by Zero Hedge - March 26th, 2017 4:35 pm
As the GOP’s healthcare reform bill was pulled on Friday, the major stock indices rebounded in a fit of confusion, helped by the collapse in market liquidity to the lowest levels of 2017…
However, as NorthmanTrader’s Sven Henrich writes, nothing has been solved (or even addressed). Our country, whether people are willing to admit it or not, has deep structural problems that require deep thinking and broad support to solve them.
For decades both parties have presided over the emergence of these structural problems and their only solution has always been to throw more debt at it. I said it before the election and I say it again: Neither candidate and neither party has shown any willingness or capability to address any of the structural problems we face.
They market solutions to fight the symptoms, but not the root causes and in the end accomplish little.
Under Republicans and Bush we ended up with a doubling of the debt and the financial crisis in 2008. Then Democrats presided over another $10B in debt accumulation and $4 trillion in central bank balance sheet expansion with a meager rise in real wages and consumers taking on record debt while all income and wealth benefits went to the top 1% resulting in vast further increases in wealth inequality. Yes things looked better on measures such as unemployment but it was paid for with massive accumulation of debt and artificially low rates. The election of Donald Trump under the banner of populism serves as evidence of the underlying discontentment.
So now Republicans are back in charge and are claiming competence and a willingness to “fix” things. Really? Are they really?
Take health care as an example. The promises given were outlandish, everyone will have coverage, premiums will go down, taxes will go down, Medicare will not get cut and it will be a “beautiful picture”. Sorry folks, but that was all nonsense. Aways has been and if you fell for it you got suckered again.
There is no magic bullet, there is no magic plan, there is only structural reality. And this structural reality says our demographic wave along with our for profit oriented health care system demand certain compromises.
The health care industry is interested in profits first, everything else is secondary. Health care is the field they are in, but they are in the business
by Zero Hedge - March 26th, 2017 3:49 pm
When one strips away the partisan rhetoric and posturing, the practical impact of Friday’s GOP failure to repeal Obamacare has a specific monetary impact: approximately $1 trillion.
Since the ObamaCare repeal bill would have eliminated most of the 2010 health law’s taxes, this would have lowered by a similar amount the revenue baseline for tax reform. Essentially, with the ObamaCare taxes gone, it would have been easier to pay for lowering tax rates. Now, if Republicans want to eliminate the ObamaCare taxes as part of tax reform and ensure the bill does not add to the deficit – which they need to do to assure Trump’s reform process continues under Reconciliation, avoiding the need for 60 votes in the Senate – they will have to raise almost $1 trillion in revenue.
In other words that – all else equal – is how much less tax cuts Trumps and the republicans will be able to pursue unless of course they somehow find a source of $1 trillion in tax revenue (or otherwise simply add to the budget deficit) to offset the Obamacare overhang.
Considering Paul Ryan’s statement on Friday, it appears that at least for the time being, Republicans would leave the ObamaCare taxes in place. “That just means the ObamaCare taxes stay with ObamaCare,” he said. “We’re going to go fix the rest of the tax code.”
Ryan also pushed back on the idea that the setback on healthcare previews difficulties with other items on the legislative agenda “I don’t think this is prologue to other future things, because members realize there are other parts of our agenda that people have even more agreement on what to achieve,” he said. “We have even more agreement on the need and the nature of tax reform, on funding the government, on rebuilding the military, on securing the border.”
While the failure to pass the healthcare bill makes tax reform harder, “it does not in any way make it impossible,” Ryan said. “We will proceed with tax reform, we will continue with tax reform.” Earlier in the week, Treasury Secretary Steven Mnuchin said that the administration has been working on tax reform for two months and plans to release a plan in the near future. House Ways and Means Committee Chairman Kevin Brady added in a
by Zero Hedge - March 26th, 2017 3:15 pm
Following President Trump’s clarifying tweet yesterday that “Obamacare will explode” on its own…
ObamaCare will explode and we will all get together and piece together a great healthcare plan for THE PEOPLE. Do not worry!
— Donald J. Trump (@realDonaldTrump) March 25, 2017
It is becoming increasingly clear that, even without the ‘repeal’, the Trump administration has already begun using its regulatory authority to water down less prominent aspects of Obamacare.
The Republicans’ failure to repeal Obamacare, at least for now, means it remains federal law. But as Reuters reports, newly confirmed Health and Human Services Secretary Tom Price’s power resides in how to interpret that law, and which programs to emphasize and fund. Earlier this week, Price stalled the rollout of mandatory Medicare payment reform programs for heart attack treatment, bypass surgery and joint replacements finalized by the Obama administration in December.
