Friday, February 5, 2016

While Stocks and Commodities Deflate, Why Is Gold Up 10%?

I've been following markets for 35 years. The first equity I ever owned was called Eastern Airlines. I have not owned an airline stock since then.

As I write today, the entire market is down. Oil has moved a little higher today (.13%) and gold after opening ten bucks lower this morning- is now in the green- albeit barely. (.40)

Gold, after trading down and closing an old gap around 1040 in January, has rallied to 1157. The HUI or mining index, after essentially having been driven into the ground, has rebounded 40%. That is where the smart money is flowing and it's just starting.

So while the markets deflate, including copper and silver to some extent, gold and gold miners are finding new life. The 64,000 dollar question is "why now?"

Markets, completely overpriced and inflated by 3 trillion dollars in QE and 7 years of zero interest rates, must come down. The dollar has been coming down which has helped gold considerably. There is simply no demand for anything right now despite the fact that everyone in America apparently has a minimum wage job.  I think the perfect storm for higher gold is here.

Exiting a 5 year bear market where prices were driven inexplicably lower for years by dumping thousands of future contracts at oddball times, gold is catching a serious bid in 2016.

I think the single greatest thing- other than debasing all of the world's currencies- is the current talk of negative interest rates. Negative interest rates- a term never heard in my lifetime- is being bandied about and actually implemented in other countries. Can you imagine a situation where your money is so worthless with regard to fractional lending requirements that the bank actually charges you interest to store your money? It's not far fetched. It's happening now.

So if you have any sort of excess wealth and you are desperately trying to save it from a falling market, confiscatory governments and banks, what's left?

Gold. And I prefer gold over silver, platinum, and palladium because gold is where the demand is. Central banks secretly horde it, The Chinese and Indians love it and right now with energy prices hovering at 10 year lows- gold miners will be extracting gold with improving margins.

I think negative interest rates are the latest trick in a banking world that never seems to exhaust all of it's tricks. I believe that gold will be a huge beneficiary of this latest charade. People will buy gold to simply preserve the inflated wealth they have garnered until they can re-deploy it. It is that re-deployment period that has me interested. I simply can't foresee it right now.

In my 35 years of trading and investing, I've never seen markets so completely detached from normal supply and demand relative to an alleged 4.9% employment rate. In the past, that type of employment rate would have created huge demand and inflation as more dollars chased fewer goods. Instead we have oil and commodities at decade lows.

I'm going to give you the names of 5 junior gold miners which I am accumulating. I believe the bottom is in. I will list these miners in order of my preference for them. These are junior miners which may or may not be takeover candidates. Please do your own due diligence.

Tahoe (TAHO) is a low cost producing miner paying 3% in dividends. They also have options.

Pretium (PVG) might be the biggest gold find in the world right now. Production is slated for 2017. I also think that they are a serious takeout candidate by a gold major.

Gold Resource Corp (GORO) They mine primarily in Mexico and they had a slightly bad (-.01) quarter. I think they were negatively impacted by silver prices.

Eldorado Gold (EGO) is a producing miner which has been acting very strong.

Klondex Mines (KLDX) is a new addition. The are reporting excellent gold intercepts and ounces per ton. They trade at an 11 PE with a good balance sheet. They are trading around 2.25.

Wednesday, January 20, 2016

The Big Hit

Ya ever heard anyone say that they felt like they've been hit by a Mack truck?

Just one day after a massive 20 semi-tractor trailer rig pile up just East of Baker City, Oregon- yours truly got a piece of the action yesterday on Martin Luther King day. Here's some video from the pileup that happened the day before. The Oregon State trooper at the end of this clip is the same trooper who attended our collision.

I've had a rough 6 months between retina detachments and surgeries, broken water mains, and various other minor calamities including but not limited to blood clots, another minor accident, and furnaces going out during cold snaps. Oddly, it should come then as no surprise to anyone reading this, that I should get rear ended by a semi-truck.

While traveling down the Oregon interstate early Monday morning, we encountered that nasty form of road- the one where the road surface appears wet but it is actually frozen over with black ice. Having spun out a time or two on that stuff as we headed west near the Snake River, the young guy driving our truck slowed down to an appropriate speed. As we began to crest a small rise, we noted a wall of trucks on either side of the two westbound lanes. Other truckers had pulled over and stopped. We had probably slowed to about 30 MPH when a sonic "KA BOOM" hit us and sent our 20 foot delivery truck careening into the median.

