With unemployment hovering at 10%, with an additional 11,000 people losing their jobs in the month of November, somehow the health care sector is actually adding jobs. 

According to the Bureau of Labor and Statistics, hospitals added 6,800 new hires in the month of October, which brings its three month total up to 21,500 new jobs in the health care sector.  Further more thats 613,000 health care jobs created since the beginning of recession in December 2007.

Pretty crazy statistics there all things considered.  With the best health care in the world, it certainly is a great thing to see the sector still growing even in times when other divisions of the economy have fallen on seriously hard times.  Its also nice to know that when other businesses are downsizing, you can still expect top notch care when it comes to your health.

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Two dissatisfied customers comment about a restaurant. One says, “The food here is terrible.” The other replies, “I know, and such small portions!” In many ways, they could be describing our current employment picture. Not only are the portions shrinking, but the jobs themselves are steadily losing quality.

Today’s release of the October jobs report showed the loss of another 190,000 jobs had pushed the official unemployment rate to 10.2%, only the second time since the Great Depression that unemployment was quoted in double digits (factoring in workers who had given up job hunting altogether or have settled for part-time work would push that rate to 17.5%). That didn’t stop Wall Street pundits from trying to fashion a silk purse of this sow’s ear. The ‘green shoots’ crowd focused on the slowing pace of job losses, the nascent economic ‘recovery’ (even if it is jobless), and the projected improvement in 2010. No mention was even made of the quality of what few jobs were being created.

The analysts completely ignored the continued trend of replacing goods-producing jobs with those jobs that require production from other sources. For example, we lost 61,000 manufacturing jobs last month, but added 45,000 jobs in education and health services. In particular, the addition of health workers is nothing to celebrate. Just as a family’s economic position is not improved by higher medical bills, the country as a whole does not benefit from increased health-care spending. Until this trend reverses, our unbalanced economy will not regain its stability, a real recovery will never take hold, and the overall job outlook will get much bleaker.

By spending trillions of dollars of borrowed money, President Obama hopes to engineer a recovery and create jobs. However, he has only succeeded in digging America into an even deeper hole than the one he inherited from his predecessor. He believes that if we can simply push up spending to levels seen during the “good times,” then those favorable economic conditions will return. The reality, of course, was that those good years came with a heavy price-tag that we have barely begun to pay.

In a press conference today, the President claimed that the latest extension of unemployment benefits will not only help the unemployed, but the overall economy as recipients spend the money. If spending government-granted money really were a benefit to the economy, why not simply increase the amounts endlessly? Why limit the benefits to the unemployed? Let’s make this recovery a real barn burner: send out million-dollar checks to everyone! Of course, what Obama and his economic advisors do not understand is that money spent by recipients of unemployment benefits is money not spent or invested by taxpayers. It’s a transfer of wealth, not a creation on new wealth.

In addition, policymakers are also struggling with diminishing returns on ultra-low interest rates. No matter how much monetary alcohol the Fed tries to pour down consumers’ throats, the swill simply will not go down anymore. Consumers have already had enough and are trying to sober up – by refusing to spend irrationally. The excess liquidity simply weakens the dollar and spills over into other pools, such as goods prices, money metals, commodities, and investment assets.

During the boom, we spent money we did not have to buy things we did not produce and could not afford. As a result, we are now deeply in debt and must sharply reduce our spending to replenish our savings. By focusing solely on consumer spending, the Administration is neglecting the capital investments necessary to improve our infrastructure and productive capacity.

To generate legitimate economic growth and meaningful jobs, we must reverse the trends that brought us down. Consumers may have led us into this recession, but they can’t lead us out. The road to recovery is a one-way street, and it’s paved with savings, capital investment, and production. It’s not an easy road, but we must follow it to ensure our future prosperity.

