Category: zerohedge

With the market not sure what bad news would send it soaring higher today, here comes the Philly Fed to save the day by tumbling from October’s 19.8 to a paltry 6.5, slamming through expectations of 15.0 – the biggest miss since February – and assuring that ahead of today’s POMO there is enough ammunition for a stock ramp to end the three days of declines.

But while the leading indicators of New Orders, Shipments and Unfilled Orders all plunged (from 27.5 to 11.9; from 20.4 to 5.6 and from 9.1 to -4.2, respectively), it was the jobs number that showed just how bad things really are with the Number of Employees and Average Employee Workweek both sliding from 15.4 to 1.1, and from 8.5 to -8.6. This is what the report said: “Labor market indicators showed little improvement this month. The current employment index fell 14 points from its reading in October (which was at a two?year high), to 1.1. Nearly 13 percent of the firms reported increases in employment, which is lower than the 23 percent that reported increased employment last month. Firms, on balance, reported lower work hours, with the average workweek index falling from 8.5 to ?8.6 this month.” Thank you Obamacare for making even more people into part-timers.

And broken down by components:

And now, since the economy is once again sliding on every possible banana peel, we can calmly go back to the “market” ramp.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/B66FOuoDiKg/story01.htm Tyler Durden

That didn't take long…

• *SENATE BANKING PANEL VOTES 14-8 TO APPROVE YELLEN AS FED CHIEF
• *REPUBLICANS CORKER, COBURN, KIRK VOTE IN FAVOR OF YELLEN
• *MANCHIN ONLY PANEL DEMOCRAT TO OPPOSE YELLEN FED NOMINATION
• *YELLEN NOMINATION AS FED CHAIRMAN SENT TO FULL SENATE

Given this, the full Senate vote will be a rubber-stamp heralding the new era of Yellenomics as the QEeen takes her thrown.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/DvVhxFU3w1U/story01.htm Tyler Durden

The relatively new Minneapolis Fed president Narayana Kocherlakota is not known for any insightful, original ideas. Before he took over the MinnFed, he was a research economist at the bank in the late 1990s, a consultant there from 1999 to 2009, taught at the University of Minnesota from 2005 to 2010 and was chairman of the U’s department of economics before being named president of the bank. What he is best known for is his epic flip-flopping: from one of the Fed’s staunchest hawks early in his presidential career, to a dove so starved for the Fed’s monetary liquidity, he often puts even Charles Evans to shame. He is among the first to suggest that the Fed should hold rates at zero until unemployment hits 5.5% (which it never will unless of course the plunge in the labor participation rate continues) something which both Goldman and Yellen have now adopted as gospel. Nobody knows what precipitated this shocking metamorphosis, although it is said Ben Bernanke can be quite persuasive during unrecorded phone calls. Which brings us to the topic of this post: what does a suspiciously reformed Fed dove do when faced with increasingly louder, conflicting voices that challenge the delusion that the only thing that will fix a failing QE is more QE? He fires them of course.

As the Star Tribune reports, two top economists at the Minneapolis Fed were “shown the door” when they disagreed with their tyrannical money printing advocate. Who were the two?

The departing economists are Patrick Kehoe and Ellen McGrattan, both highly regarded researchers with long tenures in Minneapolis. Kehoe, a Harvard Ph.D. who has taught at the University of Pennsylvania and the University of Chicago, joined the Fed as a monetary adviser in 1997. He was the bank’s highest-ranked research economist, according to data from the St. Louis Fed.

 

“He’s a high-profile person in the profession, a world-class economist,” said Stephen Williamson, a former Minneapolis Fed economist who now works at the St. Louis Fed and is a professor at Washington University in St. Louis. “He’s a big deal.”

 

Kehoe declined to comment. McGrattan said Kehoe was fired on Oct. 18. He already has a position at the U, which often shares economists with the Minneapolis Fed. “Patrick Kehoe did not choose to quit or leave the Fed,” McGrattan said.

