Tag Archives: profits

Socialized Heathcare… Do we want this?

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First Step: Watch this video on Canadian Healthcare

Did you watch the video?  I would embed it so you can watch it here, but it seems that due to technological limitations (or decisions) that isn’t going to happen.  And no I’ve decided against figuring out how to circumvent such actions.  So, click the link already.  It is only 20 minutes out of your life to watch a humorous yet somewhat painful video on the realization of socialized health care.  Don’t believe me then click the link.

Obama Plan: How do we pay for it?

You may be wondering what my take on the Obama plan is.  Well, firstly I want to know how we are going to pay for it.  Really, Social Security is going in the red, and so is Medicare.  Last I check in the red means that it isn’t profitable, and also means that there is no money to fund it.  Tax reciepts are down significantly, not to mention State Tax receipts.

So, the “income” that the Federal Governement receives is down.  Remember that the government doesn’t actually make or produce anything and is soley funded by us the taxpayer.  So, to pay for this we are going to go further in the red.  We already have a trillion plus deficit for 2009, which means borrowing or printing substantial sums of money.

While Univeral Health Care sounds wonderful, but again to pay for it we have to get the money from somewhere.  That somewhere is from the “rich”.  Maybe you feel entitled to health care, maybe not.  Essentially what is going to happen is that money will be siphoned from those with high incomes to subsidize the plans.  This is a blatant transfer of wealth, which is what the government does.

At what point do high income earners decide that enough is enough and decide to earn less?  If I were taxed at say 60%, which means I get to keep 40% of my income my incentive to earn more declines.

Rationing: Supply and Demand

Here is where socialized health care gets interesting.  Let’s say there is $100 billion dollars allocated to public health care per year.  For the moment don’t worry about the exact sums of money as this is an example.

With that $100b services can be provided up to that point.  Once that point is reached or even if we start to near that point where if anything else is spent then the program is in the red.  How might the administrators prevent that from happening?

1) You have to wait in line for your turn… these lines could get really long

2) Deny you service… bummer looks like you don’t get that MRI

3) Rationing, where there is a limited number of services available

So, in a perfect world we would all be healthy, and have 100% health care.  As much as I’d like that to be a reality we have to be realistic.  The only thing we get for free is the air we breath.  Anything else requires work, which then can be exchanged for a good or service.  I’m not saying our present system is perfect, by no means, but I don’t think this is the way.

Overextended…

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… is exactly where the market was back in March when the S&P 500 hit 666.  Everyone thought the world was coming unhinged, and well it was and still is.  However, not everything comes tumbling down instantly.

With every play there are acts, and at some point the climax.  Without the climax how can we have resolution?  They are conditions dependant upon eachother unless we are speaking of the experimental genre.  With our money supply and government expendatures into the stratosphere we may be in the experimental, however let’s stick to the traditional for our discussion.

As this drama plays out I think we will have the main plot divided by smaller and yet smaller sub-plots each with their own climax and resolution.

While the market tops and is due for a correction we are jumping for joy at watching green shoots emerge from the abyss.  The media and figureheads talk about these shoots sprouting from here and there, but I don’t seem them.  Withered shoots perhaps.

Let’s introduce the buildup to the climax, and considering the climax euphoric the buildup sets the stage for euphoria.  In our case hope.  Beyond oversold conditions that we reaached in March we also had hit a stage of dénouement (catastrophy). However, this was only a subplot as if it had been the true bottom we would not have seen a short rebound in prices that have taken us up over 35%.  We needed complete disgust with the markets and an unwillingness to jump back in, which we didn’t see.

Instead will we go from Climax (the present) to catastrophe and back again I imagine a few more times before this is over.  We are fairily resiliant beings and can stand being pushed, pulled, and battered a bit before we completely throw in the towel.

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We are now starting a push into anxiety as the green shoot euphoria wears off.

Where are we going?
If the past is able to predicate the future, and if we are playing out subplots within the overall plot that leaves us with a theme of euphoria, despondency, optimisim and so on.  With despondency we will need to see disguist, lack of conviction in the government, and a swearing off the the financial markets. We aren’t even close.
Meanwhile as we go through these girations, while the Alt-A mortgages readjust, and commercial real estate weakens I’m expecting to see price fluxuations, and gyrations that flow with human emotion.  After all with so many players the markets are more emotion driven than anything else.

If the markets weren’t emotion driven then how can we explain people buying equities when the P/E ratio of the S&P500 is over 100, or how technical traders use patterns to profit?  After all we humans tend to do the same thing over and over again.  History repeats whether we like it or not.  The Romans clipped gold coins to fund increasing government expenditures, and in the modern era we print. Nothing has changed except the means in which it is accomplished with the same outcome.

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Short-Term:
A recovery in the dollar based on nothing more than everyone else is hurting perhaps worse than us, and it is very oversold.  Bernake and co might pull-in some liquidity to lessen foreigner’s fear of a devaluing dollar to support our debt markets.  This however, will undoubetly cause a collapse in the equity markets, commodities, and precious metals, while the dollar will rally as will bonds.

