USA Shutdown and Debt-ceiling are affecting the World

pierreapienaar
By pierreapienaar on Thu, Oct 3, 2013 - 5:21am

Dear Reader,

 

Writing from Namibia, it is disheartening to see a superpower, that many see as a saviour of all problems, I don’t, they cannot control their government. I don’t want to mingle into the affairs of the USA, but since the US is doing it, and that its economy is affecting the World Economy, I would like to give some comments on the current affairs.

 

First of all, US, its strategic intention is to maintain and safeguard its hegemony, which has existed since the end of the Cold War. In 1992, the US Department of Defence released a report entitled "Prevent the Re-emergence of a New Rival" which stated: "Our first objective is to prevent the re-emergence of a new rival." After the Obama administration came to power, this strategic intention has become more intense, as President Obama stressed, "I do not accept second place for the United States of America". Therefore, the US has been on a high alert and kept a watchful eye on any country, which has the potential to challenge its hegemony. 

Even, Mr. David Cameron, PM of the UK is seriously worried, how it will hurt his country and the rest of the world.

 

One aspect of the shutdown and world economy it will hurt because the dollar is main trading currency. This should change, but are there alternatives? One solution is that country-to-country trade the said currencies should be used as transaction, like the Yuan and yen. Trade between the BRICS countries could either be using a BRICS currency, which non- BRICS countries could use, or the said currencies between BRICS countries. In the long run it will give more value to countries’ currencies.

Gold is another option. It will give it its past value. The question is if there enough gold supply to support such a move? 

Coming back to the reasons for the shutdown:

 

There is so far no end in sight to the shutdown as both Republicans and Democrats have not made serious talks to break the standoff. The House GOP efforts to fund some parts of the government were rejected on Tuesday night. Fears are rising that the funding deadlock could stretch into a debt-limit fight.

1. OBAMACARE

I cannot see why people don't want other people to have affordable health care. Knowing with a chronic disease (RSD/CRPS), without an affordable health Insurance, I would have suffered even more.  It will help small business owners as well as their employees. It is a matter of die, you’re not worth living. The pharmaceutical companies have definite as a say in this anti-OBAMACARE.

They will have to lower their prices. Where will the millions of bonuses be taken from? Fire more employees. 
 

2. The debt ceiling

The idea of a debt ceiling to be able to pay the government  bills, as Mr. Obama said in his speech, is not totally negativism, but spending cuts are necessary like every business and household. Stop defence spending by stop mingling in other countries' affairs. However, there is a problem the USA must use their weapons, and what will happen to the big defence contractors?

Stop giving aid to developing countries, like Namibia, it just makes them dependent, and not self-sufficient, and start paying the full price of products' worth. Commodities should only be import as value-added products, and then they won't need aid.

 

Yes, there are solutions to the problem, if the USA start changing it’s Elections system. Are the voices of the people really of value? I don’t think so, looking at the current impasse. The collegiate system is in any case very complicated and open to fraud, and it seems that it happened before, and the 2-party-system is not really democracy. Harsh words, but it is time that the world stands up and say, “ENOUGH IS ENOUGH”. The USA should start acting by looking more towards its own citizens, and start treating all countries equally. It includes all rich nations.

 

To all traders: Currently, the markets around the world are hurting (However, the Stock exchanges are fairing better this morning), but I believe chaos brings opportunities. You must utilise the trends to make a profit in your trading. Global stock markets 'may face volatility, depends on how long the shutdown will last.

Example of an opportunity: THE Australian dollar rose as the US dollar fell against most currencies on the realisation that the government shutdown in Washington may not be short-lived.

In short, a government shutdown in itself is not that critical to the overall economy.  It is not slated to do much more to the stock market than shave a couple of percentage points off the YTD gain.  But it does add an element of uncertainty to the already fragile trading environment.  And it is only the beginning of more messiness ahead: the Fed’s possible tapering, a possible S&P downgrade (again), and a highly unlikely but still worrisome (that it is even a possibility) debt default.  The last time those last two things loomed large, the Dow tumbled 14%.  It took 5 months to get it back.

