Gyroscopic Investing

I don't mean this as a rant or that I'm worried. I'm not concerned personally because I'm smart enough to overcome and succeed in any environment, especially with the PP as my backbone of my financial life. I'm not personally freaking out but I do see things and make observations and from what I'm seeing, 2013 will be the worst year for the country in a really long time.

1) It's the first year where unemployment benefits will be cut back to 6 months from 2 years. As a libertarian I am in favor of this cut, however it's going to hurt a lot of people in the short term.

2) 2% to 10% increased taxes on everyone around the board.

3) People are starting to realize how much of an economically infeasible idea Obamacare is. The CEO of Aetna came out today saying it will cause premiums to double overnight. Speaking as an industry subject matter expert myself, I agree. Bipartisan politics aside, Obamacare is a horrible idea and will cause a dramatic increase in costs to the middle class. By Q3 of 2013 when the reality sets in (of what will happen on Jan 1, 2014), the S will hit the F and the Obamacare debate will reopen from the beginning.

4) The Left Wing has dramatically underestimated how big of a battle Gun Control will be. If the country was divided before, that level of polarization increased substantially over the last 2 weeks. Tens of thousands of people who were politically disinterested are now fired up. Depending on what the government is able to push through with respect to gun control *could* push the country to the brink of a civil/revolutionary war.

I think the Left Wing knows this and won't push that far... but all it will take is a few hundred strong-willed gun owners to assemble, become martyred, and inspire a few thousand gun-owners to take a stand... which will result in Martial Law and spiral into galvanizing even more against the federal government. Ironically, pushing "too restrictive" gun control will cause significantly more violence than a few lunatics shooting up a public place every 6 months. Combined with a poor economy will push more gun owners into the fight.

5) The Fed is pushing us more towards an inflationary spiral that will kick in eventually... there's a possibility of it kicking in during 2013 which would only compound everything else.

6) More people are on the internet and communicating and forming groups (such as this PP forum). 10 years ago that wasn't the case. In 1994 when the first Assault Weapon Ban kicked in, gun-owners were spread apart. Now they are all on gun forums, all talking about preserving the constitution. This is separate bullet point from the "gun control" point above because increased communication doesn't only impact gun control. It also facilitated the Occupy Wallstreet Movement. Essentially, the more stupid shit the government does in 2013 (which is inevitable), the more people will be communicating and banding up against it. This will ultimately lead to further constitutional erosion such as internet kill switches, mandated ISP monitoring and warrantless email seizure.

7) Businesses have no idea what the government is going to do and uncertainty causes businesses to operate suboptimally, which is passed down to society in the form of higher prices, reduced stock returns, and reduced employment.

Summing everything up we have a large number of people who:

• are experiencing economic hardships due to unemployment, rising healthcare costs, rising food costs, rising gas costs
• are increasingly disarmed of firearms rights and unable to defend themselves
• are pissed off at the government for eroding the constitution
• are increasingly able to form groups against what they perceive as tyranny

Meanwhile, Politicians get free tax-payer healthcare, use insider information to beat the market an average of 15% per year, get sweet consulting gigs after their political career as payback for political favors they passed at the expense of taxpayers, are protected by taxpayer paid armed guards 24/7 and can afford to send their kids to schools protected by armed guards 24/7.

I think 2013 is going to be a really bad year but I'll excel as I always do.

Let me play devil's advocate a bit… 

TripleB wrote: 3) People are starting to realize how much of an economically infeasible idea Obamacare is. The CEO of Aetna came out today saying it will cause premiums to double overnight. Speaking as an industry subject matter expert myself, I agree. Bipartisan politics aside, Obamacare is a horrible idea and will cause a dramatic increase in costs to the middle class. By Q3 of 2013 when the reality sets in (of what will happen on Jan 1, 2014), the S will hit the F and the Obamacare debate will reopen from the beginning.

At a certain point, something becomes so expensive that a lot of people will just give up in disgust. If insurance becomes stupidly expensive, a lot of people will go uninsured, pay cash, and accidentally participate in the re-marketization of health care. It's already happening for college degrees. When the government pushes the price up too far, people find cheaper alternatives. It's the market in action.

TripleB wrote: 4) The Left Wing has dramatically underestimated how big of a battle Gun Control will be. If the country was divided before, that level of polarization increased substantially over the last 2 weeks. Tens of thousands of people who were politically disinterested are now fired up. Depending on what the government is able to push through with respect to gun control *could* push the country to the brink of a civil/revolutionary war.

