Screen Shot 2013-09-01 at 8.04.20 PM

Ted Cruz:

Republicans repealing Obamacare

to help African-Americans and Hispanics


ObamaCare will Hurt

the Poorest Americans


Reduce Availability of Quality Care




ObamaCare Will Destroy Economy if it’s not Repealed




Exclusive: Dr. Lee Heib awakens D.C. to reality of offering ‘free’ health care


Obama and the architects of health-care reform are long on theory, but short on the reality of medicine.

But there is a reality, whether or not the theorists like to consider it. The facts are the facts, and in this case hard to deny. Even some of the most verbal proponents of Obamacare – are being “bitten in the a–” so to speak by the real world results of their ridiculous attempt at micromanagement of a complex field that constitutes 14 percent of the nation’s economy.

Max Baucus, Democrat from Montana called implementation of Obamacare a “train wreck.” Senators Franken and Lobuchar from Minnesota are finding out that Obamacare’s tax on medical manufacturing is wreaking havoc with their state’s huge medical manufacturing industry. They have, at least on this minor point in the law, moved to the opposition.

Congressional staffers themselves are now subjected to the laws they helped write –and they are not happy to live under the rules! As the joke goes, a conservative is a liberal who has been mugged by reality.

So let us review the real effects of Obamacare to date:

1. Roseland Community Hospital, a Chicago south-side hospital that cares for many of the area’s indigent is laying off 68 employees including clerks, lab staff, ER nurses and managers. Executives and others are taking a pay cut. This is a direct result of decreased reimbursements under Medicare as mandated by the Patient Protection and Affordable Care Act, or PPACA, otherwise known as Obamacare.

2. In a June CNBC survey, 41 percent of small businesses reported having frozen hiring due to the new health-care law. 1 out of 5 said specifically the freeze was due to Obamacare. Thirty-eight percent of small businesses said they pulled back on their plans to expand, specifically citing Obamacare.

3. Ministry Health Care is planning a layoff of 225 to 250 full-time jobs due to the reducing reimbursement.

4. Allegany Co. Pennsylvania Community College cut hours for 400 adjunct faculty and other employers so it did not have to pay $6 million in Obamacare-related fees.

5. Medina, Ohio, cut hours of its city employees, citing the fact that they had the money to pay salaries, but not the budget to pay for the new health care required, which would have added $1 million to their cost.

6. Dearborn, Mich., is cutting more than 700 part-time and seasonal workers down to 28 hours a week. According to the Mayor, John O’Reilly, “If we had to provide health care and other benefits to all our employees, the burden on the city would be tremendous.”

7. Temporary staffing jobs hit a record 2.68 million in May as employers look to hire more part-time employees and therefore avoid the ramifications of Obamacare. The temp employment industry in the last four months has added 98,000 jobs, making it the No. 2 growth industry.

8. Medicare cuts in reimbursements to hospitals have resulted in cutting physician staffing. In the Henry Ford Medical Group, 20-25 physicians will be taking early retirement as 3-4 percent is cut from the physician budget. This makes evening and weekend call difficult to cover.

9. A Birmingham, Mich., commissioner, Gordon Rinschler summed it up, “We simply cannot afford the ‘affordable care act.’”

These are just a few of the myriad announcements of job layoffs and the cutting of hours so more people are part-time employees. This is the first response to Obamacare –the real effects will not become fully manifest until 2014. At that time when all the fat has been cut, when all the fines are coming due, when doctors have retired in droves, when the size of government has further expanded and the rest of the costs kick in, there will be nowhere to run. Businesses then will start closing their doors.

There comes a time to examine theory in the cold hard light of reality. The ideal of “free health care” is a false ideal. There is no free lunch and there is no free health care. And when the government offers you something for “free,” grab your wallets because you are about to be fleeced, as businesses, doctors, hospitals and local governments are finding out


Screen Shot 2013-09-01 at 8.06.55 PM

Will Obamacare Hurt Jobs?

It’s Already Happening, Poll Finds

   Text Size  

Published: Wednesday, 19 Jun 2013 | 12:21 PM ET

By:  | Health Care Reporter
Getty Images

Small business owners’ fear of the effect of the new health-care reform law on their bottom line is prompting many to hold off on hiring and even to shed jobs in some cases, a recent poll found.

“We were startled because we know that employers were concerned about the Affordable Care Act and the effects it would have on their business, but we didn’t realize the extent they were concerned, or that the businesses were being proactive to make sure the effects of the ACA actually were minimized,” said attorney Steven Friedman of Littler Mendelson. His firm, which specializes in employment law, commissioned the Gallup poll.

“If the small businesses’ fears are reasonable, then it could mean that the small business sector grows slower than what economic conditions otherwise would indicate. And small businesses have been a growth engine in the economy,” Friedman told CNBC.

Forty-one percent of the businesses surveyed have frozen hiring because of the health-care law known as Obamacare. And almost one-fifth—19 percent— answered “yes” when asked if they had “reduced the number of employees you have in your business as a specific result of the Affordable Care Act.”

The poll was taken by 603 owners whose businesses have under $20 million in annual sales.

Another 38 percent of the small business owners said they “have pulled back on their plans to grow their business” because of Obamacare.

Those are “some pretty startling answers,” Friedman said.

“To think that [nearly] 20 percent of small businesses have already reduced the numbers they have in their business because they’re concerned about the medical coverage is significant, and a bit troubling,” Friedman said.

(Read More: Two-Thirds May Not Insure Under Obamacare: Survey )

Play Video
Health Insurance Crisis Ahead?
Will Obamacare prevent a majority of Americans from obtaining health care next year? Sen. John Barrasso (R-WY) discusses.

Under ACA, nearly all companies with 50 or more full-time employees will have to either offer health coverage or face a fine of $2,000 per full-timer after the first 30 workers.

Friedman said that Littler Mendelson, which recently created a health-care reform consulting group, had heard small business clients talk about their fear that the rules and other effects of the ACA will lead to higher costs. The poll supported that anecdotal data with the finding that 48 percent of owners think the law will be bad for their bottom line.

Just 9 percent of the small employers surveyed agreed that Obamacare would be “good for your business,” while another 39 percent saw “no impact.”

The prevalent pessimism tracks other answers in the poll, which showed that 55 percent of small business owners believe that the ACA will lead to higher health-care costs. By contrast, about 5 percent said the law would lead to lower costs.

And more than half—52 percent—said they expected a reduction in the quality of health care under Obamacare, while just 13 percent expected an improvement.

Getty Images

“I can’t say that the fears appear overstated, because the potential for big problems seems rather large,” Friedman said about law’s implementation.

“We don’t know until 2014 and beyond what the impact of the ACA will be on businesses,” he said. “There is tremendous fear that the premiums will be much higher, for small businesses especially. At this point we can’t look a client straight in the eye and say, ‘Don’t worry about it. Everything will be fine.’ ”

In addition to restricting hiring or cutting jobs, small companies are considering other ways to mitigate the expected financial fallout. Twenty-four percent are weighing whether to drop insurance coverage, while 18 percent have “reduced the hours of employees to part-time” in anticipation of the ACA’s effects, the poll found.

Gallup Chief Economic Dennis Jacobe said small business owners’ answers in the poll “is consistent with owners’ tendency to be more Republican than Democratic, higher-income, more against big government, more conservative and less optimistic than Americans overall.”

One group that favors Obamacare for small businesses said the findings reflect misconceptions about its true effects as well as the need for continued outreach by reform advocates to the small business community.

“We need to do more educating about the law,” said Rhett Buttle, vice president for external affairs for the Small Business Majority, an advocacy group that has run informational meetings for owners about Obamacare.

“We think small business owners stand to benefit under the ACA,” Buttle said. ”We think small business owners, as they learn more [about the ACA] … will save money in the long run.”


Will Obamacare Destroy Jobs?

THE ECONOMIST AUG. 26, 2013, 9:37 PM 12,164 54
Barack Obama first termWhite House photo/Pete Souza

Health reform may make Americans work less

BEFORE the recession, Richard Clark’s cleaning company in Florida had 200 employees, about half of them working full time. These days it has about 150, with 80% part-time. The downturn explains some of this. But Mr Clark also blames Barack Obama’s health reform. When it comes into effect in January 2015, Obamacare will require firms with 50 or more full-time employees to offer them affordable health insurance or pay a fine of $2,000-3,000 per worker. That alarms firms that do not already offer coverage. But for many, there is a way round the law.

Mr Clark says he is “very careful with the threshold”. To keep his full-time workforce below the magic number of 50, he is relying more on part-timers. He is not alone. More than one in ten firms surveyed by Mercer, a consultancy–and one in five retail and hospitality companies–say they will cut workers’ hours because of Obamacare. A hundred part-timers can flip as many burgers as 50 full-timers, and the former will soon be much cheaper.

Opinions are furiously divided as to whether the unintended harm caused by health reform will outweigh its benefits. Republicans, who have always hated the whole package, howl that it will destroy jobs. Nonsense, say Democrats; it will promote growth and boost employment. Since the law has so many moving parts, it is hard to predict who is right. But there is a risk that a lot of workers will be hurt.

American health insurance and employment are uniquely entangled. During the second world war, firms began using health insurance to woo scarce workers. Some 57% of employers now offer it, covering nearly 150m people. Company-provided insurance is not taxed, and workers like it because the alternative is abysmal. On the individual market, insurers charge the sick exorbitant rates.

All this has had strange effects on the labour market. Workers stay in bad jobs for fear of losing insurance. As the cost of insurance rises, employers lower wages. Health costs seem to depress hiring, too. A study found that from 1987 to 2005, industries that offered health insurance saw jobs grow more slowly than those that did not. No such pattern was seen in those industries in Canada, where people receive health insurance from the government.

Land of confusion

Into this jumble comes Obamacare. From January next year insurers will no longer be allowed to charge the sick higher rates. If only the sick were to seek coverage, costs would explode, so the law requires everyone to be insured or pay a fine. To make this easier for those not already covered, Obamacare will create online shopping places for health insurance, called exchanges. People who cannot afford coverage will receive generous subsidies.