Hospitals and physician groups have been counting on support from Medicare – the federal insurance program for the elderly and disabled – to continue driving payment reform policies built into Obamacare that reward doctors and hospitals for providing high quality care at a lower cost. The Obama Administration had committed to shifting half of all Medicare payments to these alternative payment models by 2018. Although he has voiced general support for innovative payment programs, Price has been a loud critic of mandatory federal programs that dictate how doctors should deliver healthcare.
Without the backing of Medicare, the biggest payer in the U.S. healthcare system which Price now oversees, the nascent payment reform movement could lose momentum, sidelining a transformation many experts believe is vital to reining in runaway U.S. healthcare spending. Price “can’t change the legislation, but of course he’s supposed to implement it. He could impact it,” said John Rother, chief executive of the National Coalition on Health Care, a broad alliance of healthcare stakeholders that has been lobbying the new administration for support of value-based care.
The move Friday to pull the Republican bill only reinforces the risk to the existing law.
“It seems that the Trump Administration now faces a choice whether to actively undermine the ACA or reshape it administratively,” Larry Levitt, senior vice president at Kaiser Family Foundation, wrote on Twitter.
As a painful reminder,
by Zero Hedge - March 26th, 2017 2:41 pm
The allegation – now accepted as incontrovertible fact by the “mainstream” media – that the Russian intelligence services hacked the Democratic National Committee (and John Podesta’s emails) in an effort to help Donald Trump get elected recently suffered a blow from which it may not recover.
Crowdstrike is the cybersecurity company hired by the DNC to determine who hacked their accounts: it took them a single day to determine the identity of the culprits – it was, they said, two groups of hackers which they named “Fancy Bear” and “Cozy Bear,” affiliated respectively with the GRU, which is Russian military intelligence, and the FSB, the Russian security service.
How did they know this?
These alleged “hacker groups” are not associated with any known individuals in any way connected to Russian intelligence: instead, they are identified by the tools they use, the times they do their dirty work, the nature of the targets, and other characteristics based on the history of past intrusions.
Yet as Jeffrey Carr and other cyberwarfare experts have pointed out, this methodology is fatally flawed. “It’s important to know that the process of attributing an attack by a cybersecurity company has nothing to do with the scientific method,” writes Carr:
“Claims of attribution aren’t testable or repeatable because the hypothesis is never proven right or wrong. Neither are claims of attribution admissible in any criminal case, so those who make the claim don’t have to abide by any rules of evidence (i.e., hearsay, relevance, admissibility).”
Likening attribution claims of hacking incidents by cybersecurity companies to intelligence assessments, Carr notes that, unlike government agencies such the CIA, these companies are never held to account for their misses:
“When it comes to cybersecurity estimates of attribution, no one holds the company that makes the claim accountable because there’s no way to prove whether the assignment of attribution is true or false unless (1) there is a criminal conviction, (2) the hacker is caught in the act, or (3) a government employee leaked the evidence.”
This lack of accountability may be changing, however, because Crowdstrike’s case for attributing the hacking of the DNC to
by Zero Hedge - March 26th, 2017 2:05 pm
OK, comrades, let’s check our partisanship at the door and deal with some real analysis on the health care bill that just went down in flames. Here are a few of our thoughts on why the Trump/Ryan healthcare bill to repeal and replace Obamacare went down and some economics behind it…
1) Most important, the bill had no support throughout the country. The latest poll released Thursday afternoon showed that only 17 percent of the country supported the plan.
The Quinnipiac University poll, released Thursday afternoon, shows fewer than one-in-five voters, 17 percent, approve of the Republican plan to replace Obamacare. The majority, 56 percent, disapprove, with slightly more than a quarter, 26 percent, undecided on the proposal.- Politico
2) Ceteris Paribus (all other things equal) doesn’t hold in negotiations. Almost every concession Trump/Ryan made to the hard-right Freedom Caucus resulted in a loss of moderate Republicans, such as the Tuesday Group. The last straw seemed to be the gutting of the services provided by a typical insurance policy.
House Republicans leaders promised hard-right conservatives yet another concession on the health care bill on Wednesday, but it has already lost key support from House moderates and may seriously endanger their chances of getting the bill through the Senate. Ahead of the vote on Thursday, GOP leaders said the Senate would gut Obamacare’s Essential Health Benefits rule after the House passes the American Health Care Act.