The force of the impact was such that I was sent reeling forward into the dash and then backwards into the metal cab directly behind my seat. I acquired a nice lump on top of my head from the dash, and an even bigger lump in the back of my head from the metal support behind my seat- I bit down so hard on my tongue that it was lacerated and bleeding on both sides. When we came to, both of us just stared at each other. I do not remember how we landed in the median. I do remember some guy asking us if we were ok through the driver's side window. I could taste the blood in my mouth and my head, neck, shoulders, and back were hurting. Eventually we unbuckled and got out of the truck to find out what the hell hit us. The road was so slippery we could barely stand.

This is where I will give you some helpful advice.

If you ever rear end someone with your semi-truck at 60-70 MPH, it might be nice of you to ask the occupants that you have just struck if they are alright or heaven forbid- apologize to them for hitting or injuring them. Under no circumstances should you exit your truck and in a hostile and angry manner ask the people you have just struck, "How come you didn't have your flashers on!" Trust that I am telling you the truth as I mention this.

Had I known Ms Ramirez would be driving with her head up her ass, and had I thought it might have helped her avoid striking us, I would have begun lighting flares and throwing them out of the passenger window as she careened down on us.

As it stands, the 2 feet of wrought iron lift gate on the back of our truck probably saved us from serious injuries. It did however, put a woeful gash through the front of Ms. Ramirez' Peterbilt truck before caving in her radiator and supply hoses- sending radiator fluid onto the back door of our truck.

Ms. Ramirez, employing the same successful strategy she had used earlier, followed us down the shoulder as we surveyed the damage and another semi turned over in the ditch. That driver had the good sense to try and avoid striking the unfolding collision in front of her and chose instead to careen down an embankment and overturn instead. That decision may have averted another 20 truck pile up like the one the day before. As I stood trying to figure out whether that driver was hurt, Ms. Ramirez doubled down on her first winning statement by telling us she needed our names and insurance info. I told her, "Let's just wait for the cops instead."

Ms. Ramirez and her female passenger spent the rest of their morning filming us with their cellphones after we victimized them- by slowing down with nothing other than our brake lights sans some fireworks and a flashing neon sign or two.

We waved off the ambulance, mostly because I didn't want to spend the day in Baker City or the night in observation. We exchanged info with the Oregon State police who oddly, made no inquiry as to whether or not we had employed our flashers. We limped the truck back home.

At the hospital in Boise, I went to the ER which only had one person in the ER waiting room. After signing in, a river of people began arriving. One by one, all six or seven people were checked in behind me and seen by doctors. I was left all alone in the waiting area. After an hour or so, I stood up and informed the desk that I was leaving. In the same helpful tone employed by Ms Ramirez earlier in the day, the gal at the front desk told me, "Ok, whatever."

On Tuesday night I found another river of people at the same ER. Having experience in the matter, I left, got in my truck, and traveled to the hospital in Nampa which checked me in and treated me ala a CT scan in a fairly expeditious manner as hospitals go. Two hours later, I received a clean bill of health.

This morning my lower back still hurts. My swollen tongue has returned to normal size. I can move my head side to side although I keep hearing popping noises in my neck. All in all, I feel pretty good and grateful given the circumstances.

I'd be a liar if I told you I hadn't thought "Ok, so what's next?" I can hardly wait.

Saturday, January 16, 2016

Three Days in Uber Hell- The Sunday Collage

My friend Jon is smart and he can rally when the chips are down.

Just days after losing his job, Jon was applying for free government stuff including unemployment and food stamps. He began selling plasma as often as possible and driving for Uber. Jon told me that his Uber gig was so lucrative that he made 500 bucks in 3 days although one of those days happened to be New Year's Eve. Jon convinced me that Uber was a great thing. So it was that I fell for Jon's bullshit.

For the un-initiated, Uber is essentially a taxi app on your phone. With a credit card on file, riders simply request a ride. Uber charges their credit card and using GPS- it locates and pings the nearest Uber driver. The Uber driver accepts (or rejects) the trip and then uses the phone's navigation to arrive and then subsequently- uses the navigation to get the rider to their destination. Uber does this with no brick or mortar costs. Drivers furnish their own late model 4 door car, insurance, and gas. They must have the vehicle inspected. Uber skims 25% of each fare plus a "rider" fee. I am still trying to figure out how the "rider" fee works.

Uber is a fantastic deal and a smart idea. It is great for employees and shareholders and riders love it. It is faster and a lot cheaper than a normal taxi. People using Uber do not tip and they like that. A typical 5 mile ride using Uber in Boise will cost you about 10 bucks out the door. Dirt cheap.

A wise old man, a city councilman at that, once told me that the devil is always in the details. Uber is a shining example of that.

