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Mark's Market Blog

11-21-09: ObamaCare ready for debate

By Mark Lawrence

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This week the market took a few days off. Next week will have light trading due to the holidays.

S&P 500 August 26 2009 to November 20 2009

27% of MIT's undergraduate students now end up in the world of finance, far more than any other industry. The University of Pennsylvania and Harvard paint a similar picture, as 24% and 23% of their undergraduates, respectively, end up in finance. Cornell proudly lists the 10 biggest employers of their 2008 grads. Half of them - Citigroup, Goldman Sachs, JPMorgan Chase, Lehman Brothers, and Merrill Lynch - were in the field of finance.

Driven by rising unemployment, prime mortgage loans accounted for nearly 33 percent of new foreclosures last quarter. That compares with just 21 percent a year ago, when high-risk subprime loans made during the housing boom were the main reason for default. About 4 million homeowners were either in foreclosure or at least three months behind on their mortgage payments as of September, according to the mortgage bankers group. Those foreclosures will push home prices further downward. Subprime loans with adjustable rates have fallen to 16 percent of new foreclosures from 35 percent a year earlier.

The nonpartisan Congressional Budget Office said that Majority Leader Harry Reid's 10-year, $848-billion bill would produce a net reduction of $130 billion in federal deficits in its first decade. With President Barack Obama pledging to tamp down ruinous health care costs, Democrats took the new CBO estimates to the bank, while skipping over the caveats. Preparing for a noontime rally with supporters, Reid said the legislation would "save lives, save money and save Medicare."

The CBO said Reid's bill would extend coverage to 94 percent of eligible Americans, after subsidies to make premiums more affordable start flowing in 2014. That's one year later than in the House Democratic bill, and well into the next presidential term. Postponing the subsidies by one year allowed Reid to offer somewhat more generous assistance to defray the cost of insurance premiums. Reid's bill relies on cuts in future Medicare spending to cover costs, as well as on higher payroll taxes for the well- off, a new tax on patients undergoing elective cosmetic surgery, and a laundry list of other taxes, fees and penalties.

State and local governments will have to raise taxes and cut spending in the current and next two fiscal years to cover shortfalls totaling $469 billion, according to an Economic Policy Institute report. The think tank said the U.S. government must give states and cities at least $150 billion in direct budget relief to save between 1.1 million and 1.4 million jobs.

How the various states are doing, budget deficit wise. Darker is worser.

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