That rule requires insurance plans to cover a basic minimum of health care services. These benefits include maternity and newborn care, pediatric care, emergency services, substance abuse treatment, and prescription drugs. Organizations representing 400,000 doctors wrote a letter to Congressional leaders earlier this year asking them to keep these requirements in a replacement of Obamacare. – Think Progress.
3) The legislation was a “corner solution.” That is, it only had the support of Republicans and was not a nonpartisan bill. President Trump sounds like he has learned through this process that the country wants affordable health care for all and will reach out to Democrats on the next iteration. This should neuter the Freedom Caucus in blocking the next bill.
by ilene - March 26th, 2017 1:54 pm
Gibberish Is the White House’s New Normal
Courtesy of Todd Gitlin
This post first appeared on BillMoyers.com.
Once upon a time, there were presidents for whom English seemed their native language. Barack Obama most recently. He deliberated. At a press conference or in an interview — just about whenever he wasn’t speaking from a text — his pauses were as common as other people’s “uh’s.” He was not pausing because his vocabulary was impoverished. He was pausing to put words into sequence. He was putting phrases together with care, word by word, trying out words before uttering them, checking to feel out what they would sound like once uttered. It was important to him because he did not want to be misunderstood. President Obama valued precision, in no small part because he knew he lived in a world where every last presidential word was a speech act, a declaration with consequence, so that the very statement that the sky was blue, say, would be scoured for evidence that the president was declaring a policy on the nature of nature.
That was then. Now we have a president who, when he speaks, spatters the air with unfinished chunks, many of which do not qualify as sentences, and which do not follow from previous chunks. He does not release words into a stream of consciousness but into a heap. He heaps words on top of words, to overwhelm meaning with vague gestures. He does not think, he lurches.
Here are some examples from TIME’s transcript of their cover story made out of their phone interview with the president of the United States. I have italicized the non sequiturs, incomplete propositions, indefinite pronouns and other obscurities that amount to verbal mud.
Scherer: So you don’t feel like Comey’s testimony in any way takes away from the credibility of the tweets you put out, even with the quotes?
Trump: No, I have, look. I have articles saying it happened. But you have to take a look at what they, they just went out at a news conference.
Scherer: Mitch McConnell has said
by Zero Hedge - March 26th, 2017 1:30 pm
The “political appointees” in the intelligence community knew exactly what they were surveilling for, former CIA officer Col. Tony Shaffer told Fox News, adding that the case is “much worse than Watergate by an order of magnitude.”
While Trump was not physically wiretapped, with a wire into his phone, Shaffer said the “basic fundamental idea and claim is true.”
“Clearly they were after gossip because it was political,” Shaffer said, maintaining that the alleged wiretap had nothing to do with Russia.
Due to the simplicity required to “mask” an American’s name during an incidental wiretap, Shaffer said that the leak of Gen. Michael Flynn’s name was “accidental on purpose.”
Even if the surveillance was done legally, Shaffer exclaimed that whoever is responsible for the “unmasking” of Americans’ names and the leaking of the information are felons.
With Comey and Rogers facing “closed sessions”, and Trump looking for a win, we can’t help but think something substantial looms for the leakers just ahead. Of course, the biggest dilemma for exposing the leakers is the confirmation of what we already know to an even wider audience of deniers – that Snowden, Binney, et al. are 100% correct and the surveillance state’s all-seeing eye is everywhere and far beyond government control. (just remember it’s for your own good).
by Zero Hedge - March 26th, 2017 12:53 pm
From Eric Peters, CIO of One River Asset Management, here is a topical anecdote, as well as a review of the key events in the past week.
“Where’s the beef?” bellowed Biggie Too. “Health care, regulation reform, tax cuts – where’s it at?” continued the Chief Global Strategist for one of those too big to fail affairs.
“You boys were always gonna face this moment,” barked Biggie, sliding into a slow groove.
“But here’s the thing brotha. The market doesn’t care about health care – you know that. Poor people care about health care. And the market doesn’t care about poor people. No one cares about poor people.” Biggie nodded, smiled, a big golden smile.
And pulled out a roll; crisp $100 notes. “The market only cares about taxes, regulations baby. It’s all about the Benjamins.”
- “You cannot spend all the money on drinks and women, then ask for help,” said some Dutch dude with an utterly unpronounceable name, trying on a little Trump, just to see how it feels to call it as you see it. “Dijsselbloem lost a great opportunity to be quiet,” responded Italy’s failed former prime minister Renzi. “Dijsselbloem’s European vision is evident in the union’s policies: a presumed economic, moral and even cultural superiority coming from northern countries, to the detriment of the South,” announced the Five Star Movement, memories of Berlusconi’s Bunga Bunga parties echoing off the ruins of Caligula’s castle.
