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Sympathy For The Devil?

Trouble in paradise for the bankers
Friday, May 5, 2017, 2:32 PM

In our recent report, Banks Are Evil, we pulled no punches in making the accusation that the financial system is the root cause of injustice in today's society.

It's a good blood-boiler. You should read it if you haven't already.

Its main premise is this:

In my opinion, it's long past time we be brutally honest about the banks. Their influence and reach has metastasized to the point where we now live under a captive system. From our retirement accounts, to our homes, to the laws we live under -- the banks control it all. And they run the system for their benefit, not ours.

While the banks spent much of the past century consolidating their power, the repeal of the Glass-Steagall Act in 1999 emboldened them to accelerate their efforts. Since then, the key trends in the financial industry have been to dismantle regulation and defang those responsible for enforcing it, to manipulate market prices (an ambition tremendously helped by the rise of high-frequency trading algorithms), and to push downside risk onto "muppets" and taxpayers.

Oh, and of course, this hasn't hurt either: having the ability to print up trillions in thin-air money and then get first-at-the-trough access to it. Don't forget, the Federal Reserve is made up of and run by -- drum roll, please -- the banks.

With their first-in-line access to this money tsunami, as well as their stranglehold on the financial system that it all runs through, the banks are like a parasite feasting from a gusher on the mother-lode artery.

It should come as little surprise that, with all this advantage they've amassed, the banks have enriched themselves and their cronies spectacularly. They have made themselves too big to fail, and too big to jail. Remember that their reckless greed caused the 2008 financial crisis, and yet, in 2009, not only did bankers avoid criminal prosecutions, not only did the banks receive hundreds of billions in government bailouts, but they paid themselves record bonuses?

And the bonanza continues unabated today. By being able to borrow capital for essentially free today from the Fed, the banks simply lever that money up and buy Treasurys. Voila! Risk-free profits. That giveaway has been going on for years.

Couple that with the banks' ability to push market prices around using their wide arsenal of unfair tactics -- frontrunning, HFT spoofing and quote stuffing, stop-running, insider knowledge, collusion, etc -- the list is long. James Howard Kunstler is dead on: we don't have a free market anymore. Instead, we have rackets, run by racketeers. The rest of us are simply suckers to be fleeced.

But all is not roses if you're a banker these days. Even within the evil machine, there is great disparity in how the plunder is being divided.

Bad Times For Bankers?

A guy I've known since childhood works on the 'sell side' (investment/commercial banking, stock brokers, market makers) and has been telling me how cutthroat things have become over the past few years. The pay structure and job security have deteriorated notably. And he says the same is true for many of his colleagues on the 'buy side' (hedge funds, asset managers, institutional investors), too.

Really?

Even with enjoying the "unabated bonanza" described above, even with the markets back partying at all time highs, things are getting worse for many bankers?

Yes.

And while I personally can't conjure any sense of empathy for these poor devils, it looks like things are going to get even harder for them.

So what's going on here?

Well, it's mostly a story of the banking system's plundering ways coming back to bite it.

Capital Is Fleeing From Active To Passive Funds

First off, by flooding world markets with over $12 Trillion since the Great Recession, the central banks have pretty much destroyed "alpha".

Alpha is the "excess return" that fund managers' fees are based on -- i.e., "you're paying more for a smart guy like me to 'beat the market'". But when a tsunami of liquidity rises all boats at once, it's that money flood (i.e. the central bank money printing) that drives valuations. And its influence is so much larger than any other factor that it's really the only factor that matters. Great and crappy companies alike rise in price -- the "fundamentals" that fund managers use in their analysis become useless.

Which is why 66% of large-cap active managers failed to top the S&P 500 in 2016, and why 90% missed their benchmarks over the past 15-year period.

So it's no wonder that investment capital is fleeing from actively-managed funds to passively-managed ones. If the passive funds have much lower fees AND they perform better than the actively managed ones, why the heck shouldn't money flow into them?

Per CNBC:

A buoyant start to the stock market in 2017 couldn't stop investors from ditching actively managed funds.

The trickle away from stock pickers and toward indexes has turned into a flood, with more than half a trillion dollars heading into passive funds over the past 12 months, according to Morningstar.

Active management in total saw $13.6 billion in outflows for January, mitigated only by net inflows to bond funds, Morningstar said. U.S. equity saw $20.8 billion in outflows, bringing passive management closer to parity when it comes to domestic stock funds.

By contrast, passive management saw just shy of $77 billion in inflows. U.S. equity funds, which track broad indexes like the S&P 500 and its sectors and subsectors, pulled in $30.6 billion for the month.

Overall, actively managed U.S. equity funds now hold $3.6 trillion in assets while their passive counterparts hold nearly $3.1 trillion. All classes of passive funds have seen inflows of $563 billion over the past year, while active funds have suffered $325.6 billion in outflows.

"The massive exodus from actively managed U.S.-equity funds continued in January," Alina Lamy, Morningstar's senior analyst for quantitative research, said in a statement. "The tidal wave is showing no signs of stopping, threatening all but a select few and making active investing a dangerous ocean to swim in."

The result of this is tremendous mounting pressure for active managers to reduce their fees. Lower fees being charged on shrunken fund pools obviously affords fewer asset managers, who in many cases are now working for less compensation.

