Healthcare Debate, Cash-for-Clunkers Truth, Congress, and Investing Overview

As I look back over the past three months since my last writing, the major themes resounding in the public seem to be anger over apparent Obamanomic Socialism and the headwinds surrounding it.

Firstly, it is very alarming that so many liberals have so much anger towards Obama. The other day, a friend told me about a conversation they had with a die-hard liberal who, when my friend brought up Obama, simply stated forcefully "Don't talk to me about Obama!" Where does this vehemence swell from? It's as if pent-up anger that had been suppressed through fear tactics during the Bush era is erupting against a President who actually encourages debate.

This general malaise of rabid critique affecting the country is best seen through the lens of healthcare reform. Citizens across the country view this reform as government doing some massive disservice to the country. Yet, I suggest that EVERY American has seen their costs for healthcare skyrocket in the past decade, well beyond the costs for almost every good and service! I can attest that at my last employer, the best deal the business manager at the school could land each year was an 18% cost hike for our coverage as teachers. To put that into perspective, at that rate, my costs would have doubled ever 4.5 years roughly! That is insane. What's even worse, now that I work for myself, my private health policy monthly premium shot up an astounding 37% in year for similar if not reduced benefits! As a small-business owner, healthcare costs are one of largest costs on the balance sheet with no end in sight to escalating costs. In light of this, it is difficult to understand how Americans can be so opposed to some form of overhaul.

I also feel the anger towards Obama is misplaced: remember, our elected representatives in Congress VOTE on every proposal that passes! This was true with Bush's war in Iraq, this was true on Bush's bank bailout freebies, and this was true with Obama's stimulus package. Our collective frustration should be with the very members of Congress whom we voted to office and not directed at the President. In the end, the bill that Democrat Bauccus put forward today does NOT include key components of Obama's plan and the final bill that passes after the Republicans have their way will probably look very unlike the plan from the White House.

On the other hand, there is misguided support for the Cash-For-Clunkers program, which is by far the most socialist policy thusfar, and one that was voted in support of by Congress. The market and the government wanted to spur the economy so they gave people $4500 to buy a new car. To do so, however, they had to kill the perfectly good car (even if slightly less fuel-efficient) they already owned. Because of the recession, I just had to sell my car, yet now my tax dollars are being given to someone else to buy a new one? In this line of inquiry, my laptop just died which is integral to me doing my job: why isn't the government giving me $500 to buy a new laptop and scrap the old one (instead of simply having me spend a mere $250 for a new hard-drive)? And now we read that the government will unveil a Cash-For-Old-Appliances program to spur new purchases of fridges and ovens. What occurs is that these subsidies fast-forward purchases by consumers who would otherwise push off big-ticket items until the future when they might be able to afford them on their own. If people buy cars and appliances in 2009 that they would have bought in 2010 or beyond given they already had working solutions, who is going to buy in 2010?

The markets cheer these subsidies because "coincidentally" retail sales exploded this past month, based on the jump in auto sales, go figure. This allows the cheerleading squad of Ben Bernanke and media to declare the economy is on the mend. Yet, the consumer is retrenching, savings rates are soaring, debt is being paid down rather than seeing new goods purchased, the unemployment rate continues to rise, foreclosures on adjustable rate mortgages are still occuring at significant rates, banks aren't lending but instead hoarding cash, and the purchasing power of the dollar has been getting killed precisely because of the policies of elected and non-elected (Federal Reserve). So where is the evidence that the consumer is going to be able to spend to pull the economy out of the down-trend given consumer spending is a whopping 70% of our economy?

It is laughable that Obama is pegged as a socialist when it is Congress who votes on these policies. It is Congress who established the policy of spending our tax dollars to help buy new cars, it is Congress who enacted the stimulus bill and bailouts (along with the Fed), and it is Congress that will end up overhauling healthcare.

Finally, on the investing side of this synopsis:

As I said, gold and silver have been racheting higher (on inflation concerns), commodities like oil have rebounded. I was incorrect on the dollar over the past three months as I thought it would strengthen from near-term deflation, but I am still betting that. I also argue that although the markets might continue to rise in the near-term, it has risen to far too fast and should correct down to at least take a breather. I am shorting the euro and the major indexes. I am also shorting gold and silver in the near-term although I think the longterm outlook for both is still very strong.

Please take action either politically or economically to ensure the next generation of Americans is protected and given room to follow their dreams. Good day.