I see no civil war on the horizon. Rather, I see a crushing legislative defeat, followed by regulatory and executive order shenanigans that enrage the vast, underestimated corps of gun owners and results in a backlash against the D's that costs them some seats at the state and local level.

TripleB wrote: 6) More people are on the internet and communicating and forming groups (such as this PP forum). 10 years ago that wasn't the case. In 1994 when the first Assault Weapon Ban kicked in, gun-owners were spread apart. Now they are all on gun forums, all talking about preserving the constitution. This is separate bullet point from the "gun control" point above because increased communication doesn't only impact gun control. It also facilitated the Occupy Wallstreet Movement. Essentially, the more stupid shit the government does in 2013 (which is inevitable), the more people will be communicating and banding up against it. This will ultimately lead to further constitutional erosion such as internet kill switches, mandated ISP monitoring and warrantless email seizure.

It also means people are more aware of stuff like that and will be more able to communicate if the unthinkable happens. In Syria where they shut down the internet, people still use it. I don't see something that crazy happening here, precisely because of the growing voting power of politically-aware internet denizens. What I see is even left-leaning young netizens realizing the uselessness of politicians and their fear and hostility toward one of the greatest pockets of freedom in human history.

TripleB wrote: 6) More people are on the internet and communicating and forming groups (such as this PP forum). 10 years ago that wasn't the case. In 1994 when the first Assault Weapon Ban kicked in, gun-owners were spread apart. Now they are all on gun forums, all talking about preserving the constitution. This is separate bullet point from the "gun control" point above because increased communication doesn't only impact gun control. It also facilitated the Occupy Wallstreet Movement. Essentially, the more stupid shit the government does in 2013 (which is inevitable), the more people will be communicating and banding up against it. This will ultimately lead to further constitutional erosion such as internet kill switches, mandated ISP monitoring and warrantless email seizure.

"Crypto everywhere" is a technological solution to part of this. See e.g. the Cyphernomicon, circa 1994:
http://www.cypherpunks.to/faq/cyphernom ... micon.html

At a certain point, something becomes so expensive that a lot of people will just give up in disgust. If insurance becomes stupidly expensive, a lot of people will go uninsured, pay cash, and accidentally participate in the re-marketization of health care. It's already happening for college degrees. When the government pushes the price up too far, people find cheaper alternatives. It's the market in action.

What will probably happen too is people will just pay cash for the small things and if they get really sick will buy a (probably subsidized) policy on the exchanges (little or no waiting period, none of this stuff about open enrollment only in Novemeber/October and blackout dates for the rest of the year, and no requirement to keep the insurance beyond the month you bought it) and then drop it as soon as they get better. Nice little adverse selction death spiral. It's happening with the Commonwealth Connector under RomneyCare.

I don't think it will be any worse than 2001 (9/11), 2003 (stupid Iraq War II), 2008 (financial crisis), or 2009 (deep recession becoming apparent).

Really bad years tend not to be foreseen.  That's part of what makes them bad.

The country is still pretty shell-shocked from the 2007-2009 recession, and I think it would take a lot to really rattle it.

It's also good to remember that a really bad day in the U.S. is still better than most days in many other parts of the world.

TripleB wrote: 1) It's the first year where unemployment benefits will be cut back to 6 months from 2 years. As a libertarian I am in favor of this cut, however it's going to hurt a lot of people in the short term.

2) 2% to 10% increased taxes on everyone around the board.

I am worried about the general popularity of austerity measures. I am not sure voters fully comprehend how tax increases and spending cuts can hurt an economy that is barely hanging on.

4) The Left Wing has dramatically underestimated how big of a battle Gun Control will be. If the country was divided before, that level of polarization increased substantially over the last 2 weeks. Tens of thousands of people who were politically disinterested are now fired up. Depending on what the government is able to push through with respect to gun control *could* push the country to the brink of a civil/revolutionary war.

I think the Left Wing knows this and won't push that far... but all it will take is a few hundred strong-willed gun owners to assemble, become martyred, and inspire a few thousand gun-owners to take a stand... which will result in Martial Law and spiral into galvanizing even more against the federal government. Ironically, pushing "too restrictive" gun control will cause significantly more violence than a few lunatics shooting up a public place every 6 months. Combined with a poor economy will push more gun owners into the fight.

I don't know a ton about this issue, but surely the gun lobby has defeated these kind of measures in the past without resorting to revolt? They have some great political channels for expressing themselves, such as the entire Republican party and even some Democrats.

5) The Fed is pushing us more towards an inflationary spiral that will kick in eventually... there's a possibility of it kicking in during 2013 which would only compound everything else.

