Correction to previous post

I have kept thinking about the cost of Medicare. In an earlier post on Dec. 12, 2012 entitled "The cost of Healthcare in the U.S." I made a serious error. The median income figure I used is incorrect. I used the number for median household income when I should have used the number for median income. Median income in the U.S. in 2000 was $22346.
A huge difference.
I blush at my foolishness.
I know not many people read this but I fool myself with mistakes like that.

My apologies to any who read it.

gh

Hi O Silver! Away?

The debate is always about inflation versus deflation is the asset markets.

Silver and gold are proxies for these macro-economic sentiments.

To me the Silver prices look to be expecting inflation. I would suspect that the outcome of the so-called fiscal cliff negotiations in Congress will be inflationary. In other words I do not have confidence that our politicians will come to a major decision that actually raises taxes by much nor cuts government by much. Somehow they will paper over the problem. Kick the can, to use the prevalent metaphor.

As a trader I am looking for clues in the markets. Silver offers what I think are clues. I may be wrong of course. The outcome may be different. The silver market participants may be surprised. At least in the short term. Or even for the long term. Though I doubt that Congress will do anything of a long term solution.

Or maybe something else will move the market in a meaningful way. But IF the silver market starts going up and makes some new highs I would expect another meaningful and possibly explosive rally. Silver traders can get really crazy......

The charts.

And as I post this the headline is that the Democrats are saying that they will not present entitlement cuts to the Republicans. The Republicans must present the cuts.
It only sounds fair to me! If they want to cut entitlements they should specify how.
The Dems want to raise taxes and they have stated how much.

Round and round she goes......

gh

Emerging markets

Good news out on the China economy here.

A look at the charts of emerging markets show an interesting situation.

EEM looks to be breaking out of a consolidation on the daily as well as the weekly long term charts. It is a good sign when there are breakouts in multiple timeframes.

And markets are fractals. Meaning that often the same patterns are noticed in charts of different timeframes. Much as a tree is seen in a branch and a branch in a twig....

Notice the cup and handle formation in the weekly and daily charts and the breakout.

EEM:

This may be the start of another long term move in the emerging markets. And may be a harbinger of things to come worldwide.  Take another look at the small cap chart IWM....

and while we are here, an instance of support/resistance in MCP:

control risk!

gh

Euro-crisis for dummies

So politics and economics bores you. But you always liked "Full Metal Jacket". If that is your kind of movie, and you don't mind subtitles, perhaps you can learn about the Euro-crisis1

 thanks jesse

The cost of healthcare in U.S.

I apparently have too much time on my hands. I don't know how this got started but I spent most of the day trying to figure out how much the cost was for my health insurance plan. And this was the result.

Health care costs over a lifetime

According to a study by Health Services Research (HSR) here:http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1361028/
The average cost over a lifetime for an American using year 2000 US dollars was $316,579. This includes medical, dental, and vision, as well as nursing home and hospice type care. (All health care costs)

According to the US Census bureau the median wage in year 2000 was $41994 ($42000)

I calculate a working lifetime as those years from age 18 to age 65. Total 47 years.

Dividing the total lifetime healthcare cost by the number of working years.

$316579/47years = $6735/yr.

$6735 represents 16% of the year 2000 median wage.

If individual health care costs increase at the rate of inflation and if median income increases at the rate of inflation then a person would be able to "save" enough for a lifetime of health costs by contributing 16% of his wages to a health cost pool. (insurance plan)

Some would contribute more actual dollars and some would contribute less. Just as some will use more health dollars and some will use less.

I researched what my employer and myself contribute to my present health insurance. If I add my employers contribution for health insurance to my gross wages then the cost of health insurance is 12% of total compensation. Plus the 3% we presently pay for Medicare tax equals 15%.

However, my insurance is only available up to age 65 if I continue to work. Then I go on the government plan. Medicare Part A is free at this time, Part B and C at present will have a premium of approx. $130.

