From The New York Times:

“The Congressional Budget Office said the bill would cost $829 billion over 10 years. The costs include $345 billion for the expansion of Medicaid and $461 billion for subsidies to help lower-income people buy insurance.

The budget office said the costs would be completely offset by new fees and taxes and by cutbacks in Medicare, so federal budget deficits in the next 10 years would be $81 billion lower than now projected.”

My Comment:

Again, this adds more detail to my continual drum-beat on this blog that insurance is the heart of the problem. From AIG, to the reinsurance industry, to the WTC attacks, to health insurance, to securities risk insurance, to the new “impact-of-financial-crises-on-poor-people-in-the-third-world- insurance ” (bet you hadn’t heard of that one, but it’s in the works) that pretends to help people by taking the risk out of life.

That’s like drugging yourself to take the pain out of burning, and then cozying up next to a fire. It’s no more than cushioning the downside of bad economic or personal behavior. Which inevitably means – surprise – more bad economic or personal behavior. And then finally when the majority turn into bad actors, even the good actors have to go bad to keep up…..

We don’t need more government intervention in insurance. We need less of it. We need small, voluntary insurance pools. Pared down. Local. Community-based and private. As many and as various as possible, competing against each other. With strict safe-guards to prevent them becoming a racket for lobbyists, drug companies, doctors, and lawyers. Take away the cookie-jar and you’ll get rid of the sticky fingers.

Indian gold demand has perked up with the fall, looking forward to the Hindu light festival, Diwali, that takes place around now. But experts say that demand is down this year overall.

From The Singapore Business Times:

“India is the world’s largest consumer of gold, importing 400-800 tonnes of gold a year, according to various trade body estimates. But this year, high prices and the global economic meltdown have taken a toll on demand.

Ms Bhat [a top official of HDFC Bank] said that total imports at the end of this year could be half that of last year. World Gold Council’s (WGC) data shows that India imported 712.6 tonnes of gold last year.

HDFC is one of the 23 banks licensed to import gold and sell to traders and jewellers. Trade sources put it neck-and-neck with ICICI Bank for top position in the retail bullion segment, and one of the top 10 in the wholesale segment.”

— “India Awash In Foreign Investment” (October 15, 2009)

My Comment:

Note: ICICI Bank is the same bank that uses Penson Financial Services, as I blogged before. That’s the Penson that denies that its software is shown in the video posted by Matt Taibbi last week. The video supposedly shows software that enables naked shorting.

From John Pilger:

“Obama’s “showdown” with Iran has another agenda. On both sides of the Atlantic the media have been tasked with preparing the public for endless war. The US/Nato commander General Stanley McChrystal says 500,000 troops will be required in Afghanistan over five years, according to America’s NBC. The goal is control of the “strategic prize” of the gas and oilfields of the Caspian Sea, central Asia, the Gulf and Iran – in other words, Eurasia. But the war is opposed by 69 per cent of the British public, 57 per cent of the US public and almost every other human being. Convincing “us” that Iran is the new demon will not be easy. McChrystal’s spurious claim that Iran “is reportedly training fighters for certain Taliban groups” is as desperate as Brown’s pathetic echo of “a line in the sand”.

During the Bush years, according to the great whistleblower Daniel Ellsberg, a military coup took place in the US, and the Pentagon is now ascendant in every area of American foreign policy. A measure of its control is the number of wars of aggression being waged simultaneously and the adoption of a “first-strike” doctrine that has lowered the threshold on nuclear weapons, together with the blurring of the distinction between nuclear and conventional weapons.All this mocks Obama’s media rhetoric about “a world without nuclear weapons”. In fact, he is the Pentagon’s most important acquisition. His acquiescence with its demand that he keep on Bush’s secretary of “defence” and arch war-maker, Robert Gates, is unique in US history. He has proved his worth with escalated wars from south Asia to the Horn of Africa. Like Bush’s America, Obama’s America is run by some very dangerous people. We have a right to be warned. When will those paid to keep the record straight do their job?”

My Comment:

When? When they’ve done taken care of the truly dangerous folk. You know, Sarah Palin, Alex Jones, Lyndon LaRouche, assorted tea-partiers, home-schooling anti-vaccination moms, and anyone else who doesn’t snap their heels together and shoot off a stiff-armed salute fast enough to suit the oligarchs.

And then people wonder why, for a large part of the public, the media is the enemy.

Peace is that brief glorious moment in history when everybody stands around reloading.

–Source Unknown

Convincing.

Maybe it’s because the market is making me queasy, I didn’t watch the action today.

I know gold has broken out, to all appearances, but over the last several years, appearances have been knocked out of the ring more than once.

Walking Montevideo’s streets – even in the rain (and it’s been raining the past day or so) – takes my mind off all the feverish commentary from gold bugs and bashers – the sum total of which spells WE DON’T KNOW.

In the next few weeks, the break-out will either be confirmed or dispelled and then the lucky soothsayers will pat themselves on the back (and why not?), declare their genius, and make the rounds of the talking shows as the new Merlins of the Market. Reporters will get to shoot off snappy little missives about equities “plunging” or “soaring” or “sliding.” Each time the reason will be different. In between, we will have the entertainment of trying to pin the tail on the billion dollar donkey – Goldman Sachs. The donkey will kick occasionally and poor Matt Taibbi will get custard in his face for trying to educate the masses. And so it goes on.

