Forget The Phony Pension Accounting, Here"s How Much Your State Pension Is Really Underfunded

The phony assumptions that go into calculating public pension underfundings in the United States are a frequent topic for us.  As our readers are aware, state pension administrators are given fairly wide leeway to simply pick a discount rate out of thin air.  Of course, since pensions are nothing but a massive stream of future liabilities that stretch out into perpetuity, every 100 bps increase can substantially, and artificially, lower the fund"s reported underfunded level. 

In fact, we estimated the impact of higher discount rates on underfunding levels in a post entitled "An Unsolvable Math Problem: Public Pensions Are Underfunded By As Much As $8 Trillion"...here was the result:

Fortunately, we"re not the only ones that see through the ridiculously phony assumptions that go into duping retirees and taxpayers as the team at American Legislative Exchange Council (ALEC) has just dropped a report which reviews the financial health of public pensions all over the country if you toss out their 7.5% discount rate and replace it with a risk free rate...

Faulty accounting and reporting methods obscure the magnitude of unfunded liabilities. Partly in response to the devastating impact of the Great Recession, the Governmental Accounting Standards Board (GASB) made two significant changes in 2012 (Statement No. 67, Financial Reporting for Pension Plans and Statement No. 68, Accounting and Financial Reporting for Pensions) to the methods used for measuring the financial health of pension plans. GASB intended these changes to increase transparency, consistency, and comparability of pension information. Public pensions are now required to report their assets and liabilities using a standardized actuarial cost method, to disclose investment returns, and to include unfunded pension liabilities on state balance sheets.

 

Unfortunately, states have found ways to work around these requirements and paint an unrealistically rosy picture of their pension funding status.

 

The Center for State Fiscal Reform at ALEC analyzes the annual official financial documents of more than 280 state-administered pension plans using more realistic investment return assumptions in order to gain a clearer picture of the pension problem. The unfunded liabilities of each pension plan are revalued using a discount rate equal to a risk-free rate of return, best represented by debt instruments issued by the United States government. This year"s study uses a risk-free rate of 2.142 percent, derived from an average of the 10- and 20-year U.S. Treasury bond yields over the course of 12 months spanning April 2016 to March 2017. Based on these revised investment return assumptions, we report on total unfunded pension liability, unfunded pension liabilities per capita, and the funding ratio of these plans.

...and as you might expect, the results are fairly bleak.  In terms on aggregate underfunding, ALEC figures our taxpayer-funded pension ponzis are roughly $6 trillion underfunded, or roughly 2-3x worse that the often-quoted $2-$3 trillion underfunding calculated by state pension administrators.  Meanwhile, using ALEC"s discount rates, the state of California is nearly $1 trillion underfunded by itself.

So, what is your personal share of these massive public liabilities?  Well, if you"re in one of the 10 bottom states it"s anywhere from $25,000 to $45,000.  Of course, that"s the liability for every man, woman and child so the typical American household (with 2.57 residents) in those states is on the hook for $67,500 - $115,650.

Finally, and perhaps most shocking of all, ALEC found that when using a risk-free discount rate only 1 state pension in the entire country was more than 50% funded.

ALEC"s full report can be reviewed here:

Considering Faking Your Own Death? Then The Philippines Is The Place For You

The technical term is pseudocide - a fancy word that means, essentially, “faking your own death."

Hundreds of thousands of Americans - some struggling with seemingly insurmountable debt burdens or are being hounded by the IRS after stiffing the tax man - have probably fantasized about faking their own deaths. But few understand just how easy it is to - um - execute such an ambitious, if legally precarious, plan.

That’s where purveyors of so-called “death kits” come in. Few westerners are aware of its existence, but there’s actually a thriving cottage industry based in the Philippines, where investors can purchase all the tools they need to fake their own deaths for the surprisingly low price of about 350 pounds (about $500).

Of course, the scheme has several macabre elements. The process involves buying an unclaimed corpse from one of the many morgues in the Philippines where the bodies of John and Jane Does are stored.

According to the Telegraph, many customers who choose this route are desperate Wall Street bankers seeking to escape debt, and men having affairs who want to leave their families.

The Philippines has long been cited in official statistics as the foreign location with the highest number of American tourist deaths. But many of these fatalities are actually fraudulent, the result of desperate westerners faking their own deaths.

Take Elizabeth Greenwood, who “died” as a tourist in the Philippines in 2013. Multiple spectators witnessed her crash her rental car into another vehicle on a busy road in Manila, and doctors at the local hospital pronounced Greenwood dead on arrival - or so her death certificate would have you believe...

Greenwood, who was inspired to fake her own death by her ballooning student debt, is now working as a journalist in New York City after deciding at the last minute that she didn’t want to go through with the scheme.

She first stumbled upon the idea during lunch with a friend who joked about it after she finished ranting about the colossal size of her student debt. But the joke got her thinking. So she started Googling.

“I began poking around online and discovered that death fraud truly is an industry with a whole host of experts and consultants to help you go through with it, and that there are far more people than you might imagine who had done it themselves, with varying degrees of success,” Greenwood explains.

She eventually stumbled on a Wall Street Journal article from the 1980s that referenced “a southeast Asian country” where morgues pick up the bodies of derelicts and freeze them to help customers commit death fraud for insurance purposes.

Greenwood then discovered two elite private investigators, Steven Rambam and Richard Marquez, who consult for life insurance companies seeking to stamp out death fraud.

“Again and again, they named the Philippines as a hotbed for the kind of theatrical death fraud that involves false corpses,” she adds. “They sniff out life insurance fraud all over the globe - it is attempted everywhere - but they told me some memorable stories about cases they’d worked on in the Philippines, so I wanted to check it out myself."

The cost of death fraud can vary widely. A fake death certificate from the Philippines generally costs anywhere in the region of £100 to £350. Some will pay upwards of £20,000 to hire a professional fixer who will help them scratch their trail as they move forward with a new identity.

During a week-long stay in the Philippines, Greenwood found a pair of locals there who obtained a fake death certificate for her from a mole working inside a government agency. All the witness accounts were fake, and there was never a fatal traffic accident as outlined on the papers.

She never crossed the line and actually filed the documents with the US embassy.

“My death certificate sits encased in a plastic sheath at the bottom of my filing cabinet,” Greenwood states.

The difficulty of feigning one’s death depends on the purpose of the fraud. If one is trying to cash in a life insurance policy, then the fraud will require a body and an accomplice, since, without a body, most insurers will wait seven years before paying out a claim. This is why the cottage industry of fake morgues has sprung up.

Some fraudsters might go to the lengths of staging a funeral for their dummy corpse and filming it to submit to the insurance company, she adds, but in most cases, this is an unnecessary flourish.

If insurance fraud isn’t your ultimate aim, then the process of faking your death will be exponentially easier.

“If you’re not committing life insurance fraud, you needn’t go to all the extra trouble,” Greenwood told the Telegraph. “Staging a more open-ended, elegant escape, like disappearing while on a hike, usually looks more believable to investigators."

While insurance companies typically hire private investigators to sniff out death fraud, few cases are ever prosecuted, particularly if they were committed on foreign soil. Often, the only punishment for death fraudsters is their insurance claim being denied.

Greenwood cites one example of a German woman who faked her death and whose fraud remained undiscovered for two decades.

When German authorities discovered she was alive in 2015, after being presumed dead since 1985, the only penalty she shouldered was the trouble of filling out the paperwork necessary to declare herself still alive.

Death fraud happens “constantly”, Greenwood said adding that she detected a spike in cases around the financial crisis.