Keep in mind, between just the ECB and the DOJ, nearly $200 Billion of additional liquidity has been -- and continues to be -- injected into world markets each month(!). So, as the above article says, don't expect the tidal wave of capital fleeing actively-managed funds to stop while the central banks' liquidity spigots are still flowing.

The White-Collar Cost Of Automation

Finance was one of the first industries to embrace the automation boom, given the obscene profits that could be made. In his book Flash Boys, Michael Lewis described how the arms race of high frequency algorithms literally changed the game in terms of how financial instruments are traded -- and made $billions upon $billions of unfair profits for the big banks that invested in the technology.

Well, many of the bankers who cheered the boost the machines gave to their annual bonuses aren't cheering so much now. You know what algo-driven markets don't need? Human traders.

Below is photo of the UBS trading floor from 8 years ago, contrasted with one from this year (source: Zero Hedge):

8 Years Ago

UBS trading floor 2009

Now

UBS trading floor 2017

Per the Wall Street Journal:

Technology is replacing people on trading floors and in the middle and back offices where trades are checked, confirmed and settled. Some of this is to give investors an edge in markets with computer-driven tools such as algorithmic and high-frequency trading.

But technology also means more work can be moved offshore or to cheaper locations. More reliable internet links with India, for example, mean people can work together on the same documents or files in real time.

The total number of people employed by all kinds of banking in the U.K. has fallen 22% from its precrisis peak in 2008, or by about 120,000 jobs, according to data from Britain’s statistics office.

Here's another stark example:

Goldman Had 600 Cash Equity Traders In 2000; It Now Has 2

For the dramatic impact of technology, and specifically trade automation from algo, quant and robotic trading  on today's capital markets, look no further than Goldman's cash equities trading floor at the firm's headquarters which, according to the MIT Tech Review, employed 600 traders its height back in 2000, buying and selling stocks for Goldman's institutional client clients. Today there are just two equity traders left.

(Source)

As warned of in our earlier article Automating Ourselves To Unemployment, jobs lost to automation don't come back. More than that, the technology itself lowers the cost structure, ultimately lowering industry profits as other competitors invest in similar tech and the margins are competed down:

Structural changes to the equities business over the last several years, such as the rise of electronic trading, have knocked off around $15 billion from the equities fee pool, according to a report from Morgan Stanley and management consulting firm Oliver Wyman.

Electronic trading has dramatically increased trading volumes, while making the cost of trading much cheaper.

Oliver Wyman partner Christian Edelmann, who co-authored the report, does not see those revenues coming back. "Once the equities model has become technology driven, that's not going to change," he said.

(Source)

A Cultural Shift To Cost-Cutting

And the jobs cuts aren't just related to technology. As profit margins are squeezed, players in the financial industry are looking for any and all reasons to cut costs. 

A current victim of this trend is equity research. For decades, sell side firms like the investment banks offered their clients "expert analysis" from their research departments. Historically, that was bundled into the bank's overall fee it charged its clients.

But now, increasingly cost-conscious clients are demanding to know how much that research is costing them. Especially since almost all of that research doesn't even get read. A recent Reuters article showed that of the 40,000 research reports produced every week by the world's top 15 global investment banks, less than 1 percent are actually read by investors.

It's long been a poorly-kept secret that the research departments were a dependable vehicle for investment banks to bilk their clients for unnecessary profit. Now it looks like that ruse is over. And billions in revenue per year along with it:

Banks have already been trimming their research budgets. Spending on research at the top investment banks fell by just over half to $4 billion in 2016 from $8.2 billion in 2008, according to Frost Consulting.

(Source)

An industry long known for its "Wolf of Wall Street" culture of excess is now counting its pennies. That's a very significant perception shift.

A Sign Of The End

What's important about all this is not sympathy for the poor bankers who have to accept lower wages or a pink slip. Consciously or unwittingly, they've been foot soldiers for a cabal that's done the greatest evil towards global human rights and prosperity over the past century. Personally, I'll happily take a front row seat, open up a bag of popcorn, and delight in the schadenfreude of watching that industry collapse on itself.

What is important is what all this tells us about where we are in this story. We are now getting close to the end.

For decades and decades, more and more sharks found their way into the financial industry. And for decades and decades, there was plenty of prey for them all to feast and fatten on.

But now we're at the point where there's much less to prey on. So the biggest sharks are now turning on the smaller ones. Those at the top of the industry are trying to preserve their share of the pie -- and if they have to do so by cannibalizing those below them on the org chart, so be it.

It has now become a shark vs shark world.

That's important. 

This is happening, mind you, at a time when the banks are in their 8th straight year of enjoying practically-free money from the world's central banks, which is essentially a great wealth transfer from the public's coffers. And at a time when financial assets have been re-inflated to all-time highs.

If things have reached this cutthroat a state when Wall Street is booming, imagine how much more gruesome this "eating their young" dynamic can/will become during a market downturn.

We're at the point where those at the apex of power are becoming increasingly desperate to maintain their unfair advantage. And as the economic pie refuses to grow due to the twin overload of too much debt and declining net energy, these apex predators will turn on each other -- first to maintain their spoils, and then simply to survive.

Things will get nasty in a hurry during that stage, as we warned about in our recent report: Positioning Yourself For The Crash.

