The President was either flat out ignorant of how the new health care program would impact people’s insurance premiums, or he flat out lied over and over to the American people. Take your pick. There aren’t too many other possibilities, and it’s hard to figure which is worse.
I take that back. Calculated deception is worse that bone headed ignorance. And I don’t think ignorance is what were are dealing with here.
The President knew that Obamacare would be repealed if the American people knew they were going to lose their health coverage and that premiums would skyrocket. Sebelius knew this. The whole White House team knew. Pelosi knew. A good part of the media knew.
But Obamacare was such an opportunity for the government to take over a large swathe of the economy (in partnership with the large health insurance companies – at least initially) that the president’s crew in the White House and beyond felt ,”The truth be damned. One way or another, we are doing this.”
At least that’s what I think they probably thought.
The ends justify the means. “One has to break a a few eggs to make an omelet.” Lie. Cheat. Steal. All in the name of “social justice.”
That’s not to say that the United States won’t make repayment arrangement s that are a virtual default.
In the age of virtual reality, a virtual default makes sense.
What would a virtual default look like? Pretty much like it does on the individual level, when you owe someone money, and you can’t pay it back so you convince them to accept something else. If you have something your creditor values as much or even more than the money you owe, then that can be a perfectly fine payment and no default at all. But if what you have to offer really isn’t worth as much as you owe, that’s a virtual default.
For the United States, the wild idea of having the Treasury mint a trillion dollar coin, that would be a virtual default.
That’s not the wildest idea out there however. We have some economic geniuses who say to themselves ‘Hey, if we can make a one trillion dollar coin, why not a 20 trillion dollar coin, or a sixty trillion dollar coin?’
This is the idea being proposed by our strange fellow-citizens over at MoveOn.
The last time I checked, they had 213 signatures for their petition demanding that “The President should immediately mint a $60 trillion coin, and use the proceeds to pay off the national debt completely, cover all likely deficit spending by Congress over the next 15 years, and take the issue of spending cuts in programs that benefit the 99% off the table!”
According to the site, they now have a “new goal” which is 300 signatures. So if you act fast, you might be able to join the MoveOn dream-team and get you signature affixed to this important petition.
You can’t argue with their logic. You might be able to if they actually used logic.
According to petition signer #206, Pamela Rees, it “isn't crazy, it's a tool and an opportunity to entirely reframe and alter the national conversation. The danger of Federal debt of a myth from which banks benefit and because of which people are, literally, dying. “
Signer #181 Jeffrey Kurland, spies a partisan opportunity in the scheme; ” Take down the Republicans and save the people from paying again for the vile financiers. Save our social democratic support programs.”
Frances Walker, proud petition signer #174, sees the coin as perhaps a kind of silver- bullet that can tame the Tea Party, “Please mint the coin to end the anti-government insanity “he writes in his comment field.
There is more, but let me conclude these examples by passing along the wisdom of John McDonald, petition signer #160, who solemnly states “This will end the foolish discussion on debt that has been going on endlessly for what seems like years now.”
In McDonald’s defense, I have to admit that this idea makes me also a little concerned about foolish discussions and debates that go on endlessly for what seems like years.
Unfortunately, our well-intentioned but misguided MoveOn-ers don’t really understand the concept behind the idea for a trillion dollar coin. It was a real idea, but it was never intended as real money paid to real people for real debt.
It was proposed as accounting trick between the Treasury and The Federal Reserve.The Treasury would mint the coin and with a wink give it to the Fed, who with a nod would hold it and give another trillion in credit, thus bypassing congress and avoiding the debt ceiling debate.
But they already have plenty of accounting tricks, and they don’t need or want a physical symbol of their wink and nod covert relationship. Plus, the Democrats always emerge from the debt ceiling-crisis-muck basking in the public’s adoration and shaking their head at the Republicans who seem bent on taking a Cruz to nowhere, impotently making threats they know that the Democrats know they can never follow up on.