 

McGrattan, a Stanford Ph.D. who taught at Duke University before joining the Minneapolis Fed in 1992, will take a position with the University of Minnesota in January and will go on unpaid leave at the bank. She has been an adjunct professor at the U since 1993 and said she was pushed aside at the Fed more implicitly than Kehoe.

As a reminder, “The Minneapolis Fed has a reputation as one of the premier economic research institutions in the country. A close partnership between the U and the bank over the years resulted in an innovative marriage of academic economic research and policymaking. It was a fruitful collaboration in which economists such as Prescott, Tom Sargent, Chris Sims and Neil Wallace helped put the Minneapolis Fed and University of Minnesota on the map. Former President Gary Stern and Art Rolnick, the former research director, continued the tradition. Sargent, Sims and Prescott eventually won Nobel Prizes in economics, and Sargent and Prescott still have ties to the U and the Minneapolis Fed.”

Sargent, incidentally, is the same person who a few days ago was heard uttering the most apocryphal words a Fed cardinal could hear, namely that deflation is actually a good thing, and that Greece might benefit from returning to a gold standard. It is easy to see why Kocher does not like him.

But back to Kehoe and McGrattan who were mercilessly sacked by their dovish boss: why did he do that one may ask? Simple – they disagreed with his monetary religion.

There are subtle policy differences between Kocherlakota and the economists who are leaving. Kocherlakota has been at the center of a debate over the effectiveness of the Fed’s low-interest-rate policy. He has pushed for nearly two years for the Fed to hold down rates until unemployment drops to 5.5 percent.

 

He argues, in general, that what are known as “New Keynesian” economic models are helpful. This school of thought has helped create an unprecedented intervention in the financial markets by the country’s central bank — the $85 billion a month bond-buying program known as quantitative easing.

 

But Kehoe and McGrattan published a paper in 2008 arguing that monetary policy can do little to affect the unemployment rate, and Fed policymakers should instead focus primarily on controlling inflation.

 

“New Keynesian models are not yet useful for policy analysis,” they wrote.

Which is effectively the same as telling the Spanish Inquisition that god does not exist. Luckily, modern society is a little more developed (for now). Instead of Kehoe and McGrattan getting the iron maiden, they were merely fired.

Prescott laments that this sort of debate within the bank, long encouraged, no longer appears to be welcome. “A good administrator sets up a loyal opposition,” he said.

Don’t ask. Don’t question. Just accept. And with that it’s case closed for how the Fed’s pathological voodoo shamans deal with any dissent.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/64P8UQk-Dh0/story01.htm Tyler Durden

The relatively new Minneapolis Fed president Narayana Kocherlakota is not known for any insightful, original ideas. Before he took over the MinnFed, he was a research economist at the bank in the late 1990s, a consultant there from 1999 to 2009, taught at the University of Minnesota from 2005 to 2010 and was chairman of the U’s department of economics before being named president of the bank. What he is best known for is his epic flip-flopping: from one of the Fed’s staunchest hawks early in his presidential career, to a dove so starved for the Fed’s monetary liquidity, he often puts even Charles Evans to shame. He is among the first to suggest that the Fed should hold rates at zero until unemployment hits 5.5% (which it never will unless of course the plunge in the labor participation rate continues) something which both Goldman and Yellen have now adopted as gospel. Nobody knows what precipitated this shocking metamorphosis, although it is said Ben Bernanke can be quite persuasive during unrecorded phone calls. Which brings us to the topic of this post: what does a suspiciously reformed Fed dove do when faced with increasingly louder, conflicting voices that challenge the delusion that the only thing that will fix a failing QE is more QE? He fires them of course.

As the Star Tribune reports, two top economists at the Minneapolis Fed were “shown the door” when they disagreed with their tyrannical money printing advocate. Who were the two?

