1. The group of people that see the doctor the most are the elderly. They are also the ones with totally free health care. Great. Instead of health care, imagine the price of pizza. If pizza lover, fat people, and college kids all had a permanent ‘all you can eat pizza for free’ card that was paid by the US government, how much do you think pizza would cost for the rest of us! The supply couldn’t keep up; the price would just skyrocket.

2. Medical liability lawsuits force doctors into overtesting. Have a cough? They’ll run an intense panel and send you to a specialist. Easier to just lay the cost on your insurance company (and ultimately to ther est of us with higher premiums) than risk a lawsuit.

3. Health insurance companies are just a fiasco. No way else to say it. Some beaurocrat at teh end of the line looking at every procedure to seee if it is necessary to do.

Obama wants free care for all, which will just exacerbate the first issue. He won’t do anything about number 2, and number 3 is something no one knows what to do. We need a system where people pay a flat 20-30% for everything up to a certain limit. Seniors need to not get totally free care unless they are poor; otherwise they need to share the cost in their treatment like the rest of us. Efficiencies need to be found, but I just don’t trust the government will be the ones that will find it.

Above all else, we just need less doctors in our lives. If your diet consists of hamburgers, fried chicken, soda, and beer, you’re going to have to deal with the consequences.

The only caveat to this is that I think Obama’s true intentions is to turn GM into a government-run company. This way he can crank out a bunch of hybrids and other small cars that no one wants and will not want to pay exorbitant prices for…..unless they find ways to jackup the price of oil (cap and trade anyone).

Anyways, if anything, seems like a good time to buy a car since dealers are so desperate to have any sales right now. Here’s some tips on buying a car that I found on the Internet.

Let’s go back to the root of the problem real quick. Americans went crazy in the housing market, buying home they couldn’t afford at prices that greatly overvalued the home. Wall Street took on this risk by making these loans and through CDOs, proliferated and polluted this risk throughout the system.

If this weren’t bad enough, the banks overleveraged themselves making these loans, essentially making them insolvent. So a lot of capital and manpower was devoted to an inefficient good…a lot. Now, with the credit crisis, capital is having a harder time being put towards actual efficient projects, such as small business loans for real, profitable businesses.

Japan had a similar property investment bubble in the late 80′s that led to similar bank failures, so this sort of situation isn’t new. Heck, our property asset bubble looks tame by comparison. Just before the bubble broke, the Japanese were valuing a small commercial district around the Imperial Palace as being worth more than the entire state of California! The Nikkei index reached its all time high just shy of 39,000 in 1989.

The Japanese tried multiple efforts at reviving their failing economy. The cornerstone were Keynsian-style economic stimulus programs, much like ours. Theirs focused more on bridges and tangible investments, unlike ours which are more just pure pork.

The Japanese result? A recession lasting more than a decade. Economic growth was flat throughout the 90′s. The Nikkei is at 7650. Did I mention the Japanese debt/GDP ratio is now about 180%

The democrats are trying to frame this entire situation as a short term problem brought on by a sudden drop in credit and spending power of the American consumer. Their view of the problem tries to boil it down to a high school economics course viewing that ‘aggreggate demand’ is artificially small so ‘pump priming’ through government spending will cut down on unemployment. Even if the government spending is a bit wasteful, the added spending power of people with government jobs will cause that money to be respent wisely, thereby increasing demand.

Wishful thinking. If government spending was so great, then Europe would be the world’s leading economic powerhouse and the Soviet Union’s economy would have been decent. What we have and have had is a massive misplacement of capital and labor. Too much capital was put towards home construction, property investments, investment banking, etc. Too much white collar labor in these sectors was created.

