Wednesday, December 31, 2014

15-year total return from popular Vanguard index funds through 12/31/14 shows bonds beating stocks since 1999 except on the short end

Per annum return per Morningstar tonight:

Total international stock index, VGTSX = 2.96%

Short term bond index, VBISX = 4.05%

S&P 500 stock index, VFINX = 4.13%
Total stock market index, VTSMX = 4.75%

Total bond market index, VBMFX = 5.45%
Intermediate term bond index, VBIIX = 6.52%
Long term bond index, VBLTX = 8.37%

US could join this list of the world's top oil exporters thanks to relaxation of 1974 oil export ban yesterday

Export of up to 1 million barrels per day could put the US in 16th or 17th on this list from the US Energy Information Administration by the end of 2015.

Jobless claims finish December averaging 362,000 per week, 2014 ends at 15.9 million total first time claims for unemployment

All figures are raw, not-seasonally-adjusted.

The 15.9 million figure is now the lowest in the 21st century, beating the heretofore best level achieved under Bush, which was 16.2 million (but when the participation rate of the labor force was much higher than it is today, 66.4% in November 2006 vs. 62.8% in November 2014). Previously I had expected claims to total 15.7 million in 2014, but first time claims for unemployment ramped up a little higher in December than they had been averaging through November.

Here's the historical record:

2001 20.9 million
2002 20.9 million
2003 20.8 million
2004 17.7 million
2005 17.7 million
2006 16.2 million
2007 16.7 million
2008 21.6 million
2009 29.5 million
2010 23.7 million
2011 21.7 million
2012 19.4 million
2013 17.8 million
2014 15.9 million.

Conditions remain very favorable for making continued progress on a recovery of full-time jobs, which are still 3.8 million off their 2007 peak, over seven years ago.

The global oil war just got even more interesting: Dept. of Commerce relaxes export ban

With a tip o' the hat to Andrew Critchlow at the UK Telegraph, Reuters reported just a couple of hours ago that the US Dept. of Commerce has announced relaxation of some parts of the 1974 US oil export ban, here:

(Reuters) - The Obama administration has opened a new front in the global battle for oil market share, effectively clearing the way for the shipment of as much as a million barrels per day of ultra-light U.S. crude to the rest of the world.

The Department of Commerce on Tuesday ended a year-long silence on a contentious, four-decade ban on oil exports, saying it had begun approving a backlog of requests to sell processed light oil abroad. It also issued a long-awaited document outlining exactly what kinds of oil other would-be exporters can ship. ...

... the impending swell of U.S. petroleum into global markets may intensify what many analysts say is a pivotal oil market war, with Saudi Arabia and the Organization of the Petroleum Exporting Countries (OPEC) unwilling to yield ground. Now they will face even greater competition beyond U.S. shores.



Tuesday, December 30, 2014

Alan Greenspan is expecting mediocre GDP in 4Q, says housing and investment must recover to fix it

Quoted here at Bloomberg:

Greenspan said the economy won’t fully recover until American companies invest more in productive assets and the housing market bounces back.

“Almost all of the weakness in the last four, five, six years has been in long-lived investments” in capital goods and real estate, Greenspan said. “Until these pick up, we’re not going to get the kind of vibrant growth that everyone is hoping for.”

Greenspan, who retired from the Fed’s helm in January 2006, said he expects growth to dip below a 3 percent annual rate in the fourth quarter of this year. His forecast is in line with the estimate of 2.5 percent in a Bloomberg survey of economists.



Libertarian Real Clear Markets trots out no less than THREE screeds against housing today








Libertarians really hate the idea that people want to get married, settle down and have children . . . you know, producing future Americans, future tax-payers, well-adjusted, law-abiding, competent future workers. They'd rather have machines they can move around and interchange at will without all the trouble that human beings present. 

Dangerous idiots they are these libertarians, enemies of the permanent things, and of humanity itself.

Good thing no one is paying attention on New Year's Eve Eve.

Norway whacks GDP projection by over 50% amidst plunging oil prices

Seen here:

According to Statistics Norway, lower investment in the oil sector, Norway's primary growth engine, will likely slow the country's overall GDP growth to 1% next year from 2.1% anticipated in September.

The Conservative-led government has not proposed modifications to the current tax levels imposed on the oil and gas sector, where an additional 51 percent income tax rate applies to make the effective rate 78 percent.

Instead, in order to compensate for declining oil revenues, the current right-wing government, made up of the Conservative and Progress parties, has proposed tax reform measures that would significantly alter the distribution of Norway's tax revenues. 


The measure, that would see the tax burden moved from corporate and personal income toward taxes on consumption and property, has been criticized by left-leaning opposition parties.

IEA revises down 2015 oil demand growth by 20%, a third of British oilers in big trouble, mostly smaller

Andrew Critchlow reported Dec. 12th here:

The International Energy Agency (IEA) said on Friday that world demand for oil will grow by 900,000 barrels per day (bpd) next year, a downward revision of 230,000 bpd from its previous estimate.

The Paris-based watchdog now expects world demand to reach 93.3m bpd in 2015. The agency said: "A strong dollar and the lifting of subsidies have so far limited supportive price effects on demand."

And here on the 29th:

A third of Britain’s listed oil and gas companies are in danger of running out of working capital and even going bankrupt amid a slump in the value of crude, according to new research.

Financial risk management group Company Watch believes that 70pc of the UK’s publicly listed oil exploration and production companies are now unprofitable, racking up significant losses in the region of £1.8bn.



Less than 10 years ago $2.29 per gallon was a new high price for gasoline


Monday, December 29, 2014

You could almost say the few people Obama's added to the labor force he's sent straight to the unemployment lines

The lowest jobless claims yet still don't yield the lowest unemployment levels under Bush.

