One of the more sensible mottos of sanity is to " only worry about things that one can change, and not worry about the rest"! Just as with a great fiction novel, the media spends hours regurgitating factoids and opinions about the upcoming (!) government shutdown, the end of the 2013 fiscal year today, the sequester- Part II, raising the debt ceiling, Tapering, Obama$care, Syria, and the next Fed Chairperson - between Yellen and Screemen!
Barron's Cover Story by Gene Epstein cites the CBO Budget Office projecting a minimum 190% Debt to GDP by 2038, more than Greece's current ratio. That is nearly double the ratio back in 1929, as Uncle Ben knows well. The last time the debt ceiling was fought over, Aug. of 2011, the DJIA dropped from 12,800 to 10,800 in a few days , over 15%. With today's drop of over 100 points, we are just down 3% from its recent top.
As pointed out in today's Sentiment Blog: http://mktsentiment.blogspot.com/,
Insider Selling jumped off the charts last week, from a recent 13 to 1 ratio over Buyers, to 180:1. Still, most investors have not panicked yet, although the monthly ETF results show the first decline in equity flows for a while, with bonds and Int'l staying about the same. Open-end Mutual Funds for last week saw almost no change in the equity funds flows, while MMFs (money markets) gained a huge $36B. Small S&P 500 Buyers finally outnumbered the Sellers in the COT ( Commitment of Traders) area.
Last weekend's Wall St. Journal had some tips for signing up for the healthcare exchanges - most importantly, to wait awhile since there is much confusion in this area. Although tomorrow is day One, one has until Dec.15 to sign up for next year's insurance. No one knows for sure how much Obamacare will add to the Debt, but it looks huge - there are government grants to HC advisors to the poor ($1M); a cafeteria plan depending on which "precious metal" one chooses - Platinum, Gold, Silver, Bronze; as well as stratified adjusted income, up to 3 times the poverty level. So even if one saves money on an exchange, they will pay extra for those with waivers (such as Congresspersons), tax deductions, including the 50 million people added to the rolls.
Finally, there is the undeniable fact that when the gov't gets involved, quality goes down, and costs go up - see college tuition, education, Welfare, Social Security, etc. It is estimated that of the $800B annual cost of Medicare, 1/10, or $80B goes to Fraud - surely to occur in Obamacare shortly after encated. Not including MedicAid.
With all the Wall of Worry mentioned above it seems like a good time to take a vacation, so this column may be erratically timed next week, as will the concomitant blogs: