Thursday, July 10, 2014

Calling Mr. Yellen

The fundamentals of project management provide that any project manager worth a shit- is far too intelligent to take over a half completed project that is already vastly over budget. Those things don't make your project resume' sparkle. Please think of the Federal Reserve's QE programs as a project- because I think the analogy is accurate.

Several of the commenters on the Zero Hedge comment boards like to refer to Federal Reserve Chairman Janet Yellen as "Mr. Yellen."

I'm not sure what the genesis of that was precisely, however, I strongly suspect it has something to do with her not so appealing looks- some folks have even said that when Janet enters any bank- they turn off the surveillance cameras just to be on the safe side.

Mr. Yellen's husband is George Akerlof. I spent this morning reading some of Akerlof's papers and thus opinion pieces- trying to get an accurate read on the collective Yellen thought process. Akerlof claims to be on the staff at the University of California Berkeley but that's not entirely true. Not only is he a liberal economist/banker/keynesian shill but he is a full fledged researcher working for the International Monetary Fund. Oh goody.

I'd like to draw your attention to this chart posted on the Economic Policy Journal which was produced by the BLS. This is a chart comparing various items and their inflated or deflated prices over the last 5 years.

Whenever I see charts such as this, I always wonder why the author selected the items that he/she selected for inclusion on the chart. Missing are things like tax rates, health care costs, and college tuition. Costs that virtually all of us incur- which are far more damaging and reoccurring- than buying a box of Lego blocks for your nephew at Christmas.

So please focus on this chart for a minute. What I'm about to do is make a real world apples to apples comparison. I am acutely aware of my spending habits- mostly because I do the spending and I consider my spending habits to be fairly representative of most folks. To be on the simplistic and fair side, please remember that I am only counting myself- not a wife, kids, or family.

For those of you who hate math and calculations, you may skip down to the bottom line and  find this*.

First I shall calculate my savings via the deflated right side of this chart over the last 5 years.

Toys- 0. I have purchased one laptop for 400.00 and a few other components for 200.00 My savings using the above chart have been 216.00 dollars. My girlfriend and I bought a 60" TV for Christmas that cost 600.00 My older TV cost 800.00 in 2010. So collectively speaking, I have saved about 900.00 bucks on television sets in 5 years.

According to the BLS then, I have saved 1116.00 over the last 5 years on those purchases.

Now let's try the left side of this bar chart.

I drive 15,000 miles per yr. (conservative est., I also have a motorcycle) The Elantra gets 30 MPG combined. So does the bike. That's 500 gallons of gas per year multiplied by 5 years. Let's say the current cost of gasoline is 3.50 a gal. So I spend 1750.00 per yr on gas. Therefore, I have lost about 1300 dollars per yr filling up my tanks since 2009. Total aggregate loss in buying power is 6,500.00.

I eat a lot of ground beef, sirloin. I am going to say  2 lbs. a week. I will use the current price and round it to 4.00 a pound. So I spend 8.00 a week or 416.00 per year on ground beef. Multiplied over 5 years that cost becomes 2100.00 or so. (remember as costs increase- so do sales taxes) Total aggregate loss here is about 750.00.

Auto insurance costs me 1000.00 a year for the car and bike. That is 5000.00 over 5 years. Using their 23% inflation handle means I have lost an additional 1150.00 since 2009.

* So I have saved 1116.00 dollars on deflating items. I have lost 8400.00 on inflating items. Therefore I have a net loss over the last 5 years of 7284.00 on just the items this simple chart depicts.

That loss is HUGE particularly over that short of a time frame.

Now I want you to note that in the middle of this bar chart, the BLS has stated that Consumer Price Inflation or CPI over this period of time (09-14) was 11% or about 2.2% per year. Of course that is complete bullshit as I have proven here. In fact, I have suffered a 5% rate of inflation just on the items they selected. That does not count toilet paper, health insurance, cost of housing, utilities, taxes- all those things that I cannot avoid, items and prices that have been rising in dramatic fashion.

