Friday, September 30, 2011

Soc Gen's Albert Edwards Forecasts S&P500 at 400

I'm looking for a bear market decline to 575 because I think 800 is fair value and these things overshoot to the downside just as they do to the upside, but hey! 400 is in the same town as 575, just don't go there at night alone:

Edwards said he has been long government bonds for the same amount of time [since 1996] and now feels vindicated with the yield on the 10-year Treasury having fallen from 7 percent to 1.75 percent, "a hair’s breadth" from his longstanding ... 1.5 percent target.

He dismisses those who argue that stocks are cheap historically and believes US stocks are overvalued based on Tobin’s Q , or the ratio of firms' assets to their stock prices; Shiller, Graham & Dodd’s normalized price-to-earnings ratios; and cyclically adjusted price-to-earnings measures.

Read it here, if you dare.

For the record the Shiller p/e stands tonight at a still rich 19.45. Don't unleash all 100 Dalmatians until it's well below 10. The last time that happened?


California AG Joins New York, Pulls Out of Negotiations to Settle Big Bank Abuses

Now there's some news worthy of being buried on a Friday evening where it can do as little harm as possible to the banks in question already down in the markets on a bad day and on a bad end to Q3:

California Attorney General Kamala Harris wrote in a letter on Friday that she will pursue her own investigation.

"California was being asked for a broader release of claims than we can accept and ... the relief contemplated would allow too few California homeowners to stay in their homes," Harris said in the letter to government officials leading the talks.

Read more about it here.

Herman Cain Comes Closest to a True Flat Tax

So says Stephen Moore for The Wall Street Journal, here, pointing out that FICA taxes do go in the shredder under Cain's 999 plan:

But the candidate who comes closest to a true flat tax is Herman Cain, the former Godfather's Pizza CEO. His argument for a "9-9-9" plan puts the current income and payroll taxes in the shredder and replaces them with a 9% personal income tax with no deductions, a 9% net business income tax, and a 9% national sales tax.

That would be rocket fuel for the economy, though the combination of a federal sales tax and an income tax is a big worry. But at least Mr. Cain has super-sized solutions to an economy with super-sized problems.

Solution? In 2008 Cain's 999 plan would have meant 900 billion fewer dollars in receipts for federal social insurance. I don't see how he could make up that difference, let alone an additional $300+ billion he comes up short compared to what was actually collected in 2008.

It looks more like a stealth plan to bankrupt Social Security and Medicare by ignoring it.

  • A 9 percent tax on $8.50 trillion in adjusted gross incomes in 2008 comes to $765 billion (actual collected in 2008 was $1.03 trillion).

This is actually a huge tax cut on the wealthy and a big tax increase on everyone else. And does Cain intend to do away with deductions even for IRAs and 401Ks? If so that AGI number would be much higher, and the tax revenue higher, along with your tax bill. At least the billionaire will pay the same rate as the janitor, as Obama now famously says he wants.

  • A 9 percent tax on $1.25 trillion in corporate profits comes to $113 billion (actual collected was $309 billion).

This is a huge tax cut on business, which is why Stephen Moore calls Cain's plan rocket fuel.

  • A 9 percent tax on $4.40 trillion in total retail and food service consumer spending in 2008 comes to $396 billion. 

Does Cain intend this to be wider in scope than indicated? It is often said that 70 percent of the economy is consumer spending. In a $15 trillion economy, that's $10.5 trillion. A 9 percent tax on that would boost the receipts of a national sales tax to $945 billion.

But all told, Cain's plan would have collected only $1.274 trillion in federal revenue for 2008 when the government actually collected $2.5 trillion and still ran a deficit of close to $400 billion anyway.

We're currently spending $3.8 trillion in this country under Obama, $1 trillion more than in 2008. The 999 plan doesn't look up to the task.

Obama Executes American Terrorist in Yemen Without Trial

Your American citizenship means nothing, just as the War Powers Act means nothing. We live in a tyranny, where the rule of law is completely optional. You could be next:

Al-Awlaki's death is the latest in a run of high-profile kills for Washington under President Obama. But the killing raises questions that the death of other al Qaeda leaders, including bin Laden, did not.

Al-Awlaki is a U.S. citizen who had not been charged with any crime. Civil liberties groups have questioned the government's authority to kill an American without trial.

U.S. officials have said they believe al-Awlaki inspired the Fort Hood shooter, Army psychiatrist Maj. Nidal Hasan, who is charged with 13 counts of premeditated murder and 32 counts of attempted premeditated murder in the November 2009 attack at Fort Hood, Texas.

In New York, the Pakistani-American man who pleaded guilty to the May 2010 Times Square car bombing attempt said he was "inspired" by al-Awlaki after making contact over the Internet.

Al-Awlaki also is believed to have had a hand in mail bombs addressed to Chicago-area synagogues, packages intercepted in Dubai and Europe in October 2010.

The complete story from CBS News is here.

Thursday, September 29, 2011

Herman Cain's 999 Plan Would Have Cut Corporate Taxes in 2008 by 64 Percent

Average annual corporate profits for 2008, 2009, and 2010 were $1.47 trillion.

The average annual corporate tax paid on those profits was $331 billion for an average annual corporate tax rate of 22.5 percent.

How Herman Cain thinks he can lower the rate to 9 percent and still have enough revenue in combination with a 9 percent income tax rate and a 9 percent national sales tax rate is beyond me.

In 2008, those 9 percent rates would have yielded a mere $112 billion in corporate taxes (instead of the $309 billion actually collected), $400 billion in sales taxes, and $765 billion in income taxes, or $1.223 trillion short of the $2.5 trillion actually collected by the federal government.

If Cain leaves social insurance taxes in place, which would make it a 9997.65 Plan, not a 999 Plan, the $900 billion collected in 2008 in FICA taxes would still have left him $323 billion short of actual revenue collected in 2008.

See the corporate profits data in Table 11 from the Bureau of Economic Analysis, here:

Final Estimate of Q2 2011 GDP at 1.3 Percent

As reported by the Bureau of Economic Analysis, here.

