Looks like Congress will provide billions more free money so people can turn in good cars to get new ones that get as little as 1 mile/gallon better milage. What a waste of taxpayer money. How can dealers make deals this weekend without knowing if the Senate will approve the extension? If this is the way government runs this program how can we have any confidence in them running healthcare?-Lou
House Votes to Extend 'Clunkers' Program
The House voted Friday to transfer $2 billion in emergency funding from the economic stimulus plan to the "cash for clunkers" program, ensuring it has sufficient funds to continue.
The move follows a scramble Thursday after it emerged that the initial $1 billion allocated to the clunkers program may have been close to exhausted after just one week. The legislation would shift $2 billion from the $787 billion stimulus plan to the program.
The House voted 316 to 109 to approve the extension. Because the measure was placed on the suspension calendar, it required two-thirds of lawmakers' support to carry it.
The clunkers program, which began last week, offers consumers vouchers for as much as $4,500 to trade in their gas guzzlers for new, more fuel-efficient models.
As of Friday morning, the National Highway Traffic Safety Administration, which is handling the clunker rebates, has processed $250 million in vouchers, the Transportation Department told auto makers and industry lobbying groups, a person said. NHTSA is doubling the number of people it has reviewing voucher applications to speed up the process, this person said.
The National Auto Dealers Association said it has been given "specific assurances" by the Obama administration that all clunkers deals closed on Friday will be honored. Despite the assurances, however, the organization's chairman reiterated concerns that the clunkers program could run out of funding and that some dealers might not be reimbursed for rebates extended to customer.
"Until further definitive guidance on the availability of funding is provided by the Administration, dealers who accept additional 'clunkers' deals may face a risk that they will not be reimbursed," John McEleney said.
House Speaker Nancy Pelosi (D., Calif.) voiced support for efforts to add funding to the program.
"Both sides of the aisle, people acknowledge the effectiveness of this initiative," Ms. Pelosi said on the House floor, adding that early evidence showed that the program was exceeding its environmental targets. But she added that she had a "concern" about the source of funding for restoring clunkers monies -- an energy program in the economic stimulus package.
Ms. Pelosi said she hoped that any funds taken from the energy program would eventually be restored.
The Senate won't consider an extension until next week, according to Sens. Carl Levin (D., Mich.) and Debbie Stabenow (D., Mich.). Even then, it is not certain the measure will be approved in the Senate without extensive debate.
MORE
Friday, July 31, 2009
Gold Takes Off
Here is a chart of the gold market. The green line represents today's action. Look how gold took off from 940 to 956 in minutes. Gold took off when the dollar index broke through important downside technical level of 78.40. Something big is coming in the currency and gold market, stay tuned.-Lou
Recession Two Times Worse
Todays GDP revisions for first quarter reveal that the recession was twice as worse than originally reported. Todays 2nd quarter GDP news showed the economy shrinking only 1%. Perhaps we are seeing a bit of stabilization in the economy as the trillions of stimulus money takes hold. Let's see what the econmic reports show between now and October. After a bit of stabilization, I think we will see the next and most likely painful decline in both the stock market and the economy.-Lou
Recession Worse Than Prior Estimates, Revisions Show
By Bob Willis
July 31 (Bloomberg) -- The first 12 months of the U.S. recession saw the economy shrink more than twice as much as previously estimated, reflecting even bigger declines in consumer spending and housing, revised figures showed.
The world’s largest economy contracted 1.9 percent from the fourth quarter of 2007 to the last three months of 2008, compared with the 0.8 percent drop previously on the books, the Commerce Department said today in Washington.
“The current downturn beginning in 2008 is more pronounced,” Steven Landefeld, director of the Commerce Department’s Bureau of Economic Analysis, said in a press briefing this week. The revisions were in line with past experience in which initial figures tended to underestimate the severity of contractions during their early stages, he said.
The updated statistics also showed that Americans earned more over the last 10 years and socked away a larger share of that cash in savings. The report signals the process of repairing tattered balance sheets following the biggest drop in household wealth on record may be further along than anticipated.
Spending Slumps
Consumer spending, which accounts for 70 percent of the economy, decreased 1.8 percent in last year’s fourth quarter from the same period in 2007, exceeding the prior estimate of a 1.5 percent drop. Purchases also began sinking sooner than previously projected, registering their first decline at the start of 2008 rather than in the second half.
Treasuries headed higher after the report, while stock- index futures declined. Benchmark 10-year note yields were at 3.58 percent at 8:51 a.m. in New York, from 3.61 percent late yesterday. Contracts on the Standard & Poor’s 500 Stock Index were down 0.3 percent at 979.
Residential construction fell 21 percent during the period, almost 2 percentage points more than previously reported, aggravating what was already the worst slump since the Great Depression.
The Commerce Department also reported today that the economy contracted at a 1 percent annual rate from April through June after shrinking at a 6.4 percent pace in the first quarter, the most since 1982. The decline in the first three months of the year was previously reported as 5.5 percent.
MORE
Recession Worse Than Prior Estimates, Revisions Show
By Bob Willis
July 31 (Bloomberg) -- The first 12 months of the U.S. recession saw the economy shrink more than twice as much as previously estimated, reflecting even bigger declines in consumer spending and housing, revised figures showed.
The world’s largest economy contracted 1.9 percent from the fourth quarter of 2007 to the last three months of 2008, compared with the 0.8 percent drop previously on the books, the Commerce Department said today in Washington.
“The current downturn beginning in 2008 is more pronounced,” Steven Landefeld, director of the Commerce Department’s Bureau of Economic Analysis, said in a press briefing this week. The revisions were in line with past experience in which initial figures tended to underestimate the severity of contractions during their early stages, he said.
The updated statistics also showed that Americans earned more over the last 10 years and socked away a larger share of that cash in savings. The report signals the process of repairing tattered balance sheets following the biggest drop in household wealth on record may be further along than anticipated.
Spending Slumps
Consumer spending, which accounts for 70 percent of the economy, decreased 1.8 percent in last year’s fourth quarter from the same period in 2007, exceeding the prior estimate of a 1.5 percent drop. Purchases also began sinking sooner than previously projected, registering their first decline at the start of 2008 rather than in the second half.
Treasuries headed higher after the report, while stock- index futures declined. Benchmark 10-year note yields were at 3.58 percent at 8:51 a.m. in New York, from 3.61 percent late yesterday. Contracts on the Standard & Poor’s 500 Stock Index were down 0.3 percent at 979.
Residential construction fell 21 percent during the period, almost 2 percentage points more than previously reported, aggravating what was already the worst slump since the Great Depression.
The Commerce Department also reported today that the economy contracted at a 1 percent annual rate from April through June after shrinking at a 6.4 percent pace in the first quarter, the most since 1982. The decline in the first three months of the year was previously reported as 5.5 percent.
MORE
Cash For Clunkers Hit Roadblock
This program was so successful the billion dollars allocated was used up in 4 days. I guess everyone likes free money from the government. This should help the car dealers July sales numbers.-Lou
Cash for Clunkers suspension? White House scrambles
This much seems certain about the Cash for Clunkers program: Consumers are happy to take government rebates to buy new cars.
Other than that, confusion reigned Friday morning.
The fate of the $1 billion trade-in program was up in the air over concerns that it may have already burned through its funds less than a week after it was officially launched.
And it was unclear how much longer car buyers would be able to trade in clunkers after reports surfaced on Thursday night that the program would be suspended.
On Friday, the Obama administration said it was working with Congress to try to get more money and that Clunkers deal certificates would be honored through the weekend.
"The program will be in place" for anyone who had been planning to make a car purchase this weekend, White House spokesman Robert Gibbs told CNN. "This program appears to be a success for car buyers, car dealers, car companies and taxpayers."
One of the program's main champions in Congress, Sen. Debbie Stabenow, D-Mich., told CNN that the Michigan, Ohio and Indiana congressional delegations are working on a $2 billion extension of Clunkers program.
Stabenow had said the effort has provided an important boost to the economy and resulted in 200,000 car sales.
"I am delighted to hear dealers say that all of their salespeople are busy and they are selling more cars in a day than they had been selling in a month," Stabenow said.
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Thursday, July 30, 2009
Obamacare: "Medical Homes" A Dumping Ground For The Elderly
Seniors better wake up and fight this healthcare bill with everything they got. Healthcare cost savings will be entirely borne by the elderly in this country. The earlier the elderly die the better for the program. Hopefully this bill will be disected and truthfully reported before it's voted on in September. If I was older than 60 I would be terribly frightened.-Lou
House Health-Care Bill Would Establish 'Medical Homes' for the Elderly and Disabled
(CNSNews.com) - The House health-care reform bill proposes to decrease hospital visits by establishing a “medical home pilot program” for elderly and disabled Americans. Such a medical home would not require a physician to be on the staff, and therefore could be run solely by nurse practitioners and physician assistants.
Medical homes also would practice “evidence-based” medicine, which advocates only the use of medical treatments that are supported by effectiveness research. But physicians’ groups say the legislation could lead to restrictions on which treatments may be used for certain conditions, despite the fact that some patients might require a unique or unconventional approach.
It also may lead to dumping Medicare/Medicaid patients in facilities that are not required to have physicians on staff.
The Center for Medicine in the Public Interest (CMPI) expressed its concerns in a report that explains why statistical evidence does not always reflect reality of effective medicine. “‘One size fits all’ rarely does,” the report said. “From clothes to shoes to hats, few people find that items carrying that label work with their individual bodies. So why do we entrust the health of our bodies -- one of the most important assets we have -- to a one-size-fits-all mentality?” According to CMPI and individual physicians, however, this one-size-fits-all mentality is just what congressional health-care reform suggests.
Chart Of The Day
Foreigners have virtually stopped buying long-term US Bonds. This is why the Fed has been forced to monetize the debt with printed funny money. Either interest rates will have to rise substantially (causing a deeper depression) or the Fed will continue to run the electronic printing press resulting in rising inflation, not a good choice for Benny & The Fed.-LouForeign Investment in the U.S. – Going Down, Down, Down - The Casey Files - by David Galland & Bud ConradManaging Editor, BIG GOLD from Casey ResearchJuly 28, 2009
Here at Casey Research, we’ve been watching the actions of foreign holders of U.S. dollars as closely as a Las Vegas pit boss watches a card player on a $1 million winning streak. Many of those in the deflation camp largely, or entirely, ignore the potential role these foreign holders may play in the drama now unfolding.
But in fact, foreigners have, over the last decade, been by far the single most important source of buying for U.S. Treasuries.Given the Treasury’s need to flog on the order of $3 trillion worth of its unbacked paper this year just to keep the government’s doors open – and that is a four- or fivefold increase over 2008 – the foreign buyers not only have to show up for the Treasury auctions, they have to show up in droves.In mid-July, the Associated Press reported that “Foreign demand for long-term U.S. financial assets dropped by the largest amount in four months in May, as Japan and Russia trimmed their holdings of Treasury securities . . . foreigners actually sold $19.8 billion more long-term U.S. securities than they purchased in May.
That compared with net purchases of $11.5 billion in April.”Below you see the big picture of all cross-border flows in May as published by the U.S. Treasury. It shows both foreign investment in the U.S. and U.S. investment abroad. It includes Treasuries, agencies, corporate bonds, equities, and short-term instruments like T-bills. Foreigners bought a lot of T-bills when the credit crisis became acute.
LINK
US Mail Bankrupt?
Do we really still need a bloated postal service? Between e-mail and electronic bill paying (and E-Birthday Cards) there is little need for traditional mail. the postal service should downsize delivering snail mail 4 days a week.-LouUSPS May Be Unable to Make Payroll in October and Retiree Health Plan Costs!
On July 14, unions representing United States Postal Service (USPS) workers wrote the White House with “extreme urgency” asking for a meeting to address lack of funding for both employee payroll in October and health benefits for retired employees.
The letter, which the FederalTimes.com blog provided a scanned copy late last week, says:
“[USPS] top executives are now saying that the USPS will default on a $5.4 billion payment to prefund future retiree health benefits on September 30, 2009. And its government affairs representative are now telling Congressional staff that the Postal Service may not be able to make payroll in October and will be forced to issue IOUs instead.”