As I pointed out here, jobless claims for 2014 are probably going to finish the year at the 15.7 million level, not-seasonally-adjusted. The comparable year under Bush was 2006, coincidentally also his sixth year in the presidency, when there were 16.2 million similarly measured jobless claims. That's as low as claims ever fell under Bush in absolute terms, and as low as they've been in this century, until now.

So things are better under Obama, right, because claims are going to be the lowest yet this century?

The civilian labor force level was 152.6 million in November 2006, almost 10 million higher than when Bush was first elected, but only 3.7 million higher now at 156.3 million as of November 2014. So claims were 10.6% of the civilian labor force in 2006, and 10.0% of the civilian labor force in November 2014, so yes, things are marginally statistically better, but still very close.

But what's not close is the unemployment rate, or the unemployment level. Not-seasonally-adjusted the rate was 4.3% in November 2006, but 5.5% in November 2014. The civilian labor force has barely grown by 1.7 million after six years of Obama, yet the unemployment level is still 2.05 million higher today than it was in November 2006 when first time jobless claims were at their lowest level before now.

You could almost say Obama sent the few people he's added to the labor force since 2008 straight to the unemployment lines. The other 8 million or more sent themselves straight out of the labor force, never to be counted as unemployed again.

Obama's civilian labor force has only grown 1.7 million since 11/2008, 1.3 million of which came in the last year!

The civilian labor force grew by 1.3 million 11/13-11/14
By contrast George Bush's civilian labor force grew by 11.8 million over his presidency, 6.9 times more than Obama's. To the same almost 6 year point in his presidency Bush's civilian labor force grew by 9.8 million, 5.8 times more than Obama's.

The current year's addition of 1.3 million may be contrasted to the 2.4 million added at the same interval under Bush.

Obama, he sucks!
The civilian labor force grew by 2.4 million 11/05-11/06

2.8x more people left the work force in the last year than did at the same time under Bush

360,000 left the labor force 11/05-11/06
1 million have left the labor force 11/13-11/14
Unemployment comes down faster when you have fewer unemployed people to count.


Sunday, December 28, 2014

Giving USA puts 2013 charitable giving at $335 billion, still in depression from 2007's $349 billion

Seen here:

"At an estimated $335.17 billion, total charitable giving from U.S. individuals, corporations, foundations and bequests in 2013 approached the peak seen before the worst of the Great Recession, adjusted for inflation, according to research released today by Giving USA Foundation and its research partner, the Indiana University Lilly Family School of Philanthropy. ...

"Donations in 2013 increased 4.4 percent (in current dollars) from the revised estimate of $320.97 billion for 2012. Adjusted for inflation, total giving rose 3.0 percent over the 2012 estimate. ...

"When adjusted for inflation, 2007 donations totaled an estimated $349.50 billion."

Jeb Bush pocketed $1.4 million in 2013 working for ObamaCare profiteer Tenet Healthcare of Dallas

So says the LA Times, here:

And on Wednesday, Bush resigned from the board of directors of Tenet Healthcare Corp., also effective Dec. 31, according to a corporate filing. The Dallas-based company actively supported the 2010 Affordable Care Act, and has seen its revenue rise from it, an issue that could draw fire in Republican primaries.

Bush earned cash and stock awards worth nearly $300,000 from Tenet in 2013, according to corporate filings. He also sold Tenet stock worth $1.1 million that year, the records show.

Saturday, December 27, 2014

Dr. Copper has been trading below $3 since before Thanksgiving

Except for a brief ten day period in March, copper hasn't been this low this long since the stock market low in 2009. Combined with oil falling out of bed, the prospects for improving GDP look dim.

Part-time jobs peak at the end of the year, and full-time jobs peak in the middle of the year

Part-time jobs hit a new all-time high level in November at 28.225 million. This follows a pattern of part-time peaking at Christmas time and full-time peaking around Independence Day. The oscillation between the two is best observed in the not-seasonally-adjusted data.

Thursday, December 25, 2014

If Obama had wanted to "rescue" the economy in 2009, he should have ramped-up the wars as he's doing now

If Obama had really wanted to rescue the economy in 2009, he would have ramped up dramatically the wars in Iraq and Afghanistan instead of putting them on the path to euthanasia. In this sense he was a very bad Keynesian who made FDR spin in his grave.

Of course, that assumes he is smart enough to understand Keynesianism, being raised as a doctrinaire Marxist who was content to bask lazily in the glow of his presidential victory while a bunch of Clinton re-treads did their mediocre best for him . . . recreating HillaryCare. A more sinister interpretation believes that the inattention to the economy was all on purpose, since suppressing the middle class is the main objective of revolutionary leftism faced with successful capitalism almost everywhere. Still others simply chalk it up to Obama's incompetence, just another example of the Affirmative Action Presidency at work.

But I digress.

The simple reason for the need to have ramped up the wars back in 2009 is that the radical stimulus spending called for by the likes of Paul Krugman (3x what Obama ended up spending), who ridiculed the smallness of Obama's stimulus spending plan in The New York Times here, cannot be accomplished quickly through any other department of the federal government except through what we used to call more accurately The War Department. 'There are only a limited number of “shovel-ready” public investment projects — that is, projects that can be started quickly enough to help the economy in the near term,' Krugman wrote at the time.

That's for sure.

Proof of this can now be seen in the GDP numbers in just the last year when ISIS all of a sudden became a threat on the administration's radar screen even though ISIS had been building in the open for years and the administration actually had been warned about it and knew about it.

Federal government consumption had been a net negative subtraction from GDP for each of the last three years, 2011-2013, totaling -0.28 points of GDP for each year on average, and 75% of that came on average from cutting spending on National Defense.