With Q1 GDP at 0.4 percent, average GDP is at a paltry 0.85 percent so far in 2011.

Average annual GDP from 1930-2000 was 3.5 percent.

For the ten years from 2000 it averaged 1.67 percent (Europe was worse, at 1.5 percent).

A measly 0.85 percent in 2011 is stall speed, and that means less government revenue, which makes the deficit worse and the national debt grow, interest payments on which will exceed $434 billion this year, about one eighth of current spending of $3.8 trillion, or 12 percent.

Think of that as having to make interest payments on debts of $236,000 totaling $7,440 every year, $620 every month, on a salary of $62,000.

The implied interest rate of 3.15 percent won't last forever, but let's be generous and assume it does while what you owe keeps growing by 9 percent per year for the next decade because you keep spending and you never pay it down. Let's also assume you get a crummy annual raise of 1.7 percent every year for ten years.

Now you'll owe over $596,000 supported by a salary of nearly $74,000, but your interest expense will have grown to nearly $19,000 from $7,440 ten years prior, amounting now to 25 percent of your income as compared with 12 percent of your income then. More than doubled.

That's where America is headed . . . if interest rates don't rise and slow growth mirrors 2000-2010.  

Herman Cain's 999 Tax Idea is a Pipe Dream

Total retail and food services sales, according to the US Census Bureau here, in 2008 came to $4.4 trillion. (For 2010, the annualized estimate based on 8 months' of data is running at $4.6 trillion).

To replace the federal tax revenue of $2.5 trillion in 2008 solely on the back of consumption taxes, such as a national sales tax, would imply a national sales tax rate of . . . 57 percent. Unthinkable, unless you are Greece.

Herman Cain doesn't advocate that. But his idea of a 9 percent sales tax would have generated, at most, a paltry $400 billion in 2008. Coupled with about $765 billion from a 9 percent income tax on about $8.5 trillion in total adjusted gross income in 2008, the business community would have been on the hook for the missing $1.3 trillion in 2008 federal revenue, when it actually contributed only $300 billion in taxes that year.

A 333 percent increase in the tax liability of American business sounds like something only a commie like Obama would propose.

Herman Cain's numbers don't even come close to matching the problem which we are facing.

Tariffs on Imports at 100 Percent Wouldn't Be Enough to Cover Federal Spending

Here are the import numbers (rounded) for the last three years for all goods and services, according to the latest revision from the US Census Bureau, here:

2008 = $2.5 trillion
2009 = $2.0 trillion
2010 = $2.3 trillion.

Federal revenues in 2008 equaled $2.5 trillion, coming mostly from income and social insurance taxes, as well as a more modest contribution from corporate and excise taxes.

To completely replace that income from tariffs would imply a 100 percent tariff, which is unimaginable.

Presumably at least some of our trade with the world is reciprocally fair, excluding it from such a punishing rate.

At some point along the tariff scale as you rise toward that extreme level, otherwise off-setting import revenues will fall as retaliatory tariffs are imposed by the global marketplace.

A 25 percent tariff on Chinese imports, as The Donald recommends, in 2010 could have generated only in our dreams something around $91 billion in revenues.

At a minimum, a vigorous reliance on tariffs for federal revenues today implies a much reduced size of the federal state.

Wednesday, September 28, 2011

Vanguard's Jack Bogle Admits No Assets Are Undervalued

Well, that's putting the best construction on it.

What he means to say is, Most assets are dearly priced.

Dollar cost averaging into stock index funds right now is buying at very high prices with the Shiller p/e near 20, when the mean is more like 16.

Oil is about $80 per barrel vs. $20 in the go-go days, gold is $1,586 the ounce vs. its last peak of $800 in 1979, and the price of the Vanguard Total Bond Index is at historical highs around $11.

People who own these things are nervous because the prospect for considerable increase in price is improbable, for various reasons. Some wonder when to sell. Many more have bought and will hold as they have been taught to do. How many people do you know who ride it on up, and ride it on down? Well, can you afford to do that facing retirement? What if the next leg down is really big? Let's say a retest of the 600 region of the Standard and Poor's 500 Index, and we bump along down there like Japan for another seven years.

People who don't own these things are also nervous, because what they do own, if they own anything like cash and real estate, is declining in value and is returning nothing. They wonder when to buy the other things, and don't especially believe it when people like Mr. Bogle tell them they've got to invest in the markets at these prices.

What would you expect him to say, under the circumstances, Don't buy my funds?

He sells good stuff, but maybe you should wait for a sale, and be patient with what you do have, and try to find a way.

Read him, here.

Hallmark's New Unemployment Cards Are Flying Off The Shelves in Dallas

So, what does that tell you about Texas, Governor?

Story here.

High Tariffs Allowed Domestic Producers To Get Really Rich Off Captive Consumers

So says John Steele Gordon, who provides a short history of taxation for The Wall Street Journal, here:

After the Civil War, nearly all the wartime taxes—including the nation's first income tax—were repealed and the federal government relied mostly on the tariff for revenues. It provided the government with more than ample peacetime income. In 1882, the government had revenues of $403 million, but expenses were only $257 million, a staggering budget surplus of nearly 36%. The reason the tariff was so high was, ostensibly, to protect America's burgeoning industries from foreign competition.

Of course, the owners of those burgeoning industries—i.e., the rich—were greatly helped by the protection, which enabled them to charge higher prices and make greater profits than if they had had to face unbridled foreign competition.

But the tariff is a consumption tax, which is simply added to the price of the goods sold. And consumption taxes are inherently regressive.

Which ought to get more attention on the right when one considers that liberals like Paul Krugman, Nancy Pelosi and Barack Obama and so-called conservatives like Herman Cain, Rick Perry and Mitt Romney all seem to like consumption taxes in one form or another.

The move would raise more revenues off the rank and file, and preserve the fortunes of the rich, which is why so many politicians support them. The better to eat you with, my dear.

