I have used the Wilshire 5000 level atyearend multiplied by 1.2 as a proxy for total stock market capitalization (except where noted by the month), and the latest summer revisions for calendar nominal GDP, in summer 2014 for the period back to 1999, and in summer 2013 for the period back to 1971.
A ratio close to 1.0 indicates the market is fairly valued relative to GDP. A ratio less than 1.0 indicates the stock market is "on sale" to some extent (for example, a ratio of 0.48 indicates the market is trading at a 52% discount). A ratio of more than 1.0 indicates the stock market is expensive and may be considered overvalued for investment purposes (for example, a ratio of 1.72 indicates the stock market is as much as 72% too expensive).
1999 1.715 2000 1.420 2001 1.209
2003 1.125 2004 1.170 2005 1.147
March 2009 .676
March 2014 1.407
June 2014 1.446
Historically considered, valuation of the stock market by the end of 2008 made then a much better investing opportunity than was late 2002 and early 2003, almost 20% better. And valuations have remained reasonable throughout 2010-2012 and only became expensive in 2013. The four year period beginning in late 2008 has been an excellent opportunity for those with cash to invest.
I maintain that a primary driver of conditions in 2013 was the midnight hour 2012/2013 resolution of tax uncertainty, in the form of making the Bush tax cuts and alternative minimum tax rates permanent, ending the tinkering with Social Security, and reaching a compromise on capital gains tax rates.
Lawlessness and mayhem isn't just for po folk in Ferguson, Missouri, where law enforcement was overwhelmed by the bad actors doing millions of dollars in damage on the streets. Same goes for freeloaders in judicial mortgage states like New York where the authorities do not have the capacity to deal with the widespread problem of non-payment.
Millions of homeowners are already seriously delinquent. “The average length of time that houses remain delinquent nationwide is 995 days,” [Keith] Jurow says. “The worst culprit is New York State. The average delinquency period there is four years.” Many homeowners are aware that banks are not in a rush to file foreclosures, so they stay in their houses mortgage-free. “The banks are not initiating foreclosure proceedings because once the servicer forecloses, the lender takes a hit on earnings,” Jurow says. “They also have to manage the property, and most banks don’t want to do that.”
What's completely man-made is this account of the week, "Where the Five-Day Workweek Came From", in which long observation of four lunar phases of 7.4 days in length over millennia means nothing to an architect, who is, fittingly, cited as an authority, as in architects making stuff up.
The author, one Philip Sopher, an economics graduate from Princeton who should know his dates better, is completely ignorant of the Julian calendar reform of the Roman market day cycle of eight days to the more natural seven, which together with its other changes in 46 BC helped remove ever after in the West, not add, deliberate human meddling with the calendar, a common problem at the time of Caesar, here:
“Seven days,” wrote Witold Rybczynski in the August 1991 issue of The Atlantic, “is not natural because no natural phenomenon occurs every seven days.” The year marks one revolution of the Earth around the sun. Months, supposedly, mark the time between full moons. The seven-day week, however, is completely man-made.
If it’s man-made, can’t man unmake it? For all the talk of how freeing it’d be to shave a day or two off the five-day workweek, little attention has been paid to where the weekly calendar came from. Understanding the sometimes arbitrary origins of the modern workweek might inform the movement to shorten it.
... At the very latest, the seven-day week was firmly entrenched in the Western calendar about 250 years before Christ was born.
Bank of America is a chief offender appearing in the lists. The latest fine against it, among others, is detailed here:
"The Bank of America deal announced Thursday, the government’s largest-ever settlement with a single company, means the nation’s second-biggest bank will shell out $16.65 billion over allegations that it knowingly sold toxic mortgages to investors. ... The sum surpasses Bank of America’s entire profits last year and is significantly higher than the $13 billion it offered during negotiations in July."