All of that changed on a dime in 3Q2014 when ISIS surged into Iraq. Consumption on national defense suddenly vaulted to +0.69 points of GDP from +0.12 points in 1Q and -0.07 points in 2Q, to the point where defense spending now represents fully 97% of the federal contribution to GDP in the third quarter of 2014, and over 13% of GDP overall. All the current big contributors to GDP come in lower than this except for exports, with which defense spending is tied. 

Only the military can spend large sums of government money quickly in this slow-moving, inertia-plagued bureaucratic state. Future presidents, take note: War is still the father of everything.

Wednesday, December 24, 2014

Our markets closed early today in honor of the birth of Jesus Christ, you rag-headed heathen bastards


Merry Christmas: The world is experiencing the benefits of Western liberty like never before

The Nativity at Night c. 1490
Freedom from want, loneliness, ignorance, danger, disease, discomfort and drudgery.

From Richard Rahn:

As we go into this Christmas week, you should count your blessings that you live in 2014. ...

People in the world live far better today than they did a mere half-century ago. World per-capita gross domestic product is now a little more than $14,000 per year, a little less than where the United States was in 1960 or where the Japanese and United Kingdom were in the mid-1970s (inflation adjusted). In October, the World Bank reported that those living in extreme poverty fell from 36 percent in 1990 to 15 percent in 2011. ...

Read the whole thing, here.

Tuesday, December 23, 2014

Zero Hedge gets ObamaCare spending all wrong, again

The latest screed is here, claiming that healthcare spending is "the reason" behind the surge in Q3 GDP.

From the BEA here, healthcare spending contributed 0.52 points (line 17) to 5.0 GDP, about 10.4% of the total.

Zero Hedge wants to leave the impression there was no single bigger contributor to GDP, which isn't the case at all:

Equipment contributed 0.63 (line 30)
Durable goods 0.67 (line 4)
Pure consumption from defense spending 0.69 (line 55)
Export of goods 0.69 (line 47).

More importantly, it's not like we haven't spent 0.52 points of GDP on healthcare before.

We spent 0.51 in 4Q2011, 0.70 in 1Q2012, 0.48 in 4Q2013, and 0.45 in 2Q2014.

That last one is really important. It's the third estimate final figure of healthcare spending for the immediately preceding quarter, which can now be compared to the third estimate final figure for this one. The difference? Just 0.07 points, for an increase in healthcare spending of 15.5% on an annualized basis from 2Q to 3Q. As I've said, we've seen such increases before, quite apart from any new developments over ObamaCare.

The proper comparison, notably, is with 2Q, not with the previous estimate of healthcare's contribution to GDP for the current quarter, which, like everything else, was admittedly incomplete in the BEA's own words, as is always the case with the estimates before the third and final report.

And what that shows, last of all, is that GDP hasn't "surged" at all between 2Q and 3Q. The only thing which surged is the final revision based on the more complete data. The quarterly measure of GDP is up a very modest 0.40 points, from 4.6 to 5.0, or about 8.7% on the annualized basis. Healthcare's share of that increase to GDP is just 17.5%. 82.5% comes from other categories.

The worrisome thing is all kinds of people read and sometimes quote Zero Hedge: Rush Limbaugh, John Hussmann and Bill Gross come to mind. And Real Clear Markets often links to it, which is how I saw it.

Zero Hedge is embarrassing to read, kind of like pornography.

To date current dollar GDP under Obama is running 9.6% behind Bush every year



























Bush nominal GDP increased 43% over his term. To date nominal GDP under Obama is up less than 20%.

Bush nominal GDP rose $4.4338 trillion from the end of 2000 to the end of 2008, from $10.2848 trillion to $14.7186 trillion. That comes to $554.225 billion per year for eight years.

Obama nominal GDP has risen to date $2.8812 trillion from the end of 2008 to the end of 3Q2014, from $14.7186 trillion to $17.5998 trillion to date. That comes to $501.078 billion per year for 5.75 years.

The $53.147 billion difference amounts to a difference of 9.59% on average per year to date.

Total market cap to 3Q2014 GDP ratio falls slightly on third revision . . .

. . . to 1.415 from 1.419.

The ratio was 0.74 at the end of 2008, indicating that the stock market was 91.2% more expensive at the end of September 2014 than it was at the end of 2008.

At rich valuations the return from stocks over the subsequent long haul is surprisingly small. From the peak in August 2000 to now the average nominal return from the S&P500 has been just 4.22% per annum, with dividends fully reinvested. From the peak in October 2007 to now the average nominal return has been 6.35% per annum.

The great bull market from July 1982 to August 2000 produced an average annual return of 18.99%. 

The dollar is trading above 90 today

The dollar is trading above 90 today, for the first time since early 2006.

Third and final revision of 3Q2014 GDP surges to 5.0% on personal consumption and investment revisions

Personal consumption added 2.21 points to today's revision of 3Q2014 GDP at 5.0% while government consumption added 0.80 points. TOGETHER they represent 60% of the total, which again gives the lie to the meme that 70% of the economy is still consumer spending.

Not any more. Frugality is still operative in this economy when only 44% of it is from the consumer side. Keep in mind that that's a one month IMPROVEMENT in the BEA's assessment of the contribution of personal consumption by 46%.

Hm. The difference a month can make.

In the second report a month ago personal consumption had added just 1.51 points, and government consumption 0.76. Personal consumption had been averaging just 1.48 points in contribution in 2011, 2012 and 2013. Government consumption had been averaging -0.45, actually adding a SUBTRACTION to GDP over the same period. The positive contribution from government spending now, however, is nearly 83% defense spending . . . the war on ISIS.

More war, more GDP.

Gross private domestic investment added 1.18 points in today's revision, but only 0.85 in the second. The three year average had been 0.94. The 39% improvement in the estimation for this category is a very healthy and welcome sign for the economy.