But while faking one’s death on foreign soil is easier than many believe, the reasons people get caught are also simpler than many might assume.

Particularly if an accomplice is battling it out with an insurance company, fraudsters are typically caught when they try to reach out to loved ones or their parents.

As it turns out, even if they’re dead on paper, many people just can’t cut the ties to their old lives.
 

Are You Infuriated Yet?

Authored by Chris Martenson via PeakProsperity.com,

More and more, I"m encountering people who are simply infuriated with how our "leaders" are running (or to put it more accurately, ruining) things right now. And I share that fury.

It’s perfectly normal human response to be infuriated when an outside agent hurts you, especially if the pain seems unnecessary, illogical or random.

Imagine if your neighbor enjoyed setting off loud explosives at all hours of the day and night. Or if he had a habit of tailgating and brake-checking you every time he saw your car on the road. You’d been well within your rights to be infuriated.

Or to use a much more common example from the real world : When your politicians repeatedly pass laws that hurt you in favor of large corporations -- that, too, is infuriating. Especially if those actions run directly counter to their campaign promises.

There’s a lot of be infuriated about in the world today, so go ahead and embrace your rage. By doing so, you’ll be in a better mindset to understand things like Brexit, Catalonia, and Trump, each of which is a reflection of the fury of your fellow citizens, who are finally waking up to the fact that they"ve been victims for too long.

An easy prediction to make is that this simmering anger of the populace is going to start boiling over more violently in the coming years. Welcome to the Age of Fury.

"Over The Top" Dumb

Do you ever get the sense that, as a society, we"re being dangerously reckless? Perhaps so dumb that we might not recover from the repercussions of our stupidity for many generations, if ever?

There are economic and financial idiocies in motion that are, by themselves, unsolvable predicaments without a peaceful solution. But when combined with resource depletion and declining net energy, they"re positively intractable.

Take for example the hundreds of trillions of dollars-worth of underfunded entitlement and pension promises. Those promises cannot be kept and they cannot be paid. Everybody with a basic comprehension of math can conclude as such.

Yet we continue to operate as if the opposite were true. We comfort ourselves that, somehow, all the promised future payouts will be made in full -- even though the funds are insolvent, their returns are much lower than the actuarial projections require, and payout demand mercilessly rises each year.

Spoiler alert: This isn’t some future disaster lying in wait. It’s unfolding right now.

Take these headlines spanning the past several years:

• Congress approves plan to allow pension cuts (Dec 2014)


• 273,000 union workers and retirees brace for pension cuts (May 2, 2016)


• In unprecedented move, pension plan cuts benefits promised to retirees (Jan 27, 2017)  -- note the laughable use of "unprecedented" here


• Teamsters face 31 percent pension cut (Mar 7, 2017)


• New York State Teamsters pension fund cuts approved (Sept 13, 2017)

When it comes to broken retirement promises, the future is now. It will be with us for a very long time.

Why? Because the math simply doesn’t work. It’s broken, it’s been broken for a long time. You can"t put too little in the piggy bank at the start, then raid it over time, and still expect to have enough at the end.

And yet we, as a society, have preferred to pretend as if that weren’t the case. Which, it turns out, was a terrible “strategy.”

But if you think that"s bad, you’re going to positively hate this chart:

The pension liabilities now blowing up are contained within the thin green smear in the middle of this chart. Think on the nation"s inability to handle that single crisis, and now reflect on how overwhelmed it"s going to be by the far larger predicaments that lie elsewhere on the chart.

The Infuriating Plunder-fest That Is Health Care

The Medicare liabilities (the orange and largest band on the above chart) are immense, and will only become more so as our largest demographic, the baby boomers, further ages. But they become especially infuriating when seen in the larger context of the racketeering that drives the health care system in the United States.

Instead of doing anything constructive about the high number of IOUs building up within Medicare, Washington DC politicians are sidestepping the most obvious elements that contribute the most to the problem. Enormously wasteful, the “healthcare” system is entirely out of control and spiraling deeper into an abyss that threatens to literally destroy the most productive segment of the US social structure: the middle and upper middle classes.

That should be a topic of serious discussion in the halls of power. But none is being had.

Literally each day brings worse news on the skyrocketing costs of healthcare. But, as with most topics,  the media mostly focuses on the symptoms (prices) rather than the causes of the issue.

The real culprits here are the insurance cartel and a hospital system that has the most unfair, incomprehensible, and inhumane billing process ever devised. One easy to grasp feature of both the insurance companies and conspire to pay the executives far more than they actually deserve or are truly worth.

Health care premiums for 2018 set to go up by as much as 50 percent

Oct 5, 2017

 

Several states have announced rates for health insurance premiums on the Obamacare exchanges for 2018. Topping the list is Georgia, with rates that are 57 percent higher than last year, while Florida said some premiums will be 45 percent higher.

 

Among the reasons for these increases is the uncertainty about the future of the Affordable Care Act. President Donald Trump has vowed to repeal and replace the health care law, which was passed under his predecessor President Barack Obama.

 

Insurers are raising premiums in the face of repeated threats from President Trump to stop funding so-called cost-sharing reductions, payments to insurers that cover out-of-pocket costs for some low-income consumers. Trump previously referred to these payments as “bailouts” for insurance companies and threatened to stop making the payments so as to “let Obamacare implode”.

(Source)

That’s the story the health insurers are going with: they have to raise rates because they"re uncertain whether they will get AS MUCH LOOT under the new rules being considered as they did under the utterly disastrous Obamacare provisions.

How much loot are we talking about? Look at this chart of the stock price of United Healthcare (UNH) since the passage of the Affordable Care Act (aka Obamacare):

If this chart showing massive near-4x gains in just 5 years, coupled with your steep annual premium increases, doesn’t infuriate you, you are just not getting it.

Even if your employer pays for your health care (somewhat obscuring the true impact of premium increases), the cost to you is fewer and lower pay increases, as well as steady yearly reductions in covered services along with higher co-pays and deductible amounts.

Still not infuriated? Ok, maybe this will do the trick. Here how much executive compensation at the major insurers was last year:

(Source)

The average family health care insurance premium in 2016 was $18,764, meaning that Mark Bertolini from Aetna alone required 100% of the premiums from more than 2,200 families just to pay him in 2016. Of course, the “C-suite” of these health care insurers are loaded with other high-paid parasites who are just as busy gouging the young and old alike.

This is a complete travesty and joke. Congress and the Senate, sitting on their deservedly low approval ratings, pretend they cannot do anything about it. Too complicated they say. Bullshit I say. Go after the obscene pay packages and profits of the insurance industry as a first matter of business. Then make it a crime for hospitals to bill people differently for the exact same services.

That’s a no-brainer. Can you imagine if your mechanic had a secret pricing formula for every customer that was, literally, based on their maximum ability to pay? Nobody would stand for it, it’s disgusting that we tolerate this when it comes to something as vital and necessary as our health and even lives.

Fury, not tolerance, is what"s needed now.

Conclusion (to Part 1)

The future has arrived. The pension losses are here and just getting started and the future will have a lot more of those sorts of broken promises.

The health care insurance crisis has been with us for 20 years or so now and Obamacare just put some extra accelerant on that fire, which is now consuming middle class households by the tens of thousands.

Both the pension and health care crises are infuriating and self-inflicted wounds. We could have avoided them by making wiser choices in the past. We didn"t. We could limit their damage by making better choices today. We almost assuredly won"t.

