Archive for the ‘Obamacare’ Category

The Neverending Story

Thursday, February 13th, 2014

Why change?

It’s been more than five years since The Federal Reserve Board began its quantitative easing program.  We’ve had QE, QE 2, Operation Twist and the never-ending QE 3.  The Fed’s portfolio of bonds exceeds $4 trillion and it now owns more than a third of all bonds issued by the U.S. government.

The net result of this never-before attempted experiment in easy money policy has been a still slumping job market, growth around 2% vs. a non-QE average of 3.3% and a drop in personal income of 4.7% since the “recovery” began.  At least there hasn’t been any deflation.

Yet new Fed Chair Janet Yellen announced this week that she’s “staying the course,” continuing QE maybe forever.  Although she said she plans to continue tapering, too, she added that the bond buying program is “not on a preset course,” so perhaps The Fed may taper its tapering, creating an untapering by buying even more bonds.

After all, $65 billion a month doesn’t buy what it used to, even with today’s low rate of inflation.

The market reacted positively, with the Dow Jones Industrial Average jumping nearly 200 points.  Once again, just as it looked like the market was reacting to real business conditions, the Queen of QE proved that the market is still firmly under the Fed’s control.

What Ceiling?

Remember “The Neverending Story?”  The book, which was made into a movie, takes place in a fantasyland, in which a dark entity called “The Nothing” threatens to consume everything.  In the neverending story of QE, “The Nothing” could be The Fed itself, consuming every bond in sight, or the federal government, consuming everything and casting a pall of new regulations that threaten job growth and recovery.

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One Man’s Ceiling Is Another Man’s Floor

Friday, September 27th, 2013

“There’s been some hard feelings here
About some words that were said …
Remember, one man’s ceiling is another man’s floor.”
                                                         Paul Simon

Here we go again. Hold on to your wallets, taxpayers. It’s time for another debt ceiling “negotiation.”

We use the term “negotiation” loosely, as it’s now extinct in Washington.

On one side, we have House Republicans waging an unwinnable battle, saying they’ll agree to suspend the debt ceiling limit for a year in exchange for a one-year delay of the individual mandate for ObamaCare, tax reform, approval of the Keystone pipeline and other concessions. While such changes would potentially provide a huge benefit to the economy, they have zero chance of passing in the Senate, which is controlled by the Democratic majority.Debt ceiling

On the other side, we have President Obama and Senate Democrats saying the Republicans are trying to shut down the federal government, because they are not willing to lift the debt ceiling without concessions from the President.

There will be no concessions by the Democrats. As President Obama put it, “I will not negotiate on anything when it comes to the full faith and credit of the United States of America.”

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Obamacare’s Economic Impact

Saturday, July 6th, 2013

What would be a more effective way to increase employment and boost the economy – continue quantitative easing or repeal Obamacare?

The answer is obvious to anyone paying attention.  After more than five years of quantitative easing and nearly $4 trillion in bond buying, the unemployment rate is still 7.6%, which is well above the targeted rate of 6.5%.

But, as we’ve pointed out before, that U-3 unemployment rate is deceiving, as it doesn’t include people who have given up looking for work and it counts part-time employees as if they were fully employed.

As we reported in April, 90 million Americans had given up looking for work, which is why the unemployment rate dropped to 7.6%.

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Healthcare For All – Like it Or Not

Friday, June 29th, 2012

The U.S. Supreme Court’s decision to uphold the Constitutionality of Obamacare by a 5-4 vote will mean different things to different people.

Even its impact on healthcare companies will vary.  Health insurers will face pricing pressure, although those that benefit from Medicaid spending stand to benefit from increased funding.  However, the ruling limited the law’s plans to expand Medicaid, determining that the federal government cannot without a state’s entire Medicaid allotment if it fails to participate in Obamacare.

Medical device companies, likewise could feel some strain, while manufacturers of diagnostic tests and hospitals could benefit.