Mr Obama has said that workers who like their company-provided insurance will be able to keep it. This is like promising that if you like sunshine, it won’t rain. Actually, it is even more misleading. When he shakes up the health-care market, employers will have no choice but to respond.

Last month Mr Obama delayed the employer mandate by a year, to give firms more time to comply. For the moment, large firms that already cover workers are unlikely to stop doing so, predicts Mercer. But coverage is changing nonetheless. Many firms are making workers pay more of their health bills. Obamacare includes a tax on generous healthplans, starting in 2018, which is making some employers reconsider lush benefits. Unions, which fought for them, are livid. At the other extreme, some low-paid workers may want their employers to drop insurance, so they can receive subsidies on the exchanges.

More worrying, though, is the possibility that Obamacare may kill jobs. In 2010 the Congressional Budget Office (CBO) projected that it would shrink employment by 0.5%. The law’s many provisions would pull in opposite directions. Some would raise employment, the CBO predicted. For example, by expanding Medicaid (health care for the poor) to those with higher incomes, Obamacare would remove a disincentive to work. People who might have turned down extra work for fear of losing their Medicaid would now take it, ran the argument.

Other provisions would reduce employment. Partly, this would be because employers like Mr Clark will cut jobs and hours to avoid being subject to the law. (Unions publicly fret about the threat to the 40-hour week.) But mostly, the CBO thinks it would be because people will choose to work less. Obamacare’s subsidies will boost the finances of poor workers; they may therefore work fewer hours. After examining employment and subsidised insurance in Tennessee, Craig Garthwaite of Northwestern University and his colleagues estimate that Obamacare’s subsidies will prompt up to 940,000 workers to leave the labour force. Many will be older people, keen to retire early.

Another concern is that Obamacare will lower wages. For example, if firms that do not now offer insurance comply with the mandate, their costs will jump. Nearly 60% of such firms say they will offer coverage, according to Mercer. As health costs rise, they may pay their staff less. A study in Massachusetts found that, roughly speaking, every extra dollar spent on insurance comes out of wages.

The White House, however, points to various ways in which Obamacare might boost employment. By making it easier for individuals to buy health insurance, it should make it less frightening for them to switch jobs or start their own companies. Democrats claim the law will lower health costs for firms. Tax credits for small businesses will make it cheaper for them to offer health insurance. Measures to reward efficient health care will reduce the cost of treatment. If insurance becomes cheaper, firms will have more money to hire workers and raise wages. In 2010 David Cutler of Harvard University estimated that Obamacare’s cost-control measures would create up to 400,000 jobs each year.

However, Casey Mulligan of the University of Chicago contends that Obamacare’s distortions to the labour market will outweigh any growth from lowering health costs. By adding his estimates to those of Mr Cutler, Mr Mulligan predicts that Americans will work 3% less in 2015 than they otherwise would have.

Interestingly, the number of jobs in sectors most affected by Obamacare, such as retail, leisure and hospitality, have grown relatively quickly, notes Alec Phillips of Goldman Sachs. But the hours worked in such industries have grown more slowly, suggesting a reluctance to add more full-time jobs (see chart).

When the final diagnosis is done, Obamacare may have nasty side-effects.

Click here to subscribe to The Economist


Read more:


Screen Shot 2013-07-31 at 4.59.56 PM


Wouldn’t We All Be Wealthier If We Printed More Money?

If we print more money, prices will rise such that we’re no better off than we were before. To see why, we’ll suppose this isn’t true, and that prices will not increase much when we drastically increase the money supply. Consider the case of the United States. Let’s suppose the United States decides to increase the money supply by mailing every man, woman, and child an envelope full of money. What would people do with that money? Some of that money will be saved, some might go toward paying off debt like mortgages and credit cards, but most of it will be spent. I know the first thing I’d do is go down to Walmart and buy an Xbox or PlayStation 2 (if you have an opinion of which I should buy e-mail me by using the feedback form).

I’m not going to be the only one who runs out to buy an Xbox. This presents a problem for Walmart. Do they keep their prices the same and not have enough Xboxes to sell to everyone who wants one, or do they raise their prices? The obvious decision would be to raise their prices. If Walmart (along with everyone else) decides to raise their prices right away, we would have massive inflation, and our money is now devalued. Since we’re trying to argue this won’t happen, we’ll suppose that Walmart and the other retailers don’t increase the price of Xboxes. For the price of Xboxes to hold steady, the supply of Xboxes will have to meet this added demand. If there are shortages, certainly the price will rise, as consumers who are denied an Xbox will offer to pay a price well in excess of what Walmart was formerly charging.

For the retail price of the Xbox not to rise, we will need the producer of the Xbox, Microsoft, to increase production to satisfy this increased demand. Certainly this will not be technically possible in some industries, as there are capacity constraints (machinery, factory space) that limit how much production can be increased in a short period of time. We also need Microsoft not to charge retailers more per system, as this would cause Walmart to increase the price they charged to consumers, as we’re trying to create a scenario where the price of the Xbox won’t rise. By this logic we also need the per-unit costs of producing the Xbox not to rise. This is going to be difficult as the companies that Microsoft buys parts from are going to have the same pressures and incentives to raise prices that Walmart and Microsoft do. If Microsoft is going to produce more Xboxes, they’re going to need more man hours of labor and obtaining these hours cannot add too much (if anything) to their per-unit costs, or else they will be forced to raise the price they charge retailers.

Wages are essentially prices; an hourly wage is the price a person charges for an hour of labor. It will be impossible for hourly wages to stay at their current levels. Some of the added labor may come through employees working overtime. This clearly has added costs, and workers are not likely to be as productive (per hour) if they’re working 12 hours a day than if they’re working 8. Many companies will need to hire extra labor. This demand for extra labor will cause wages to rise, as companies bid up wage rates in order to induce workers to work for their company. They’ll also have to induce their current workers not to retire. If you were given an envelope full of cash, do you think you’d put in more hours at work, or less? Labor market pressures require wages to increase, so product costs must increase as well.

n short prices will go up after a drastic increase in the money supply because:

  1. If people have more money, they’ll divert some of that money to spending. Retailers will be forced to raise prices, or run out of product.
  2. Retailers who run out of product will try to replenish it. Producers face the same dilemma of retailers that they will either have to raise prices, or face shortages because they do not have the capacity to create extra product and they cannot find labor at rates which are low enough to justify the extra production.

In articles such as “Why Does Money Have Value?“, “The Demand For Money“, and “Prices and Recessions” we’ve seen that inflation is caused by a combination of four factors. Those factors are:

  • The supply of money goes up.
  • The supply of goods goes down.
  • Demand for money goes down.
  • Demand for goods goes up.

We’ve seen why an increase in the supply of money causes prices to rise. If the supply of goods increased enough, factor 1 and 2 could balance each other out and we could avoid inflation. Suppliers would produce more goods if wage rates and the price of their inputs wouldn’t increase. However, we’ve seen they will increase. In fact, it’s likely that they’ll increase to such a level where it will be optimal for the firm to produce the amount they would have if the money supply had not increased.

This gets us to why drastically increasing the money supply on the surface seems like a good idea. When we say we’d like more money, what we’re really saying is we’d like more wealth. The problem is if we all have more money, collectively we’re not going to be any more wealthy. Increasing the amount of money does nothing to increasing the amount of wealth or more plainly the amount ofstuff in the world. Since the same number of people are chasing the same amount of stuff, we cannot on average be wealthier than we were before


You know a city is in deep trouble when its mayor invites Wall Street but not the press and not private citizens to a closed meeting to discuss the future, including a sell-off of city assets.

Philadelphia Mayor Michael Nutter, whose municipality has the lowest credit rating of the five most-populous U.S. cities, did just that.

My translation: Philadelphia is bankrupt. However, that easily discernible fact will of course be denied until it officially happens.

Please consider Philadelphia Holds Closed Meeting With Wall Street

Philadelphia Mayor Michael Nutter, whose municipality has the lowest credit rating of the five most-populous U.S. cities, will address investors at a conference financed by underwriters and closed to the public and the press.

The invitation bills tomorrow’s meeting as a chance to hear “Philadelphia leaders and investors discuss building the city’s future.”

Philadelphia is hoping to attract investors for the city, which is rated three steps above junk by Standard & Poor’s. The city and its authorities have $8.75 billion in outstanding debt as of September, according to bond documents. Philadelphia’s pension system is 47.6 percent funded this year, the documents say.

Tours of city assets are set for the second day of the conference, including the Philadelphia Gas Works, the largest municipally owned natural-gas utility in the U.S. The city plans to hire a broker to steer the sale of the system, which may fetch as much as $496 million, according to Lazard Ltd. (LAZ)

Sam Katz, chairman of the Pennsylvania Intergovernmental Cooperation Authority, created in a 1991 state law that oversees the city’s finances, said that with the conference being held locally, it “certainly created some concern on the part of people that it should be made public.”

He’s more troubled, however, by the fact the school district isn’t on the agenda, he said. Facing a $304 million deficit, school officials have asked the city for $60 million and the state for $120 million.

“The school district’s in a crisis,” Katz said. “They’re the same tax base.”

Philadelphia officials facing a $1.35 billion spending gap over five years voted in March to shut 9 percent of its public schools.

Philadelphia, 5th Largest City in US is Bankrupt

It does not take a genius to figure out what is going on here. Philadelphia is bankrupt. Without even seeing the details, it is safe to assume untenable union wages and pension benefits are at the heart of it all. A 47.6% funded pension is rather telling in and of itself.

