that markets rise more often than not, unfortunately, it is when markets don't that investors are critically set back from their long term goals.  It is not just the loss of capital that is devastating to the compounding effect of returns but, more importantly, it is the loss of "time" which is truly limited and never recoverable. Therefore, as we look forward into 2013, we want to review three reasons to be bullish about investing in the months to come but also review three risks that could derail the markets along the way. The reality is that no one knows for sure where the markets will end this year; and while it is true that "bull markets are more fun than bear markets" the damage to investment portfolios by not managing the risks can be catastrophic.

I left yesterday for the bobbling heads - to the artists of verbiage that weave arguments of their own accomplishments much as the artists of Three Card Monty hide the truth behind their shells. Yesterday we had a nice rally in the equity markets. No surprise; the sigh of relief was palpable that Congress did something, anything to address our fall over the cliff. I would not get too excited however. We raised taxes, we penalized those succeeding and we did it in a meaningful manner. We did not cut the national debt as sung by the chorus across the airwaves. In fact, according to the Congressional Budget Office we decreased revenues by $3.6 trillion over ten years. We did not protect the middle class, but because of the expiration of the payroll tax decrease, Federal taxes will rise for 77% of all working Americans. Thus we rewarded non-working Americans at the expense of those with jobs. The game was the continuation of postponement and avoidance and reckless governance of the nation.

This deal has made our debt problems worse.

Econophile's take on the 7 most important economic events of 2012 and why they will impact 2013 and beyond. This is not what the MSM will tell you.

Keynesian economists believe, regardless of logic and data, that economies can be managed from the top down. In their world, economies are little different than machines. Change some inputs here, speed them up over there, add some lubrication, etc. and the machine will respond in the fashion desired. Output can be “managed” to whatever level needed purely by adjusting the parts of the machine. Austrian economists on the other hand do not see a machine. They see millions of individuals all making decisions to improve their own lives. The price system provides the coordination among these separate pieces, performing a function no human, supercomputer or government could ever accomplish. For Austrians, economics is a bottom up approach. To effect change, you must change the incentives and disincentives that individual decision makers are afforded. “Those who cannot remember the past, are condemned to repeat it.” George Santayana. Ideology is powerful, capable of masking unpleasant facts. Whether we recognize it or not, we are all slaves to ideology.

The problem with democracy. 

If there was any good news in today's Chicago PMI, it is that the headline number beat expectations of 51.0, rising from November's 50.4, to 51.6, leaving the two months of sub 50 prints in September and October in the past, or so the ISM institute would like us to believe. Because a casual glance at the data reveals that things are actually getting worse, with the Employment index plunging from 55.2 to 45.9, the lowest print in three years, while the all critical Capital Equipment buying policy plunged to a new 28 month low. So much for that CapEx spending. In fact the only indicator that posted an increase in today's release was the New Orders index which jumped to 54.0 while Order Backlogs, Supplier Deliveries, and Prices Paid all dropped. And for those hoping that in Q4 that inventory glut will finally clear itself, we have news: it won't -the Inventory index posted yet another jump, from 47.1 to 49.8. And while the data was ugly, perhaps the saddest, or funniest blurb, came from one of the respondents, which probably captures business sentiment in America with absolute precision: "We are on a hiring freeze in Q4, waiting to assess the outcome of the fiscal cliff deliberations. We are also planning cutbacks due to increased healthcare costs and Obamacare related expenses." Nuf said.

Gravity took hold, and ass over teakettle she went.

What a year 2012 has been!  The mainstream media continues to tell us what a “great job” the Obama administration and the Federal Reserve are doing of managing the economy, but meanwhile things just continue to get even worse for the poor and the middle class. Right now we are living in a bubble of debt-fueled false prosperity that allows us to continue to consume far more wealth than we produce, but when that bubble bursts we are going to experience the most painful economic “adjustment” that America has ever gone through.  We need to be able to explain to our fellow Americans what is coming, why it is coming and what needs to be done.  Hopefully the crazy economic numbers that we have included in this article will be shocking enough to wake some people up.

InTrade may have gotten the Obamacare outcome horribly wrong, but it was spot on in predicting the Obama presidential victory. And if it has continued its accurately predictive ways, it will mean a lot of pain is in store for the market (if not so much the President) very shortly, because the online betting service, now only accessible to offshore based US residents just saw odds on a debt ceiling deal plunge to all time lows of 10% earlier today, before rebounding weakly to 16%. As a reminder, Harry Reid has said on numerous occasions that there will be no Fiscal Cliff resolution without a favorable debt ceiling outcome, which therefore means that according to InTrade the odds of a Fiscal Cliff getting done in 2012 have plunged to 16%, and the probability of a market tumble, as the cliff moving over to 2013 means a cornucopia of unintended consequences, is logically (1-16%).