The story doesn't mention the nearly $90 billion paid out by the FDIC Deposit Insurance Fund for the failed banks which have numbered over 500 since 2007, the funds for which are supplied by insurance premiums extorted from the honest banks. But it is the depositors who end up paying for that cost of doing business in the end. Nor does it ruminate on the effects of the Federal Reserve's Zero Interest Rate Policy, which allows those first in line for money to get it rock bottom cheap and speculate with it. The financial sector now rivals the household sector in stock ownership. Savers meanwhile get the crumbs which fall from their masters' table. Ten years prior to 2007 the country was finally beginning to recover from a decade long Savings and Loan crisis which witnessed over a thousand institutions fail, costing the taxpayers directly about $130 billion. No sooner was that over in 1995 when the wizards of smart conspired to abolish the Glass-Steagall banking regime in 1999, precipitating the recent panic less than a decade later. And, of course, the Great Depression after 1929 followed closely on the heels of the establishment of the Federal Reserve itself in 1913, signed into law by one Woodrow Wilson, Ph.D., Johns Hopkins University. Over 700 banks failed in 1930, and 9,000 over the ensuing decade. The professionals have a long history of failure. The prudent avoid them.
The New York Times reports here in "National Guard Troops Fail to Quell Unrest in Ferguson":
"Early Monday, after a new spate of unrest, Gov. Jay Nixon said he was bringing in the National Guard. Hours later, he said that he was lifting the curfew and that the Guard would have only a limited role, protecting the police command post. ... at the police command post, National Guard members in Army fatigues, some with military police patches on their uniforms, stood ready but never entered the area where protesters were marching. State and local law enforcement authorities oversaw operations there."
"Those spikes will make it quite difficult to exit in the nice, orderly manner that speculators seem to imagine will be possible. Nor are readily observable warnings (beyond those we already observe) likely to provide a clear exit signal. Galbraith reminds us that the 1929 market crash did not have observable catalysts. Rather, his description is very much in line with the view that the market crashed first, and the underlying economic strains emerged later: 'the crash did not come – as some have suggested – because the market suddenly became aware that a serious depression was in the offing. A depression, serious or otherwise, could not be foreseen when the market fell.'"
Lisa Freiburger, vice president for finance and administration, didn’t have an estimate on the number of vacant positions the college will delay filling or leave unfilled altogether. ... Freiburger said an improving economy is likely one of the factors causing enrollment to decline. In addition to a declining headcount, students are also taking fewer courses. “We are seeing students take less classes, and I assume those students are perhaps working more than they might have been,” she said. “Clearly, we’re down farther than we anticipated, but we are managing that drop and related loss in revenue.”
I like Ralph Benko. Ralph Benko often makes important arguments on behalf of the gold standard. But when he tries to force everything in the universe to be interpreted through the lens of it you know you have met an ideologue who has become unhinged from reality. Which is why Forbes is a good place for him.
His latest screed here is a mere flight of fantasy, imagining Richard Nixon was forced to resign over the closing of the gold window in 1971. Had he presented it as such, it would have entertained and illumined, even pleased. Instead, its talk of correlation only annoys, the way a chart reader plots two things on a graph and yells 'See! See! They both go up together!' Against Benko, Pat Buchanan may be forgiven for ignoring what didn't exist, just as Nixon's enemies ignored it, except in the fever camps of utopianism.
Benko makes Thomas Paine's opinions about gold a prophecy reaching 200 years into the future where gold becomes Nemesis and the end of Bretton Woods Hubris. Covering up Watergate? Well, simply an instrumental little detail:
"The House Judiciary Committee’s charges and the Connally indictment uncannily fulfill a prophecy by Tom Paine. ... Connally was acquitted on the charges of graft and perjury. Later he underwent bankruptcy before dying in semi-disgrace. Nixon resigned rather than undergoing impeachment, also living out his life in disgraced political exile. The spirit of Paine’s declaration was fulfilled in both cases. Connally and Nixon engineered this violation, abandoning the good, precious-metal, money contemplated by the Constitution. Nemesis followed hubris. The closing of the 'gold window' was based, by Connolly, on deeply wrong premises. It was sold to the public, by Nixon, on deeply false promises."
