This from Taipan Daily:

“$700 billion here… $700 billion there… after a while, you are talking about real money!”

Yeah, I filched the line. Supposedly it was originally uttered by famed Illinois Senator Everett Dirksen. Except it was supposed to be about a mere couple billion dollars. And no one’s really sure if he actually said it.

Here’s something I know he said, as I filched it from the Congressional Record of June 16, 1965:

One time in the House of Representatives [a colleague] told me a story about a proposition that a teacher put to a boy. He said, ‘Johnny, a cat fell in a well 100 feet deep. Suppose that cat climbed up 1 foot and then fell back 2 feet. How long would it take the cat to get out of the well?’

Johnny worked assiduously with his slate and slate pencil for quite a while, and then when the teacher came down and said, ‘How are you getting along?’ Johnny said, ‘Teacher, if you give me another slate and a couple of slate pencils, I am pretty sure that in the next 30 minutes I can land that cat in hell.’

Ah, That Ain’t Nuthin’

Way back in the dark ages around the middle of the previous century, Dirksen worried that President Lyndon Baines Johnson’s “Great Society” might bankrupt the country: “If some people get any cheer out of a $328 billion debt ceiling, I do not find much to cheer about concerning it.”

LBJ is infamous in conservative circles as a “BigGovernmentTaxandSpendLiberal,” second only to the big cheese himself, FDR. But he can’t hold a candle to the numbers thrown up by the supposedly fiscally conservative administration that is just now giving up control of the White House.

In 2008, the U.S. budget deficit was $455 billion. In the first three months of the current fiscal year of 2009 (commencing in October ’08), they managed to rack up a $452 billion gap. Looking forward, the folks at the Treasury, the Federal Reserve and the FDIC have committed to spending something along the lines of $7.2 trillion.

Oil’s Big Bounce begins on January 21st

In just days, two key conditions for soaring petroleum prices coincide for the first time in history.

Here’s how you could play it for 190 times your money or more…

Something’s Got to Give

Now, before you get out your fountain pen and stationery: I know Mr. Bush had to deal with a war or two, a massive financial crisis and a democratic majority on the Hill. It’s the raw numbers I want to focus on, and how they are likely to impact a couple of key early decisions on the part of the incoming Obama administration.

In 2007, one particular area that was only tangentially connected to wars or finance sucked up about a quarter – some $700 billion – of that $2.7 trillion Federal budget.

I’m talking about healthcare.

Not only did Washington spend a mint on doctors, hospitals, x-rays, drugs, et al, in 2007, the country as a whole doled out some $2.45 trillion, roughly 18% of our entire $13.81 trillion annual GDP.

Something’s got to give, if Obama is to have any sort of free hand at all, and I suspect I know what couch he will look in for some loose change.

Getting Killed at the Doctors

You won’t find a clue in Washington, that’s for sure. Rather, you have to look to a small (at least in comparison to the huge figures we’ve been bandying about) fraud case being settled as we speak up in New York state.

Seems that one of our larger health insurance companies has been bilking its policyholders for years now. Here’s how the scam allegedly worked: Your insurance company only covers a portion of the fee, no matter how much the doctor charges you for a visit or procedure. They call this fraction “usual and customary.”

UnitedHealth Group (NYSE:UNH) was supposedly determining usual and customary reimbursement through “independent research from across the industry.” That is to say, they weren’t taking anyone any worse than any other insurance company.

The Best Revenge

Turns out that all their “independent research” was coming from a single source, an outfit called Ingenix.

Now on the one hand, lots of other big insurers, like Aetna, Cigna and Blue Cross, also use Ingenix. On the other hand, Ingenix is solely owned and operated by… (wait for it)… UnitedHealth!

Unsurprisingly, management at UnitedHealth “respectfully disagrees” with New York Attorney General Andrew Cuomo’s finding that they cooked the books and overcharged millions of Americans. But they clearly don’t disagree all that much, because they are paying out $50 million to a special fund that will reimburse patients.

So here’s your first takeaway from today’s column: mid-dated, at-the-money puts against UnitedHealth Group (NYSE:UNH) could stand to make between 65% and 146% over the next few weeks as UNH’s recent rally unwinds.