And there you have the real answer. The coin trick could actually work as a technicality, a way for the government to keep borrowing and spending endlessly without having to worry about the bad publicity that comes with breaching the debt ceiling.
But they don’t need it. A gifted propagandist never fears bad publicity. For them, bad publicity is a weapon to spin back on your opponents. Which is why Republican can expect to take another beating early next year when they try to slow things down after the debt quickly climbs above 20 trillion.
Welcome to stocks in the news where the headline meets the trendline.
Stock Number One: Salix. (SYMBOL: SLPX)
And the headline says: Deal Creates Gastrointestinal Leader – OptionsMonster
“Santarus agreed to be purchased by Salix Pharmaceuticals for $2.6 billion, or $32 a share,’ says OptionsMonster. “SNTS, which closed at $23.22 yesterday, is ripping 38 percent before the opening bell on [the] tradeMONSTER platform. SLXP gains more than 11 percent as well”
So you want to know what’s wrong with the stock market these days? With America in general? I counted four law firms that are already threatening to sue Santarus Pharmaceutical over this deal because they’re sniffing more money.
They want Salix pay more.
Analyst from Cantor says Salix is paying too much for the deal.
What Salix is looking for is the existing distribution network that Santarus offers them further gastrointestinal products.
The company currently trades about five times sales, which is a little rich for any biotech.
Our Ransom Notes Trendline says: Avoid Santarus and Salix
Stock number two: Toll Brothers Inc. (SYMBOL: TOL)
And the headline says: Toll Brothers Floats New Stock Issue – Motley Fool
“Toll Brothers is hoping to strengthen its capital foundation with a fresh offering of common stock. The company announced it is floating 6.25 million shares in an underwritten public flotation priced at $32.00 per share. Additionally, the issue's underwriters have been granted a 30-day purchase option for up to an additional 937,500 million shares.”
Toll Brothers will use their $1.7 billion in cash to finance the purchase of a California-based homebuilder, as was announced earlier this week.
The company is trading about 21 times earnings, with forward projections for the next five years coming in about 19% average annual growth. Earning estimates in the short run have been paired back a little bit recently, however.
With interest rates expected to stay at current levels --if maybe just a little bit higher-- Toll Brothers should continue to be a leader in the industry. However it’s probably fairly priced as of now.
Our Ransom Note Trendline says: Hold Toll Brothers
Stock Number Three: J. C. Penney Company (SYMBOL: JCP)
And the headline says: J.C.Penney's October Results Signals Turnaround Taking Hold – JC Penny
“J.C.Penney’s sales release for October 2013 is very promising,” writes Walter Loeb of Forbes. “Sales increased 0.9% over the previous year.As I have written about in past blogs, it is what I thought would happen for several reasons including very easy comparisons and better management,” says Loeb.
The problem with JC Penny isn’t sales. It’s that they’re burning about $1 billion in cash every six months. They have about one $1.6 billion in the bank and are expected to lose $3.50 pre share in 2014 and over $6.00 per share 2015.
Same-store sales increases are great, but it doesn’t solve the problem that they’re not profitable. Much more likely that this company will going to bankruptcy even though we seen the stock price rally since mid-October
Our Ransom Note Trendline says: Sell JC Penny
Currency madness has spread to the Czech Republic. Central bank intervention triggered a record plunge in the Koruna vs. the Euro.
Bloomberg reports Czechs Play Koruna Hardball as Intervention Triggers Record Drop
The Czech central bank’s return to currency interventions after 11 years heralds a push for a weaker koruna to ward off deflation and kick-start the economy.
The koruna plunged 4.4 percent to 26.982 against the euro yesterday, its biggest-ever drop and the most in the world on the day, after the central bank sold the currency in the foreign-exchange market. Governor Miroslav Singer pledged to keep intervening “for as long as needed” to spur inflation, setting a target of “near” 27 per euro, a level the koruna last traded at in 2009.
“The central bank signaled willingness to play hardball in its foreign-exchange policy,” Luis Costa, an emerging-market strategist at Citigroup Inc., said by e-mail from London. “For the moment, I believe the ‘ideal level of 27’ will be met.”