The departing economists are Patrick Kehoe and Ellen McGrattan, both highly regarded researchers with long tenures in Minneapolis. Kehoe, a Harvard Ph.D. who has taught at the University of Pennsylvania and the University of Chicago, joined the Fed as a monetary adviser in 1997. He was the bank’s highest-ranked research economist, according to data from the St. Louis Fed.

 

“He’s a high-profile person in the profession, a world-class economist,” said Stephen Williamson, a former Minneapolis Fed economist who now works at the St. Louis Fed and is a professor at Washington University in St. Louis. “He’s a big deal.”

 

Kehoe declined to comment. McGrattan said Kehoe was fired on Oct. 18. He already has a position at the U, which often shares economists with the Minneapolis Fed. “Patrick Kehoe did not choose to quit or leave the Fed,” McGrattan said.

 

McGrattan, a Stanford Ph.D. who taught at Duke University before joining the Minneapolis Fed in 1992, will take a position with the University of Minnesota in January and will go on unpaid leave at the bank. She has been an adjunct professor at the U since 1993 and said she was pushed aside at the Fed more implicitly than Kehoe.

As a reminder, “The Minneapolis Fed has a reputation as one of the premier economic research institutions in the country. A close partnership between the U and the bank over the years resulted in an innovative marriage of academic economic research and policymaking. It was a fruitful collaboration in which economists such as Prescott, Tom Sargent, Chris Sims and Neil Wallace helped put the Minneapolis Fed and University of Minnesota on the map. Former President Gary Stern and Art Rolnick, the former research director, continued the tradition. Sargent, Sims and Prescott eventually won Nobel Prizes in economics, and Sargent and Prescott still have ties to the U and the Minneapolis Fed.”

Sargent, incidentally, is the same person who a few days ago was heard uttering the most apocryphal words a Fed cardinal could hear, namely that deflation is actually a good thing, and that Greece might benefit from returning to a gold standard. It is easy to see why Kocher does not like him.

But back to Kehoe and McGrattan who were mercilessly sacked by their dovish boss: why did he do that one may ask? Simple – they disagreed with his monetary religion.

There are subtle policy differences between Kocherlakota and the economists who are leaving. Kocherlakota has been at the center of a debate over the effectiveness of the Fed’s low-interest-rate policy. He has pushed for nearly two years for the Fed to hold down rates until unemployment drops to 5.5 percent.

 

He argues, in general, that what are known as “New Keynesian” economic models are helpful. This school of thought has helped create an unprecedented intervention in the financial markets by the country’s central bank — the $85 billion a month bond-buying program known as quantitative easing.

 

But Kehoe and McGrattan published a paper in 2008 arguing that monetary policy can do little to affect the unemployment rate, and Fed policymakers should instead focus primarily on controlling inflation.

 

“New Keynesian models are not yet useful for policy analysis,” they wrote.

Which is effectively the same as telling the Spanish Inquisition that god does not exist. Luckily, modern society is a little more developed (for now). Instead of Kehoe and McGrattan getting the iron maiden, they were merely fired.

Prescott laments that this sort of debate within the bank, long encouraged, no longer appears to be welcome. “A good administrator sets up a loyal opposition,” he said.

Don’t ask. Don’t question. Just accept. And with that it’s case closed for how the Fed’s pathological voodoo shamans deal with any dissent.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/64P8UQk-Dh0/story01.htm Tyler Durden

The confusion reigns. The USD (aside from against the EUR) is bid and Treasuries are being sold along with precious metals in a continuation of yesterday’s taper-tantrum. However, stocks (and crude oil) are surging. As JPY’s implosion of moar QE from Japan expectations lift carry traders back from the grave.

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/aUvInJqaBfk/story01.htm Tyler Durden

The confusion reigns. The USD (aside from against the EUR) is bid and Treasuries are being sold along with precious metals in a continuation of yesterday’s taper-tantrum. However, stocks (and crude oil) are surging. As JPY’s implosion of moar QE from Japan expectations lift carry traders back from the grave.