Net exports added 0.78 in today's report, unchanged from the second, but way up from the prior period average contribution of just 0.08 points.

Refined petroleum exports, up 3.7% on average in 2014 year to date over the 2013 average. It's a good thing.

Republican enthusiasm for the Line Item Veto began under Reagan and was their version of the imperial presidency

No different than Reagan's enthusiasm for federal mandates like EMTALA, which is the proximate cause of ObamaCare. But J. T. Young doesn't remember it that way, or that far back, here:

'Unmentioned in Obama's legacy is that he killed the line-item veto. While not having done so directly, Obama's presidency has ended this long-time Republican goal just as assuredly as if he had. The political and fiscal role reversals between the Congress and presidency - and between Republicans and Democrats - transpiring for twenty years, have culminated with this administration.

'Twenty years ago, Republicans, armed the Contract with America, dramatically rode to Congressional majorities for the first time in decades. Prominent within that important document was a call for a line-item veto for the president.

'The intent was to give a president power to eliminate wasteful federal spending with pinpoint accuracy. Instead of having to veto an entire bill, and risk shutting down all, or part of the government, a president would be able to stop particular provisions but leave a larger spending bill intact. This authority would reverse the "Hobson's Choice" that prevailed between Congress and a president.'

------------------------------------------------------------------------------

'Ronald Reagan said to Congress in his 1986 State of the Union address, "Tonight I ask you to give me what forty-three governors have: Give me a line-item veto this year. Give me the authority to veto waste, and I'll take the responsibility, I'll make the cuts, I'll take the heat."'


WHATEVER CONSERVATISM IS, IT MOST CERTAINLY IS NOT ABOUT SEEKING TO ACQUIRE MORE POWER BUT RATHER ABOUT SEEKING TO DIFFUSE AND DISTRIBUTE IT, SOMETHING THE CONGRESS DELIBERATELY BETRAYED IN THE 1920s WHEN IT DECIDED TO STOP THE NATURAL EXPANSION OF REPRESENTATION. NO BRANCH OF THE GOVERNMENT MAY BE SAID SINCE THAT TIME TO BE IN ANY WAY CONSERVATIVE IN SPIRIT, EXCEPT IN THE OCCASIONAL IRRITABLE MENTAL GESTURE IN THAT DIRECTION WHICH IS USED AS A CLOAK FOR MORE SELF-AGGRANDIZEMENT. NO ONE ANYWHERE RETAINS "SELF-RESTRAINT" IN THEIR LEXICON.





What waiting over seven years for that full-time job looks like

"Been waiting here that long, eh?"

Terrorism is a feature of Islam, not a bug

"Against them make ready your strength to the utmost of your power, including steeds of war, to strike terror into (the hearts of) the enemies, of Allah and your enemies, and others besides, whom ye may not know, but whom Allah doth know. Whatever ye shall spend in the cause of Allah, shall be repaid unto you, and ye shall not be treated unjustly."

-- Surah 8:60, source of the motto "Be Prepared" of the Muslim Brotherhood, except these Boy Scouts intend to terrify, not to be helpful, friendly, courteous or kind

Sunday, December 21, 2014

Obama says you're better off than when he took office, except you are not

click to enlarge
Obama says, quoted here:

"Like the rest of America, black America in the aggregate is better off now than it was when I came into office."

On the contrary:

Full-time jobs have not recovered to their 2007 peak and won't until summer 2015, if we are lucky. That will be eight years later, when full-time jobs in the past have always bounced back after at most three years in post-war recessions. Obama has done nothing for jobs, except to let the problem fester and try to heal itself.

Health insurance costs much more, covers much less and has narrower and less convenient networks. The proof of this is in the polling, where the majority of Americans remain opposed to ObamaCare. The minority which likes ObamaCare is benefiting from it at the expense of those who don't, who are more numerous. It's called income redistribution. Otherwise known as socialism. You know, like in Cuba, Obama's new best friend.

Owners' equity in household real estate stands at 53.94%, still almost 10% below where it was in 2005. Completed foreclosures in the last month are still running 95% above normal.

More than half of the 66% of Americans who have saved anything for retirement have individually saved less than $25,000. American taxpayers are forced to contribute on average 13.5% to the pensions of the country's government employees and save for themselves only at the rate of 5%.

But perhaps the most damning indictment of Obama is how Americans of all stripes have been impoverished under his watch. Real median household income in the US is lower now than when the recession ended in Obama's first term in 2009, and much lower than when he took office:

"At this point, real household incomes are in worse shape than they were four years ago when the recession ended."

Lies told often enough can become the truth, but they are still lies.

Saturday, December 20, 2014

Miles traveled in October indicates sharp uptrend to a new level since 2007

Miles traveled on American roadways in October (2.988 trillion) indicates a sharp uptrend which no longer bears comparing with the levels of 2008 but instead with the record year for travel, 2007, and its predecessor 2006.

Since April 2014 the 12 month moving average of miles traveled had broken out of a desultory pattern of travel which had basically fallen and flatlined since the 2007 peak. Travel since April had recovered enough to be compared with 2008 levels, however, which was a very good sign, but now in October the 12 month moving average has bested October travel in every year including 2008 (2.983 trillion miles).

That's the best news yet because it indicates Americans are on the move in October like never before since the catastrophe of 2008-2009, and for reasons other than lower gasoline prices. Gasoline didn't really fall out of bed until the very beginning of November when the national average for a gallon of gas dipped below $3.00 for the first time since late 2010.

The hope is that the reason for all the new miles has to do with commuting to jobs. Full time employment is up almost 214,000 per month year over year, not seasonally adjusted, and part time is up 27,000 per month to a new record high level.

