Saturday, January 17, 2015

The Greatest Story Never Told- The Sunday Collage


In the United States, the majority undertakes to supply a multitude of ready-made opinions for the use of individuals, who are thus relieved from the necessity of forming opinions of their own.
Alexis de Tocqueville

Critical thinking is the study of clear, reasoned thinking. All things are considered.

We no longer employ critical thinking nor do most folks understand what that is. They simply react favorably to a situation that benefits them or unfavorably- if they find themselves on the losing team. That is as deep as most folks get. I believe this is because critical thinking takes effort and investigation. It takes research, reading, comprehension skills, and time. It takes reasoning and good judgment. All speech is purposeful and critical thinkers understand that concept.

In a fat, lazy, country- people don't want to exert any additional physical energy. They want a pill to make them skinny. It's no different with their intellectual energy. Rather than do any independent thinking- intellectually lazy people- want someone who they perceive as credible to do their thinking for them. People then pick out those arguments that they think make sense- and they offer that up to bolster their ego and belief systems. That way they are free from all of the intellectual work and time that critical thinking demands. That's why millions of people drink like fish and watch television. That's America. Our government loves fat, lazy people who pay taxes, pull levers, and don't ask questions. Government must love our culture.

If that sounds arrogant- I'm sorry. There is simply no other way of describing a fat, lazy nation that looks for instantaneous and miracle cures for everything- without having to put forth any effort whatsoever.

What I'd like to do today, among a few other things, is to contrast the Affordable Care Act v compulsory auto liability insurance.  People often cite government's intrusion into the auto liability arena as precedent and justification for the ACA. I am so sick of hearing that lame ass argument- that I thought I would give you some cannon fodder the next time you hear some statist offer up that faulty piece of non thinking. More on that in a minute.

A few days ago, a friend of mine posted an anti-ACA type of post on Facebook. I commented that I have grown weary of people who use compulsory auto liability laws as precedent and justification while defending Obamacare. Here then is a reply to my post. Critical thinking cannot occur until you seek to understand all sides of an issue. When you don't, this is the kind of thinking that we see. I believe, more or less, that this is the thinking of millions of people receiving subsidized ACA insurance. This is the shallow end of the pool.

The quote from the FB thread: (I have added numbers to the sentences)

(1)You can choose to have health insurance, just like you can choose to not carry car insurance. (2)They are the same, but there are consequences now to not having either one. (3)With car insurance you can go to jail, or pay a fine, or have your driver's license revoked. (4)With this health insurance, it's as simple as an added fee to taxes. (5) In truth, there always was a penalty to not having health insurance, it's just that the uninsured themselves haven't had to pay it. (6)With everybody always bellyaching about "having to pay for other people" it baffles me that now we still have so many people bellyaching over paying for themselves. (7) There's never going to be a situation that makes everybody happy. (8) That much is clear. (9) I understood all the protesting when this first came out, because it was something new and people don't like change....but now, more than a year later, the shock should have worn off and folks should realize it's no different than any other rise in expenses. (10) When something happens and free healthcare is not available, you're gonna be glad you've got that health insurance just like you are when you have a mishap with your full coverage car insurance, regardless of how many months you had to pay for it "without using it".

Let's go through her comment, line by line, and try to paraphrase and determine what she is trying to say.

(1) Even though it's the law- you don't actually have to comply with it. (Not the best advice)
(2) Car insurance and health insurance are the same and you will suffer the consequences if you don't buy in. (Those two items and their objectives are entirely different)
(3) These are the penalties for non compliance. (Under the ACA, the penalty is better than the product)
(4) An added fee to taxes? (Good gawd, we are now calling taxes, "fees"- it was actually neither)
(5) The uninsured haven't had to pay a penalty. (Bet me- we call it bankruptcy)
(6) My absolute favorite line. It baffles me that people don't want to pay for other folks' insurance- or pay 200% increases for themselves. I am laughing as I write this, really.
(7) Therefore, this is the best of all of the bad solutions. (No actually, there were far better solutions)
(8) Any fool knows this. (I am so smart I shouldn't have to point out the obvious)
(9) People were upset because this was something new- that's really the only issue- now get over it!
(10) You're going to be happy because when something bad happens- you'll be covered. (Never mind that the service is so over priced that you are paying ten times what it should actually cost)

The insurance lobby was very effective when lobbying state legislatures many years ago- and lawmakers dutifully set about the task of writing laws mandating compulsory auto liability insurance. Obviously those laws, with mandatory coverage minimums, were done by the states. While there were other solutions available- it was certainly in the best interests of the insurance industry to cast the widest net. Like it or not, liability insurance is here to stay. Personally, I don't think government has any right to force us to buy products in the marketplace, but that argument is not where I want to go today. Liability insurance primarily protects property. It is avoidable- meaning that you can find other forms of transportation and avoid the costs associated with compulsory insurance.

