The Market Oracle provides an invaluable service to the world. A visitor to the Market Oracle site is treated to a wide ranging scope of insight into financial and economic issues in virtual real time by insightful and accredited contributors. We are treated to contributions from the likes of Ron Paul, Peter Schiff, Mike Shedlock, Mike Stathis, Jim Willie and John Mauldin (to name a few). Market direction analysis by Nadeem Walayat is second to none.  James Quinn’s lyrical musings on the tragic fate of the American society is always entertaining (notwithstanding my personal disagreement with some of James’ negativity).

The Market Oracle contributors possess one common point of view (with the exception of the esteemed Mike Stathis) regarding the present nationwide controversial issue raging within the borders of the United States: reforming the US national health care system.

To be fair, the contributors to the Market Oracle have been correct with respect to the US banking crisis, the US housing crash, and predicting the US market downturn well in advance. I had also been on the correct side of these issues, warning of a wide scale banking failure leading to a Depression in my book, “If Everyone were Rich, who would make me Dinner?”. My clients have (with tongue firmly in cheek) taken to referencing my book as the “modern day Nostradamus” with respect to predicting these events in an easily understandable format designed for those who are not financially learned.

The common theme provided by Mr. Schiff, Dr. Paul et al with respect to health care reform in the United States is that the US simply can not afford another massive entitlement program for it’s citizens. The theory espoused by these well learned individuals rails against the flaws of deficit financing of such programs. The central flaw in the arguments proposed by these authors is glaringly obvious but yet remain to date unsaid on the market oracle: The present United States Health Care System is not driven by free market capitalism.

While Mr. Schiff and Dr. Paul have been very clear on this site and others that a free market, unencumbered by government intervention is the panacea to the ills that plague the US Health Care System, they are missing the one glaring component of an efficient free market system absent in the US Health Care System: anti trust regulation.

The purpose of anti trust regulation in the United States is to prevent business entities from monopolizing industries and thus, fixing prices. The US Health Care System, specifically the US Health Insurance Industry, enjoys a rare exemption from anti trust rules in the US, thus enabling the US Health Insurance Industry to be controlled by a handful of companies that control and fix prices across the industry. The absence of anti trust regulation has created a monopoly of greed that has eroded the fragile wealth of the American citizen, and has become the primary reason for bankruptcy filings in the US.

Medical insurance premiums in the US now the equal of the average monthly mortgage payment. Never in the history of the US have medical insurance costs risen to such levels as they are today. In fact, the US spends twice as much on health care for it’s citizens when related to health care costs in other countries around the world. The lack of anti trust regulation permits the US government to turn a blind eye on the price fixing monopolization of the health care industry that is crippling the financial condition of it’s citizenry.

The absence of free market capitalism within the US Health Care System has created a monopoly that can not be dismantled overnight. Accordingly, the need for a direct competitor equal to the monopolistic size of the US health insurance companies must exist for any meaningful reform to take place. A public option, self funded by insurance premiums paid by the US taxpayer, is the only viable reform that makes sense at the present time. A public option is a compromise that keeps the health insurance industry solvent, but allows the presence of competition in the “not-so free market” of the US Health Care System.

To be clear, a public option is NOT an entitlement program. The notion of a public option is to provide a competitive balance to an industry that presently exists without competition, while funding the program with insurance premiums paid by the US taxpayer.

The US economy has shifted from a manufacturing economy to a service economy over the past three decades. A major contributor to domestic manufacturing costs is the cost of health care for it’s workers. As the US health care industry has risen to 20% of the overall US economy, these ballooning costs have led directly to the inability of US companies to compete on a level playing field with companies abroad. Accordingly, US companies have turned to cheaper imports to satisfy domestic demand and have shut down it’s domestic manufacturing concerns, leading to massive unemployment of it’s citizenry. The erosion of employment in the US has now bled over to the service sectors of the US economy, whereby simple customer service call centers are now being outsourced to other parts of the world, again increasing the intolerable state of the unemployed in the US.