The October level of travel also moves the comparison needle up on the backside of 2007 as well, to somewhere between 2005 (2.985 trillion miles) and 2006 instead of between 2004 and 2005, when we were still building up new records year after year. 

Amounts allocated for retirement soar to $24.2 trillion in 3Q2014

The Investment Company Institute reports, here.

IRA-type instruments continue to lead the way with 30% of the total amount saved, followed by 401k-type plans holding 27%, and government defined benefit plans at all levels 21%.

The latter figure, representing $5.1 trillion, remains remarkable in view of the fact that the taxpayers have contributed significantly to this sum through taxation, on top of funding their own retirements, or not funding them as the case may be.

As recently as 2011 the national average rate of taxpayer contributions to state employee pension plans, and teacher, police and fire retirement plans combined was 13.5%, according to data reported here by The Buckeye Institute. Contrast that with average annual personal savings rates under Bush of just 4% and under Obama of 6%. And for the most recent 5 months of 2014 the rate has fallen to 5%.

Taxpayers are funding the retirements of government workers at a rate more than double their own, which is one reason why most people haven't saved enough for their own retirements. CBS News reported again just weeks ago here that of the 66% who have saved anything for retirement, the majority have saved $25,000 or less.

Meanwhile, government pension plans, as rich as they may appear from the data, may be underfunded long term by as much as $4 trillion, according to The Boston Globe, here.

With a week left before Christmas, maybe you should make do with what you've spent so far, and put something away for a rainy day. It's a comin'.


Michigan legislators correctly send sales tax increase for roads to the voters

Mlive.com reports the story here.

As I've argued before, here, an increase in the sales tax for road repairs is far less regressive than the gasoline excises as they currently stand, so I support this if I only had various tax increases to choose from. Governor Snyder's plan to raise excise taxes even higher to pay for roads was a non-starter for this reason. Commuters to minimum wage jobs shouldn't have to bear the brunt of a consumption tax on fuel which is at least twice what it is on a roll of toilet paper.

Paying prevailing wages for road repairs under Davis-Bacon laws to union shops, however, guarantees that we pay the highest prices for roads. We shouldn't have to put up with that. Competitive bidding by non-union shops is called for.  

It is also regrettable that the excise tax isn't being eliminated altogether, because, as I've said, it's about twice as onerous as the current sales tax of 6%. That it is actually being expanded somewhat under the bill is moving in the wrong direction. Maybe we can work on eliminating that in future.

Opponents of the sales tax increase should consider whether now is the time to pick a fight with the unions to get better roads at a lower price, and should also lay out what could be cut from the current budget to otherwise accomplish the goal. But the roads have been allowed to get so bad for so long it is difficult to accept the idea that we can afford to wait any longer.

The current compromise may be the best deal for everyone involved.


Michigan legislators cut the baby in half in lameduck twilight, requiring internet sales tax collection from businesses with any form of physical presence

Reported here:

SB 658 and SB 659 extend the state's sales and use taxes to out-of-state companies with a physical "nexus" or presence in the state. That would apply these taxes to companies like Amazon, which has a presence in the state but not a retail front.

A ruling worthy of a rabbi.

The latest snapshot of the asset allocation of the United States is "risk on"

Total bond market per SIFMA through 3Q2014: $38.65 trillion (49.8%)
Total stock market capitalization per ^W5000 right now: $26.07 trillion (33.6%)
Cash per MZM money stock: $12.89 trillion (16.6%)
Total: $77.61 trillion

If you add in Households, Owners' equity in real estate, you add another $10.98 trillion for a total pie of $88.59 trillion, thus 43.6% to bonds, 29.4% to stocks, 14.6% to cash, and 12.4% to real estate.

From the perspective of the Talmud this allocation is very unwise because it is much too light on cash and owners' equity. The amounts allocated to business, to cash and to your homestead should each be about 33%, indicating that we are very heavily "risk on" indeed.

Food for thought.

Vanguard bond index funds, 15 year performance per annum vs. stocks

HMS Vanguard
Per morningstar.com, annual performance 15 years to date for all popular bond index funds beats stocks hands down, except for the short index:

VBISX: 4.05% (short)
VBMFX: 5.42% (total)
VBIIX: 6.48% (intermediate)
VBLTX: 8.30% (long).

Average annual total nominal return from the S&P500, dividends fully reinvested, has been only 4.52% per annum.

That's what happens when stocks are inflated in value over a long period of time, as they have been almost continuously since the late 1990s, except for about four years between 2008 and 2012. And remember, present gains off those lower valuations are already part of the relatively poorer performance of stocks over the last 15 years. It could be much worse.

Attention dollar-cost-averagers: Through November bonds still beat stocks for the last 15 years

morningstar.com
politicalcalculations.com

Your average annual nominal return from the S&P500 for 15 years through November is just 4.52%, with dividends fully reinvested. From intermediate term bonds in an index fund like VBIIX your average nominal return for 15 years through 12/18/14 is 6.46%, and better sleep.

Friday, December 19, 2014

America pushes NATO right up to the Russian border, the EU confiscates Cyprus' assets, and the Economist calls Putin paranoid

Proving once again that the West completely disrespects Russia. They could easily be our friends, if America were still a Christian country. That, dear friends, is the root of the problem.

The story "As ye sow, so shall ye reap: The collapse in the rouble is caused by Vladimir Putin’s belligerence, greed and paranoia" is here, in the ever arrogant Economist.


Bank Failure Friday: the 18th of 2014 is in Mankato, MN

Northern Star Bank, Mankato, Minnesota, failed today, costing the FDIC $5.9 million.

As of September 30, 2014, there are 6,589 institutions remaining in the FDIC system.

That means that since the summer another 67 formerly independent participating institutions in the FDIC have left the system, most of which have been absorbed by larger institutions through acquisition and mergers because they were no longer able to survive and compete as stand-alone profitable banks in the new rigorous regulatory environment imposed under the Dodd-Frank legislation and Basel capital rules.