I pegged last Saturday (Jan 9th) as my first day of driving for Uber. My very first fare was a young gal at the airport who wanted a ride home to the Boise State campus. She was a sweetheart and told me she used Uber all of the time. Uber was half the price, no tipping, and she could see the online pictures of her driver and the car that would be picking her up. The distance of that trip was 4.7 miles. The total fare was 9.73. Uber got 2.43 of that and I received 7.30.

It took me a few rides to figure out how to use the phone application. All in all, in the first two days of driving for Uber- I picked up 15 rides and made 81 dollars. I've even had a few 2 and 3 dollar fares.

Uber charges and applies the same pricing whether or not you have one passenger or four. This is not lost on drunk college kids who will load your car with friends and split the fare four ways. Two bucks to travel 5 miles is a pretty good deal. No wonder taxi companies in every city are suing Uber and trying to get rid of them. Competition with that sort of pricing power will eventually put them all out of business. In the old days, that was the way our world worked.

So not only did I find myself hauling gangs of obnoxious, drunken college kids around Boise last Saturday night- but many pulled the bizarre shit that young and drunken college kids are famous for.
I had one kid sneak two beers in the car and spill one on the floor mat. I had two people start vaping in the back seat. One kid left his phone in the car which I returned free of charge. One gal lost her sombrero- and it was in the backseat so long I can't remember who left it there. Other passengers were wearing it and laughing.

Very often passengers will make drivers wait outside for extended lengths of time while they do whatever they need to do. I waited in front of one house for 15 minutes. That's just self centered and rude.

One of the favorite tricks of the multi-passenger crew is that they input the closest destination- the one Uber charges them for- and then they ask for a subsequent ride to some further out destination after I close out the initial trip. I have been suckered by that tactic once or twice.

I have taken one drunken, married couple through a drive up window and ordered burritos. I've had one kid pass out in the back seat. All of this has happened over the course of 3 days and about 25 trips. Nobody ever tips.

Uber employs what they call "surge pricing." Surge pricing occurs when there are a shortage of Uber drivers and an over supply of potential passengers. Uber will charge 2 or 3 times the normal rate during those times. Unfortunately, surge pricing occurs at bar closing time in Boise which is at 2 a.m. It never lasts longer than about 15 minutes or so as flocks of Uber drivers descend on those areas looking to make a 12 dollar fare instead of a 6 dollar one. The smart kids simply leave the bars early or wait until the surge is over before ordering up a ride.

It's true that you can work at Uber when you want. Unfortunately during the day, there just isn't enough Uber traffic to make it worthwhile. So you are left catering to young, drunken college kids at night. That is your clientele. All in all, probably 75% of my passengers have been drinking or are drunk. The other 25% are sober folks getting rides home from the airport.

Passengers and drivers can rate each other. I don't like the rating system. Passengers can rate you poorly if they don't get what they want. They may rate you while drunk. If you receive a poor enough rating, Uber will suspend you. I doubt the same holds true for poorly rated passengers. One other sneaky detail. Drivers must rate passengers right away- passengers have days to rate you. That way you cannot tell which passenger gave a driver a poor rating.

For now, I have a "five star" rating which I will tell you- is subject to change immediately.

Uber is a wonderful idea and they have muscle. They are not afraid to sue cities that try to impede free markets on behalf of taxi companies. They make a lot of money with virtually no overhead by attracting drivers and vehicles with very little incentive. Passengers love Uber. Where else can you get a custom ride on demand- across town for 5 or 10 bucks?

At peak times, Uber will guarantee drivers a 9 or 14 dollar an hour wage simply for being available. They added 36 bucks to my 81 dollars in fares last week and deposited 117.00 into my bank account. I worked about 14 hours which means I made about 8.50 an hr. gross. Add in gas, insurance, and car payments- and it doesn't take a math major to figure out that you are making about 6 bucks an hour.

Uber is a terrible deal for drivers. Uber is clearly focused on attracting and building a huge base of repeat passengers- at the expense of their drivers. When Uber cuts pricing 25%, as they did in January of this year to attract more passengers, they don't reduce their cut by 25%. The hit comes at the expense of drivers who are making 25% less. Uber then tells it's drivers on our phone applications that they are cutting prices and that ultimately- it will benefit the drivers due to an increase in future passengers. Shit. What kind of ass kissing, corporate bimbo writes stuff like that? Surely they must tell themselves... those low IQ neanderthals will spot our visionary corporate acumen and forget all about that 25% slice we're taking from them.