Gold was said to be following the equity market and moving against the dollar. But then today the markets went to 10,000 and gold stumbled a bit, while the dollar index stayed low (mid 75’s).  If gold is the new money, that makes sense. It stayed down, like the dollar. What drives it? I’d say speculation, right now. When equities look solid, gold slips, along with money. At least, that’s my five minutes worth of tea-leaf reading. Tomorrow, gold will move against money, and then we can all go back to the old refrain about inflation expectations driving gold.

Onto other things.

Who said Montevideo was cheap? It’s not, though I hear Brazil is more expensive. A young pharmacist, struggling alone on the street with his three month year old daughter and my bad Spanish, gave me the lowdown. His electric bill was around $US200/mth. That’s for a man, his wife and two children. His food bill runs to about $US200/mth. His gas bill was around $US50. That’s the same or a bit more than many families in the US. And in Uruguay, $US500-$1000/mth is a good salary. So food is really about three times more expensive than in the US.

People are careful with the lights. Which I’m used to, from India.  Last night, my landlady Gabriela was groaning about the German woman who lived in my room last year. She ran a hot shower three times a day and used the hair dryer incessantly.  Gaby said she was going to switch to gas to heat the water. Gas is cheaper here.  She goes through 2-3 cans of gas a month for her space heaters and it comes to about a thousand pesos a month.

Montevideo has enough of a gay culture that someone can run a hotel catering to male couples, impeccably maintained and done up. Exposed brick, walls with stenciled designs, ikebana, polished wood, a flower garden, a kennel, and a tub on the terrace. It charges $50 a day for a couple, breakfast included. A good business.

Revitalize the inner cities? Just drop a squadron of gays into them.

And over at the Washington Times, Jeffrey Kuhner asks an incredible question (October 4, 2009):

“Mr. Ahmadinejad insists Tehran only wants atomic energy for “peaceful purposes.” Yet, he cannot answer one simple question: Why does a country with the world’s second-largest natural gas reserves and third-largest oil supply need domestic nuclear power?

The answer, Mr. Kuhner, is to avoid the fate of Iraq.

At Dealbreaker, Greg Michaels asks an important question:

“A day after people threw both questions and shoes at IMF chief Dominique Strauss-Kahn, he said that the organization’s new mandate is to be the global lender of last resort.

The international monetary system must be more stable, and anchored by a global lender of last resort,” he said, outlining his vision for the IMF.

So now we’re going to have the IMF there to cushion the world from another near economic meltdown. It’s a simple as that. Problem solved. What could possibly go wrong.”

Hedge funds are increasingly moving out of trading in futures to directly investing in physical commodities, increasing the possibility of a dangerous shortage of those commodities:

Martin Hutchinson:

“Only when the gold price breaks definitively downwards, dropping 25% or more from its high, will policymakers know that they have succeeded in breaking the commodity investment mania. Such a development is however likely to occur only after a definitive crack in government bond markets, forcing policymakers to address their gigantic budget deficits as a matter of urgency.

Given the predilections of today’s policymakers, it is unfortunately unlikely that they will tighten monetary policy sufficiently to break the commodity flight, whatever the gold price does. Instead, led by the determined Keynesians of the International Monetary Fund, they are much more likely to attempt to control the gold price itself, either surreptitiously by selling off massive quantities of the world’s gold reserves, or openly by imposing limits on gold futures trading and possibly, like Franklin Roosevelt in 1933, making it illegal for ordinary individuals to own gold or to buy gold futures.

That will of course only make matters worse; it would be equivalent to trying to avoid a speeding ticket by smashing the car’s speedometer. Manipulating the gold price to pretend that liquidity is not excessive does not stop liquidity from being excessive. Nor does it lead any but the stupidest institutional investor to believe that his urge to invest in physical commodities is misguided. Rather, it will cause commodities investment to be carried out through shell companies in tax havens, away from regulators’ radar screens. The effect on global supply chains will be equally damaging, but policymakers will no longer have a straightforward way of determining how to avoid the resulting economic depression.

I wrote last week that tightening liquidity directly by entering into a central bank “exit strategy” is dangerous. However , the Financial Time’s story itself and the gold price breakthrough have significantly increased the size of the hike in interest rates necessary to halt the flight to commodities.

Time is short and the probability of disaster is rising.”

An interesting India connection with Penson, the clearing house and broker-dealer alleged by Matt Taibbi to have trading software that lets facilitates naked short selling (note: this is from October 2007):

“ICICIdirect.com, the online broking arm of ICICI Securities, today launched its overseas trading service that will allow its resident Indian customers to buy and sell equities across 13 US stock exchanges, including NYSE and Nasdaq.

ICICIdirect.com has tied up with Penson Financial Services, the fourth largest clearing and broker-dealer company in the US, as its overseas trading partner. Penson Financial Services handles about 10,00,000 settlements everyday and has over $6.8 billion in assets, including customer assets.”