Over 300 formerly FDIC-participating institutions have suffered this same fate since the beginning of this year.

And in February 2007 there were 8,743 FDIC member institutions, 2,154 more than there are now. Only 500+ of these failed. The rest have been gobbled up by big-banking.

Mitt Romney remains the frontrunner and more popular than Jeb Bush, beating him 19 to 12 on average

Byron York reported here yesterday:

A Fox News survey released this week found Romney the GOP leader, with 19 percent, ahead of Jeb Bush, who was pretty far back at 10 percent. Everybody else was bunched together behind Bush.

A McClatchy-Marist poll a few days earlier showed a similar result, with Romney leading at 19 percent and Bush at 14 percent. A Quinnipiac poll before that found Romney at 19 percent and Bush at 11 percent.

Many polls don't include Romney in their surveys. But the many that do suggest that, at least for now, Romney is a front-runner, if not the front-runner in the 2016 Republican race.


Average food stamp participation under Obama is 43.2 million annually to date, 84% higher than under Bush

Under Bush it was 23.5 million on average, and under Clinton 23.1 million.

Liberal WaPo defends economist who says middle class is just fine because of . . . transfer payments!

Where have I heard this before?

Consider The Washington Post, here:

"CBO saw a dramatic difference in middle class income gains because it captures information that tax records miss, such as income from transfer programs such as Social Security and Medicare, [economist Stephen J.] Rose said."

A libertarian made this same argument to me very recently: that the middle class is intact if you count transfer payments made under the tax code.

For a libertarian to argue with a straight face that the middle class is intact because of income redistribution is an offense to capitalism. To be middle class from the purely economic point of view is to have achieved a level of economic independence and status not shared by the lower class. It is symbolized by home ownership, and by that new car smell every few years. Dependence on government transfer payments to maintain such status does nothing but obscure the truth of what is really going on.

This is consistent with the wider practice of economic liberalism in our time, which is similarly designed to hide the truth while posing as its custodian at the same time.

Mark-to-market accounting rules have been changed since April 2009 under Financial Accounting Standards Board rule 157, making price discovery of many "assets" nearly impossible. Circumstances became catastrophic under the old rule during 2008, so the solution was to change the rule. Call it moving the goal posts.

The Fed, acting as the Board's tag team wrestling partner, through QE has been buying up the crappy assets of the banks and transferring them to its own balance sheet in order to hide the truth of their crappiness and restore the banks to health. At the same time the Fed makes war against the free market with its repression of interest rates to the zero bound, driving up the value of risk assets, especially housing, stocks, bonds and commodities while punishing savers and aspirants to the middle class. It's not a coincidence that this helps only the elites, who cannot continue to spend money they don't have unless they can borrow it on the cheap.

A truly conservative economic universe, that is, one aligned with reality, would not permit any of this. 

Too bad we don't live there anymore. Libertarians shouldn't pretend that we do.

Thursday, December 18, 2014

Brian Wesbury is wrong: First rate hike will not be in six months

Brian Wesbury & Co. here says the first Fed rate hike is coming in six months (June) because "considerable time" has secretly meant six months to Janet Yellen all along. Dropping that phrase for the word "patient" signals that the six month timer has begun ticking.

OK, maybe so.

But if the employment numbers cool as I expect them to after the first of the year when all the part-timers hired recently are let go, the Fed will still be in the rhetorical catbird seat to delay a June rate hike indefinitely because of the language change, without looking like it has back-tracked on its plan.

Janet Yellen may have an "obsession with the labor market" but she is not stupid.

If Democrats and Republicans had been so obsessed, she wouldn't have to be. At least workers' lives matter to Janet Yellen, which is more than can be said for the usual practitioners of the dismal science.

The good olde days . . . when Cuba was still the enemy

PT boat on the way to Havana
I used to make a livin' man
pickin' the banana
Now I'm a guide for the CIA
hooray . . . for the U.S.A.
Baby, baby, make me loco
Baby, baby, make me mambo






Sent to spy on a Cuban talent show
First stop . . . Havana a go go
I used to make a living man
pickin' the banana
hooray . . . for Havana
Baby, baby, make me loco
Baby, baby, make me mambo

Useless Steve Gruber Show shields Rep. Tim Walberg from heat for Cromnibus vote

Steve Gruber had his opportunity this morning to let Congressman Tim Walberg feel the heat for his vote last week which helped move Cromnibus through the Congress, and instead shielded him by talking about anything but that.

1320 WILS' Michael Cohen had a much better interview of the Congressman here on Monday addressing the issue in depth, but alas it was not a talk show which takes callers' questions and comments.

They call it freedom of the press in America, but its organs make sure that they continue to protect the liberal status quo for obscene government spending and its representatives, because they PROFIT from it.

Wednesday, December 17, 2014

Was the valet driving?


Rep. Tim Walberg (MI-7) admits everyone in the US House read the Cromnibus bill in July and knew what was in it














In a recent interview, here (Capital City Recap with Michael Cohen for Monday, December 15th), Republican Rep. Tim Walberg (MI-7) said one of the reasons he ended up voting for Cromnibus was that it overturned some parts of Dodd-Frank, a law which in his view is responsible for the middle class being "destroyed".

How putting the FDIC on the hook for derivatives is good for the public in a crisis like we just had is beyond me. The FDIC went severely into the red, had to be backstopped by the very public it serves, and then was replenished by raising rates on member banks which have crushed the small and regional banks who behaved honorably, and raised costs for everyone who uses a bank. The whole process has accelerated bank sales and consolidations, reducing competition in the industry. 

Well, at least Walberg acknowledges the middle class is in big trouble, unlike some people. But becoming "unbanked" is hardly at the top of the list of their troubles like being unemployed is.