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/aUvInJqaBfk/story01.htm Tyler Durden

While the last few days’ hearings have focused on the nefarious aspects of the crypto-currency, it would appear that the adoption of Bitcoin is growing in the broad market place. While drugs, assassinations, and money-laundering are the headline-grabbing reasons why this unregulated asset is under the US (and European) government’s eye, from ATMs, Subway (sandwich shops), and online retailers, the appeal is growing… and now, as AP reports, Cyprus’ largest university will start accepting the digital currency Bitcoin as an alternative way to pay tuition fees.

 

Via AP,

Cyprus’ biggest private university says it will start accepting the digital currency Bitcoin as an alternative way to pay tuition fees.

 

University of Nicosia’s Chief Financial Officer Christos Vlachos says the move will help foreign students in countries where traditional banking transactions are either difficult or costly to pay fees for programs such as online degrees.

 

The university claims it is the first in the world to take Bitcoin payments.

 

Vlachos told The Asssociated Press on Thursday that the university is also offering a new Masters’ degree in digital currency, a field he says is the monetary equivalent of the Internet in its infancy.

 

He said the Cypriot government should set up a regulatory framework to attract digital currency trading companies and boost the bailed-out country’s foundering economy.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/qu6U55YCuL4/story01.htm Tyler Durden

Reports indicate strong Bitcoin interest in China.  BTC, the China-based Bitcoin exchange accounts (trading a third of all Bitcoin transactions, while China may account to close to half of the daily turnover,  according to some internet reports) at an estimated 200k Bitcoins a day. 

Registered participants on BTC is reportedly near 10k and rising quickly lately.  China-based Baidu, one on the largest internet companies in the world, has begun integrating Bitcoins into their network. 

On a recent trip to Asia and since, we found the Chinese media, in particular, had strong interest in Bitcoin angles and stories.  That level of interest, however, did not appear reflected among the asset managers to whom we spoke.

There two general explanations offered from the Chinese interest in Bitcoins.  The first is that it is part of China’s challenge to the US dollar.   Some who are involved in the digital currency space, think that the Bitcoin could actually chip away at the US dollar’s reserve currency status.  This seems quite far fetched and a incredible claim (in the sense of lacking credibility), though it has not stopped reporters from repeating it.  Yet, not to lose point, the idea is that digital currencies, of which the Bitcoin is the biggest and best known, is an alternative to fiat money. 

The other explanation of the popularity of China’s interest in Bitcoins is much less philosophical and normative and simply pragmatic and grounded into real needs.  Simply put, in a country that continues to closely regulate capital flows, the Bitcoin gives Chinese savers a way to circumvent the government’s strictures. 

China has been in the process of financial liberalization for some time, albeit at varying speeds.   It is expected to become gradually easier to investment overseas.   Often, when legitimate channels are developed, officials crack down harder on the shadier channels.  Back in 2009, Chinese officials did move against another digital currency (QQ).  Some argue that it was the centralized form that Chinese officials thought challenging rather than digital currencies in theory. 

Yet, there are few places in China to really spend Bitcoins and the issue seems to be how much are the Bitcoins, simply another speculative vehicle and how much is it a circumvention vehicle.  Even if it is most a speculative vehicle, regulators may still take an interest.   To be fair, the media coverage outstrips the actual number of people involved with Bitcoin trading in China. 

In the US, Bitcoins have a different function.  An like bluejeans and rock and roll music, the plasticity or flexibility of American culture and political institutions offers a different tact.  In Senate hearings early this week, both the chairman of the Senate Committee on Homeland Security and Governmental Affairs and the Director of the Treasury Department’s Financial Crimes Enforcement Network (FINCEN) suggested that digital currencies are comparable to the internet in its earliest days.  

Treasury’s Calvery was quoted saying, “So often, when there is a new type of financial service or a new players in the financial industry, the first reaction by those of us who are concerned about money laundering or terrorist finance is to think about the gaps and the vulnerabilities that it creates in the financial system.  But it is also important that we step back and recognize that innovation is a very important part of our economy.”  