As a first step, our politicians must stop pushing us backward. Rather than imposing more market-distorting regulations, we should repeal those most responsible for inefficient resource allocation. Rather than creating new moral hazards, we should withdraw guarantees for large financial institutions and irresponsible consumers. Rather than continuing the Greenspan policy of keeping interest rates too low, we should let them rise. Rather than trying to prop up asset prices, we should let them fall to market levels. Rather than increasing the burden of bureaucracy on the economy, we should look for ways to lighten the load. Rather than encouraging people to borrow and spend, we should reward those who save and produce.

Until we acknowledge these fundamental errors, more of our citizens will lose their jobs. As those that stay employed are funneled into unproductive industries like the federal bureaucracy, the country will sink further into stagnation. Worse still, everyone taking jobs in these sectors will be laid off in the next phase of the crisis – and will have lost this opportunity to build practical skills for the new economy.

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Peter is usually much more vehement and outspoken when he recommends the investment of betting against the US economy and its currency. However the guy is running for the Senate seat in Connecticut and can’t appear to be very outspoken about the fact that living in America and investing here is the equivalent of burning your life savings in a fire.  At this point I recommend the dollar for shorting and am long in any currency that is not economically tied to ours.  Even Europe scares me.

That being said if you live in Connecticut I would advise you to support Mr. Schiff as when the decline of America occurs we will best served by having someone in office to be able to say, “I told you so.”

I think that Ron Paul although very admirable is too much on the fringe as his associations with Alex Jones leaves me wondering as to his mindset.  The guy believes in aliens and conspiracies.

Peter Schiff

For the most part, the value of the dollar is given cursory attention by the financial media. Typically, its movements are assigned an importance on par with much less determinative metrics such as natural gas futures and construction permits. It’s only when major milestones are reached that anyone really takes notice of the dollar. We are living through one of those times.

The great dollar rally of 2008-2009 has come full circle. When the financial crisis exploded in its full ugliness in mid-2008, the dollar, which had steadily declined over the previous four to five years, put in a rally for the record books. By March 2009, as investors across the world sought safety from the financial storm, the index had surged more than 25%. Since then, the dollar has steadily declined to the point where nearly all those gains have vanished. In short, the panic rally has given way to the long term trend.

So, as the dollar index makes fresh 52-week lows on a nearly daily basis, discussion on the greenback is heating up. And while real insight on the topic is hard to find, the debate centers on the battle between two conventional opinions – both of which are wrong.

The first camp, which is generally supportive of government intervention in the economy, argues that dollar’s decline is a positive for both the economy and the stock market. The second camp, which tends to fall on the more conservative end of the political spectrum, views the dollar’s decline as a problem but feels that tough talk and slightly higher interest rates are all that is needed to restore ‘King Dollar’ to its throne.

First of all, a weak dollar is no better for Americans than a lower paying job is for a worker. And although I would prefer that the dollar remain strong, I know that currency values are a function of supply and demand, not wishful thinking. The past years of reckless monetary and fiscal policy have created conditions that must push the dollar down. Vastly expanded debt levels and monetary expansion have created a greater supply of dollars, while poor investment performance and diminished industrial capacity have lessened the demand for dollars.

The regrettable truth is that while the weak dollar will help rebalance the global economy, it is not a panacea for the U.S. The fall is no more worthy of celebration than a student celebrating falling grades on his report card. If the dollar does not recover eventually, Americans will suffer diminished living standards. To avoid this we must make difficult reforms now. If we continue our current policies, we run the risk of a complete dollar collapse. Far from helping to solve our problems, this would be a true nightmare scenario.

On the other side of the argument, those who correctly equate a weaker dollar with a weaker America mistakenly believe that mere posturing by officials or trivial rate hikes would be sufficient to restore the dollar’s lost vitality. We are long past that point. The best we can do now is to accept the penalty of a weaker dollar as punishment for our prior failures, and start building for the future.

To save our currency, the Fed must get very aggressive with interest rate hikes and rein in the supply of dollars that have flooded the world over the past few years. The federal government must also do its part by cutting spending, which means no more stimulus and no more bailouts. Undoubtedly, these actions will have unpleasant economic and political consequences. A student who studies harder may have to miss a party or two. A simple analogy, but unfortunately it is that simple.