Massive US unemployment has led to larger government programs that are paid with borrowed money, further contributing to the massive US deficit, weakening an already battered dollar, and leading, inevitably, to an impossible state of simultaneous inflation and deflation.

A first step in the effort to right the ship that is the US economy would be the implementation of a public option for the US citizen’s health care costs, while removing the anti trust exemption enjoyed by the US health insurance industry. Only upon these changes can the US begin to cure the ills that plague the US Health Care Industry, and by extension, the US economy. If there is any merit to the expression “So goes the US economy, so goes the world economy”, then it is the interest of all nations to see the US Health Care Industry cured.

A funny thing happened on the way to managing my portfolio.  I made the classic mistake of watching CNBC and acting on their “reporting”.  I should have known better, after watching investors loose trillions in the market while CNBC continued to hype the market all the way, way down.

Generally, I do not trade securities often, but due to a really dumb stock purchase, I was compelled to trade my way back to respectability.  For a good laugh: I was watching CNBC one mid-July day (the kiss of death), when at 3 pm, Maria Bartoromo  announces that her “sources” told her that the company, CIT, would have a resolution “within the hour” to it’s cash flow problems.  It should be noted that throughout the day, CNBC had reported that the President was kept updated on the situation, and the Treasury Secretary was in day long meetings with CIT to, in theory, provide the company with financial assistance.  Let’s see…banks getting bailouts have moved significantly higher since the march lows, so why not take a shot at this one?  I mean…CNBC would not intentionally mislead an investor, would they?  So, at 3pm I buy a bunch of CIT at 1.64 per share.  My idiotic idea was to hold this security for 45 minutes, so what was I really risking?  Well, at 3:10, the stock was halted.  Couldn’t sell if my life depended on it.  Bartoromo and CNBC had sucked me in (as well as 7 million other shares that traded hands in ten minutes).

Needless to say, CIT did not open for trading until the next day, while overnight it was reported that CIT failed to get government assistance.  CIT opened the next day at…31 cents!!!  To the rescue came David Faber, the dogged “investigative reporter”, who gave report after report of the imminent demise of CIT.  Faber repeatedly reported the company was filing bankruptcy the next day.  The stock closed at 38 cents, where I sold half of the pennies I had left just in case CNBC actually said something truthful.  Well, Friday comes and no bankruptcy.  The stock rises as high as 90 cents, whereby our dogged investigative reporter Faber gets on the tube to assure the audience that the company will file bankruptcy over the weekend.  Each time Faber reported, the price of CIT tanked.  Like clockwork.  CIT closed that friday at 77 cents.

The weekend comes and goes, and of course, no bankruptcy.  Instead, CIT worked out a deal over the weekend with it’s largest bondholders, who provided the company with 3 billion dollars worth of financing.  CIT opened on the following monday at 1.31…Not to be deterred, the CNBC tag team (first it was Bartoromo, then Faber) had Stevie “I got my economics degree from the bubble gum machine” Liesman, to jump on the bandwagon to let the whole world know that the recently obtained financing was only an overpriced bandage that would not stop the cash bleed at CIT.  Every time Stevie spoke, again and again, CIT tanked.  Thanks, Steve.  Wrong-o again.  Not once did any of the Three Stooges opine that they had gotten it wrong, notwithstanding the millions of dollars that were lost by investors who actually looked to CNBC for the story.  The trifecta of baffoons at CNBC  had  whipsawed me out of most of my investment…

The story has a happy ending.  After studying some charts, it looked like CIT could trade down to 77 cents, so I sold my position at 1.30.  I put in a buy for the same number of shares at 80 cents.  The next day, sure enough, CIT traded down to 77 cents.  I sold at a buck, then bought some CIT preferred.  After some zig zagging, I sold out of the preferred with a profit.  I still hold a little preferred, just in case CIT makes it out of it’s cash flow problems.  I then had to trade securities repeatedly to make up the difference I had lost in CIT.  I bought some fannie mae at 1.23, sold at 1.90 for another positive step back.  It felt like I was pulling myself up by my bootstraps trying to recover from listening to CNBC,  It should be noted that CNBC paraded expert after expert in front of the camera to tell you fannie mae was worth zero.

