Bill Fleckenstein: Why the new health care reform will be a financial disaster

Contrarian Chronicles3/26/2010 6:30 PM ET

And now, the great health care bailout

We protect the big banks and Wall Street, so why not protect everyone with health care reform? Because, like the other bailouts, this will be a financial disaster.

By Bill Fleckenstein
MSN Money

To probably no one's surprise but against the hopes of many, the House has passed one of the costliest pieces of legislation, potentially, of the past 40 years.

To be clear: I am for reforming the health care system and trying to help those truly in need. But I'm against this political fiasco that's being called reform.

Over time, this bill is going to be an epic financial disaster. And the accounting by which the Obama administration claims to pay for it sets a new low in financial honesty (or, said differently, a new high in government financial chicanery).

For everyone who loves socialism and all the things that socialism can bring, over the next 20 years you're going to get the health care system in this country that you've longed for. And for those of you who don't, it won't matter. You're going to pay anyway.

This is another variation of having the prudent bail out the reckless -- though more like the business owner who promises to "cheat the other guy and pass the savings on to you." For those who aren't clear on why socialism doesn't work, I recommend reading George Orwell's "Animal Farm."

(The morning after the bill was passed, I tapped "All animals are equal, but some are more equal than others" as the headline for my daily column on my Web site (subscription required). There is a follow-up below.)

An intergenerational rip-off

Thus, at a moment in time when the country has immense financial problems, we've now got another gigantic one -- funded, such as it is, by another intergenerational rip-off. I don't know how folks can advocate the pursuit of these policies and look young people in the eyes, telling them we're doing the right thing.

Of course, you can also ignore the next generation if what you've got is not a conscience but a heavy-duty case of crony capitalism. Yes, my views on the health care bill are deeply held, but they are just as strong regarding that version of capitalism being practiced in America.

I stated as much when the bailouts were taking place, and this week I'd like to share like-minded comments from an astute reader of my daily column:

I loved Animal Farm, and while I certainly don't like this healthcare bill either, I think the quote you used is probably more relevant to the Wall Street crowd and the bailouts it has received than the healthcare bill. I see the healthcare reform as just one more example of how slowly but surely populist anger will continue to creep into our lives in the form of entitlements for the masses (not a particularly surprising response to the widening wealth gap spawned by the crony capitalism we've been practicing in this country for the past couple of decades).

I personally blame the greedy fake capitalists (Greenspan, CEOs and their lobbyists, and the Wall St. marketing machine) that have been running this country into the ground since the mid-90's. . . . Had the pendulum not been allowed to swing so far out of balance, there wouldn't be such a high degree of anger to tap into and you couldn't sell these sorts of things to a normally conservative public.

This reader has made many important points that I truly agree with. The era of greed was fomented by incompetence and irresponsibility at the Federal Reserve, paving the way for reckless behavior on Wall Street (and nearly the entire banking industry), abetted by the abdication of responsibility by the so-called regulators.

Had such egregious behavior not taken place, perhaps the mentality of those who feel ripped off (probably a good portion of the country) would be different.

Continued: Bubble vortex draws in cerebral cortex

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