Current conversations and proposals are thinly disguised sleight-of-hand movements whose purpose is to deflect attention from the thefts underway. Anybody who studies the system and its math comes to the same conclusion: the corporations have all the power and they are misusing it for private gain.

Why there aren’t more politicians willing to call a spade a spade and actually protect their constituents is a real mystery. But the next wave of populist candidates certainly won’t be. People are sick and tired of being asked to give more and more while corporations and wealthy elites keep taking more and more.

It’s simply infuriating.

But that’s not the worst of it. The mistakes we are making right now in terms of energy policy and ecological destruction are far more dangerous to your personal health, liberty and future prospects than a simple market crash.

In Part 2: It"s Time For Action, we uncover the hidden downside risks in today"s financial markets and explain how, as destructive as a coming market crash will be, the longer-term damage to society and risks to your well-being are rooted in the potential breakdown of the systems we depend on to live. As with pensions and health care, we are pursuing similar dangerously misguided policies in our farming & food systems, extraction of industrial resources, and ecological management -- to name just a few.  There"s an appropriate time for fury. And that time is now -- provided we use the anger to spur us into constructive action. Get your fury on. Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

 

Vulture Investors Swarm To Houston As Flooded Homes Sell For 40 Cents On The Dollar

      "The time to buy is when after there"s blood water in the streets."

As 1,000"s of families along the Texas shoreline continue to struggle with putting their lives back together following the apocalyptic landfall of Hurricane Harvey roughly 6 weeks ago, vulture investors are increasingly swooping in to exploit their misery with offers to buy flooded homes for cents on the dollar.  As Bloomberg points out this morning, one such investor is Bryan Schild who has sourced capital from local "hard-money lenders" to scoop up 30 flooded homes for as little as 40 cents on the dollar.

Bryan Schild drives through the byways of Houston looking for what could be the investment opportunity of a lifetime: homes selling for as little as 40¢ on the dollar. “We Pay Cash For Flooded Homes $$$$$$$$ Don’t fix it, sell it. Quick close,” read the signs piled in the back seat of his Ford pickup.

Schild stops by a ranch-style house where 74-year-old Paul Matlock lives with his wife, disabled from multiple sclerosis. Matlock is desperate to leave and is considering Schild’s offer of $120,000—half the home’s value three weeks earlier. A half-dozen other investors have made offers, one as low as $55,000. “The whole thing makes me feel like there’s a bunch of vultures sitting on my back fence,” Matlock says. “They’re waiting for the dead body to fall over.”

It’s axiomatic on Wall Street that the time to buy is when fear overtakes greed—when blood (or, in this case, water) is in the streets. Now some are eyeing the billions of dollars in hurricane-ravaged property in Texas and Florida and deciding it may be the time to take out their checkbooks. Investors such as Schild figure they can buy low, either fix up and flip the houses or rent them out for several years, and unload them later, doubling their money or more.

And if exploiting the elderly isn"t enough to make you a little queasy, how about taking advantage of a disabled Army vet who has been forced to live out of a hotel room and eat two meals a day just to save a little cash after he lost his home to Hurricane Harvey...

One of Schild’s prospects is Joseph Hernandez, a disabled U.S. Army veteran married to a housekeeper. The couple are living in a hotel and saving money by eating only two meals a day. Schild has made them a painful offer. If they walk away from their two-bedroom house, worth $127,000 before Hurricane Harvey, Schild will pick up the mortgage payments, paying nothing else. Although he says he sympathizes with the Hernandezes’ plight, he thinks the offer is fair because he figures the home is now worth less than its $65,000 mortgage.

Hernandez is in a bind. He didn’t buy flood insurance because his house wasn’t in a high-risk area. He can’t afford to rebuild, and he’s been told he’s eligible for only $23,000 in federal assistance. If he turns over the deed, he’s looking at losing the entire $60,000 in equity he had before the flood. “It’s blurry, what’s coming,” he says. “We’ll probably have to sell to an investor, and that’s not good. We were forced out.”

Hernandez isn’t ready to take Schild’s deal. But Matlock, who rescued his disabled wife from chest-high water, is tempted by the investor’s $120,000 offer. Their home, now stripped to the beams, has flooded twice in two years. Schild says Matlock should be able to recover much of his loss on the house’s value through federal flood insurance. (In past storms, homeowners have complained the program lowballed them.) Before he leaves, he asks Matlock to spread the word. “Anybody looking to sell, tell them to call me,” he says. “I’ll give them a bid.”

But, it"s not just small-time, local investors looking to earn big profits from the misery of displaced Texans.  Nope, wall street investors, led by Bain Capital, are also getting involved.

The cycle begins with small-time investors such as Schild, who’s bought more than 30 waterlogged houses for an average $175,000 apiece. Then Wall Street swoops in. Gary Beasley, former chief executive officer of Waypoint Homes, also sees an opportunity. He’s pitching private equity firms and pension funds on the potential profit in buying flooded homes, repairing them, and renting them back to homeowners.

Bain Capital LP and billionaire Marc Benioff, co-founder of Salesforce.com Inc., are backing Beasley’s two-year-old company, Roofstock Inc. It runs a website where investors can buy and sell single-family rental properties. Beasley thinks owner-occupants may be interested in selling there, too, and that flooded neighborhoods are the Next Big Thing. “It’s much like the housing crisis, when the institutional guys came in to buy homes nobody wanted,” he says. Like other investors, Beasley and Schild view themselves as helping homeowners to move on and Houston to rebuild.

Of course, as Andrea Heuson, a finance professor at the University of Miami, points out, most of the people selling aren"t doing so because of a lack of financial sophistication that impairs their ability to comprehend the fact that they"re getting shafted but rather just a complete lack of alternatives.

Others take a less rosy view. “What worries me is people making pretty dramatic decisions without the education to figure out what the alternatives are and without looking at the situation rationally,” says Andrea Heuson, a finance professor at the University of Miami who specializes in mortgages. Some of those considering Beasley’s strategy don’t want to be named for fear of looking like catastrophe profiteers, Beasley says.

Many homeowners would be forgiven for panicking. During hurricanes Harvey and Irma, wind and water damaged almost 1.8 million homes, causing uninsured flood losses of as much as $57 billion, according to CoreLogic Inc., a real estate data firm. Homeowners without federal flood insurance are most likely to be desperate. Those with policies don’t yet know how much they’ll get for their losses, which is key to deciding whether it makes sense to sell.

On the upside, these displaced families will be able to buy their homes back from Bain at double in the price in 5 years or so...

Trump to Expedite the Death of Obamacare; Healthcare Stocks Clown-Punch Lower

Content originally published at iBankCoin.com

Over the weekend it was announced that President Trump was going to ditch restrictions that banned people from buying health instance across state lines. For the love of God, he"s going to allow competition and not force you to buy from your state monopoly. While this might sound wonderful, it will expedite the death of Obamacare -- which is probably the gameplay here.

Trump can"t get his way, so he"s gonna burrrrn the whole kit and caboodle down.

Source: Washington Examiner

The plans offered by associations would be less expensive because they wouldn"t have the same requirements as Obamacare coverage. For instance, they wouldn"t be required to cover customers with pre-existing illnesses and could either deny coverage or charge these customers more. They also would not be required to provide coverage for a range of medical care, from addiction to maternity services. Insurers would be likely to sell coverage from a state with the fewest restrictions, which is why its supporters bill it as a move that would allow a long-stated conservative goal to sell health insurance across state lines.
 
Association health plans used to be more common before Obamacare, which placed restrictions on their use.
 