US officials seem to recognize the digital currencies can provide a legitimate financial service and has the same benefits and risks of online payment systems.  Later today, the Federal Election Commission is to decide today whether digital currencies, such as Bitcoins, can be used as contributions to political campaigns. 

For those devotees who embrace the Bitcoin in the US (of high income countries more generally) as an alternative store of value than fiat (paper) money, there seems to be a fundamental contradiction.  If it is truly desired as an alternative store of value, then the exchange value is less important, but if it cannot be used, then it might not be considered money.   It seems that such a holder of Bitcoins should only use them for transactions if they felt that value of Bitcoins was rich to paper money. 

The critique of fiat money indicates that paper money will continue to fall depreciate against some external metric, like gold or a basket of goods.  This view argues against using Bitcoins as medium for transactions.  Economists often argue there are three functions of money, a medium of exchange,  a store of value and a unit of account.    Digital currencies, including the Bitcoin has not achieve the networking effect that is required for a unit of account.  We argue here that its function as a store of value works against it acting as a medium of exchange.    Perhaps this is the trilemma facing digital alternatives to fiat money. 

Sovereigns traditionally have two monopolies:  the power of coinage and the legitimate use of violence.  There are numerous examples of the sovereign sharing its monopoly with others, but only in limited ways.  Those who embrace digital currencies as an alternative to fiat money may always exist, but in relatively small numbers.  Surely, the income and wealth divergence that transcends economic models, suggest that far too many people do not have sufficient fiat money to make ends meet and digital currencies are a luxury they cannot afford. 

On the other hand, digital currencies to facilitate transactions may have a greater future, but then, predicated on fiat currencies.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Gmu45YOyHR0/story01.htm Marc To Market

Today’s AM fix was USD 1,248.50, EUR 929.64 and GBP 775.76 per ounce.
Yesterday’s AM fix was USD 1,271.50, EUR 939.69 and GBP 787.11 per ounce.

Gold fell $28.70 or 2.25% yesterday, closing at $1,244.70/oz. Silver slid $0.47 or 2.31% closing at $19.85/oz. Platinum dropped $22.80 or 1.6% to $1,389.00/oz, while palladium fell $9.75 or 1.4% to $708.25/oz.

Gold was trading near four month lows today after its biggest drop in seven weeks yesterday. Another bout of peculiar concentrated selling led to Comex halting trading in December gold futures twice yesterday, the fourth time in less than 3 months.

Gold in U.S. Dollars  and Suspensions Of COMEX Gold Trading – 3 Month (Bloomberg)

Minutes of the Fed’s October policy meeting suggested that the Fed may start scaling back the U.S. central bank’s $85 billion in monthly asset purchases at one of the next few meetings and this may have exacerbated the sell off. ‘Taper’ speculation remains rife despite the increasing likelihood of no taper due to the very fragile state of the U.S. economy.

Gold trading on Comex was interrupted twice, according to Nanex, which provides exchange data and summarizes high frequency trading activity. Thus, trading of gold futures were suspended twice yesterday and four times in the last three months as trading was also suspended on September 12, October 11, and now, November 20.

Nanex reported that about 1,500 gold futures contracts traded in one second at 6:26:40 a.m. Eastern time on Wednesday, triggering a $10 drop in prices and a 20 second trading halt.

Damon Leavell, a spokesman for the exchange said trading was halted at 6:26:41 a.m. New York time, for about 20 seconds. The December contract fell about $11 in less than a minute before trading was suspended.

Leavell declined to comment on the size of the trade that led to the halt. The “stop-logic” mechanism gives traders the opportunity to provide additional liquidity and prevent excessive price movements.

Immediately after the release of the Fed minutes, came another burst of selling which led to gold futures being suspended for another 20 seconds. The second bout of concentrated selling is believed to have been even more than 1,500 contracts. Each contract is worth 100 ounces so 1,500 contracts is worth nearly $200 million.