We have other problems  too. We have too many lawyers; we spend too much time in school. We have the highest years of schooling of any country and can you say you really learn anything vitally important in higher education? Remember, we’re spending massive amounts of money and putting a large part of our labor force towards a fundamentally inefficient industry. The amount of education we get keeps going up and up, yet our retirement age isn’t budging. This means people are working less as a percentage of their life. So we have less people working but more entitlement spending, not exactly a recipe for economic growth

We have some massive underlying issues in the economy that ‘stimulus’ isn’t going to help. Wasting money doesn’t create efficient jobs and encourage innovation. Rather, by delaying taxing cuts and scheduling in tax increases (as the Japanese did), we discourage innovation and push capital overseas. America and Japan have the two highest corporate tax rates; new, mobile industries that emerge over the next few years will find themselves choosing to make a country besides ours home.

We need to get back to basics. We need companies that make a product efficiently and make money. We don’t need to save and subsidize corporate behemoths that are too big for their own good. We need to stimulate small businesses by keeping tax rates low for both corporations and at the individual level (yes, those evil $250k+ people are often small businesses that create real jobs). We need to let the free market determine how much education is useful, not keep people in school until their 30′s. We need entitlement programs that won’t bankrupt the country.

By borrowing a bunch of money to waste on government projects, we are just emulating Japans moves in the mid 90′s…and look where it got them.

On Desperate Housewives, a lot of the conversation was about how people were cutting back on spending, affecting Lynette and Tom’s pizza place.

Luby’s, which has been raising its prices on dinners in recent years (due to enlarging their portions) is now offering a $4 Luann Platter on Friday and Saturday nights. Valentine’s Dinner here I come!

- We eat a hamburger at McDonalds instead of a steak at Outback.

- We watch a movie instead of going to a sports game.

- We shop at Wal Mart instead of anything that is higher end.

- If we’re getting married, it’s going to be a cheap wedding, not a luxury wedding.

- We may not even buy coke, we buy generic brand soda.

I’ll make a new post with some more of these when they come to me.

If there’s one thing college kids do, they like to imitate others, espeically people that are in their opinion successful. After seeing people have high six figure salaries in a decade of work, they figure why not them too. The best paying jobs were often with funds and investment banks, so college kids chased those jobs.

Now, there is a glut of 20-somethings in New York City that have been laid off or are still hoping for that hedge fund job that isn’t going to come. Since Lehman isn’t hiring anymore, where are the college kids flocking towards? I assume many are still hoping to get ‘consulting’ jobs, whatever those jobs may be. It’s not clear how the consulting arena is doing, since most of the major firms are private. Somehow, I doubt businesses that are struggling to survive are going to spend money listening to other people how to run their business; they’ll just figure it out themselves.

The one tried and true arena for college kids to still run towards is law school. Since they don’t need to be ‘hired,’ they just need to be accepted (and some school will accept them), the recession won’t affect getting into law school. Also, the recently laid off investment bankers and hedge fund workers are the same types of people that would go to law school; their first choice just happened to be Wall Street.

Already law schools have been pumping our more lawyers than ever. Law school is already the default option for a college graduate with good grades that either does not want to go to work or doesn’t know where he or she wants to work. Added to that now is that many laid off Wall Street workers may run to law school instead of finding work in another arena and there just are fewer jobs for college kids to get in general.

All of the signs of a labor bubble in law is in place. The question though is what does this mean for us? Hopefully, the bubble won’t become a self-fulfilling prophecy, where lawyers lobby lawmakers to make more laws just to necessitate their employment somehow. Assuming that’s not the case,  the wages of lawyers may go down or many lawyers may just end up as glorified legal aides and secretaries.

I don’t see a way to take advantage of the lawyer bubble, and I honestly can’t see how it will play out. I can just tell that there is one. My only advice is that if you are in college and are about to graduate, don’t go to law school unless you really, really want to.

Safe Haven – if the possibility of losing money with your investment causes you great stress or if you’re nearing retirement age, this might be for you:

Treasury Notes (Bonds) – With fear still high on the Street and many investors losing confidence in the market, it is likely that the market has not bottomed. Sitting in on cash until we see fear receding is a safe haven bet for those who prefer to take minimal risk during recession. Yields on 10-year Treasury notes should go considerably higher and should be a safe investment.

