That Red Line In Syria, Somebody Else Drew That

Organisation for the Prohibition of Chemical Weapons

President Obama, quoted here:

“I didn’t set a red line, the world set a red line,” Obama said. “My credibility’s not on the line. The international community’s credibility is on the line. And America and Congress’s credibility’s on the line."

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When everyone's responsible, no one is.

Radioactive Water Tank Leaks At Fukushima Produce 2.2 Sv/hr

Reported here:

Readings just above the ground near a set of tanks at the Fukushima Daiichi plant showed radiation as high as 2,200 millisieverts (mSv), the Nuclear Regulation Authority (NRA) said on Wednesday. The previous high in areas holding the tanks, 1,800 mSv, was recorded on Saturday. Both levels would be enough to kill an unprotected person within hours. The NRA has said the recently discovered hotspots are highly concentrated and easily shielded.

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Normally, 2000 mSv/hr is enough to kill you, but because the story says the radiation is "easily shielded" after it's found, this must mean this is not deadly gamma radiation for the most part. Paper can block alpha and foil can block beta, but gamma requires 2.5 inches of concrete just to reduce intensity by 50%.

Constitutional parchment was no "practical security" against the US Senate's ObamaCare, was it?

After discriminating, therefore, in theory, the several classes of power, as they may in their nature be legislative, executive, or judiciary, the next and most difficult task is to provide some practical security for each, against the invasion of the others.

What this security ought to be, is the great problem to be solved. Will it be sufficient to mark, with precision, the boundaries of these departments, in the constitution of the government, and to trust to these parchment barriers against the encroaching spirit of power? This is the security which appears to have been principally relied on by the compilers of most of the American constitutions. But experience assures us, that the efficacy of the provision has been greatly overrated; and that some more adequate defense is indispensably necessary for the more feeble, against the more powerful, members of the government. The legislative department is everywhere extending the sphere of its activity, and drawing all power into its impetuous vortex. The founders of our republics have so much merit for the wisdom which they have displayed, that no task can be less pleasing than that of pointing out the errors into which they have fallen. A respect for truth, however, obliges us to remark, that they seem never for a moment to have turned their eyes from the danger to liberty from the overgrown and all-grasping prerogative of an hereditary magistrate, supported and fortified by an hereditary branch of the legislative authority. They seem never to have recollected the danger from legislative usurpations, which, by assembling all power in the same hands, must lead to the same tyranny as is threatened by executive usurpations. In a government where numerous and extensive prerogatives are placed in the hands of an hereditary monarch, the executive department is very justly regarded as the source of danger, and watched with all the jealousy which a zeal for liberty ought to inspire. In a democracy, where a multitude of people exercise in person the legislative functions, and are continually exposed, by their incapacity for regular deliberation and concerted measures, to the ambitious intrigues of their executive magistrates, tyranny may well be apprehended, on some favorable emergency, to start up in the same quarter. But in a representative republic, where the executive magistracy is carefully limited; both in the extent and the duration of its power; and where the legislative power is exercised by an assembly, which is inspired, by a supposed influence over the people, with an intrepid confidence in its own strength; which is sufficiently numerous to feel all the passions which actuate a multitude, yet not so numerous as to be incapable of pursuing the objects of its passions, by means which reason prescribes; it is against the enterprising ambition of this department that the people ought to indulge all their jealousy and exhaust all their precautions. The legislative department derives a superiority in our governments from other circumstances. Its constitutional powers being at once more extensive, and less susceptible of precise limits, it can, with the greater facility, mask, under complicated and indirect measures, the encroachments which it makes on the co-ordinate departments. It is not unfrequently a question of real nicety in legislative bodies, whether the operation of a particular measure will, or will not, extend beyond the legislative sphere.