Last night at 1:30 a.m., I just couldn't bear the thought of one more load of drunks in exchange for 6 bucks. Let some other math challenged idiot give them a ride. I packed it in. Tonight, I am going to work my 4th and final night for Uber. They are just going to have to find someone else to sodomize. For now, the only score left to settle is with my friend Jon. While writing this piece, Jon texted me to let me know that he found a new, normal job at Fred Meyer. He is giving up the Uber gig.

I told you Jon could rally.

Thursday, January 7, 2016

The Best Move in Oregon Is To Simply Walk Away- The Sunday Collage

Please allow me to meander just a bit....

One of the great gifts of small town policing, the kind we saw in the Andy Griffith Show, was Andy's ability to resolve every situation amicably. This happens or used to happen in small town America. In my old policing days, I am not ashamed to say that often enough- drunken bar patrons would call the police station directly for a ride home and if we had time as we often did- we drove them home.

Back in those days, we didn't fear some public backlash. There was severability- which meant we were free to do our jobs as policemen without getting sued for the actions of others. That all changed in my lifetime as groups like M.A.D.D. and large award seeking lawyers found ways to sue the police and our employers, (government and thus taxpayers) for our actions. The lawyers were always looking for the most money or "deepest pockets." In the end, I won't speculate whether that was all good or bad. but it changed the way we did business and it also spelled death for policing ala Mayberry style and the places that policed in a similar fashion.

I remember being in Jackson Hole, Wy. in the early 90's once  and reading about a big debate in the local paper in which the cops were defending the practice of taking would be drunk drivers home- long after the rest of us had thrown in the towel.

The next big police controversy to take center stage were vehicle pursuits. People were getting killed needlessly over small infractions and misdemeanors all over America. It was a big deal. Ultimately pursuit policies were revised and thinking changed. Law enforcement quit engaging in frivolous pursuits. We were consistently weighing them for their ill effects and refusing to engage in pursuits if they were too dangerous.  I believe there are thousands of people alive today because police officers began to see the error in that "one size fits all" approach to pursuing drivers for every minor offense.

The point of those two illustrations is that circumstances beyond our control caused us to rethink the way we did business. We became better risk managers. We began to see the larger picture and the ill effects of our actions. Every way of resolving a situation was examined. We made better decisions.

Which brings me to the current state of affairs in Oregon. Last week, armed militia members took over an abandoned (for the winter) wildlife visitor center in a very remote and un-populated part of Oregon. The militia are protesting the treatment of a local ranching family who live near the Malheur Wildlife refuge- the Hammonds. The Hammonds have apparently been getting the worst of it for several decades as the Federal government employs it's brand of big city policing in the middle of nowhere. Here is the best, most comprehensive history of the situation- shaded a bit for the underdogs.

In the story you will see a picture of a small visitor center. This I guess, is what the militia has taken over and occupied. Big deal.

What would Andy do?

Well, let's think. Nobody has been hurt or taken hostage. There have probably been a couple of minor crimes committed, trespassing and burglary of an unoccupied dwelling, but all in all- not much of anything has really transpired. The Bundys and their supporters are responsible- they have publicly claimed responsibility thus investigating this at some future point and charging them appropriately seems pretty easy- albeit a little time consuming. What's the worst thing that can happen if law enforcement packs it up and goes home? Maybe a government building gets destroyed. Big deal. I doubt they will do that anyway.

So you know what I'm thinking?

The smart move here is to simply fold up shop and go home. Nobody gets hurt, the Bundys' will no longer have a stage with which to draw attention to this situation or their plight, and the media will conduct a few interviews and go home.  If the Bundys' and their friends break any serious laws- it will greatly damage their future credibility and subject them to the consequences.

So if this was my Mayberry, I'd tell the troops to go home. Maybe check in on things once in awhile to make sure Cliven Bundy doesn't accidentally shoot himself in the foot or poach a deer in the off season. Sooner or later they'll run out of food, energy, and passion and go home.

We'll see if the Feds can sort this out. Perhaps they will worry and speculate that leaving this mess behind will embolden other groups to take over the parking attendant jobs at Mt. Rushmore or the guard shack at the Grand Canyon where the Feds shake us down for 20 bucks. In a way, the whole thing seems pretty comical. Never under estimate the ability of government to screw things up. They can snatch defeat from the jaws of victory nearly every time.

Friday, January 1, 2016

Build Lots of Prisons, For We Shall All Be Criminals Soon Enough- The Sunday Collage

Courage is contagious. When a brave man takes a stand, the spines of others are often stiffened.