After a month and a half of trading, I’ve recovered almost the entire loss from CIT.  I am long Tenet Health Care, Rite Aid, Citibank, Huntington Bank, Etrade and UNG, the natural gas ETF.  Nat Gas is a risky play, but I bought at 9.50 and think it’s upside is 14 in the short term.  I just can’t reconcile the difference between the large run up in oil while nat gas has tanked.  I’ve read all about the oversupply issues in nat gas, and the problems that ETF’s are having with the CFTC, but It still makes no sense, and my judgment is that the recent rip down in the price of the ETF was a final shake out for retail investors.  The key here is that nothing is certain.  I will be ready to get out of nat gas should the ETF resume it’s down turn.  I do not engage in short selling, as I believe short selling is immoral in that it (short selling) artificially increases the supply of a security on the open market by borrowing securities from unsuspecting investors who never knew their securities were being lent out for the purpose of bringing down the price.  A full 100% of the clients I have surveyed over the past 5 years do not know what short selling actually is, and how the securities that they own are being lent out to traders for the purpose of flooding the market with an artificially high supply that must lead to lower prices (see supply and demand/economics).  When the client is advised of how short selling actually works, each and every client is shocked that such trading is legal.  Such is the nature of markets…

The major markets have shown relative strength, but I would not get giddy just yet.  The long term downtrend of the market is still intact, so I’d hang in there but be ready to pull out completely.  The next level in the DJIA, 10400, is the time when I plan on exiting altogether.  This level is where the long term downtrend intersects with the short term uptrend of the market.  From a time frame standpoint, we have another month to go before the possible resumption of the bear market is upon us.  If the DJIA breaks through this barrier, I will stay in until the charts say otherwise.

Predicting market direction is tricky business.  I have spent much time reading and researching, applying technical analysis to investing, and am always looking for competent opinions. The hands down, most diverse source of market advice can be found at http://www.marketoracle.co.uk.  The market oracle provides a myriad of perspectives, from currencies to securities to commodities, from contributors residing in all parts of the world.  A fascinating array of opinions will give you a wealth of perspectives that can prove profitable to your portfolio.

The moral of the story is:  If you want to lose all of your money, follow the advice of CNBC.  If you want to make money in the markets, do exactly the opposite of what CNBC, Bartoromo, Faber, and Liesman tell you to do.  You will also help yourself immeasurably by stopping by the market oracle for real market analysis.

After watching CNBC and Fox News the last few weeks, you’d think that the world of health care was crashing down with the talk of President Obama’s pursuit of a health care system that brings down both costs and premiums for all Americans.  We are being fed distortions by CNBC and Fox News that make you believe that universal health care-in this case, competition for health insurance companies-is a terrible thing.  In the face of polling that demonstrates that 72% of Americans want universal health care-the major media giants CNBC, Fox News, numerous Senators and members of Congress have brazenly stepped up their rhetoric designed to put a major scare into it’s audiance that is riddled with half-truths, lies and deception.

What I ask of you is to use simple common sense.

Look at the state of the economy.  Did CNBC ever tell you to get your 401K plan out of the markets and into cash before the Great Crash of 2008-2009?  No, in fact, all the way down the pundits on CNBC were telling you to “buy, buy, buy” instead of getting out.  Sure, CNBC put up a guest or two who warned of a bad market, but that guest was always offset by four or five stock market pumpers who told you to “buy now-it’s never been better”.  Psychologically, anyone actually believing CNBC was doomed, outnumbered by Stock Market Pumpers who fleeced you of your life savings.  The same exact scenario played itself out on Fox News.