Myra Saefong of Dow Jones Marketwatch wrote on her blog that, “sudden drops in gold prices and temporary trading halts in gold futures on the Comex division of the New York Mercantile Exchange seem to be becoming the norm”.

The timing was interesting as it came a day after news that Britain’s financial regulator is looking into whether gold benchmarks could have been rigged. The Financial Conduct Authority has launched a preliminary review into the issue, a person familiar with the matter told Bloomberg.

It is believed the London gold fixing is one of the important benchmarks being investigated for rigging. The London AM Fix determines the spot price for physical gold and is set twice daily by a panel of five banks. Zero Hedge suggested that the price falls on the COMEX yesterday may have been due to official intervention, possibly by the Bank of International Settlements.

Gold in U.S. Dollars, 1 Year – (Bloomberg)

Some entity appeared determined to get the gold price lower and they succeeded – for now.

The peculiar trading action in gold again yesterday suggests that certain banks may be manipulating the gold price in the same way that they rigged LIBOR and are alleged to have rigged foreign exchange markets. If so, a key question is, are they manipulating prices purely for profit motives or is there an official sanction for such intervention as alleged by GATA for many years now and by Zero Hedge recently.

The bottom line is that such trading action makes traders on the COMEX very nervous to go long and prevents gold getting some momentum and animal spirits.

However, while price manipulations work in the short term, in the long term gold prices will be dictated by the real world forces of physical supply and demand forgold coins, bars and jewellery. The smart money is fading out the considerable noise regarding volatile intraday price falls and focussing on gold’s importance as a long term diversification in a portfolio.

Investment Pyramid – (GoldCore)

It remains prudent to ignore this short term noise and day to day volatility and focus on gold’s importance as financial insurance and a vital diversification for all investors and savers today.

Support at $1,250/oz has been breached and gold is vulnerable of a fall to test support at $1,200/oz and the June 28th low of $1,180/oz.
 
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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/cvjvXaN-0yE/story01.htm GoldCore

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

ObamaCare will act as a neutron bomb on the U.S. economy for systemic reasons.

Longtime readers know I have repeatedly explained why healthcare, i.e. sickcare, will bankrupt the nation. ObamaCare simply speeds up the coming collapse. Here are two of the dozens of entries I've written on sickcare: 

America's Hidden 8% VAT: Sickcare (May 10, 2012) 

Can Chronic Ill-Health Bring Down Great Nations? Yes It Can, Yes It Will (November 23, 2011)

I have also explained why ObamaCare's "fixes" are simulacra reforms that don't even address the systemic costs arising from the cartel-fiefdom structure of sickcare: 

Why "Healthcare Reform" Is Not Reform, Part I (December 28, 2009)

Why "Healthcare Reform" Is Not Reform, Part II (December 29, 2009)

Sickcare is unsustainable for a number of interlocking reasons: defensive medicine in response to a broken malpractice system; opaque pricing; quasi-monopolies/cartels; systemic disconnect of health from food, diet and fitness; fraud and paperwork consume at least 40% of all sickcare funds; fee-for-service in a cartel system; employers being responsible for healthcare, and a fundamental absence of competition and transparency.

Please glance at these charts to see how the U.S. healthcare costs are double those of competing nations on a per capita basis. Japan provides care for a mere 36% per person of what the U.S. spends–yet millions of Americans remain uninsured or underinsured.

If you set out to design a corrupt, inefficient, wasteful, unfair, deranged and unreformable system, you would arrive at U.S. healthcare/ObamaCare.

ObamaCare ignores the structural causes of our ill-health:

86% of Workers Are Obese or Have Other Health Issue Just 1 in 7 U.S. workers is of normal weight without a chronic health problem.