While you still can, you want to make sure the bulk of your investment capital is positioned for safety, and you want to make your lifestyle as resilient as possible so that, no matter what jarring developments the future may bring, you and the ones you love are least impacted by them.

Click here to read the report (free executive summary, enrollment required for full access)

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32 Comments

macro2682's picture
macro2682
Status: Platinum Member (Offline)
Joined: Sep 3 2009
Posts: 538
Traders are now blue collar...

I'm on the buy side and agree with almost all of this. But don't think for a second that sell side market makers are viewed with respect within the industry. They have been considered blue collar for years by higher ups.  

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1411
Some Thoughts

It was inevitable the infighting would start when we are in a depression.   The scary thought is how much has been automated via computers using linear algorithms.   No bid crash upcoming.   Markets will close for months.

Sharsta's picture
Sharsta
Status: Bronze Member (Offline)
Joined: Aug 12 2009
Posts: 32
Front Row seats

After looking through Zero Hedge this morning (Saturday), I find myself joining you Adam with another bag of popcorn -

http://www.zerohedge.com/news/2017-05-05/macron-says-he-victim-massive-coordinated-hack-after-9-gigabytes-private-documents-r

The French Presidential Election tomorrow - despite all the prognostications about Macron winning comfortably this time and Le Pen winning in 2022, what happens if they are not right?

The effect may be pretty catastrophic for the Euro, but what about sovereign debt? The European Bankers? Other bankers? (Which as you point out, are having a hard time and barely keeping it under control as it is.)

Oh dear.

(P.S. Already gone through the resiliency list and completed as much as possible.)

 

 

pat the rat's picture
pat the rat
Status: Bronze Member (Offline)
Joined: Nov 1 2011
Posts: 99
numbers

When the computers do all the trades there will be just numbers going back and forth no profit to be made, oh how the mighty will have fallen.

Time2help's picture
Time2help
Status: Diamond Member (Offline)
Joined: Jun 9 2011
Posts: 2720
Rank & File vs CBs

When it comes to the rank and file workers of the banking system, I'd imagine they are largely ignorant to the goings on up above, like most others.

For the executives and central banksters however, perhaps they might find sympathy somewhere between shit and syphilis in the dictionary?

aggrivated's picture
aggrivated
Status: Platinum Member (Offline)
Joined: Sep 22 2010
Posts: 523
New Orleans First NBC Bank failure last week (Apr 28,2017)

Check www.fdic.gov to get an idea of what it feels like when your bank goes down.

I don't know if this bank is a canary or a domino, but I do know I don't ever want all my eggs in one basket.

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5441
Speaking of rackets

As odious as the banking sector is, and it's pretty bad unless you are a fan of parasites that have not yet evolved to the point of understanding the limits of their host, the health-care racket is possibly even more evil.

To take sick people, under duress, and gouge them to the maximum extent their personal bank accounts can manage and then toss them into the bankruptcy dumpster is beyond odious, it is immoral and sociopathic.

Today's fun fact involves the number 130 million:

In the wake of Congressional Republicans’ failure to drum up support for their health plan last month, the White House is negotiating to put repeal of the Affordable Care Act, or ACA, back on the table. While the previous proposal would have already driven up health care costs and stripped millions of coverage, the new proposal is rumored to include provisions that would undo protections for the more than 130 million Americans who have a pre-existing health condition.

(Source)

I can only assume that the "pre-existing condition" involved here is "something left in their bank account."

How is it even possible that the new health care plan includes driving up costs for nearly everyone?  We've already endured 25% to 60% increases each of the past three years, depending on which state you live in.

Janet prints up money and hands it directly to the wealthiest bankers and well-connected members of society and then Congress turns around and shafts the the lower and middle classes every time it passes a bill that more deeply enforces whatever racket is involved.

So my question is; are they trying to start a civil war?

Because, if not, they are laying dry wood around a monument labeled 'social unrest.'

kaimu's picture
kaimu
Status: Silver Member (Offline)
Joined: Sep 20 2013
Posts: 158
IS BANKER A PRE-EXISTING CONDITION?

Aloha! I would like to see certain occupations of the Kakocracy listed as "pre-existing psychotic conditions" ... like banker and career politician!

On another note ... where do we draw the line? So this makes all 320mil Americans "pre-existing"! At what point do we look in the mirror? Or can I qualify to have a "behavioral health disorder" by saying I voted for Trump? Half the country would say ... YES!

As a society we are in deep trouble once other people's money runs out!

 

louisdoran's picture
louisdoran
Status: Member (Offline)
Joined: Oct 2 2010
Posts: 5
central banks

Great article once again Adam. Thank you. Very informative. I do have a question however. You mention in the article that central banks are privately owned. That sparked my interest. We know this to be a fact for the US Federal Bank but what about other central banks around the world? Who owns them. A quick google research yielded numerous sites that claim they are owned by the Rothschild's or some other wealthy family/cartel. However these claims are not backed by solid evidence from what I can see. And one reason why I like PeakProsperity.com so much is because it is grounded on facts. So do you have any evidence on the ownership of other central banks around the world? At least the most important ones Japan, Canada, France, England, Swiss, China, etc. I know that the Bank of Canada (or at least I think I know), my own country's central bank is a crown corporation which I believe means that it is owned by the Canadian government and thus the public. ( Now whether the bank is managed for the greater good or to line bankers pockets is another question) but again where if anywhere can one find reliable information about the ownership of other central banks? And if any Canadians out there know better about our own CB, (what does being a crown corporation really entail? to whom do you answer and by which mechanism? please feel free to enlighten me but please using solid facts and references.