There are still millions of uninsured motorists running around- which proves the world did not invert when people didn't comply with the law. Instead, most of us carry insurance that protects our property and we carry uninsured and under insured motorist coverage which protects us against giant medical bills.
The objectives of compulsory liability insurance are entirely different than the objectives of health insurance- the most important of which was that health insurance companies were on the verge of total collapse in 2009 and desperately needed a bail out of their own.

In late 2008 all the way through 2009, the American economy lost 10 million jobs. http://en.wikipedia.org/wiki/Job_losses_caused_by_the_Great_Recession

The greatest story never told- is the one where 10 million people lost their jobs and insurance and they didn't come back for insurance. Millions of people, healthy people, simply opted out of purchasing health insurance. Unhealthy people had to stay in. This created one of the biggest balance sheet distortions ever experienced by health insurance companies. Like banks, they needed a bailout. There was simply no way that the American people would stomach another taxpayer bailout- thus politicians devised the sneakiest bailout of all time and they called it the "Affordable Care Act." The affordable care act was always a lie. It was conceived to force back in- all of those healthy people and place them onto the asset side of the ledger again.  Government always uses clever names when seizing our assets. In doling out fines- the government calls that something cutesy and palatable like "shared responsibility." Obamacare was the greatest stealth bailout ever conceived and the democrats even managed to look like champions of the poor and pick up a few million votes in the process.

Of course it was nothing more than a con job- but the government knows that they can blow smoke up the public's ass because the public lacks critical thinking skills. In fact, most folks buy into the "shared responsibility" meme offered up by the democrats. Not only that- but the government has been quite successful in hijacking the narrative and pitting the subsidized side (D) against the unsubsidized (R) side. It is nothing more than a distraction from the truth. Government climbed into bed with bankers and insurers long ago- they win- and we the people lose. The best part is that most people have bought into their bullshit. They don't care what argument you fall for just so long as you keep turning your money over to them.

People buy into those ridiculous narratives they've been selling and that's why we have threads like the one I posted above. I am sure every one of you has seen something similar.

I am in awe that of all of the fantastic writing about the illegal activities of bankers by people like Matt Taibbi and Yves over at "naked capitalism" that the one story that has never been investigated or reported on is the one where the health insurance lobby came crawling on their knees and received the ACA as a bailout complete with a government backstop in the event they suffered mounting losses once the plan was implemented.

Why do you think nobody in Congress read the bill? Because they knew what it really was- a stealth bailout. It didn't concern them nor were they going to be subjected to it. They didn't care.

Let's just hope the life insurers don't come calling for a bailout and lobby Congress for a law making us purchase life insurance and naming the IRS as the beneficiaries.

Here's a great piece from 2009 in the L.A. Times before the final ACA draft. Nobody calls the ACA what it really was- but even back in 2009 everyone knew where the money trail led. backhttp://www.latimes.com/nation/la-na-healthcare-insurers24-2009aug24-story.html

I have never lost sight of who the real villains are. I don't blame people who need healthcare and can't get it. I understand survival. I understand people who are desperately trying to remove pain while improving and extending their lives. They don't particularly care where the money comes from just so long as they have access to healthcare. I get all of that.

I'm not falling for the part where one political side wants to use me to play kickball with the other side. We all want reasonable access to affordable healthcare and unfortunately- we all can't get it because a co-opted Congress works for the people who write them checks instead of consumers. They don't represent "We the people" anymore. They haven't represented us for years- even though they lie and say they do. They probably believe their own bullshit.

One day, if critical thinking ever returns to this culture, we might have a conversation about making health insurance illegal. Perhaps we could even return to a system where an actual buyer and a seller agree on a pre determined price. A market place where bloated middlemen are severed from the process. A competitive and fair marketplace. All of that is fantasy of course- until honesty and leadership make a giant come back in our political process. Honesty and leadership can't make a comeback until people realize why they were important in the first place. Until then- the leaderless group exercise continues.

We are fast approaching the stage of the ultimate inversion: the stage where the government is free to do anything it pleases, while the citizens may act only by permission; which is the stage of the darkest periods of human history, the stage of rule by brute force.
-Ayn Rand















Thursday, January 15, 2015

Blow Off Tops and Washed Out Bottoms, Is the Gold Rally Finally Here?

Sometimes you don't need a road map to see where things are going. I snipped this paragraph from a CNN piece on the Swiss National Bank's decision to let it's currency trade freely after imposing a peg on it some 3 years ago.