Methinks Tom Paine himself would be a little embarrassed at the almost religious regard with which some of his present day followers come to what he has left behind for us on paper.
Reported here, with this excellent comment appended by a reader:
"Now we learn the National Guard is being called in. More than looking like the military, which the locals cops were accused of doing, these fellows 'are' the military. If this doesn't vindicate the local cops accused of being over the top in their response, nothing will."
Ross Douthat in The New York Times calls for taking away the militarized components of police departments, here.
But Ferguson, MO, police effectively watched on the sidelines as millions of dollars in damages were inflicted on property owners by rioters there, and didn't use their hardware to stop it. They should have.
It would have sent a message across this country to cease and desist, or suffer the consequences. Law-abiding people everywhere want this in their hearts, but are afraid to speak up because of the intimidation they would suffer from an insane media allied with the race hucksters of this country. It's too bad Ross Douthat has joined them.
"QuikTrip, which saw its store at 9420 West Florrisant Ave. looted and burned, estimated Monday the damage total to be in the seven figures.
"More than a dozen other businesses along West Florissant Avenue were damaged and looted, including Zisser Tire & Auto, Wal-Mart, Taco Bell, St. Vincent de Paul Thrift Store, and Toys R Us. Nu Fashion Beauty, Party City and Boost Mobile were also affected. The unrest spread beyond Ferguson Monday night, as a Shoe Carnival on Gravois near Grand was vandalized and looted."
In America, unfortunately, some property is more unequal than others.
Germany now joins Japan and Switzerland in the below 1% yield club. The rush into the safety of government bonds driving down yields is a sign everywhere of lousy productivity.
Meanwhile yields below 2% exist in Taiwan, Hong Kong, Sweden, The Netherlands, Ireland, France, Finland, Denmark, The Czech Republic, Belgium, and Austria. Finland is the lowest of these presently at 1.14%.
"Following disappointing growth data for the euro zone, 10-year yields finally broke through the 1 percent handle on Thursday—a first—dipping to an intraday low of 0.998 percent. Yields then fell below 1 percent again on Friday, on reports that Ukrainian troops had attacked armed Russian military, which had crossed into the country near the border of Izvaryne. U.S. yields also declined, hitting a low of 2.333 percent, while the euro and European stocks turned negative."
German GDP fell in the second quarter from the first, at -0.6% annualized, which was, believe it or not, blamed on a mild winter there after poor GDP Stateside was blamed on an unusually harsh one.
The Wall Street Journal reported with a straight face here:
"Germany's economy, long Europe's growth engine, shrank for the first time in more than a year, a development economists largely attributed to a mild winter that boosted activity in the first quarter at the expense of the second. The bigger concerns, they say, are France and Italy, where respectable rates of growth aren't even in sight."
The resident communist at MarketWatch weighs in here:
Sure, people need to keep some money handy to pay their bills and some folks might have a few hundred or a few thousand in a rainy-day fund, but no one needs immediate access to the equivalent of 11 months of income. In essence, there’s $10.8 trillion stuffed into mattresses. That $10.8 trillion hoard represents a failure of Fed policy. Since the Fed began quantitative easing in September 2012, U.S. households have socked away $1.17 trillion in their low-yield accounts. That means that 95% of the Fed’s $1.24 trillion QE3 ended up not in bubbly markets but in a safe and boring bank account.
The $1.17 trillion since September 2012 is nicely represented in "excess reserves of depository institutions", which are up $1.21 trillion since that time. So sorry, Rex, the banks are holding on to that cash, not households. The reason? They must, to help comply with increased capital requirements under Basel III rules in the wake of the panic of 2008. That's the reason for QE, but no one wants to call it the continued bank bailout that it is while the rest of us continue to suffer without bailouts of our own. People might actually revolt if they did that, so it's best to call QE and its evil twin ZIRP necessary measures to prop up housing, employment and the like. To call it a bank bailout would just give it away, and we can't have that, now can we?