Even in the unlikely event that our political leaders take these courageous steps, the near-term trajectory of the dollar may still be uncertain. A dollar rally that results from higher interest rates and a narrowing federal deficit may soon fade as the recessionary forces that such moves would unleash act to weaken the dollar once again. But at least we would be building a foundation upon which the dollar could eventually find some footing.

With a restructured economy, higher savings, more capital investment, lower government deficits, and higher interest rates, the United States would once again attract international investment. Funds would flow here not out of fear, as they did last year, but out of confidence. The dollar’s strength would not rest on the willingness of foreign governments to buy our debt, but the willingness of foreign consumers to buy our products.

Only then could King Dollar regain its throne.

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Senate Democrats Hit Snag With Doctor Payment Bill
New York Times, Robert Pear, 10/21/2009
In the face of solid Republican opposition, Senate Democrats on Tuesday backed down from their effort to increase Medicare payments to doctors without offsetting any of the cost over the next 10 years.

In this story the Democrats realize that they can’t have everything want as their need to appeal to both Seniors and the Physician lobby doesn’t appear to help their plan to offer health insurance to as many people as possible and also keep the economy from collapsing.  Yes we all want health care and health insurance and no doubt for free, but we also want to keep the United States from collapsing from the crushing weight of debt.  Single payer will solve all of these problems as would many of Ron Paul’s libertarian ideals.  Though if we go his route many Americans will feel a high amount of pain for a time before the economy is finally able to recover for all of the years of Government abuse.  If we go the single payer route (which is what I espouse) we will still be on a collision course with economic collapse (much like Britain) as our debt and deficits will surely become unmanageable.  Solution:  Move to Canada!

Liberals Increase Pressure For Public Insurance Plan In Health Bill
Washington Post, Shailagh Murray and Lori Montgomery, 10/21/2009
Combined bill could be introduced this week.

I do believe that the health reform bill going through Congress right now is ridiculous.  To have no public option is to basically give the health insurance companies the same thing that the Federal Reserve has:  a license to print money.  I do not want the health insurance companies to become more powerful.  Neither should you.

Dems Eye Insurance Industry’s Antitrust Protection
Associated Press, David Espo, 10/21/2009
Top Senate Democrats intend to try to strip the health insurance industry of its exemption from federal antitrust laws as part of the debate over health care, according to congressional officials, the latest evidence of a deepening struggle over President Barack Obama’s top domestic priority.

Great idea!  Also lets allow health insurance products that are “regulated” not discount plans compete in other states.  This will give the health insurance competition.  This will bring down prices.  More competition fairer markets…Hmmm sounds so familiar!!!

Monopolies (besides government ones) are bad especially when they are involved in necessities.  Like health reform and electricity.  Remember Enron?  Remember how much it used to cost for a long distance call?  How about Wall Street?

Poll: Americans Skittish Over Health Changes
USA Today, John Fritze, 10/21/2009
Americans are increasingly worried about the cost and quality of medical care that could result from President Obama’s effort to revamp health care, but a majority still trust him more than Republicans to change the system, a USA TODAY/Gallup Poll shows.

Americans should be worried about bankruptcy!  Health Care is important, but the fact is that the US is facing a deficit and debt with interest payments alone that are going to become unsustainable.  Either we will default which will crush our economy or we will inflate our currency thus making every American lose significant purchasing power.  The other possibility?  Trust me you don’t want to know!

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“Total health care costs in the last 20 years have doubled to about 16 percent of the economy, with no signs of tapering. Along with universal coverage, Mr. Obama has made controlling those costs a central pillar of his health care overhaul, calling the current course “unsustainable.” The effort is a pivotal test of his campaign promise to break the stranglehold of special interests.”

from the New York Times today

I just want to know who did this.  Who is the guy that keeps letting these health care costs get so high.  I believe that if we all thought about it we could find a few very rich, smart white guys who are responsible for this health care cost escalation.  Somebody or some group is complicit in letting health care become 16% of the economy.  Can you really put that into perspective?

