Analyst/trader Karl Denninger predicted years ago that Obama Care would “kill the economy” and “eventually implode.” That is exactly what’s happening now. Denninger contends, “The majority of the money we spend in healthcare is jacked up due to these monopolist policies which raise the cost four or five times where it ought to be. On top of that, we are being forced to pay for people who have made lifestyle choices that dramatically raise their cost of healthcare. . . . The health insurance people are faced with an untenable problem because if the only people who buy car insurance wreck one car a year, the cost of car insurance is $20,000 a year because that is the cost of the car.” Denninger goes on to point out, “The rate increases that are coming down this year are astronomical. I am seeing rate increases as high as 50% for inferior coverage. . . . Benefits come off your top line as an employer. So, all of this means much slower growth if any at all because all this money is being siphoned into the health insurance and healthcare system.”
With the economy sinking in part due to Obama Care, is the Fed going to raise rates soon? Denninger says, “Janet Yellen doesn’t have any choice but to raise rates. We have an emergency policy rate right now that is destroying the pension funds and the insurance companies in this country. This is where the pressure is coming from. It has nothing to do with the economy. It has everything to do with fixed income bond ladders. That is a mathematical problem that Yellen has to confront. She certainly is going to take a lot of heat, but rates are going to go up.”
Denninger contends, “It’s going to be a quarter of a point, and everybody will scream but it does not mean anything from an economic perspective. What it does is it signals to the market that the game of rolling down interest rates is over, and increasing systemic leverage, that era is over. That’s really the bottom line here. Valuations have grown over the last 30 years of the basis of a secular trend, and that secular trend has ended. It is mathematically certain that is has ended. So, how long does the bubble remain? Where do we go from here? Not in a positive direction.”
We’ve played serial bubble blowing to the point where we are out of powder here. We are scraping the bottom of the barrel to get one more shot out of the cannon. I don’t see where Yellen gets away with this for any great length of time. . . . What I see is a global economy that has been running on fumes for the last couple of years, and cheap money has been powering it.”
Greg is the producer and creator of USAWatchdog.com. The site’s slogan is “analyzing the news to give you a clear picture of what’s really going on.” The site will keep an eye on the government, your financial interests and cut through the media spin. USAWatchdog.com is neither Democrat nor Republican, Liberal or Conservative. Before creating and producing the site, Greg spent nearly 9 years as a network and investigative correspondent. He worked for ABC News and Good Morning America for nearly 6 years. Most recently, Greg worked for CNN for shows such as Paula Zahn Now, American Morning and various CNN business shows.