I've tried to be a good citizen most of my life. I've never had much use for rural speed limits but other than that- I've been pretty good. Once in awhile a murderous rage overcomes me, but as of yet, the government hasn't figured out how to ferret those thoughts out of me, pass a law stopping them, or just ask me to disclose them and send in a fine. So while I've had the good discipline to avoid any sort of rap sheet thus far- that is certainly subject to change.

You see, you simply cannot look at this leviathan government with it's Supreme Court rubber stampers and envision any sort of future or ending other than a violent one.

Nobody wants to talk about that. We think we can negotiate, reason with our masters. Come to agreement. We think we are too intelligent or civilized to have to settle our issues using "violence." Unfortunately throughout time- it is violence that settles most issues.

Try to envision a day, which shouldn't be too hard to do, when the government at all three levels- local, state and federal are garnishing your wages collectively at 75%- leaving you with 25%. The only people escaping this tremendous tariff will be the poor who simply can't pay it and the somewhat rare and uber rich who have already bribed our government to get the best tax treatment money can buy. The rich and elite also have the means to hide money and evacuate to some other locale. Being the chicken shits that I have known most rich people to be- I doubt they'd be much use to anyone, anyway.

That this is coming is evidenced by our government which has now passed a law preventing people who owe taxes from leaving our shores and suspending their passports. You will be stuck here like some poor, wage slave except this that plantation is much larger than the ones in South Carolina.

Thus at some future point, everyone stuck between the uber poor and the uber rich- will be getting their financial asses kicked paying taxes on everything. This will scale up rapidly I think, as more and more people drop out and the rich start to flee our shores. The most level headed among the remaining souls will want to negotiate with our government masters. Our government masters, having all the power will engage in some superficial negotiations and may even make a minor concession here or there- presenting themselves as cooperative. The middle class negotiators may use this as evidence that our government is still representative and responsible to "we the people"- which of course it is not.

The people with standing power never negotiate. Not only are negotiations not in their collective interest- they don't see any gain in making concessions. Power has a collective ego which says, "we are right and they are wrong." And so it is that our government masters will selfishly trench themselves in- ultimately making peaceful negotiations impossible. Our middle class negotiators will find superficial victories less common and anything substantive will be hollowed out and lost.

That is how this will end.

Now perhaps you are of the mindset that believes that all of this can be avoided. That somehow, some way, people will come to their senses in time to avoid all of this. To that I will point to the history of mob rule democracy- a democratic regime which is clearly in charge right now. They will appropriate for themselves anything they desire and they will invoke their majority as reason enough. Obamacare is a fine example of this.

Our masters are going to seize what they want from us. They are going to pass laws, tax and criminalize any sort of behavior which aids them- while diminishing you and your freedoms. People will appeal these arbitrary laws and seizures to the rubber stampers. The rubber stampers, members of government, will make their decisions in favor of government expansion which they have already been doing for 90 years or so.

And one day, when we are all sick and tired of losing- people are going to wake up. The force that divides us now will be the same force that unifies us then.

They'll pass a lot more laws, try to outlaw guns, outlaw gold and silver, outlaw currency and trade done in cash sans government monitoring. Credit cards with chips embedded in them will track you and shut off your money flow when they see fit. They'll pass laws preventing you from leaving our shores which they already have and they'll continue to tax you after you leave.They will pass a lot of shitty, freedom sucking laws and I suspect that most people- like the sheep that they are- will obey them.

There will be the dissenters, the old men like me, who will tell Obama, or Clinton, or Trump, or Congress, or Justice Roberts to go fuck themselves. I don't need any help reading the Bill of Rights nor do I need their bullshit interpretation of the commerce clause or their abandonment of "we the people" in favor of "we who write big re-election checks." It will be lonely at first. It always is.. These are the bravest of souls. The first ones will be labeled traitorous or treasonous. They will be punished and jailed, perhaps executed. Normal, decent folks like Edward Snowden and those that will surely follow him.

One by one, the pieces will fall into place. The government with it's vast array of eavesdropping capabilities, stored fuel, ammunition, drones and hastily built prison camp system- will think they are ready and own the high ground.

Americans, armed with well over a billion guns, a boatload of ingenuity, and a healthy distaste for a bully government will finally find some courage and have their say. The talking time will have passed.

Oh how I envy those who will see those days. Those deserters of death who will help restore the Republic. Government as we know it will finally be eradicated and re-manufactured with the additional lessons we have learned regarding campaign reform, term limits, the elimination of a central bank and the banking cabal once and for all, lobbyists and corporate bribery all gone. A fair tax and social programs where workers participate- rather than be ordered and gutted. Representation that spends money where it should be spent- at home. Never ending wars finished.Terrible precedent and woeful decisions by the rubber stampers thrown out. A re-installation of our Republic and a rule of law which applies to all once again.  What a wonderful place this will be then. What a wonderful place this once was.

