July 10, 2013
- Shopping for health insurance as simple as booking a flight? No, but there’s a way to channel your Obamacare tax dollars back to your own pocket
- Five years into the “econopocalypse”… and the “old economy” is on the verge of transformation
- Waiting on the Fed… an oily milestone… gold’s July best
- The state that outlawed computers… an alternative take on the Flight 214 headlines… in praise of Edward Snowden… and more!
“Beginning Oct. 1,” said the president during a speech on Monday, “Americans will be able to log on and comparison shop an array of private health insurance plans, side by side — just like you go online and compare the best deal on cars or the best deal on computers.”
The politicians still can’t let go of the Travelocity analogy…
The reality was revealed back in March, by the bureaucrat overseeing the technology for the vaunted “exchanges.” His name is Henry Chao. He told a panel discussion in Washington his team’s aims were rather lower.
“Let’s just make sure,” he said, “it’s not a third-world experience.”
That was around the same time the application form was revealed to be a 15-page monstrosity. It has since been cut to three.
“If you’ve been reading all the Obamacare stories lately,” writes Margot Sanger-Katz in National Journal, “you might get the impression that the administration has just realized it will not be able to implement the massive health reform as designed.
“It has known for months.” Chao’s candid concession was only the beginning.
“To get a sense of what the Obama administration is up against,” she goes on, “take a look at this chart, provided by Dan Schuyler at Leavitt Partners, a consultancy helping states build exchanges. (Bear in mind this chart is supposed to simplify and explain.)”
So simple, a child prodigy could understand it…
Says The Associated Press: “Squads of technology experts — federal, state, insurer and contractor employees — are trying to mesh government and private computer systems together in ways that haven’t been tried before.”
So far, there’s still no reliable way to make sure the IRS’ computers — verifying your income — can talk to Homeland Security’s computers — verifying your citizenship. Or that either of them can talk to the computers in your state capital.
“My guess is some of these states are not going to be up and running on time,” says Dan Maynard, who runs a contractor building three exchanges.
“For the right companies,” says our Chris Mayer, “the Affordable Care Act opens up new veins of potential profits.”
Before we proceed any further, a disclaimer: Talking about the investment opportunities opened up by Obamacare is, as Chris concedes, “distasteful.”
“But so much of the economy is entwined with politics these days,” he says, “it is hard to avoid.”
This thinking is of a piece with our “make the empire pay” thesis, laid out late last year. So with that in mind…
“Obamacare greatly expands Medicaid,” says Chris, spotlighting the program for people with low incomes.
“About 20 million additional people will qualify by 2014 that would not have made the cut before. The government’s own figures project Medicaid spending will grow from about $450 billion to $900 billion by 2020. That’s a double in less than eight years. Not too many industries have such a sure growth curve.
“Then there is Medicare. This program offers basic medical insurance for people over 65. There are 51 million Americans eligible for Medicare, and 2 million Americans turn 65 every year. This ain’t a cheap program either. Spending will probably hit $600 billion this year and top $900 billion by 2020. That’s a 50% increase.”
Together, the two programs make up 37 cents out of every dollar the U.S. government spends.
“Those are two big markets,” says Chris, “with big growth curves.”
Finding a worthwhile play in the sector is no easy task… but Chris has unearthed what he calls “a rare value play in a market where such things are about as common as snow in July.” Readers of his flagship publication Capital & Crisis learned all about it last week. If you’re not among their ranks, you can join them here.
Major U.S. stock indexes are treading water this morning: the Dow and the S&P down fractionally, the Nasdaq and Russell 2000 up fractionally.
Traders are biding their time until 2:00 p.m. EDT, when they get to play amateur Kremlinologist and try to deduce clues from the minutes of the Federal Reserve’s June meeting.
The words of Jim Rickards in The 5 a week ago yesterday ring in our ears: “Practically all markets now move based on Fed manipulation.”
“The days of companies with names like ‘General Electric’ and ‘General Mills’ and ‘General Motors’ are over,” author Cory Doctorow wrote in his sci-fi book, Makers.