The “Even-Newer Deal’s” Stealth Stimulus Plan

But here’s where it gets truly interesting. As I mentioned earlier, many of the other giants in this industry also use Ingenix to determine how much or how little they reimburse clients.

I believe that Cuomo’s case was just a trial balloon. (Think about how the states went after Big Tobacco last time they needed a little spending money.) This time around, they will basically force the big insurance companies to create a whole second “stimulus package” without writing a single government check.

I will keep you up to date as these cases progress, and offer additional short plays on the victims.

Source: Make 146%, Fix the Economy and Put the Screws to an Insurance Company, All at the Same Time… What’s Not to Like?

Obama’s stimulus proposal is filled with tax credits, accounting modifications and continuations of current tax laws set to expire. It has little in the way of direct financial stimulus to any industry, especially the healthcare industry.

The President-elect’s goal is to create jobs and reduce taxes in an effort to quickly revise consumer spending. In the short-term, his plan will boost infrastructure-related profits and create revenues for the nation’s “green” industries. But the money will not immediately flow through all sectors of the economy.

In fact, one of Obama’s favorite stomping points during his seemingly endless campaign was healthcare industry reform. It is widely know the Democrat wants to work towards a nationalized healthcare system.

Promises? What promises?

But now that revitalizing (or is it reviving?) the American economy has become top priority, the healthcare industry will be put on the back burner. The nation simply cannot afford the shockwaves of manipulating the financially vibrant sector. Unfortunately, many investors have not realized this point.

Take a look at Allscripts-Misys Healthcare Solutions (NASDAQ:MDRX), for instance. Profit-hungry investors are jumping all over this stock in hopes of getting in on Obama’s stimulus action. Unfortunately, they are making the plunge at a time when the stock is extremely vulnerable.

Later today, Allscripts will release its second-quarter earnings report. After all the attention this company has gotten over the last two months, even an iota of unexpected bad news could send shares on a downhill journey.

For investors willing to take on some speculation, this is a great opportunity to short sell shares of the stock. They could see strong profits as share price drops on any bad news.

If you are not willing to take on any unnecessary risk right now (I cannot blame you), keep a close eye on the stock’s action and be prepared to buy on any strong dips. Allscripts is a strong company with good products, but with its current share price of close to $9, is overvalued. Look to pick up shares in the $6 range.

Obama may be creating profit potential, but it is certainly not working out how he intends it to.

Source: Want something to short? Check out this healthcare player

And on what? News that wasn’t as bad as expected, that’s what.

I guess the bulls are really looking forward to a recovery in the second-half. But let me ask you, when lending is being crippled, how can a recovery even come in the second-half?

I doubt it will.

So here’s what I see…

Manufacturing won’t do as bad since exports are rising by about 3-4% every quarter. Services may suffer, but there is a lot of job creation going on in the healthcare industry. In fact, in the past year, there have been more medical jobs added then manufacturing jobs lost.

All that will do is help the consumer from defaulting as much.

But there are still a slew of foreclosures hitting the markets. As these foreclosures hit, people will move into apartments. As demand for apartments increase, so too will prices.

So not only will we experience food and energy inflation. But we will also see rentals increase in the next two years as well. And as we all know, inflation hurts purchasing power.

And then, let’s not forget that the credit crunch basically killed the municipal bond market, forcing cities to look elsewhere for funding. In some cases, interest rates went up so high that cities will have a hard time keeping up.

As cities are squeezed of funding, jobs and spending takes a hit.

Ahhh, but let’s not forget how hard its becoming for less-than-stellar companies to acquire funding. Just last wekk two airliners went out of business. But there are hundreds of other companies getting close to doing the same.

As these businesses go bankrupt, people will lose their jobs and spending takes another hit.

So, I predict this ‘recovery’ everyone expects simply won’t happen. The economy might not contract horridly, but it won’t really grow either. It will be stagnant. And if inflation keeps moving higher, then we’ll have stagflation.

In the meantime, I have this feeling the Dow will re-test 12,800. If tomorrow it goes higher, i’m getting out of my puts and looking into some calls.

Again, i’m not calling the end of the bear market. Far from it. But I recognize when a rally is in the works. And it looks like that might just be the case.

We’ll see in the next few days.