Winners: The US Dollar, Bonds
Losers: Everything else — Note: I’m cautious in shorting commodities due to when the next scenario will hit.

Intermediate-Term:
As liquidity is reduced Bernake will realize if he hasn’t already that there is no way out and that we will never be able to repay our debt.  The only way out will be a default via inflation, but that will prove futile once inflation hits 20%.  Wages will not rise and people will protest.  A depression will follow.

Winners: Precious Metals, Raw Commodities, Real Estate
Losers: Everything else

Longer-Term:
We will survive, and I hope we will change our ways to more responsible Americans.  The case for responsibility is huge as it has gone by the way side.  Instead of takeing care of ourselves, we look to others to make our decisions, pay for our health-care, take care of us in retirement, and essentially wipe our asses.  Fiscal responsibility needs… needs to happen.  No longer can we live off of debt that has we have no way of repaying.  I’m sorry, but a hummer purchased via your HELOC adds no value to your income.  Hence it is a poor investment and you must increase your earnings in other areas (no, housing doesn’t go up forever).
And here is our reset.  The New American emerging from the ashes. This is a ways out in time so we will revisit it as the cycle ticks on.

Why America Rocks!

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Many of us worry about our own personal bubble or world within.  We sometimes forget that we are part of a larger system.  No, I’m not talking about anything spiritual or religious, but a system as a whole… The Earth is a system and for everything on Earth to function there are interdependencies.  Those interdependencies begin to break-down when a system fails or is interrupted.  

For example: When people feel scared or helpless they look towards authority for the answers.  Folks, the answer is within yourself and everyone around you.  Why not talk to the person next to you at the street crossing, in line, on the bus, airplane, or train?  

CarrotMob came up with an idea that coordinates a group to make a difference or change.  I like the idea of giving a business, customers, in exchange for something.  In this instance it is a ton of customers for 22% of profits to go towards improving energy efficiency of the store.

Say on a normal day you pull in $2000.00, but on the day CarrotMob comes around you pull in $9000.00.  Okay so now you are taking 22% of your profits and putting them towards a long-term energy conservation program that is directly benefiting you the store.  

Let’s have some fun with numbers (these are only an example to illustrate a point):

Normal Day:
Sales: 2000.00 @ 25% profit margin = $500.00 Gross Profit

CarrotMob Day!
Sales: 9000.00 @ 25% profit margin = $2250.00 profit – 22% = $495.00
           == Gross Profit $1755 

Whoa!  Even after giving away 22% of profits they still made more in that one day than a normal day and they now have long-term energy savings.

Now, watch the video…


Carrotmob Makes It Rain from carrotmob on Vimeo.

 

Crazy right?  NO 
I think we have forgotten, but are starting to wake-up that as a group of individuals we have the ability to do anything. 

Let’s now take this to a bigger scale as CarrotMob does at the end of the video.  What if a hundred thousand people went to a solar manufacturer and said hey we all want solar for our houses.  If we guarantee 100,000 orders will you give us a discount?

This isn’t a new idea… collective pooling of money to make purchases.  However, what makes me excited is that this isn’t a Business – Business transaction, but a Group – Business transaction.  Sure there are more complexities involved when you are dealing with 100,000 orders versus a bunch of orders for one company, but it is possible.  

We are a nation founded on thinking outside the box to come up with innovative and new ideas.  The energy crisis that we are and will be facing isn’t outside the grasp of an entrepreneur.  Unfortunately there is a big BUT here…

What motivates an entrepreneur? :: wealth
What inhibits an entrepreneur? :: regulations and taxes

You say that regulations are necessary… perhaps, but what happens when there is a corn subsidy or ethanol subsidy?  – Money that may have gone towards an innovative idea is redirected towards corn and ethanol, which may not be the best solution.  I don’t know about you, but I highly doubt a few individuals are capable of deciding what is for the greater good, using public money.  There are unforeseen consequences of such actions.  

It is what we don’t see that concerns me.  What could be manufactured instead of ethanol plants?  We may never know to the full extent because the path of least resistance leads companies to produce ethanol.  If I’m guaranteed certain monies from the gov’t, if I do this (the entrepreneurial idea with no subsidy) or that (governmental idea with subsidy), of course I’ll do that because it is easier and has an implicit profit regardless of the profitability of the company. 

In looking at the present bailout package… my concern is what we are missing and not seeing.  If this package or a variation thereof passes what could that money have been used for?  $700 bn dollars is a lot of money.  We are going to be over a trillion dollars in debt after it is passed and that is only for THIS year.  

The bankers and government officials “employed” by the bankers don’t want you nor I to truly understand how the present system works.  Just take a look at my previous post.  

In conclusion I hope that you realize that as a group of individuals we can do anything.  Fear will keep us paralyzed, major traumatic events allow the Constitution to be thrown out the window, and the media feeds us a story they want us to believe.  We are a nation of entrepreneurs! You have a choice.