I hope this will trigger a valuable and lively debate.

 

Have a peaceful, purposeful,  happy and profitable day

 

Pierre A Pienaar

11 Comments

Grover's picture
Grover
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Posts: 845
Obamacare should be repealed

Pierre,

There is much to discuss considering the US shutdown. You allude to the real game which is simply keeping the upstart nations in check. In the meantime, the wealthy contributors to either political party get rewarded with legislative loopholes and military backing when they exploit foreign resources. I'm going to focus on your statement of Obamacare.

pierreapienaar wrote:

I cannot see why people don't want other people to have affordable health care. Knowing with a chronic disease (RSD/CRPS), without an affordable health Insurance, I would have suffered even more.  It will help small business owners as well as their employees. It is a matter of die, you’re not worth living. The pharmaceutical companies have definite as a say in this anti-OBAMACARE.

They will have to lower their prices. Where will the millions of bonuses be taken from? Fire more employees.

I am not a fan of being forced to participate in a government required healthcare system. Firstly, it isn't constitutional (IMO.) The Supreme Corp narrowly approved it based on the weasly idea that congress can levy taxes. What a proud moment!

The US has the highest concentration of lawyers in the world. It is one of the more lucrative professions; however, it too is having employment issues. Big lawyer outfits love all the laws with nebulous verbiage that they can exploit. Other professions have to protect themselves against attacks. They do it by hiring their own lawyers to identify and minimize risk, but they also have to carry malpractice insurance.

A friend of mine is a nurse who worked for an Ob/Gyn MD. Several years ago, during a conversation, she told me that his malpractice insurance had just topped $365,000 per year - $1,000/day. I'm sure it hasn't decreased since then. He generates that money by charging his clients. This is on top of the cost to keep the office running and pay all the salaries.

To reduce risk, he'll prescribe medications promoted by the drug companies whenever the symptoms match those for the medication. Is this the right thing to do ... or simply expedient? The clients think they are getting quality medical attention. The insurance covers most of the costs so the client's incentives to question have been reduced.

If congress really wanted to make healthcare affordable, they would have limited the abilities of lawyers to sue practitioners. Since congress consists predominantly of lawyers, there is no chance that will ever happen.

Hopefully, one of our medical people will chime in here about the additional paperwork and intrusive questions that have to be asked. Does that make you feel as warm and fuzzy as I feel?

On top of it, depending on the size of company that employs you, different rules apply. If you work part time, the company isn't required to supply insurance. The definition of part time was changed as well for this legislation. This has resulted in worker's hours being cut so they squeeze under the legal wire.

Actually, I believe this aspect was one of the prime motivations of the "Obamanation." He has used the unemployment rate as one of his key indicators of how the economy is doing. Spreading 3 former full time jobs (40 hrs/wk each = 120 hrs/wk) to 4 part timers working 30 hrs/wk gets the work done and increases the number employed - at least on the books.

Does it supply universal healthcare? NO! Is it affordable? NO! Is it appropriate? NO! Will it help small businesses? NO! Will it help all employees? NO! If it were such a good idea, it wouldn't require government to force it upon us. It should be repealed.

I'm not sure to whom you refer in this paragraph:

They will have to lower their prices. Where will the millions of bonuses be taken from? Fire more employees.

I'm not sure who will have to lower prices. The drug companies? Why? Workers who have to accept part-time employment will definitely see their paycheck cut (and without healthcare to boot.) The big boyz will continue to get their bonuses. If they can fire more employees and still make their bottom line, that's exactly what they'll do. Why hassle with employees if it doesn't pad the bottom line?