If you get $100 from your bookie do you realize that $16 of those hard luck dollars are going to pay for your medical costs.  Except that wouldn’t be right.  It wouldn’t pay for your medical costs.  For most people, it would pay for someone else’s medical costs.  I love my grandparents very much and they deserve everything that they have.  But at least two of them could afford to pay some of their own health care costs. 

I believe Ron Paul pointed out the difference between health care now and back in the 1940’s.  The big difference is that we are spoiled.  Used to be health insurance was insurance.  Insurance implicitly means catastrophic.  Now insurance can be used to pay for antibiotics that you shouldn’t even be taking. 

The fact that you keep wolfing down those antibiotics actually has helped engineer a super bacteria. 

Here is what we are looking at right now for those of you keeping score at home. 

1.  Health Care costs becoming the entire economy

2.  Complete economic meltdown from government excess and poor regulation

3.  Greenhouse gas and complete enviornmental upheavel which at the very least will kill millions by starvation.

Of course there are subpoints to those general points such as the dollar being inflated into Zimbabwe.  Or running out of oil just as we need to build the world’s largest air conditioner to help cool the earth.  I just wonder which of these three things is going to happen first and if I am going to be alive for any of them.

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Inflation USA Website

Here is a pretty crazy video they posted today, of course take it with a grain of salt as there is always somebody at the gas station asking for change.  Still the perception is the economy is on the edge and though you might not see it on the news, all of the national polls are indicative of a sense of panic or foreboding if you will.

It is surprising that the news will run a poll of the economic barometer of the country and in spite of the 80% who are very worried about the economy you still have the news outlets and public officials talking about the fact that we are in a jobless recovery.  I am unsure if the term jobless recovery is a new invention or somehow an old term that was reinvented, but at this point I think that we are yearning for the feel good 70’s and Jimmy Carter.

In fact though I am strongly libertarian, I am beginning to think that Carter who is probably more dismissed as incompetent than Bush was more or less correct with his economic policy.  He certainly wasn’t aggressive, nor was the Fed in pursuing destructive interest rate manipulation.

I am interested to read more about Jimmy Carter’s economic policy (more specifically his Fed Chief’s) leading up to the election of Paul Volcker who is generally well regarded for his work while at the Chairmanship in spite of his being a Democrat.

From Wikipedia “Paul Volcker, a Democrat,^[5] was appointed Chairman of the Federal Reserve in August 1979 by President Jimmy Carter and reappointed in 1983 by President Ronald Reagan.^[6]

Volcker’s Fed is widely credited with ending the United States’ stagflation crisis of the 1970s. Inflation, which peaked at 13.5% in 1981, was successfully lowered to 3.2% by 1983.

The federal funds rate, which had averaged 11.2% in 1979, was raised by Volcker to a peak of 20% in June 1981. The prime rate rose to 21.5% in ‘81 as well.”

Volcker went on to be fired by Reagan for not being more aggressive.  In the end however there is no such thing as a good Fed Chairman as the entire government office should be done away with and fiscal discipline re-instituted.  Though the highs won’t be so high the low’s won’t be potentially lethal.  In this age of uneven globalization we cannot play with our currency anymore.  In fact, if we were not the national currency this would not even be a discussion.

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Peter Schiff’s speech at the Connecticut Libertarian Party convention

Peter Schiff speech at the Connecticut LP convention 30 May 2009
I think this is the first Peter Schiff’s speech as a “politician” and not exclusively as an economist , Peter Schiff marks his debut into politics at the Libertarian Party convention in Connecticut
He tells the audience that it is a waste of resources running as a minor party. “We haven’t won anything in 40 years” and “we don’t have another 40 years to try.” Instead, he recommends joining the Republican party while it is in shambles in order to expand the influence of the libertarian wing. We can only hope that Peter Schiff will lead by example and run for Senate in 2010 against the neocon Rob Simmons in the primary and Chris Dodd in the general election.

below is the entire clip from the convention , Peter starts his speech at around min 15:00 the speech ends at around 1:32 then Peter answers questions from the audience

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The recent drop in the value of the dollar has, in fact, been a good thing for anyone who works for a company that sells goods or services abroad. The reason is simple: As the dollar falls relative to the value of another country’s currency, people using that foreign currency can buy more stuff priced in dollars. Since American-made goods and services become cheaper abroad, companies making those goods and providing those services make more sales, hire more workers, and so forth.