Unlike interventions aimed at strengthening the exchange rate, which require sales of foreign currencies that can deplete foreign reserves, the Czech central bank is printing more koruna to drive down its value. The money supply increase may lead to the higher inflation rates that Singer is pursuing.
“The power is unlimited,” Guillaume Tresca, a Paris-based strategist at Credit Agricole SA, wrote by e-mail yesterday. “They can theoretically print as much koruna as they want.”
Hardball in Pictures - Koruna vs. Euro
It seems the "ideal" level of 27 was reached in a day. Of course it is preposterous to propose that anyone, especially central banks have any notion of what the "ideal" level is.
From a consumer standpoint, the more European goods Czech citizens can buy with the Koruna the better. But central banks will have none of that.
About That Eurozone Entry
Wikipedia comments on the Czech Republic Plans to Join the Eurozone.
The Czech Republic planned to adopt the euro in 2012, but its government suspended that plan in 2007. Although the country is economically well positioned to adopt the euro, there is considerable opposition to the move within the Czech Republic. According to a survey conducted in January 2011, only 22% of the Czech population was in favour of replacing the koruna with euro.
One alleged disadvantage of joining the eurozone is giving up the ability to do what the Czech Republic just did.
Of course the ECB is on its own currency debasement mission vs. the US dollar and Japanese Yen as noted in ECB Unexpectedly Cuts Rate to .25%; Draghi Promises Loose Policy for "Extended Period", "Ready to Consider All Instruments"; What Debasement is Next?
Where Does It End?
For years, I have been asking supporters of these competitive currency debasement schemes "where does it end"?
Recently, Ambrose Evans-Pritchard at the Telegraph proposed the ECB devalue the Euro to support growth and end deflation.
For further details, please consider Lunatic Howls for Competitive QE Debasement; Another Swan Dive Into Cesspool of Economic Silliness; Following Lemmings Over The Cliff; It's Madness!
How the hell can competitive devaluation work, when every country can "theoretically print as much currency as it wants" and every country wants a declining currency vs. every other currency to support growth?
Ambrose, I am still waiting for the answer to that question.
Given that Ambrose (and every other misguided monetarist on the planet) proposes a mathematical impossibility, I may be waiting for a long time.
Mike "Mish" Shedlock
Read more at http://globaleconomicanalysis.blogspot.com/#ghWDTwsYrlILTtTw.99
We congratulate Governor Elect McAuliffe on his win. It was a slugfest and he emerged from the brawl. He should enjoy the moment.
However the win was anything but a mandate. McAuliffe nearly lost the race he had been leading by double digits just a couple of weeks before. People remember his role as the chief money guy for the DLC Democrats and so many on the “Left” don’t trust him. This is a big reason why “Mac” was nearly knocked out last night. His supporter pool is very shallow. He is not liked. But the pool was just deep enough to win last night, and that’s what counts this morning.
Going forward however it is likely to be a different story.
Check out this article from from the progressive Mother Jones.
(From Mother Jones)
Allow me to explain. McAuliffe represents an unseemly slice of Washington. His primary role in politics for the past two decades or more has been raising money—most notably, for the Clintons. He cooked up the idea of essentially renting out the Lincoln bedroom during the Clinton administration as a fundraising vehicle, and he smashed all previous presidential fundraising records in the process. When McAuliffe was the Dems’ top fundraiser, a campaign finance scandal besieged the Clinton White House. Coincidence? No. McAuliffe was all about pushing the envelope when it came to the political money chase.
Welcome to stocks in the news where the headline meets the trendline.
Stock Number One: Twitter. (SYMBOL: TWTR)
And the headline says: Twitter surges 74% in market debut after pricing at $26 a share– CNBC
“Twitter opened at $45.10 a share, more than 70 percent above its IPO price of $26 a share. The stock is trading under the ticker symbol TWTR,” says CNBC. “On an interview on CNBC, Twitter CEO Dick Costolo said investors should not be concerned about the company's current lack of profits, because it's part of a plan to invest for the long term. He also said employees had agreed to an 180-day lockup.”