In order to avoid the great deflationary event which should have unfolded in 2009, the unelected masters of the universe- Bernanke and Yellen- have embarked on a 4 trillion dollar stimulus project that has caused the prices of virtually everything to rise, except for a couple of novelty items produced by the Chinese.

This egregious market distortion and it's ill effects are going to unfold in dramatic fashion as all QE programs are halted OR plan (B) they kick the can some more by installing new QE plans and trying to dump the smoldering ruins onto some other sap.

Either way, I wouldn't want to be Mr. Yellen or her husband. They were left with an unfinished and wildly over budget project (without precedent!) that is going to cause a serious shit storm in the years to come- because there are only two ways out (deflation or hyperinflation) and both ways suck. 

Wouldn't you love to know how much gold Ben Bernanke personally owns? I'll bet it can be measured in pounds.

Wednesday, July 9, 2014

How To Financially Survive the American Health Care Disaster

This piece is predicated on two things. That you have some disposable income and that you currently do not have health insurance.(and know this- many of you will soon lose it.)

In 2007, I was able to retire early at the ripe old age of 46. It had always been a dream of mine not to spend my entire life toiling away for someone else. In the America of my dreams- life planning, hard work, discipline, determination, denying myself big ticket purchases, and saving- might allow me to pull that off. My American dream was contingent on freedom and the expectation that government or anyone else for that matter, would not be allowed to steal my money.

I'm not talking about an opulent life. I am talking about being able to afford a decent house, a new car, and enough money to travel when I want. Those things are attainable- but you have to live frugally. Frugally does not include paying 500 a month for health insurance coupled with an annual 2000 dollar deductible. That rounds out to something like 700 dollars a month or roughly- what I pay for my current mortgage.

In other words, I did not live my life saving every penny that I could just to turn around and piss it all away because some imperial President and his left wing puppets think they should be allowed to seize my money and redistribute it. There were no reforms, no spending caps, no cost caps. There was no due diligence. Obamacare stands as the worst law of my lifetime. It is the absolute antithesis of freedom. That the Supreme Court allowed this sham to stand is proof positive that we no longer have a Republic- we have a mob run democracy.

Health care costs were already out of control and barely affordable in the early 2000's after Rubin, Congress, and Clinton removed Glass-Steagall in 1999. With the help of a complicit and co-opted Congress, bankers were able to destroy what was left of our economy with the worst lending and accounting standards ever conceived. I use destroy in the past tense- because there have been zero reforms since the 2008 collapse. After the collapse of 2008, healthy and young people lost jobs and healthcare by the millions. I was one of them. Instead of stepping up and punishing those responsible- this government of theirs because it's surely not a government of ours- decided that innocent folks like myself needed some additional financial screwing to help keep the insurance and health care industry afloat.

This is how I've survived. Let me be more specific. This is what I have done to survive in America without health insurance for the past 7 years. I am 53.

The first thing I did was the most obvious and the most difficult- yet I believe that most Americans lack the will to do it. I got healthy.

No more drinking alcohol, smoking cigarettes, or eating that shit that they sell you in the grocery stores. Corn syrup is garbage and they put it in everything. I won't use ethanol in my car because it strips my car of performance and gas mileage and I consider corn syrup- the equivalent of  human ethanol. Your body does not know how to process corn syrup because it does not know what is is. I quit eating a whole host of "cheap carbohydrates" as well. Back in 2007, I was faced with a few looming health issues. Potential diabetes brought about by the shit I was eating and drinking, a complete lack of exercise, and lugging around an extra 80 pounds of fat which was not only hard on my circulatory system- it was creating stress and pain on my knees and ankles and actually preventing me from exercising. So I changed my diet first and quit drinking. As I was losing all of that excess weight, mostly from dietary changes, I introduced a simple exercise plan that included walking 5 miles a day every day of the week. I quit using tobacco. Today I run 2.5 miles a day and I lift weights. I still fight weight gain. I am a member of Planet Fitness which costs me a paltry 10 bucks a month- money well spent.