“The money on the table is like krill: a billion little entrepreneurial opportunities that can be discovered and exploited by smart, creative people.”
Makers, published in 2009, focuses on a culture bearing the same name, a group Doctorow defines as “people who hack hardware, business-models and even living arrangements to discover ways of staying alive and happy even when the economy is falling down the toilet.
Pre-“econopocalypse” Makers
“Weirdly,” Doctorow goes on, “I wrote it years before the current econopocalypse, as a parable about the amazing blossoming of creativity and energy that I saw in Silicon Valley after the dot-com crash, after all the money dried up.”
Doctorow’s book is not to be confused with upcoming Vancouver speaker Chris Anderson’s nonfiction rendition of Makers.
Although Anderson does admit he was inspired in part by the science fiction novel, Doctorow’s version was written solely from the realm of imagination. Anderson’s side of the story, however, reveals how quickly Doctorow’s science fiction is to turning into science fact.
“This world of real stuff,” Ray Blanco, our tech arbiter begins, “the food you eat, the car you drive, the chair you’re probably sitting on — is the ‘old’ economy developed in the physical world. This world of human-manipulated atoms evolved through scarcity, trial and error. Despite the breakneck speed at which the digital economy has developed, it’s still dwarfed by this old economy.”
Ray cites a passage from Anderson’s Makers…
“To put a ballpark figure on it, the digital economy, broadly defined, represents $20 trillion of revenues, according to Citibank and Oxford Economics. The economy beyond the Web, by the same estimate, is about $130 trillion. In short, the world of atoms is at least five times larger than the world of bits.”
All that is about to be stood on its head…
“The past 10 years have been about discovering new ways to create, invent and work together on the Web. The next 10 years will be about applying those lessons to the real world.”
“These lessons will be applied to the real world,” Ray goes on, “when the differences between the digital and physical worlds shrink — and that will change everything.
Mid-econopocalypse Makers
“Instead of industrial large-scale production, where one-size-fits-all products are marketed to the masses, the world of manufacturing will begin to resemble the Internet of today. It will be highly customized and individualized, and new objects will as be as easily created as Web pages are today.
“What would it look like if someone could create real-world structures with that sort of accuracy with a wave of a mouse and a tap of a keyboard? What if everyone could become a ‘maker’?
“The future will be far different from the past,” Ray concludes. “It’s the beginning of the ‘click, print anything’ revolution.”
[Ed. Note: As you’re probably aware, Chris Anderson will be joining us in Vancouver to talk shop on how a new generation of Makers will drive the next wave in the global economy. Our last-ever Symposium begins in only two short weeks and we anticipate a sellout, perhaps as soon as today. Click here for a full speaker lineup, and call Opportunity Travel at 800-926-6575, or 561-243-2460 to reserve your spot.]
Oil has crested $105 for the first time since March 2012.
The weekly crude inventory report from the Energy Department is out this morning, and it registered a drop of 9.9 million barrels, on top of a 10.3 million barrel fall last week.
The reversal of the Seaway pipeline, allowing crude at the Cushing, Okla., terminal to flow toward Houston appears to be making a meaningful difference.
Some of that crude gets refined in Houston, and some of it reaches the export market. Thus is the “spread” between U.S. and international crude prices shrinking to less than $3 this morning. At last check, a barrel of West Texas Intermediate fetches $105.41, while Brent commands a price of $108.09. A disparity dating back to early 2011 may be coming to an end…
Precious metals are drifting higher. At $1,260, gold is as high as it’s been all month. Silver’s at $19.36.
“Are you in Florida? Are you reading these words?” Mary Beth Quirk of the Consumerist asks.
“… technically,” she writes, “you are breaking the law if you’re on the Internet on any device, claims one lawsuit.”
Backing up a bit…
Lawmakers in the Sunshine State recently voted to shut down illegal slot machines in the wake of an online gambling scandal that led to 57 arrests on racketeering and money laundering charges.
In the process, though, they inadvertently made all computers illegal.