Anyone who would tell you not to worry about losses because it’s a part of a broader plan isn’t being quite candid with you. Ultimately stock valuations come down to whether a company can monetize their product.
Twitter has not shown an ability to do that yet. Until they do, Twitter is not an investment.
It’s a reality show disguised as an investment.
I can’t predict the future, but I would expect a pullback from these were trading ranges once reality sets in.
Our Ransom Notes Trendline says: Avoid Twitter
Stock number two: Suntech (SYMBOL: STP)
And the headline says: Sun Sets on Suntech’s U.S. Listing– Wall Street Journal
“China’s one-time solar champion is about to be delisted from the New York Stock Exchange,” reports the Wall Street Journal. “The move caps a dramatic reversal of fortune for Suntech Power Holdings Co. %, which raised $400 million in an initial public offering in 2005. Suntech’s IPO was the largest in the U.S. for a China-based company that year, and it was so successful that Suntech’s founder, Zhengrong Shi, was later asked to join a NYSE advisory committee.”
Take Suntech as a cautionary tale that even the full faith and credit-- and the dollars-- provided by the United States government cannot guarantee a company will be successful.
In fact, Suntech demise was probably a direct result of Obama’s huge government-sponsored investment in solar.
The company is a mess and it’s likely that it won’t even be able to complete its annual report.
It also can serve as a cautionary tale for China companies. Despite being powered by the sun, it apparently isn’t that transparent, having stopped releasing financial reports.
Our Ransom Note Trendline says: Suntech is Dead to Me
Stock Number Three: HomeAway, Inc. (SYMBOL: AWAY)
And the headline says: HomeAway Reports Strong Q3 Earnings– Zacks
“HomeAway, Inc. reported adjusted third-quarter 2013 earnings of 12 cents per share, exceeding the Zacks Consensus Estimate of 10 cents,” says Zack Investment Research. “The adjusted earnings per share exclude one-time items but include stock-based compensation expense. Investors responded to the reported numbers, sending shares up 13.1% in after-hours trading.”
With the news Home Away moved past some resistance. It will be interesting to see where closes today. If it closes above $34 that’s good. It could climb higher.
The problem is that the valuations are skewed quite a bit. It’s currently trading about 142 times it’s trailing earnings and 45 times it’s forward earnings
Our Ransom Note Trendline says: Avoid Home Away
oday, I sing in glorious praise of unhappiness. Lest you think I lost my mind, first consider an Op-Ed in The Hill by life-long friend David Wise. He writes on Ending the Budget Wars.
For the second time in two years the U.S. has stepped back from the precipice of default.
In January, absent agreement to the contrary, a second sequestration will go in effect and on February 7, 2014 the nation would face yet another debt ceiling crisis. The inability of the so-called supercommittee to reach a compromise when given a similar task in 2011 is enough reason for pessimism.
A long-term solution requires that no one come into the talks with preconditions and that everything be on the table. One sign that a successful accord has been reached is that no one walk away from the table completely happy. It is necessary. The time has come.
Common and Uncommon Ground
I am not in complete agreement with everything my life-long friend says. For starters, I disagree with his stance that a default would have been catastrophic.
That's a moot point however, and cannot be proven either way because the precipice was essentially an illusion. We may have been on the edge, but there was approximately a zero percent chance of falling off.
Those small differences aside, I wholeheartedly agree with the three key ideas in Wise's article.
Compromise Misery Needed
In regards to point number 3, Wise did not go far enough. I propose what's needed is for Democrats and Republicans alike to both walk away from the table, not only unhappy, but downright miserable. Here are my proposals for mutual misery.
In return for the above much needed Democrat misery, I would be willing to accept a modest increase in taxes. Of course that would make Republicans unhappy. But unhappiness is not what we need, we need outright misery as follows.
Some issues are non-partisan. For example food crop supports are promoted by farm-state Republicans and Democrats. Drug imports fall along similar lines. Thus we need to spread the misery.
