Monday, June 4, 2007

Oil, Pharma & Insurance in Dems Crosshairs

Politics influences your investments. At the Democratic Debate in New Hampshire Sunday the candidates were united in their attacks on insurance companies, oil companies and pharmaceuticals. The notable quotes were:

Insurance and Pharmaceuticals:

EDWARDS: And I believe you cannot cover everybody in America, create a more efficient health care system, cover the cracks, you know, getting rid of things like pre-existing conditions and making sure that mental health is treated the same as physical health, I don't think you can do all those things for nothing. That's not the truth.

OBAMA: So my emphasis is on driving down the costs, taking on the insurance companies, making sure that they are limited in the ability to extract profits and deny coverage; that we make sure the drug companies have to do what's right by their patients instead of simply hording their profits.

CLINTON: What's important, and what I learned in the previous effort is you've got to have the political will -- a broad coalition of business and labor, doctors, nurses, hospitals -- everybody standing firm when the inevitable attacks come from the insurance companies and the pharmaceutical companies that don't want to change the system because they make so much money out of it.


DODD: Well, what we've offered already, in fact, and that is, of course, we ought to be saying here that when the price of a barrel of oil gets beyond $40 a barrel, where there's plenty of profit here, that those dollars ought to be returned to the consumers in a rebate or plowed back into the research that would allow us to develop alternative technologies.

EDWARDS: The first thing we got to do is find out what's happening with these oil and gas companies. Because we know they're making record amounts of money. We know that the same people that are refining the oil are selling it at the gas pump. So there's a huge vertical integration in this operation.

I think there ought to be an investigation of the oil and gas companies by the Justice Department. I think if the laws that presently exist don't deal with this problem and price manipulation, there should be some change in the anti-trust laws. I think we need states to enforce clean air laws against these refineries.

BIDEN: Take away the subsidy which I've introduced legislation to do. It's about $6 billion, $2.7 directly to the oil companies, number one.

Number two, investigate, as president of the United States; use the Justice Department to go in an investigate this whole issue of price-gouging.

RICHARDSON: Here's my answer: What would help in the short term, give us -- the states -- the authority to engage in serious price-gouging investigation.

This means that if Dems take the White house your investment in Exxon (XOM), Chevron (CVX), Cigna (CI), Aetna (AET)), AIG (AIG), Pfizer (PFE), Merk (MRK) and other in their industries will be under attack. Whether you agree with these policies or not is irrelevant. The facts seem to remain that Dems have their eyes on oil profits and the regulation that have allowed insurance companies to realize record return the past few years. Pharma, already seeing margins being crushed by generics looks to have their pricing power further eroded if a Dem enters 1600 Pennsylvania Ave.

Now, this could also be just sound bites that play nice to the choir but once in office, the tune may change. One never really knows. But, if you are making investment decision for the next few years, you have to pay attention to what these folks are saying.

Most likely the only true statement of the night that we can be sure of?

CLINTON: ... when I become president, Bill Clinton, my dear husband, will be one of the people who will be sent around the world...

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