I'm glad you found insurance that helps to cover your chronic condition. Explain to me why I should be forced to subsidize your healthcare (or anyone else) by requiring me to carry healthcare insurance when I haven't taken as much as an aspirin this year. (I did have a "health issue" this year. I was splitting oak firewood and dislocated my elbow while lifting a large round. I popped the bones back into place, uttered a stream of expletives, rubbed and stretched, and then continued with the wood splitting after about 10 minutes. After that, I was a little more careful about lifting. Yes, it hurt.)

Grover

jonesb.mta's picture
jonesb.mta
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Doctors and Nurses

I'm with Grover but wanted to point out one more thing keeping health care costs high. The government (through the AMA) controls how many doctors and nurses are allowed to graduate each year and purposely keep the numbers low as to play to the supply and demand factor. The fewer doctors allowed to graduate, the higher the cost of a doctor. The more doctors to graduate, the lower the cost of a doctor. That's without taking malpractice insurance into the cost. The hospital my brother works at wanted to buy their own lithotripsy machine to bring down the cost of kidney stones by a factor of four. The state wouldn't allow them to buy their own machine, they had to keep renting one at a huge cost (no doubt owned by a big donor). If we got the government out of our health care things would be much, much cheaper.

Pierre, I don't want to pay for your pre-existing condition either.

pierreapienaar's picture
pierreapienaar
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Posts: 44
Grover,

Grover,

I want to thank you to give your side of the story. You're lucky not to have to use any health care, but the majority of people do need it, and cannot afford it. Your argument to be forced to take health care, is the same for taxes (partly), social security. You never know when disaster strike. it happened to me, and can happen to everybody else. 

Both drug companies and practitioners will have to lower their prices. It will be a big fight, we have it here in Namibia as well.

I hear the word "fair" is being used in this debate. Is it fair that there are poor people in this world?

I don't know if there will ever be a resolution that will suit different parties.

pierreapienaar's picture
pierreapienaar
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Posts: 44
High costs

I don't know if the cost will be lower, because the profit margins  will always be high. What about kindness to those who can't afford it?

Nate's picture
Nate
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Spot on
Grover wrote:

 Does it supply universal healthcare? NO! Is it affordable? NO! Is it appropriate? NO! Will it help small businesses? NO! Will it help all employees? NO! If it were such a good idea, it wouldn't require government to force it upon us. It should be repealed.

Grover

Sorry Grover,

Only allowed one thumbs up!

Grover's picture
Grover
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Posts: 845
Healthcare Paradox

Pierre,

Government has the unique ability to force me to participate under threat of loss of liberty or wealth. If a non-government entity did the same, it would be a crime. I believe government power must be reserved for the few things that are common to all citizens. I place national defense at the top of that list. Even that is abused by the government's Department of Defense Offense and the various entities that spy on regular citizens as a matter of course.

Does universal healthcare benefit all citizens? It should be self-evident, right? I don't see it that way. I see medical providers, drug companies, insurance companies, and lawyers trying to game the system. Obviously, they have huge stakes in maintaining their income sources. Unsurprisingly, they hire the best lobbying firms and get provisions added to the law that benefit themselves at the expense of the citizenry.

You asked, "What about kindness to those who can't afford it?" That is a good argument for charity, but not for a government law. I'm not opposed to folks willingly giving of their time and/or means to help their fellow citizens. I find that admirable and I give of my time in other venues.

You also said, "You're lucky not to have to use any health care". I'll agree that luck has something to do with it. A dozen years ago, I was diagnosed with a chronic problem. My doctor prescribed some drugs to control the problem and other drugs to mask the side effects of the original drugs. My doctor told me I should plan on taking these drugs the rest of my life. Before health insurance, my treatments cost over $10,000 per year. With health insurance, it was about $720 out of pocket. That seems like a pretty good deal for me. Meanwhile, at the time, my health insurance cost about $8,000 (my cost was about $2,000 + employer cost) per year for the health care. I followed my doctor's orders for several years.