Food Stamp Misery
To get people off welfare and on to workfare, we need to reduce the incentives to collect welfare. This is what I suggested earlier.
My proposal would do something positive for food stamp recipients' health and the budget.
And what better way to make people miserable than to make them eat healthy? Hopefully, miserable enough to seek a job.
I am open to still more misery, as much as it takes, on each side, to balance the budget and lay a foundation for growth.
Make All the Politicians and Lobbyists Miserable
I nearly missed this key point: We need to make all of the politicians, public union advocates, and lobbyists on both sides of the aisle completely miserable. The way to do that is institute serious campaign finance reform.
Vote buying and political pandering on both sides of the aisle are key reasons we are in this fiscal mess in the first place.
To date, the word "compromise" means both sides get all the spending they want, deficit be damned. Worse yet, politicians are all too happy to let lobbyists write the legislation in return for donations. The result is the worst legislation money can buy.
I revised the ending paragraphs with some small changes regarding food stamps, and more importantly to include campaign finance reform, vote buying, and the current meaning of compromise.
Mike "Mish" Shedlock
Read more at http://globaleconomicanalysis.blogspot.com/2013/11/in-praise-of-pronounced-unhappiness.html#LyDLiZXHYoI6g8XV.99
On its current trajectory, the GOP is set to regain relevancy in 2024—if they can keep following the Democrats to the left and field an electable presidential candidate. Peering into my crystal ball, I imagine a New York Times story in December 2024 reading something like this;
“Republican President Elect Jerry Brown addressed the media at a party he held for his transition team, where the former Governor of California jubilantly praised the GOP voters who helped elect him. ‘Back in 2018, when the Democrats under the leadership of President Clinton, along with the help of our brothers and sisters in the GOP were able to finally criminalize the Tea Party, we turned the corner of progressivism’ he said. ‘And when that criminal conservative element was purged, and they tried to form a third party run for the White House in 2020, it created an opportunity for moderates like myself to transition to the Republican Party to help fill the power vacuum. As President, I pledge to continue to root out any remaining domestic terrorists and hold them accountable for their radical pro-liberty ideas. It’s the dawn of a new day, and I’m proud to announce my first round of appointments, who along with myself have pledged to reshape the Republican party and help me continue to re-educate the small minority of people who still don’t understand why all of us former Democrats have moved to the other side of the isle. With that in mind, I’m pleased to announce that my Secretary of State will be Al Sharpton.Taking over as Secretary of Homeland Security will be my good friend George Clooney. These two will be joining Treasury Secretary Chelsea Clinton, myself and Vice President Elect Streisand in getting to work, as soon as we’re done partying that is!’”
Of course I exaggerate for effect. Somewhat. The fact is, President Obama’s fundamental transformationis now fully revealedto be a bolt to the political left, dragging the GOP reluctantly along as the center slides ever further towards socialism.
The fate of the GOP will be decided by the current war between the mainstream wing who, fearful of looking like the Grinch next to the Democrats’ Santa Clause, are all too willing to follow the liberals ever further to the left while at the same time doing the dirty work of trying to wean out the real conservatives who have rallied around the Tea Party flag.
This battle goes back several years. The lines were clearly drawn by Nancy Pelosi herself, who back in 2011 urged Republicans to “take back their party so that it doesn’t matter who wins elections.”
You should think about this a little bit before jumping on the anti-Tea-Party bandwagon.
If Pelosi and her self-described “Republican friends” have their way, there will be absolutely no substantial difference between the Democrats and the GOP. At that point, the elections will indeed not mean anything, and therefore they will not need your vote anymore.
And when they don’t need your vote anymore, that’s when the other shoe drops—right on your head.
If liberals truly value diversity as they incessantly claim, then by definition that would include respecting and valuing everyone—even a devil tea-bagger.
Revealed by their own words and actions therefore, liberals are uniformly anti diversity and anti-inclusiveness. Their goal, as stated by Pelosi, is a single political party with shared collectivist values.