The letter was co-signed by the presidents of the American Postal Workers Union, National Rural Letter Carriers’ Association, National Association of Letter Carriers and National Postal Mailhandlers Union, and sent to White House Deputy Chief of Staff, Jim Messina.
Fed buys $2.99 billion in Treasurys
In an effort to keep interest rates low the Fed has continued to create money and buy US bonds in the open market . We are seeing foreigners become net sellers of US debt recently and if the Fed does not step in with a bid interest rates will move significantly higher. The increasingly record amounts of Treasury debt being issued is finding fewer buyers and the Fed is forced to buy that debt as well. Can inflation and a currency crisis be avoided? I don't see how, history shows us that deficit spending and massive money creation almost always leads to inflation, hyper-inflation, currency collapse, shortages of basic goods and civil unrest. The best protection is monetary metals, gold and silver.-Lou
Fed buys $2.99 billion in Treasurys
NEW YORK (MarketWatch) -- The Federal Reserve Bank of New York bought $2.999 billion in Treasurys maturing between 2021 and 2026 on Wednesday, its latest operation in a program intended to keep a lid on borrowing costs. Dealers submitted $11.707 billion to the central bank to buy. The amount purchased was the same as at the Fed's last buyback in the same maturity range. Treasury yields remained lower on the day, pushing prices up. Benchmark 10-year note yields /quotes/comstock/31*!ust10y (UST10Y 3.66, -0.02, -0.65%) fell 6 basis points to 3.63%.
Wednesday, July 29, 2009
5 Year Treasury Auction A Dog
Todays 5 year auction saw few buyers as foreigners shun US Treasurys. Interest rates are going up folks, not good for housing or the economy.-Lou
Debtor Nation
When Debtors Decide to Default
By DAVID STREITFELD
Published: July 25, 2009
NYT-Melissa Birks is being stalked. Her cellphone keeps ringing, always from a caller marked “unknown.” She says she knows it is her credit card company wondering why she stopped making payments. Ms. Birks, who owes $28,830, has nothing to say.
Those on the front lines of the debt industry say there is a small but increasingly noticeable group of strapped consumers who, like Ms. Birks, are deciding they will simply stop paying. After loading up on debt eagerly provided by the card companies during the boom times, these people now find themselves trapped in an endless cycle where they are charged interest on interest and fees upon fees while the lenders get government bailouts.
They are upset — at the unyielding banks and often at their free-spending selves — and are pre-emptively defaulting. They could continue to pay for a while longer but instead are walking away. “You reach a point where you embrace the darkness of default,” said Adam Levin, chairman of the financial products Web site Credit.com.
The lending industry term for these people is “ruthless defaulters.” In a miserable economy where paychecks, savings and expectations are all diminished, their numbers will surely grow.
“They’ve done the math on their account and they’re very angry,” said Corey Calabrese, a Fordham Law student who is an administrator of the school’s walk-in clinic for debtors at Manhattan Civil Court. Public sentiment is on their side, she added: “For the first time, Americans are no longer blaming the borrower but are looking at the credit card companies.”
MORE
By DAVID STREITFELD
Published: July 25, 2009
NYT-Melissa Birks is being stalked. Her cellphone keeps ringing, always from a caller marked “unknown.” She says she knows it is her credit card company wondering why she stopped making payments. Ms. Birks, who owes $28,830, has nothing to say.
Those on the front lines of the debt industry say there is a small but increasingly noticeable group of strapped consumers who, like Ms. Birks, are deciding they will simply stop paying. After loading up on debt eagerly provided by the card companies during the boom times, these people now find themselves trapped in an endless cycle where they are charged interest on interest and fees upon fees while the lenders get government bailouts.
They are upset — at the unyielding banks and often at their free-spending selves — and are pre-emptively defaulting. They could continue to pay for a while longer but instead are walking away. “You reach a point where you embrace the darkness of default,” said Adam Levin, chairman of the financial products Web site Credit.com.
The lending industry term for these people is “ruthless defaulters.” In a miserable economy where paychecks, savings and expectations are all diminished, their numbers will surely grow.
“They’ve done the math on their account and they’re very angry,” said Corey Calabrese, a Fordham Law student who is an administrator of the school’s walk-in clinic for debtors at Manhattan Civil Court. Public sentiment is on their side, she added: “For the first time, Americans are no longer blaming the borrower but are looking at the credit card companies.”
MORE
The Next Shoe To Drop
I have been warning for months that the coming commercial real estate collapse will dwarf that of residential housing. Already we are seein half empty office buildings, strip malls strippped of stores and mega malls with vacancies. The banks will buckle under when they have to write off the debt coming due that cannot be repaid.-Lou
Commercial Real Estate Crash Looming, Says Fed’s Yellen
By AUSTIN KILGORE July 29, 2009
As the industry looks for signs the housing sector is beginning to stabilize, the threat of a crash in the commercial mortgage market grows, according to San Francisco Federal Reserve president Janet Yellen.
Speaking this week at a bankers convention in Idaho, Yellen said while there are signs that the economic growth is beginning to return — house price declines are abating, consumer spending is stabilizing and new unemployment is lessening — the recovery will be painfully slow and the Fed believes commercial real estate is the economy’s next vulnerable spot.
The problem, Yellen said, is maturing loans for commercial properties that lost significant value.
“Borrowers seeking to refinance will be expected to provide additional equity and to have underwriting and pricing adjusted to reflect current market conditions,” Yellen said. “In some cases, borrowers won’t have the resources to refinance loans.”
Yellen urged the community bankers at the conference to be proactive in preparing for a potential downturn, which could include, she said, property value drops as high as 30% to 40%. Namely, she told the audience to address emerging credit problems and commission new appraisals, but also encouraged them to continue lending to creditworthy borrowers.
The remarks fall in line with a number of credit ratings reports that warn commercial real estate is set to take a tumble.
Commercial Real Estate Crash Looming, Says Fed’s Yellen
By AUSTIN KILGORE July 29, 2009
As the industry looks for signs the housing sector is beginning to stabilize, the threat of a crash in the commercial mortgage market grows, according to San Francisco Federal Reserve president Janet Yellen.
Speaking this week at a bankers convention in Idaho, Yellen said while there are signs that the economic growth is beginning to return — house price declines are abating, consumer spending is stabilizing and new unemployment is lessening — the recovery will be painfully slow and the Fed believes commercial real estate is the economy’s next vulnerable spot.
The problem, Yellen said, is maturing loans for commercial properties that lost significant value.
“Borrowers seeking to refinance will be expected to provide additional equity and to have underwriting and pricing adjusted to reflect current market conditions,” Yellen said. “In some cases, borrowers won’t have the resources to refinance loans.”
Yellen urged the community bankers at the conference to be proactive in preparing for a potential downturn, which could include, she said, property value drops as high as 30% to 40%. Namely, she told the audience to address emerging credit problems and commission new appraisals, but also encouraged them to continue lending to creditworthy borrowers.
The remarks fall in line with a number of credit ratings reports that warn commercial real estate is set to take a tumble.
MSNBC Says Fed is Fraudulant
MSNBC's explanatory take on how the Federal Reserve "bailed" the system out and why the Fed is so keen on perpetuating the secrecy.
Eliot Spitzer: "The Fed is a Ponzi scheme, an inside job, it is outrageous, it is time for congress to say enough of this"
Bernanke: This may be worse than Great Depression
What happened to the "green shoots" Mr Bernanke?-Lou
WASHINGTON (MarketWatch) -- Federal Reserve Board Chairman Ben Bernanke discussed the economy with average Americans on Sunday, saying the current financial crisis could be even more virulent than the Great Depression.
"A lot of things happened, a lot came together, [and] created probably the worst financial crisis, certainly since the Great Depression and possibly even including the Great Depression," Bernanke said at the start of a town-hall meeting in Kansas City.
Bernanke defended the Fed's extraordinary moves, which have included slashing interest rates to zero, pumping billions of dollars to keep credit markets open, and buying Treasurys and mortgage debt to keep long-term interest rates low.
"I was not going to be the Federal Reserve chairman who presided over the second Great Depression," he said.
The event is being televised over three nights, beginning Monday, by U.S. public television network PBS. Members of the public, screened by PBS, were able to ask questions.
Many questioners expressed unhappiness with the "too big to fail" doctrine. One asked when Bernanke would get around to firing the leadership of banks that had to accept government assistance.
Another participant said the only thing that was clear to him in the whole crisis was that his small business was "too small to save."
Monday, July 27, 2009
Listen to This Week's Radio Show
Listen to this week's "The Financial Physician" radio show. Even though I was out of town on Sunday I pre-recorded a fresh showed that aired yesterday.
On My Way Back Home
Great To Be Heading Back Home
Wish I could have posted more but between poor internet service on the cruise ship (and expensive) and enjoying my vacation it was difficult.
Anyway I'm feeling well rested (actually exhausted from touring 5 countries in 15 days) and look forward to being back at work on Wednesday.-Lou
Encourage the elderly to commit suicide..!!!
Health Care Bill Requires Medicare Beneficiaries To Get Suicide Advice
This is outrageous. The assault on the elderly is disgraceful. I have been telling you for weeks that this bill will ration health care for the elderly.-Lou
Sunday, July 26, 2009
"Cheers" From Europe
Here is Sue and I with our new friend John Ratzenberg aka Cliff Claven from "Cheers" We met him last night on the Crystal Serenity. He is a really nice guy
Saturday, July 25, 2009
Bank Failure Friday Part II
Busy Friday night for the FDIC-Lou
Friday, July 24, 2009
First NY Bank Failure Announced Since 200
The Empire State's first bank failure since 2004 was announced late Friday afternoon. Waterford Village Bank in Clarence, N.Y., was closed by the Banking Department of the Superintendent of Banks for the state of New York for insufficient capital.
The bank is a single-branch bank which held $62 million in total assets and $58 million in deposits, as of May 31 of this year.
According to a release issued by the New York Superintendent of Banks a "purchase and assumption agreement" has been struck between the Federal Deposit Insurance Corporation, which was named receiver of the bank, and with Evans Bank, N.A., in Angola, New York, which will take on all of Waterford's deposits. Depositors will automatically become depositors of Evans Bank, N.A.
“It is a top priority of the New York State Banking Department to protect the deposits of customers of New York State banks and ensure the safety and soundness of the banking system in the state,” said Richard H. Neiman, Superintendent of Banks for New York State, in a press release. “We determined that the management team’s inability to adequately and timely address problems outlined in a Feb. 12 Cease and Desist Order led to the bank being critically undercapitalized.”
Customers of Waterford Village Bank can contact the FDIC with questions at 1-800-323-6111, or visit the FDIC's Web site about the failure.
New Yorkers can contact the Banking Department of the New York Superintendent of Banks by calling 1-877-BANK-NYS or visiting its Web site.
Waterford Village Bank is the 58th U.S. bank to fail this year.
Bank Failure Friday
Bank failure Friday was a big one this week with the FDIC announcing 6 bank failures in Georgia. What's going on in Georgia? A quarter of all bank failures this year happened in Georgia. Only another $807 burned by the FDIC trust fund, they should be broke by early fall and have to get a bailout from the taxpayers. Don't be fooled by optimistic commentary or the stock market rally, there are big problems with the banks and the economy. The recession has a long way to go in my opinion. -Lou
Friday, July 24, 2009
Six Bank Failures Reported in Georgia
Kathryn Glass
FOXBusiness
The Federal Deposit Insurance Corporation announced the failure of 6 Georgia banks, with 20 bank branches on Friday, bringing the total number of U.S. bank failures this year to 64.
All six banks were subsidiaries of Macon, Ga.-based Security Bank Corporation, and the banks held a total of $2.8 billion in assets and $2.4 billion in total deposits, as of March 31, 2009.
The FDIC is acting as receiver of the banks and a purchase and assumption agreement has been arranged with Pinehurst, Ga.-based State Bank and Trust Company, which will take over all deposits at Security Bank Corporation subsidiaries. State Bank and Trust Company will share the $1.7 billion in losses on the bank’s assets with the FDIC.