My feeling is the Fed is fully prepared to fight inflation when the time comes. I think rate hikes could kill off a financially based inflation pretty quickly. I see the Fed as controlling the brakes. Right now they have their foot entirely off of the brakes and the economy still isn't moving, but the brakes (rate hikes) would slow down an overheating economy. I am going to wager that next years inflation will run under 4%  Let me know if you want to take the other side!

I'm with MT.  If we can avoid some stupid and unnecessary war that costs us several trillion dollars over a decade and thousands of our best and brightest, then I'll consider 2013 an improvement over 2003.

Having said that, I don't think it's all that inconceivable that our moronic leaders could push us, and by extension the global market, back into a major recession with their shenanigans.

As for the 2nd amendment advocacy having other means besides revolt to address concerns...every strategy stops working eventually.  If the founders thought democratic action would be sufficient to preserve freedom indefinitely, the 2nd amendment wouldn't exist in the first place.

Only in decadence and complacency lies danger. When the mood is bad, usually bright times lie ahead.

As the energy challenge is developing well with shale oil, new methods for natural gas, cheap wind and solar power, a lot of pressure will be lifted from the economy in the coming years.

Furthermore, new break-throughs in flexible automation, flexible robotics and intelligent software (weak AI) are currently unfolding, with enormous potential to immensely increase productivity. This technology will be the kernel of the upcoming next Kondratieff cycle.

There is only one big problem: human labor is rapidly becoming obsolete and societies are not yet able to cope with the cultural shock and resulting imbalances because of insufficiently effective redistribution of resources. Let's see how that will work out.

My best guess for the big nation to get into really nasty troubles first because of this underlying reason is ... France!

dkalder wrote: There is only one big problem: human labor is rapidly becoming obsolete and societies are not yet able to cope with the cultural shock and resulting imbalances because of insufficiently effective redistribution of resources. Let's see how that will work out.

I find it fascinating that where the great innovations in earlier times were in time saving devices and tools, many of our innovations today are in new and interesting ways of wasting time (Facebook, Twitter and Angry Birds-type video games are a few that come to mind).

OK, a non-US point of vue on Obamacare (what we know of it here, at least). One of the things we have in France and wouldn't like to give up is our mandatory health insurance. You can't avoid it, any revenue is taxed to finance it. The more you earn, the more you pay. Sick people dont' pay more than healthy ones. Sure, it's quite expensive when you think of it, and it's far from perfect, but that means nobody in France dies of an illness that he didn't have the money to cure. That's huge. I don't understand how a rich & civilized country can fail to have such a system, not even mentioning fighting it once a small part of it is set up.

dkalder wrote: There is only one big problem: human labor is rapidly becoming obsolete and societies are not yet able to cope with the cultural shock and resulting imbalances because of insufficiently effective redistribution of resources. Let's see how that will work out.

My best guess for the big nation to get into really nasty troubles first because of this underlying reason is ... France!

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I'm not sure I understand why. Could you explain plz ?

TripleB wrote: 3) People are starting to realize how much of an economically infeasible idea Obamacare is. The CEO of Aetna came out today saying it will cause premiums to double overnight. Speaking as an industry subject matter expert myself, I agree. Bipartisan politics aside, Obamacare is a horrible idea and will cause a dramatic increase in costs to the middle class. By Q3 of 2013 when the reality sets in (of what will happen on Jan 1, 2014), the S will hit the F and the Obamacare debate will reopen from the beginning.

What exactly in it is a horrible idea that will specifically cause premiums to double overnight?

TripleB wrote: 4) The Left Wing has dramatically underestimated how big of a battle Gun Control will be. If the country was divided before, that level of polarization increased substantially over the last 2 weeks. Tens of thousands of people who were politically disinterested are now fired up. Depending on what the government is able to push through with respect to gun control *could* push the country to the brink of a civil/revolutionary war.

Doom porn.

TripleB wrote: 5) The Fed is pushing us more towards an inflationary spiral that will kick in eventually... there's a possibility of it kicking in during 2013 which would only compound everything else.

I give it .01% chance.  Inflation kicking in would require an economic recovery and I don't see one happening since we're already in another recession.

MediumTex wrote: I find it fascinating that where the great innovations in earlier times were in time saving devices and tools, many of our innovations today are in new and interesting ways of wasting time (Facebook, Twitter and Angry Birds-type video games are a few that come to mind).

