ObamaCare: No prescription for spending

Here’s what ObamaCare has done to the US economy in the last month and it’s certainly is not healthy for growth.

  • There’s no benefit rise for Social Security¬†recipients because there is no inflation, although Medicare rates and co-pays are jumping 15% for those under Affordable Care coverage.
  • Coverage for working families is expected to cost 8% more as lower cost companies closed up during the year on big losses. Industry-wide losses are projected to be $2.5B.
  • All the additional health-care spending by consumers added 30% to the Q3 GDP, which is a tax and should not be included in the survey.

Under these conditions, US consumers will be constrained with their spending next year to afford health coverage. Not an ideal position for an economy looking raise rates.

If the consumer is 68% of the US economy, then picking their pocket further to allow greater coverage will not help discretionary spending.


A new study shows what Americans are doing with their gas cost savings.

While more well-off consumers spent the money at restaurants and on groceries, lower middle-class consumers actually put the savings in their tank. Instead of buying $5 in gas, they were more likely to fill it up.

Since there is no interest inducement to bank the savings and therefore have the cash available to pay down debt, consumers are spending it.

The idea of improving the economy on the back of oil-price decline is really superficial, since spending is not growing, just shifting from the Mobil station, to McDonald’s.

That’s fuel for thought.

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Millennials get Supreme treatment

Give me a moment to pivot off of an economic subject to address the Supreme Court rulings this week.

The left-leaning high court’s ruling this week, while monumental, probably did more to bring millennials into the political process than the Obama election.

The rulings on the legitimacy of ObamaCare and upholding the right to gay marriage are two issues directly affecting these young people.

Government-sponsored universal health care will be a very important issue to the young people about to enter adulthood.

Sorry economic sidebar: Many of these millennials will be working in jobs that do not offer the benefits that most working Americans enjoy today.

And going forward I feel many jobs will not offer medical benefits for their workers, because of the rising costs. The salaries will not be able to cover the preminums for medical/dental.

To that end, our medical community will become further bifurcated. One medicine practice for the masses and another for the wealthy.

Access to better medicine will be limited by costs and ability to pay without insurance. Because if the practice accepts insurance, then they must charge a lower fee.

Most of these millennials will be on the socialist medicine track, which does not mean access to the best or quickest treatment it just means access to treatment.

And that will affect your quality of life, whether you know it or not.

Secondly the federal right to Gay Marriage. Many millennials see sexuality today as a spectrum. They do not see a great distinction between gay, lesbian, transsexual or straight.

Over the course of their early sexual lives they may experiment with different partners of differing sexual identities. Broadly speaking the Stephen Stills song “Love the one your with,” is the operating system for this generation.

So this law probably seems like a no-brainer to them.

What are the social and economic ramifications of these two rulings?

Gay marriage will probably not affect my life to any great extent, the same way other marriages don’t impact me much (except my own).

The ObamaCare law will have plenty of consequences and many will be unforeseen, but suffice it to say that as an American male who will be calling on the medical community more and more in the next twenty years for additional care this ruling will probably shorten my life span.

Well as long as everyone else is happy, that’s what socialism is.

 

 

Shutdown

Equity markets globally are down over 1% Monday morning on the trifecta of: US government shutdown, Italian government crisis and initiation of ObamaCare.

As midnight budget deadline looms, projects of GDP falling flat for Q3 have investors piling into the 10-yr bond with yields touching 2.5% handle.

Tapering is on the back burner with economic growth coming to a standstill and jobless claims rising as employers cut back hours on workers to end run ObamaCare.

Whether we arrive at a continuing resolution 17 hours from now is immaterial to the larger question of ending the US socialist experiment of capitalism.

The sooner the Fed tapers its $85B in daily injections (proper word choice since its heroin for markets) and allows markets to clear on their own, the better for the US economy. Let the market provide the liquidity needed, not DC.

There needs to be the creative destruction of failed firms unable to survive without covert daily injections of cash for bad MBS paper. This would do more in short term that any regs coming out of Dodd Frank.