And oh how I laugh at those that think things will be settled any other way.

Monday, December 28, 2015

All Men Are Not Created Equal- The Sunday Collage

I think men were created with rights. Be they God given or by galactic mistake. We weren't put here to serve others unless of course, we choose to do so.

I guess that choosing part, who chooses, makes all the difference.

Thomas Jefferson, the great polymath, penned the phrase "all men are created equal." As he penned that phrase, Tom must have forgotten about those slaves he owned. I suppose being a polymath does not always include uncovering your own hypocritical tendencies.The great truth is, all men are not created equal. They never have been. In fact it's not even close and as it turns out- that is a large part of our current problem.

You see the big credentialed geniuses then and now- really aren't the geniuses we think they are. The truth does not become truth simply because some well respected man utters a phrase which we wished were true but in all reality- is completely false. Wishing something were true does not make it so.

This week on "American Thinker" I read a piece about how the government can now seize your passport for being a tax "scofflaw." The author, part of the brain washed herd of Americans, thinks that it is perfectly fine to seize one's passport for an arbitrary amount of uncollected taxes- now currently 50k and certainly to be revised downward in the coming years, Apparently this author believes it is the state that endows us with our freedom. That our freedom to travel is some privilege that can only be conferred upon us by our government masters and now taken away as they see fit.

This is why I detest government yet love my country- filled as it is with brainwashed sheep. This is in large part why I started this blog. I come from the brainwashed herd.

In America, we once fought a war with a King over 3% in taxes. Today we think of nothing of paying 40-50% in taxes or better- nearly all of us- except for those wealthy, elite corporate souls who have created a tax law which allows them to dodge what those of us in the middle class cannot.

Please think about this. Every time the government snatches some of your money- you have lost the freedom that comes with that money. It might have been a vacation, tuition, or elective surgery. Your freedom, your ability to succeed, hinges on what the government takes from you. We see this  each time the government passes a new law- somebody somewhere is losing a freedom they used to possess.

Mostly we don't care as government sets about the task of identifying minorities- like lottery winners- and sucking up every last cent that they can get away with. Government couldn't accomplish such brazen acts of thievery without the aid of a hollowed out media that pretends to have some watchdog function- yet we all know that our media owners ride on horses carrying the government's brand.

We once had a media whereby authority was questioned. Where truth spoke to power and our Kings like Nixon- were banished in disgrace. Today we have a corporate media- completely captured and owned by elite tax dodgers. Afraid to call criminals like Hillary- a criminal. They sit idly by while these pieces of shit seek shameless power for themselves knowing they will benefit when they remind Hillary of the stories they quashed, of the checks they sent.

We once had leadership which refused to allow any central bank to skim off our wealth and inflate away the buying power of our work product by manipulating the quantity of our currency. Andrew Jackson where are you now?

We wouldn't dream of allowing tax money- money needed for running our government- to be siphoned off for loans to private banks, insurance companies, automakers, and anyone else promising votes or campaign contributions. We wouldn't have simply gotten rid of these government types that exercised control over our tax dollars- we would have had them prosecuted for malfeasance, fraud, or dereliction of fiduciary duty. Not only do they hijack our tax dollars, and create the very system that destroys us- but they have the shameless audacity to write books about themselves such as Paulson's On the Brink: Inside the Race to Stop the Collapse of the Global Financial System.

Our founders could not have conceived of a Supreme Court that rules nearly 100% of the time against "We the people" in favor of expanding government control over us and diminishing our freedoms every chance they get. A court that apparently has suspended the rule of law, turns a willful blind eye to 4th and 5th amendment protections against illegal seizures and due process- that allows government to do anything just so long as it can hop over the lowest bars of justification real or imagined. They do this because they owe. They owe their jobs to government and the party which selected them. You, they owe nothing to. You are simply some subservient herd animal, powerless to intervene or change the course of events. You exist as a conduit to be governed and fleeced. Any talk of freedom will be done with their permission.

That's how the system has evolved. Or devolved. The individual is powerless and he sure as hell is not equal.

I believed that Thomas Jefferson bullshit for 50 years. Until I realized it was bullshit, written by a slave owner, a member of the elite class of his day. No different then than the bullshit spewed by Trump to an angry America now. Trump is a man certainly created greater than equal, just like Mr Jefferson was. People are going to fall for Trump's bullshit just like Jefferson's. We desperately want what they say to be true. We believe it.