I'm reminded of this cartoon by Stuart McMillen that was inspired by Neil Postman's book Amusing Ourselves to Death:

http://dont-tread-on.me/?p=2951

MediumTex wrote:I find it fascinating that where the great innovations in earlier times were in time saving devices and tools, many of our innovations today are in new and interesting ways of wasting time (Facebook, Twitter and Angry Birds-type video games are a few that come to mind).

Of course the former paved the way for the latter. 

I don't remember where I heard/read this, but labor-saving devices (washing machines, tractors, etc.) were not invented for the rich.  They already had labor-saving devices (slaves, servants, etc.).  Labor-saving machines were invented for the poor and middle class.

I totally understand where you are coming from. All I can say is, reality can be challenging, but how we handle it can make it worse (or better).

I wrote an article ages ago on stress reduction i.e. different pieces of music, self help acupressure and certain kinds of mini meditation which might be of help.  It is posted in the other discussion section with the word stress in it and I bumped it somewhat recently.

As to the rest, the people get the gov't they vote for.  Perhaps if they have to face the consequences of their choices they will stop doing retarded things (or at least I can hope so).

MachineGhost wrote:

TripleB wrote: 3) People are starting to realize how much of an economically infeasible idea Obamacare is. The CEO of Aetna came out today saying it will cause premiums to double overnight. Speaking as an industry subject matter expert myself, I agree. Bipartisan politics aside, Obamacare is a horrible idea and will cause a dramatic increase in costs to the middle class. By Q3 of 2013 when the reality sets in (of what will happen on Jan 1, 2014), the S will hit the F and the Obamacare debate will reopen from the beginning.

What exactly in it is a horrible idea that will specifically cause premiums to double overnight?

Most specifically, and I'm going to paraphrase from memory since I don't recall exact specifics:

No health insurance company can deny a person coverage.

No health insurance company can charge more than 3x the rate between the sickest person and the healthiest person.

All pre-existing conditions must be covered.

In essence, one could walk around uninsured until they find out they have a very expensive cancer that costs $500k to treat. Immediately apply for and receive insurance. Make the first monthly payment, receive $500k in treatment, discontinue insurance (or not, at that point it doesn't matter because the insurance company can only charge this person 3x more than the healthiest person and relative to a $500k expense, it's going to be  a huge loss).

Additionally, because of Obamacare, more people will be insured (because people who never wanted insurance will be required to carry insurance and because very sick people who couldn't afford insurance before will now be able to purchase it).

Simultaneously, [the fed gov through CMS pays for 55% of all healthcare payments in the US through Medicare and Medicaid] CMS is reducing payments to providers in order to "balance the budget." This has caused many hospitals to scale back services providers, many private practices to discontinue seeing Medicare/Medicaid patients, many older doctors to retire early.

So we have more people using healthcare (greater demand) and less providers offering healthcare (less supply).

Meanwhile, since people are required to carry health insurance [inelastic demand], the insurance companies are free to raise rates. One might argue, "in a free market so if a single company decides not to raise rates, it will get more consumers and thus drive the cost down... just because people are required to buy it doesn't mean insurance companies can charge whatever they want."

However, as mentioned above, insurance companies can only charge the sickest person 3x what they charge the healthiest person. The average "sickest" person probably will require $100k in medical bills per year for the rest of their life. The healthiest person would have be charged $33k per year and use $0 in healthcare each year, under this rule.

The insurance cos are left with two options:

1) Lose money on the sickest patients and declare bankruptcy.

2) Raise rates on the healthiest patients so considering the 3x multiplier, they are still making their meager 2% profit.

Thus, insurance costs WILL double in 2014. Since most insurance is employer-provided, employers will have to reduce wages in order to pay for higher benefit costs. Considering the recession that's been kept alive due to continued government meddling, this is not going to play out well.

There's numerous other smaller factors at play as well such as cost-shifting between CMS and private insurers which occurs when hospitals lose money on CMS claims and thus have to raise rates on private payors... which gets passed down through higher insurance premiums.

Another smaller factor is increased use of electronic medical records which allows/facilitates higher billing rates for the same procedure due to enhanced documentation. Most hospital visits/emergency department visits are based on a Level of Service charge that is calculated based on documentation. i.e. the Nurse performed 4 patient assessments as documented in the charge, so the LOS charge is $X. Previously on paper charting, these LOS charges were artificially low because nurses weren't incented to document and it was more complicated. Now it's just a few mouse clicks away and Nurse Managers can easily track metrics of nurses, querying average LOS per nurse. Government incentive funding for EMRs were a part of Obamacare.