On the other side, the executive power being restrained within a narrower compass, and being more simple in its nature, and the judiciary being described by landmarks still less uncertain, projects of usurpation by either of these departments would immediately betray and defeat themselves [don't laugh, he really wrote this]. Nor is this all: as the legislative department alone has access to the pockets of the people, and has in some constitutions full discretion, and in all a prevailing influence, over the pecuniary rewards of those who fill the other departments, a dependence is thus created in the latter, which gives still greater facility to encroachments of the former. I have appealed to our own experience for the truth of what I advance on this subject. ...

The conclusion which I am warranted in drawing from these observations is, that a mere demarcation on parchment of the constitutional limits of the several departments, is not a sufficient guard against those encroachments which lead to a tyrannical concentration of all the powers of government in the same hands.

-- James Madison, 1788 (Federalist 48, emphases added)

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Repeal the 17th Amendment.

Estimated Fair Value Of The S&P500 Today Is About 1000

Doug Short doesn't say "fair value", but about 1000 should be the fair value level of the index using regression analysis, here (where he has, as always, a vivid chart):

The peak in 2000 marked an unprecedented 152% overshooting of the trend — nearly double the overshoot in 1929. The index had been above trend for two decades, with one exception: it dipped about 11% below trend briefly in March of 2009. But at the beginning of July 2013, it is 62% above trend. In sharp contrast, the major troughs of the past saw declines in excess of 50% below the trend. If the current S&P 500 were sitting squarely on the regression, it would be around the 998 level. If the index should decline over the next few years to a level comparable to previous major bottoms, it would fall to the 450-500 range.

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Investors with a memory will remember that when TARP was signed on October 3, 2008, the S&P500 was at 1099 and then fell dramatically from there until early March 2009, and that on the third anniversary of TARP in October 2011 the index revisited 1099 exactly, in the wake of the summer debt ceiling brouhaha. But we haven't looked back since.

Unfortunately, the S&P500 has another date with the depths, but just hasn't set it yet.

Fed Tapering QE "In Part To Relieve The Collateral Scarcity"

Mentioned here by Peter Coy:

The abrupt shrinkage of the budget deficit this year caused the Treasury Department to cut back on issuance of debt in the shorter maturities that are sought after on Wall Street. Foreign demand has been strong, partly because some European government securities that had been used as collateral are no longer considered safe enough. Finally, the Federal Reserve, in its efforts to stimulate the economy, has been soaking up $85 billion a month of Treasuries and mortgage-backed securities. Some market participants argue that the Fed is planning to taper its bond purchases in part to relieve the collateral scarcity.

Stereotypical Federal Spending Wei Tu Hai

Federal outlays from fiscal 1985 through 2012 are up 274%, from $946.3 billion in 1985 to $3,537.1 billion in 2012. Federal receipts have lagged those outlays, however, up only 234% over the period, resulting in a net addition to deficits in nominal terms of $9.08 trillion as of the end of fiscal 2012, exploding the national debt. The political argument has been whether the taxes were insufficient to cover the spending, or the spending too high given the taxes. But in 24 of those 27 years there were annual deficits, each a message that Sum Ting Wong. Many Democrats shrugged and answered on taxes "Wi Tu Lo". Republicans looked at all that spending and said "Ho Lee Fuk, spending Wei Tu Hai". And now that we are $17 trillion in the hole the people say "Bang Ding Ow". But will they demand a cut to spending? No Fuk Hing Wei. Nao Tu Suun, they will say, as always. Po Ni up Tai Ni Sum later, maybe, but No Like Lee. Besides, Ri Li No Won Tu, anyhow. No Fun. Rather Tai Wan On.

London Grows By A Million 2001-2011, But 600,000 Native Whites Flee

Which helps explain why UKIP is winning elections in Great Britain: It just went from 7 seats in Parliament local elections to 147, with Britons fed up with regulations which come with EU membership and flood their country with cheap, foreign labor.

Stories here at The UK Telegraph, and here at Sky News.

(originally posted May 7th, corrected)

Got Gas? You Should.

The cheapest Grand Rapids gasoline price today is $3.64/gallon, while the average price is $3.75/gallon. The cheapest price is up 6.7% from just a week ago when gasoline was already expensive at $3.41/gallon. Truly affordable gasoline would be closer to $2.60/gallon, according to Tim McMahon at inflationdata.com.

