It is cool here. A welcome change from Athens, Madrid, and Paris.
The markets were cool yesterday, too. The Dow rose 70 points. Nothing to get excited about.
Today, we report on a new front in the Great Zombie War — the US health care sector…and why costs there are set to rise.
For now, we are sitting in the bar at The Hazelton Hotel. We always thought of Canadians as being a bit more reserved and conservative (socially, not necessarily politically) than their neighbours to the south.
Well, not in this hotel!
It is more like Dallas than what we recall from our summers in Nova Scotia. People dressed in the latest gaudy fashions, loud hipster music, trendy décor, women who appear to have had extensive body work done.
And on the TV above the hotel bar is a recurring ad from a zombie law firm advertising for personal injury cases!
Is Spain the next Greece?
We floated our way through Europe’s wine country, foggily trying to keep track of what we are seeing.
We surveyed the Greek front with a pitcher of red wine on a blue paper tablecloth. Greek wine is as mysterious to us as Greek finance — both make you a little light-headed.
The wine served in the street restaurants of Athens is cheap and plentiful. In Madrid, our host insisted on a classic Rioja…a rich, complex wine.
Madrid is a cleaner, more modern, and more sophisticated city than Athens. The wine is similarly more advanced and reliable.
And in France, a Bordeaux…a Saint-Émilion…or a Saint-Estèphe…usually anchors our red-checkered tablecloth. After the Rioja, the perplexing Greek wine, and months of drinking Malbec in Argentina, the French wines seem to lack character.
They are like the French people: subtle and clever.
In Greece, we were there to witness a financial system meltdown. It didn’t oblige. The scheduled breakdown didn’t happen when it was supposed to; Greece and its creditors booted the can down the road yet again.
Even after two weeks of closed banks…and widespread expectations of a financial crack-up…we saw no sign of panic.
Instead, the Greeks were prepared. Bloomberg, interviewing a local restaurateur, sheds some light on how:
‘My son is a fisherman. Today I took two kilograms of my son’s fish to the butcher. He gave me two kilograms of meat in return.
‘We don’t take money to the bank. The money we earn is spent on supplies and expenses to eat and drink.’
Meanwhile, our sources in Madrid explained…
‘There is a big political movement here to throw out the baby and the bathwater. There’s a whole new political party, called Podemos [which translates as ‘We Can’].
‘It came out of nowhere. It was organized on the social media. I’ve never seen anything like it. I don’t know what these people want…but I don’t think they’re going to be as predictable and as flexible as the traditional parties.’
Our guess is Podemos wants to slip Spain’s debts.
Most people will be zombies — if they can get away with it.
Everyone wants wealth, power, and status. And they want to get it in the easiest way possible. So, it really only makes sense for them to support the political party that promises to give them more than they can get on their own.
Or, to put it differently, in a modern democracy, politicians must promise to give voters back more than they take from them in taxes.
If a party gives back only what it takes in from taxes, the zombies get no net gain. And when the politicians promise to run a budget surplus to pay down debts from past spending, the zombie maths no longer works.
The voters must pay more in taxes than they get in redistributions.
That’s when the logic of modern popular democracy breaks down. And when that happens, watch out!
Now, back in the New World, we turn our lips to a California wine and our attention to the North American front of the Great Zombie War.
From the New York Times comes news of a big zombie push in the health insurance sector.
You’ll recall the lay of the land. Crony lobbyists for insurance companies, Big Pharma, and the medical industry got together with the Obama administration and created ‘Obamacare.’
The law was so complex and so long-winded that politicians voting for it admitted they didn’t know what was in it. Only the cronies knew what was in this pudding; they had put the sugarplums in themselves.
The rest of us would just have to wait until we choked on the seeds: Reports the New York Times:
‘Health insurance companies around the country are seeking rate increases of 20% to 40% or more, saying their new customers under the Affordable Care Act turned out to be sicker than expected. Federal officials say they are determined to see that the requests are scaled back.
‘“As a result, millions of people will face Obamacare sticker shock,” said Senator John Barrasso, Republican of Wyoming.’
Yes…the medical industry is a battleground, too. The zombies are fighting hard — by hook, crook, regulation, and legislation — to get even more of your money.
Stay tuned for the next dispatches from the front lines…
For Markets and Money, Australia