Since the ban was put in place, the Tampa Bay Times writes, “an estimated 200 operators of adult arcades, more than 1,000 Internet cafes and hundreds of Miami’s have been forced to close down across Florida.”
One cafe, which provided online services to migrant workers, is now suing.
The ban defines an illegal slot machine as “any machine or device or system or network of devices” that may be used in a game of chance, the lawsuit says.
The broad wording, the lawyers argue, could count for any smartphone, tablet or computer with access to the Internet.
As Chris Mayer is wont to say every year in his Vancouver talk, “You can’t make this stuff up.”
“I am so pleased,” a reader writes, “that Byron King wrote a positive article about Boeing and the 777 technology.
“After the Asiana Airlines accident, all that you could see as headlines in papers and online was that a Boeing 777 crashed. Asiana was mentioned second. This pattern of reporting always disturbs me, because it implies that the airplane manufacturer is somehow at fault. In my opinion, the headlines should logically read ‘Asiana Passenger Plane Crashes’ and then mention the airplane manufacturer as a side note.
“Boeing may have had some minor problems over the years, but if you consider just how incredibly complex one of these new flying machines is, how fantastic it performs, how much Boeing has done to improve air and space transportation and just how well built their planes are, they should be assumed to be innocent compared with a common pilot/man. ‘Man Crashes Plane’ is the best bet for a headline when it comes to aerospace technology and products.”
“I applaud Snowden,” a reader writes on the subject of the NSA’s electronic snooping, “for revealing the federal government’s invasion of personal privacy.
“For weeks, I have said to myself, ‘It doesn’t matter, I have nothing to hide.’ I was wrong. I was giving up. It is, after all, my privacy until I choose to reveal it, or until I choose not to defend it.
“Although I have nothing to hide, I should be wary about just letting the government go about its self-proclaimed business. Who gave it the right to look at my life without cause, without oversight? No one, unless you say to yourself, ‘It doesn’t matter…’
“I am tired of living in a police state. I am tired of living in a nanny state.
“Tired is no justification to give up personal rights.”
“Do you guys ever read anything other than your notes to each other?” a reader writes skeptically after our “Editor’s Note” on Monday about the Laissez Faire Club’s new report, Make Yourself Invisible to the NSA.
The 2012 article in Wired about the NSA’s facility in Bluffdale, Utah, goes in depth about the millions/billions of dollars they’ve spent decrypting, they claim with some success, using their giant computer, and that they are building a larger one.
“Knowing our government, I think the report you are peddling will be no more of use than the ‘Surviving Obamacare’ you touted sometime back. I have it, and it is amazing that there is no information of use in it.
The 5: Huh? We haven’t even put out a “Surviving Obamacare” report… although there’s one in the works.
Meanwhile, we were hip to James Bamford’s article about the Utah Data Center at the time it came out. As for the usefulness of encryption, we turn to someone who knows a thing or two about it.
“Encryption works,” said Edward Snowden during an online chat with Guardian readers when he was still holed up in Hong Kong. “Properly implemented strong crypto systems are one of the few things that you can rely on.”
True, the snoops can make an end run and remotely install a keystroke logger on your computer, monitoring your messages before you ever send them. But they’re liable to do that only if you’ve made yourself a target for the feds in the first place.
So yeah, we’re pretty confident in the guidance furnished by the privacy specialist we recruited for the Laissez Faire Club. But you don’t have to take our word for it: Check out what he has to say for yourself.
Cheers,
Dave Gonigam
The 5 Min. Forecast
P.S. Addison ventures into the belly of the beast a week from tomorrow. He’ll take part in a luncheon event at the Cato Institute, introducing Lewis Lehrman — one of the two dissenters on President Reagan’s Gold Commission. (The other was Ron Paul.)
Mr. Lehrman has just published Money, Gold and History — a volume collecting 40 years of essays on the gold standard he’s written for The New York Times, The Wall Street Journal and other publications that would give him a hearing.
If you happen to be in Washington next week, the event is at noon on Thursday, July 18. Registration details are at this link.