It’s true that America imports far more than it exports, and that much U.S. manufacturing has moved offshore to take advantage of cheaper labor in developing countries. But exports still account for a large and growing chunk of the U.S. economy. Last year, exports of goods and services added $1.6 trillion to the gross domestic product — up from a little over $1 trillion in 1998.

A falling dollar is also good for large, far-flung U.S. companies taking advantage of rapid growth in the developing world and expanding their markets in developed countries. If you sell a lot of Pepsi in Japan, for example, you get paid in yen. As the dollar falls, those yen become more valuable. When you eventually convert your yen back to dollars to bring them home, you get a nice little lift to the bottom line. Shareholders like that.

Of course some people hate to see the dollar fall, including American tourists in Europe whose spending power is weakened when they face a dinner check priced in euros.

The biggest losers, though, are foreign investors and countries that bought U.S. Treasury securities or any other investment denominated in dollars. The falling dollar makes these investments worth less to them.

The risk for them — and us — is that the dollar falls too far, too fast, or both. For now, investors don’t seem to be too bothered by the dollar’s gradual decline. If the dollar falls rapidly, though, they could get spooked and slow or stop buying dollar-based investments.

That’s why the folks at the Fed and the Treasury keep a close eye on the dollar. As the world’s biggest borrower, the Treasury badly needs foreign investors to keep coming back.

If the drop in the dollar eats too deeply into their investment, those foreign buyers are going to demand higher interest rates every three months when the Treasury goes to auction the next bazillion dollars worth of securities. As long as Congress spends money faster than the government takes in, the Treasury has no choice but to pay whatever it takes to move those freshly printed bonds and notes.

If the Treasury has to pay higher interest rates, the cost of borrowing goes up for anyone else borrowing dollars. As a big buyer and seller of Treasuries, the Federal Reserve can — and does — try to keep a lid on interest rates. But it only has so much money to play with. If investors in the bond market decide interest rates should go up, they’ll go up.

With the U.S. economy still trying to get back on its feet and banks still mopping up hundreds of billions of dollars of bad loans, that’s exactly what we don’t want to see happen. A falling dollar may bring more orders for a U.S. exporter. But that company won’t be able to borrow the money needed to expand production if the cost of borrowing rises too far.

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Report Provides State-By-State Look at the Impact to Residents, Businesses and State Government if Health Reform Fails

Out-of-Pocket Health Care Costs Could Increase More Than 35 Percent in Every State by 2019
Researchers from the Urban Institute used the Health Insurance Policy Simulation Model to estimate how coverage and cost trends would change between now and 2019 if the health system is not reformed. The health reform failure report shows that under the worst-case scenario, within 10 years:

The number of people without insurance would increase by more than 30 percent in 29 states.
In every state, the number of uninsured would increase by at least 10 percent.
Businesses would see their premiums increase—more than doubling in 27 states.
Even in the best case scenario, employers in 46 states would see premiums increase by more than 60 percent.
Every state would see a smaller share of its population getting health care through their job.
Half of the states would see the number of people with ESI fall by more than 10 percent.
Every state would see spending for Medicaid/Children’s Health Insurance Program (CHIP) rise by more than 75 percent.
The amount of uncompensated care in the health system would more than double in 45 states

Yes this is all very terrible!  However what would be considerably worse and what is also much more likely to occur is in fact the dollar being debased or devalued.  As we keep saying and screaming, STOP SPENDING!

What difference will having great health insurance make if you have no food?  The level of poverty in the United States is getting ready to explode, regardless of health care reform.

The basic economic facts are simple.  We cannot spend another dollar that we don’t have, as the only reason that the United States economy is afloat now is because other countries allow us to be.  China and other Asian countries that are developing are sending their economic resources here to make sure we have enough money to buy their gadgets.  When they realize the foolishness of such an errand which it seems they have, they are going to pull the plug on their treasury purchases.  This will hasten our free fall.