The six banks that have been closed include:
-- Security Bank of Bibb County, Macon, Ga.
-- Security Bank of Houston County, Perry, Ga.
-- Security Bank of Jones County, Gray, Ga.
-- Security Bank of Gwinnett County, Suwanee, Ga.
-- Security Bank of North Metro, Woodstock, Ga.
- Security Bank of North Fulton, Alpharetta, Ga.
The FDIC estimates that the failure of these six banks will cost $807 million. Bank customers should visit the FDIC’s Web site if they have questions or need additional information.
Sixteen bank failures have now been reported in the state of Georgia -- that accounts for one-quarter of all bank failures in the U.S. so far this year.
Friday, July 24, 2009
No Healthcare For Grandpa
The only way Obama will be able to get health care costs down is to refuse treatment to the elderly. Most of our lifetime health care costs comes at the end of our life as costly procedures and surgery are performed to extend our lives. The only way to cut costs is to refuse these services to the elderly. Where is AARP on this issue? They are with Obama because it serves their business interests.-Lou
Obamacare: Seniors will get mugged
A health economist warns that President Obama's government-run healthcare plan may result in denying care to a significant number of Americans, especially senior citizens.
Conservative opponents of President Obama's healthcare plan have been arguing that a government takeover of healthcare will allow Washington bureaucrats to use "comparative effectiveness research" to dictate to doctors which treatments they should prescribe and how much those treatments should cost. Critics say this will lead to rationing of care.
In the medical journal The Lancet (January 2009 [PDF]) Obama's special health policy advisor Ezekiel Emanuel wrote that if healthcare has to be rationed, he prefers the "complete lives system," which "discriminates against older people." 
Dr. Devon Herrick, a senior fellow at the National Center for Policy Analysis, says Emanuel believes young adults should be given preferential care over seniors because they have more years of their life ahead of them.
"I guess the implication of that is if you're older, you will be assumed to have lived a complete life; whereas if you're younger, you'd have yet to live a complete life," Herrick suggests. "So in a way I kind of see it as a method to ration care to the elderly, but trying to use an ethicist's view to justify it."
In an article written more than a decade ago [PDF] for the Hastings Center Report, Dr. Emanuel suggested that health services should not be guaranteed to "individuals who are irreversibly prevented from being or becoming participating citizens." He said "an obvious example is not guaranteeing health services to patients with dementia."
'Obamacare' targets young, healthy, wealthy
A Florida congresswoman says the healthcare legislation being pushed by President Obama sends a blunt message to senior citizens: "drop dead."
On Monday, President Obama said that "the single biggest threat to our fiscal stability" and "the single thing that could drive us into long-term staggering and difficult debt" is Medicare and Medicaid.
Wall Street's Heist Continues
Over 15% of Americans are unemployed or under-employed and Wall Street pays itself billions. Time for the rest of Americans to stand up and stop this outrage.-Lou
Wall Street's biggest banks are setting aside billions of dollars more to pay their executives and other employees just months after these firms were rescued with a taxpayer bailout, renewing questions about compensation practices in the aftermath of the financial crisis.
The recent outcry over bonuses at bailed-out firms prompted public alarm and promises of reform from financial leaders, who acknowledged that pay and bonuses should not reward risky short-term business decisions -- such as those that contributed to the meltdown -- but instead longer-term financial performance.
But Wall Street, helped by improving profits, is on track to pay employees as much as, or even more than, it did in the pre-crisis days. So far this year, the top six U.S. banks have set aside $74 billion to pay their employees, up from $60 billion in the corresponding period last year.
The increase in set-asides for employee pay has raised the ire of Washington, where lawmakers denounced financial leaders for returning to old habits and vowed to enact measures governing executive compensation.
"It strengthens our commitment to getting legislation passed," Rep. Barney Frank (D-Mass.), the chairman of the House Financial Services Committee, said in an interview Wednesday, adding that a committee vote on a bill to increase oversight of Wall Street pay has been scheduled for Tuesday. "The amounts are troubling."
Goldman Sachs caused a stir last week when it disclosed it had set aside a record $6.6 billion for compensation expenses in the most recent quarter, bringing the total for the first six months of the year to $11.4 billion. If that pace continues for the rest of the year, Goldman's employees will earn an average of about $773,000, more than double the figure last year and even exceeding the $700,000 paid in 2007.
Life Is Good!
As you all know I am on a European cruise with my wife Sue celebrating the completion of my book: "The Financial Physician" which will be in bookstores nationwide December 15th. Yesterday Sue and I rented a small speedboat and spent 8 hours cruising the Amalfi coast. We went to Capri for lunch then headed down the Amalfi coast to Positano and Amalfi. We found a small beach bar between Positano and Amalfi filled with Italians who spoke little english. They welcomed us and we sat by the seashore drinking wine and loving life. We all have some much to deal with in our lives and when we get the chance to just enjoy life and each other it is to be savored. Yesterday goes down as one of the top 5 days of my life. Here I am driving the boat, off the coast of Positano, yes life is good!-Lou
Ron Paul Grills Bernanke
Ron Paul give Helicopter Ben a good grilling. At about 1:55 Bernanke states that interest rates will have to rise to combat inflation. Whatever the Fed does will not be enough to stop the hyper-inflation coming our way. Ron Paul is the only one in congress that knows anything about economics-Lou
Quote Of The Day
"You cannot help the poor by destroying the rich.
You cannot strengthen the weak by weakening the strong. You cannot bring about prosperity by discouraging thrift.
You cannot lift the wage earner up by pulling the wage payer down.
You cannot further the brotherhood of man by inciting class hatred.
You cannot build character and courage by taking away people's initiative and independence.
You cannot help people permanently by doing for the masses, what they could and should do for themselves.."
Abraham Lincoln
Some quotes stand the test of time and this one certainly does-Lou
Wednesday, July 22, 2009
Watch Rep Alan Grayson Take Down Bernanke
In this amazing video, Rep Alan Grayson calls Ben Bernanke on the carpet on the Fed's outrageous actions of the last year. Every American should watch this video. The Fed is steering us into the financial abyss.-Lou
When In Rome.......
Today my European Cruise takes us to the Eternal City, Rome. Yesterday Sue and I spent the day privately touring the beautiful Chianti wine country in Tuscany. We enjoyed a wonderful four course lunch prepared by an Italian grandmother in her 1,000 year old villa overlooking vineyards and rolling hills. We also enjoyed some wonderful wine and olive oil from this special region of Italy. The Italians sure know how to live!-Lou
Gold Is A Must In Every Portfolio
I bring this article to your attention to prepare you for what I (and others) believe will be a major inflation and currency problem i the United States. Seeking Alpha is a great website and I visit it often, you should as well-Lou
24 Trillion Reasons to Buy Gold
It is a worst case scenario, but Neil Barofsky, the inspector general for the Troubled Asset Relief Program, has said the bailouts, bank rescues and other economic lifelines could end up costing the federal government as much as $23.7 Trillion. To put this number into perspective, it is nearly double the nation’s entire economic output for a year, more than the cost of all the wars the United States has ever fought combined and the most the federal government has spent on any single effort in American history. It is about $80,000 for every U.S. citizen.
Printing and borrowing $800 billion to hand over to the banks with no strings attached never seemed like a good idea. We wrote about it back in October of 2008 in this article. And despite some 80% of Americans being against the bailouts, our elected officials decided to hand over taxpayer money to their banker buddies anyway.
A soon-to-be released report by special inspector general Neil Barofsky finds:
Many of the banks that got federal aid to support increased lending have instead used some of the money to make investments, repay debts or buy other banks. It is not clear whether the report will also disclose the banks’ use of the bailout money to pay executives fat bonuses which they used to buy gold toilets and prostitutes, and to lobby Congress to stop any meaningful reform.”
It is infuriating and does not bode well for the U.S. dollar or our economic future. There is a point on the horizon when foreign governments and banks are going to stop buying our debt and holding our dollars. First we had news that the 2009 deficit had already topped $1 Trillion for the first time in history. As if that wasn’t bad enough, the sticker shock from this latest estimate is really going to upset some of our Eastern trading partners.
A figure like $24 Trillion just might be the breaking point for an already furious Chinese administration that has thus far been willing to support the dollar and our government’s spending binge for fear of losing American consumer demand. The tipping point comes when it is no longer worthwhile for China, Japan and others to continue financing America and propping up our sick economy. While I used to believe that point was still a few years away, it now seems to be rushing upon us full throttle.
This of course is going to lead to a massive sell off in the dollar and fireworks for precious metals. If you aren’t already invested in gold and silver, this is likely your last chance to buy gold for under $1,000 and trade in those paper promises for something of real tangible value that cannot be printed out of thin air. When the dollar collapse begins, I expect the drop to be fast and furious. Savvy investors will want to be positioned well before the bottom falls out.
LINK
Tuesday, July 21, 2009
More On Paulson and Goldman Sachs Grand Larceny
Henry Paulson is a crook and should go to jail in my opinion. He (as past head of Goldman Sachs) engineered the biggest heist in world history. Congress needs to dig deeper into this story.-Lou
Monday, July 20, 2009
Barney Frank Lies Through His Teeth
We as a country are doomed. This is one of the most powerful men in government. Barney Frank was the leader in getting Fannie and Freddie to lend to sub prime borrowers. Now he lies through his teeth in an incoherent interview. There is video I published on this blog of him in Congressional hearings berating Bush Administration officials for trying to limit loans to people who could not pay, now he mumbles about it being Bush's fault. We are in big trouble folks, there is no accountability just lies by those in charge. I'm on vacation in Europe but I will did up the video of him telling the Bush Administration that they have to lend more to lower income borrowers.-Lou
Barney Frank: Don't Blame Me for the Housing Bubble
Who’s to blame for the subprime housing bubble? A popular answer – especially on the right side of the aisle - is Massachusetts Democrat, Barney Frank.
Why?
The argument, best summed up in an Investor's Business Daily editorial published in March 2009, goes like this: "Starting in the early 1990s," Rep. Barney Frank "(and other Democrats) stood athwart efforts by regulators, Congress and the White House to get the runaway housing market under control." It goes on to say in, "2002, Frank nixed reforms" of Fannie Mae and Freddie Mac and that in 2003, "led by Frank, Democrats stood as a bloc against any changes" that President Bush proposed making to Fannie and Freddie.
Is it true? Frank doesn't think so.
Here are some of the main points the current Chairman of the House Financial Services Committee made to Tech Ticker's Aaron Task during their interview last week on Capitol Hill.
First, and it's a point Frank returned to several times, is he and the Democrats did not have the power to call the shots since they were in the minority during most of the Clinton and Bush years. "Tom Delay was running the House of Representatives. So I take responsibility for what I do but I don't take responsibility for Newt Gingrich and Tom Delay’s policies," he protests. Making a broader point, he says, "if I really had the power to stop the Republicans from doing anything you know what I would have done first?
I would have stopped the war in Iraq. I would have stopped the impeachment of Bill Clinton. I would have stopped tax breaks for people making millions of dollars a year."
Listen to This Week's Radio Show
Listen To This Week's "The Financial Physician" Radio Show.
I'm in Europe this week and next so this week's show was a pre-recorded show with my good friend and well known market guru, Peter Grandich. I have already received great feedback from yesterday's program.
To all Peter Grandich followers welcome to The Financial Physician website, I hope you come back often. Peter and I are compatriots in regards to where we think the our great country and economy are headed.
Peter told me today that he believes this was his best interview ever.
I look forward to having Peter as my guest when "The Financial Physician" goes national on Sirius/XM satellite radio channel 165 Sundays 6-7pm ET following Glenn Beck late August.
Stay tuned for exact date
Beautiful Portofino
Today Sue and I are in beautiful Portofino Italy as we continue our European cruise aboard the Crystal Serenity. What a lovely (and expensive) town.