- “It’s worth bearing in mind that the UK helped restructure Germany’s post-war debts at the 1953 London conference,” said Sir Bill Cash, presiding over the EU Exit Committee, reminding Europeans of the devastation inflicted by Germany. You see, Sir Cash wants nothing of the E60bln Brexit bill. “It might be worth tactfully reminding people – not one of my strongest points – that there’s a realistic position here that we don’t really owe anything to the EU,” concluded Cash, Europe’s endless war with itself always a scratch below the surface.
- The European Central Bank urged Brussels to toughen sanction procedures against governments who persistently fall foul of its economic rules, as over 90 per cent of its reform recommendations had been ignored by member states last year.
- “If they weren’t ashamed, they would revive the gas chambers,”
by Zero Hedge - March 26th, 2017 12:21 pm
Style Over Substance
“May you live in interesting times,” says the ancient Chinese curse. No doubt about it, we live in interesting times. Hardly a day goes by that we’re not aghast and astounded by a series of grotesque caricatures of the world as at devolves towards vulgarity. Just this week, for instance, U.S. Representative Maxine Waters tweeted, “Get ready for impeachment.”
Well, Maxine Waters is obviously right – impeaching the president is an urgent task of the utmost importance. As everybody knows, he is best friends with Vladimir Putin, the shirtless barbarian who rules the Evil Russian Empire (they were seen drinking kompromat together in Moscow, a vile Russian liquor that reportedly tastes a bit like urine. Senator McCain has the details on that story). And as Maxine Waters has just disclosed, Putin’s armies are recently advancing into Korea! We cannot let this stand, or he’ll invade Kekistan next (note that he already controls Limpopo and Gabon). Who knows where it will end?
We assume this was directed at President Trump. But what Waters meant by this was sufficiently vague. There was no guidance as to how President Trump should be getting ready.
Should he pack his bags? Should he double knot his shoelaces? Should he say a prayer? Naturally, the specifics don’t matter in the darnedest. Rather, these days, it’s style over substance in just about everything. This is why Waters – a committed moron – rises to the top of class in the lost republic of the early 21st century.
At the same time, the individual has been displaced by the almighty aggregate. Economists pencil out the unemployment rate, with certain omissions, as if it represents something meaningful. Then lunkheads like Waters repeat it as if it’s the gospel truth.
Somehow, through all of this, our representatives are oblivious to what’s really going on; that the U.S. government is just months away from a possible default.
The Dutch Experience
Last week, via our friends at Zero Hedge, we came across as article by Simon Black of Sovereign Man titled, The U.S. Government Now Has Less Cash Than Google. Inside, Black details the invention of the government bond in 1517 Amsterdam and the
by Market Shadows - March 26th, 2017 12:10 pm
Financial Markets and Economy
Investors need to contend with the waning impact of energy base effects on inflation and a terminal rate that lacks momentum before they can aspire to push interest rates higher.
One of Wall Street's most steadfast bulls is worried about stocks (Business Insider)
In a note sent to clients on Friday, Lee said several factors that had supported his views on the market, including attractive valuations and central-bank support, had turned neutral or possibly negative.
Queensland is bracing for its worst cyclone in six years amid expectation that a severe weather system will cross the coast in the north of the Australian state early Tuesday.
Populism is the result of global economic failure (The Guardian)
The rise of populism has rattled the global political establishment. Brexit came as a shock, as did the victory of Donald Trump. Much head-scratching has resulted as leaders seek to work out why large chunks of their electorates are so cross.
There's a civil war in the bitcoin community over the digital currency's future.
Developers, miners, and other stakeholders are locked in a heated debate over how best to scale the network, with chances steadily rising of irreconcilable differences causing a so-called "hard fork" that would split Bitcoin in two.
Sluggish Housing Recovery Took $300 Billion Toll on U.S. Economy, Data Show (The Wall Street Journal)
The decline in homeownership rates to near 50-year lows is partly to blame for the U.S. economy’s sluggish recovery from the last recession, new data suggest.
After a two year absence, Malaysian casino and property mogul Chen Lip Keong is back on the Forbes list of the world’s billionaires. Dr Chen – he was a physician before turning to business – is the CEO of NagaCorp, the Hong Kong listed company