After hearing reports on the radio this week that Michigan ranks 10th in number of miles traveled by car in the country, today Woodradio.com reports, more to the point, that travel miles are actually down in Michigan, all the way to 2005 levels, something I and some others have been reporting for over a year about the country in general. Travel miles actually have been stuck at levels first achieved 8-9 years ago as a consequence of the economic depression we entered in 2007, when travel miles reached their peak.

We haven't been the same since.

Home Buyers Using All Cash Hits All Time High

So says the National Association of Realtors, here:

Walt Molony, a spokesman for the National Association of Realtors, says that the association’s estimates of the share of the market made up by all-cash buyers are lower than the others, at 31% in July, but that they’re still at an all-time high. ... Molony says that investors make up 35% of all-cash buyers (70% of all investors pay cash), while retirees who’ve built up equity in their homes or paid off their mortgages account for 12%. The rest include vacation-home buyers and foreign buyers.

Obama's Appallingly Bad GDP Reports For The Last 3 Quarters Average +1.23%

Revised GDP Q2 2013 was reported this morning UP at 2.5% from 1.7%. Q1 remains at 1.1% and Q4 2012 remains at 0.1%

Truly abysmal figures, despite the revision.

The news release from the BEA is here:

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.5 percent in the second quarter of 2013 (that is, from the first quarter to the second quarter), according to the "second" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 1.1 percent.

The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 1.7 percent. With this second estimate for the second quarter, the increase in exports was larger than previously estimated, and the increase in imports was smaller than previously estimated (see "Revisions" on page 3).

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A rate of 2.5% in Q2 is much better than 1.7% to be sure, but hardly commensurate with a recovery. The last three quarters now yield an average report of 1.23% instead of 0.97% prior to today's revised report. Woo Hoo! Compared to 2.8% for all of 2012, Obama's best year (cough), the 2013 figures which yield an average report of 1.8% to date are also appallingly bad.

This would be a good time for the president to begin doing his job, except he has no clue what it is. 

most recent quarterly figures

most recent annual figures

Ironman Arrives At The Same Conclusion Reached By The True Born Sons Of Liberty

TARP is fascism

At Real Clear Markets, here:

The United States would appear to be well on its way to adopting fascist Italy's political-economic system, favoring the politically-connected while starving entrepreneurs out of the economy. Although today in America, we call it "crony capitalism". And the people who practice it "progressives".

Do you think we should start calling it what it really is?

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This blog was born of the observation here in 2009, and I think first used the term in the specifically financial sense involving not just banking, but housing, a year later, here. Since those days, however, we've decided England invented fascism long before Mussolini did and founded America on the principle, but the English undoubtedly got it from the great old Roman idea of the patron-client relationship.

Fiscal 2013 Spy Budget Just Under $53 Billion

The heretofore classified figure is now known because Edward Snowden gave it to The Washington Post, which has revealed here.

Previously the best estimate was about $75 billion.

Since 911 more than $500 billion has been spent according to the lengthy WaPo story. Peak spending on spying was in the 1980s at $71 billion in current dollars, according to WaPo.

Jobless Claims Now Average Below 300k For Three Straight Weeks, A New Record For Obama

First time claims for unemployment have never looked so good in 4.5 years under Obama. In the last three weeks not-seasonally-adjusted first time claims have averaged monthly under the 300k mark because claims in the last five weeks have consistently printed below that level. This week's average for four weeks beats last week's by 1000, setting a new record under Obama of 282k average first time claims weekly in the last four weeks.

If ever there were good conditions for adding to the employment rolls under this president, these are those. Sustained for a year, the current average would mean just 14.7 million first time claims per year, not-seasonally-adjusted, a low level on an annual basis not seen since the 20th century ended.

The report is here.

Is The Cost Of College Really Up 538% Since 1985? Or 53%?