Gutless Mayor Michael Nutter does not even have the decency to let the public or the press hear what is going on. Instead he invited Wall Street to a private tour of Philadelphia’s assets, hoping to sell assets and stave off the inevitable. READ MORE>>

5th Largest City in US is Effectively Bankrupt

Mike Shedlock | Apr 18, 2013

= e

Detroit Slides From Industrial Might to Bankruptcy

By Steven Church, Dawn McCarty & Margaret Cronin Fisk - Jul 19, 2013 1:01 PM ET
[stream flv=


Avik RoyAvik Roy, Contributor
WASHINGTON, DC - APRIL 11: Treasury Secretary ...WASHINGTON, DC - APRIL 11: Treasury Secretary Jack Lew takes his seat to testify before the House Ways and Means Committee on the president's fiscal year 2014 budget proposal on April 11, 2013 in Washington, DC. (Image credit: Getty Images via @daylife)

The Obama administration has decided to delay the implementation of Obamacare’s employer mandate—the requirement that all firms with 50 or more employees offer health coverage, or pay steep fines—until 2015. The mandate was supposed to go into effect on January 1, 2014. This development will have a significant impact on the rollout of Obamacare, the private health insurance market, and the nation’s economy, as I detail below.

The news was first reported by Mike Dorning and Alex Wayne of Bloombergthis afternoon. The ruling, they say, “will come in regulatory guidance to be issued later this week. It addresses vehement complaints from employer groups about the administrative burden of reporting requirements, though it may also affect coverage provided to some workers.”

“First,” wrote Treasury official Mark Mazur in a statement, the delay “will allow us to consider ways to simplify the new reporting requirements consistent with the law. Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees.” (Mazur’s full statement is appended to the end of this article.)

Will more employers dump coverage if the mandate is delayed?

As a matter of background, Section 1513/4890H of the Affordable Care Act requires that all firms with more than 50 full-time-equivalent employees—defined as 120 hours per month—offer government-certified health coverage to their workers, or pay a steep fine. For more details on how the mandate works, and how it incentivizes firms to offer “unaffordable” coverage to their workers, read mypiece on the topic from May 21.

In the short term, the delay will have several effects. First, the mandate drives up the cost of labor, and therefore increases unemployment; delaying the mandate by one year may modestly mitigate that disincentive.

Most importantly, the delay of the mandate means that more people will want to enroll in Obamacare’s subsidized insurance exchanges. Every year, fewer and fewer employers offer health coverage; given one more year to restructure their workforces, this process could accelerate.

There’s been a lot of debate as to whether or not Obamacare incentivizes employers to drop coverage for their employees. A 2011 survey of employers by McKinsey & Co. found that 30 percent of employers “definitely or probably” would stop offering coverage after 2014; among those who felt that they had the most knowledge of the law’s inner workings, that number rose to 50 percent.

However, the Congressional Budget Office, in a2012 report, argued that employers do not have a large incentive to dump workers’ coverage. And even if employers dropped coverage for an additional 20 million workers relative to the CBO’s projections, the deficit would not increase, says the CBO, because the subsidies paid to low-income workers would be offset by an increase in tax revenue from lower utilization of the tax exclusion for employer-sponsored insurance.

In general, it would appear that with the rollout of Obamacare’s exchanges in 2014, paired with a delay of the employer mandate until 2015, many more people may enroll in the exchanges. This is both good and bad: good, because it’s a good thing for people to buy insurance on their own, rather than having it bought on their behalf by someone else with their money; bad, because the exchanges are proving to be quite costly, though comparable in cost to premiums in the employer-sponsored market today.

Does Obama have the legal authority to delay the mandate?

The Affordable Care Act is quite clear as to the effective date of the employer mandate. “The amendments made by this section shall apply to months beginning after December 31, 2013,” concludes Section 1513.

The executive branch is charged with enforcing the law, and it can of course choose not to enforce the law if it wants. But people can sue the federal government, and a judge could theoretically force the administration to enforce the mandate.

So the question is: Would anyone sue the Obama administration over this? Employers, of course, will be thrilled to be spared the mandate for one more year. Democratic politicians, similarly, will be glad to have this not hanging over their heads for the 2014 mid-term election.

The wild-card is left-wing activists. Most, you’d think, would defer to the administration on questions of implementation. I’m no lawyer, but it seems to me that all it would take is for one judge to issue an injunction, for an activist to require the administration to enforce the mandate.
Health wonks of every persuasion, myself included, have long argued that the original sin of the U.S. health-care system is the quirk in the tax code that incentivizes people to get health coverage through their employers, instead of shopping for it on their own.

If you like Obamacare, and you want it to work, you don’t need the employer mandate. Democrats put the employer mandate in Obamacare because the President was worried that, without a mandate, employers would dump coverage, violating his oft-repeated promise that “if you like your plan, you can keep it.” Before Mitt Romney signed Massachusetts’ health-reform bill into law, he vetoed that state’s employer mandate. The heavily Democratic legislature overrode his veto.

Even if the Obama administration’s delay lasts for only one year, that delay will give firms time to restructure their businesses to avoid offering costly coverage, leading to an expansion of the individual insurance market and a shrinkage of the employer-sponsored market. Remember that the administration is not delaying the individual mandate, which requires most Americans to buy health coverage or face a fine.

But delaying the employer mandate could lead, ultimately, to its repeal, which would do much to transition our insurance market from an employer-sponsored one to an individually-purchased one. Indeed, earlier this year, abill to do just that was introduced by Rep. Charles Boustany (R., La.), Sen. Lamar Alexander (R., Tenn.), and Sen. Orrin Hatch (R., Utah). If the employer mandate were to ultimately be repealed, or never implemented, today’s news may turn out to be one of the most significant developments in health care policy in recent memory.


 [ flv=

Small Businesses Freeze Hiring Over Obamacare

  • Many small businesses are holding off on hiring or are even shedding jobs due to fears of higher costs resulting from the implementation of Obamacare, a new poll reveals.The Gallup poll was commissioned by the law firm Littler Mendelson, which specializes in employment law, and surveyed more than 600 owners whose businesses have less than $20 million in yearly sales.More than four in 10 of the businesses surveyed — 41 percent — disclosed that they have frozen hiring because of Obamacare. And 19 percent said they had reduced their number of employees "as a specific result of the Affordable Care Act."Another 38 percent of the small business owners said they have "pulled back on their plans to grow their business" because of the ACA."We don't know until 2014 and beyond what the impact of the ACA will be on businesses. There is tremendous fear that the premiums will be much higher, for small businesses especially," Littler Mendelson attorney Steven Friedman told CNBC.Under Obamacare, nearly all firms with 50 or more full-time workers will have to offer health coverage or face a fine of $2,000 per full-timer after the first 30 employees.The poll found that 18 percent of businesses surveyed have reduced the hours of employees to part-time to avoid the fine.Other results of the poll include:
  • 48 percent of owners believe Obamacare will be bad for their bottom line, compared to 9 percent who say it will be good for business.
  • 55 percent of owners say the ACA will lead to higher healthcare costs, while just 5 percent believe it will lower costs.
  • 52 percent expect Obamacare to reduce the quality of healthcare.
  • 24 percent say they may go so far as to drop insurance coverage due to Obamacare. "Small businesses are a major driver of job growth," The Weekly Standard observed, "and this Gallup poll helps shed light on why job growth has been so abysmal during the Obamacare era."

Five Reasons the Stock Market Correction Is Already Over
by Chris Preston

After months of cryptic warnings that a market correction was imminent, the long overdue pullback finally arrived. The S&P 500 fell almost 100 points, or 5.8%, from its all-time high on May 21. It was the first 5% market correction in over 200 days.
Just as it looked like stocks might be in the dumps for a while, a funny thing happened. Last week the markets recovered. The S&P is up 3.3% in the last five trading sessions, reclaiming most of the losses suffered during its month-long mini-slump.
So has the pullback come and gone in just a month?
Here are five reasons to believe the market correction is over:
  1. Investor Fear is Dissipating. Two weeks ago, the CBOE Volatility Index (VIX) - a.k.a. the investor fear gauge - topped 20 for the first time all year. The VIX had been rising steadily for more than a month, advancing 64% from May 17 to June 20. Talks of the Federal Reserve "tapering" its $85 billion-a-month bond buying fueled investor fear, peaking in the days after Ben Bernanke's recent confirmation that the Fed does indeed plan to put an end to QE3 sometime in the next year. In the last week, however, that fear disappeared - perhaps because investors are coming to terms with the idea that less money printing is actually a GOOD thing. In just five days, the VIX fell 20%. That's a trend in the right direction.
  2. U.S. Stocks Remain Cheap. Second-quarter earnings season begins next week. As of now, however, U.S. stocks are trading at an average of 15 times what companies have earned in the past year. That's below the median 16.1 price-to-earnings ratio of the past decade. Comparatively, stocks are still cheap - even as they approach record highs again.
Retire on One Stock
Truth is, most dividend stocks just don't cut it. But we've found one stock that pays dividends so big - you can live off them. This cash-cranking company has a history of raising its dividend quarter after quarter. In fact, it's hiked its dividend 10-FOLD!... paying investors like you dividends of $428.57, $913.93, and $924.43! If these ever-increasing payouts sound good to you -Click here to read my full report on this and two more high yield stocks - so you can secure this reliable stream of income for yourself.
  1. History Says So. According to the Stock Trader's Almanac, July is the best month for stocks in post-election years. Since 1950, the S&P 500 and the Dow Jones Industrial have risen by an average of 2% in the year after we elected a president. The Nasdaq has performed even better, advancing an average of 3.1%. There's another positive historical trend working in the market's favor this year. When stocks rise in January and February, as they did this year, the S&P posts an average full-year return of 24%. That would be another 10% rise from today's prices.
  2. The Apple Factor. Most stocks have thrived this year. Apple (NASDAQ: AAPL) has not been one of them. Shares of the world's largest company have been mired in a nine-month slump, falling 41% since last September. During that time, the S&P 500 has advanced 10% and the Nasdaq is up 7%. Not too long ago Apple essentially was the market. When it rose, so did other stocks. Lately, however, the market has risen in spite of Apple - not because of it. Despite its recent struggles, Apple remains large enough to have major influence over the market. If Apple ever gets out of its current rut, that is likely to give the market another boost.
  3. QE3 Isn't Over Yet. Bernanke said it himself: QE3 isn't ending anytime soon. It could be another year until the Fed pulls the plug on its stimulus program. Until then, let the good times roll. Stocks tend to rise during periods of quantitative easing. During QE1, the S&P returned 37.3% in 16 months. In QE2, the index gained 10.2% in eight months. Since QE3 was announced last September, stocks have risen 10% in less than 10 months. With another 10 months - or more - remaining until QE3 disappears, it's reasonable to expect stocks will keep rising.
The summer can be a slow period for the market. But there is compelling evidence that investors will continue to favor stocks over bonds.
With stocks up considerably in 2013, the rapid rise for the market may slow down a bit.  But even so, stocks are attractively priced, offer attractive yields, and are positioned for profits in the coming six months.
Good investing,
Chris Preston

Investors Pull Back From Emerging Markets

Screen Shot 2013-06-01 at 10.52.54 PM


Emerging-market currencies, bonds and stocks fell sharply Friday, as rising bond yields in developed markets and an improving U.S. economic outlook dimmed the allure of assets in countries from Thailand to Chile.