Walberg also stated that voting against Cromnibus and shutting down the government as a possible consequence was not an option because that would have punished members of the American military who wouldn't get their paychecks, presumably at this the happiest time of the year. No, you wouldn't want to shut down the government and anger a government employee, no sir.

Maybe the most interesting thing Walberg said, however, and doubled-down on in the interview is that everyone in the House knew what was in the massive spending bill because they had all read the individual components of the bill in the form of individual legislation which they had passed in July and sent to the Senate piecemeal . . . all to die under the withering glare of Dirty Harry Reid.

So all the crap that's funded in the bill Rep. Tim Walberg is admitting to knowing about ahead of time, and voting for.

Read like what, here, but not after meals.

Moochelle turns anonymous shopping into racism

Liar liar pants on fire.

Seen here.

Yield on the US 10-year has fallen 29% since last December but the S&P500 is up 11% year over year

It's a little odd.

Falling yields have been associated with big stock market pull backs in the recent past, but not this year . . . so far.

Between December 2007 and December 2008, the 10-year Treasury yield fell over 40% while the S&P500 tanked 37% in calendar 2008. Similarly in calendar 2011 the S&P500 barely eeked out a total return of 2% as the 10-year yield also fell 40%.

Conversely, rising yields have been associated with healthy stock market gains. In 2013 yield on the 10-year rose almost 69% as the S&P500 posted a phenomenal total return in excess of 32%, the fourth best return since 1970. Similarly yield rose 50% between late 2008 and late 2009 as the S&P500 recovered 26% in 2009.

Steady yields in 2006, 2007, 2010 and 2012 relative to the prior year are associated with S&P500 gains of between 5.5% and 16%. That 5.5% year in 2007 is associated with a yield drop of 10%.

The current yield of 2.07% would need to fall another .33 to represent a 40% drop in yield year over year associated with the big stock market pull backs of the recent past which everyone seems to have been waiting for but not getting.


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

Obama was mistaken for a valet?

He's also been mistaken for a president, an American and a golfer, but who's counting?

The story in People here is making a lot of people pretty angry.

Gone are the days back in 2011 when Obama claimed to miss being so anonymous.

Liar then. Liar now.

Queen Moochelle STILL has a huge chip on her shoulder

Seen here:

"I tell this story – I mean, even as the first lady – during that wonderfully publicized trip I took to Target, not highly disguised, the only person who came up to me in the store was a woman who asked me to help her take something off a shelf. Because she didn't see me as the first lady, she saw me as someone who could help her. Those kinds of things happen in life. So it isn't anything new."

WHAT A BUNCH OF CRAP.

I WAS IN THE STORE RECENTLY AND AN OLD LADY COULDN'T REACH SOMETHING AND ASKED ME TO FETCH IT FOR HER, NOT BECAUSE SHE MISTOOK ME FOR AN EMPLOYEE BUT BECAUSE PEOPLE DO THINGS FOR EACH OTHER . . .

. . . UNLESS YOU ARE THE QUEEN OF THE USA. DON'T ASK HER FOR A SIMPLE ACT OF HUMAN KINDNESS, NO SIR.

THAT'S RACIST!

Tuesday, December 16, 2014

Did Steve of the Steve Gruber Show ever pay attention to the guy he just helped reelect?

You know the guy: Rep. Tim Walberg, who said the middle class in this country was getting crushed?

You know Tim Walberg, the same guy Gruber had on his show like clockwork during election season, campaigning for free, who just got reelected and promptly voted for Cromnibus?

And you know the Gruber, the one who recently agreed with his buddy Liberal Lee that the middle class in this country was quite intact, and spoke out against Cromnibus?

They must be smokin' the really special ganja on the set of the Steve Gruber Show, you know what I mean man?

True Born Sons of Liberty 2, Gruber 0

Gas for $2.50: What Obama called a phony promise in 2012 is now the reality, without him, without Gingrich, without government


Gasoline nationally just now averages $2.50/gallon without Newt Gingrich's help, or Obama's

See here for the controversy over Newt's faith in his drilling program in March 2012, which materialized without him, and without Obama, because private enterprise did it all, drilling on private lands:

The Gingrich campaign responded to [White House spokesman Jay] Carney Tuesday with a statement that read in part, "$2.50 gasoline is achievable and drilling here, drilling now so we can pay less and be independent of Middle East oil is just common sense."

Jeb Bush meets with John McCain for advice on how to win without conservatives

You know, without those 2012 fear-mongering types.

From the New York Times, here:

When former Gov. Jeb Bush of Florida quietly visited Senator John McCain in his Capitol Hill office this fall, discussion turned to a subject of increasing interest to Mr. Bush: how to run for president without pandering to the party’s conservative base.

“I just said to him, ‘I think if you look back, despite the far right’s complaints, it is the centrist that wins the nomination,’ ” Mr. McCain, an Arizona Republican, said he told Mr. Bush. ...

Mr. Bush would benefit most if those Republicans who do run vie for the support of the party’s hard-liners. That would fracture the conservative base, leaving an opening for him among more moderate-leaning Republicans.

“Lock up the center and let them fight it out on the right,” Mr. McCain said.

-----------------------------------------------------------------------------------------------

Yeah, and lose the election.

Who wants another president who thinks it's perfectly alright to divide instead of unite in order to win?