The Patient Protection and Affordable Care Act (PPACA), i.e. ObamaCare, is a neutron bomb for employment. A neutron bomb is an enhanced-radiation thermonuclear weapon that famously leaves buildings, autos, etc. intact but kills all the people, even those inside buildings. vehicles, etc.

ObamaCare will act as a neutron bomb on the U.S. economy for these systemic reasons:

1. It is immensely complex, and already-marginalized small business owners will shed employees or simply close rather than have to figure out what all those thousands of pages of regulations and statutes mean to the survival of their business.

2. ObamaCare's primary mechanisms of lowering costs, insurance exchanges and technocratic selection of "best care practices," do nothing to change the systemic flaws of sickcare.

Many other commentators have already outlined how ObamaCare is driving employers to replace fulltime workers with part-time workers to avoid having to pay outrageously expensive monthly healthcare insurance premiums.

I see this response as a Corporate-America strategy. Corporate America has the human resources infrastructure and financial heft to figure out compliance and exploit loopholes in the insanely complex law. Small business has neither the infrastructure nor the financial resources. Small business owners will rely on the same cartels that are currently providing insurance for guidance, and of course the ObamaCare offerings will suit the financial needs of sickcare cartels.

Once small business owners see the costs of their options, some may opt to pay the penalties and others may follow the corporate strategy of turning each fulltime job into two part-time jobs to avoid paying for coverage or penalties, but many will choose instead to call it quits: either downsize to a one-person/one-household business with no employees at all, or sell/close the enterprise and escape the burdens.

What the lobbyists and attorneys who wrote the Obamacare monstrosity do not understand (because they have no exposure to or experience in the real economy) is the fragility of most small businesses: costs keep rising but revenues are stagnant. The mental and financial stresses keep rising, and ObamaCare does nothing to mitigate either source of stress.

The inside-the-Beltway types who crafted this mess have no idea of the pressures facing legitimate (non-black-market) business in America, corporate and small business alike.

ObamaCare offers even more incentives for Corporate America to offshore operations, and it provides powerful incentives to millions of marginal small businesses to shut down or shed all employees.

I am not alone in simply not wanting to waste the time, money and energy required to understand the new law and its various impacts on my business. We will cling to our already insanely expensive private healthcare insurance, one of the few that has been grandfathered in: new self-employed entrepreneurs won't be able to buy the absurdly costly policy we have–they will be offered a range of even worse deals, with higher costs and less coverage.

3. Perhaps most cruelly, the bronze level of ObamaCare–the "affordable" care–is a mirage, a simulacra of insurance rather than actual insurance. Bronze level ObamaCare features deductables of around $6,000.
In other words, you have to spend $6,000 before your insurance kicks in.

In an economy in which two-thirds of all households live paycheck to paycheck, this is the equivalent of no insurance. High-income sickcare lobbyists and millionaire politicos may look at $6,000 as no big deal, but for households with little savings or credit, that might as well be $60,000.

4. As many others have pointed out, the income levels that divide receiving a Federal subsidy from not receiving a subsidy are begging to be gamed. If $62,000 is the line in the sand that qualifies your household for a hefty subsidy on health insurance, the incentives to adjust earnings to fall just below $62,000 (or whatever the number is for the locale and household size) are immense.

People respond to the incentives and disincentives they are presented with, perverse or otherwise. The lobbyists, toadies and apparatchiks who wrote and passed ObamaCare could not have stuffed the bill with more perverse incentives if they had set out with that as their primary goal.

The neutron bomb has gone off, unseen by politicos and the Elites who wrote the bill. It is already undercutting fulltime employment, and it will soon add momentum to the free-fall erosion of small business growth and employment.
The strip malls and office parks will still be standing; there just won't be many employees in them.

Of related interest:

About Your $3.16 a Day Healthcare Insurance Plan… (February 21, 2013) MirageCare

What If ObamaCare, Too Big To Fail Banks and the State Are All the Wrong Sized Unit?(February 25, 2013)

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/yHh0_4ChTmY/story01.htm Tyler Durden