Little Risk – if you’re open to some or little risk taking in exchange for higher return or is nearing retirement age, this might be for you:

Domestic Blue-Chip American Companies – Companies like General Electric (GE), Microsoft (MSFT), Intel (INTC), Kimberly Clark (KMB) are sitting at good value. These companies are the backbones of American economy who offer real value and products that are needed even during economy recessions. A diverse investment portfolio including a couple of those companies or buying the S&P 500 through a mutual fund or ETF are both good choices.

Semi-Aggressive – if you understand investment comes with considerable risk and is not concerned with a 20% swing in either direction, this might be more you:

Diverse Portfolio – Use traditional diversification strategy by investing in a combination of domestic and international stocks and bonds. A portfolio along the lines of 25% in S&P’s large-cap stock index, 20% in small-cap value, 25% in international, 10% in commodities, 10% in Treasury inflation-protected securities and 10% in cash is a reasonable mix of return and risk. Individuals in this category should adjust the percentage based on their level of comfort with risk.

Aggressive – if you prefer the high risk high return model or are using extra income or are not concerned with retirement at this point, this might be for you:

Small / Mid Caps – The real opportunity in a market tumble usually lies in stocks below $10 per share. Be careful to select reputable companies and avoid Pink Sheets and OTC’s. Many Pink Sheets and OTC’s will likely become penniless in 2009. ProShares Ultra Dow 30 (DDM) contains high quality choices that are worthy to be looked at.

Overall, be cautious to assuming now is the time to pour everything back into the market. Try putting your funds into the market in stages rather than all at once. 20% is a reasonable amount to test the water.

Some people try to point to the deflation associated with recessions, such as falling oil prices, as a plus. This is of course incredibly short sighted. Who cares that gas is cheaper if you don’t have a job anymore.

The benefits of a recession are long-term. It is mainly that a recession is a cleansing period that exposes and gets rid of many societal inefficiencies.

For example, let’s take our current recessions. The investment banks like Lehman Brothers and Bear Stearns have been destroyed by the credit collapse. While many people were laid off of work, those people’s labor was essentially be put towards an unproductive purpose. Those companies were taking excessive risk and leverage for unprofitable activities. It took awhile, but the deck of cards finally collapse. Now those laid off can find work in businesses where their work goes towards productive use.

In general, the white collar labor world has been filled with inefficiency. Rarely is the bus boy at a restaurant or the factory worker (unless he works for the UAW) grossly overpaid for inefficient tasks. But this has persistently been the case in the white collar world. Since white collar tasks tend to be managerial or indirectly affect a company’s bottom line, inefficiency in that realm can go undetected for quite awhile.

But with the current recession and the cost cutting that is necessary for businesses to survivive, they take a hard look at their work force and see what is going on. Companies cannot afford to pay their CEOs $20 million a year if the CEO is really not adding that much value that a replacement CEO would bring for $1 million a year. Fresh out of college kids are often not worth paying $120k a year to have them do a bunch of meaningless research.

People are cutting out spending that they did not care much about. Newspapers are being forced to go online since most people realized they don’t care about reading  a physical newspaper more than the online version.

Recessions need to not let be spun out of control. We cannot allow for a deflationary spiral where perfectly good businesses are laid to waste because of short-term credit needs. Nevertheless, bubbles inevitably burst.

The good thing about government intervention is that it aims to prevent the situation from getting worse. The government will not and is physically unable to permanently prop up every inefficient business. GM’s labor woes will have to be dealt with, carmaker bailout or not. All of the government spending in the world will not save the fact that many hedge funds will have to close up shop since the world does not need tens of thousands of people investing our money for us in the market.

The tech bubble’s burst proved that you cannot just build a website and hope it will make millions eventually. Labor and capital was shifted out of the tech sphere and put towards more productive uses. Likewise, we have seen a huge bubble in credit-driven industries, which are primarily comprised of white collar labor. As these businesses get flushed out, many employees in these industries will have to find a new line of work that actually provides value to companies and society.