My biggest concern was that I was hopelessly addicted to these drugs that were controlling the symptoms, but slowly destroying my liver in the process. If a SHTF event occurred, I wouldn't be able to get my medicine. Then, where would I be? I started researching my malady and found an alternative treatment. I decided (on my own) to slowly reduce the prescribed drugs while increasing the alternative. Over the course of a year, I was able to wean myself of the prescription drugs completely.

I'm not suggesting that any alternative is viable for everyone. Your mileage may vary. I do think that the medical practitioners are more concerned for their own welfare than mine. (That's okay. I'm more concerned with my welfare than theirs.) Given a choice between following the traditional drug therapy or really finding out what works best for me, the answer is simple. They don't have time to be creative, they set themselves up for liability issues when prescribing alternatives, and they limit whatever promotional bonuses the drug companies set up.

The traditional idea of insurance was that the insurance company would use actuarial tables to charge you a small premium, based on your relevant conditions. They would then invest the surplus premiums (typically in bonds) after accounting for payouts, payroll, and profit to shareholders. So far, so good. What has happened to the bond market recently? How can these insurers make enough profit from investments to cover their costs? My guess is that they have to behave like hedge funds ... chasing profit wherever they can. Will that end well?

If the government requires health insurance, the companies that survive will quickly become bigger by gobbling up the competition. At some point, they'll become too big to fail (like the banks in 2008. How did that end? From my perspective, it hasn't yet. It will be ugly when it does end.) Can a government that tolerates TBTF banks realistically limit the size of insurance companies? Are you sensing that I see disaster unfolding?

Over the past century as the modern age progressed, usage rates of resources made it look like we had enormous quantities available and needn't worry about running out. We increased our population while increasing our per capita usage. Politicians were convinced that humanity could solve any problem and promised bigger future packages to buy votes. Now, we have some resources that are constraining growth. Should we allow politicians to promise evermore at this stage? We still procreate. Is it wise to expend limited resources to prolong human life at any cost? At some point, reality will make the tough choices for us. It may not happen until you and I have lived beyond our normal life expectancies, but it will happen.

What incentive do folks have to live a healthy lifestyle and take control of their own healthcare when there are subsidies to traditional medicines and doctors? Economics says that demand will increase when a good is subsidized and that demand will drop for something that is encumbered with additional costs. Being in Namibia, you may not see the large numbers of obese people in the US. I'm sure some of them have medical reasons for being obese. The rest just have bad habits. There are a plethora of maladies associated with obesity. Those would certainly be covered under universal health care.

Paradoxically, universal health care would be worse for the people of this country. We're where we are because of the culture of excess. The surplus years are quickly ending. At the same time, we've got a glut of Baby Boomers advancing to the time of life that typically consumes the most health care. It is a disaster in the making and it won't end well! Why set up false hopes for a future that can't happen?

Grover

troof's picture
troof
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Give to your heart's content
pierreapienaar wrote:

I don't know if the cost will be lower, because the profit margins  will always be high. What about kindness to those who can't afford it?

You, sir, are free to donate large portions of your personal wealth to demonstrate kindness to those who can't afford it. 

But before you do that, you may wish to actually read parts of Obamacare and acquaint yourself with it in order to discover that you don't seem to understand the first thing about what it entails.  It's not your normal socialized medicine program.

Have a delightful day and kiss the first beautiful girl you see for me.  Thank you.

westcoastjan's picture
westcoastjan
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Great post Grover

With regard to your paragraph:

If the government requires health insurance, the companies that survive will quickly become bigger by gobbling up the competition. At some point, they'll become too big to fail (like the banks in 2008. How did that end? From my perspective, it hasn't yet. It will be ugly when it does end.) Can a government that tolerates TBTF banks realistically limit the size of insurance companies? Are you sensing that I see disaster unfolding?