FORD = Fascist Obama Reelection Debacle

FORD Wimps Out Again, Pulls Anti-Bailout Ad After White House Intimidation

And Daniel Howes for The Detroit News sums it up this way, here:

Ford supported the bailouts before Congress, in public statements and still does today, despite the recurring snarkiness you hear around its offices in Dearborn that it "didn't take the money."

No, it didn't. But Ford did seek a line of credit from the feds, borrowed billions under a government program to "retool" its plants and effectively failed first. That's why it recruited a superstar CEO from Boeing Co. and gave him some $23 billion in borrowed money to save the Blue Oval from bankruptcy.

Or it would have taken the money, too.

Peter Orszag Comes Out For Less Democracy

But like everything else about liberalism, you'll have to pay just for the privilege of reading why.

Tuesday, September 27, 2011

Wolfgang Schauble Calls Tim Geithner's EFSF Leverage Idea STUPID!

It's about time someone did.

Ambrose Evans-Pritchard has the quotation from the German finance minister, here:

"I don't understand how anyone in the European Commission can have such a stupid idea. The result would be to endanger the AAA sovereign debt ratings of other member states. It makes no sense," he said.

Female Dem. Gov. of NC Gets Hysterical Over Growing Tea Party Power

As reported here:

I think we ought to suspend, perhaps, elections for Congress for two years and just tell them we won't hold it against them, whatever decisions they make, to just let them help this country recover. I really hope that someone can agree with me on that.

She calls herself Bev Perdue.

This is obviously a desperate ploy to short-circuit Tea Party anger and get it to go away out of sheer fatigue and get it accustomed to the idea of the increased power of the state under Obama. The outcome would be two more years of the status quo, with a divided Congress doing nothing because that's the way Sen. Harry Reid wants it.

What's next? Suspension of presidential elections? 

This is a small depression by comparison with historical depressions, but a woman governor of a southern state completely loses her mind and calls for a blatantly unconstitutional recourse to tyranny to get us over it.

Did FDR propose such a measure under far worse circumstances?

If ever there were an argument to deny the vote, and the right to serve in office, to women, this is it.

No more Sarah Palins. No more Michele Bachmanns. No more Hillary Clintons. No more Debbie Blabbermouth Schultzs. No more Nancy Pelosis. No more Laura Ingrahams. No more Tammy Bruces. No more Barbara Boxofrocks. No more Jennifer Granholms.

No more . . . Ann Coulters.

Radiation Hotspots South of Iitate Japan in Namie Range from 11-20 Microsieverts/Hr

Measurements in Iitate, Japan, are much lower by comparison at 2.6 microsieverts per hour, but are still far above normal of 0.11 per hour.

Libertarians WANT a Revolution, Real Conservatives are Trying to Prevent One

Rep. Ron Paul is at it again, here:

"The country is ripe for a true revolution".

If Republicans know what's good for them, they'll purge these cranks from the party.

Bing-Bing-Bing! Ricochet S&P!

Monday, September 26, 2011

The Incident at Fukushima Six Months Later has a very affecting story about the aftermath of the earthquakes, tsunami, and nuclear meltdowns at Fukushima.

A brief excerpt:

The area’s [Minami Soma's] biggest festival, Soma Noma Oi, a re-enactment of samurai battles, attracted 200,000 visitors last year. This year 37,000 came. Of the 300 horses typically used in the event, 100 were drowned in the tsunami and another 100 were evacuated due to radiation.

Read all of it here.

Rep. Maxine Waters Gets A Little Upset With Uncle Tom Obama

For saying this, as reported here:

“[T]ake off your bedroom slippers, put on your marching shoes. Shake it off. Stop complaining, stop grumbling, stop crying. We are going to press on. We’ve got work to do, CBC.”

Video of Maxine here:

"I don't know who he was talking to because we're certainly not complaining," Rep. Maxine Waters (D-CA) said on CBS' "Early Show" in response to President Obama telling blacks to stop complaining.

"I found that language a bit curious because the president spoke to the Hispanic Caucus, and certainly they're pushing him on immigration... he certainly didn't tell them to stop complaining," she said. "And he would never say that to the gay and lesbian community, who really pushed him on Don't Ask, Don't Tell."

The Cure for Drowning Victims: Ye Olde Smoke Enema

Particularly effective in cases of drowning in debt.

Sunday, September 25, 2011

France Blows Smoke Up The World's Ass: French Banks Have No Toxic Assets!


That's the lie of the decade, at the very least, betrayed by just one phrase: loans to Greece Italy.

From here:

Noyer, who is France’s chief financial regulator, dismissed reports that foreign companies such as Siemens AG (SIE) have withdrawn an unspecified amount of short-term deposits from Societe Generale, saying he’s confident in the health of France’s lenders.

“It’s a bit of a nonsense to look after every move from one bank to another,” he said. “I’m extremely confident” in French banks because “we know them very well. We know their balance sheets, their risk assessments. We know they have no toxic assets.”

Yes, well, I'll bet he also knows madam, and uses protection.

It's a bit of nonsense alright. Kind of interferes with the rhythm of the good life, which is about to come crashing down around your ears.

Siemens withdrew 500 million euros from a French bank it judged unsafe and placed it on deposit with the European Central Bank, according to widely circulated reports.

But of course that's just the old Germany vs. France thing, right?

What are the French going to say when Deutsche Bank comes crashing down with Soc Gen? And Bank of America, too?

C'est la vie?

U.G.L.Y. You ain't got no alibi, you ugly!

Interest Expense on the National Debt Outstanding

Per the US Treasury, here:

Fiscal year 2011 will top $434 billion.

Radiation Readings 3km from Fukushima Plant as High as 68 Microsieverts/Hr on 9/22/11

As reported here:

Latest Fukushima Map Shows Four Radiation Hotspots NW of Nuke Plants

As shown on today's map from here, air measurements continue to show values from 15 to 31 microsieverts per hour northwest of the crippled nuclear plants on the coast at four locations beyond the 20 km evacuation zone:

For comparison, note that Iitate, Japan, continues to post values quite a bit lower in the vicinity of 2.6 microsieverts per hour, but that normal values should be more like 0.11 in all areas.