Lifting these protections would offer less comprehensive coverage, but would also make health plans less expensive. Critics worry that they set people up for "junk insurance" and would further destabilize the Obamacare exchanges, which already are plagued with mass exits by insurers and double-digit premium hikes. The move, critics say, could result in an even sicker population on the exchanges while healthier customers are picked off into the association health plans.
 
Still, the proposal is popular with conservatives. Middle class customers who don"t receive subsidies under Obamacare are facing the prospect of buying more expensive coverage in 2018 through Obamacare"s exchanges, and could avail themselves of the option. Through a short-term health insurance option, they face similar coverage as those sold on association health plans.
 
The increases these customers face come as a result of lack of profitability in the markets as well as vast uncertainty over what the Republican-controlled Congress and the Trump administration would do about the law as they sought for months to repeal or overhaul portions of it.

 
A backdoor way of totally destroying Obamacare and there is nothing anyone can do about it -- chaos theory.

Healthcarefags, BTFO.

ESRX -5%, ABC -3%, CYH -6%, THC -5%, LPNT -3%, CVS -3%, DVA -8.5%, AAC -5.5%, ACHC -4%.

The only outlier: HIIQ.

Health Insurance Innovations: Trump rollback benefits HIIQ -- Canaccord Genuity (18.05 +1.15)

Canaccord notes that in light of WSJ reports that President Trump intends to roll back certain health insurance regulations concerning short-term medical insurance, which should have a direct benefit to Tampa-based Health Insurance Innovations (HIIQ), firm feels, "This should be positive for HIIQ: Even though 2Q"17 was still a strong quarter, we believe results would have been even better (specifically at Agile) if the Obama policy did not go into effect; thus, we believe the reversal of the three-month limitation rule will be positive for growth at Agile in addition to providing a greater sense of legitimacy for STM insurance, especially in light of the recent negative sentiment generated by the various short reports. Furthermore, we would point out that a main driver of the stock"s performance since Trump won the election was the potential for him to de-regulate the insurance industry and reverse the three-month limitation; thus, it is encouraging to see this play out."

"Lies, Lies, & OMFG More Lies!"

Authored by Jim Quinn via The Burning Platform blog,

“There are three types of lies — lies, damn lies, and statistics.” – Benjamin Disraeli

Every month the government apparatchiks at the Bureau of Lies and Scams (BLS) dutifully announces inflation is still running below 2%. Janet Yellen then gives a speech where she notes her concern inflation is too low and she needs to keep interest rates near zero to save humanity from the scourge of too low inflation. I don’t know how I could survive without 2% inflation reducing my purchasing power.

This week they reported year over year inflation of 1.9%. Just right to keep Janet from raising rates and keeping the stock market on track for new record highs. According to our beloved bureaucrats, after they have sliced, diced, massaged and manipulated the data, you’ve experienced annual inflation of 2.1% since 2000. If you believe that, I’ve got a great real estate deal for you in North Korea on the border with South Korea.

“Lies sound like facts to those who’ve been conditioned to mis-recognize the truth.” ? DaShanne Stokes

Ignore that silly Shiller PE ratio far surpassing 1929 and 2007 levels. Ignore every historically accurate valuation method showing the stock market 70% to 129% overvalued. Wall Street shysters like Jamie Dimon, faux financial analysts, corporate media talking heads and even Donald Trump tell you this time is different. Tax cuts, amnesty for illegals, more wars, and eliminating the debt ceiling will surely spur massive economic growth. Trillion dollar deficits are always bullish. Making America Great with More Debt should drive the stock market to 30,000 in no time.

All is well. Real median household income just surpassed the level achieved in 1999. Think about that for a second. It took seventeen years for the average American family to get back to a household income of $59,000. The $59,000 of household income in 2017 doesn’t quite go as far as it did in 1999, with even BLS manipulated inflation showing an 87% increase in medical costs, 80% increase in energy costs, 51% increase in food costs, 53% increase in housing costs, and a 115% increase in college education. And of course the BLS changed their methodology, boosting household income by $1,700 in 2013. So, in reality it is still below 1999 levels.

When you consider 50% of all households make less than $59,000, have not benefited one iota from the Fed/Wall Street debt engineered stock bull market, have less than $1,000 in savings, and less than $50,000 of retirement savings, you realize your Deep State masters must propagandize economic data and manipulate inflation and unemployment figures to keep the masses confused, deluded, and misinformed. The Big Lie is their strategy of choice.

The lies built into the politically motivated CPI figure are designed to screw senior citizens, bond investors, and average hard working Americans who depend upon annual salary increases to keep their heads above water. Corporations are able to point to the low levels of CPI as the reason they don’t need to provide higher salary increases. The government can get away with providing little or no Social Security increases to senior citizens by purposely under-reporting inflation based upon academic theories put forth by captured Ivy League pinheads paid off by the Deep State.

The chart below provides the government reported cumulative increases in key categories since 2000. Not only does the government purposely under-report the increases in these costs, they also purposely under-weight the significance of particular categories in order to reduce the reported level of inflation. Some of these categories show significant increases, but they are far lower than what average Americans are actually experiencing in the real world.

One of the outrageous examples of how the government uses academic gibberish about product improvements to drastically under-report CPI is how they report new vehicle inflation. The average price of a new car in 2000 was $22,000. Today, the average price is $34,500. That’s a 57% increase. The BLS bullshit artists have the gall to report new vehicle inflation of a whopping 2% since 2000.

They have “adjusted” away 55% of the actual increase by saying airbags and other unnecessary technological baubles improved automobiles to such an extent, prices didn’t really go up. What a fucking joke. Having your ass warmed with the push of a button didn’t put the extra $12,500 in your bank account to pay for that car. And new vehicles account for 3.6% of the CPI calculation, while health insurance accounts for 1% of the weighting. Yeah, that reflects reality.

Another outrageous example of under-reporting inflation is in the highest weighted category of housing. It is supposed to reflect the cost of rent and home ownership. The owners equivalent rent calculation is purposely opaque in order to suppress the true cost increase. Median home prices were $165,000 in 2000 and are currently $317,000, a 92% increase. The average rent of $475 in 2000 has risen to $910 today, also a 92% increase. So it makes total sense for the BLS drones to report a 53% increase in housing since 2000. I’m sure their academic model adjusted the true increase downward by 39% due to some obscure algorithm created by a Princeton economics professor.

Medical care advancing by 87% since 2000 sounds substantial, but that only equates to annual inflation of 3.5%. I’d love to find anyone in this country who has only seen their medical costs rise by 3.5% per year. The blatantly shameful falsification of medical inflation is evident to anyone living through the current Obamacare nightmare. According to these BLS prevaricators, health insurance has only risen by 21% since the passage of the Obamacare abortion bill. That lie is beyond comprehension as anyone living in the real world has likely experienced insurance premium increases exceeding 100% since 2009.

I work for the largest employer in Philadelphia, with the most leverage in negotiating insurance premiums with the health insurance complex. I also have tracked my expenditures by category since the 1990’s with Quicken. I know exactly what my medical costs and health insurance costs were in 2009 and what they are today. Let’s do a reality check on the BLS inflation figures of 26% for medical services and 21% for health insurance premiums.

Back in 2009 we had no individual or family deductibles, no co-pays for lab work, and low co-pays for doctor visits. Today, with $1,500 individual deductibles and co-pays 70% higher, our annual medical expenses are 140% higher than they were in 2009, with one less person in the house. That’s slightly more than the BLS fraudulent figure of 26%. Our annual health insurance premiums aren’t 21% higher than 2009. They are 90% higher. And I work for an employer that has negotiating leverage. Many Americans are experiencing 200% to 400% increases. This is the real world, not some excel spreadsheet model world created by academics, politicians and bureaucrats.

Could the BLS be as incompetent in capturing medical inflation as they appear or are they massively under-reporting the true inflation and the weighting for the average American family on purpose? I would contend it is purposeful and directed by those in power as a last ditch effort to keep the masses from revolting and hanging them from the nearest lamppost. The Federal Reserve and their Deep State co-conspirators must massively understate true inflation because reporting the truth would require interest rates to be raised, Social Security payments to be increased, and wages to be elevated – blowing a gaping hole in the federal budget and initiating a stock, bond and housing market collapse.

Those in power know their decades of propaganda and social engineering in public schools have dumbed down the masses to such an extent not one in ten could even tell you what CPI stands for, let alone how it is measured. Any critical thinking intelligent person aware of their daily costs knows their true annual inflation rate isn’t 1.9%. It exceeds 5% and has exceeded 5% since 2000.

Anyone reading and understanding this article is a dangerous man to the government. We know they are dishonest, insane and intolerable. Our job is to spread discontent until a tipping point is reached. I don’t think we are too far away.

“The most dangerous man to any government is the man who is able to think things out for himself, without regard to the prevailing superstitions and taboos. Almost inevitably he comes to the conclusion that the government he lives under is dishonest, insane and intolerable, and so, if he is romantic, he tries to change it. And even if he is not romantic personally he is very apt to spread discontent among those who are.” ? H.L. Mencken

Catastrophe Bonds Suffer Biggest Crash In History

Lat week, when the eye of Hurricane Irma was still expected to pass over Miami, resulting in potentially unprecedented damages, including dramatic losses to the P&C sector, we reported that "Catastrophe Bond Investors Face Wipe Out As Hurricane Irma Approaches." This was partially validated by several liquidation trades, the most prominent of which was the plunge in the Citrus Re Cat bonds, which were repriced from par to 50 cents on the dollar after someone dumped a massive chunk of the paper heading into this weekend, unwilling to hold on further risk exposure which according to some of the more aggressive loss estimates, saw as much as the entire principal on the issue wiped out.

As it turns out, it wasn"t just that one Citrus Re seller who got spooked: following the latest weekly remarking of the Swiss Re Cat Bond price return Index, the entire catastrophe bond sector saw broad-based, pardon the pun, liquidations last week and as a result was marked down by a record 16% on Friday, wiping out all of the year"s gains and then some.

And yet, despite concerns of a worst-case scenario, hurricane Irma weakened as it moved past Tampa on Monday, leaving in its wake a state that avoided the worst predictions of its destruction by sea and storm.

“Miami and Miami Beach, we didn’t dodge a bullet, we dodged a cannon,” Miami Beach Mayor Philip Levine said in an interview Monday morning.

So in light of the sharp reduction in estimated damages from Irma, investors are assessing whether the record plunge in cat bonds is justified and if it makes sense to, well, BTFD.

As reported earlier, various analysts have released revised damage numbers on Monday, prompting a sharp squeeze in P&C stocks. As Bloomberg reported, Chuck Watson, an Enki Research disaster modeler in Savannah, Georgia, had predicted total damages as high as $200 billion. However, the hurricane dwindled to a Category 2 before reaching the Tampa Bay area. That could keep damages under $49 billion, with insured losses at about $19 billion, sparing insurance companies, Watson said. Bloomberg Intelligence analyst Jonathan Adams puts insured losses now at $13 billion, down from an earlier estimate of $33 billion.

Citi, similarly, reduced its Irma-related losses from $150 billion to only $50 billion; AIR Worldwide lowered its top estimate for U.S. insured damage from Hurricane Irma to $40 billion from $50 billion, maintaining the low end its expected range at $20 billion, according to Artemis.

By comparison, total losses from Hurricane Katrina reached $160 billion in 2017 dollars after it slammed into New Orleans in 2005. While Irma didn’t reach that level of destruction, it could surpass the damage caused by 1992’s Hurricane Andrew that punched its way across the Florida peninsula.

Furthermore, as Gadfly notes, on Saturday, risk modeling company RMS said there"s only a 10% chance that wind losses from Irma will exceed $60 billion, an estimate that will be drastically lowered further this week. That should give a further boost to the cat bond market, as 60% of it is linked to wind damages.

The weighting toward wind makes sense, as it"s much easier to model. Flood is a different matter -- it"s much harder to project losses, and so comprises a much smaller part of the catastrophe bond market, which itself occupies one corner of the reinsurance sector known as the insurance-linked strategies market.

And while flood-related losses will likely be sizable, worries here are more constrained as they are more broadly diluted across the entire Insurnance-Linked Securities space:

"instruments linked to flood risk are dispersed across the ILS market, and a wobble in one of them need not affect the whole sector. As concern begins to shift from the initial storm hit to the damage from rising water levels, it looks like both the ILS and cat bond markets will be able to cope with the damage, and the rest of the U.S. storm season."

And so, following a restless weekend in which the smallest of revisions in the hurricane"s path resulted in dramatic downstream consequences for billions in assets, investors are offered yet another opportunity to generate short term returns, this time courtesy of Buying The Hurricane Dip.

The Next Shock For Texans: Insurance Often Doesn't Cover Floods

A complete assessment of the property damage wrought by Hurricane Harvey will take weeks, if not months, to deliver. But as the first disaster victims return to their homes, some are being forced to confront an unfortunate reality: Gaps in their homeowners’ insurance that will leave them on the hook for thousands of dollars’ worth of damages.

According to analytics firm CoreLogic, hundreds of thousands of affected residents in Texas and Louisiana aren’t insured for flooding damage. The firm estimated that residential flooding has caused $25 billion to $37 billion in damage spread across 70 counties in Texas and Louisiana hit by Harvey. Of that, about 70%—or $18 billion to $27 billion—is uninsured.

Scientists have confirmed that Harvey caused a "1-in-1,000-year flood" and that the total cost of property damage and lost productivity could be as high as $190 billion.

One homeowner who spoke with the Wall Street Journal said the first thing she did when she returned to her home was check the details of her insurance policy.

“Among them is Andrea Womack, a 38-year-old mother of four.

The carpet and some clothing in her one-story house in Houston’s Settegast neighborhood were damaged by water. On Friday morning, Ms. Womack was waiting for an insurance company representative to come by and go through what was covered.

‘I signed up for insurance a while back, but on my papers it says it does not cover flood insurance. So I’m not sure’ what will be covered, she said.”

The Federal government’s flood-insurance program has written 250,000 policies for Houston residents, compared with 1.7 million housing units that may’ve experienced flood damage, according to WSJ.

“Overall, households and businesses in Harris County, which includes Houston, held roughly 249,000 federal flood insurance policies as of June 30, according to the Federal Emergency Management Agency. There are about 1.7 million housing units in the county.”

The reason is simple: Even in flood-prone areas, many homeowners don’t read the fine print of their insurance policies until disaster strikes.

“Many homeowners never examine details of the policies they buy, and it is only after a flood they learn the basics: Standard homeowners’ policies provide payouts for damage from wind, fire, fallen trees and other storm-related events—but not flooding. For that, people generally need to buy separate policies from the U.S. government, through its nearly 50-year-old National Flood Insurance Program.”

In an ironic twist, homeowners with mortgage debt might be better off than their peers who own their homes outright.