The South African rand and Brazilian real hit four-year lows against the dollar. Bonds, particularly those denominated in rapidly depreciating local currencies, sold off. Stocks were down as well, with share indexes in Brazil and Indonesia among those showing losses.


Investors have sold emerging-market assets for most of May amid speculation that the U.S. Federal Reserve is preparing to wind down its bond purchases as economic growth picks up. Fed stimulus has kept Treasury yields and borrowing costs near record lows, pushing money into economies as diverse as Thailand, Mexico and South Africa, where returns are higher.

Now, with the dollar rallying and Treasury yields soaring to 13-month highs, the flows are reversing.

"We are experiencing a purge right now," said Francesc Balcells, an emerging-markets portfolio manager at Pimco—the word's biggest bond fund—in Munich. "After the massive inflow we had on emerging-markets fixed-income debt and currencies, now investors are pulling out of it."

Investors are also worried about falling commodity prices and slowing growth, a reversal from the outlook at the start of the year, when many developing economies appeared to be racing ahead.

Mexico, for one, slashed its 2013 growth forecast earlier this month to 3.1% from 3.5%, contributing to a more than 6% decline in the peso in May, to about 12.8 per dollar on Friday. Yields on peso-denominated 10-year government bonds rose to 5.361% Friday, from an all-time low below 4.5% at the start of the month. Bond yields rise when prices fall.

Worsening economic conditions are seen weakening state finances and prompting central banks to cut interest rates, making holding emerging-market bonds and currencies a riskier proposition in the eyes of many investors.

Meanwhile, recent U.S. data has shown steady improvement, including pending home sales reported Thursday at a three-year high. That has sent investors into U.S. stocks, which have hit record highs, as well as the dollar, which is rising against many currencies.

Investors' bullish dollar bets as of May 28 were at their highest level since at least 2007, government data showed Friday.


Central banks in several countries fought back against the greenback's surge on Friday. Turkish Central Bank Governor Erdem Basci said Friday in Istanbul that the central bank may take additional measures to defend the lira and could tighten monetary policy, as the lira traded to 1.8970 per dollar, its weakest in 17 months. Brazil's central bank said it would auction dollar-swap contracts, a form of intervention to boost the real. Later, the real traded at 2.1496 against the dollar, a four-year low, according to CQG.

Policy makers are fighting massive outflows by individual investors as well as funds that buy emerging-market assets.

Investors pulled $2.94 billion out of emerging-market equity funds in the week ending May 29, analysts at Barclays BARC.LN -0.65% said, citing data from fund tracker EPFR Global. In Thailand, foreign investors sold a net of 24.1 billion baht ($792 million) in local bonds in May, the first outflows since September 2011, according toSociété Générale GLE.FR -0.74% .

"It's a case of 'what goes in, goes out' in terms of flows," said Timothy Ash, head of emerging-market research at Standard Bank PLC.

Not all investors are leaving. While emerging-market growth is slowing this year, in the long run, these economies are expected to grow at a faster clip than the developed world. And, if the U.S. economy were to recover, the rise in U.S. consumer spending and demand should give a lift to emerging economies.

"If you look beyond the noise, I don't think the world has changed too much," said Pierre-Yves Bareau, head of emerging-market debt at J.P. Morgan Asset Management, which manages $1.5 trillion in assets.

But for now, markets are being driven by expectations for an end to the Fed's loose monetary policy.

"The prism through which we have looked at the world will change in terms of what we think prices should be" when the Fed pulls back from easing, said Angus Halkett, portfolio manager in emerging-market debt at Stone Harbor Investment Partners in London.

—Erin McCarthy contributed to this article.

Screen Shot 2013-03-22 at 2.30.05 PM

Big Russian money out of Cyprus;

crisis endangers flows

(Reuters) - If Russian oligarchs still have money in Cyprus, where a lot of them base their businesses, they aren't letting on.

"You must be out of your mind!" snapped tycoon Igor Zyuzin, main owner of New York-listed coal-to-steel group Mechel (MTL.N), as he dismissed a suggestion this week that the financial meltdown in Cyprus posed a risk to his interests.

His response is typical across the oligarch class of major corporations and super-rich individuals, reflecting the assessment of officials and bankers on the Mediterranean island who say the bulk of the billions of euros of Russian money in Cyprus comes from smaller firms and middle-class savers.

The collapse of an economy 75 times smaller than its own may not have much impact in Russia, though the crisis has strained relations with the European Union, raised questions on Russian influence over Cypriot politicians and highlighted geopolitical competition for new offshore gas fields. But some would suffer.

As much as losses likely to be sustained on deposits held in Cypriotbanks, pain for the Russian economy could come from a disruption in money flows between Russians which pass through the island - transfers that dwarf Cyprus's own national income.

Light regulation and taxes, cultural ties through Orthodox Christianity and the weather have long attracted the capital and savings of Russians - many keen to keep their wealth out of the sight of often predatory bureaucrats at home.

Yet precisely because investors can hide their wealth behind nominee structures - often held in the name of a local lawyer - it is difficult to say just how much Russian money is tied up on the Mediterranean island. Or how much has already left.

Where it is going is also unclear, though a possible rise in Russian deposits in fellow EU member Latvia, a former Soviet republic that hopes to enter the euro zone next year, has raised concerns of displacing instability northward.


Russians are believed to account for most of the 19 billion euros of non-EU, non-bank money held in Cypriot banks at the last count by the central bank in January, when total non-bank deposits were 70 billion, 60 percent of them classified as "domestic". Of 38 billion in deposits from banks, 13 billion came from outside the European Union.

But the ease with which Russians can establish residency and local corporations in Cyprus muddy the data. One senior financial source in Moscow said a total of 20 billion euros held by Russian firms in Cyprus was a "significant underestimate".

Cypriot central bank chief Panicos Demetriades was asked by Russia's Vedomosti newspaper this week how much Russians held on the island. He replied: "It depends how you count it."

Deposits formally identified as Russian totaled 4.9 billion euros, he said. Add the funds of shell companies believed to be linked to Russia and the figure rose to 10.2 billion euros. But many Russian and other analysts think the sums are much higher.

One Cyprus-based lawyer reckons that $2 billion in Russian money fled in the 10 days before banks were shut down this week while Nicosia argued over an EU bailout. Phones are ringing from Malta to the Isle of Man as that cash seeks a new safe haven.

Russian business leaders criticized the EU bailout plan, and the "haircut" it would impose on depositors. However, if Cyprus stands by its rejection, heavier losses could result.

"There will be a serious outflow of capital from Cyprus," said Vladimir Potanin, the chief executive of Norilsk Nickel (GMKN.MM), the world's largest nickel and palladium miner.

"It won't affect me or my company. But they have put Cyprus to the knife and what has happened is a disgrace."

Sources in the wealth management, advisory and banking industry in Nicosia say Russia depositors are typically smaller savers and entrepreneurs. Fiona Mullen, a British economist in Cyprus, said Russians she encounters tend to be buying 300,000-euro homes, not the palaces favored by oligarchs in London.

"There is a lot of Russian business done through Cyprus," she said. "It's so difficult to do business in Russia, you've got to bribe so many people, that it's easier to do it through Limassol. It's kind of the back office for Russia."

A business adviser said of his Russian customers: "Clients would be well off, but not the private jet kind." Most did not use Cypriot banks to keep money but as a conduit for funds.

Cyprus charges foreigners no tax on dividend income and capital gains. A double taxation treaty with Russia provides attractive incentives for Russians to use Cypriot banks. Even on Thursday, with Nicosia in crisis, one adviser said he had had two new requests from abroad to set up Cyprus shell companies.


Given the risk of disruption to its financial flows, Russia in particularly concerned about any imposition of controls on capital movements; Cyprus has already drafted such legislation as a precaution in case the EU cuts off aid to its banks.

"If, in any way, capital flows are restricted that would have a significant impact on Russian businesses," said German Gref, chief executive of state-controlled Sberbank (SBER.MM), Russia's largest bank.

"I hope the Cypriot government has the wisdom not to undertake such measures, because if they do all investors will leave the country. It would be a perfect case study in what not to do," the former economy minister told Rossiya 24 television.

Morgan Stanley has estimated that Cyprus, with a GDP of just $25 billion, is both the source and destination of 25 percent of Russian inward and outbound foreign direct investment - a result of Russians "round-tripping" their own cash via the island.

Cyprus was also the source of $203 billion in foreign loans to Russia between 2007 and 2011, equivalent to 24 percent of the total, Morgan Stanley economists wrote in a research report this week. Shrinking the Cypriot banking sector could force Russian firms to borrow more dearly elsewhere, they warned.

Russia's central bank gave a public assurance on Friday that it did not see Cyprus posing a meaningful danger for the Russian banking system: "I don't see any systemic or individual threat here," First Deputy Chairman Alexei Simanovsky told reporters.

State-controlled VTB (VTBR.MM) has the largest presence on Cyprus, through its subsidiary Russian Commercial Bank. It has estimated potential losses in the tens of millions of euros in a worst-case scenario.

Russian banks have, meanwhile, shown no interest in a rescue deal through which they could acquire stakes in Cypriot banks, Finance Minister Anton Siluanov said on Friday after two days of talks with his Cypriot counterpart ended without a deal.