Fukushima International Association Stops Reporting Iitate Radiation Figures

The air measurement of radiation in Iitate, Japan, which remains stubbornly high compared to other areas at 2.59 microsieverts per hour, was routinely published here at the English version of the Association's website through September 9, 2011:

As of September 10th, Iitate has been de-listed from the report, along with three other reporting points:

Rush Limbaugh Slams Obama's 'Peace is Hard,' Forgets Bush's 2004 'Hard Work' Remarks

"We don't elect presidents expecting them to tell us how damn hard the job is." 

-- Rush Limbaugh, Thursday, September 22, 2011, reacting to Obama's comments to the UN that Mideast peace is hard.

I guess Rush doesn't remember these lines from George W. Bush from the first 2004 presidential debate with Senator John Kerry:

"In Iraq, no doubt about it, it's tough. It's hard work. It's incredibly hard.

"I understand the serious consequences of committing our troops into harm's way. It's the hardest decision a president makes.

"There's a lot of good people working hard.

"I work with Director Mueller of the FBI; comes in my office when I'm in Washington every morning, talking about how to protect us. There's a lot of really good people working hard to do so. It's hard work.

"And now we're fighting them now. And it's hard work. I understand how hard it is. I get the casualty reports every day. I see on the TV screens how hard it is. But it's necessary work. And I'm optimistic. See, I think you can be realistic and optimistic at the same time. I'm optimistic we'll achieve -- I know we won't achieve if we send mixed signals. I know we're not going to achieve our objective if we send mixed signals to our troops, our friends, the Iraqi citizens. We've got a plan in place. The plan says there will be elections in January, and there will be. The plan says we'll train Iraqi soldiers so they can do the hard work, and we are. And it's not only just America, but NATO is now helping, Jordan's helping train police, UAE is helping train police. We've allocated $7 billion over the next months for reconstruction efforts. And we're making progress there. And our alliance is strong. And as I just told you, there's going to be a summit of the Arab nations. Japan will be hosting a summit. We're making progress. It is hard work. It is hard work to go from a tyranny to a democracy. It's hard work to go from a place where people get their hands cut off, or executed, to a place where people are free. But it's necessary work. And a free Iraq is going to make this world a more peaceful place.

"You know, every life is precious. Every life matters. You know, my hardest -- the hardest part of the job is to know that I committed the troops in harm's way and then do the best I can to provide comfort for the loved ones who lost a son or a daughter or a husband or wife. You know, I think about Missy Johnson. She's a fantastic lady I met in Charlotte, North Carolina. She and her son Bryan, they came to see me. Her husband PJ got killed. He'd been in Afghanistan, went to Iraq. You know, it's hard work to try to love her as best as I can, knowing full well that the decision I made caused her loved one to be in harm's way.

"There are 100,000 troops trained, police, guard, special units, border patrol. There's going to be 125,000 trained by the end of this year. Yes, we're getting the job done. It's hard work. Everybody knows it's hard work, because there's a determined enemy that's trying to defeat us.

"I understand how hard it is to commit troops. Never wanted to commit troops. When I was running -- when we had the debate in 2000, never dreamt I'd be doing that.

"We've done a lot of hard work together over the last three and a half years. We've been challenged, and we've risen to those challenges. We've climbed the mighty mountain. I see the valley below, and it's a valley of peace."

Wasn't George W. Bush re-elected shortly after these debate remarks?

Feds Drop Short-Barreled Rifle Charge Against Hutaree Member

As reported here:

Federal prosecutors have dismissed a gun charge against Hutaree militia member David Brian Stone Jr. Prosecutors filed a motion Friday in federal court in Detroit that says "the ends of justice would best be served by this dismissal." It does not elaborate.

The charge alleged Stone Jr., who is the adopted son of Hutaree leader David Brian Stone, had a short-barreled rifle that wasn't registered.

"The ends of justice would best be served . . .."?

Uh huh.

If the Feds had a case you can bet they would have tried to make it.

They didn't have one. 

Saturday, September 24, 2011

Smartest President Ever Says We Built The Intercontinental Railroad

Ah, that would be transcontinental.

Andrew Malcolm for The LA Times, here:

"We’re the country that built the Intercontinental Railroad," Barack Obama.

That's what the president of the United States flat-out said Thursday during what was supposed to be a photo op to sell his jobs plan next to an allegedly deteriorating highway bridge.

A railroad between continents? A railroad from, say, New York City all the way across the Atlantic to France? Now, THAT would be a bridge!

It's yet another humorous gaffe by the Harvard graduate, overlooked by most media for whatever reason. Like Obama saying Abraham-Come-Lately Lincoln was the founder of the Republican Party. Or Navy corpseman. Or the Austrian language. Fifty-seven states. The president of Canada. Etc.

"[Obama's] probably the smartest guy ever to become president."

(Michael Beschloss, Harvard MBA, presidential historian, interviewed on Don Imus in November 2008, transcript and appropriate commentary mockery here.)

No wonder Obama keeps his college transcripts sealed.

"How does a bad student go to Columbia and then to Harvard?"

Obama vs. Bush: Initial Claims for Unemployment Compared

Hundreds of thousands of people lose a job every week, year in and year out, and file a first-time claim for unemployment benefits. The federal government keeps track of that information and reports it weekly, here. You can examine it for yourself by following the link at the bottom of that page at the US Department of Labor.

What follows is the Obama record of such claims (150 weeks so far-November 2008 to present) compared with the Bush record (417 weeks-November 2000 through October 2008), showing the seasonally adjusted number of weeks in which 200,000 or more filed a claim for first time benefits, 300,000 or more, and so on up through 600,000 or more.

Generally speaking, first time claims in the 300,000s is consistent with an economy where people lose a job and find a new one within the usual period of benefits, which customarily has been limited to 26 weeks (6 months). Hence the usual advice of financial advisers to save money equivalent to 6 months' expenses. At the same time, net new workers enter the workforce as the population grows in size, and they also find work under those conditions.

200,000+ (Obama: 0 weeks; Bush: 14 weeks) -- longest consecutive streak: Bush with 7
300,000+ (Obama: 8 weeks; Bush: 304 weeks) -- longest consecutive streaks: Bush with 104, 61, 30, 24
400,000+ (Obama: 86 weeks; Bush: 98 weeks) -- longest consecutive streaks: Obama with 52, Bush 23
500,000+ (Obama: 35 weeks; Bush: 1 week) -- longest consecutive streak: Obama with 20
600,000+ (Obama: 21 weeks; Bush: 0 weeks) -- longest consecutive streak: Obama with 18

Unless initial claims soon recede below 400,000 per week and stay there, Obama will easily beat Bush's two term record of first time claims at the 400,000+ level in just one term. And so far, 60 percent of Obama's time in office has been spent with unemployment at catastrophically high levels week after week, whereas under Bush it was just 6 percent of the time.

Friday, September 23, 2011

James Altucher Talks Up Optimism, and Five Stocks He Doesn't Own!

Give me a break! Put your money where your mouth is, bro!

Apple, Exxon Mobil, Walmart, Amazon and Google: This year's dinosaurs are next year's tank of gas. It's happened before, and it will happen again. Maybe not right away, but Steve Jobs will die. The Arabs will try another embargo over Israel. Companies depending on relatively cheap transportation and distribution will experience tighter margins. And we can't predict the future, but a world where energy costs more is a world where electricity usage puts free operations like Google between a rock and a hard place.

On the macro side James Altucher really shows his colors: securitization without mark-to-market. You can't have the one without the other. He must be reading too much Steve Forbes.

Have fun stormin' the castle!

The Economy Is Not The Same Thing As The Market, Or Is It?

Mark Hulbert reminds everyone here that the DOW quadrupled between July 1932 and March 1937.

He thinks analogists should think about that when drawing doomsday scenario parallels. He's surely correct that smart investors could make a lot of money if today's market replays the DOW from that period in The Great Depression.

But that's one hell of a big "if".

I don't buy the analogy.

For one thing, the Shiller p/e ratio then had fallen way below 10 to the near rock bottom levels near 5 once seen in 1920-1921. Today we're still around 19.

And then there's the little matter of GDP.

Having fallen from $103.6 billion in 1929 to $58.7 billion at the end of 1932, GDP began to rise again in 1934, reaching $91.9 billion by the close of 1937. From the GDP low of $56.4 billion in 1933, GDP rose nearly 63 percent in just four years of the DOW's five year cyclical bull recovery in that secular bear during the 1930s. Today growth is mired in the vicinity of 1 percent, after a decade of average annual growth of 1.67 percent. That was a raging fire then. We've only lit a match.

The depression of 2008-2009 was much too small by comparison to 1929-1940 to draw any meaningful parallels: a 46 percent drop in GDP over four years today would mean reducing our $15 trillion economy by nearly $7 trillion. We didn't drop even a half trillion dollars from GDP in 2009. And the last time the p/e ratio got close to the low 1921 and 1932 levels was in 1982.

We've had a little depression. A little growth and a little gain in the markets would seem to follow.

But since government can screw up a two-car funeral, anything is possible. 

Michael Moore: Another Leftist Threatening Violence

As reported here:

"The smart rich know they can only build the gate so high. And, and, sooner or later history proves that people when they've had enough aren’t going to take it anymore. And much better to deal with it nonviolently now, through the political system, than what could possibly happen in the future, which nobody wants to see," Michael Moore said on Current TV's "Countdown" program.

Moore was alluding to riots, which he was discussing with "Countdown" host Keith Olbermann prior to his comment to deal with things nonviolently now.

He should be arrested and prosecuted for conspiracy to commit mob action.

Fukushima Radiation Hysteria Lives on at Naked Capitalism and Washington's Blog

The latest example is here.

For a self-described moderate, Yves sure does showcase a lot of left-liberalism, conspiracy theory, anti-capitalism and fear-mongering.

I can't take her claim to moderation seriously. I think it's meant to deceive. She's obviously working for the other side, so much so that for her, even socialist Bernie Sanders is a Quisling.

Maybe she's a moderate communist: Who else would link to Gorbachev's NYT defense of Russia's war in South Ossetia?

Thursday, September 22, 2011

So, You Think You Should Buy On This Dip?

The Shiller S and P price to earnings ratio stands tonight at 19.42, as here, still way above the historic middling 16.

I can remember people calling it the buying opportunity of a lifetime, at around 15, in March 2009. Why isn't this the selling opportunity of a lifetime?

The S and P is down over 10 percent year to date, down less than one-half of one percent in the last 12 months when QE II got underway, and down 14 percent in the last five years despite QE I and II. Not counting (negligible) inflation on the negative side, nor (declining) dividends on the positive side.

Since 1881 opportunities to sell around 20 outnumber opportunities to buy around 10, but not by much: the ratio is roughly 11 to 9, in my post-prandial bliss.

This is still a selling opportunity.

Steve Forbes: Shill for the Banks, Defends TARP and Suspension of Mark to Market Rules

And just to be consistent, recommends the same to Europe now, here.

Why, if government can conjure $7 trillion in money creation from $700 billion in TARP investments, why don't we just dispense with private capital altogether and let governments do this all the time?

Then people all over the world can enjoy perpetual unemployment while Steve and his clones get filthy stinking rich because they're first in line for the easy money.

Great idea, Steve! Until your precious banks implode under their own weight.

It can't happen soon enough. 

I Don't Like Felix Salmon's Chart. I Like My Chart.

His chart here makes it look like what's been going on since 1995 has been part of one relentless long term uptrend, the sanguine implication of which is that we should stop worrying if we are long term investors:

My chart shows that since the beginning of 1995 the trend supercharged into what people call, for lack of a better description, irrational exuberance, so named by Alan Greenspan himself at the end of 1996, whose own Federal Reserve management arguably makes him the very author of it:

You'd entirely miss that from Felix's chart.