The average Social Security payment is now $1230/ mo. So the above Medicare premium represents 10.5% of SS income. Almost the 11% I am paying now. (Iwillhave more than SS:)

According to the HSR study, the cost of healthcare by age per year:
The cost for a 40 y/o is $2601/yr.
The cost for a 65 y/o is $10,245.
The cost for a 85 y/o is $17,071.

As you can see and as we would expect the cost rises dramatically in our later years. Yet I am paying 12% of my potential income for private insurance now that will dump me when I get to age 65.(And this is a subsidised cost, it is paid in pretax dollars by myself and my employer) And I am paying 3% now for Medicare, the insurance that will be expected to cover the bulk of my lifetime health care cost when I am old. So the bulk of the money that I am contributing to my healthcare costs is going to private insurance that will not be around for me when I incur the vast majority of the costs of healthcare.
Currently Medicare enrollees pay about $130 a month for Parts B & D.

Medicare currently pays only about 75% of medical costs for enrollees. The HRS study is talking about all costs for everybody. The AVERAGE COST for a lifetime.

These are averages. This means that if health care costs were covered by WORKING PEOPLE ONLY it would require 16% of income going to health coverage during working years to pay for healthcare costs. No deductibles. No age limits. As it is the money paid into the private healthcare insurance scheme is paying for coverage that is, for the most part not used by the generally healthier workers. But a significant cost of health insurance is due to cost of providing care to the uninsured. And frankly I'm in favor of sin taxes going toward heath care expenses. Alcohol, tobacco and even firearms could be taxed toward the cost of healthcare. As could sugar.

The bottom line is that the cost of healthcare for a lifetime could be paid for by the equivalent of 16% of income during the working years. During that time and after in retirement there would be no additional cost. I can hear the rich complaining now about the dollar cost of the 16%. But imagine the flexibility provided to the workforce by being able to change jobs without worrying about health insurance. Or going to school and retraining. I imagine there would be upward pressure on wages due to that flexibility as people exercise their right to change jobs...

I suspect that the cost of healthcare would come down with a single payer due to billing simplification and limits to compensation. And how much of present day insurance premiums are the result of just the fear of going broke without insurance. Prices go up and people still demand the coverage. And as prices go up insurance becomes even more of a necessity. What is the price of lifesaving medicine? Isn't that duress? This is part of the self-reinforcing mechanism of increased medical costs.
I notice that on my latest pay statement that my total payroll tax comes to 18.2% of gross: Medicare is a miniscule 1.38%. Social Security is 4%. Federal tax is 7.8%. State tax 5%. Workers comp is 0.06%. (2 deductions, and as a percent of GROSS income. And I should be in the 25% bracket) Think Bush tax cuts. And then there is the 12 % for medical insurance.

I think that my place of employment is on the generous side. I suspect that they pay a larger portion of the total cost than most. They are part of the problem, after all....

Can you see the political problems with asking a minimum wage worker to pay 16%?
Or asking a multi-millionaire to pay a straight 16%?


Is it any wonder that the Federal government is going broke? Would I pay another 4% for peace of mind? And no deductibles. And vision and dental after retirement. YOU BET I WOULD!
I can't believe it actually works out this way. But I've been at this all day and that is what I keep coming up with.

And then there is this from "The Big Picture",

http://baselinescenario.com/2012/12/03/entitlements-scare-tactics/

Just thinkin',
Again...
gh
　
　
　
　

TC

Many of the metals stocks under pressure lately. GG, IAM, FCX, SLW, etc...

This one showing some life for some reason that I am unaware of. (and don't want to know!)

Possible trade here. If Thompson Creek Metals can get above todays high price I see it going to $4. It would stop there for an undetermined time, or decline. If it got above $4 it would be an easy leap to $6.
A lot depends on what the general market sentiment is, as always. But the idea above could be the basis for a trade. Keeping in mind that it may not do as expected and with the resolve to not hold it and hope if it strays too far from the basic expectation.
I guess that is what trading is!!
Based on technical analysis and general market sentiment right NOW.