Unfortunately, it ain't true just because we want it to be true.

The reality is simple. We are not created equal. We are not free in as much as the great orators and geniuses of our time spout that bullshit. For me to believe that means I must disregard everything my lying eyes and ears tell me.

Government and freedom are not mutually exclusive concepts but they certainly are today. There is no stopping this. It will continue until such point that it can't continue- that will happen when virtually every American realizes they have been fucked and a collective anger the likes of which has not been seen in a long time sweeps across this land once again.

I shall end here today with the great inescapable truth about freedom which Isabel calls "harm"- as spoken by someone not a polymath and certainly not a member of the elite class.

“Most of the harm in the world is done by good people, and not by accident, lapse, or omission. It is the result of their deliberate actions, long persevered in, which they hold to be motivated by high ideals toward virtuous ends.” 
― Isabel PatersonThe God of the Machine

 Born Isabel Mary Bowler in rural Manitoulin IslandOntario, she moved with her family to the west when she was very young. She grew up on a cattle ranch in Alberta. Paterson's family was quite poor and she had eight siblings. A voracious reader who was largely self-educated, she had brief and informal public schooling during these years: about three years in a country school, from the ages of 11 to 14. In her late teen years, Bowler left the ranch for the city of Calgary, where she took a clerical job with the Canadian Pacific Railway. As a teenager, she worked as a waitress, stenographer, and bookkeeper, working at one point as an assistant to futureCanadian Prime Minister R. B. Bennett.

Sunday, December 6, 2015

Now Is the Time To Make Health Insurance Illegal- The Sunday Collage

All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.

Have you ever looked at a problem and thought...."A complete moron could do a better job of managing this?" That's how I feel about healthcare in the United States. Getting rid of health insurers would be a huge leap in the right direction.

The idea is not mine. I culled it from the comments on a daily financial blog. The commenter failed to elaborate on the point yet I began to mull over the possibility that he was on to something. Let's call it a radical reform idea and preface it with a brief history of what happened within the entire health care arena prior to the controversial installation of the Affordable Care Act.

For the purposes of this piece I am going to try and write this as politically non-partisan as possible because politics and who did what are little more than distractions to be studied in some future history class. Interesting, but no longer useful.

A good starting point for our healthcare dilemma begins with the installation of Medicare in 1966. It is important to start here for two reasons. This is the beach head, that moment when government edged itself into the arena and set the precedent. It is also important to note there was no trust fund or savings set up prior to the installation of Medicare- thus it started out in the hole from the very beginning. People were receiving benefits without even having paid anything into the system.

Throughout the remainder of the 60's, 70's, and 80's, health care in the United States was satisfactory and mostly affordable although the slow drip of rising costs had already begun. Costs in medicare were quickly over run. Parts C and D were added. The program expanded allowing new treatments and new providers. The medical device industry and big pharma were demanding and receiving 20 year patent protection which truly amounts to a license to steal. Lawyers refused to cap awards in litigation, malpractice suits were costly and rampant. Malpractice insurance was also outrageous, sometimes forcing doctors to fold up shop. Insurers were busy maintaining margins, paying stockholders, and making all sorts of demands upon insureds and providers seeking to contain costs rather than take care of their customers. Customers became some third party conduit- largely left out of cost containment. Rarely is the actual consumer a part of the cost containment process where insurance is involved. Insurance and risk management in turn forced extended and specialized education with it's associated rising costs and credentialing. Within the provider world, a full third of hospital expenses were administrative. Non tax paying hospitals or non profits- have built empires rather than pay taxes. The demographics are just as bad. It seems that everyone in the health care arena was positioning themselves to take full advantage of the aging and largest generation ever. By the early 90's, the meteoric rise of healthcare costs was just beginning and it would take the financial meltdown of 2008 to bring it to critical mass. It was and still is- the perfect storm. The ACA was hastily written by a desperate healthcare industry and bullied through Congress because millions upon millions of healthy, young workers had left the work force and they weren't coming back to pay premiums. This left an over supply of unhealthy plan participants sucking the assets out of healthcare insurers.

The Affordable Care Act was simply a health insurer bailout. That is all it ever was.

Max Baucus, the former Montana Senator likes to take credit for the two years he spent writing the ACA. The truth is, that's simplistic and inaccurate. The ACA was largely modeled after the Massachusetts health care system. The ACA bill was actually written by a number of people, some in the House and Senate, but others who were advisers to President Obama (like Ezekiel J. Emmanuel), and some who advised members of congress (like Elizabeth Fowler).  Other influences included lobbyists from the health care industry; the former governor of Massachusetts (and Republican presidential candidate) Mitt Romney; MIT Economics professor Jonathan Gruber (a former aid to Mr. Romney and later an adviser to the Obama Administration); and Harvard Professor of Public Health John McDonough (also a former adviser to Mr. Romney, and later an adviser to several US senators).