It would seem that Google is setting their sights on the gaining a piece of the healthcare $$$ pie:

http://content.time.com/time/magazine/article/0,9171,2152422,00.html

When one considers that Google's mission is to know everything about everyone via their online activities, the thought of them entering the healthcare market is the next step in the quest to dominate humans. Imagine what it would be like if they controlled the purse strings for health insurance coverage when they know everything about you and your illnesses/issues/conditions via your social media postings as well as your online searches for treatments and cures. This is a truly scary Orwellian trajectory. In fact (wait, I need to put my tinfoil hat on first) it gives me one more reason to believe my (ever recurring thought) that Google is merely a government entity held at arm's length. Why else would they be allowed to get away with so many privacy breaches while at the same time being given a free pass to learn and exploit everything about everyone?

When you combine that with the ever increasing use of digital in banking and finance compelling us to use technology even if we do not want it (e.g. forced direct deposit of pay cheques and government cheques, elimination of the use of cheques in favour of debit and so on) it becomes obvious that even if one wanted to contemplate going off grid completely, they are going to make it increasing difficult to do so, forcing us to use systems that are designed to exert control over us.

At times I wonder if what the Borg on Star Trek said is really true: "Resistance is futile"

Jan

jonesb.mta's picture
jonesb.mta
Status: Silver Member (Offline)
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Posts: 126
ACA

I'm 70 years old and have watched this country eat itself since Nixon took us off the gold standard. My mother was a single mother who worked sometimes two jobs to keep us healthy and had no insurance. At that time the doctors and hospitals ate a part of people like my mother's doctor and hospital bills (just like Dr. Ron Paul did). But health care was much less expensive because there weren't any ambulance chasers or malpractice lawyers, doctors weren't required to do so much cover your ass tests, doctors didn't have reams of government paperwork to do, and most people didn't have insurance so doctors had to keep prices down or have no patients. Insurance also drives up the cost of anything that's insured. We moved to a town in Alaska where the local dentist charged $15 for an extraction, the State of Alaska gave the employees dental insurance and within a year the cost of an extraction was $60 with a $15 co-pay. The insurance didn't help at all, other than for the dentists and they weren't supposed to be the beneficiaries. I watched the same thing happen with pet insurance, dog mushers have a tough time running Iditarod if they don't have a veterinarian for a sponsor, vet care has really gone up since pet insurance came along. Now, imagine the government responsible for health care, it gives me the shivers.

Grover's picture
Grover
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Posts: 845
And now, the rest

Pierre,

I've noticed that folks tend to comment on things that strike a chord - either good or bad. I agreed with most of your original post. I just didn't agree with the health care portion. You certainly struck a chord with me.

pierreapienaar wrote:

One aspect of the shutdown and world economy it will hurt because the dollar is main trading currency. This should change, but are there alternatives? One solution is that country-to-country trade the said currencies should be used as transaction, like the Yuan and yen. Trade between the BRICS countries could either be using a BRICS currency, which non- BRICS countries could use, or the said currencies between BRICS countries. In the long run it will give more value to countries’ currencies.

Gold is another option. It will give it its past value. The question is if there enough gold supply to support such a move? 

The US owns the world's reserve currency. This may appear to be a blessing, but I see it as a curse for everyone. The US gets the privilege of trading real goods for printed currency, but we are doomed to continually operate with a current account deficit. Our greatest export has to be dollars. Other countries have to make goods to trade for dollars so they have the dollars to trade with other countries. If these countries don't sterilize their dollar hoard, they get punished with a currency that becomes too strong. As a result, they buy US Treasurys. It lowers US interest rates so that those on a fixed income can't get by without taking exorbitant risks in the stock markets. I'm not sure who it is good for.

Country to country trade is the answer. If gold backed up the currencies, there wouldn't be any risk to accepting the currency. If the country's gold reserves weren't sufficient, their currency wouldn't be worth accepting. At that point, direct trades (barter) or a generous country (welfare) would result. Note that any country that wasn't willing to trade gold for their currency on demand doesn't have a gold backed currency.