The CNBC’s and Fox News channels of the world were dead wrong about markets-from real estate to stock.  The end result, if you listened to these wolves, landed you under water in your mortgage and no retirement.  If you followed Fox News and CNBC over the last decade, if you acted on their collective advices over time, you are insolvent and most likely contemplating bankruptcy. Why, on God’s Green Earth, would you listen to these wolves now-when they hysterically distort with lies and deception the President’s health care proposals?

CNBC and Fox News serve the interests of Wall Street and Corporate America.  It is in the best interest of Corporate America to keep the American middle class financially strapped. If the American middle class is forever strapped, we will always be working two and three jobs per household. This endless work ethic leaves us too fatigued, at the end of the day, to question the effects of Corporate America’s influence over public policy. Accordingly, CNBC and Fox News fall in line and follow suit.  As for the members of Congress and Senators that parade on these networks who continue to deny what 72% of Americans now demand universal health care, they are nothing more than paid off mouthpieces for the health insurance and hospital industry.

Last week, Wendell Potter, a former executive of Cigna, one of the nation’s largest health insurance companies, testified before the Congress of the United States that Michael Moore’s movie, “Sicko”, which depicts our sham of a health care system for what it is-was exactly correct.  We don’t have the “best health care in the world”.  In fact, the best health care in the world is located in countries that have embraced universal health care.  Mr. Potter goes on to tell Congress that CIGNA intentionally ran a media blitz public relations campaign distorting the truth of government run health care.  Mr. Potter’s interview with Bill Moyer of PBS is below. I urge you to watch this video, as it is very informative and sheds a real truth on the health care debate. Fascinating.

Members of Congress and the Senate do not pay for health care!  Do you really think those politicians really care about our health care costs?  No, plain and simple, they don’t.  These politicians have brazenly laughed in the face of the 72% of Americans by fluffing off the polling as “Americans don’t know what they want”.

Every single politician that gets on these networks have been bribed by the health insurance  and hospital industrial complex to keep costs so high that the American middle class will never retire.  Please remember this the next time one of these horrible excuses of human existence gets on these networks and distorts the truth about health care costs.

One thing’s for sure: if we took away the health insurance benefits from these paid off politicians from Congress and the Senate you could bet the ranch that each one of them would be screaming to high heaven about how every American citizens who pays for health insurance is the victim of greed and hubris by the health insurance and hospital industrial complex.  That’s really the answer-take away the lifetime health insurance benefits given to members of the United States Senate and members of Congress.  Only then will we see a real change.

AS A SMALL BUSINESS OWNER IN AMERICA:

Don’t let the media scare you.  The crushing costs and poor quality of health care in America continues to bankrupt the citizens of this great country.  Yesterday I received the health insurance renewal package for my small business, and the premiums have once again been jacked up another 20 to 25%.

My small business pays 24,000. per month for health insurance coverage.  Premiums range from $1,000 to $1,600 per month for family coverage and $ 300 to 500 per month for single individual plans.  Now the health insurance company wants 20% more for most likely, less coverage.  (Each year the “plan design” changes whereby the actual benefits of coverage of the plan are reduced).

Let’s do the math:

This year’s plan, $ 24,000. per month, at 12 months, is $ 298,000. per year.  That’s just this year.  Next year the costs will be almost $ 29000. per month, for less coverage.  Over the course of the year, my business will have paid another  $ 348,000. for health insurance (less) coverage.

Each and every year I have to do this dance with the health insurance companies that always end the same.  I am forced to review the “plan design” and seek a lower cost plan with much less benefits.  This year will be no different.  I will most likely switch “plan designs”, pay higher deductibles, just to keep the premium the same.  Either way the health insurance company gets their money-either through higher premiums or less payments for health care.  …and the beat goes on…with health insurance company executives buying more yachts on the backs of businesses like mine.  Since 2002, my company has paid over 2 million dollars -let me say it again- 2 MILLION DOLLARS FOR HEALTH INSURANCE PREMIUMS FROM MY SMALL BUSINESS ALONE-with almost 60% of the premiums going into the pockets of the health insurance companies after paid claims (good luck getting the health insurance company to pay a claim).