(Additional reporting by Maya Dyakina, Megan Davies and Oksana Kobzeva, and Laura Noonan in Nicosia; Writing by Douglas Busvine Editing by Timothy Heritage)

Screen Shot 2013-03-22 at 2.30.49 PM

Learning from Cyprus

This tutorial comes compliments of the tiny euro zone island off the coast of Greece, which has been a favored haven for billions of euros from mostly Russian investors but is now facing a financial meltdown.

First, there is still no free lunch. High-reward, low-risk investment products aren't.

Second, off-shore havens for money may save you money in taxes but could well cost you far more in the end.

Third, financial repression isn't a psychological disorder, it is the new way of the world. So-called financial repression is any one of a number of tactics which a government uses to capture any money from any available source to help it meet its goals.

These are lessons that depositors in Cyprus banks are learning to their cost. It would behoove international investors to take note as well.

Cyprus is a tiny country, far away and arguably someone else's problem. U.S. investors might easily dismiss its troubles, even though they are huge. Still, they illustrate trends which will apply worldwide, even though they are highly unlikely to be replicated on anything near this scale in the United States.

Cyprus is struggling under the weight of a bloated and dangerously shaky banking sector which has grown to more than seven times the size of itseconomy, largely on the back of taking in off-shore deposits from wealthy Russians. While this is a risky business model for an economy under the best of conditions, it becomes a disaster when that huge banking sector invests heavily in domestic real estate and Greek debt, both of which have plunged in value.

A member of the euro currency, Cyprus first struck a deal with the EU and the International Monetary Fund for a bailout which included an involuntary contribution, called a levy, from bank depositors. This deal, now in flux, called for accounts under 100,000 euros to be snipped by 6.75 percent and larger accounts, many off-shore money, by 9.9 percent. Cyprus has been on an extended bank holiday since the bailout was first mooted, effectively trapping deposits.

Let's be clear: there is no sign anything anywhere near this is going to happen in the United States, so cancel those freeze-dried food orders.


While deposits in Cyprus banks are insured to up to 100,000 euros, and any policy which violates the spirit of that is an outrage, the truth is that depositors should have known better. And here I am not even talking about an in-depth analysis of a bank's balance sheet, or even spending one's time reading about the euro crisis and its potential knock-on effects.

There was a very easy way that everyone with money in a Cyprus bank could tell they were sitting at the end of a very long limb: the deal was too good. Deposit rates for euro accounts in Cyprus were recently at 4.45 percent, as against just 1.5 percent in banks in Germany. In fact, a depositor who put one euro each in a typical German and Cyprus bank five years ago would have enjoyed nearly twice the cumulative returns, according to central bank data.

Repeat after me: there is no extra reward without extra risk.

Much of the money in Cyprus banks came from Russia-based depositors. The Tax Justice Network estimates that there is some $21 trillion globally in offshore accounts, a figure which has grown sharply in recent years.

All of that money is today in more danger than it was a year ago, and very likely will be less secure yet in another year. First off, big centers are becoming far more aggressive in going after tax evaders, as shown in recent U.S. efforts to go after Swiss accounts.

As well, we live in a time of rolling bank crises. While you might do well to make sure that your bank is sound, ultimately your bet in a bank is a bet on the domicile, because those banks depend in turn on the backing of their governments. Offshore centers have large financial systems relative to their economies, and, like Cyprus, could easily be caught in situations where a banking crisis is beyond their ability to solve without seizing assets.


Financial repression, which takes many forms, has historically been a popular way for governments to dig themselves out of debt holes. A prime way to do this is to keep interest rates artificially low - quantitative easing anyone? As well, governments can and do try to capture pools of capital by, if not confiscating it, then at least channeling it in ways which will be useful to the government in addressing its debt problems.

A great example of this is forcing pension funds to invest in government debt, or, as is being considered in Cyprus, in a kind of national fund.

Any roadblock to the free movement of capital is a form of financial repression. Cyprus, where depositors are likely to receive either shares or bonds issued by the banks in which they hold money, is a perfect example.

More of this is coming. My guess is you are better off at home than abroad, as it is harder to do voters out of their capital than honored guests, as the Russians have learned.

Bottom line on Cyprus is: don't over-react, but don't be surprised if more of this kind of thing happens.

(At the time of publication James Saft did not own any direct investments in securities mentioned in this article. He may be an owner indirectly as an investor in a fund. You can email him at and find more columns at )

(This story is corrected with attribution in 14th paragraph to The Tax Justice Network from McKinsey & Co)

By James Saft

Fri Mar 22, 2013 1:20pm EDT

(Reuters) - Even if you have zero exposure to the euro, the sad tale of Cyprus teaches investors about important old and new realities.



Screen Shot 2013-02-15 at 6.43.28 PM


Four Key Questions for Health-Care Law


Thanks to the Supreme Court and Barack Obama's re-election, the Affordable Care Act—"Obamacare" to foes and a few of its friends—isn't going away. The issue now is how it will work.

Even by Washington standards, implementing this law is extraordinarily complex. The federal government last year issued 70,000 pages of guidance, including 130 pages on the look of websites for new marketplaces where many will shop for insurance.

Mr. Obama barely mentioned the law in his State of the Union address Tuesday. If it works as he hopes, he will have secured his legacy and solved the long-festering problem of the uninsured—though not the companion problem of rising costs. If the law flops or provokes a backlash, a future president will be forced into more radical reshaping of the health-care system.

Implementing the act turns on what Paul Keckley, head of the Deloitte Center for Health Solutions, calls "the four major hanging chads."

A quick look at each:

What will consumers do?

Most will do pretty much what they do now. About 55% of Americans of all ages get health insurance through an employer; another 32% through a government program. For most, not much will change, though workers are likely to pay more for health care as employers pass along costs. Also, the law will require employers who offer skimpy benefits to provide more robust ones.

The challenge is to prompt one group of consumers to change: the 18 million 20- and 30-somethings who don't have health insurance. The arithmetic of Obamacare depends on getting more Americans to buy health insurance. If the young and healthy don't show up, the math doesn't work—and the cost of insurance for those who do shop in the new exchanges will be higher. That's why there is a high-profile campaignin the works to recruit young people.

What will employers do?

Mostly wait and see. Even employers flirting with getting out of the benefits business or giving workers a fixed sum and letting them shop for insurance won't move quickly.

[image]Bloomberg NewsImplementing the Affordable Care Act is extraordinarily complex. Above, customers get information at UnitedHealthcare store in New York City.

One provision already appears to be having unwelcome, unintended consequences. It requires employers with more than 50 workers to offer insurance to anyone who works 30 hours a week or more. That gives fast-food, retail and other employers who rely heavily on low-wage, part-timers an incentive to keep workers to 29 hours or less; word is that many already are doing so. (It won't be long before some Democrat in Congress proposes lowering the threshold to 20 hours.)

Smaller firms have reason not to expand their workforces above 50, or to game the system by subdividing themselves.

The Congressional Budget Office estimates that about 8 million fewer workers, about 5% of the total, will get insurance through employers five years from now than would have been the case without the Affordable Care Act.

But no one really knows how many employers will find ways to drop coverage or to structure benefits so sicker, costlier workers get insurance at the new exchanges.

What will states do?



They have until Friday to decide whether to create an exchange or let the federal government set one up. New York and California already are committed to fully running their own exchanges; Texas and Georgia have signaled they won't take on any of the tasks. It isn't clear how much help the abstainers will offer Washington in crafting the marketplaces and recruiting customers. State resistance would be an obstacle to an already tough task.

And then there is Medicaid, the state-federal program for the poor. The law substantially expands eligibility, at Washington's expense for the first three years, but the Supreme Court ruled that states don't have to go along. CBO projects that in the next five years, Medicaid rolls will grow to 45 million from 36 million.

About half of the governors (including six of the 30 who are Republican) have decided to expand their Medicaid programs; turning down federal money is hard.

But about half say they won't (including 13 Republicans) or are still on the fence (including 11 Republicans). States that don't expand Medicaid likely will have more uninsured, which means, among other things, that health-care providers and employers who do offer insurance will, effectively, pick up the cost of caring for the uninsured when they do get care.

What will health-care providers do?

Merge and grow bigger. The law encourages the integration of hospitals, doctors and nursing homes. It takes aim at the underlying problem: The U.S. has evolved the developed world's most inefficient health-care delivery system, one that too often rewards volume of care and not quality. Integrated health providers such as Kaiser Permanente and Geisinger Health System are seen as models of low costs and high quality.

But there is a risk or—if you talk to insurers—a nightmare. The proliferation of hospital mergers and hospitals' appetite for buying doctors' practices—in part to assure a steady stream of patients to fill hospital beds—could create local monopolies that raise prices without increasing efficiency. "Historically," says Deloitte's Mr. Keckley, "hospital consolidation hasn't reduced costs."

The next couple of years will bring the biggest changes to the American health-care system since the advent of Medicare and Medicaid in 1965. We're about to find out if they're for the better.



France to alter plan to raise taxes

on rich after new legal decision

says 75 pct rate unfair

Published March 22, 2013

Associated Press

PARIS –  The French government's plan to raise taxes on the wealthy is being radically scaled back after a second legal opinion said the proposed marginal rate of 75 percent was unfair.France's highest court had already thrown out the 75-percent rate, and a high-level advisory council agreed. The Socialist government on Friday said that under the decision, the rate on those with incomes above 1 million euros ($1.3 million) could not exceed 60 percent.French President Francois Hollande campaigned on a promise to impose the tax, despite criticism that it would do little to solve growing fiscal problems and would drive away the wealthiest citizens. The current top tax rate is 41 percent.The government says it will introduce a new measure in response to the decision.




Everything You Need to Know About the Fiscal Cliff



The Fiscal Cliff deal explained to fifth Graders



Details of Senate Bill Averting Fiscal Cliff

Tuesday, 01 Jan 2013 09:50 AM

Highlights of a bill approved Tuesday by the Senate aimed at averting wide tax increases and budget cuts scheduled to take effect in the new year. The measure would raise taxes by about $600 billion over 10 years compared with tax policies that were due to expire at midnight Monday. It would also delay for two months across-the-board cuts to the budgets of the Pentagon and numerous domestic agencies.