“Those homeowners who do have flood insurance are likely those whose mortgage lenders require it, said Etti Baranoff, an associate professor of insurance at Virginia Commonwealth University.

‘The mortgage company checks if your home is in a flood zone or not, and they’ll make you take’ a policy out if so, she said.”

But even those who bought flood insurance from the federal government may not receive enough to cover all their property damage, according to WSJ. These policies pay out a maximum $250,000 for rebuilding and $100,000 for personal possessions.

Some homeowners are putting the cleanup on hold until they’ve spoken to an insurance agent.

“"That’s kind of storm Houstonians judge everything by,’ said Mr. Truss, 36 years old. ‘It did not flood during Allison.’

Even so, the couple’s bank still required them to get a federal flood policy that they bought through their Allstate agent.

‘We’re hearing you have to have [all the damaged items] to get insurance’ claims paid, Mr. Truss said, surveying the piles of clothes, toys and books in his front yard. He said he was initially going to wait until he heard from insurance officials before clearing out the house, but “it would be a disaster if we kept waiting any longer.

He’s trying to photograph every item to show an insurance adjuster eventually.”

The National Flood Insurance Program is already bracing to pay out claims equal, or perhaps larger, than the amount disbursed after Superstorm Sandy.

“Standard homeowners’ policies do pay for some damage from water—such as if it enters the house after the wind rips off the roof or a tree crashes through the attic. But if water overflows a riverbank or gushes down a street to seep into a house, the homeowner can expect a claim to be rejected, according to industry lawyers.

The federal flood insurance program’s payouts for Harvey appear on track to rival those made for superstorm Sandy in 2012, the nation’s third costliest hurricane (behind Katrina in 2005 and Andrew in 1992.) So far, 130,622 Sandy claims have cost the program $8.4 billion, an average of $64,331 apiece, according to the Insurance Information Institute trade group.”

And in what’s likely to be a boon for auto makers, payouts for car-related damages could be “several times larger” than those for homes.

“Insurers’ payouts for cars damaged by Harvey’s flooding could be several times larger than those they make for homes. Investment bank Keefe, Bruyette & Woods puts insured personal and commercial auto costs at roughly $4.7 billion. But not all the estimated 500,000 vehicles flooded by Harvey are covered by insurance.

Overall private-market insurance payouts for Harvey are expected to be dominated by payments to business policyholders and range from $10 billion to $20 billion altogether. At the high end, they would likely top those for Sandy, which cost $19.8 billion in 2016 dollars, according to the Insurance Information Institute.”

However, KBW noted that 13% of Texas motorists don"t own any car insurance whatsoever, according to Insurance Research Council. And of those who do, more than a fifth don"t buy " comprehensive" coverage, which protects against flooding damage. Many vehicle owners go with just the bare-bones liability coverage that is required by law.

In areas where homes were damaged by both flooding and wind, homeowners should expect insurers to try and dispute some of their claims, according to WSJ, local courts should be sympathetic to homeowners.

“If there is a breath of wind and breath of storm surge, that ought to be enough to put in front of the Texas courts and ask for relief for these people,” said David Wood, a policyholder lawyer for corporate clients at Barnes & Thornburg LLP in Los Angeles."

While individual homeowners may end up settling for reimbursements that don’t cover the damage, at least, according to JPM, the economies of the 70 counties affected by the storm may find an “offset” in the construction boom expected to follow the storm. The investment bank says it could provide a slight boost to US GDP estimates in the third and fourth quarter.
 

Massive PBGC Rate Hikes Force Corporate Debt Binge As Companies Try To Pay Down Pensions

As if defined benefit pensions funds weren"t fun enough for corporate shareholders, the Pension Benefit Guarantee Corporation (PBGC), the federal entity that backstops pension obligations when companies default, has enacted massive increases in insurance premiums for operating such plans over the past 5 years. 

Ironically, the premiums started to skyrocket during Obama"s second term with flat-rate premiums nearly doubling from $35 per participant in 2012 to $69 per participant in 2017.  Moreover, the variable rate premium paid by corporations nearly quadrupled over the same period from $9 per $1,000 of Unfunded Vested Benefits (UVBs) to $34.

Meanwhile, the rate-hike party at the PBGC is hardly over.  Corporate pension operators can expect another 16% and 24% hike in flat and variable-rate premiums, respectively, over just the next two years.  Which should be plenty of money to hire a bunch of new bureaucrats...

Sometimes its the taxes that aren"t necessarily called "taxes" that sting the most.

Of course, companies aren"t simply sitting back and accepting the massive "tax" hikes from the PBGC.  No, instead they"re crystallizing their pension debt with real debt.  As the Financial Times notes, investment grade corporate debt is yielding 3.11% today which is a full point less than the 4.2% "premium" companies will have to pay the PBGC on UVB"s starting in 2019.

Companies also face a higher penalty on their unfunded pension plans from the Pension Benefit Guaranty Corporation. The premiums are based on the number of employees a company has in its defined benefit pension pool, as well as the size of its deficit. By 2019, that fee is expected to rise to 4.2 per cent, according to Bank of America Merrill Lynch.

“Only now can companies deal with the problem by issuing bonds at no incremental cost,” said Hans Mikkelsen, a strategist with the bank. “They pay the same or less to service the bonds than the insurance fees. And you know the insurance fees are going to go up.”

Yields on corporate debt remain historically low. Merrill Lynch’s broad investment grade index, shows yields averaging 3.11 per cent.

Joe Nankof, a partner at Rocaton Investment Advisors, said other companies were having the same discussions about raising debt to fund pension contributions, particularly as their deadlines to file tax returns for 2016 nears. Many companies apply for extensions to submit their returns, with that looming on September 15 for some, he said.

In fact, even high-yield borrowing rates are looking attractive compared to the PBGC"s surging insurance premiums (a.k.a. "taxes").

And then there is also the chance, however small, that the Trump administration is actually able to lower corporate tax rates thereby reducing the benefit of future tax deductible contributions.

A number of companies are selling bonds and taking advantage of low borrowing costs to support their retirement obligations as corporate treasurers anticipate US tax reform in 2018.

As investors question the Trump administration’s ability to pass comprehensive tax reform, the prospect of lower tax rates next year is motivating an increasing number of companies to boost their pension contributions.

Such payments are tax deductible, allowing companies to lock-in savings at the current 35 per cent rate. Should the Republican-controlled Congress succeed in cutting corporate taxes, future deductions companies can take on pension fund contributions would also fall.

International Paper, the paper and packaging group, motor oil maker Valvoline, and US grocer Kroger have all issued debt to top up unfunded pension plans in recent weeks, according to filings with US securities regulators.

“The math speaks for itself,” Glenn Landau, the chief financial officer of International Paper, told the Financial Times. “That is a tax deductible contribution. And in case of any future tax rate changes — and we don’t know more than you know — it at least locks in the 35 per cent rates we have today.”

The costs of maintaining the nanny state....

There's Good News And Bad News For Obamacare Buyers In Iowa

The "good news" is that if you"re an Obamacare buyer anywhere in Iowa there is still one provider willing to sell you healthcare insurance, which wasn"t the case just a few weeks back when it looked like large areas of the state would have no providers at all.  The bad news is that your rates are going up 57% so you"re probably not going to be able to afford insurance anyway.

As the Des Moines Daily Register points out today, Medica is the only healthcare insurance provider still willing to offer Obamacare plans in the state of Iowa and they"re hiking rates by 57% in 2018 just to make it economically feasible.  Of course, Medica was also very clear to point out that it"s all Trump"s fault.