There is just exactly enough gold in the world to support this system. Were there twice (or half) as much gold, there would still be exactly enough. The price in each currency would determine whether traders would prefer gold or the currency. The right price occurs when traders have no preference.

pierreapienaar wrote:

The idea of a debt ceiling to be able to pay the government  bills, as Mr. Obama said in his speech, is not totally negativism, but spending cuts are necessary like every business and household. Stop defence spending by stop mingling in other countries' affairs. However, there is a problem the USA must use their weapons, and what will happen to the big defence contractors?

Stop giving aid to developing countries, like Namibia, it just makes them dependent, and not self-sufficient, and start paying the full price of products' worth. Commodities should only be import as value-added products, and then they won't need aid.

I couldn't agree more. Our Department of Defense Offense is the primary backing for the dollar. Any country that tries to skirt around us will eventually feel the wrath. There is a big reason why most foreign people hate America but feel compassionately toward Americans.

Just as in welfare, aid isn't given without some stinky strings attached. We want much more than we're giving. We design the gifts to hook the leaders so we can leverage them toward our specific goals at the expense of their citizenry. I'm not sure that saying "no, thanks" is an option for these countries accepting aid. We'd probably just drum up some reason to invade then.

pierreapienaar wrote:

Yes, there are solutions to the problem, if the USA start changing it’s Elections system. Are the voices of the people really of value? I don’t think so, looking at the current impasse. The collegiate system is in any case very complicated and open to fraud, and it seems that it happened before, and the 2-party-system is not really democracy. Harsh words, but it is time that the world stands up and say, “ENOUGH IS ENOUGH”. The USA should start acting by looking more towards its own citizens, and start treating all countries equally. It includes all rich nations.

Again, I agree. I also know that the people in power would lose considerably if this were to occur. I'd like to see term limits imposed on congress and the Supreme Corp. Why is it okay to have term limits on the president and not the other 2 branches? I can only vote for 1 representative and 2 senators from my State yet I have no control over the other 432 congressional people or the 9 justices. Make 12 years the maximum available term for congress 6 - 2 year terms in the House or 2 - 6 year terms in the Senate or up to 3 terms in the House and 1 term in the Senate. Subtract any time served in congress from the Supreme Corp availability. All of these folks need to live under the laws they make or enforce.

I'd also pay these people a princely sum - $10 million per year to serve our country. In return, I'd make it treason (punishable by hanging) if any congressman accepted anything of monetary value from anyone while serving our country.

They would have to pay for their meals, their vacations, and all the rest. Just like any unconnected person in America currently does. They can suffer with the rest of us on Obamacare. For pensions, let them contribute to their own 401(k) - same as the rest of us.

Think there would be huge changes? I sure do.

pierreapienaar wrote:

“Have a peaceful, purposeful,  happy and profitable day”

 

Pierre, I don't have anything positive or negative to say about your trading advice. For your signoff quote, I say that purposeful is the most important one for me. The rest seem to follow as long as there is a purpose.

Grover

pierreapienaar's picture
pierreapienaar
Status: Bronze Member (Offline)
Joined: May 21 2013
Posts: 44
I want to thank all of you

I want to thank all of you who posted their ideas. Especially, thanks to Grover's detailed comments. I really appreciate it. I think we agree to disagree.

I just want to add: Chess-players. They are not very good players. Democrats and Republicans rather go for stalemate than checkmate. There will be no winners, even if there is some kind of compromise. Both sides spite themselves. In the mean time, with no end in sight to the stalemate in Washington, global stock markets slid and investors sought out the safer havens of gold and some government bonds.

Markets and investors are losing money, but savvy Forex traders making good money, short-selling the US Dollar.

The default is looming, and all eyes are on Washington. They are keeping most people hostage.

 

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