Cheers to all and may this grotesque mascarade which parades as the truth hopefully ends sooner than later. I am getting exasperated of waiting.

PS. I would be more than glad to hookup with other Peakprosperity minded folks in the Quebec city area (Canada) if there are any out there for moral support for one, constructive exchanges for another and finally to see what kind of actions we could collectively start doing to get the public conversation going in a new direction and start experimenting on new ways to build healthy, sustainable, human-centered communities.

 

Edwardelinski's picture
Edwardelinski
Status: Gold Member (Offline)
Joined: Dec 23 2012
Posts: 309
Maryland requesting 50%next year

Maryland's largest insurer Carefirst is requesting a 50% increase on individual policies for 2018.Cigna health 37.36% and Kaiser of the Mid-Atlantic States is requesting 18.08%.According to the Baltimore Sun one third of residents purchase individual policies.I live in the North East and the numbers haven't been run yet.....Kinda like the art of the deal.throw it all against the wall and see what sticks....

 

aggrivated's picture
aggrivated
Status: Platinum Member (Offline)
Joined: Sep 22 2010
Posts: 523
Two comments on health (sick) care

If we are to get anywhere in resolving the care of illness then this country [USA] has to decide if this is a personal or social responsibility. Physicians are expected to 'do no harm', but they are no longer in direct relationship with their patients. Having the financial aspect (whether insurance private interests or socialized public interests) between the provider and the patient lets both doctor and patient off the hook. Doctors are expected to provide the best care money can buy since the patients are removed from financial pain, and the patients don't have any financial incentive for preventive habits.

As long as the corporate financial interests are between the two parties the racket will continue. If we expect our great Uncle Sam to be the money source then we must also be willing to let others (some board or bureaucrat) to decide what constitutes good health care.

richcabot's picture
richcabot
Status: Silver Member (Offline)
Joined: Apr 5 2011
Posts: 118
Healthcare CEO pay

In addition to is other "wonderful" provisions, the proposed healthcare legislation removes the caps on CEO compensation.  You can't recruit sociopaths to run your companies unless they can get obscene amounts of money doing it.

VeganDB12's picture
VeganDB12
Status: Platinum Member (Offline)
Joined: Jul 18 2008
Posts: 722
health care racket

Indeed it is. 

speculation: If there is ever a way to end the racket I think there will be many retired and semi retired doctors and nurses who would go back to work in a more ethical system where they can help people and not the bottom line/corporate system.

The pre-existing condition clause used to require a 1 year period of no coverage for pre-existing conditions if there was a gap in coverage. Getting rid of that was one of the true gifts of the ACA.  Bringing that back could leave the majority of us without coverage for quite a while so your point is well taken.

Expect more senior clinicians to leave clinical practice because they will be in the impossible position of being unable to help people when they're supposed to care for them.  And their hands will be tied. We bought into managed care in the 80's and that was the real trap. And as much as people don't like it most physicians and nurses really are trapped in the system. Not blameless as a group but trapped. 

Anecdote: Some people may think it is good to have fewer doctors. The ones I know who have mostly dropped out in their 50's are the ones you want to see stay. Family docs who are smart, aggressive and compassionate. Neonatal specialists who are dedicated to patient care.  The kind of people who fight for their patients.  A pity.  

sand_puppy's picture
sand_puppy
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Posts: 1662
Swiss National Bank Buys Stocks

SNB goes on buying spree and loads up on Apple, Alphabet, Microsoft stock.

Picture

[W]e are long beyond the point of debating the central bank intervention in equity markets (we do want to remind readers that until several years ago, it was considered "fake news" to even mention it, and those who accused central bankers of manipulating stock markets were said to be paranoid tinfoil basement dwellers), we want to point out that unlike the BOJ, which at least keeps its capital markets distortion local, the SNB, which likewise creates money out of thin air (then sells it for dollars in an attempt to keep the Swiss franc depressed) is actively resulting in even greater price distortions in the US.

The chart above may also explain why Goldman is bullish on the Nasdaq 100: after all, when a central bank can and does create money out of thin air, then splurges on the company [Apple] that accounts for 12% of the weight in the Nasdaq, pushing the Nasdaq and all indices higher, what is the point of even talking about "risk"?

----And a favorite comment below the article from "I woke up":

How to get people to agree to go to war.
Central banks inflate portfolios by directly buying stocks.
They coordinate pulling the plug, blame it on the Russians or Chinese.
CB's rob everyone blind and the wrath of the people goes to whoever the media deems the culprit

skipr's picture
skipr
Status: Bronze Member (Offline)
Joined: Jan 9 2016
Posts: 81
South Park

OK, I must admit that I’m a big fan of the Comedy Channel's South Park.  Does that make me a perverted Baby Boomer?  I would love to see them do a full-fledged movie where their Satan character is a Wall Street bankster who is at war in hell with his one time boyfriend, Sadam Hussein.  The creators of the show would somehow have to work in how Iraq was invaded by the US (owned by WS banksters) because Hussein wanted to switch from the dollar to the euro.  It sounds like it would be a challenge to make it funny, but I think those comic geniuses could pull it off.

thatchmo's picture
thatchmo
Status: Gold Member (Offline)
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Posts: 417
My esteemed

My esteemed Senator..............Mazio Hirono (D), just finished a "town hall" meeting on Kauai, broadcast on our community radio station (Yeah, KKCR.org!), and was asked about 15 questions.  I would have reamed her on her answer to every single question asked of her- all questions were thoughtful and concerned, most showed hopeful ignorance.  All answers by her were drivel- Citizens United "is not sustainable for communities" what ever that means.  When asked twice about the Sick Care Bill, no one thought to ask her how she felt about HER current policy.  Pity.   Aloha, Steve.

