A reader e-mailed Mark Steyn at The Corner on National Review Online regarding the financial impact on companies that Obamacare has had – immediately. Pay close attention here.
3M Corporation announced that it was taking a 12 cent per share charge to earnings for the effects of the health care bill. The costs here are really of two varieties. First, is the hard costs that shows up on company’s income statement and is reflected in the reduced earnings per share. The second cost is the effect of the reduced earnings per share on the company’s market value. 3M sells for about 18 times its earnings per share which means that a 12 cent charge reduces the stock price by about $2.16. Multiply that by 711 million shares outstanding and you get a reduction in the market value of the company of about $1.5 billion.
That’s one business. It would be interesting to know just how much value last Sunday’s vote instantly vaporized at, say, the S&P 500 companies. We will soon enough.
And, again via NRO, as Victor Davis Hanson reminds, In the End, There Is Only the Debt. And climbing out from under this debt is impossible while we as a nation continue to pile the dirt of debt upon our financial grave.
Amid all the fighting over health care, Obama’s new promises, the Israeli spat, the Frum controversy, et al., looms the national debt. We can ignore it; get angry at it and say, “What the hell, I’ll quadruple it!”; have our “experts” write sophistic treatises about how it either doesn’t matter or is in truth good; hear our politicians claim it is secondary to the passing of a “progressive” agenda; or secretly smile that its service will require higher taxes and more “redistributive change”; but in the end, what we as a nation collectively owe others and ourselves transcends politics.
Cranky 19th-century-minded farmers used to preach about the tentacles of low interest. Apparently they had this strange idea that when interest rates went too low, the uninformed mob-like masses borrowed too much — and the resulting live-for-today demand for cheap money forced the once-endless pool of ready loans to dry up and interest to rise — and a few smarter people were sticking around to profit when this cycle played out like clockwork.
In short, the United States is floating far more loans than ever before in peacetime, and for longer scheduled durations, because interest rates are only a quarter of what they have been in the past. But this theory that we can endlessly multiply the size of our debt because the service costs remain low and static is a prescription for disaster — like the credit-card introductory offer of 2 to 3 percent for 6 months that hooks the naive into charging thousands of dollars, only to end up without the means to service the debt when the rate climbs over 20 percent. For a technocracy that is Ivy League certified and brags about its competency, we have fallen into the age-old trap that snares the naive ARM house buyer, the teenaged MasterCard mega-borrower, and the “free” coupon holder who heads headlong to Vegas.
This is the recipe used to cook Mexico – or if your news cycle attention span prefers, Greece.
The talk of a VAT tax will gain much momentum, probably coming to a head in 2012 debates. But the uncomfortable truth will remain: As we punish our businesses and vilify their CEO’s, the economy is relentlessly constricted by all levels of American government like a team of angry pythons. And extracting tax revenues from it will become soon akin to squeezing blood from a stone.
Obamacare is merely a component; indeed, like a gateway drug.
We are witnessing the antithesis to the Laffer Curve. And it should be dubbed the Crier Curve.
It is a curve along the path that has but one name: Unsustainable.
The consequences are dire in every sense of the word. For all of us. And for the cause of Liberty the world over. For as America consumes herself, the defense of Liberty falls to no one.
Again, as a National Security writer and commentator, I feel compelled to challenge: Forget what you’re defending and Defense isn’t all that important, is it?