Recession Not Over
I agree with Shilling, the recession is far from over and the worst is yet to come. The robust earnings of the nation's largest banks are smokescreen based on changes in accounting rules and gains in trading revenue. Loan portfolios are continuing to deteriorate with credit card defaults rising to record levels and commercial real estate loans about to blow up. The stock market rally looks similar to the bear market rally during the Great Depression only to be followed by the worst of the decline. Use this rally to lighten up equity positions, the rally is a gift to those who failed to sell before last years crash.-Lou
False Bottoms
A. Gary Shilling, 07.15.09The recession is not over. Investors will soon return to worrying about deflation and weak share earnings
Despite a 31% gain in the S&P 500 since Mar. 9 reports of the bear market's demise are greatly exaggerated. There have been statistics that suggest otherwise--that the economic decline is tapering off or that green shoots are sprouting on the economic landscape--but before you kick your shoes off and frolic in the foliage, take a hard look at the stock rally and our economy.
The stock market is exhausted, and I think investors are again worrying about the reality of a deepening worldwide recession. They're beginning to shun stocks, sell commodities and buy the buck. And they're grasping Treasurys to their bosoms as they again fear deflation.
False signs of a recovery are common in recessions. Since World War II there have been 11 recessions, and in 8 of them real GDP rose in at least one quarter well before the recession was over. Recessions don't start at the top and go straight to the bottom. I see the current downturn as following a sawtooth pattern along a declining trend. It's quite normal to have upticks in an otherwise bad-news economy. A rebound from last fall's financial and consumer spending nosedives was likely. If things continued straight down, this recession wouldn't just be the worst one since the Depression, it would rival those dark days when unemployment rose to 25%. It's not that bad today.
The government has been pouring hundreds of billions into the economy, but so far most of its programs are off to slow starts. The Public-Private Investment Program, for example, may be mortally wounded by the emasculation of mark-to-market rules. Banks no longer have to mark their toxic assets down to the market prices where hedge funds and others will buy them. So they can sit on dead assets and pretend that nothing is wrong. The consequence is that our banks are at risk of becoming zombies like Japanese banks in the 1990s.
The folks in Washington are big fans of modifying mortgages to make them more affordable. Alas, this doesn't cure what ails homeowners. More than 50% are behind in payments only 60 days after modification.
Glenn Beck Explains The Goldman Sachs Crime
Glenn Beck can be a bit nutty, but his explanation on how Goldman Sachs fleeces taxpayers is infuriating. Goldman through their contacts in government, namely ex chief executive Henry Paulson may have stole billions from us taxpayers. How does Goldman Sachs make billions EVERY quarter in their trading account no matter what happens in markets? Some have called Goldman, also known as Government Sachs , the largest insider trading operation in the world. They know every move the government is going to make before everyone else and, most likely (very) trade ahead of the intervention. With so much government involvement in markets (and Goldman the governments agent), it is like shooting fish in a barrel. I wish I had the same access to information that the fortunate folks at Goldman have. Watch this entire video, it will make your blood boil.-Lou
Click On Video For Larger Viewing
Sunday, July 19, 2009
Congress Will Keep Their Health Plan-And Just Destroy Ours
The people in Congress are too much. They will destroy everyone elses healthcare availability but will keep their generous plan. They don't participate in Social Security either, their retirement plan is so much better, thank you. What a bunch of creeps-Lou
Their Own Medicine
Senators prefer the insurance they have
WSJ-In the health debate, liberals sing Hari Krishnas to the "public option" -- a new federal insurance program like Medicare -- but if it's good enough for the middle class, then surely it's good enough for the political class too? As it happens, more than a few Democrats disagree.
On Tuesday, the Senate health committee voted 12-11 in favor of a two-page amendment courtesy of Republican Tom Coburn that would require all Members and their staffs to enroll in any new government-run health plan. Yet all Democrats -- with the exceptions of acting chairman Chris Dodd, Barbara Mikulski and Ted Kennedy via proxy -- voted nay.
In other words, Sherrod Brown and Sheldon Whitehouse won't themselves join a plan that "will offer benefits that are as good as those available through private insurance plans -- or better," as the Ohio and Rhode Island liberals put it in a recent op-ed. And even a self-described socialist like Vermont's Bernie Sanders, who supports a government-only system, wouldn't sign himself up.
Of course, they also qualify now for generous Congressional coverage. Most Americans won't have the same choice. Some will be transferred to the new entitlement as it uses its taxpayer bankroll to dominate insurance markets. Others work for businesses that will find it easier to dump their policies and move employees to the federal rolls. Democrats also know that the public option will try to control health spending by squeezing payments made to doctors and hospitals, and by not paying for treatments that Washington decides are too expensive, which will result in inferior care.
No doubt Mr. Dodd acceded to the Coburn amendment to blunt such objections, and in any case he'll strip it out later in some backroom. Judd Gregg was the only GOP Senator to oppose it, on humanitarian grounds. As he told us in an interview, the public option "will be so bad that I don't think anyone should be forced to join."
Friday, July 17, 2009
In Monte Carlo this Weekend
My wife Sue and I are in Monte Carlo this weekend as we celebrate the completion of my book "The Financial Physician". Barcelona was very nice now we are on The Crystal Serenity cruise ship getting ready to dock in the beautiful Monte Carlo harbor. Sorry for the lakc of posts the last few days, the internet service at sea has been pretty spotty, stay tuned this weekend, I should have better reception in port.-Lou
Thursday, July 16, 2009
Escape From New York
I live in New Jersey where it is just about the same as New York. Don't you think high income New Yorkers will find ways to lower their taxable income? Welcome to "That 70's Show"-Lou
DEM HEALTH RX A POI$ON PILL IN NY
TERRIFYING 57% TAX LOOMS FOR BIGGEST EARNERS
Congressional plans to fund a massive health-care overhaul could have a job-killing effect on New York, creating a tax rate of nearly 60 percent for the state's top earners and possibly pressuring small-business owners to shed workers.
New York's top income bracket could reach as high as 57 percent -- rates not seen in three decades -- to pay for the massive health coverage proposed by House Democrats this week.
The top rate in New York City, home to many of the state's wealthiest people, would be 58.68 percent, the Washington-based Tax Foundation said in a report yesterday.
That means New York's top earners, small-business owners and most dynamic entrepreneurs will be facing new fees and penalties.
The $544 billion tax hike would violate one of President Obama's ironclad campaign promises: No family will pay higher tax rates than they would have paid in the 1990s.
Under the bill, three new tax brackets would be created for high earners, with a top rate of 45 percent for families making more than $1 million. That would be the highest income-tax rate since 1986, when the top rate was 50 percent.
The legislation is especially onerous for business owners, in part because it penalizes employers with a payroll bigger than $400,000 some 8 percent of wages if they don't offer health care.
Being Poor Isn't What It Used To Be
Free food, free healthcare and now free cell phones, nobody needs to work anymore. If you do work the government will take half of what you make and give it to someone who doesn't. I hate to think about where this country is going-Lou
Poor in Colorado may get free phones
Denver Post- Thousands of low-income Coloradans reliant on public assistance could get a free cellphone under a plan before the state Public Utilities Commission.
If approved, the plan by TracFone Wireless in Miami would make Colorado the 17th state it has settled into with free cell service for the indigent, a form of wireless welfare that proponents say taps into one of the last untapped markets for the telecom technology.
"Our hope is to have it up and running by September," said Jose Fuentes, TracFone's director of government relations. "Historically, it's a very underutilized service, and we'd like that to change."
The program is a twist on Lifeline, a long-standing federal subsidy that provides low-income families with a break on their land-line telephone bill in order to ensure emergency 911 service.
In Colorado, it's called LITAP — the Low Income Telephone Assistance Program — and is available to anyone receiving aid from any of six welfare funds: Colorado Works Assistance (TANF), Supplemental Security Income, LEAP, Aid to Needy Disabled, the Old Age Pension Fund and Aid to the Blind.
Statewide, about 65 percent of those eligible participated in Lifeline last year.
The money — more than $800 million in subsidies were paid last year for low-income phone service across the country — comes from the Universal Service Fund, a tax on all telephone lines. Of that amount, Coloradans received nearly $3.2 million in low-income subsidies.
TracFone's subsidized program, called Safelink Wireless, gives users at least 68 minutes of free cell service each month — in Colorado, it would be 83 minutes — and unlimited access to 911 service even if the minutes are used up.
Users also get a free Motorola phone worth $50, according to the company's PUC filing. As long as subscribers are on the welfare rolls, they get the phone subsidy.
TracFone is best known as one of the country's biggest pay-as-you-go phone services, and Safelink subscribers can purchase additional minutes on the government-paid cellphone, Fuentes said.
"Historically, we've attracted those who don't have the means to afford a monthly billing for a land phone or don't want to be tied to a long-term cell contract," Fuentes said.
The idea is to convert Safelink users to regular cell customers as they are weaned from the public dole.
Critics question the cellphone idea, mostly pointing to malfunctions or user error that could create a problem in an emergency.
Wednesday, July 15, 2009
Inflation On The rise
The dollar continued to fall today despite the nice rise in the equity markets. The CPI was up .7% for June, mostly due to rising energy prices. If the economy is indeed ready to rise (jury still out on that one) then inflation will be the big risk going forward. Expansion of the money supply coupled with economic growth will surely result in a rising inflationary environment.-Lou
Consumer prices rose in June at their quickest pace since last summer, as expensive gasoline claimed a larger chunk of household budgets.
The Labor Department said Wednesday that its Consumer Price Index climbed 0.7 percent last month from May, slightly more than the 0.6 percent increase expected by economists. The index’s core rate, which excludes energy and food prices, also accelerated quicker than expected, to 0.2 percent.
But fears of broad-based inflation are not likely to be set off now, after economists anticipated that a month of roller-coaster trading in the oil markets might ultimately skew the June index.
“The C.P.I. is not much of a story this month,” said Mickey Levy, Bank of America’s chief economist. “The core is just moving sideways and then you have the upward pressure on energy and gas prices.”
But the data also soothed fears that the economy might be slipping into a deflationary trap, where unemployment, falling wages, lower aggregate demand and shelf prices spiral downward. Mr. Levy noted that prices had held up surprisingly well despite the severity and length of the recession. “I expect core C.P.I. to drift lower but not outright decline,” he said.
Congress Will Tax the Rich For Healthcare Reform
I don't think the government understands the ramifications that redistribution of wealth will have on the economy. High earners will adjust by deferring income and eliminating employees. This is a radical change in the American way. Socialism has always resulted in a diminished economy and standard of living for all.-Lou
House bill to hit millionaires with 5.4 pct surtax
WASHINGTON, July 14 (Reuters) - A sweeping overhaul of the U.S. healthcare system to be announced on Tuesday in the U.S. House of Representatives will include a surtax on millionaires of 5.4 percent, congressional sources said.
The tax rate is higher than the 3 percent surtax lawmakers had been discussing earlier and would be imposed on those making more than $1 million a year, the sources said.
Monday, July 13, 2009
Off To Barcelona
After spending 16 intense weeks writing my book it is finally finished. Time for a much needed vacation in Europe with my wife Susan (poor girl has been a widow last few months). Off to Barcelona tonight for a couple of days then a 12 day European cruise. I will be updated the blog as much as possible (depending on internet availability) and will also be posting pictures of my European Adventure so come by daily and see what I'm up to.-LouSunday, July 12, 2009
Take A Look At What May Be The New World Currency
Here it is, a coin representing the new world currency. The dollar is destined to decline to levels unimanagable, and it may happen very soon. Gold is your only protection if the dollar crashes.-LouMedvedev Shows Off Sample Coin of New ‘World Currency’ at G-8
July 10 (Bloomberg) -- Russian President Dmitry Medvedev illustrated his call for a supranational currency to replace the dollar by pulling from his pocket a sample coin of a “united future world currency.”
“Here it is,” Medvedev told reporters today in L’Aquila, Italy, after a summit of the Group of Eight nations. “You can see it and touch it.”
The coin, which bears the words “unity in diversity,” was minted in Belgium and presented to the heads of G-8 delegations, Medvedev said.
The question of a supranational currency “concerns everyone now, even the mints,” Medvedev said. The test coin “means they’re getting ready. I think it’s a good sign that we understand how interdependent we are.”
