by Karl Denninger, Market Ticker:

Oh well, easy come, easy go!

“I strongly urge the Committee to hold hearings where GM and other corporations who have laid off workers since the passage of the tax break are called to testify regarding tax breaks they received and how this money was spent,” Ryan wrote in a letter to the committee’s leadership. “The American people deserve to know if the tax cuts they paid for are being used to inflate corporate profits at the expense of their economic security and the survival of American workers.”

Awwww……

Gee, the buybacks — many funded with debt — over the last few years weren’t obvious?  Nor was what was going to happen when the worm turned and prices didn’t always go up?

Oh by the way the firms were doing the buyback dance before the tax cut was passed, so nobody can claim they didn’t know, or that Congress was duped.  It wasn’t.

A lot of those bought-back shares are underwater.  This means that an actual economic loss has taken place in those firms, whether they recognize it in their accounting or not.  Further, for those companies that funded said buybacks with debt not only did they take an economic loss they’re paying interest on the money too and as a result that loss is not over; it is in fact compounding.

Of course Trump and Kudblow have never met a bubble they didn’t like inflating — except when he could blame it on Hillary or Obama, like before the election.  Now it’s all good…. right up until the pin finds it, at which point all those uneconomic actions come home to roost.  Then the overshoot to the downside is a bit more than you’d think as not only does the air come out of the bubble but the outsized costs imposed by those losses must be paid.

Psst…. if you think that’s bad just wait until 2024 — six years from now — when Medicare is taking in $250 billion but paying out $1.1 trillion ($1,100 billion) a year as it did last year.  Right now Medicare is depleting the “stash” of Treasuries it holds, exchanging them for marketable ones (redeem one dollar of bonds in the Medicare “trust” fund, issue one by Treasury into the market since Treasury has no actual cash as we run a deficit every year — net is zero.)  The facts are right in the table — “intergovernmental” debt rose 3.79% over the last 12 months while public debt rose 7.15% and is roughly three times as large.  This is, incidentally, why the Treasury breathlessly reports a $779 billion “deficit” while the debt to the penny numbers show a much worse total — and accurate — figure.  Nobody cares about the accurate figure even though I’ve written on it several times and it’s published on a literal daily basis.

In 2024 by law Medicare will be unable to do that because it will run out of Treasuries it can “cash” and by law it also won’t be able to write the checks — it’ll be 75% short.  Since nobody in government — state, federal or local — will take the mediscam schemes on and put a stop to all the blatant lawless behavior in the medical and “health insurance” businesses — including rank violations of 15 USC Chapter 1 that are felonies, twice reviewed by the USSC with the medical and insurance firms losing both times, the only options will be to either literally cut 3/4 of all Medicare spending at once, throwing every Senior who “relies” on it to the wolves or to re-write the law to allow Medicare to write unfunded, unlimited checks on the general Treasury fund which would explode the deficit by over $800 billion a year right here and now.

Of course given the rate of inflation in medical expenses over the last decade or so in six year’s time when that day comes it won’t be $800 billion a year, it will be somewhere around $1.5 trillion ANNUALLY in additional deficit we’ll try to add, all of it in the public debt markets, on a permanent basis each and every year forevermore.

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