In 2012 Jeb Bush sought to distance himself from conservatism, but in 2014 he wears it like a badge

Judge for yourself from the video and full transcript here a couple of days ago when Jeb insisted he isn't going to change what he believes if he decides to run for president, but it's plain as day to me that he has already flip-flopped and wants this conservative thing both ways, just like his brother did and just like his father did, because he's basically an open borders libertarian who doesn't want to go to the trouble of lifting up existing Americans to fill the "skills gap" and instead wants to bring in the best and the brightest from abroad to take those jobs:

"WE HAVE A LOT OF PROBLEMS THAT COULD BE SOLVED IF WE FIX A FEW BIG THINGS AND IMMIGRATION IS ONE OF THEM. SO LONG STORY SHORT, IF I WAS TO RUN, I WOULD TRY TO PERSUADE PEOPLE. I'M NOT GOING TO CHANGE WHAT I BELIEVE. AND MY BELIE[F]S, [I] THINK, ARE GOOD SOLID, MAINSTREAM CONSERVATIVE THOUGHTS."

Flashback to February 2012 here when Jeb Bush sought to distance himself from conservatism, his own and its then-current expression in the Republican presidential debates:

"I used to be a conservative and I watch these debates and I'm wondering, I don't think I've changed, but it's a little troubling sometimes when people are appealing to people's fears and emotion rather than trying to get them to look over the horizon for a broader perspective and that's kind of where we are," said the former Florida Governor. "I think it changes when we get to the general election. I hope."

---------------------------------------------------------------

So in 2012 we have this incoherent jibber jabber that it was totally acceptable to "change for the general election" but he hasn't changed a lick even though he used to be a conservative but in 2014 it's not acceptable to change and Jeb Bush is all transparency and light and hasn't changed a wit don't you know (except he used to be a conservative), and if anyone's changed it's them, those fake conservative demagogues, and vote for me because I'm what I've always been, blah blah blah.

For Jeb Bush conservatism is exhausted by three things in the interview: reforming what's broken, limited government and liberty. Nothing there about preserving anything valuable which exists or what those things might be or how they got that way, or how people in this country who have perverted liberty into license are supposed to be capable of limiting the government when they can't, and won't, control themselves.

And evidently it also just comes down to consistency, which is the hobgoblin of libertarian minds.

It haunts him still.

Average hourly earnings are up 2.69% year over year, inflation 1.66% suggesting Fed tightening may be coming

Earnings are actually getting ahead of the curve in the latest data, suggesting the Fed may move to raise interest rates as "planned".

Not-seasonally-adjusted, average hourly earnings are up $0.65 from $24.11 to $24.76 for all private employees in November. For October the all items consumer price index is up only 1.66% year over year.

In July the picture wasn't as clear, before the dollar took off and gasoline prices began to fall off the cliff. Average hourly earnings at the time were up just 2.01% year over year while CPI (again with a one month lag) was up a nearly identical 2.07%.

I'll go out on a limb and say the Fed continues with "the plan" in order to cool the heat evident in rising earnings.

Not that they should.

I think everyone is forgetting that the employment numbers have recently surged as they always do at the end of the year because part-timers have swelled the ranks at the end of the year. Full-time surges to its cyclical peaks in the summers and early autumn. This is always made more clear by the not-seasonally-adjusted data, which is why it is often missed.

Remember, full-time failed to rise above the 2007 peak again this summer, the seventh year in a row and another dubious post-war distinction for the Obama regime, and part-time just made an all-time high.

An accommodative Fed is still probably necessary, unfortunately, at least the way they think.

Monday, December 15, 2014

Terrorist heads! Terrorist heads! Terrorist heads on pikes!

A venerable old practice, described here.

Pacifist Rama is the first caller to Steyn on Limbaugh today, and now to Savage!

Just now.

How did he do that? People claim they've been trying sometimes for decades to get through to these radio talkers, and Rama punks two of them in one day?

Ambrose Evans-Pritchard says Britain's George Osborne is full of fiscal baloney

George Osborne is in today's Wall Street Journal here, bragging about Britain's fiscal discipline, among other things:

"In the U.K., faced four years ago with a record budget deficit of over 10%, we set out a clear deficit-reduction plan and steadily implemented it. The challenging spending totals I set out for the British government have been consistently achieved year after year."

Ambrose Evans-Pritchard has heard it all before, and says baloney, here:

On the fiscal front, Britain has a deficit of 5pc of GDP a full five years into the economic recovery, when growth is running at 3pc and should be generating a windfall of tax revenue. This is prima facie evidence of a chronic reliance on state borrowing to perpetuate a consumption model.

The deficit is 4.4pc in France, 1.5pc in Italy and 0.2pc in Germany. The US deficit - once similar to ours - has dropped to 2.8pc of GDP on a quarterly basis. Britain sticks out like a sore thumb. ... 

For all the superficial likeness, the Anglo-Saxon growth stories in Britain and America have nothing in common. The US has cut its current account deficit from 6pc to 1.9pc of GDP. It is on track to achieve energy independence by 2018, igniting a revival of its chemical, plastics, glass and steel industries along the way. Luck has played its part but one recovery is durable, the other is literally on borrowed time.

---------------------------------------------------

Methinks Ambrose overestimates US GDP in his analysis to arrive at his rosy 2.8% deficit, and is too sanguine about the future of Republican spending restraint now that Cromnibus has passed, but you get the idea . . . Politicians spinning tales.


Federal Reserve and FDIC lose power

Electrical, but hey! we can dream can't we?

From the story here:

"Most power at the State Department was lost and employees were told to work as best they could. Other buildings affected included the Federal Reserve, the General Services Administration, Metro’s Smithsonian subway station, the Labor Department, the U.S. Park Police and the Federal Deposit Insurance Corp."

Maybe Ted Cruz & Company have been trying to shut down the government the wrong way!

Steve Gruber Show grudgingly admits middle class needs rescuing

Hm, imagine that.

Here, in "Fracking Rescuing Middle Class", concluding:

"Hats off to fracking and the American energy revolution that is riding in to save the economy and the American middle class!"

True Born Sons of Liberty 1, Gruber 0.