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 4774
destruction

So America is definitely a sick country.  If the Republicans pass this monster, and it does indeed raise costs for everyone (and/or it freezes people into their existing jobs because they can't change - to change means to have to be accepted under the new company's insurance policy), then I predict the destruction of the Republican party as it exists today.

Seriously.  The only reason they won is because people kind of forgot what they were like, and the hope was that Trump might be different.  Once they are seen as the "cartel harvesting machine", that will be the end of them.

We really need public healthcare.  People with pre-existing conditions should not be in the "insurance" market, any more than someone who has a house that's on fire should be able to get fire insurance.  Insurance is to protect against something that hasn't happened yet.

The core problem is that the "cash" medical pricing system is absurd.  In other countries, I go into a hospital, and they have list prices for tests, procedures, and whatnot.  It's not some mystery how much things will cost.  I can comparison-shop.  (I've actually done this).  But that's not possible in the US, because prices are top secret.  And so as a consumer, either your insurance pays some secret amount, or you end up bankrupt.  So the entire focus of everything is making sure your insurance pays.

Bottom line: the desire to cover pre-existing conditions is really a desire for some mechanism that protects people from our current predatory sickcare system with its sociopathic pricing models.  The real fix is to require public, consistent pricing for every procedure so we can have competition, and at the same time provide a basic level of public healthcare for citizens to cover the common things that go wrong, like having babies, broken arms, and auto accidents.

Trying to fix this thing through the insurance mechanism is wrong, I think.  You can't insure a house that's on fire for a very good reason: everyone will game the system - nobody will get fire insurance until their house actually catches fire.

Every other industry requires that participants charge consistent prices for all their customers.  Secret pricing is illegal.  But not in sickcare.  We should start by fixing that.

Public healthcare would absolutely gut the insurance industry.  They'd be forced to actually compete.  People could live lives without them, because basic healthcare would be provided, and "extra care" would be provided for a "list price" that you could shop around for.  The focus on making sure "insurance" will cover all those pre-existing conditions would vanish.

I've actually seen this work in other countries.

Uncletommy's picture
Uncletommy
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Joined: May 3 2014
Posts: 426
Magic beans?

Wouldn't it be novel if you knew what something costs before you bought it? Conversely, wouldn't it be great if you had some idea of the value of a particular medical procedure before considering if you would subject yourself to it. I've always like the ancient Chinese model of doctors being paid when people are healthy, and not paid when people are sick. Perhaps free access to marijuana, Oxycontin and Prozac would reduce the number of medical complaints and be a far cheaper approach to self-medication?

There are better "health care" systems in this world if Americans want some suggestions.

treebeard's picture
treebeard
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Posts: 581
All the Plenary's Men

Max Keiser recommended that film.  It's a bit dry, but details the control mechanism used to derail prosecution of the "too big to fails".  A bit of an inside view of how the banking cartel operates.  I put this in the morbid curiosity category.

I agree with the opt out policy, I think that it is the most powerful action we can take.  As Catherine Austin Fitts recommends, get the banking warfare tapeworm out of your life. But leave all options on the table, especially local activism.  couldn't agree more with the comments about the medical racket. The ACA was written for and by the insurance industry, which is why it is structured the way it is.  They did throw a few bones to the poor guy on the street, but not enough to keep the thing from sinking under its own weight.

We are definitely living the curse of "living an interesting life".  

sand_puppy's picture
sand_puppy
Status: Diamond Member (Offline)
Joined: Apr 13 2011
Posts: 1662
How much do you charge? How much do ya' got?

In one of the Chevy Chase movies Chevy is driving cross country when his car breaks down.  He is forced to stop at a seedy car repair joint.  He asks how much the repair will cost and the response is "How much do ya' got?"  

As best I can tell, this is the medical pricing mechanism also.  More respectably stated "How much will the market bear."

Surgery Costs Vary Wildly -- Even in the Same Area.

The cost of having a knee or hip replaced varies wildly and can be up to four times more in one place than another -— even in the same area...

A total knee replacement averaged about $31,000,  ... [b]ut in [a single city,] Dallas, it ranged from $16,772 to $61,584.86.

Across the USA, knee replacements costs as little as $11,317 in Montgomery, Ala., and as much as $69,654 in New York City,

Some of the price differences are expected -— rent and other overhead costs are much higher in New York City than in Alabama. But the reasons why hip replacement in Fort Collins, Colo., costs tens of thousands more than in Pittsburgh may have more to do with whatever the market will bear.

Variable pricing in pharmaceuticals through the international markets is similarly explained as "what the market will bear."