The snip:

However, in an effort to ensure investors don't get too excited about swapping euros or dollars for francs, the central bank also slashed interest rates to -0.75%, down from -0.25%.
"It's like a tax on people holding money in Swiss francs," said Simon Smith, the chief economist at FxPro in London.

Instant haircut for swiss savers.

You want real currency price discovery? There it is. The shit is so worthless, we are going to charge you three quarters of a point just to hold it. Think about how outrageous that is. Swiss currency is trash. They want people to remove money from the bank.

Two months ago, I noted that silver traded down to 14.12. I bought nearly 100 ounces which averaged my overall holdings price down to about 21.00. That bottom was so low that silver immediately rallied nearly 25% and it is holding around 17. Gold rallied off the 1150 lows and it is up nearly 100 bucks.

The gold bull is back, Bill F says so. http://investingchannel.com/article/331384/Bill-Fleckenstein-The-Bull-Market-In-Gold-Has-Resumed#.VLnrVNxGmdM

Wait until the European Central Bank announces their QE program in less than 10 days.

The DJIA's blow off top occurred just over the 18,000 level. Without QE, the market simply cannot rally further. They have squeezed every last ounce of credibility out of the "buy the dip" theme. Commodities are all down- even cattle futures are starting to deteriorate. Dr. Copper is toast. Housing starts are down as well. Without a consumer feeling confident in "make believe equity" and buying worthless shit with Helocs- I don't know where any potential rally can come from. Last but not least, the oil bust is wiping out capital expenditures, market caps, equity, and jobs. The first oil patch bankruptcy was announced earlier this week.

I am liking this year a lot thus far.

You can't put money in the bank, you can't buy bonds paying less than 2%, you can't buy equities that have topped out after a 6 year, QE induced rally. You can't go long commodities or even currencies since we all know where they are headed.

What does that leave? Gold and silver.

I read a report earlier this week that said that all of the known gold in the world will have been mined in 20 years. Gold is a finite resource. We are well beyond "peak gold and silver" as all of the major miners are desperately mining and looking for new assets.

The bottoms are in for now and I see nothing to impede their rise. Gold 1300 this month. Silver 18.00 this month. I feel confident buying at these levels. I might even buy a little platinum while I sit back and watch the currency wars fireworks take place. Hopefully, the 3 and 1/2 year bear market is finally over in the precious metals markets now that the central banks have loaded up on gold.

Not coincidentally these past two weeks- the dollar fell against the yen and the Swiss franc. However, we have the European Central Bank announcing their own QE program later this month- so we'll see if that announcement has already been priced in.

I think it has.





Sunday, January 11, 2015

Learning Shit the Hard Way- The Sunday Collage

Today I am going to beat myself up a little bit. If you are uncomfortable with grown men telling on themselves- then you will probably not want to read on. Having gotten that piece of business out of the way, let's start here...

Growing up in Montana meant spending my entire life surrounded by guns and hunting. I think I can safely say that as a young man, I was obsessed with hunting and shooting. In my spare time, that's all I did. I can't even begin to estimate how many rounds I've put down range. So I've spent a lot of time around guns.
In my early 20's, I simply gave up on hunting. Honestly, I was tired of dealing with posted land, hordes of hunters, and cleaning things I never ate. When I entered law enforcement school in the early 80's, shooting handguns became a regularly scheduled event. Police officers shoot a lot. 

I think as I look back, the worst year of my life was probably 1987. Everything went wrong that year. A friend of mine said my moon was in retrograde Mercury that year or some other nonsense. To be quite honest, sometimes I think I was just unprepared for adulthood. Or maybe I'm just a knucklehead, a little A.D.D., and sometimes a little careless. So whatever blend of cosmic soup I am- came calling one afternoon on the firing range in 1987. I was 26 years old that year and I was at peak cockiness.

It was the first day of a three day training exercise where we would each shoot a 1000 rounds or so. We had been shooting all day on various courses with an FBI swat team leader. There were about 30-40 police officers in attendance. We were shooting Beretta 92's in 9mm which was a relatively new handgun in the 80's. We had shot our way through some targets and combat courses and I could feel my action and slide sticking on my Beretta during the early afternoon exercise. I hadn't experienced any jams or stovepipes yet and I didn't have time to clean the gun. So instead of just field stripping the gun and cleaning it- I sprayed a bunch of lubricant on the gun, Break Free, and inserted a full magazine. I racked a round into the chamber which cocks the hammer on a 92. That's when it happened. Instead of simply using the de-cocking lever to let the hammer down- I tried to hold on to it with my thumb while pulling the trigger- a very bad habit I had learned while shooting .45 caliber Colt 1911's. The hammer slipped because of the Break Free I had sprayed everywhere and the gun went off. I had the barrel pointed at the ground and downrange thankfully, and the round struck a couple of feet in front of me. I had a few fellow cops standing around me-who all seemed to vanish in an instant. About 40 heads turned my way.