Medvedev has repeatedly called for creating a mix of regional reserve currencies as part of the drive to address the global financial crisis, while questioning the U.S. dollar’s future as a global reserve currency. Russia’s proposals for the G-20 meeting in London in April included the creation of a supranational currency.
Max Keiser: Goldman Sachs Robs Money From US Citizens
Pretty daming video regarding the Goldman Sachs and how they have stolen billions from American Taxpayers. It has been said and I beleive it that Goldman Sachs is the biggest criminal enterprise on the planet.-Lou
Saturday, July 11, 2009
Bank Failure Friday
Another Friday, another bank closure, but hey it was only one this week.-Lou
SAN FRANCISCO (MarketWatch) -- Thermopolis, Wyo.-based Bank of Wyoming was closed by regulators Friday, the 53rd U.S. bank failure of 2009 as the credit crisis continues to claim victims.
Lander, Wyo.-based Central Bank & Trust has agreed to assume the failed bank's deposits, according to the Federal Deposit Insurance Corporation.
Bank of Wyoming, the first FDIC-insured bank in that state to fail since 1991, had $70 million in assets and $67 million in deposits as of June 30, the FDIC said.
The FDIC estimated that the cost of the bank's failure to its deposit insurance fund will be $27 million.
House Democrats Plan to Tax the Wealthy to Pay for Health Care Reform
Ok, so they pushed up the income limits for the 4%bsurcharge to $350,000 for married couples. Still this tax the rich till they are broke strategy is bad for the country. The rich are small business owners who are the nation's biggest employers, anything that hurts them hurts jobs. Everyone knows that you do not raise taxes in a recession. This 4% surcharge is in addition to the tax rate increases on higher earners in Obama's 2010 budget proposal. Share the wealth was the one campaign promise Obama has kept.-Lou
NYT-To pay for a sweeping overhaul of the health care system, House Democrats will propose a surtax on individuals earning $280,000 and up and couples earning more than $350,000, the chairman of the tax-writing Ways and Means Committee said on Friday.
Read David M. Herszenhorn’s complete report.
In all, the proposal is projected to generate roughly $550 billion over 10 years, which would cover about half of the estimated cost of the $1-trillion-plus health care legislation. The balance of the cost is expected to be covered by lower government spending on Medicare and other savings in the health care system.
But it remains unclear if the Senate would approve such an across-the-board income tax on the wealthy. Although some Democrats said they would gladly vote to tax the rich to pay for an improved health care system, most if not all Republicans and some centrist Democrats seem to be opposed.
The Ways and Means chairman, Representative Charles B. Rangel of New York, said the surcharge would begin at 1 percent and would step up for individuals earning more than $400,000 and couples earning more than $500,000, and step up yet again for individuals earning $800,000 and up, and couples earning more than $1 million.
Lawmakers were also planning to insert language that would increase the surtax in 2013 if expected cost-savings in the health care system do not materialize.
Financial Physician Radio Show to Go National
I'm happy to announce that this week I signed a contract with XM/Sirius satellite radio to bring "The Financial Physician" radio show to a nationwide audience starting mid-late August. The show will air Sundays at 6-7pm ET following Glenn Beck on Channel 165 Talk Radio.
The show will be separate from my Sunday morning show in New Jersey and will be a financial advise call in show with my usual straight forward, no nonsense financial advise and commentary. I'm very excited to have the opportunity to be a national talk show host after 9 years on WOBM-AM in New Jersey.
I will let you know the exact date when it is finalized.
The new publication date for my book "The Financial Physician: How to Cure Your Money Problems and Boost Your Financial Health" is December 15th 2009. I just finished the book yesterday. The book will be out just in time for Christmas, and will make a great gift for everyone you care about. The book can be pre-ordered for only at $10.19 (a steal!!) at Amazon.com check it out HERE
Friday, July 10, 2009
Don't Cheat On Your Taxes!
The IRS is going to get very aggressive during the Obama Administration. Make sure you accurately prepare your taxes in the future.-Lou
Faced with massive deficits and dwindling tax revenues, the U.S. government is "turning every rock it can over to find as much revenue as it can," says Ken Rubinstein, senior partner at Rubinstein & Rubinstein.
In addition to potential tax hikes, Rubinstein sees a wholesale change in how America treats foreign holdings of U.S. individuals and corporations, citing:
- Repatriation: The Obama administration has discussed raising taxes on profits earned overseas by U.S.-based corporations. "This will increase revenues but some companies may leave the country," Rubinstein says.
- Flexing Muscles: The U.S. government will ask all nations to sign a "tax information exchange agreement," says Rubinstein, citing unnamed foreign government officials. He declined to specify but the attorney has advised Caribbean banking centers in the past. Smaller nations will have no choice but to acquiesce, Rubinstein says.
- Crackdown on Havens: Beyond the government's ongoing case against UBS, pending legislation declares "anybody who sends money to a ‘tax haven country' will be presumed to be committing tax fraud," Rubinstein says. "The burden will be on the taxpayer to prove he didn't commit tax fraud. The judge, jury and prosecutor will be the IRS." This will make it increasingly difficult for U.S. citizens to shelter assets abroad - even for legitimate reasons.
The government is "doing as much possible to increase amount of taxes it receives," he says. "It will increase revenues, but the question is whether the government looks at things in the long-term or only in the short-term."
I think we all know the answer to that question.
Barrons: This Is a Depression
On Fox Business Channel a Barrons writer states that the country is in a Depression, watch this eye-opening video.-Lou
Thursday, July 9, 2009
Obama Repealing Medicare?
Since details began to leak about the healthcare overhaul bill I have been warning my senior radio show listeners that the only way this plan works is to get rid of old people who have so much money spent on their life-end healthcare. For many,the health care costs the last six months of their lives exceeds the entire cost of their health care before. This plan will ration medical coverage based on "cost effectiveness" meaning the older you are the less care will be approved for you. AARP has not stepped up because they stand to benefit by healthcare reform, they are big business and care not for the retirees they say they represent-LouOBAMA WILL REPEAL MEDICARE
Obama's health care proposal is, in effect, the repeal of the Medicare program as we know it. The elderly will go from being the group with the most access to free medical care to the one with the least access. Indeed, the principal impact of the Obama health care program will be to reduce sharply the medical services the elderly can use. No longer will their every medical need be met, their every medication prescribed, their every need to improve their quality of life answered.
It is so ironic that the elderly - who were so vigilant when Bush proposed to change Social Security - are so relaxed about the Obama health care proposals. Bush's Social Security plan, which did not cut their benefits at all, aroused the strongest opposition among the elderly. But Obama's plan, which will totally gut Medicare and replace it with government-managed care and rationing, has elicited little more than a yawn from most senior citizens.
It's time for the elderly to wake up before it is too late!
In our new book, Catastrophe, we explain - in detail and in depth - the consequences the elderly of Canada are feeling from just this kind of program. Limited colonoscopies have led to a 25% higher rate of colon cancer and a ban on the use of the two best chemotherapies are part of the reason why 42% of Canadians with colon cancer die while 31% of Americans, who have access to these two medications, survive the disease.
Overall, the death rate from cancer in Canada is 16% higher than in the United States and the heart disease mortality rate is 6% above ours'.
Under Obama's program, there will be a government health insurance company that gets huge subsidies of tax money. It will compete with private insurance plans. But the subsidies will let it undercut the private plans and drive them out of business, leaving only the government plan - a single payer - in effect.
Today, 800,000 doctors struggle to treat adequately the 250 million Americans who have insurance. Obama will add 50 million more to their caseload with no expansion in the number of doctors or nurses. Indeed, his plan will likely reduce their number by lowering reimbursement rates and imposing bureaucrats above them who will force medical decisions down their throats. Fewer doctors will have to treat more patients. The inevitable result will be rationing.
And it is the elderly who rationing will most effect. Who should get a knee replacement a 40 year old or a 70 year old? Who should get a new hip, a young person or an old person? Who should have priority in the operating room a seventy year old diabetic who needs bypass surgery or a younger person? Obviously, it is the elderly who will get short shrift under his proposal.
But the interest groups that usually speak up for the elderly, particularly AARP, are in Obama's pocket, hoping to profit from his program by becoming one of its vendors. Just as they backed Bush's prescription drug plan because they anticipating profiting from it, so they are now helping Obama gut the medical care of their constituents.
It is high time that the elderly of America realized what the stakes are in this vital fight to preserve Medicare as we know it and keep medical care open, accessible, and free to those over 65. It is truly a battle for their very lives.
Wednesday, July 8, 2009
7 Ways Credit Cards Rob You Blind
The credit card companies are doing everything they can maximize fees and interest rates before real restrictions kick in in February. Here is 7 ways the rip you off. From Minyanville website.-LouHere are 7 things you need to know to avoid getting bitten by your credit card:
1. Read the disclosure statement: This sounds totally obvious, but many cardholders don’t take the time to read the legalese in fine print. All terms and conditions are there in black and white. The challenge: slogging through legal verbiage as thick as molasses. The reward: keeping more of your money.
2. Use a calculator: Do the math before transferring your balance to a new card offering a low introductory rate. Some banks have raised the balance transfer fee, and this eliminates any savings. JPMorgan Chase (JPM) plans to increase its maximum balance transfer fee on selected cards from 3% to 5%. That may sound innocent enough, but it’s a 66.67% increase -- and it comes out of your pocket.
3. The simple solution: Pay your balance in full each month. This allows you to use the bank’s money interest free for a month and helps you build a solid credit rating. It also means that the bank will want your business and be likely to give you better rates in the future.
4. Don’t be bashful: If you’ve been a good customer and your bank slaps you with a higher interest rate, try to negotiate a better deal. The bank won’t want to lose you. If it doesn't lower your rate, shop around for a better deal at another bank. Then be sure to tell your original bank why you’re taking your business elsewhere.
5. Track your expenditures: Many banks tack on a hefty fee, some as high as $40, when you exceed your credit limit. Avoid this by saving your receipts and reviewing your statement each month. Beginning in February, banks will be required to inform customers when a purchase exceeds their credit limit, which should eliminate this fee for the vast majority of customers.
6. Stay in the bank’s good graces: Review the grace period -- how much time you’ve got to pay your bill before incurring a finance charge -- and get your bill in on time. Call the card issuer and change your bill's due date to match your pay cycle. For example, if you pay your rent or mortgage with your paycheck issued at the end of the month, consider paying your credit card bill with the paycheck you receive on the fifteenth. Spreading out major payments helps you avoid a financial crunch.
7. Keep a wary eye on the mailbox: Any changes to your credit agreement are likely to be sent to your home via snail mail. It’s easy to overlook such notices in the usual crush of junk mail. Open all mail from your bank, since it may include the only notice you’ll get of pending changes to your credit agreement. Telling your beloved bank “I didn’t know” probably won’t stop it from penalizing you for changes to your agreement you didn't bother to read.
LINK
1. Read the disclosure statement: This sounds totally obvious, but many cardholders don’t take the time to read the legalese in fine print. All terms and conditions are there in black and white. The challenge: slogging through legal verbiage as thick as molasses. The reward: keeping more of your money.
2. Use a calculator: Do the math before transferring your balance to a new card offering a low introductory rate. Some banks have raised the balance transfer fee, and this eliminates any savings. JPMorgan Chase (JPM) plans to increase its maximum balance transfer fee on selected cards from 3% to 5%. That may sound innocent enough, but it’s a 66.67% increase -- and it comes out of your pocket.
3. The simple solution: Pay your balance in full each month. This allows you to use the bank’s money interest free for a month and helps you build a solid credit rating. It also means that the bank will want your business and be likely to give you better rates in the future.
4. Don’t be bashful: If you’ve been a good customer and your bank slaps you with a higher interest rate, try to negotiate a better deal. The bank won’t want to lose you. If it doesn't lower your rate, shop around for a better deal at another bank. Then be sure to tell your original bank why you’re taking your business elsewhere.
5. Track your expenditures: Many banks tack on a hefty fee, some as high as $40, when you exceed your credit limit. Avoid this by saving your receipts and reviewing your statement each month. Beginning in February, banks will be required to inform customers when a purchase exceeds their credit limit, which should eliminate this fee for the vast majority of customers.