Iowans who buy their own health insurance through the Affordable Care Act exchange would see their rates increase nearly 57 percent next year under a revised rate proposed Wednesday.

The proposal is 13 percentage points higher than previously was estimated by Medica, the one remaining carrier selling individual policies in Iowa next year.

Medica attributed the additional increase to uncertainties over federal health care subsidies, the insurer said in a release.

“We remain hopeful the federal government will fund the cost-sharing reductions, but we are working with the Iowa Insurance Division to help consumers understand the implications of lack of this funding,” Geoff Bartsh, Medica vice president of individual and family business, said in a statement. “We regret the disruption this creates for consumers.”

Perhaps Medica didn"t notice but the Trump administration hasn"t even decided to cut federal subsidies yet...maybe we can all agree it"s just a little disingenuous to be blaming something that hasn"t even happened yet?

But, if federal subsidies are cut, even the CBO recently found doing so would cause a 20% increase in Obamacare premiums in 2018, no where near Medica"s 57% increase. Here are the highlights from the CBO report:

- The fraction of people living in areas with no insurers offering nongroup plans would be greater during the next two years and about the same starting in 2020;

- Gross premiums for silver plans offered through the marketplaces would be 20 percent higher in 2018 and 25 percent higher by 2020—boosting the amount of premium tax credits according to the statutory formula;

- Most people would pay net premiums (after accounting for premium tax credits) for nongroup insurance throughout the next decade that were similar to or less than what they would pay otherwise—although the share of people facing slight increases would be higher during the next two years;

- Federal deficits would increase by $6 billion in 2018, $21 billion in 2020, and $26 billion in 2026; and ? The number of people uninsured would be slightly higher in 2018 but slightly lower starting in 2020.

Meanwhile, Doug Ommen, Iowa"s insurance commissioner, pointed out the real reason Obamacare premiums are soaring in his state...healthy, young, working people who don"t qualify for subsidies simply can"t afford it and the result is a deteriorating risk pool that grows exponentially more expensive to insure with each passing year.

State Insurance Commissioner Doug Ommen said Wednesday that many middle-class Iowans will choose to forgo health insurance rather than pay the "extraordinarily high premiums."

"While those that are subsidized may not feel the full impact of this additional increase as their contribution is capped based on a percentage of their income," Ommen said, "those middle-class Iowans who do not receive federal subsidies and are paying the full premium cost out-of-pocket are forced to make very difficult choices."

Perhaps the smart thing for the Trump administration to do would be to leave the federal subsidies in place.  That way when Obamacare fails under it"s own weight there will be no ambiguity as to what caused it. 

What Would You Do To Fix America’s Rapidly Failing Health Care System?

You may be quite surprised by how people answered this question on Facebook. I posted the question in the headline to my Facebook profile, and I got dozens of responses. Obamacare has resulted in much higher insurance premiums, lower quality care and more red tape, and I have talked to so many conservatives that desperately want Congress to do something about it. Today, Americans spend more on health care per capita than anyone else on the planet, and yet we have one of the unhealthiest populations in the entire industrialized world. We must do better, and I believe that we can do better.

In this article, I would like to share my thoughts on just a few of the comments that were left on my Facebook profile. The original comments that were posted by others are in bold, and my responses follow each one…

“The Federal government should not be involved in health care.”

I definitely agree with that. Whenever the federal government gets involved in anything it tends to get worse. We once had the greatest health care system in the world, but the more that federal bureaucrats have gotten into the mix the more it has declined.

“A free market system!”

This just seems like common sense to me, but unfortunately most members of Congress don’t seem to agree. Free markets work if you allow them to, but the trend all over the globe is to move toward socialized healthcare. Personally, I believe that we need to move toward free market principles throughout our society, and true competition would do much to dramatically drive down health care costs.

“Crack down big time on Medicare fraud, leave feds out of healthcare.”

Medicaid fraud costs us about 140 billion dollars a year, and Medicare fraud has been estimated to be somewhere around 60 billion dollars a year. So if you we could just crack down on those two things, we could save up to 200 billion dollars a year.

“Break the FDA big pharma monopoly.”

Yes, there are way too many executives going back and forth between the FDA and the big pharmaceutical companies. I don’t understand why Republicans and Democrats both don’t want to fix this.

“Go hard after big pharma and hospitals for being the greedy pigs they are.”

Greed is a major problem in our health care system. Way too many are in it just to make as much money as possible, and that should not be what drives people into this profession.

“Let people join medical clubs like Sean Hannity proposes.”

Rand Paul has also suggested the same thing. We should allow any group of people to band together to purchase health insurance. That would greatly level the playing field between us and the big health insurance companies, and it would definitely help drive down costs.

In addition, models such as direct primary care that cut out the big health insurance companies completely should be encouraged. Health insurance companies are the number one factor driving up health care costs, and collectively they now make about 15 billion dollars in profits a year.

“Stop the illegitimate lawsuits based on greed. Again, doctors are human and unfortunate outcomes happen even when care was provided correctly. There are risks in everything.”

Tort reform is going to have to happen state by state, but it is desperately needed. Malpractice insurance has become exceedingly expensive, and doctors pass those costs along to their patients. If we ever want to drive down costs to where they should be, this is something that must be addressed.

“Be like Canada!!!!”

That sounds good, but it isn’t the solution to our problems. I personally know Canadians that have come down to the U.S. for care because they can’t get the care that they need back home in Canada.

“Legislation needs to be introduced that forces health insurance companies to compete across state lines.”

This is something that President Trump has been pushing for a long time, and I very much agree with him. Competition across state lines will drive down rates, and this is something that should be implemented as soon as possible.

“More emphasis on nutrition, education about whole foods and natural healing, non- GMOs.”

I very much agree. Today, most doctors only have two types of solutions to offer: drugs or surgery. I believe that natural solutions need to be incorporated much more extensively into our system of health care, and that is something that we should all be able to agree upon.

“Force all US Senators, Congressman and their families to be on whatever healthcare system they force on us peons. No exceptions!”

That only seems fair, right? If I am elected, I am going to push very hard to make sure that the same rules that apply to all of the rest of us also apply to all members of Congress. And if you would like to help make this a reality, I would encourage you to visit HelpMichaelWin.com.

Ultimately, I believe that we need to rebuild our system of health care from the ground up, and that begins with medical school. For decades medical schools have been greatly restricting the number of medical students, and now the growing doctor shortage in this country is becoming a major crisis.

Like others have proposed, I believe that we need to double the number of medical students immediately. And we need to do whatever else we can to promote more competition and the implementation of free market principles in our health care system.

It won’t be easy to fix things, and we have got a lot of corrupt politicians that we need to kick out of office, but I believe that we can get there if we all work together.

Beijing Blowback Begins: China Orders Anbang To Sell Its Overseas Assets

Two weeks ago, when discussing the troubles plaguing one of China"s conglomerates and "boldest dealmaker", HNA Group - recently best known for acquiring Anthony Scaramucci"s SkyBridge capital in a transaction that has yet to close - we said that what until recently was one of the world"s most aggressive roll-ups of varied companies from around the globe, including stakes in Hilton Companies and Deutsche Bank, as well as countless Chinese acquisitions, could very soon become the "reverse roll-up from hell", as the stock price of HNA tumbled, putting the roughly $24 billion in loans that had been taken against HNA stock in jeopardy of breachin their LTV limits, forcing a massive margin call, and potential firesale liquidation of the company"s assets as shown in the chart below...