Savings deposits, meanwhile, are up less than $1 trillion since September 2012, to which, by the way, no one has "immediate access". Savings deposits are not "demand deposits" like checking accounts. It can take up to 30 days to get all your money out of savings, which now totals $7.38 trillion. Demand deposits at commercial banks, on the other hand, are up just $220 billion since September 2012, to $1.18 trillion, and total checkable deposits are up just $320 billion to $1.66 trillion. Not exactly a lot of money in a $17 trillion economy.
These savings, such as they are, aren't a failure of Fed policy. They are actually a repudiation of it by a part of the population which still possesses a cultural memory of the basis of capitalism.
It is absolutely ludicrous to argue that the momentum in our political sphere among the younger generation is not more libertarian. It’s obvious to anyone who’s paying attention to politics on the ground. Why is that? Well, it’s not because of the Libertarian Party. It’s because there’s a host of younger people, the children of George W. Bush voters or Bush voters themselves, who realized that libertarianism speaks more to their worldview than modern day conservatism. It’s because Ron Paul worked to build an army of volunteers and took the message of libertarian ideas to a generation of voters, with a focus on slowly taking over the Republican Party. It’s because the views of Ron and Rand, Mike Lee, Justin Amash, and other libertarian-leaning Republicans on the issue of abortion made them more palatable to a Christian audience (as opposed to someone like former New Mexico Gov. Gary Johnson, who takes the opposite view on the abortion issue). Why is the Token Libertarian Girl, pro-life Christian Julie Borowski, not just a typical Republican? The Pauls evangelized libertarian ideas to a young audience ready to hear them and eager to make them a reality; and then, with the rise of the Tea Party, they expanded that appeal beyond the youngsters, too. That’s why.
Mr. Butler, 67 years old, said he was attracted to Brookings by the idea of working at a place that is not monolithic in its approach to public policy.
“Brookings is a different kind of institution. It’s a collection of scholars as opposed to a team-focused organization,” Mr. Butler said in an interview Thursday. “There’s an opportunity to sit around in the cafeteria to talk about all kinds of different issues from the theoretical to the practical.”
Stuart Butler was the author of the original healthcare mandate idea at Heritage in 1989. He's been trying to walk that back ever since 2010, but what appears to have driven him into the arms of the liberals was the ascendancy of libertarian Senator Demented Jim to head up Heritage, who subsequently brought in Club For Growth founder Steve Moore, who was The Wall Street Journal's libertarian bad boy for many years.
The actor suffered a lifelong struggle with depression, alcohol and drugs. After starting his battle with addiction in the 1970s he once explained it this way: "Cocaine for me was a place to hide. Most people get hyper on coke. It slowed me down." ... [A]vowed liberal and Democrat, Williams was a frequent supporter of and contributor to progressive causes and campaigns. ------------------------------------------------------------
Some people would say self-destructive behavior ending in suicide is the logical conclusion of liberalism, and that Robin Williams simply finally realized that.
We'll see if it really was suicide.
I for one think the liberalism is an artifact in this case. It's more an example of the tragic hero whose incredible gift almost depended on a deeply profound curse from which it derived its sheer magnitude and excellence, a bipolar extremism which few can imagine or understand who haven't experienced it for themselves.
[Nick] Gillespie [of Reason Magazine] was unimpressed by Ronald Reagan, who declared a new “war on drugs,” raised the national drinking age to 21, raised all sorts of taxes, preserved Social Security which Gillespie regards as federally mandated generational theft) and in general claimed to champion American individualism while squashing it every chance he got.
“I was never conservative,” he told me as we sipped our gin. “Republicans always saw libertarians as nice to have around in case they wanted to score some weed, and we always knew where there was a party. And for a while it made sense to bunk up with them. But after a while, it would be like, ‘So if we agree on limited government, how about opening the borders?’ No, that’s crazy. ‘How about legalizing drugs? How about giving gays equal rights?’ No, come on, be serious. And so I thought, There’s nothing in this for me.”