6. Stay in the bank’s good graces: Review the grace period -- how much time you’ve got to pay your bill before incurring a finance charge -- and get your bill in on time. Call the card issuer and change your bill's due date to match your pay cycle. For example, if you pay your rent or mortgage with your paycheck issued at the end of the month, consider paying your credit card bill with the paycheck you receive on the fifteenth. Spreading out major payments helps you avoid a financial crunch.
7. Keep a wary eye on the mailbox: Any changes to your credit agreement are likely to be sent to your home via snail mail. It’s easy to overlook such notices in the usual crush of junk mail. Open all mail from your bank, since it may include the only notice you’ll get of pending changes to your credit agreement. Telling your beloved bank “I didn’t know” probably won’t stop it from penalizing you for changes to your agreement you didn't bother to read.
LINK
4% Surtax to Pay For Health Care Destruction
Government is totally out of control. This Congress and Administration will wind up taxing us to death. Obama's 2010 budget already has tax increases for people making over $200,000 a year, now Congress wants to add a 4% surtax. This will kill the small business and result in more job losses. Higher income American's are being asked to pay for the destruction of the U.S. health care system. This is pure re-distribution of wealth-Lou
U.S. House May Include Surtax on Wealthy in Health-Care Package
July 7 (Bloomberg) -- House Ways and Means Committee members are likely to propose a surtax on high-income Americans to help pay for an overhaul of the health-care system, according to people familiar with the plan.
The tax would be similar to, yet much smaller than, a surtax proposed in 2007 by Ways and Means Committee Chairman Charles Rangel, a person familiar with the committee’s talks said. That plan would have added at least a 4 percent levy on incomes exceeding $200,000, and was projected to reap as much as $832 billion over 10 years.
Two people familiar with closed-door talks by committee Democrats said a House bill probably will include a surtax on incomes exceeding $250,000, as Congress seeks ways to pay for changes to a health-care system that accounts for almost 18 percent of the U.S. economy. By targeting wealthier Americans, a surtax may hold more appeal for House Democrats than a Senate proposal to tax some employer-provided health benefits.
“The surtax is obviously more attractive to Democrats in the House because it’s more progressive, which they find attractive in and of itself,” said Paul Van de Water, a senior fellow at the Washington-based Center on Budget and Policy Priorities, a research group focused on policies affecting low- and moderate-income families.
Supporters on the Ways and Means Committee include Representative Lloyd Doggett, a Texas Democrat who backs including a surtax among revenue-raising measures in a health- care package, Doggett spokeswoman Sarah Dohl said.
Republicans in Congress, and some Senate Democrats, are likely to fight moves to increase tax rates, said Clinton Stretch, who analyzes tax legislation at Deloitte Tax LLP, a Washington consulting firm.
MORE
U.S. House May Include Surtax on Wealthy in Health-Care Package
July 7 (Bloomberg) -- House Ways and Means Committee members are likely to propose a surtax on high-income Americans to help pay for an overhaul of the health-care system, according to people familiar with the plan.
The tax would be similar to, yet much smaller than, a surtax proposed in 2007 by Ways and Means Committee Chairman Charles Rangel, a person familiar with the committee’s talks said. That plan would have added at least a 4 percent levy on incomes exceeding $200,000, and was projected to reap as much as $832 billion over 10 years.
Two people familiar with closed-door talks by committee Democrats said a House bill probably will include a surtax on incomes exceeding $250,000, as Congress seeks ways to pay for changes to a health-care system that accounts for almost 18 percent of the U.S. economy. By targeting wealthier Americans, a surtax may hold more appeal for House Democrats than a Senate proposal to tax some employer-provided health benefits.
“The surtax is obviously more attractive to Democrats in the House because it’s more progressive, which they find attractive in and of itself,” said Paul Van de Water, a senior fellow at the Washington-based Center on Budget and Policy Priorities, a research group focused on policies affecting low- and moderate-income families.
Supporters on the Ways and Means Committee include Representative Lloyd Doggett, a Texas Democrat who backs including a surtax among revenue-raising measures in a health- care package, Doggett spokeswoman Sarah Dohl said.
Republicans in Congress, and some Senate Democrats, are likely to fight moves to increase tax rates, said Clinton Stretch, who analyzes tax legislation at Deloitte Tax LLP, a Washington consulting firm.
MORE
Another Stimulus Plan?
Congress wants to spend more money it does not have on an economic stimulus plan that won't stimulate anything. This is pure madness and the will result in the destruction of the U.S. dollar and economic life as we have known it. The first stimulus worked so well, they might as well try it again.-Lou
U.S. must be open to second economic stimulus: Hoyer
WASHINGTON (Reuters) - U.S. leaders should be open to the possibility of a second stimulus package to jolt the economy out of a recession still causing job losses, House of Representatives Majority Leader Steny Hoyer said on Tuesday.
But in the Senate, Majority Leader Harry Reid was more skeptical of the need for more stimulus spending -- an idea that rattled markets fearful that the economy is far from well and corporate earnings could suffer.
Reid said he saw no evidence another stimulus was needed, saying the "shoots" of economic recovery "are now appearing above the ground."
President
Despite continued large job losses, both Reid and Hoyer -- who spoke at separate news conferences -- said not enough time had passed since first package was approved for it to have the full impact on the U.S. economy, which has been in a recession since December 2007.
"It's certainly too early right now ... to say it's not working," Hoyer said of the initial stimulus package. "In fact we believe it is working. We believe there are a lot of people who otherwise would have been laid off, lost their jobs, who haven't done that."
Tuesday, July 7, 2009
Lost Vegas: The Decline of An American City
This documentary is a preview of the future of America and it's a scary one. Worth a watch.-Lou
Monday, July 6, 2009
A Goldman Sachs Trading Scandal?
This is too precious not to bring to your attention. Who needs a computerized trading system when you are fed a steady stream of inside information from Washington?-Lou
Did someone try to steal Goldman Sachs’ secret sauce?
While most in the US were celebrating the 4th of July, a Russian immigrant living in New Jersey was being held on federal charges of stealing top-secret computer trading codes from a major New York-based financial institution—that sources say is none other than Goldman Sachs.
The allegations, if true, are big news because the codes the accused man, Sergey Aleynikov, tried to steal is the secret code to unlocking Goldman’s automated stocks and commodities trading businesses. Federal authorities allege the computer codes and related-trading files that Aleynikov uploaded to a German-based website help this major “financial institution” generate millions of dollars in profits each year.
The platform is one of the things that apparently gives Goldman a leg-up over the competition when it comes to rapid-fire trading of stocks and commodities. Federal authorities say the platform quickly processes rapid developments in the markets and uses top secret mathematical formulas to allow the firm to make highly-profitable automated trades.
The criminal case has the potential to shed a light on the inner workings of an important profit center for Goldman and other Wall Street firms. The federal charges also raise serious questions about the safeguards Wall Street firms deploy to protect their proprietary trading systems.
The criminal case began to unfold on the evening of July 3 when Aleynikov was arrested by FBI agents at Newark Liberty Airport, after returning from Chicago. Aleynikov had just started a job with another firm in Chicago, after leaving the big firm in NY in early June. It appears the financial institution allegedly victimized by Aleynikov had alerted federal authorities that its former employee might be up to no good.
"Debt Explosion" Coming: Fed Economist
Tim Geithner, the US Treasury Secretary, has faced searching question about the growing US Budget deficit
Pretty sober forecast from the Federal Reserve's senior economist.-Lou
US lurching towards 'debt explosion' with long-term interest rates on course to double
The US economy is lurching towards crisis with long-term interest rates on course to double, crippling the country’s ability to pay its debts and potentially plunging it into another recession, according to a study by the US’s own central bank
In a 2003 paper, Thomas Laubach, the US Federal Reserve’s senior economist, calculated the impact on long-term interest rates of rising fiscal deficits and soaring national debt. Applying his assumptions to the recent spike in the US fiscal deficit and national debt, long-term interests rates will double from their current 3.5pc.
The impact would be devastating by making it punitively expensive to finance national borrowings and leading to what Tim Congdon, founder of Lombard Street Research, called a “debt explosion”. Mr Laubach’s study has implications for the UK, too, as public debt is soaring. A US crisis would have implications for the rest of the world, in any case.
Using historical examples for his paper, New Evidence on the Interest Rate Effects of Budget Deficits and Debt, Mr Laubach came to the conclusion that “a percentage point increase in the projected deficit-to-GDP ratio raises the 10-year bond rate expected to prevail five years into the future by 20 to 40 basis points, a typical estimate is about 25 basis points”.
The US deficit has blown out from 3pc to 13.5pc in the past year but long-term rates are largely unchanged. Assuming Mr Laubach’s “typical estimate”, long-term rates have to climb 2.5 percentage points.
He added: “Similarly, a percentage point increase in the projected debt-to-GDP ratio raises future interest rates by about 4 to 5 basis points.” Economists are predicting a wide range of ratios but Mr Congdon said it was “not unreasonable” to assume debt doubling to 140pc. At that level, Mr Laubach’s calculations would see long-term rates rise by 3.5 percentage points.
The study is damning because Mr Laubach was the Fed’s economist at the time, going on to become its senior economist between 2005 and 2008, when he stepped down. As a result, the doubling in rates is the US central bank’s own prediction.
California To Take Down Obamanomics
California’s Nightmare Will Kill Obamanomics: Kevin Hassett
July 6 (Bloomberg) -- Last week, we discovered that the state of California will gladly pay you Tuesday for a hamburger today.
With California mired in a budget crisis, largely the result of a political impasse that makes spending cuts and tax increases impossible, Controller John Chiang said the state planned to issue $3.3 billion in IOU’s in July alone. Instead of cash, those who do business with California will get slips of paper.
The California morass has Democrats in Washington trembling. The reason is simple. If Obama’s health-care plan passes, then we may well end up paying for it with federal slips of paper worth less than California’s. Obama has bet everything on passing health care this year. The publicity surrounding the California debt fiasco almost assures his resounding defeat.
It takes years and years to make a mess as terrible as the California debacle, but the recipe is simple. All that you need is two political parties that are always willing to offer easy government solutions for every need of the voters, but never willing to make the tough decisions necessary to finance the government largess that results. Voters will occasionally change their allegiance from one party to the other, but the bacchanal will continue regardless of the names on the office doors.
California has engaged in an orgy of spending, but, compared with our federal government, its legislators should feel chaste. The California deficit this year is now north of $26 billion. The U.S. federal deficit will be, according to the latest numbers, almost 70 times larger.
Bleak Picture
The federal picture is so bleak because the Obama administration is the most fiscally irresponsible in the history of the U.S. I would imagine that he would be the intergalactic champion as well, if we could gather the data on deficits on other worlds. Obama has taken George W. Bush’s inattention to deficits and elevated it to an art form.
MORE
July 6 (Bloomberg) -- Last week, we discovered that the state of California will gladly pay you Tuesday for a hamburger today.
With California mired in a budget crisis, largely the result of a political impasse that makes spending cuts and tax increases impossible, Controller John Chiang said the state planned to issue $3.3 billion in IOU’s in July alone. Instead of cash, those who do business with California will get slips of paper.
The California morass has Democrats in Washington trembling. The reason is simple. If Obama’s health-care plan passes, then we may well end up paying for it with federal slips of paper worth less than California’s. Obama has bet everything on passing health care this year. The publicity surrounding the California debt fiasco almost assures his resounding defeat.
It takes years and years to make a mess as terrible as the California debacle, but the recipe is simple. All that you need is two political parties that are always willing to offer easy government solutions for every need of the voters, but never willing to make the tough decisions necessary to finance the government largess that results. Voters will occasionally change their allegiance from one party to the other, but the bacchanal will continue regardless of the names on the office doors.
California has engaged in an orgy of spending, but, compared with our federal government, its legislators should feel chaste. The California deficit this year is now north of $26 billion. The U.S. federal deficit will be, according to the latest numbers, almost 70 times larger.
Bleak Picture
The federal picture is so bleak because the Obama administration is the most fiscally irresponsible in the history of the U.S. I would imagine that he would be the intergalactic champion as well, if we could gather the data on deficits on other worlds. Obama has taken George W. Bush’s inattention to deficits and elevated it to an art form.
