Single Payer

A lot of Democrats want to move to a single payer system. My guess is that eventually we will. But there will be consequences. Here is one consequence from England:

Hip replacements, cataract surgery and tonsil removal are among operations now being rationed in a bid to save the NHS money. ... Examples of the rationing now being used include:

* Hip and knee replacements only being allowed where patients are in severe pain. Overweight patients will be made to lose weight before being considered for an operation. 

* Cataract operations being withheld from patients until their sight problems "substantially" affect their ability to work.

Why Is Our Health Care A Mess? All goods have to be rationed in some way. In a free market system the rationing is based on price. If you cannot afford a product you do not buy it. Most people are uncomfortable with this in the medical field. But our current system is not working precisely because health care is not rationed in America. Yes, we have copay and yearly deductible, but for many people they end up "eating" all the health care they can, because they are not paying the cost. (This is why I should not go to a buffet.)

No doubt you are expecting me to rail and rant about how awful rationing is, but it seems to me it is just necessary. If price rationing is off the table, and let’s face it, it is, then you have to ration in some other way, or eventually the whole system collapses. Since we do not ration either by price or waiting in line, we are proving this today—the main reason the government is falling apart is health care. The Government pays for over 50% of all medical bills; 25% of all government spending is health care. (This does not include VA hospitals.) Unless we adopt either a single payer system with long lines for treatment, and death panels, or adopt a free market approach, we will collapse. The middle ground we are on is actually worse than either of these options.

Keynes on the Gold Standard

It would be hard for anyone to be more wrong. When we said this gold was at £5 for one ounce, today, and the day is just begining, it is over £1,000. 

Fiat money always fails, always. For those of you that did not see this, here is a defense of the gold standard I shared two weeks ago

Financial Newsletters

I get a number of "hard money" newsletters. Most of them are free. They, of course, want me to also subscribe to their paid newsletters. Usually I do not.

One paid newsletter I do get is The Sovereign Individual. I will not be renewing. (I subscribed because I wanted a "free book" that came with the subscription.) The reason I will not renew is that if they really could predict which stocks to buy they would not need my subscription money. They would already be wealthy and retired on the French Riviera, or wherever hard money newsletter writers go when they retire. Here is their profound advice for which I paid the "greatly discounted" price of $50:

Imagine owning McDonald's as it joined the New York Stock Exchange in 1965 and was on the frontier of fast food convenience. A $2,250 investment in 100 shares at that time would today be 74,360 shares worth nearly $5.9 million. 

Wow. This is true of course, but is it relevant to their investment advice? Or maybe if you had bought 100 shares of Apple in the late 90's when it was $5, today that $500 investment would today be $40,000! They continue:

These kinds of opportunity await investors in the frontier. Any one of the names inside Mark's frontier portfolio could be the next McDonald's, 

Of course you could have invested in Control Data, MCI, Global Crossing or maybe Enron. These kind of companies are probably also in Mark's portfolio. Can an individual investor pick individual stocks and beat the market? I doubt it. 

What is the best investment advice? I discussed this in an early blog post, Golden Dreams. 

Get out of debt. Have a 6 month cash reserve. Until you have done this you should not invest. This might mean you need to rent your home instead of buying it. The Real Estate crash is not over quite yet. 

Build Your Own Toaster?

We are very dependent on society, we could not survive independently. 

Will the Markets Collapse?

We are headed for a crisis. Readers of this blog know I am optimistic. We can trust our leaders to do the right thing and tell us the truth: 

On March 29, when speculation swirled that Portugal needed a bailout, Prime Minister Jose Socrates denied — again — that that would happen despite clearly unsustainable market pressures.

“I’m sick of saying we won’t” be requesting help, he told journalists.

Just eight days later, in a chastened appearance on national television, Socrates did just that.

For Jean-Claude Juncker, the prime minister of Luxembourg, the threat of immediate market turbulence means the usual norms of transparency don’t apply.

“When it becomes serious, you have to lie,” Juncker, who as the chairman of the regular meetings of eurozone finance ministers is one of the currency union’s key spokesmen, said in recent remarks.

There is an old cliché from the era were currencies had a fixed value. It is called lying like a finance minister before a devaluation. Can we trust anything that any politician says?-maybe a few here and there. Juncker told the truth in this quote when he admitted he would lie. I suppose he could be lying when he tells us he lies, like that old Star trek episode with the androids.

If you want to know why no one is hiring, consider the risks associated with investing right now. You cannot trust anything that anyone says. I began the crisis with 16 employees. Now I have 8. I have zero plans to hire anyone. Far more likely is that I will let more go, maybe doing their jobs myself. 

Like the Androids in the Star Trek episode, the logic of lying leads to shutdown. There is a lot of trust inherent in the market place. If we enter an era without trust the markets will stop. 

This is the risk in our current situation, if no one can trust the markets, no one will trade. And if no one will trade then the whole edifice collapses. This is not what I expect to happen but it could.