". . . Part of why I’m a libertarian is that if you restrict people less, interesting stuff happens.”
Conservatives restrict themselves. If libertarians restrict anything, it just shows their incoherence.
Damn those speed limit and stop signs, and those cops, which keep me and my kid safe on the way to school, except less so now thanks to libertarianism in places like Colorado, where the interesting stuff which is happening is more traffic accident deaths due to marijuana legalization.
"The problem is, Republicans in Congress keep blocking or voting down almost every serious idea . . .. This obstruction keeps the system rigged for those at the top . . .. And as long as they insist on doing it, I’ll keep taking actions on my own . . .." (Radio address, 6/28/14)
You don't robocall Republican-inclined voters on election eve featuring a Democrat urging Democrats to cross over and vote for Ellis in the Republican primary, and then say you paid for it.
I don't think that endeared Republican-inclined voters to Ellis, who suspected there was no there there to begin with. Offering no alternative to radical libertarianism made Brian Ellis a lousy candidate. Who wants to vote for libertarian-light when you've got the real deal in Amash?
This seems to be all too characteristic of Republicans: they frequently portray themselves as moderate liberals, whether it's being for abortion in the cases of rape, incest and life of the mother, civil unions, DADT, smarter big government, or Heritage Foundation health care mandates.
Republicans need to figure out what conservatism is and whether they ought to believe in it. Until they do they'll continue to mistake libertarianism for conservatism. Even Nancy Pelosi is for "In God We Trust". Justin Amash is not.
"Brian Ellis, you owe my family and this community an apology," Amash said. "You had the audacity to try to call me today after running a campaign that was called 'the nastiest in the country.' "I ran for office to stop people like you." . . . "I want to say to lobbyist Pete Hoekstra, you're a disgrace," said Amash, noting the former U.S. representative who appeared in a TV ad for Ellis. "I'm glad we can hand you one more loss before you fade into total obscurity and irrelevance."
In the political world imagined by the founders of our country, there would be just 30,000 people in Justin Amash's district, who would no doubt have some tar and feathers always at the ready for the likes of him.
Parker says his “come to Jesus” moment, persuading him of the “call” to abortion, happened when he heard a sermon by Martin Luther King Jr. on Jesus’ parable of the Good Samaritan. By performing abortion, Parker sees himself as the Samaritan, caring for the beaten neighbor on the side of the road.
For now, said Suzanne B. Goldberg, a law professor at Columbia, "the court's recent gay rights decisions seem to be catching up with women's rights cases of earlier decades."
"At the same time," she added, "we live in a society that now seems more receptive to gay rights than women's rights generally, so it is disheartening but not surprising to see that reflected in decisions like Hobby Lobby, which failed to see the link between contraception access and women's equality."
Most of these ordinary safeguards of tyranny are said to have been instituted by Periander of Corinth, and also many such devices may be borrowed from the Persian empire. These are both the measures mentioned some time back to secure the safety of a tyranny as far as possible [including] . . . to set men at variance with one another and cause quarrels between friend and friend and between the people and the notables and among the rich . . ..
-- Aristotle, Politics, 5, 1313ab
Rule 13: Pick the target, freeze it, personalize it, polarize it.
Now that 2Q2014 GDP is in, it's time to look again at the ratio of total stock market capitalization to GDP.
Using the Wilshire 5000 as a proxy for the whole market, you find it closed at 20862.74 on June 30, 2014, the last day of the second quarter. 20862.74 X $1.2 billion = $25.035288 trillion of total stock market capitalization on record date.
Current dollar (that is, nominal) GDP for the second quarter just came in at $17.2947 trillion in this week's report from the Bureau of Economic Analysis.
The ratio of the capitalization divided by the GDP is thus 1.45, ticking up from 1.41 at the end of 1Q2014 (23.995212 divided by 17.044).
The ratio for 1Q2009 was 0.72, exactly half what it is today.