TC:

And BAC went as expected today. Look at the intraday for what a strong breakout looks like!

gh

BAC

The markets still have a good tone.

Bank of America is the latest good looking chart. Feels good on an intraday basis too.
This stock trades at only a fraction of it's historic highs. Not that that is a good reason to buy. There is probably a trillion reasons for a low price on this bank. But for the time being it looks set to make another leg up.
I have not bought this one. I'm working on a couple other things.    (FSLR is one....)

Here's the chart: BAC

Control risk!
gh

Something coming?

short note. The markets starting to pick up. Good news coming?? Time 1054 PST....
gh

Countries aren't companies

As I watch the markets during the day I have CNBC on the television in my office. Not to listen for trade ideas, but to listen to the ideas traders have. CNBC is on the "solve the fiscal cliff" trade now. They continue to have business leaders on for their advice. Almost without exception these leaders of corporate business have the same advice for the U.S. govt. and the fiscal problem. That advice can be summed up as " raise revenues and control costs". This is how a company survives and it is not surprising that they believe it is the prescription this country needs to regain economic leadership in the world. However I will point out that there is a difference between a corporation or private business interest and a country of multiple and varied interests.

It is not difficult to see the neccessity of raising taxes/revenue to balance the budget, particularly after 30 years of declining tax rates and increased loopholes. But the advice on controlling costs is different for a country than for a corporation. When a corporation controls spending, they are attempting to control the flow of money OUT of the corporation. They attempt to control the costs of materials or services that they use to produce the product or services they sell. A governments expenses are different in the sense that the taxes raised are spent inside the country. The analogy would be internal spending in a corporation or company between divisions or departments in the company. There is no net loss to the company as a whole. And spending between departments is probably neccessary to the functioning of the company. Tax money is mostly spent INSIDE the country so is more analogous to internal private spending. The loss to the U.S. economy is from the money that flows out of the country balanced against the inflow of money from items sold. In other words the balance of trade/current account is the most important indicator of economic strength or weakness in the longer term.

If we want to control costs we should focus on those things that we do that send our money abroad. Military spending to protect the world comes immediately to mind. The so-called "defense" spending. We spend more than the rest of the modern world combined on our military and we spend it around the world, freeing up those countries that we "protect" to pursue more productive endeavors.

Another cause of trade deficit is the offshoring of our production and import of consumer goods, which is exacerbated by our consumer debt. We buy stuff we don't need and borrow the money to do it!

I think that if we want to get our economy strong again and gain advantage in the world economy we need to stop listening to business leaders who advocate what is good for multi-national corporations. They will find their profits where they find them around the world. And their paradigm is one of the U.S. as a continuing "piggy bank" to be raided to support corporate profits. This is not what is good for THIS country. We need to think of the total United States as a company. Internal spending may be neccessary to change our "business model" to one of increased production of goods and services for ourselves and to export to the world. And while the argument of taxes as a drag on economic activity may have some validity in the short run, in the longer term it is only good for the multinationals. Tax cuts are only another form of artificial stimulus to the consumer and they are temporary. We need to raise money to invest internally and change the rules to encourage/promote exports.

Thinking again
gh

Social Security under attack

A group of CEO's of major corporations are trying to influence the debate over Social Security in a way that reduces benefits for retiree's. Social Security and safety nets in general are a form of national saving. Money put into these programs is used later for support of the participants. Like savings.
Corporate influence wants to put that money back in the pockets of the taxpayers today, so they can spend it on something that the corporate overlords are selling and thus keep corporate profits up. The same argument and the same motive in all of the tax cut debates. This has been the case for 30 years with the low tax argument. Put more money in the hands of the consumers so they spend it!

Yes, it is "freedom". But it is not in the interest of the nation. Some have no way to save for retirement or illness. Their wages have been reduced through inflation and the assault on labor, as well as the technologic effects of increased production, not to mention oursourcing to other countries.

We should pay for Social Security and Medicare.

From the Institute for Policy Studies.

gh