The article posted on today daily commentary by edwardelinsky is another great example.

 

Who benefits from this system?  The insurance industry.  But wait.  Who exactly is that?  Who are the human beings hidden behind the mask of the term "insurance industry?"

The oligarchy owns the insurance industry.  I don't know the specific details of exactly who that is, but a group of the wealthiest own the insurance industry and this small group controls its actions.  It is, most definitely, one of the structures that the oligarchy uses to harvest resources from the population.

As a single example, I read that the late David Rockefeller was a principle (meaning >5% ownership) in 105 of the largest 125 corporations on earth.  So we have a single human being intensely invested in, and with high level of controlling influence over, the current system, one component of which is the immensely profitable parasitic operation called "health insurance."  Together, this fairly small group of people form the parasitic alliance.

This is the same oligarchy that owns the media and funds the re-election campaigns of our "representatives."  I personally believe that there is a fairly high degree of coordination among this elite class to shape society for its own benefit.  The elite make the laws, rules and and propagate the myths that move the sheeple.

A social activist from the civil rights era remarked that power is never relinquished voluntarily.  It must be demanded.

Are we to the place where we are ready to demand a transparent and equitable system that cannot be gamed?  Or must the pain be increased further?

A government owned program with employed, salaried, doctors and nurses would be one such system.  Despite my visceral aversion to "government control," this seems smartest, and least likely to be gamed, to me.  And as DaveF has pointed out, it is a globally tested system.

 

 

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Uncletommy
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When you feel like you're being pissed on. . .

. . .there are options. When all you have is lemons, try making lemonade. However, in this case, I see they have tempered the approach!

http://www.cbc.ca/news/technology/danish-brewery-pisner-urine-beer-beercycling-1.4101819

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sand_puppy
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Sickcare: "And Jesus Said Unto Paul of Ryan ..."

An awesome example of an archetypal conversation between the Mean ORANGE Meme (MOM) and GREEN.  From the NYT opinion page.

And Jesus Said Unto Paul of Ryan ...

A woman who had been bleeding for 12 years came up behind Jesus and touched his clothes in hope of a cure. Jesus turned to her and said: “Fear not. Because of your faith, you are now healed.”

Then spoke Pious Paul of Ryan: “But teacher, is that wise? When you cure her, she learns dependency. Then the poor won’t take care of themselves, knowing that you’ll always bail them out! You must teach them personal responsibility!”

They were interrupted by 10 lepers who stood at a distance and shouted, “Jesus, have pity on us.”

“NO!” shouted Pious Paul. “Jesus! You don’t have time. We have a cocktail party fund-raiser in the temple. And don’t worry about them — they’ve already got health care access.”

Jesus turned to Pious Paul, puzzled.

“Why, they can pray for a cure,” Pious Paul explained. “I call that universal health care access.”

 

Jesus turned to the 10 lepers. “Rise and go,” he told them. “Your faith has made you well.” Then he turned back to Pious Paul, saying, “Let me tell you the story of the good Samaritan.

A man was attacked by robbers who stripped him of clothes, beat him and left him half dead. A minister passed down this same road, and when he saw the injured man, he crossed to the other side and hurried on. So did a rich man who claimed to serve God. But then a despised Samaritan came by and took pity on the injured man. He bandaged his wounds and put the man on his own donkey and paid an innkeeper to nurse him to health. So which of these three should we follow?”

“Those who had mercy on him,” Pious Paul said promptly.

Jesus nodded. “So go ——”

“I mean the first two,” Pious Paul interjected. “For the Samaritan’s work is unsustainable and sends the wrong message. It teaches travelers to take dangerous roads, knowing that others will rescue them from self-destructive behaviors. This Samaritan also seems to think it right to redistribute money from those who are successful and give it to losers. That’s socialism! Meanwhile, if the rich man keeps his money, he can invest it and create jobs. So it’s an act of mercy for the rich man to hurry on and ignore the robbery victim.”

How hard it is for the rich to enter the kingdom of Heaven,” Jesus mused to himself. “It is easier for a camel to go through the eye of a needle than for a rich person to enter heaven.”

“Let me teach you about love, Jesus — tough love!” Pious Paul explained. “You need a sustainable pro-business model. And you need to give people freedom, Jesus, the freedom to suffer misery and poverty.”

“The Lord God has anointed me to bring good news to the poor,” Jesus replied, emphasizing the last two words. Then he turned to a paralyzed beggar at his feet. “Stand up!” Jesus told the man. “Pick up your mat and go home.” As the man danced about joyfully, Pious Paul rolled his eyes dismissively.

 

“Look, Jesus, you have rare talent, and it should be rewarded,” Pious Paul said. “I have a partner, The Donald, who would like to work with you: He’d set up a lovely hospital, and the rich would come and pay for you to heal them. You’d get a percentage, and it’d be a real money-spinner. Overhead would be minimal because every morning you could multiply some loaves and fishes. You could strike it rich!”

 

Blessed are the poor, for theirs is the kingdom of God,” Jesus said. “But woe to you who are rich, for you have already received comfort.”

“Oh, come on, Jesus,” Pious Paul protested. “Don’t go socialist on me again. Please don’t encourage class warfare. The best way to help the needy is to give public money to the rich. That then inspires the poor to work harder, galvanizes the sick to become healthy, forces the lepers to solve their own problems rather than kick back and depend on others. That’s why any realistic health plan has to focus on providing less coverage for the poor, and big tax benefits for the rich. When millions of people lose health care, that’s when a country is great again!”