There is no reason why stocks should be down today, as Felix says, except that from the long term perspective an S and P 500 index in the vicinity of 800 looks like a more fair valuation than 1200. The market has twice tried to tell us that, in 2002-2003 at the 775 level, and again in 2008-2009 at the 675 level.

It may be getting ready to tell us something similar again.

What say 575?

Libertarians Are Nuts: Transparent, Principled Representation Is Easily Stopped

Usually by a pair of tits or testicles, or ambition, greed or personal animus.

"Transparent, principled representation—supported by grassroots networks and promoted through social media—is becoming an unstoppable force," says a Republican libertarian would-be star in a fundraising letter.

That's pretty transparent all by itself. Dangle hope, and raise money. Reminds me of a certain prominent Democrat's recent campaign, which is bumping up against the unstoppable force of failure and its discontents.

Like all good ideologies, the libertarian one assumes people are essentially good and will do the right thing more often than not, if the politician but sets a good example and gives everyone all the information. A child of his age is this one, worshipping at the altar of Education, which the more one has, the better one is.

Why, one wonders why the founders bothered separating the powers of government at all, seeing how history teaches us how good men are.

"But what is government itself, but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. A dependence on the people is, no doubt, the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions."

-- James Madison, Federalist No. 51

At least my libertarian has declined to run for the Senate. For now.

Having gone from daddy's business to one term in the state House and one term in the federal House, that would be just too obvious.

Besides, it takes millions to run for the Senate, and right now, the coffers are looking a little light for another House run in a redrawn district which will be more Democrat than before.

Which explains statements like this: "I always vote for the side that increases our personal and economic freedoms—regardless of party."

Tracking left, where the votes are, where he belongs.

Shared Sacrifice: Moochelle Sports New Diamond Jewelry

Where else? At a fundraiser!

As reported here:

Moochelle's New $42K Diamond Cuffs

Wednesday, September 21, 2011

Two Big Reasons I Support Rick Perry


Federal Reserve Says 'Let's Twist Again, Like We Did Last . . .1961'

In another effort to reduce longer term interest rates, those from six years to thirty, evidently aimed at the mortgage market, which remains in ICU.

Expect short term interest rates to increase as short term instruments are sold by the Fed and replaced with longer term bonds on the Fed balance sheet.

Complete coverage here at

And just for fun, here's Chubby Checker:

S and P 500 Index Plays Ricochet Rabbit With 1200 Four Times Since August 4th


And bing again.

The index closed today at 1166, over 7 percent down year to date:

My Congressman, Rep. Justin Amash, Is Way Out There.

At least he's in right field, sort of:

Story here.

It was reported on Monday here that Rep. Amash has endorsed Rep. Ron Paul for president.

I see that is still available.

How Many Gay Sailors Does It Take To Screw In A Light Bulb?

One. However, it takes a whole emergency room to get it out.

Tuesday, September 20, 2011

While Warren Buffett Wants To Raise Your Taxes, He's Been Fighting His Since 2002

So says The New York Post here:

Billionaire Warren Buffett says folks like him should have to pay more taxes -- but it turns out his firm, Berkshire Hathaway, hasn’t paid what it’s already owed for years. ...

[T]he company openly admits that it owes back taxes since as long ago as 2002.

“We anticipate that we will resolve all adjustments proposed by the US Internal Revenue Service (“IRS”) for the 2002 through 2004 tax years ... within the next 12 months,” the firm’s annual report says.

It also cites outstanding tax issues for 2005 through 2009. ...

Obama, and co-conspirators like Buffett, claim to want to slap only “millionaires and billionaires.” ...

Obama’s hikes on “millionaires and billionaires” actually start with folks earning as little as $200,000.

Buffett's annual report states he is fighting the IRS over $1 billion in unpaid taxes.

Obama's Lies on Taxes Obvious Even to the Associated Press

Today, in a fact-check piece by Stephen Ohlemacher :

President Barack Obama makes it sound as if there are millionaires all over America paying taxes at lower rates than their secretaries.

"Middle-class families shouldn't pay higher taxes than millionaires and billionaires," Obama said Monday. "That's pretty straightforward. It's hard to argue against that."

The data tell a different story. On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor, according to private and government data. They pay at a higher rate, and as a group, they contribute a much larger share of the overall taxes collected by the federal government.

The rest summarizes all the data, here.

Monday, September 19, 2011

Sharp Uptick in ATM Crime Since June When Obama Blamed Tech. for Unemployment

Seen here:

"Hey #attackwatch, I saw 6 ATM's in an alley, killing a Job. It looked like a hate crime!" wrote @thorninaz.

Obama blamed technological efficiencies like ATMs for unemployment in June, as reported here:

On the June 14 edition of NBC's "Today," President Barack Obama ascribed part of the blame for the high unemployment rate to ATMs, yet most media outlets continue to ignore the gaffe.

"There are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers," lectured Obama in an interview with NBC's Ann Curry. "You see it when you go to a bank and you use an ATM, you don't go to a bank teller, or you go to the airport and you're using a kiosk instead of checking in at the gate."

Cash For Clunkers Was Extremely Successful

Seen here:

"hey #AttackWatch I heard the only good 'Cash For Clunkers' did was get all the obama stickers off the roads, thank you," tweeted @speedyjerry.

All, except for this one:

A paroled killer’s “Obama” bumper sticker was the break that helped cops nab the man accused of the cold-blooded murder of a Tedeschi’s convenience store clerk, jurors in Edward Corliss’ murder trial learned yesterday.

Nissan Maximas, of course, are not clunkers:

Please Send This To

Arrogant Prick

The Obama Jobs Bill 'Right Now' Farce

Jobs 'right now' had to wait for Obama's August vacation to conclude, and for over 2.5 years of his first, and hopefully last, term of office.

