Mad Spending

by Larry Levin

I guess I'm not writing about the market today. When I read the latest headline from the Obama Administration I just had to write about it: mad spending. Specifically, the headline read, Health-Care Price Tag: $634-billion.

Wow! The President is on a roll. He just pushed a Pork-laden spending bill through Congress disguised as a "stimulus" bill with a price tag of (including interest) $1-TRILLION. This afternoon the House of Representatives passed a normal spending bill of $410-billion, which is loaded with 9,000 earmarks of pork. And then we're hit with the "free health-care" tab. Well, that's surely just an estimate. It could be closer to TEN TIMES that if it's passed.

Hmm, let's do a little quick math...

$1 trillion

$410 billion

$634 billion

--------------

$2.044-TRILLION spent in just a few days. Impressive.

Oh, and that's just today's estimates folks. The Congressional Budget Office believes the Porkulus Bill alone sets in motion $3-trillion of future spending because it knows how Congress works: Once spending is in place, it is rarely eliminated.

Here's an example of what is coming. The Prescription Drug Modernization Act was signed into law by George Bush on December 8th, 2003 with an estimated cost of $400 billion. Did you really believe that? Seriously, are you STILL as gullible as you were when you were a teenager? I scoffed at the price tag and was almost immediately proven correct. One month after concealing the real potential price tag, and thereby securing the votes of the so-called fiscally responsible Republicans (aaaahahahahaaaa!), the Bush Administration said it would really cost $534-billion - a 33.5% increase.

But that wasn't the real price tag - oh no! By early 2005, the White House Budget had increased the 10-year estimate to $1.2 trillion, a three fold increase! Like a typical politician, "W" looked you right in the eye and lied, saying this would SAVE the government money. Sickening. I couldn't find today's 10-year estimate, but I wouldn't doubt it is now 10-times the original estimate.

Ok, let's revisit the numbers above shall we?

$3 trillion...was $1 trillion

$410 billion...leaving as is

$1.902 trillion...was $634 billion

--------------

$4.902-TRILLION spent or promised to be spent in just a few days. Impressive indeed! But wait, isn't this health care package for nearly everyone in the US, which is massively larger than Medicare Part D? Maybe we should assume it will be 10 or 20 times the original estimate, putting the minimum 10-year cost at $6.34-trillion, maybe $12-trillion.

Hey WTF, spend away right? After all, George Bush spent so much in Iraq we're supposed to believe the next Administration should spend even more - right? Again I must ask: Is this "change" or business as usual? It is only changing what we're spending money on - not the rate of money spent or the total spent.

At its core, however, it is simply another government power grab which is business as usual - not change.

The cost of health care in this country is a serious issue and I wish I had the answer, but I do not. However, one thing I know that has NO CHANCE of working is for the federal government to take complete control. It is already running Medicare into the ground.

I fear the day when our heretofore foreign friends become irate at the outrageous and profligate spending of the US. When they conclude that we can't pay the interest on this massively surging debt (forget the damn deficit - look at the total DEBT), we will rue the day we ushered in "stimulus" bills and "health care" bills on top of limitless world improvement costs.

At that point, Atlas will have shrugged and there will be riots in the streets.

Trade well and follow the trend, not the so-called experts.

(PS - Don't bother sending me emails with the President's claims of "found savings" in the budget. It will simply prove you're as gullible as a teenager.)


1) IDVA buy @ 9:35am at 756.25 = -1.00 (1-lot)

2) OTF sell @ 10:30am at 759.75 = b/e & b/e (2-lot)

3) FT buy @ 10:50am at 759.00 = -1.50 (1-lot)

4) OTF buy @ 11:00am at 758.25 = +1.50 & -1.50 (2-lot)

5) IDVA buy @ 11:50am at 752.25 = +1.50, +2.75 & +4.25 (3-lot)

6) VA sell @ 1:50pm at 768.25 = -1.00 (1-lot)

7) Algorithm positions (1)...combined SofT and Algo total...+4.00



Previous Day's Trading Room Results:

Trade Date: 2/25/09

E-Mini S&P Trades*
(before fees and commissions):


1) Pivot sell @ 1:40pm at 768.25 = +1.00, +3.50 & +2.50 (3-lot)

2) Algorithm positions (4)...combined SofT and Algo total...+10.00


Electronic (YM) Mini-Dow:


1) No trades today



Sign up as an AvidTrader Member to receive "The Technician" Value Area's each day. The market then has an 80% chance of filling the Value Area. Many traders familiar with the Value Area and the techniques that go along with it use it to help them decide what trades to do each day. Join and see how this technique can help you trade more successfully!