Once you've done everything you can do to mitigate your own personal health risks- find an independent doctor. Independent doctors are not beholden to giant hospital and health care systems- which means they are not required or encouraged to prescribe unnecessary imaging, tests, and other services unless they need to. One of the greatest health care con jobs in America is the doctor who loves to order un-necessary diagnostic tests because you are insured. Doctors also love to reduce their exposure to malpractice suits with tests which essentially prove nothing and cost thousands.

I am never afraid to weigh my costs against the expected results. If your doctor is somehow offended because you question the need for testing- consider getting a new doctor. I have had two bad experiences, oddly enough both were with female doctors, who were miffed because I questioned the efficacy of what they were trying to accomplish while they were ordering tests which cost me money, serious money. They are so used to burning insurance money that they don't even know what their ordered tests cost anymore, nor do they care. I make a habit of asking- and the truth is- this makes some doctors uncomfortable.

Interview doctors and dentists. Get cash prices and make payment plans. If they don't want to help you- move on. There are still compassionate professionals out there.

Many small and independent labs- and some "doc in the box" type clinics- will provide routine blood work for fractions of the costs of hospitals. I have monthly routine, blood clotting or protime tests. One local hospital charges 100 dollars a month for this testing while my local "doc in the box" arrangement costs me 14 bucks. That's a savings of 1000 dollars a year.

I am currently shopping for a colonscopy- cash price. I  am not afraid to leave our state and get it done outside of Idaho and maybe spend a night in an Oklahoma hotel if need be. The costs of a colonscopy are outrageous and can vary from 1500 to 5000 dollars or more. Getting it done out of state with a cooperative referral is possible with an independent doctor.

Prescriptions. Drug companies are granted 20 year patent protection on drugs they research, develop, and bring to market. Patent protection gives American big pharma a license to steal. Gilead Sciences recently developed a hepatitis C cure which they are selling for 84,000 dollars or 1 thousand dollars per pill over a 12 week period. This is the kind of monopolistic and insane pricing that can only be brought about when desperately ill people need treatment from greedy and protected drug developers. What's a fair price for Gilead's drug? Probably something far less than 84k but it's not like you have any regulatory body checking profit margins once big pharma gets a monopoly license.

Fortunately the internet has changed the rules of the prescription drug game. Where big pharma once had a captive U.S. audience- many of us have found ways to escape. I routinely use Canadian pharmacies. Would you rather pay 250 bucks for ten tabs of Viagra at a U.S. Walmart or 15 bucks for 10 tabs of Viagra (or its generic equivalent) at Northwest Pharmacy in Canada? 

I recently paid 75 bucks for a 35 gram tube of steroid cream at a local Walmart. I found a 50 gram tube, same strength, in Canada for 22 bucks. That's a savings of over 200%. 

Several years ago, I had friends who frequently traveled to Mexico to buy prescriptions for 1/20th of the costs they incurred in the United States. These were the same drugs produced by the same manufacturers. In a sense, American consumers and their health insurance plans, have subsidized the costs of drugs all over the world.

Behold the rise of ala carte and cash based surgery clinics.

When you take responsibility for the costs of your own health care- it's amazing to see how quickly and dramatically the costs can come down. It's almost as though you have to become part risk manager- part insurance adjustor and eliminate all of the waste and fraud yourself.

Despite all of this, I am still faced with two dilemmas. In the event of a catastrophic illness or traumatic injury- I will not be able to pay. Obamacare has never offered a true low priced- catastrophic plan. The other problem of course is the looming and enhanced penalties of 2.5% of your income for failing to obtain insurance in 2015 and beyond. I don't think I'm going to pay the penalties and that's my bottom line. I have already considered consulting with an anti Obamacare attorney that I am familiar with. I am quickly becoming one of those people who is growing weary of federal extortion and over reach. Maybe they will have to build new prisons for all of us health care dodgers and then of course- provide health care once we are all confined.

Finally, we may get a health plan we can afford.