The House is expected to vote on the bill Tuesday or Wednesday.

Highlights include:

—Income tax rates: Extends decade-old tax cuts on incomes up to $400,000 for individuals, $450,000 for couples. Earnings above those amounts would be taxed at a rate of 39.6 percent, up from the current 35 percent. Extends Clinton-era caps on itemized deductions and the phase-out of the personal exemption for individuals making more than $250,000 and couples earning more than $300,000.

—Estate tax: Estates would be taxed at a top rate of 40 percent, with the first $5 million in value exempted for individual estates and $10 million for family estates. In 2012, such estates were subject to a top rate of 35 percent.

—Capital gains, dividends: Taxes on capital gains and dividend income exceeding $400,000 for individuals and $450,000 for families would increase from 15 percent to 20 percent.

—Alternative minimum tax: Permanently addresses the alternative minimum tax and indexes it for inflation to prevent nearly 30 million middle- and upper-middle income taxpayers from being hit with higher tax bills averaging almost $3,000. The tax was originally designed to ensure that the wealthy did not avoid owing taxes by using loopholes.

—Other tax changes: Extends for five years Obama-sought expansions of the child tax credit, the earned income tax credit, and an up-to-$2,500 tax credit for college tuition. Also extends for one year accelerated "bonus" depreciation of business investments in new property and equipment, a tax credit for research and development costs and a tax credit for renewable energy such as wind-generated electricity.

—Unemployment benefits: Extends jobless benefits for the long-term unemployed for one year.

—Cuts in Medicare reimbursements to doctors: Blocks a 27 percent cut in Medicare payments to doctors for one year. The cut is the product of an obsolete 1997 budget formula.

—Social Security payroll tax cut: Allows a 2-percentage-point cut in the payroll tax first enacted two years ago to lapse, which restores the payroll tax to 6.2 percent.

—Across-the-board cuts: Delays for two months $109 billion worth of across-the-board spending cuts set to start striking the Pentagon and domestic agencies this week. Cost of $24 billion is divided between spending cuts and new revenues from rule changes on converting traditional individual retirement accounts into Roth IRAs.

© Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Read Latest Breaking News from
Urgent: Should Obamacare Be Repealed? Vote Here Now!


Cantor Leads GOP Charge Against Senate Cliff Bill

Tuesday, 01 Jan 2013 03:36 PM

Last-minute efforts to step back from the fiscal cliff ran into trouble on Tuesday as Republicans in the House of Representatives balked at a deal that would prevent Washington from pushing the world's biggest economy into a recession.

House Republicans complained that a bill passed by the Senate in a late-night show of unity to prevent a budget crisis contained tax hikes for the wealthiest Americans but no spending cuts. Some conservatives sought to change the bill to add cuts.

That would set up a high-stakes showdown between the two chambers and risk a stinging rebuke from financial markets that are due to open in Asia in a few hours.

The Senate would refuse to accept any changes to the bill, a Senate aide said, and it appeared increasingly possible that Congress could push the country over the fiscal cliff after all, despite months of effort.

Strictly speaking, the United States went over the cliff in the first minutes of the New Year because Congress failed to produce legislation to halt $600 billion of tax hikes and spending cuts that start kicking in on Jan. 1.

But with financial markets and federal government offices closed for the New Year's Day holiday, lawmakers had a little more time to work out a compromise without real-world consequences READ MORE>>



Dear Suzee,

Today, the Senate passed a typical, Washington-insider deal to avert the fiscal cliff. Their deal?Increase taxes, and increase spending. If this so-called deal passes the House, we are in big trouble as the Senate-passed bill increases already insane deficit spending.

Tell your Representative NOW and tell them the House cannot pass this reckless bill.

The politicians just don’t get it. With trillion dollar deficits and a $16 trillion debt, they want to take even more of your money and have already made plans to spend it all, with $330 billion in new spending.

Tell Congress right now – we can’t afford more taxes and more spending!

Republicans who vote like Democrats ought to be ashamed of themselves. But we can still stop this madness in the House.

We must stand together and force Washington to live within its means. On the first day of 2013, we must tell them in a clear voice that the days of endless spending and more taxes are OVER.

Click here to Contact your Congressman.

In Liberty,

Matt Kibbe Signature

Matt Kibbe

P.S. FreedomWorks-endorsed Senators Rand Paul, Mike Lee, and Marco Rubio voted to stand with you and protect your money and the economy from the politicians in DC.

FreedomConnector    Facebook    Twitter    Forward to a friend

An Economic Collapse - How It Can Happen



U.S. Budget Compromise Inches Closer

President Barack Obama and congressional Republicans were inching closer to sealing a budget deal that would raise income-tax rates for the first time in nearly 20 years, maintain unemployment benefits to millions of people and extend a number of tax breaks for families of modest means.

One element in the way of an agreement—how, if at all, to postpone the $110 billion in spending cuts due to take effect Wednesday—moved closer to resolution when lawmakers agreed to defer the cuts for two months. Left unclear was how lawmakers would pay for that delay, which equals $24 billion.

Sen. Jon Kyl (R., Ariz.), emerging from a meeting of Senate Republicans, said staff members are working to draft a bill on the agreement. He and other senators said they hoped the Senate would vote Monday.

Top Senate Democrats said Monday evening that lawmakers are close to a deal and plan to vote on the measure in the coming hours. Sen. Charles Schumer of New York told reporters the plan is to vote on the measure in he Senate later on New Year's Eve, after Democrats meet behind closed doors.

But given the late hour, it became increasingly unlikey the House would be able to vote on fiscal-cliff-related legislation before midnight. But with U.S. markets closed Tuesday, the impact of waiting one day could be minimal.

According to officials on both sides, the key elements of the emerging deal, developed during all-night negotiations between Senate Republican Leader Mitch McConnell (R., Ky.) and Vice President Joe Biden, include:


Permanently raising tax rates on income over $400,000 for individuals and $450,000 for households.

Raising taxes on capital gains and dividends for those households, from the current 15% to Clinton-era levels of roughly 20%.

Limiting the number of personal exemptions as well as the value of itemized deductions, two restrictions that would kick in at $250,000 for individuals and $300,000 for couples. Those limits were abolished as part of the 2001 Bush-era tax revamp.


Setting the estate tax rate at 40% on estates over $5 million, up from the 35% that applies now to estates over $5.12 million. That isn't as high as the 45% rate Mr. Obama sought with a $3.5 million exemption.

The emerging agreement met with opposition from Senate Democrats who believe the administration gave away too much in compromising on their party's signature commitment to raise taxes on income over $250,000. Mr. Biden was invited to the Capitol Monday to sell his own party caucus on the deal.

The Biden-McConnell deal is a classic compromise that included something for everyone to love—and hate. The key question is whether the positive components and the pressure of the Jan. 1 deadline are enough to neutralize the parts that raise objections. If not, attacks from the left and right could combine to topple the deal.

For Republicans, the bill includes the bitter medicine of the first income-tax rate increase since 1993, a violation of the anti-tax orthodoxy that has defined their party. On the other hand, it would codify the Bush-era lower income-tax rates for most Americans as permanent law, ending the recurring battles over how long they will endure.

For Democrats, the bill's tax increase makes good on their party's marquee promise in the 2012 campaign to raise taxes on upper-income Americans and not the middle class. But many Democrats, especially liberals, were infuriated that the bill set the income threshold as high as $450,000.

Mr. Obama, speaking Monday afternoon, said negotiators had made "progress" over the past few days toward a deal. "It appears that an agreement to prevent this New Year's tax hike is within sight, but it's not done," he said. "There are still issues left to resolve but we're hopeful Congress can get it done."

One sticking point has been automatic spending cuts, known as the sequester, which are set to take effect in coming days.

Republicans had insisted the cuts of $24 billion be offset with savings in other areas. The White House wants some of the offset to be in the form of tax increases, not just other spending cuts.

In words that rankled GOP lawmakers, Mr. Obama also suggested any future deals would have to include tax increases, too. "If Republicans think I will finish the job of deficit reduction through spending cuts alone…then they've got another thing coming," Mr. Obama said. "That's not how it's going to work. We've got to do this in a balanced and responsible way."

The changes in tax rates that were agreed to between Messrs. Biden and McConnell would raise roughly $600 billion in new revenue over 10 years. While that would represent the largest tax increase in decades, it would be less than 20% of the revenue that would have come in if policy makers allowed all the current tax breaks to expire on New Year's Eve.

It is also substantially less than the $1.2 trillion to $1.6 trillion in new revenue sought by the White House, suggesting that the Obama administration is likely to pursue more tax increases in 2013, likely though limits on tax breaks.

Other elements of the deal could be costly. It calls for a permanent fix to the alternative minimum tax, a one-year extension of unemployment insurance benefits, and a five-year extension of other tax breaks. Among them are tax credits for families of modest means, including one for college tuition, and an expanded earned income tax credit, which provides cash to working poor families who don't earn enough to pay income taxes. It also would block a scheduled cut in Medicare payments to doctors for one year.

The deal taking shape also would include tax breaks adopted by the Senate Finance Committee earlier this year, aides with knowledge of the talks said. Among them was a one-year extension of the tax credit, with slight modifications that would allow wind-farm developers to claim the credit for projects that begin construction by Jan. 1, 2014.

Liberal opposition to the deal began to emerge almost as soon as details surfaced. "The direction they are heading in is absolutely the wrong direction for our country," said Sen. Tom Harkin (D., Iowa).

Still, some remained hopeful that elements of a deal were on the table and could be brought into alignment at the last minute. Sen. Barbara Boxer (D., Calif.) urged colleagues not to "prejudge'' the outcome before the negotiations are complete.

"This is a compromise. We don't have a parliamentary system of government here,'' said Ms. Boxer, who like other Democrats from high-cost states, welcomes a compromise that raises the threshold on income-tax increases because $250,000 doesn't go as far in California as it does in other regions.