From everyone who has been given much,” Jesus told him, “much will be required.”

“Well, sure, this hospital would have a foundation to do some charity work. Maybe commissioning portraits of The Donald to hang in the entrance. But let’s drop this bleeding heart nonsense about health care as a human right, and see it as a financial opportunity to reward investors. In this partnership, 62 percent of the benefits would go to the top 0.6 percent — perfect for a health care plan.”

Jesus turned to Pious Paul on his left and said: “Be gone! For I was hungry and you gave me no food; I was thirsty, and you gave me no drink; and I was sick, and you did not help me.”

“But, Lord,” protested Pious Paul of Ryan, “when did I see you hungry or thirsty or sick and refuse to help you? I drop your name everywhere. And I’m pro-life!”

Truly, I say to you,” Jesus responded, “as you did not help the homeless, the sick — as you did not help the least of these, you did not help me.”

--------------------

ORANGE is the developmental where personal achievement/advantage is the main motivation and the filter of winners vs losers us used.  Normally people in ORANGE are well into developing the next Meme, GREEN, and are showing the signs of growing compassion.  When the budding empathy/compassion just isn't happening a particularly bad cul-de-sac happens called the Mean ORANGE Meme.  Heartless greed.

GREEN is moved by compassion.  But rejects economic concerns.

If a YELLOW had been present, he/she might have suggested both 1) Jesus continue with the immediate healing of the sick, and 2) the formation of an organization with a self sustaining business model to train workers so that the healing work could continue into the future.  :-)

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davefairtex
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healthcare vs insurance

Jesus was a revolutionary.  That's why TPTB had him whacked.  But it turns out, even that ended up causing more than a little blowback.

People don't want insurance.  They want healthcare.

The insurance model only works for stuff that hasn't happened yet.  Healthcare, on the other hand, works just fine even if you have pre-existing conditions.  Arguably, healthcare's largest market is people with pre-existing conditions.

So perhaps we should optimize a system for people with problems, rather than for the people who don't have any problems yet.

If we had a healthcare system, rather than an insurance system, it would be about half as expensive as the monster we have now.

One last point.  Healthcare takes care of health problems.  Insurance - it always seems to have a gotcha that only becomes visible when you actually need to make use of it.  Either you aren't covered, the deductible is larger than you'd expect, the policy was for "fair market value" rather than "replacement cost" - insurance buyers usually end up hosed, because they aren't the smartest people in the room when they buy it.

So yeah.  Healthcare, not insurance.

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badScooter
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No sympathy

None.  Whatsoever.

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Cornelius999
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Dave, the Pope will

Dave, the Pope will personally come round and thump you if you mix Jesus and Revolutionary. That's what used to be known as Liberation Theology and it upsets the Vatican big time. On this issue I actually agree with them. J did say give unto Cesear the things that are Ceaser's.  J didn't believe reorganizing society to be fairer worked. Things would always revert to the 1% v 99%. Instead you had to have a deeper relationship with God and your neighbour and the social arrangements then kinda  clicked into place anyhow.

But don't tell the Vatican I'm a Catholic Taoist either. That'll cause tantrums as well. 

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MillenialFalcon
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davefairtex wrote: Jesus was
davefairtex wrote:

Jesus was a revolutionary.  That's why TPTB had him whacked.  But it turns out, even that ended up causing more than a little blowback.

People don't want insurance.  They want healthcare.

The insurance model only works for stuff that hasn't happened yet.  Healthcare, on the other hand, works just fine even if you have pre-existing conditions.  Arguably, healthcare's largest market is people with pre-existing conditions.

So perhaps we should optimize a system for people with problems, rather than for the people who don't have any problems yet.

If we had a healthcare system, rather than an insurance system, it would be about half as expensive as the monster we have now.

One last point.  Healthcare takes care of health problems.  Insurance - it always seems to have a gotcha that only becomes visible when you actually need to make use of it.  Either you aren't covered, the deductible is larger than you'd expect, the policy was for "fair market value" rather than "replacement cost" - insurance buyers usually end up hosed, because they aren't the smartest people in the room when they buy it.

So yeah.  Healthcare, not insurance.

I disagree with your comment that most people want "healthcare."  Most people want someone else to have easy, zero-effort solutions for their lack of self control and poor lifestyle choices.

It all depends on what we refer to as healthcare.  I don't have any health problems currently.  My healthcare however, involves going to the gym 5 times a week. Also I try to eat 4 or 5 small meals or snacks each day. Thats eathing about 35/week. I make sure 90 % of that is healthy - salads, nuts, vegetables, healthy fats, maybe some lean protein once a day.  That means out of 35 meals/snacks 3-4 of them can be an indulgence - AKA something with sugar, flour or starch.  

I would estimate greater than 80 percent of health problems are related to poor lifestyle decisions -- Mostly bad diet, no exercise, smoking, drinking alcohol, and constant negative thoughts.  The rest are mostly environmental or genetic.