The truth is that the US needs to do more than reform health care, we need economic reform, but it is apparent that neither will happen and the status quo is seemingly prevailing.  Be prepared is the last words of encouragement I can offer.

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After reading the latest issue of Business Week I am still amazed by the amount of qualified economists that still have no idea how serious of a situation we are in financially.  I don’t know if they are afraid of creating global panic which would result in a more expedient global depression, or if they are just really in the dark.  If any economist from the previous eras from 1900-1960 were to look at the situation today in the world market, and then gauge the effects of globalization occurring at uneven paces, they would be truly awed by the way we are reacting to the current crises.

Instead of fixing the basic economic issues, we are instead creating larger deficits and larger debts which are going to end up having to be paid back.  How?  There is only two ways out, one of course would be to inflate our way out of debt which will be great for the United States but terrible for Americans.  If the currency were to inflate on the scope necessary to write off our debts it would make us unable to afford anything except the basic necessities of life, and even that would be difficult.  As the United States has become a global superpower we have exported our entire manufacturing sector to foreign nations who can do it for less money.  This would mean that we would need to import everything as our manufacturing is so antiquated here in this country that it would take us years to restart this sector.

The other way of course is to simply default on our debt.  Which is actually quite common when you think about.  The IMF is actually in the business of country mortgages.  With the usual situation however, the IMF and some powerful US corporations go into a country and open up everything to foreign ownership from public utilities to the local gas station.  In the long run, seemingly this is good for the host nation, though in the short run the pain is not quantifiable as the main ingredient in IMF participation is the elimination of basic social programs.  The other drawback to the IMF, is that the invading companies will inevitably pollute and mindlessly ruin the local economy and environment.  This is inescapable, and many of the corporations that are guilty of these sins are companies that inspire trust and have our best politicians happily accepting donations.

This is not about Republican or Democrat, there is actually no visible difference as we have seen.  Barack Obama is trying to reform health care by adding some pitiful program that will end up hurting the economy more than helping our needy citizens that are dying without health care.  Much like Bush Medicare Prescription bill of 2003, which is of course the worst piece of legislation I have ever seen,  I am certain that the health care reform bill if it is passed will more than likely, worse.  Without a public option what is the point?  But even the public option is ridiculous!  Unless we get a universal plan there is no relief to be had by adding another excuse to sign up more people with Blue Cross.    But really none of this matters.  How could it?  It is but a drop in our loan-deficit bucket. What’s a trillion dollars, when you are fighting needless wars in two countries and have troops in unnecessary places all over the world.
Really, the end of this scenario will mean rampant inflation and the dollar becoming useless and a return to the gold standard.  Lest anyone think the gold standard was not a good way to value currency, lets remember that gold is close to $1000 and many experts are expecting it to reach $2000 as the dollar keeps losing value.  The gold standard was discarded in favor of the dollar, which of course is great for the United States but terrible for other countries.  It wouldn’t be terrible save for the fact that we are irresponsible and have taken on way too much consumer debt, which of course is not our major problem.  It is instead the government debt used to pay for the entitlement programs which are bankrupting the nation.  It might be too late to save the dollar and I actually opened up my very own gold account in order to start “investing” in the future global currency.  All it takes for us to lose the dollar is China’s current request to open the dollar standard to a basket of currencies including their own yuan which is much better positioned to be the world’s currency.  But again this is not fair to other countries as should China start pursuing an economic policy like ours then we would be the ones asking for the gold standard.  Thus gold which has been the most stable asset in world history is the only fair denomination for global currencies to be hedged against.

I still believe health reform is a necessity and universal health care is one of the only ways to fix our system, but health care is only one of our problems the other ones will need to be solved by fiscal discipline and better use of our entitlement programs.  There is no reason to include private corporations in public utilities.  Similarly there is no reason to bother passing health care legislation if the dollar is devalued.

Sure Mr. Bernanke, the Economy is Fine!

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