Speaking as a quasi-industry expert, I can say with 100% certainty that as written, this is going to be a huge disaster and I'm in the majority of healthcare industry people who feel this way. This excludes the healthcare industries that will benefit from Obamacare because they know it's going to be a disaster but are thrilled because it means a huge profit.

flyingpylon wrote:

MediumTex wrote: I find it fascinating that where the great innovations in earlier times were in time saving devices and tools, many of our innovations today are in new and interesting ways of wasting time (Facebook, Twitter and Angry Birds-type video games are a few that come to mind).

I'm reminded of this cartoon by Stuart McMillen that was inspired by Neil Postman's book Amusing Ourselves to Death:

http://dont-tread-on.me/?p=2951

as was a fine Roger Waters album. At least, that's what he said in an interview last year, and the title is very similar: Amused to Death.

TripleB wrote: All pre-existing conditions must be covered.

In essence, one could walk around uninsured until they find out they have a very expensive cancer that costs $500k to treat. Immediately apply for and receive insurance. Make the first monthly payment, receive $500k in treatment, discontinue insurance (or not, at that point it doesn't matter because the insurance company can only charge this person 3x more than the healthiest person and relative to a $500k expense, it's going to be  a huge loss).

I find it very interesting that when it comes to the flood insurance program which is run by the government, not only can't you buy a policy after your house has already flooded but even after you buy it, you're not covered if  there is a flood within 30 days of the first payment. Seems to me what's good for the goose ought to also be good for the gander and I should be allowed to wait until my house gets flooded before I buy the insurance.

Obamacare will do for employer-provided health coverage what ERISA did for employer-provided defined benefit pension plans.

The politicians won't tell you this because they don't understand it, but from my perspective it is painfully obvious.

MediumTex wrote: Obamacare will do for employer-provided health coverage what ERISA did for employer-provided defined benefit pension plans.

The politicians won't tell you this because they don't understand it, but from my perspective it is painfully obvious.

Isn't that kind of a blessing in disguise? Employer-sponsored health coverage is a big thing tying people to their jobs and keeping them working for firms they don't care for. Then again, I guess you could say the same for pensions, and in practice 401(k)s haven't exactly been the panacea they were billed as.

notsheigetz wrote:Seems to me what's good for the goose ought to also be good for the gander and I should be allowed to wait until my house gets flooded before I buy the insurance.

I think the provisions to force insurance pools to accept last minute applicants is designed to drive up costs to wipe out private insurers. Then they can blame the "failure of the markets to deliver affordable health care." Ultimately, it will enable the emergence of a single payer health care system which is the ultimate end-goal in all of this.

craigr wrote: I think the provisions to force insurance pools to accept last minute applicants is designed to drive up costs to wipe out private insurers. Then they can blame the "failure of the markets to deliver affordable health care." Ultimately, it will enable the emergence of a single payer health care system which is the ultimate end-goal in all of this.

+1  Majority of the public would not support this directly so this is how they will do it.

Benko wrote: +1  Majority of the public would not support this directly so this is how they will do it.

Not so sure about that since the last election. I tend to think that at least 51 percent of American voters probably like the idea of "single payer" when it comes to health care as long as the single payer isn't them.

craigr wrote:

notsheigetz wrote:Seems to me what's good for the goose ought to also be good for the gander and I should be allowed to wait until my house gets flooded before I buy the insurance.

I think the provisions to force insurance pools to accept last minute applicants is designed to drive up costs to wipe out private insurers. Then they can blame the "failure of the markets to deliver affordable health care." Ultimately, it will enable the emergence of a single payer health care system which is the ultimate end-goal in all of this.

Agreed 100%. I hope this is what Obama is thinking because it means he won't go so hard on Gun Control in 2013. If he pushes too hard, the Dems will be voted out in 2014/2016 en masse.

By 2016 we'll realize Obamacare is unfeasible, and if the Dems are in power, they can blame it on the free market and start shifting to Single Payor, but if the Repubs are in power, they will scrap the whole thing and go back to what it was before Obama.

MediumTex wrote: Obamacare will do for employer-provided health coverage what ERISA did for employer-provided defined benefit pension plans.

The politicians won't tell you this because they don't understand it, but from my perspective it is painfully obvious.

As an employer, I agree with this completely.  We are bracing for Obamacare as it will radically change our cashflow, and ultimately cause us to drop health coverage for our managers which we currently cover.

TripleB, your last few threads have been 100% doom and gloom "the world is ending."  You should probably reign it in a bit.  Nothing is ever as bad (or good) as it seems in the moment.