Are You Feeling Lucky? Well . . . Are Ya?

The Shiller S and P 500 p/e ratio stands at a still rich 18.9.

"It's a long way down . . . from number one." -- The (original) Highwaymen

On Third Anniversary of TARP, S&P 500 Closes at 1099.23, Same as it Did 3 Yrs. Ago

What are the chances of that?!

Spooky!

Pay attention to the hand in the following chart, and the dot under it, and the closing it signifies in small print in the upper right hand corner, which was a Friday three years ago, October 3, 2008, the end of a tumultuous week in American history on which President Bush signed the TARP legislation:

I remember this vividly, because Jim Cramer came on television the following Monday, October 6th, 2008 (after what seemed like a weeks' long freefall in the markets and sheer panic among the politicians trying to get TARP passed to save their donors' bacon on Wall Street) telling people to sell if they needed their money within five years.

Well, here we are, three years later . . . in the same place.

Do you still have your money? 25 million unemployed/underemployed don't.

You'll notice TARP, signed on this date three years ago, did nothing to stop the freefall in the markets. Obama and McCain both were for it. So were Sen. McConnell, Speaker Boehner and Majority Leader Cantor. And most Democrats. The real fight against TARP was in the Republican Party, and we lost, as did they.

TARP's final cost to the taxpayer may end up as much as $37 billion, an amount similar to the paltry one House Speaker John Boehner was proud to report to great fanfare that he and the Republicans saved in the spring of this year on the budget the Democrats never passed as required by law last year.

Nor are the banks really healthy after nearly $80 billion in FDIC payouts for 396 bank failures. And let's not even talk about the housing sector, the vast repository of the wealth of the American people squandered in the "let the good times roll" of HELOCs, refinancing, and flipping.

OK, let's talk about it: household net worth, which for many is all about their homes' value, is about $7.7 trillion off peak, or back at levels last seen in . . . 1997.

As for Jim Cramer, well, telling people to sell in a panic is just stupid, as is telling people to buy in a panic. Those who kept their heads and were patient and held on and invested new sums along the way made some big money in the markets right up to August of this year.

Don't fight the Fed, as the saying goes, until the Fed stops fighting, which it just did . . . sort of.

The significance of today's market is that the S and P 500 is back where it was after all the TARP intervention, all the Federal Reserve emergency lending (massive! trillions! to foreigners too!), stimulus spending and quantitative easing has run its course.

We've declined, we're moving sideways.

I expect more of the same . . . until we decide it is important to do otherwise.

Third Anniversary of TARP: Nearly 500 Banks Still Owe $19 Billion in TARP Bailouts, 160 Behind on Payments

Americans stand to lose $37 billion on TARP when all is said and done, as reported here.

But bank failures since January 25, 2008 now total 396.

The total cost of these failures paid by the FDIC to date is calculated here at $79.97 billion. 

Fran Tarkenton Imagines The NFL Run By The Teachers' Unions

Each player's salary is based on how long he's been in the league. It's about tenure, not talent. The same scale is used for every player, no matter whether he's an All-Pro quarterback or the last man on the roster. For every year a player's been in this NFL, he gets a bump in pay. The only difference between Tom Brady and the worst player in the league is a few years of step increases. And if a player makes it through his third season, he can never be cut from the roster until he chooses to retire, except in the most extreme cases of misconduct.

Let's face the truth about this alternate reality: The on-field product would steadily decline. Why bother playing harder or better and risk getting hurt?

No matter how much money was poured into the league, it wouldn't get better. In fact, in many ways the disincentive to play harder or to try to stand out would be even stronger with more money. ...

The only thing that might get done would be building bigger, more expensive stadiums and installing more state-of-the-art technology. But that just wouldn't help.

Read it all, here, at The Wall Street Journal.

Does Roseanne Even Know How Few People Make Over $100 Million Per Year?

The answer for 2009 was something fewer than 72, according to data published a year ago by socialsecurity.gov, here, which reveals only the aggregate number making beyond $50 million.

Just 72 individuals made in excess of $50 million in 2009, with an average wage of $84 million. In 2008 the number making in excess of $50 million was 131, with an average wage of $91 million. And in 2007 it was 151 people, with an average wage of almost $94 million.

The last time the average wage of the highest wage earners exceeded $100 million was in the year 2000 when 91 heavy hitters averaged $111 million in wages.

For a successful woman whose eponymous show went off the air in 1997 and is (conveniently for this discussion) worth $80 million, she sure doesn't grasp the difference between a wealth tax and a confiscatory income tax on high earners:

"I first would allow the guilty bankers to pay, you know, the ability to pay back anything over $100 million [of] personal wealth because I believe in a maximum wage of $100 million. And if they are unable to live on that amount of that amount then they should, you know, go to the reeducation camps and if that doesn't help, then being beheaded," Barr said with a straight face.

The video of the harridan is here.

The country has about 400 billionaires, but $1 billion invested conservatively at 3.0 percent nets just $30 million a year, and $3 billion nets $90 million a year, which could easily be the situation for 286 people on Forbes' famous list of the 400 richest Americans.

And by the way, in the top 100 this year, I count just two whose primary business is banking.

Greedy Little Monsters 'Occupy' This City and That, Seeking Forgiveness of Student Loans

In DC, the mostly leftist little monsters closest to the federal feeding trough were more careful to de-emphasize the fascist partnership between the current regime and the banks in hope of getting them to forgive their debts, too, and make the 1-percenters who already pay for almost everything pay for that as well. Stories here and here, and video here.

likes Obama, sees a bailout as reform

can't stay, has to go to class

Which just proves that greed is not the exclusive preserve of the rich and powerful. But cut off the student loan gravy train and the student protesters would be replaced by tens of thousands of unemployed PhDs, college administrators and support personnel from newly closed colleges and universities all across the land, which would be a good first step in improving education in America. 

Some worshippers at the altar of the great god have discovered that the religion is not all it's cracked up to be:

purportedly seen in Wall Street

Rules For Radicals

Bush's Patriot Act Has Paved The Way For Obama To Act As Judge, Jury and Executioner of American Citizens

And the numbskulls all around us, right and left, applaud, except, for example, for Glenn Greenwald at Salon.com, here:

[H]ow terribly upset so many Democrats pretended to be when Bush claimed the power merely to detain or even just eavesdrop on American citizens without due process. Remember all that? Yet now, here’s Obama claiming the power not to detain or eavesdrop on citizens without due process, but to kill them; marvel at how the hardest-core White House loyalists now celebrate this and uncritically accept the same justifying rationale used by Bush/Cheney (this is war! the President says he was a Terrorist!) without even a moment of acknowledgment of the profound inconsistency or the deeply troubling implications of having a President — even Barack Obama — vested with the power to target U.S. citizens for murder with no due process.

It is not sufficient, however, to prune the executive, overturn this deformity and return to the status quo ante in which Americans continue to sacrifice their right to be free from unreasonable search and seizure, which is done all in the name of 50 million foreigners who we think must be allowed freely to visit our country each year while we pretend that they with us are all fellow citizens of one free world. This is the insane sickness of liberalism which threatens to kill us, that it is nearly a crime to believe that America is a distinct place with borders, a language and a culture which is ours and ours alone.

The dirty little secret here is that the more we embrace this horrid vision of global citizenship, the more we and our leaders become like the squalid tyrannies of Libya and Iraq than they become like us.

brothers in murder

  

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?

1974-1984.

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.

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.

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.