MORE
Sunday, July 5, 2009
Korea Buying Gold?
Central banks around the world are buying gold to diversify their assets away from the U.S. dollar. Should you not be doing the same?-Lou
Bank of Korea Likely to Buy Gold for 1st Time in 11 Years
The Bank of Korea has not purchased gold for 11 years, but is expected to go on a gold buying spree, as the world’s central banks have bought the commodity since the global economic erupted in September last year.
A Bank of Korea official said yesterday, “The bank has begun to set up a plan to manage foreign exchange reserves for next year. It has also closely watched central banks in other nations and trends in the global gold market. Given the changing global financial environment, the bank`s management plan is critical.”
According to experts, the comment implies that the bank plans to buy gold soon. Korea has the world’s sixth most foreign exchange reserves but ranks just 56th in gold holdings.
China, which has the world’s largest foreign exchange reserves, has secretly bought 454 tons of gold over the past six years. This has intensified global competition to obtain more gold.
The amount of gold bought by China over the period is 32 times larger than the Bank of Korea`s gold reserves. The world’s central banks have rushed to buy gold since they believe the metal will replace the greenback when the dollar’s status as the world’s leading currency weakens.
○ Managing foreign exchange reserves in 2010
The bank has said nothing officially, simply saying, “We have made no decision on the purchase of gold and cannot say if we have considered it." It will finalize by November its plan to manage foreign exchange reserves for 2010, but experts forecast that the bank will have no choice but to buy gold soon.
Based on its explanation, the central bank is apparently fearful that its management plan could cause trouble in the global financial market and harm national interests.
Chang Min, the head of the Korea Institute of Finance’s macroeconomic research division who worked at the central bank until late last year, said, “The central bank has long considered several alternatives such as buying gold to diversify its foreign exchange reserve portfolio, which is heavily focused on dollars. It needs to secure more gold to diversify its investment.”
Kwon Sun-woo, the head of macroeconomic research at Samsung Economic Research Institute, said, “The Bank of Korea`s gold reserves are far less than enough. It should have bought more gold. Given the instability of the greenback, it needs to buy more gold.”
Buy Health Insurance Or Be Fined $1,000: Senate
Right out of George Orwell's clasic "1984", the government (big brother) is calling the $1,000 fine for not buying health insurance "shared responsibility payments". I'm serious, you can't make this stuff up, "shared responsibilty payments" collected by the IRS, just call it a tax or a tax penalty that is what it is. Are we supposed to accept it more if it's called something else? The overhaul of our health care system is actually going to destroy it. Our older citizens will pay a heavy price as procedures will be witheld because they are too old and it's not "cost effective" to spend thousands on their care.-Lou
Health overhaul in Senate bill imposes penalty on those refusing affordable medical coverage
WASHINGTON (AP) -- Americans who refuse to buy affordable medical coverage could be hit with fines of more than $1,000 under a health care overhaul bill unveiled Thursday by key Senate Democrats looking to fulfill President Barack Obama's top domestic priority.
The Congressional Budget Office estimated the fines will raise around $36 billion over 10 years. Senate aides said the penalties would be modeled on the approach taken by Massachusetts, which now imposes a fine of about $1,000 a year on individuals who refuse to get coverage. Under the federal legislation, families would pay higher penalties than individuals.
In a revamped health care system envisioned by lawmakers, people would be required to carry health insurance just like motorists must get auto coverage now. The government would provide subsidies for the poor and many middle-class families, but those who still refuse to sign up would face penalties.
Called "shared responsibility payments," the fines would be set at least at half the cost of basic medical coverage, according to the legislation. The goal is to nudge people to sign up for coverage when they are healthy, not wait until they get sick.
In 2008, employer-provided coverage averaged $12,680 a year for a family plan, and $4,704 for individual coverage, according to the Kaiser Family Foundation's annual survey. Senate aides, who spoke on condition of anonymity because they were not authorized to speak publicly, said the cost of the federal plan would be lower but declined to provide specifics.
The legislation would exempt certain hardship cases from fines. The fines would be collected through the income tax system.
Saturday, July 4, 2009
Happy 4th of July
Today as we celebrate freedom, let's remember our troops who wish they could be home enjoying a cookout with family and friends. We owe our freedom to all those who served in the past and who serve now. This is a nice video to watch today, enjoy.-Lou
Now India Is Challenging The Dollar As World's Reserve Currency
Now India has joined Russia, China, Brazil and other countries calling a new reserve currency besides the dollar. Make no mistake, next week's G-8 meeting will be all about how to get away from the dollar as the world's reserve currency.-Lou
India said to question dollar's international status
NEW YORK (MarketWatch) -- A senior official in the Indian government has joined the growing chorus questioning the U.S. dollar's unofficial position as global reserve currency, according a report published Saturday.
Suresh Tendulkar, chairman of the Prime Minister's Economic Advisory Council, said he's urging India to diversify its foreign-exchange reserves and hold fewer dollars, according to Bloomberg News.
Tendulkar said the fact that India holds so much of its reserves in dollars "is a problem for us," reported Bloomberg.
Tendulkar's comments come one week after the People's Bank of China's annual financial stability report repeated an earlier call by central bank chief Zhou Xiaochuan for the development of a new super-sovereign currency that would largely take the place of the dollar. See related story.
In early June, an official at The Bank of Russia reportedly said it will cut the share of U.S. Treasurys in its foreign exchange reserves.
Alexei Ulyukayev, first deputy chairman of Russia's central bank, said the bank plans to reduce the amount of Treasurys and that Russia would switch some of its reserves into bonds issued by the International Monetary Fund, according to reports. See story.
Also on Saturday, China Daily reported that former Chinese Vice-Premier Zeng Peiyan in a speech in Beijing on Friday called for a new system to ensure the stability of the major reserve currencies. Zeng is the head of China Center for International Economic Exchanges.
Under the existing reserve currency arrangements, there needs to be tighter controls because "your currency is likely to become my problem," said Zeng, according to China Daily.
The rhetoric towards the dollar's international status comes as leaders of the world's leading economies ready to meet in Italy for the G8 Summit 2009, which will be held from July 8 to July 10. The heads of Canada, France, Germany, Italy, Japan, Russia, U.K. and U.S. will gather in L'Aquila, and discussions of ways to improve international finance are on the agenda.
India said to question dollar's international status
NEW YORK (MarketWatch) -- A senior official in the Indian government has joined the growing chorus questioning the U.S. dollar's unofficial position as global reserve currency, according a report published Saturday.
Suresh Tendulkar, chairman of the Prime Minister's Economic Advisory Council, said he's urging India to diversify its foreign-exchange reserves and hold fewer dollars, according to Bloomberg News.
Tendulkar said the fact that India holds so much of its reserves in dollars "is a problem for us," reported Bloomberg.
Tendulkar's comments come one week after the People's Bank of China's annual financial stability report repeated an earlier call by central bank chief Zhou Xiaochuan for the development of a new super-sovereign currency that would largely take the place of the dollar. See related story.
In early June, an official at The Bank of Russia reportedly said it will cut the share of U.S. Treasurys in its foreign exchange reserves.
Alexei Ulyukayev, first deputy chairman of Russia's central bank, said the bank plans to reduce the amount of Treasurys and that Russia would switch some of its reserves into bonds issued by the International Monetary Fund, according to reports. See story.
Also on Saturday, China Daily reported that former Chinese Vice-Premier Zeng Peiyan in a speech in Beijing on Friday called for a new system to ensure the stability of the major reserve currencies. Zeng is the head of China Center for International Economic Exchanges.
Under the existing reserve currency arrangements, there needs to be tighter controls because "your currency is likely to become my problem," said Zeng, according to China Daily.
The rhetoric towards the dollar's international status comes as leaders of the world's leading economies ready to meet in Italy for the G8 Summit 2009, which will be held from July 8 to July 10. The heads of Canada, France, Germany, Italy, Japan, Russia, U.K. and U.S. will gather in L'Aquila, and discussions of ways to improve international finance are on the agenda.
Stocks Down For Third Straight Week
Three weeks ago I mentioned how that week seemed like it could have been an inflection point for the markets. The relentless rise in long Treasury yields coupled with a declining dollar started to take the steam out of the historic bear market rally. Thursday's unexpectedly horrible jobs report indicates that the economy has not yet stabilized and most likely is still contracting. The resumption of the bear market may have begun at the inflection point three weeks ago. Thursday's 200 plus point decline after the employment news had the feel of crisis again. I think the next few weeks will be crucial in determining the direction of the stock market for the rest of the year.-LouU.S. Stocks Retreat for Third Week in Longest Slump Since March
By Rita Nazareth
July 3 (Bloomberg) -- U.S. stocks fell for a third straight week, the longest losing streak since March, on concern deeper- than-estimated job cuts and a drop in consumer confidence will prolong the recession.
By Rita Nazareth
July 3 (Bloomberg) -- U.S. stocks fell for a third straight week, the longest losing streak since March, on concern deeper- than-estimated job cuts and a drop in consumer confidence will prolong the recession.
The Standard & Poor’s 500 Index slid 2.5 percent to 896.42 this week. The
“The unemployment picture continues to be grim,” said
The S&P 500 has slumped 5.3 percent since June 12 on concern the 40 percent, three-month surge in the index outpaced prospects for an economic recovery. Even though the S&P 500 gained 15 percent in the second quarter for its best rally since 1998, the advance stalled in June, leaving the index up less than 0.1 percent for the month. Investors are paying 14.2 times profits from S&P 500 companies during the past 12 months. When the valuation reached 15.5 on June 2, it was the most expensive since October.
Friday, July 3, 2009
Now California Is Printing Money
An interesting take by the guys at Seeking Alpha-Lou
Watch out Ben Bernanke, the Federal Reserve now has competition in the currency game. California is planning to create its own money in the form of IOUs, just like the Fed. What is the California IOU – currency or an interest bearing note?
Officially the IUOs will be called “registered warrants”. State Controller John Chiang planned to issue $3.4 billion, maturing on Oct. 1 to replace state payments. The interest rate is set to be determined on Thursday, but cannot exceed the statutory limit of 5%.
The San Jose Business Journal “California banks ponder their stance on state IOUs” reports that banks are equally perplexed about whether to accept the IOUs and how to process them. But the banks are loath to upset the state with the largest economy in the nation; the state capable of generating the largest investment banking fees.
Bank of America (BAC) issued a statement saying they will honor the IOUs through July 10. Wells Fargo (WFC) and JP Morgan (JPM) have not decided. The smaller banks were mixed.
California’s ingenuity poses an interesting dilemma for the Fed. The IOUs would be structured as short-term tax-free bills, but trade like cash. Banks are being asked to accept the IOUs and advance customers interest. Should the Fed sanction alternate forms of money?
FDIC Shuts 7 Banks in One Day
Bank failure Fraday came a day earlier as even government bank regulators like hamburgers and hotdogs too. In what is the largest number of bank closures in one day since crisis started, the FDIC shut 6 banks in Illinois and one bank in texas. This brings the total this year to 52. It is becoming evident that the problems with smaller banks is getting worse not better. The number of banks being closed each week is accelarating. The next waves of debt failure will be credit cards which right now are at all time delinquency rates (10% and climbing) and commercial real estate loans. Massive job losses and rising unemployment will only add to the banks woes. Yesterday's stock market action indicates that the historic stock market rally off the March lows may have run it's course and the next leg down in the bear market may be ready to commence this summer.-Lou
Seven banks bring 2009 U.S. failures total to 52
Six Illinois banks go under; day's tally on insurance fund more than $300 million
Six Illinois banks go under; day's tally on insurance fund more than $300 million
SAN FRANCISCO (MarketWatch) -- Seven banks were closed by regulators on Thursday, including six in Illinois, bringing the total for 2009 to 52 as the U.S. banking system remains under pressure from rising unemployment and record foreclosures.