Since the staff contributes to their health insurance costs, each employee will have to make the hard choices along with me: pay more for less health care at a time when every dollar earned is critical in keeping the collective staff’s financial heads above water.  Over the past seven years, due to the rising costs of premiums, many employees have simply dropped their coverage and are now uninsured.  The only way to keep health insurance premiums level has been the cumulative effects of less employees participating in the plan, while those participating (including myself) are forced to cut benefits to maintain benefits.

In 2002, we had a choice of seven health insurance carriers. Each carrier gave you a choice of monthly premiums and benefits that ranged greatly.  We had a choice of coverage.   Since 2002, health insurance companies have bought each other out and have created a monopoly in the NY region of the United States. HIP plans of NY buys up Vytra Health, and GHI then buys up HIP, creating a monster company and a virtual lock on health insurance coverage in a region of millions of people.  What does this mean?  It means, in a market that was supposed to be “free”, we have a market of only a few health insurance companies that have resulted in much higher costs and little competition.  Health insurance premiums are now fixed at higher and higher rates, and by buying out their competition, literally nothing stands in the way of the health insurance companies from destroying what is left of America’s middle class.  What are the choices for my small business today?  I get to choose from the giants of GHI, Blue Cross & Blue Shield, Oxford Health and Aetna.  Aetna has been far and away out of control with their premiums, so that leaves the other three, whose premiums and “plan designs” are almost identical.  The bottom line in all this is that my company and the rest of small business in this country are held financial hostage by the health insurance monopoly that generates billions in annual profits while simultaneously bankrupting the American middle class.

THE BOTTOM LINE.

The argument that taxes will rise to pay for the President’s health care plan is bogus and deceptive-intentionally.  Conveniently, the bribed politicians and mouthpieces at CNBC as well as Fox News forget to tell you that YOUR HEALTH INSURANCE PREMIUMS WILL GO DOWN DRASTICALLY.  If a business such as mine, where my employees and myself pay nearly $300,000 per year in health insurance premiums will pay half in premium and a 1% surcharge in taxes, the net cost to my employees & myself will be $150,000 per year plus a $50,000, income tax surcharge, or $200,000. per year, compared to the $300,000 per year we presently pay the thieves known as health insurance companies.

The argument that creating a public health insurance choice will be bad for the economy is another laughable notion. One of the single largest costs facing business today is health insurance. Since American business must bear the cost of health insurance, such costs are factored into the cost of producing goods. Since most other industrialized nations that we trade with have universal health coverage, such a cost is not born on foreign competitors. Therefore, America is losing jobs to overseas companies who can produce goods without the cost of health insurance. If we implement a public choice of health insurance, American companies can be more competitive both in the United States and abroad, where our exports will increase as our cost to produce exports decrease. To sum it up, a universal health care system, or public option for health insurance would actually stimulate the economy by creating more jobs here in America as a result of an increase in our domestic and overseas manufacturing demand.

Another absurd argument being discussed in the media is that the health insurance industry will be put out of business, thus bad for capitalism.  Well, if health insurance companies would lower their premiums, they wouldn’t have to worry about going out of business.  The President’s plan actually attempts to bring back price competition to the industry-something that the health insurance industry worked so hard at eliminating.

The media distortions go on and on.  All I ask is for you to remember that the Senators and members of Congress that rail against the plan a) don’t have to pay for health insurance-for the rest of their lives, and B) these politicians have been bribed, or bought off by the health insurance and hospital industry complex via huge campaign donations.

The truth is all Americans will save significant amounts of dollars, even after considering the tax effects of the President’s plan.  Don’t let the bogus talking heads on television who pretend to be economists, pundits, politicians & university professors fool you.  Each and every one of these folks were wrong about the real estate market, completely failed to warn you of the demise of the stock market in 2008, and are consistently wrong about the President’s health care proposal as well.  Your taxes will not go up nearly as high as the health insurance premiums you will be saving.  You will also have the peace of mind that should you come down with the common cold, you won’t go bankrupt when you see the doctor.