... which have been hit with the double whammy of various rating agency downgrades in recent months, further eroding the collateral value of all of HNA"s various assets.

Yet while the fate of HNA"s conglomerate future still remains largely in the hands of the market, which could easily prompt a firesale if it were to push HNA stock low enough, another Chinese conglomerate may not have the benefit of the market"s potential generosity, because according to Bloomberg, Chinese authorities have asked HNA"s peer, Anbang Insurance Group, the insurer whose chairman was recently detained in June and was classified as a potential "systemic risk" to China"s economy, to sell its overseas assets.

In addition to demand a liquidation of many if not all assets acquired by Anbang over the past three years, the government also asked the company - whose Chairman will surely comply following his brief "detention" - to bring the proceeds back to China after disposing of holdings abroad, suggesting not only growing concerns about Chinese capital outflows, but Beijing"s apparent intention to undo the massive Chinese M&A wave that swept the globe from 2014  through most of 2016, and led to the infamous "Chinese acquisition premium."

Bloomberg notes that it is not clear yet how Anbang will respond, and in a WeChat message, the insurer said that “Anbang at present has no plans to sell its overseas assets," although that is sure to change once Beijing asks again, less politely this time. "Currently, Anbang’s various businesses and operations are all normal, and the company has ample cash and sufficient solvency capabilities.”

Anbang, together with HNA, Wanda and Fosun, were the four most prominent Chinese conglomerates which unleashed a buying binge across the globe, fueled by soaring sales of investment-type insurance policies. Since 2015, the four companies completed a combined $55 billion in overseas acquisitions, 18% of Chinese companies’ total, and according to some, were instrumental in accelerating China"s capital outflows over the same period.

Anbang first emerged in the public arena with its high profile 2014 acquisition of New York’s Waldorf Astoria hotel. Subsequently, Anbang and its peers acquired such trophy assets as AC Milan, Legendary film studios and Hilton Worldwide.

Anbang alone made billions in acquisitions in such businesses as the Westin St. Francis, InterContinental Miami, Rabobank"s mortgage portfolio and various other M&A targets around the globe.

However, it all ended with a thud in mid-June, when Anbang Chairman Wu Xiaohui was detained for questioning, while the policies fueling the company"s growth have been all but banned by regulators. At this moment Anbang is merely a shell corporation, with virtually no new business creation, one whose massive debt load threatens to careen the company soon if it does not find sources of cheap liquidity and fast.

At a twice-a-decade conference on financial regulation convened by President Xi Jinping this month, policy makers pledged to rein in corporate borrowing and said that preventing systemic risk was an “eternal theme.”

Making matters worse is that Anbang’s rise in recent years was fueled by sales of lucrative wealth-management products that offered among the highest yields compared with peers, a key spoke of China"s $9 trillion shadow banking universe. China’s insurance regulator this year started clamping down on what it termed “improper innovation” and tightened rules on high-yield, short-term investment policies. Anbang and other aggressive insurers such as Foresea Life got caught up in the crackdown.

Where Anbang"s death spiral could turn especially aggressive, is if Anbang customers start surrendering their policies and stop buying new ones, a feedback loop that would accelerate a continuing cash drain at the company, while forcing its existing product suite of wealth products to default, leading to the biggest risk facing China"s economy: a shadow bank run.

One Anbang product, called Anbang Longevity Sure Win No. 1, boosted the firm’s life insurance premiums almost 40-fold in 2014 by offering yields as high as 5.8 percent. That helped provide fuel for the firm’s more than $10 billion of overseas acquisitions since 2014 and equally ambitious investing in the domestic stock market.

If investors realize that not only China"s M&A party is over, but that the shadow banking sector is facing a potential default cliff, the scramble to recover invested capital will be unprecedented.

For now, Anbang can delay the inevitable cash call by following Beijing"s demands, and slowly - at first- begin liquidating its trophy offshore assets, and repatriating the proceeds, effectively inverting the outbound M&A surge that marked the past three years. The good news is that at least at this moment, there are plenty of willing buyers for the upcoming Anbang firesale..

Rand Paul Exposes GOP Health Care Bill as “Giant Bailout Superfund for Insurance Companies”

As Democrats fear monger over the loss of Obamacare, according to Republican Senator Rand Paul, they need not be scared, as the GOP bill is not a repeal at all.

“I think the longer the bill is out there, the more conservative Republicans are going to discover that it’s not a repeal, and the more that everybody is going to discover that it keeps the fundamental flaw of Obamacare.” Paul said on CBS’ Face The Nation.

As Paul notes, the GOP bill maintains the fundamental flaw of Obamacare which is that this was never about giving people affordable health care and always about making health insurance companies super rich by forcing all Americans to become customers of major health insurance providers.

Through Obamacare, insurance companies are literally using government force to mandate that everyone in the country buy their product, via penalties and threats, and the GOP plan keeps this in place.

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“It keeps the insurance mandates that cause the prices to rise, which chase young, healthy people out of the marketplace, and leads to what people call adverse selection, where you have a sicker and sicker insurance pool, and the premiums keep rising through the roof.” the Senator urged.

By using the state to mandate everyone purchase their product, insurance companies were given a windfall of massive profits. Even the heavily left-leaning Salon.com reported on this windfall last year:

A Salon analysis of regulatory filings found that the top five health insurers — UnitedHealth, Anthem, Aetna, Humana and Cigna — have doled out nearly $30 billion in stock buybacks and dividends from 2013 to 2015. (The Supreme Court ruled in favor of the Affordable Care Act in 2012.)

Meanwhile, the increase in customers that these health insurers received under ACA has helped raise the stock prices of the top five insurers — some 80 percent for Anthem and 165 percent for Aetna since the high court ruled on June 28, 2012 that Obamacare was constitutional.

While Americans continue to fork out more money, insurers are doing great.

In the interview with Face the Nation, Rand Paul acknowledged the same trend. “I mean, we promised the voters for four elections. They elected us to repeal Obamacare, and now we’re going to keep most of the taxes, keep the regs (regulations), keep the subsidies, and create a giant bailout superfund for the insurance companies. I just don’t see it,” Paul said.

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“I’m not for any taxpayer money going to … an industry that makes $15 billion a year,” declared Paul.

As Justin Gardner noted for the Free Thought Project last month, the health care “debate” has been portrayed as Republicans and Democrats valiantly fighting for the interest of American citizens. But as Ron Paul points out, the actual difference amounts to slightly different degrees of government control over health care, all of it stifling free market solutions and driving up costs.

Exhibit A is the recent move by Democrats and Republicans alike to ban the importation of prescription drugs from other countries such as Canada. While the American Health Care Act takes all the headlines, Congress is quietly passing the FDA Reauthorization Act of 2017—the framework of the Big Pharma protectionist racket.

While the two parties debate superficial and stagnant aspects of the Health Care bill, Republicans and Democrats alike meet behind closed doors with the insurance lobbyists they’re beholden to, in order to figure out ways to increase their bottom lines at the expense of you — the US taxpayer.

“They get enormous profit from the group plans, and then they lose money in the individual markets and they whine, and they come to Washington, they write the bill, and they get bailed out. It’s a terrible situation.” Paul urged.

Sadly, Rand Paul is one of the only politicians in Washington who is unafraid of calling out the medical industrial complex. And, in spite of his best intentions, we can likely expect the Republican bill to pass, causing even more divide between the left and the right — while the big insurance companies watch profits soar — and very little changes in regard to health care.

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