The John Warner Bank, in Clinton, Ill., was closed by the Illinois Department of Financial and Professional Regulation and the Federal Deposit Insurance Corp. was appointed receiver. The FDIC then sold the bank's deposits and most of its assets to State Bank of Lincoln, in Lincoln, Ill.
The same Illinois regulator also shut the First State Bank of Winchester, in Winchester, Ill., and appointed the FDIC receiver. The federal agency said it then sold the bank's deposits and most of its assets to the First National Bank of Beardstown, in Beardstown, Ill.
Rock River Bank, in Oregon, Ill., was also closed and the FDIC appointed receiver. The regulator sold the bank's deposits and most of its assets to the Harvard State Bank, in Harvard, Ill.
Elizabeth, Ill.-based Elizabeth State Bank was also later closed, with Galena, Ill.-based Galena State Bank and Trust assuming the failed bank's deposits, the FDIC said. Rounding out the list of Illinois bank failures on Thursday were Danville-based First National Bank, and Worth-based Founders Bank.
The lone bank failure for the day not located in Illinois was Dallas-based Millennium State Bank, the federal regulator said. Irving, Tex.-based State Bank of Texas has agreed to assume the failed bank's deposits.
The U.S. banking system has been straining under the weight of a slumping house prices and surging foreclosures since 2007. Last year, U.S. housing woes spread into a global financial crisis that felled investment bank Lehman Brothers and thrift Washington Mutual, and almost brought American International Group to its knees.
This year, panic has been replaced by a withering recession characterized by surging unemployment -- bringing more pressure on banks.
More than 1,000 banks may fail in the next three to five years as the recession intensifies and loan losses climb, RBC Capital Markets estimated in February. See Full Story
Bank failures on such a scale will deplete some of the money the FDIC has stored to pay depositors. On Thursday, the FDIC estimated that the seven bank failures will cost its deposit-insurance fund a total of roughly $314.3 million.
To keep costs down, the regulator is trying to encourage private investors to buy failed and struggling banks. However, it's also wary of some types of investors, such as private-equity firms.
Thursday, July 2, 2009
'We're in the Middle of a Crash': Black Swan
This guy has an interesting idea on how to deal with the housing market, he says the banks should not foreclose. They should lower the payments substantially and in return for debt forgiveness the bank gets a certain percent ownership of your home. Watch the video-Lou
"We're In The Middle Of A Crash"
The financial system is crashing and action must be taken by the US government to convert debt into equity to produce a more stable environment, Nassim Taleb, author of "The Black Swan," told CNBC Thursday.
"You may have green shoots, whatever you want to call them, you may have temporary relief, but you are still in a world that's breaking," Taleb said on "Squawk Box."
Anything that's fragile like the financial system will eventually crash, he said.
"We're in the middle of a crash," Taleb said. "So if I'm going to forecast something, it is that it's going to get worse, not better."
The government needs to deleverage debt and not try stimulus packages that will inflate assets, he said.
"What makes me very pessimistic in not seeing any leadership or awareness on parts of government on what has to be done, which is deleverage $40-to-$70 trillion," Taleb said.
Worse Than Expected Employment Report Roils Markets
This a very bad number given economists were forecasting a drop of "only" 322,000. The unemployment rate now stands at 9.5%, but the true unemployment rate is actually closer to 18-20%. Can we bury the term "green shoots of recovery" already? There is no recovery coming any time soon, actually I believe things are going to get much worse in the second half of 2009. Sorry to be so negative but I just call em like I see em. At post-time (12:00) the Dow is down a hefty 175 points.-Lou
Payrolls Fall More Than Forecast, Unemployment Rises
July 2 (Bloomberg) -- Employers in the U.S. cut 467,000 jobs in June, the unemployment rate rose and hourly earnings stagnated, offering little evidence the Obama administration’s stimulus package is shoring up the labor market.
The payroll decline was more than forecast and followed a 322,000
“This will be another jobless recovery,” said
Stocks slid after the report, with the Standard & Poor’s 500 Index dropping 2.2 percent to 903.43 at 10:16 a.m. in New York. Treasuries rose, sending yields on benchmark 10-year notes to 3.512 percent from 3.538 percent late yesterday.
Unemployment Claims
The number of Americans filing claims for
Milage Tax Coming?
Do you believe this article? What is happening to our country? Big brother through GPS will monitor your milage and where you go. This is madness. The Obama Administration floated a trial baloon about this a few months ago, now we hear that a University has received a grant to figure out if it will work. Before you know it, there will be cameras and microphones in your home watching you and recording everything you say. Be careful what you say about your government, you may be branded a terrorist and arrested (or worse). This is becoming George Orwell's 1984, he was 25 years too early.-Lou
Fuel tax could be replaced with by-the-mile road tax
Kansas City Star-The year is 2020 and the gasoline tax is history. In its place you get a monthly tax bill based on each mile you drove — tracked by a Global Positioning System device in your car and uploaded to a billing center.
What once was science fiction is being field-tested by the University of Iowa to iron out the wrinkles should a by-the-mile road tax ever be enacted.
Besides the technological advances making such a tax possible, the idea is getting a hard push from a growing number of transportation experts and officials. That is because the traditional by-the-gallon fuel tax, struggling to keep up with road building and maintenance demands, could fall even farther behind as vehicles' gas mileage rises and more alternative-fuel vehicles come on line.
The idea of shifting to a by-the-mile tax has been discussed for years, but it now appears to be getting more serious attention. A federal commission, after a two-year study, concluded earlier this year that the road tax was the "best path forward" to keep revenues flowing to highway and transportation projects, and could be an important new tool to help manage traffic and relieve congestion.
The decision by the 15-member National Surface Transportation Infrastructure Financing Commission was unanimous, which surprised Robert Atkinson, the group's chairman. But he said it became clear as the commission's work progressed that a road tax on miles traveled was the best option.
"If you're committed to the system being improved then it was a no-brainer," he said.
The GM Fallout
I said on my radio show two weeks ago that the fallout from the GM bankruptcy was going to be worse than anyone expected. Between now and year end you will hear how GM's Chapter 11 took down the entire US economy. The old saying is "As goes GM so goes America" and it's as true today as it ever was.-Lou
Perils ahead in GM bankruptcy include liquidation, pension shortfall
Detroit News-We've got a new D-Day in the historic General Motors Corp. bankruptcy: If the automaker's good assets cannot be sold to a "New GM" by July 10, CEO Fritz Henderson told a bankruptcy judge in New York today, the company will be forced to begin liquidation proceedings.
Leave it to Henderson, nothing if not direct, to cut to the heart of GM's existential predicament. Is it yet another riff on the "shock-and-awe" strategy popularized last fall, which posited that a collapse of GM into bankruptcy or worse would prove cataclysmic for the national economy and, certainly, the Midwest. Yes, it is.
And, to a point, it's probably true -- emphasis on the "to a point" part. Team Obama may be intent on getting a speedy resolution to this silly little thing called the largest industrial bankruptcy in American history. And its Treasury Department has a penchant, at least in the Detroit Auto space, for setting tight deadlines and meeting them. But I'm not at all convinced the boss and his minions would let the General collapse into a heap of cut-rate auctions if the judge drags his feet.
Too much to lose. Too much political capital investment, even by the president. Too much danger to organized labor, the staying power of GM's pension fund and auto communities in the Heartland. Indeed, an emerging fear -- emerging, at least, in the public consciousness -- is the likelihood that GM is burning its pension fund on buy-outs and early retirements at a faster rate than anticipated, as the New York Times details in an important story story posted late today. The danger is that pension obligations will run ahead of GM's ability to pay them, meaning U.S. taxpayers would foot the difference through the entity known as the Pension Benefit Guaranty Corp.
"GM basically raided the pension plan, by having a lot of these severance benefits paid through it," Douglas J. Elliott, a fellow with the Brookings Institution who specializes in financial institutions and policy, told The Times. Active workers "could find that they don’t get their full pensions when they retire, because the plan has had to be terminated because of the payments to current retirees. There are definitely these intergenerational transfer issues with underfunded pensions."
Wednesday, July 1, 2009
ADP Estimates U.S. Companies Cut Payrolls by 473,000
Tomorrow is the big June payroll report from the Labor Department. I find the ADP report to be more accurate since it comes from actual payroll records. The Labor Deptartment fudges the number by creating jobs out of thin air using their Birth/Death Model. The BD model estimates (fabricates) how many new jobs are created from newly formed businesses. In May they said new business created over 200,000 new jobs (44,000 in construction), if you believe that you will also believe that there are "green shoots" of economic recover popping up all over. Look for the BLS to report that 375,000-400,000 jobs were lost in June and the unemployment rate rose to 9.7%. The economy will not begin to recover until this number falls below 200,000 jobs lost per month and that will not happen any time soon.-Lou
ADP Estimates U.S. Companies Cut Payrolls by 473,000
July 1 (Bloomberg) -- Companies in the U.S. cut more jobs than forecast in June, according to a private report today, showing the labor market will be slow to improve even as other parts of the economy indicate the recession is abating.
The 473,000 drop in the ADP Employer Services gauge followed a revised reduction of 485,000 workers in May that was smaller than previously estimated.
Job losses may mount as the bankruptcies of General Motors Corp. and Chrysler LLC ripple through manufacturing. Increased firings threaten to further restrain consumer spending at a time when the world’s largest economy is showing signs of stabilizing.
“This is a weak number,”
Economists forecast the ADP report would show a decline of 395,000 jobs, according to the median of 29 estimates in a Bloomberg News survey. Projections ranged from decreases of 280,000 to 532,000.
A Labor Department report tomorrow may show employers cut 363,000 workers from payrolls in June and
The History Of Money
Here is a facinating report from Christopher Weber on the history of money. He discusses that when civilizations debase their currency (like the U.S. is doing today) they fall into economic collapse. He also explains that countries who do not have stable economies for decades or even longer. This is a great read for anyone interested in economic history or cares about the future of America.-Lou
California Misses Budget Deadline, Readies "IOUs"
This is big news and could have a dramatic effect on both the economy and financial markets. If it was only California it could be dealt with but it's not only California, there are at least 20 states that have huge budget deficits that have to be closed. The state will issue IOUs, give me a break, a welfare mother can't feed her children IOUs for breakfast.-Lou
California Misses Budget Deadline, Readies "IOUs"
California's lawmakers failed to agree on a balanced budget by the start of its new fiscal year Wednesday morning, clearing the way to suspend payments owed to the state's vendors and local agencies, who instead will get "IOU" notes promising payment.
The notes will mark the first time in 17 years the most populous U.S. state's government will have to resort to the unusual and dramatic measure.
Democrats who control the legislature could not convince Republicans late Tuesday night to back their plans to tackle a $24.3 billion budget shortfall or a stopgap effort to ward off the IOUs.
The two sides agree on the need for spending cuts but are split over whether to raise taxes. Democrats have pushed for new revenues while Republican lawmakers and Governor Arnold Schwarzenegger, also a Republican, have ruled out tax increases.
The two sides agree on the need for spending cuts but are split over whether to raise taxes. Democrats have pushed for new revenues while Republican lawmakers and Governor Arnold Schwarzenegger, also a Republican, have ruled out tax increases.
They instead see deep spending cuts as the solution to balancing the budget, but Democrats say that would slash the state's safety net for the needy to the bone.
Tempers flared in the state Senate as the midnight start of the new fiscal year neared.
"There is no excuse to hold this whole state hostage," state Senate President Pro Tem Darrell Steinberg told Republicans during a floor debate.
Senate Republican Leader Dennis Hollingsworth countered that major cuts are urgently needed. Otherwise, "There will be entire programs that will have to be lopped off," he said.
Cash Crisis Looms
Cash Crisis Looms
California lawmakers struggle with budget deadlines practically every year, but this year's budget fight is taking place amid the state's worst drop in revenues from personal income taxes since the Great Depression as recession and rising unemployment pile on to the damage done to the state's economy from its long housing slump.
Because of its steep revenue decline, California risks running out of cash later this month to pay all of its bills unless its books are balanced quickly.
To conserve cash, State Controller John Chiang plans to issue IOUs by Thursday to the state's vendors, local agencies overseeing health programs and various recipients of state aid — including the elderly and disabled and college students.
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