Gone is the Voltairian attitude of tolerance, the idea that I may not agree with what you have to say, but I'll defend to the death your right to say it. Replacing that is the Pelosian maxim to cast out anyone who disagrees, punish them and force them to accept the party line.
In the Soviet Union it was the Communist party. In Germany, the Nazis. In Iraq, it was the Ba’ath party.Will our GOP and Democrats morph into a similar creature? Or will the American spirit of diversity and inclusiveness and freedom live on?
Within the next few years, you will have your answer.
Welcome to stocks in the news where the headline meets the trendline.
Stock Number One: Tesla Motors, Inc. (SYMBOL: TSLA)
And the headline says Tesla Shares Sink; Analysts Stay Bullish—Wall Street Journal
“Wall Street analysts aren’t fretting much over Tesla Motors Inc.'s steep stock slide on Wednesday,” reports the Journal. “Shares fell sharply even as the electric-car maker’s quarterly results beat analysts’ estimates. The outlook is what spooked investors; Tesla said results for the final three months of the year would be very similar to what took place in the third quarter. Investors were expecting more. Tesla dropped as much as 17% to $146.35 on Wednesday.”
Tesla’s trading 16 times sales, 34 times its a book value, and is still losing money.
While analysts see a path to profitability for Tesla, there’s a long line of car companies that have been down that path before and run out of gas.
And of course as an electric car company Tesla doesn’t even have the kind range that a gas powered car would give them.
Our Ransom Notes Trendline says: Avoid Tesla
Stock number two: Ebay (SYMBOL: EBAY)
And the headline says: eBay pushes above its 50 sma last week's peak in recent trade – Briefing.com
EBay has been stuck in a long accumulation phase over the last year. It’s been underperforming the rest of the markets substantially.
Company is currently trading at about 25 times its trailing earnings and about 17 times its forward earnings. It pays no dividend.
Revenue growth is been robust as has earnings growth year-over-year.
But analysts have been revising their estimates downward very slightly.
If you buy the stock under $53 you can probably trade it with support coming in around $50.
Our Ransom Note Trendline says: Avoid Ebay.
Stock Number Three: Chesapeake Energy Corporation (SYMBOL: CHK)
And the headline says: Chesapeake Energy posts profit; shares fall on oil outlook– Reuters
“Chesapeake Energy Corp (CHK), the No. 2 U.S. natural gas producer, reported a third-quarter profit on Wednesday, but its shares fell more than 6 percent after it said its oil production would be lower this quarter,” says Reuters. “Chesapeake and other U.S. exploration and production companies are trying increasingly to get more higher-priced crude oil output from shale formations like the Eagle Ford in South Texas as natural gas prices remain depressed.”
I like Chesapeake. They are in the right spaces. Despite some weakness in natural gas prices and recent weakness in oil prices, Chesapeake has a great future.
Expect earnings to accelerate in the coming years.
The company pays 1.3% dividend.
There is no PE because the company lost money in the last 12 months, but analysts expect the company to be profitable in 2014 and they have recently upped their estimates for the year.
Our Ransom Note Trendline says: Buy Chesapeake Energy
Memo to Obama:
You might want clean up the Healthcare.gov website if you are going to sell us the eyewash that you meant something else when you said if you like your coverage you can keep it.
Because a blog entry there, dated August 7th, 2013, clearly says: "If you have health coverage you like, you can keep it"
It's in an entry called:
"There’s a lot to the health care law," the site says. "But it’s based on a few simple principles, which we’ve described below in a mere 214 words. Follow the links for more details."
Catch the first principle?
"If you have health coverage you like, you can keep it"
Seems that 214 words weren't enough to cover all the hums and haws Obama and the Democrats are having over this simple promise which they broke.
It took me a while to track down the exact wording because the search engine the site uses won't bring up anything relevant with the phrase: "Can I keep my own insurance?" Even though that phrase is the top suggestion by the site's search engine.
Instead, I had to download the RSS blog feed and search for the words.
Maybe they are trying to hide something?
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