In the absence of a bipartisan deal, Mr. Reid has a backup proposal, which tackles only a few items on the legislative agenda, including extending current tax rates for income up to $250,000 for couples filing jointly. Democrats are confident they could pass the bill through the Senate. A key question is whether the House, which returned Sunday evening, would approve it if it doesn't enjoy broad bipartisan support in the Senate.

—Corey Boles, Patrick O'Connor and Siobhan Hughes contributed to this article

Fiscal Cliff


Falling Over the Fiscal Cliff

See some scenarios for how different groups of people may be affected

by the tax changes that will take place if the fiscal cliff isn't resolved by the Jan. 1., 2013, deadline.

Screen Shot 2012-12-31 at 2.46.19 PM

Screen Shot 2012-12-31 at 2.46.30 PM

Screen Shot 2012-12-31 at 2.46.40 PM

Screen Shot 2012-12-31 at 2.46.56 PM

Screen Shot 2012-12-31 at 9.02.07 PM

Screen Shot 2012-12-31 at 9.02.28 PM

Screen Shot 2012-12-31 at 9.02.36 PM

Debt Limit Discussion



Signs of Negative Economic Impact Growing

Like 2011's Debt Standoff,

Drop in Consumer Confidence,

Stock Prices Show That Washington Battles Come With a Price


The damage may already be done.

Even if lawmakers manage to avoid most of the $500 billion in tax increases and spending cuts set to take effect this week, the risks to the U.S. economy have risen as consumers and investors recoil from Washington's latest budget spectacle.

Consumer confidence and stock prices have sagged and could continue sliding. Households and investors could pull back more if lawmakers fail to reach any agreement, or one that leaves in place several measures that would curb economic growth in 2013.

The latest negotiations resemble the 2011 debt-ceiling fight, which showed how 11th-hour deal making can cause serious trouble. Then, despite an agreement, the economy and markets faltered as the world outside Washington focused on the implications of an ugly process.

The 2011 debt-ceiling showdown sparked fears of a U.S. debt default. Stocks began dropping and continued even after lawmakers agreed to raise the debt ceiling, defusing the crisis. The downgrade of the nation's triple-A credit rating days later worsened the problem, compounded by worries emanating from Europe's debt crisis.

Today, the economy would take a more direct hit from some combination of tax increases and spending cuts that appear likely to occur with or without a deal. And while economists say a recession could ensue if lawmakers fail to reach a deal, even a patchwork solution would leave enough issues unresolved to exert a substantial drag on the economy, weighing on corporate profits and the stock market.

The depth of the current fight also points to the possibility of another damaging experience when Washington turns early in the new year to raising the government's borrowing limit of $16.4 trillion. The government will hit that cap on Monday, but the Treasury Department can use a series of emergency measures to buy at least two months of room. That leaves the risk of a debt default—a potentially cataclysmic event for global financial markets, as it was in 2011—on the table as lawmakers tussle over potential spending cuts.

Fraying consumer sentiment and wobbly markets suggest concerns already are mounting. The Conference Board late last week said its measure of consumer confidence fell in December after reaching a five-year high in November. The research group said Americans' outlook for the economy "plummeted" despite a positive view about current economic conditions.

Investors remained fairly calm earlier this month, but nerves began to show last week. The Dow Jones Industrial Average on Friday fell 158.20 points, or 1.2%, to 12938.11, its biggest one-day point and percentage decline since Nov. 14. Though stocks have fallen for five straight days, the Dow still is just 4.9% from its five-year high hit in October, and only 8.7% below its 2007 record. That means it has plenty of room to fall if investors grow worried.

Investors are looking ahead to what could be weeks of trouble for financial markets and the economy. The 2011 experience demonstrated how too much uncertainty can make markets turn suddenly and frighteningly volatile. "It could get ugly pretty quick and then they will have to react" in Washington, said Henry Herrmann, chief executive of asset-management company Waddell & Reed FinancialInc., WDR +0.84% in Overland Park, Kan.

Investors said it's hard to predict whether markets will give politicians days or weeks before they slump even harder. Mr. Herrmann said he hopes Washington will do something before a serious selloff, but added that he wouldn't be surprised to see the market fall 10% from its recent five-year high before Congress is spurred to act.

Because some indicators of U.S. economic growth have been improving recently, investors might be willing to wait several weeks for Washington to fully resolve the fiscal cliff issues, said Gordon Fowler, chief executive at Glenmede Trust Co., which oversees about $22 billion in Philadelphia. But they might be less patient about the debt ceiling, he said. "The point where the market panics may actually be more around the time of the debt ceiling" deadline.

Russ Koesterich, chief investment strategist at asset-management group BlackRockInc., BLK +1.08% said Wall Street is widely expecting messy solutions to both the fiscal cliff and the debt ceiling. He predicts that compromises will result in higher taxes and limits on government spending that would hold economic growth to around 2% in 2013.

That is enough growth for stock indexes to rise, but perhaps not enough to support the market's riskier consumer-related sectors. But "if we are having this conversation a month from now, there is a lot of downside" for the stock market, he said. "The market has not discounted a complete failure in Washington and that is a risk for stocks and other risky assets."



Dow Drops on Fresh Fear

Dow, S&P Sink on Economic Worries 

A soft monthly reading from the factory floor helped drive stocks lower and compound worries about slowing economic growth. Jonathan Cheng has details on The News Hub.

9/4/2012 4:27:24 PM1:36


Paul B. Farrell

PAUL B. FARRELL Archives | Email alerts

July 3, 2012, 7:13 a.m. EDT

10 explosive bubbles that will kill capitalism

Commentary: Slow-motion train wreck in store for U.S.

By Paul B. Farrell, MarketWatch

SAN LUIS OBISPO, Calif. (MarketWatch) — In mid-2005, three years before Wall Street’s credit meltdown, the Economist warned of the “Biggest Bubble in History.” In five short years after the 2000 dot-com crash property prices across the world had risen an unprecedented 75%. Real estate had become the new dot-com.

In his April 2007 quarterly newsletter, Jeremy Grantham, founder of the $95 billion GMO firm, reinforced the warning: “First Truly Global Bubble, impacting all countries, all assets worldwide.”

By midyear 2007, a deeply concerned Grantham was “watching a very slow motion train wreck.” By October, the “train hits end of track at full speed.” A year later, on schedule, Wall Street’s credit train did crash.

Flash forward: in Grantham’s early 2012 newsletter he saw a bigger train accelerating: When he focused on the “common good, it became quickly apparent that capitalism in general has no sense of ethics or conscience. And probably its greatest weakness is its absolute inability to process the finiteness of resources and the mathematical impossibility of maintaining rapid growth in physical output.”

This we call the Myth of Perpetual Growth, the pseudo-scientific justification for modern capitalism.

Grantham concludes that capitalism’s flaws are so deadly that while it does “a thousand things better than other systems,” it fails in those three crucial areas. And “unfortunately for us all, even a single one of these failings may bring capitalism down and us with it.”

Get it? Capitalism is committing suicide and destroying America too. Here are 10 explosive bubbles that warn of this trend’s accelerating trajectory:

1. Health-care Bubble: Forget court, elections — health care will implode

Dr. Marcia Angell, of the Harvard Medical School, writes in HuffingtonPost: “Why the Court’s Ruling Is Bad for Obama and Bad for American Health Care.”

“The Supreme Court’s decision to uphold Obamacare puts me in mind of the old proverb: Be careful what you wish for.” Why? Angell warns that “with or without Obamacare, the American health system will continue to unravel, quickly if Romney is elected, slowly if Obama is re-elected.”

At 15% of GDP, the highest of all developed nations and destined to go higher, heath-care costs will remain a drag on the economy, especially with 3,300 lobbyists fighting to keep the cost rising.

2. Government Bubble isolates Washington from real America

When will this bubble explode? In a Time feature the “Bubble on the Potomac,” Andrew Ferguson warns, America’s massive debt has created “new affluence flooding the nation’s capital” making Washington society “a world apart from the country it governs,” adding that “this insularity has consequences for the rest of the country.”

The average American may be struggling, but government is “for sale,” in this center of the trillion-dollar government-contracting business, where the federal budget is sold off to the highest bidders. Lobbying is the city’s “biggest business,” with more than 20 lobbyists for every elected official, all publicly advertising the huge benefits they generate, often hundreds of times over an “investment” in their lobbying fees.

3. CEO Pay Bubble up 20% while bank stocks sink as much as 61%

That same mind-set isolates Wall Street. While the average American flat-lines, bank CEOs are doing great. Bloomberg Markets reports that bank “CEO compensation jumped 20.4% in 2011” while “most bank stocks declined.”

Biggest loser? Citibank’s shareholders. Their stock has dropped 61% in three years while CEO Vikram Pandit was paid $14.9 million.

More evidence of America’s growing inequality gap: The Fed says that in the past three years the top 1% gained 2% while our vast middle class lost 39%. In fact, family net worth in 2010 was about the same as 1992.

4. Inequality Bubble now at 1929 level, warning of end of capitalism

Nobel economist Joseph Stiglitz shines in his new book “The Price of Inequality:” “America likes to think of itself as a land of opportunity,” he writes in Project Syndicate. But while we all have individual examples “what really matters are the statistics: to what extent do an individual’s life chances depend on the income and education of his or her parents?”

And unfortunately, today the “numbers show that the American dream is a myth … the gap’s widening.” Since 2008 “the top 1% of U.S. income earners captured 93% of the income growth. … The clear trend is one of concentration of income and wealth at the top, the hollowing out of the middle, and increasing poverty at the bottom.”

5. Debt Bubble: Debt-ridden college grads selling burgers, lattes

For more evidence of the gap see the amazing cover on Utne, a cartoonish Albert Einstein serving a McDonald’s hamburger special: “Fries with that? What’s a college degree worth these days?” Not much.

And in Good magazine’s “Minimum Rage,” many stories about grads handicapped by college debt. We’re killing our competitive future: 27-year-old NYU grad “Emily Sanders has been a waitress or bartender, on and off, for almost a decade. … She has no health insurance, no 401(k), and a pathetic savings account. Most days, she gets to her first job at noon and leaves her second after midnight. If she’s sick but a little short on cash, she downs some DayQuil and goes into work anyway.”