Then 'right now' got serious in the speech to Congress in early September, where he actually said 'right now' seven times.

News outlets reported Obama actually had a bill on paper to introduce on the day of the speech.

Obama waved around for the cameras over a hundred pages of something he claimed was the jobs bill.

But despite 'right now' a bill hasn't been introduced in the House, and now Democrats in the Senate expect to have a bill sometime in October, about a month from the fierce urgency of 'right now'.

Andrew Malcolm ridicules the whole thing here in The Los Angeles Times:

Well, here we are on the next Monday after that next Monday and we've just learned from the No. 2 Democrat in the Senate, Dick Durbin, that actually it seems that body won't really be seriously getting into the legislation for a while yet. The Senate has some other more important business to handle. And then there's this month's congressional vacation, which in Washington is called "a recess," like elementary school. 

Communist idlers.

Oh yeah. Great shot of Obama doing The Mussolini, too:

The blended strongman

Matt Latimer Doubts Obama is a Closet Muslim . . .

. . . and just about everything Joe McGinniss says about Sarah Palin in a new book, here.

When Matt starts doubting Obama is a secular humanist, then we're all in trouble.

Just for fun, here's a screen shot of the Fox News poll of 911 registered voters from late August showing 71 percent of Republicans don't want Sarah to run for president:

Sunday, September 18, 2011

'Hubbert's Peak Is Still Not In Sight'

So says Daniel Yergin for The Wall Street Journal, here:

By 2010, U.S. oil production was 3.5 times higher than Hubbert had estimated: 5.5 million barrels per day versus Hubbert's 1971 estimate of no more than 1.5 million barrels per day.

Saturday, September 17, 2011

Solyndra: A One Half Billion Dollar Microcosm of Obama's Crony Capitalism

Which rewards the takers, not the makers.

Read about it here, from James Pethokoukis:

"politicians enriching favored businesses, who then return the favor." 

Saudi Arabia Puts The Screws To The Muslim Sympathizer In Chief

Turki al-Faisal, here, in The New York Times:

Today, there is a chance for the United States and Saudi Arabia to contain Iran and prevent it from destabilizing the region. But this opportunity will be squandered if the Obama administration’s actions at the United Nations force a deepening split between our two countries. ...

American support for Palestinian statehood is therefore crucial, and a veto will have profound negative consequences.

Expect more bowing to Saudi Arabia from President Obama: "Palestinian" statehood based on the pre-1967 borders, despite Israel's right to Judea and Samaria as the spoils of the 1967 war, will not be vetoed by the US at the UN because Obama, well, you know, has a problem with Israel.

The tyrant is but the slave turned inside out.

The Pittsburgh Press, June 12, 1967

The Shiller Price to Earnings Ratio in the News

From Jack Hough for The Wall Street Journal, here:

The plain old trailing P/E—the one that suggests stock prices are normal—is at least based on known earnings, so it's a good place to start in deciding whether stocks are affordable. But it has a flaw: If the past year's earnings were unsustainably high, today's P/E might be deceivingly low.

One fix is to take an average of many years of trailing earnings. Yale economist Robert Shiller advocates using 10 years, adjusted for inflation. His "cyclically adjusted P/E" is 20.8, versus an average since 1881 of 16.4.

Mr. Shiller's measure suggests stocks are a bit pricey, and another signal agrees. According to government statistics, after-tax corporate earnings are near a record high relative to worker wages. In the past, similar readings have foretold sharp earnings drops.

Today, that scenario isn't certain, because companies make more of their money overseas than in the past. "The government data might be a warning," says Mr. Shiller.

So it is time to be cautious, but not necessarily to flee stocks. U.S. ones are priced to deliver long-term inflation-adjusted returns of 4 percent a year, including dividends, reckons Mr. Shiller, about double what the 10-year Treasury bond pays.

Friday, September 16, 2011

FORD Owner 'Chris' Slams Auto Companies Receiving Government Bailouts

As reported here:

"I wasn't going to buy another car that was bailed out by our government. I was going to buy from a manufacturer that's standing on their own: win, lose, or draw. That's what America is about is taking the chance to succeed and understanding when you fail that you gotta' pick yourself up and go back to work. Ford is that company for me."

Chris is obviously referring to the fact that Chrysler got bailed out once before long ago in addition to its most recent bailout, which was also taken by GM.

Memo to Sarah Palin and Michele Bachmann: The auto bailouts are crony capitalism at its worst. Why aren't you talking about that instead of Gov. Perry and Gardasil?

Because you're phonies, that's why!

California Democrat Calls Obama's Mortgage Crisis Responses Abysmal Failures

At, here:

"The administration has been AWOL on this issue," charged Rep. Dennis Cardoza (D-Calif.), "and the American people are suffering because of the mismanagement."

"In my entire political career, I've never seen anything this irresponsible," he added. ...

"I couldn't wait to get Obama in office because I was sure a Democrat would do a better job," Cardoza said, referring to the foreclosure-relief efforts under the Bush administration. "And, frankly, nothing's happened. The programs that were put in place were abysmal failures."

Liberal Bloomberg Makes a Veiled Threat of Violence, Throwing Down the Gauntlet

If a Republican issued these kinds of warnings, liberals like Bloomberg would be calling them the completely inappropriate kind of incendiary remarks typical of right wing extremists:

Mayor Bloomberg warned Friday there would be riots in the streets if Washington doesn't get serious about generating jobs.

"We have a lot of kids graduating college, can't find jobs," Bloomberg said on his weekly WOR radio show.

"That's what happened in Cairo. That's what happened in Madrid. You don't want those kinds of riots here." ...

"Now everybody's got to sit down and say we're actually gonna do something and you have to do something on both the revenue and the expense side."

Typical hypocritical liberal intemperance.

NPR Notices Obama Riffing on Jesus, But Prefers a Different Reference

NPR story here. Ours here.

