To hear Congress and the White House suggest if their plans had been in place before the current financial crisis started things would have been different is interesting. That's rich to say the very least. What model is the government going to use to just walk into a bank and begin dismantling machines and removing furniture? If there is someone on Capitol Hill that knows the exact point where risk-taking becomes too detrimental then that person is wasting a multi-billion dollar talent. This is a plain old fashioned power grab not unlike a soviet-style invasion of Baltic States and rock strewed countries. There are some things that make sense, like capital ratios and excessive leverage, but the idea of lawmakers as the watchdogs is farfetched anyway you slice it.
If an institution is too big to fail then it must be too big to exist, so I would guess antitrust laws would apply. But, what we are seeing is the notion that success is a bad thing and should be greeted with the ability for government to make things right. A company must understand that if it runs off we'll take the wreckage, allow rivals to salvage working parts, and bury the rest. It was interesting listening to Treasury Secretary Geithner brag about renewed confidence visa vie a year ago, but also attempt to sell the notion that confidence returning is contingent upon whirlwind financial regulatory reform. That's talking out of both sides of your mouth. By the way, confidence numbers are dropping like a rock. The exchange between Geithner and Congressman Kevin Brady (R-TX) was especially entertaining and revealing. When the Treasury Secretary tried to blame the guys in the last administration he had to be reminded of his last job.
I was struck when the testimony began yesterday how much the Treasury Secretary looked like the guy from the movie "Eraserhead"...I think it's his new game face. That new face, by the way, turned beet-red when Congressman Brady began talking about firing the Treasury Secretary. When there is talk of gains being "more broadly shared' I got red-faced. When I heard "just and necessary" more than once it lost the feeling of compassion and empathy and became a bumper sticker for the goal of spreading the wealth. It's all about controlling the economy through key industries including health, energy, and finance. It's very transparent, and really despicable. Over pounding the easy target in the room doesn't make me feel better, it makes me feel more vulnerable. The priorities are backward. There should be a mantra in the administration that goes something like this..."jobs, jobs and more jobs."
I've never watched the movie but from what I've read the movie "Eraserhead" is some kind of disgusting version of an urban decay show as a surreal art film. Well in many ways what's going on with our nation is surreal. Of course, there is a big jobs summit around the corner so help is on the way, who knows maybe Geithner will get frustrated enough to call it a day in time for the avalanche in jobs.
Healthcare Bill Update
Tweaks made to the Senate Finance Committee's bills were designed to appease unions and Democrats and drill deeper (literally and figuratively) into the rich. Still, the plot continues to thicken, and this thing will come down to the wire. In the House today, a 1.2% pay hike was passed for doctors that take Medicare payments. The new payment could kick in next year if the Senate passes the bill, which is unlikely. If you wondered why the AMA backed the healthcare bill perhaps it had something to do with the fact there was a scheduled 21.0% pay cut in the cards for these same doctors. What a massive shift in fortunes. In the meantime, the change is going to cost $210.0 billion over ten years...but it's not included as an official cost of healthcare reform. And, then, there's the assumption costs can be pulled out of Medicare which kicked off with the promise of a $65.0 million maximum annual tab. The tab is north of $400.0 billion, and counting.
- This bill will punish doctors that seek too many second opinions or ask for testing of patients. The plan kicks in for 2014, but the taxes begin immediately.
- The real tab is $2.0 trillion since this ten year plan is really a five year execution.
- The rich, or so-called rich, are going to be crushed but small businesses will be crushed even more.
- By the time the plan goes into effect there will be millions more uninsured as many businesses will sit on the sidelines.
- Many younger people will only buy insurance when they get sick, and the years they aren't paying will have to be paid by someone else.
- In the end, however, the most alarming aspect of this bill is the cost which will be more than the $2.0 trillion mentioned above.
- The bill tackles two birds with one stone, punishing those that have the audacity to work to be more than average and ropes more people into indentured servant status with the government.
The Welfare State is taking shape right now and it includes unlimited unemployment benefits (look for another extension any day now). The government will pay your rent, energy bills, and take care of your health and all you have to do is keep voting Democrat. The plan has worked like a charm in (most of) the black community where people have been made to feel grateful for the crumbs they are given in exchange not only for their votes but for their silence. Their dreams are limited, their confidence confined to physical endeavors, their mindset wrapped around the notion they are entitled to the basics (but feel better when there is higher minimum wage action).
Color on Dell Earnings Bomb
The now number three computer company, behind Hewlett Packard (HPQ) and Acer, reported a bomb of a quarter after the close of trading yesterday. Sales missed consensus by a wide margin, and earnings per share, despite increased cost cutting, missed sell-side analyst modeling. Although CEO Michael Dell noted improving demand for its products, it will be hard to convince investors to buy the stock on weakness in the near-term given the array of fundamental challenges that lay ahead.