6. Global Jobless Bubble: Governments warned, revolutions coming

In “The Fallen,” Rolling Stone’s Jeff Tietz gives us another snapshot of capitalism’s accelerating train wreck: A “sharp, sudden decline of America’s middle class … They had good stable jobs, until the recession hit. Now they’re living out of their cars in parking lots.”

Time used a wider-angle lens on the new global “Jobless Generation” where “tens of millions of young people are unemployed.” This is bigger than Arab Spring and OWS. Governments are warned: Figure out “how to get them jobs before they become unemployable — and erupt in fury.”

But if Grantham’s right, governments won’t act till it’s too late, and anticapitalism revolutions sweep the planet.

7. Oil Bubble: New oil crisis will trigger new Arab Springs

Financial advisers say invest in emerging markets, the “new normal” for U.S. stock returns is too low. Maybe not: Foreign Policy’s Steve Levine warns that petro-rulers worldwide are watching the price of oil “plunge at a rate they have not experienced since the dreaded year 2008. Industry analysts are using phrases such as ‘devastation’ and ‘severe strain’ to describe what’s next,” possibly a “fresh round of Arab Spring-like” revolutions, “the nightmare scenario” for oil dictators.

8. Risk Bubble: U.S. recovery threatened by global economic risks

Writing in Project Syndicate, Stephen Roach, former Morgan Stanley chairman, warns that since 2008 “the U.S. economy has been on a weak recovery trajectory.” Why? The American consumer went cold “in the aftermath of the biggest consumption binge in history.”

Since then “exports have accounted for 41%” of America’s rebound, with a whopping 83% of our export growth from Asia, Latin America and Europe. But since all three are now “in trouble, the U.S. could be quick to follow.”

9. Slow-Growth Bubble: New normal is anemic returns, austerity

Listen closely: Over 200,000 financial advisers across America already heard this report. Advisers have been warned to start “preparing clients for a low-return reality,” code for a new normal and austerity: “Slow economic growth, modest and selective improvements in equities, and interest rates remaining low.”

Get it? “Anemic growth in the second half,” with huge risks ahead. In fact, individual investors and American capitalism alike will face three doomsday scenarios in the near term: The Euroland crises, America’s post-election “fiscal cliff” and the risk of global recessions in emerging markets.

10. Capitalism Bubble: selfishness weakens our role as a leader

“The world is in a state of drift, transition or even increasing chaos,” writes Brent Scowcroft in the recent National Interest. Scowcroft’s a retired Air Force General and Bush-41 National Security Adviser.

In an update to his 1998 book, “A World Transformed,” Scowcroft says, “once we were viewed as trying to do our best for everyone: now we are seen a being preoccupied with our own special interests,” a myopic vision that reflects the trend among many politicians to govern using Ayn Rand’s extreme capitalism.

Now you know why Grantham warns of capitalism’s total lack of “ethics or conscience” and “its absolute inability to process the finiteness of resources and the mathematical impossibility of maintaining rapid growth in physical output.”

No moral compass. No vision of the future. No grasp of the consequences of their short-term thinking. These three threats are merging into a critical mass that will trigger a scenario that will “bring capitalism down and America with it.”

Bottom line: America’s new Ayn Rand style of extreme capitalism is self-destructive.







says Marc Faber

  Sept. 23 -   Greece needs to drop the common currency and claim

bankruptcy to allow its citizens to live decently,

even if European lenders have to suffer, says the author of the ''Gloom, Boom and Doom'' report.   flv=





A "Bottom-Line" Outlook for the U.S. Economy


BY MARTIN HUTCHINSON, Contributing Editor, Money Morning

Clearly, if Congress cuts back on government spending in the New Year, we can expect to see some acceleration in growth. However, that acceleration will be brought to an end - probably in 2012 - by the surge in inflation from the U.S. central bank's amazingly accommodative monetary policy, which will cause a rise in interest rates and a crash in commodity and U.S. Treasury bond prices. This development - combined with the still-troubled U.S. housing market - will spawn a new (actually, a renewed) banking crisis. And that will make the next recession an exceptionally nasty one, with a market "bottom" and spike in unemployment that's deeper and more damaging than the predecessor that ended in 2009. However, there could be a good-news outcome to this gloom, provided that the second "dip" is followed by restrained public spending, bank bailouts are avoided, and interest rates are boosted to a level that's at least 2% to 3% above the inflation rate. If those conditions are met, U.S. growth will resume at the traditional brisk U.S. rate, probably with a postrecessionary catch-up to absorb the high level of unemployed people and other resources that have stood idle. That brings us to my bottom line for this New Year U.S. economy outlook. If, as I expect, Congress cuts public spending substantially, while the Fed pursues easy money as long as it can, my prognostication is for rather faster growth in 2011, followed by a nasty financial crisis and second "dip" in 2012 and 2013. After that, if fiscal and monetary policies have been restored to a more normal track, the U.S. economic recovery that follows that nasty spell should be as brisk as what we experienced in the very strong stretch that took place from 1983 - 1985. Now here's how to profit from it.Actions to take: With uncertainty serving as the watchword in the New Year, investors will want to position themselves to profit should the U.S. stock market run up - while at the same time protecting themselves against possible downturns.

Impossible, you say?  Not if you adopt our Money Morning "protective portfolio" to your own needs. Here are the five steps that you can take. This strategy will allow you to add to your existing holdings in such a way that you will benefit, should the economy (and U.S. stock market) continue to advance. But should the U.S. economy stumble, causing U.S. stocks to do the same, these moves should cushion - or even offset - some of your losses.  READ MORE Investors looking to adopt such a stance should:


    1. Buy gold: At some point, the U.S. Federal Reserve will be forced to abandon what is clearly the most accommodative monetary policy in modern U.S. history. But until that happens, inflation remains a real threat. And that means you need to hold gold. There are many ways to invest in gold. Physical gold is always an option. Exchange-traded funds such as the SPDR Gold Trust (NYSE:GLD) are also worth considering.
    1. Buy dividend-yielding U.S. stocks: Income rules, especially during periods of uncertainty. Most investors fail to realize that dividends account for a major piece of the historic returns that stocks have offered over the long haul. Dividends provide a cushion during the tough times, when stocks are stuck in a trading range, and can help prop up a company's share prices when the broader market is in decline. One good example right now is B&G Foods Inc. (NYSE:BGS), the Parsippany, N.J.-based maker of such consumer products as Cream of Wheat oatmeal, Maple Grove syrups and pancake mixes, Ortega taco mixes and sauces - as well as many other products that grace American cupboards. The stock currently yields 5.3%.
    1. Reap the best of both worlds: The portion of your portfolio dedicated to U.S. stocks should include several American companies with some muscle in overseas markets. This is a great way to hedge your bets - you get the disclosure and accounting-rule benefits of U.S.-listed companies, plus the growth offered by such fast-evolving overseas markets as China, India, parts of Latin America, and other parts of Asia. Companies in this category would include such U.S. stalwarts as Caterpillar Inc. (NYSE:CAT), McDonald's Corp. (NYSE:MCD), soda-and-snack-maker PepsiCo Inc. (NYSE:PEP), soft-drink giant Coca-Cola Inc. (NYSE:KO), jet-airliner leader The Boeing Co. (NYSE:BA), and fast-food magnate Yum! Brands Inc. (NYSE:YUM).
    1. Look abroad: It's no longer a U.S.-centric world. Markets such as China, India, and others can no longer be viewed as portfolio afterthoughts. They must be given serious consideration at the start of the construction of any investment portfolio. In the New Year, one such market that can't be ignored is Chile, which is positioned to be a top performer in 2011. The most-straightforward way to travel is the ETF route, via the iShares MSCI Chile Investable Market Index Fund (NYSE:ECH). In terms of individual stocks, check out Vina Concha y Toro SA (NYSE:VCO), a producer of very high-quality wine. It's currently trading at about 21 times earnings, with a dividend of nearly 4.0%. That's a somewhat premium valuation, but I like the dividend, and Vina Concha is unquestionably a premium company.
    1. Don't ignore the possibility of an economic downturn: If the U.S. economy experiences a double-dip recession, the U.S. stock market will suffer in kind. We recommend buying out-of-the money "put" options on the U.S. Standard & Poor's 500 Index. Look at options that are well out-of-the-money. That will allow you to purchase this "insurance" at a reasonable price, and will put you in a position to offset some of your losses with gains on these securities - should U.S. stocks nose-dive. You can purchase these on the Chicago Board Options Exchange (CBOE). Right now, I'm looking at the December 2012 puts with an S&P 500 strike price of 700 (meaning the S&P would have to fall from its current level at 1,186 all the way down to 700 - a 40% decline). This option right now trades at approximately $37. You'll only make money if the market really crashes - as it did in 2008. But if that happens, you'll reap a real bonanza.











Part 2





Published: November 13, 2010

Budget Puzzle: You Fix the Budget!


Today, you’re in charge of the nation’s finances. Some of your options have more short-term savings and some have more long-term savings. When you have closed the budget gaps for both 2015 and 2030, you are done. Make your own plan, then share it online. CLICK the image below to connect to an interactive sight to challenge yourself to this difficult PUZZLE...that leaves us all PUZZLED!











fox news



NORDSTROM - Shop NYDJ Spring Looks



NORDSTROM - Shop New Spring Looks from Vince Camuto


Neiman Marcus Last Call (Neiman Marcus)


300x250 Logo

boston proper

Boston Proper, Inc.



NORDSTROM - Shop NYDJ Spring Looks

boston proper

Boston Proper, Inc.





Perfect invitations, great looks, great style


MACY’S 02/01/2010-ongoing






J.McLaughlin Men's Sweaters






Cutter and Buck, Inc.



Barnes & Noble


Waterford Crystal
























$10, $20, or $30 Cash Rebate on Krups Automatic Coffee Machines from the Offer valid through 12/31/10.