Nine States and 1.4 Million Votes in 2008 Made Obama President Instead ofMcCain

That's what we said here about Obama's vote margins way back in 2009, which looked like this:

Colorado 215,000
Florida 236,000
Indiana 28,000
Iowa 147,000
Nevada 121,000
New Mexico 126,000
North Carolina 14,000
Ohio 262,000
Virginia 235,000.

Now others are catching on, especially as Obama's support in those states dries up.

From The Washington Times, here:

Mr. Obama was able to win three years ago mainly because he captured nine states that had gone for Republican George W. Bush in 2004: Florida, Ohio, North Carolina, Virginia, Indiana, Colorado, Iowa, New Mexico and Nevada. Combined, those states will account for 112 electoral votes in 2012.

But with just over a year until the next election, Mr. Obama’s rating has fallen below 50 percent in every one of those states — always a warning sign for an incumbent. In only one state, Iowa, is his approval rating, 48 percent, higher than his disapproval rating, 45 percent.

The key point missing from the article, however, is that Obama turned out a massive Democrat vote in those states, garnering 3.04 million more votes than John Kerry received in 2004, while McCain failed to turn out the Republican vote, receiving nearly 200,000 fewer votes than George Bush did in 2004.

Obama is extremely vulnerable in 2012 for a host of reasons, not the least of which already is enthusiasm.

Wednesday, September 14, 2011

Why is This Woman Smiling?

Because she's got a boot up your ass, that's why.

Barack Obama Thinks He's Jesus Christ

"But if you love me you've got to help me pass this bill."

-- Obama, here

"If ye love me, keep my commandments."

-- Jesus, The Gospel of John 14:15

Can No One Tell The Truth, Even About The Great Depression?

Seen here:

Between 1929 and 1933, U.S. gross domestic product contracted by around 30%.

Where the hell does that come from?

In 1929 GDP was $103.6 billion. By the end of 1933 GDP had declined to $56.4 billion. That's a decline of over 45 percent, not "around 30 percent."

Matthew Lynn for is talking about "the buying opportunity of a lifetime" at the link.

Really? With the Shiller price-to-earnings ratio at 20.43?

The buying opportunity of my lifetime was between 1973 and 1983, when the Shiller p/e ratio rattled around 10, fifty percent lower than it is today. And it just so happens that I didn't have any money to invest in those years like I do today because of a lifetime of saving.

Not even March 2009 was the buying opportunity of a lifetime, when the Shiller p/e fell to around 15.

If you are wise you will keep your powder dry until you see the whites in their eyes, so to speak, when we get to 10. But even then, can you live with yourself if you pull the trigger and then a total market collapse like 1929 brings the p/e closer to 5?

Well, can ya?

Remember the one true thing of Keynesianism: markets can stay irrational longer than you can stay solvent. A decline from 10 to 5 can wipe out 50 percent of what you have.

There is nothing which cannot repeat itself, because human nature does not change.

Rep. Jan Schakowsky (D-IL): Commie Redistributionist, Pure and Simple.

Here she is in her own words, in an appearance with Don Wade and Roma on, The Big 89:

Schakowsky said that Americans don't deserve to keep all of their money because we need taxes to support our society.

“I’ll put it this way. You don’t deserve to keep all of it and it’s not a question of deserving because what government is, is those things that we decide to do together. And there are many things that we decide to do together like have our national security. Like have police and fire. What about the people that work at the National Institute of Health who are looking for a cure for cancer,” Schakowsky said.

Hey, what about my kid who'd like a hamburger for a change instead of rice and beans, Jan, you ignorant slut, while you and your national socialist pals bail out the bankers with our tax dollars, huh?!

Nearly One Week On Obama Still Can't Find a Democrat to Sponsor His Jobs Bill

Pass this bill! Pass this bill!

But no Democrat has filed the bill in the US House.

Maybe because Democrats went to the mat for ObamaCare in March 2010, and lost big for it in November 2010.

Democrats in the House are obviously letting The One twist in the wind right now because The One did nothing to help them win re-election last autumn. Obama let them twist in the wind while he went on vacation every six weeks during 2010.

To rub the Democrats' noses in it, Republican Rep. Louie Gohmert finally has taken advantage of the lack of initiative and co-opted the bill with one of his own by the same name, as reported here:

President Obama repeatedly asked members of Congress to pass the American Jobs Act last week. But when no Democrat filed Obama’s bill after he presented it to Congress, a conservative congressman swiped the name for his own legislation.

The American Jobs Act introduced in the House of Representatives looks quite different from the version President Obama outlined in his speech to Congress. Instead of hiking taxes on working Americans to pay for another stimulus, Rep. Louie Gohmert’s (R-TX) legislation offers a tax cut.

UPDATE: Gohmert’s bill now has a number. It’s HR 2911.

Democrats can't say Gohmert didn't give them plenty of time, considering the urgency of the matter as put forward by Obama.

The fact of the matter is, when Obama and the Democrats controlled both the House and the Senate and the Executive from the beginning of 2009 into early 2010, it was the Senate which stalled almost everything sent to it by Speaker Pelosi and Company. Hundreds of measures passed by the Democrat House never saw the light of day in the Democrat Senate.

The point is that the problem for "legislative progress" is "structural" as the economists want it. The problem is with the US Senate, no matter which party controls it.

Gov. Rick Perry is wise in recognizing that the problem specifically has to do with who elects the Senate, which is no longer the State Legislatures, the way prescribed by the Constitution.

The consequence of the 17th Amendment is that we now have two legislative houses in competition for mere populist sentiment, which is a recipe for inaction, not action, because the legislative cycle distributes populist urgency differently in the two houses of our legislature. In changing the manner of election in the 17th Amendment, they forgot to change the timing.

As it is, only one third of the Senate is up for election/re-election every two years with the House, which still keeps most of the Senate largely behind the schedule of the mere popular whim, just as the Constitution intended, and the popular whim changes so fast these days that it's usually only a Senator (!) who notices it, and he or she bides his or her time, knowing popular whim will be forgotten in two years' time, or four. Better to wait and catch the next wave, which will doubtless be different.

Obama should be so smart.