Here's the key. Nobody sat in on the process and protected the interests of consumers. The actual consumers, the people paying for this, were completely left out of the process. For over a year, I have been unable to uncover any evidence or minutes that might suggest that the number one, most interested party to this entire mess- the actual tax paying and insurance consumer- had any voice whatsoever in the ACA process.

Can you imagine passing any kind of legislation, let alone this behemoth, with zero advocacy from the people responsible for paying it? I can't even begin to imagine a process where the overwhelming  majority were simply ignored. It actually smacks of collusion.rather than public service.

Remember the "taxation without representation" cry that rang out among colonists when a foreign King tried to tax us? Where are you now? What about that fourth amendment that allegedly protects me from unlawful search and seizure? Is the ACA not a seizure of my work product and therefore my property? Can the government simply seize, under color of law, anything it chooses and then hide behind the Commerce Clause? Maybe. I'm wondering who's going to stop them and when.

The Solution(s)

The mother of invention is necessity. We have arrived at that moment in time when we have to re-think everything we do in terms of health and health care. We will never be able to eliminate unforeseen events or congenital disease; however we can estimate numbers and curtail risk. This is not rocket science, actuaries and risk managers have been doing this for eons.

If I had an employee charged with reducing accidents, risk, and curtailing employee losses at my company and his solution every year for decades was to simply raise my costs, failing to provide any innovative solutions- at some point I would ask, "Why am I employing this guy?" I'd fire him. That is the situation with health insurance companies. They have become a parasitic one trick pony with only one solution. Raise rates. No price breaks for people who abstain from alcohol and drugs, no financial incentives for people who submit to regularly scheduled health check ups. No bonus for maintaining a physical fitness regimen. They simply don't care to reward people for reducing risk. Indeed, those healthy types swell their margins. They are busy sweeping every last crumb off the table.

Why is that? Insurers are focused on the short term. They have an entirely different focus. They want to make the most money right now- in this quarter. They don't care about individual lives, outcomes, or quality of life. They care about margins. Cutting their costs. Forcing you to see doctors that have agreed to their terms. They do not have a 20 year cultural plan or vision of a changing society in charge of their own health care needs. Indeed, they would see that as their enemy.

We need comprehensive reform at the cultural, grass roots level. We need education in our school system and we need to substantially incentivize people to eliminate risks and improve their health. I'm talking about rewarding people thousands of dollars in premium cuts for maintaining their health supported by annual exams and blood tests. Individuals, people, are not sheep to be fleeced in some corporate boardroom. We have never been a society that can't innovate or solve our own problems- unfortunately we have been led by the wrong people for far too long. We really do need to innovate and re-invent the wheel.

Originally, I listed about 25 reforms that need to happen- a list which doubled the size of this piece- but in the interests of brevity I have deleted them. Instead, I would like to leave you with an intermediate solution for those of us without insurance.

Last month, while searching for alternatives to 500 dollar a month Obamacare plans, I came across a Christian based health sharing innovation. It is Obamacare exempt- meaning that the uninsured will not have to pay fines for being uninsured. For 199 bucks a month, you can obtain a million dollars worth of coverage. There are some hoops to jump through- no tobacco or booze- and they may not cover pre-existing conditions. They have a completely different model- no stockholders and no ridiculous administrative costs. If you know of somebody that is uninsured, reasonably healthy, with an income stream that can support 200 bucks a month- this link might be worth sharing.

Health insurance no longer does what it was intended to do. Rather than hedge against a catastrophic has become a catastrophic loss. The only answer health insurance companies have had- for the past 50 years- is to raise prices. They have essentially done nothing for their customers except take our checks and redistribute them.

Cutting out the insurance middleman would save billions. Consumers would no longer be forced to pay for marketing, advertising, stock holders, and all of the other expenses of insurance companies. We would save billions in administrative expenses, billions in government subsidies and backstops.

Health care providers would come face to face with their patients again. It would force providers to become competitive and it would also make for better outcomes.

Alternatives to insurers such as the liberty health share plan would be developed. In fact, I think so much money could be saved that plans could be developed according to income- where all but the terminally unemployable would participate and start putting a little skin in the game.

Making health insurance illegal is not as crazy as it sounds. It's time to find alternatives. A nation full of innovative people can surely do better than this.