The system cannot be fixed until "healthcare" is redefined.  Health Insurance rates should be cheaper if you are healthier or can show that you make healthy life style choices.  Don't smoke - cheaper policy. Don't drink - cheaper policy.  Lose 2lbs per month on average over 6 months - we will reduce your rates.  These are the types of incentives that will lower the cost burden of the entire system.  If someone gains 2lbs per month over a year their rates could go up.  This would most likely motivate people to become healthier.  

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davefairtex
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Posts: 4774
a pope-thumping

Dave, the Pope will personally come round and thump you if you mix Jesus and Revolutionary. That's what used to be known as Liberation Theology and it upsets the Vatican big time. On this issue I actually agree with them. J did say give unto Cesear the things that are Ceaser's.

Well, I certainly want to avoid a Pope-thumping at all costs, so I'll retract my statement immediately!

Well, maybe I don't in one sense.  Jesus was revolutionary in a similar way that I'm revolutionary when I say "getting out of debt is a revolutionary act."  If we all did it, it would force a reform of our current monetary system without a single violent act taking place.  Its the ultimate sort of nonviolent protest - because it is not even a protest!

Same thing is true if you practice as Jesus preached.  There's a lot of stuff that just goes away; need for healthcare, baking and fishing industries, currency exchange shops and so on.  Ok, I'm kidding again, but underneath it all, not really.

My version of 'render unto caesar': "by all means make your interest payment to the bankers, but at the same time, work every day to become debt-free."

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davefairtex
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cost & compassion

MillenialFalcon-

I disagree with your comment that most people want "healthcare."  Most people want someone else to have easy, zero-effort solutions for their lack of self control and poor lifestyle choices.

Sure.  However:

Most of society has been carefully programmed via science & technology to be in exactly the state you describe.  I used to think people were idiots and deserved the fates they got, until I realized just how much human behavior was driven by our biology, and how good a job our system does in manipulating most of us in order to bring about this very (profitable for them) outcome.

I'm not saying its a grand conspiracy, really - just that without individual awareness of what our biology drives us to do, unconscious people just trying to survive in their daily lives end up being very easily programmed by the relentless barrage of media (apps, TV, entertainment) telling them what they should do in order to be happy.

Which of course is all wrong, as you know (given your description of your lifestyle), but its really hard to rise above the biology and the all-encompassing media deluge to live a reasonably healthy lifestyle.  Its practically a revolutionary act to do so.

The fact that it is so very profitable to keep people unhealthy - for a large number of industries - probably explains why the mainstream programming remains so intense.

But all that said - even if we don't change a thing about what people do, even if we don't turn everyone else's lifestyle into your lifestyle, a national healthcare system remains a much cheaper option than our current "insurance racket + healthcare racket".

    price(insurance racket) + price(healthcare racket) >> price(national healthcare system)

This even assumes all the government waste we'll get with the national healthcare system.  I've seen it executed elsewhere.  Of course there are problems, but the costs are vastly lower to the overall economy than the system we have today in the US.

Regarding your incentive system: every system like that will be gamed by the participants, leading to unexpected outcomes that are probably counterproductive.  You seriously want to give everyone weigh-ins prior to calculating their premiums?  Cutting weight is really unhealthy behavior, but that's what would end up happening.  Just as a for-instance.  Likewise, quitting smoking for a week prior to "the test" doesn't do anyone any good.

The only possible way out is individual awareness.  Also, if the system itself were to benefit from reduced healthcare costs, we might just spend more research dollars on cheaper remedies that actually improved health outcomes.  Right now, the healthcare system overall receives a greater benefit from increased ill-health!  Even insurance companies - they get their percentage on the total healthcare spend.  The larger the spend, the larger their cut.

Edwardelinski's picture
Edwardelinski
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Posts: 309
Very Rich People

Are paying rich people to tell the middle class to blame the poor,fat,muslim,african american,jewish people. etc....You name it,they game it.

Cornelius999's picture
Cornelius999
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Posts: 357
Dave I only mentioned

Dave I only mentioned thumping because Pope John Paul XX111 publicly gave the Socalist President of Nicuagra Daniel Ortega a public ticking off before the cameras on a visit years ago.

davefairtex's picture
davefairtex
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Posts: 4774
gaming the system

EE-

You must start with the premise that everyone will attempt to game every system.  Rich people, and poor people.  We all do it, because that's just how we're built.  Biologically, we are built to cheat because there's an evolutionary advantage to doing it.  We get an internal brain-chemistry reward when we get away with something - some of us get a stronger chemical reward than others.  This is a proven, scientific thing.

We're also built to cooperate.  And to engage in altruistic behavior - as long as its reciprocal.

This isn't unique to mankind - monkeys, even bacteria and fungi cooperate, and cheat, and act altruistically.

This is because there is an evolutionary benefit to all these behaviors.  And because of this, we're also built to detect others cheating - because when someone else cheats on you, that puts you at a disadvantage.

That's all detailed in this lecture by Robert Sapolsky.

Bottom line: every welfare system will be gamed.  Every healthcare system will have fraud.    And all of us will be enraged by the cheaters because we're built to hate cheating.  And to also cheat it if we can possibly get away with it without being detected.

Gotta love that paradox.

We can overlay these biological drivers with our own morality - awareness, etc - but the body we're born into has this wiring already in place.

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Edwardelinski
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Joined: Dec 23 2012
Posts: 309
Thank You

I had forgotten this.This countries uprisings are also a very good thing....

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