There is nothing more embarrassing than an accidental discharge unless of course it is an accidental discharge in front of 40 of your peers and the FBI swat team. I have never felt so lonely as I did in the moments right after that happened.   

To say that I was teased unmercifully for the next two days is an understatement. The FBI swat leader called me "Quick Draw." He said anytime he was on a mission he wanted me along because he knew I would get the first shot off. During camouflaged operations they handed me a white sheet. I can take some teasing. By the third day though, I had had enough. There is a line somewhere between funny and malicious and I'm not sure when and where it gets crossed. I blew off the final afternoon's exercise. I was starting to get a little pissed.

In those days, I was very competitive. I hated to lose, or do stupid things, and I had a big ego. I was one of those kinds of guys that when I screwed up- it made everyone else a little happy- if you know what I mean. Let's just say nobody shed a tear for me. I took a healthy dose of shame and ridicule, a shit sandwich if you will, and I ate it back then. I have tried very hard not to order that menu item again.

Last week at work, I had a dual cargo shipment that had to leave at night. Both shipments had 10 boxes on them. One shipment was going to Oregon by ground, the other shipment was going to Arizona by air. I mixed them up and sent each shipment through the wrong carrier. It was a careless mistake. I wished I had a decent excuse but I don't. I was in a hurry to go home and I just didn't pay attention. The mistake cost my employer 1200 bucks and it has caused me some embarrassment. Right after it happened- my boss said that from now on shipments will be returned to our dock and labelled before shipping. This is a tremendous waste of time and a pain in the ass for the other drivers. Punishing co-workers because I am an idiot did not sit too well with me. I told the boss it would never happen again. The change in policy was not needed because making serious mistakes is how people learn. It is most certainly- how I learn.

Do you think there's one chance in hell this will ever happen again? Of course not. I could be on my death bed comparing dimensions and weights with bills of lading or talking to the shipper before I go through this embarrassment again. That's not to say I am incapable of making other mistakes, in fact I know myself well enough to say that I will in fact, make other mistakes. It's a pattern that's been evolving now for 54 years and I am beginning to think that it is something beyond coincidence or bad luck.

For all of my faults, and they are plenty, failing to learn from my mistakes is not one of them. So whether it's getting embarrassed in front of 40 of your peers- or getting embarrassed at work in front of your co-workers (not to mention the shipper who I owe an apology to) I learn rather quickly. I no longer possess an ego that can't take responsibility for the fact that I screw up from time to time.

The point of telling you all of this- is simply that people screw up and make mistakes. Feeling shame and embarrassment cures about 95% of the problem immediately.  It isn't the screw up that really matters- unless you injure or hurt someone else- but rather how management reacts to those incidents. That's the real point of all of this self disclosure today.

I'm talking about innocent, well intentioned mistakes- not careless, deliberate, or malicious acts which indeed call for more serious discipline.

For all of the injuries and deaths that occur on shooting ranges each year- law enforcement- will never say..."Ya know these guns are dangerous. Let's quit carrying them and stop using them. Let's get rid of them so that we may never suffer a potential injury on the range."

Making a knee jerk management decision based on the actions of one knucklehead is almost always wrong. Evaluating policy, training, and management's role when a mistake happens allows managers to focus on the appropriate issues once they are satisfied that they are not to blame. Determining what type of mistake was made and then determining the appropriate response- well that is simply the hallmark of experienced, sound, and wise management- and getting harder to find. These days- management never takes responsibility for their role when mistakes are made- which quite often, is the result of inadequate training. In Idaho, we have kind of a sociopathic management style brought about by our right to work status. Here the employee is always wrong and easily fired with no repercussions because of our "at will" status. A lot of good people have gotten screwed over by sociopathic managers in Idaho.

People make mistakes, that's what we do. Back in the day, I used to tell the press that as a Chief I made mistakes everyday. I could have always been a little kinder, a little gentler, a little more empathetic. Every situation was an opportunity for improvement and I like to think that I was a work in progress and getting better. Today I have to be careful when admitting mistakes-it almost looks like I am celebrating them or at worst- kind of glib or flippant when they happen. I've reached a level of acceptance and responsibility that I think a lot of people are uncomfortable with.

I wish I had known all of this when I was a young guy and then I think, "No, I think it's better this way. What's the point of life if we don't learn anything from it?"

I think everybody has to learn shit the hard way. I am still waiting to meet the person who doesn't- ya know that guy that enjoys being told what to do and then does it. If you meet him please tell me about him-I have a lot of questions to ask.