Thank You, Koch Brothers

The ratio of Canada’s healthcare costs to GDP is 10.4%, while America’s is 17.1% (the highest in the world). What do Americans get for spending 70% more on healthcare than Canadians? They get a shorter life-span, higher child mortality rates, and more people with no healthcare coverage than Canada. Canada’s life-span is ranked 18th in the world, while America’s is 43rd. America’s child mortality rate is 6.5 per100k, while Canada’s is 4.9. Before Obamacare, the U.S. had as many as 40 million people without healthcare, while Canada has universal health coverage.

Looking across from Canada, we are at a loss when it comes to explaining Americans’ attitude toward healthcare. They seem to be fighting tooth-and-nail for freedom from healthcare, even though it is the number one reason for household bankruptcy. Why would they not want every citizen, regardless of wealth, to stay healthy for as long as possible? If nothing else, it makes good sound economic sense to have a healthy America; you can’t be productive if you are sick.

Obamacare, while not delivering universal healthcare to Americans, at least managed to cover millions of people that were originally without health insurance. This coverage, however, came at a cost to people who were originally covered, since the cost has to be spread out over the entire group, and there is a segment of the population that just does not like sharing or paying for other people — everyone should take care of themselves — which goes along with a disdain for paying taxes.

This attitude, however, comes with macro-economic and productivity costs; people are “stuck” in unfulfilling jobs and are unable to move and increase their productivity (you are not maximally productive when you are not happy) for fear of losing eligibility; people getting sick (and unproductive) because they can’t afford preventative medical care; and illness leads to poverty that leads to costs for society which are difficult to measure.

Trump’s proposed replacement for Obamacare, would have forced 20 million Americans to go without health insurance, and many more to settle for reduced coverage and higher deductibles. This, of course, would allow the richest Americans to keep hundreds of $billions on their taxes (which were being used to pay the health insurance premiums of the poorest in society.)

As outrageous as this seems, it didn’t go far enough for the Koch brothers who managed to buy enough republican representatives to stop the bill; Kochs pledge millions to GOPers in 2018 — if they vote no on health care bill.

The Koch brothers were willing to pay $millions to stop providing healthcare to the poor, rather than using that money to help keep poor people healthy. Denying healthcare to 20 million citizens, and greatly reducing access to even greater numbers, would result in many premature deaths…of poor people. This could be viewed as a “pre-emptive strike” against the poor, who are no-longer required as wage-slaves and who might revolt and become more than a simple nuisance. Not providing healthcare, is certainly one way to reduce the number of annoying poor people.

Luckily, this has turned out to be a classic case of ‘over-reach’ which has saved Obamacare and health coverage for the poor. The stock market recovered with a sigh-of-relief during the last hour of trading on Friday. The market ‘knew’ that a sick America would not have been good for business, especially at a time when the business cycle was finally starting to turn up.

Thank you, Koch Brothers, for saving the American economy.

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The put-to-call ratio has started to move up (chart below). This may mark a down-spike in the ratio, which corresponds 80% with a local top on a weekly basis. This is consistent with our above discussion.

The vix volatility index continues to make higher-highs, and higher-lows, which corresponds with a correction on the weekly scale (chart below).

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Inflation, as measured by the Pring Inflation index, weakened this past week, but gold continued to appreciate. Here again, we believe this is due to the uncertainty surrounding the healthcare bill, and that gold will catch-up to inflation on the downside (see closeup panel in the chart below).

The HUI Gold Bugs index, and the Gold Miners Percent Bullish index continue to display weakness.

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ANG Traders

ANG Traders

Forty years of private equity trading, and still learning.

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