Gold averaged $317/ounce in 1985. Today it's knocking on the door of $1,430, up 351%. But the cost of a college education is up 538% since then, according to this story from Bloomberg:

"[T]uition expenses have increased 538 percent in the 28-year period, compared with a 286 percent jump in medical costs and a 121 percent gain in the consumer price index. The ballooning charges have generated swelling demand for educational loans while threatening to make college unaffordable for domestic and international students."

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I won't quibble about the inflation measure. I show the "all items" CPI July 1985/July 2013 up about 115%, but that just raises the question about what is the correct way to measure inflation.

Arguably the price of gold is the correct measure of inflation in the economy, not the CPI. And by that standard the cost of a college education has risen just 53% more than gold measured inflation has risen in 28 years, not 345% more, while medical costs have actually failed to keep up with inflation as measured by gold over the same period. Some maintain that most of the actual increased cost of college has to do with the increased costs of room and board, not with tuition. That seems entirely plausible. Tuition and fees where I went to school in 1985 are up 300% vs. 350% for gold.

People are finding college to be unaffordable in the same way that they are finding gold to be unaffordable. It's not that the prices are up. It's that the dollar has shrunk, the cruellest tax of all because it takes you 30 years to realize you've been robbed somewhere along the line, but just where you cannot tell.

Heresy.

Truth.

We report, you decide.

The Real Fascist Threat To America Comes From The Left, But Only Because It Won

Dennis Prager, here:

[I]f there is a real fascist threat to America, it comes from the left, whose appetite for state power is essentially unlimited. But because the left has so long dominated American intellectual, academic, artistic, and media life, it has succeeded in implanting fear of the right. ... First, it does not mean, or have anything in common with, Nazism. Nazism may have been a form of fascism. But Nazism was a unique form of fascism and a unique evil. It was race-based and it was genocidal. No other expression of fascism was race-based. And not all fascism is genocidal. So my fear that the American left is moving America toward an expression of fascism in no way implies anything Nazi-like or genocidal. ... Second, it is not liberals or liberalism that presents a threat of fascism. It is the left. Liberals of the 1940s to 1970s such as John F. Kennedy, Harry Truman, Hubert Humphrey, Henry "Scoop" Jackson, Daniel Patrick Moynihan and so many others were not leftists. They were liberals.

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I beg to differ in most of the particulars while seconding the main point.

The advent of fascist elements in American life specifically as a phenomenon of the left has gone hand in glove with the advance of liberalism under Wilson, FDR and Lyndon Johnson, in addition to the fact that the left won World War II, not the "right", whatever that is. One can hardly explain the growth of the state to its current proportions nor its growing oppressive reach without that liberalism and its spokesmen's early admiration for people like Mussolini, Hitler and Stalin. Nor can one explain our alliance with left socialism in joining the war on the side of Stalin apart from a natural affinity for that form of it as opposed to the other. "Fear of the right" is an artifact of the victory of Stalin and FDR over Hitler and Mussolini, but should more correctly be styled "fear of right socialism". 

Nor is it conceivable to imagine the rise of liberalism in America without the revolution in theology which immanentized the eschaton in the social gospel movement. For Marx religion may have been the opiate of the people, but to Spengler it was the very grandmother of Bolshevism. Russia and Germany went to war as developed rival socialisms while the majority of Americans resisted becoming involved in a fight where they had not yet a dog. They were still children in the classroom of The State. But now that we have grown up we routinely invade in the name of "freedom" because we have come to believe it is our destiny to impose it everywhere we can while ensuring cradle to grave security for one and all at home.

That's not to say America hasn't been fertile ground for fascism from the beginning, quite apart from the dominating influence of a psychology derived from Christianity and its tendency toward totalitarian-like moral conformity. But that involves the economic history, which Prager doesn't address. The contemporary corporatist model lauded by Wall Street has its roots planted comfortably deep in our origins in English colonialism, going all the way back to the crown's banking operations on behalf of the sea-trading companies. Many of the original American colonial charters were patterned on this model of state sponsorship and were first and foremost state-capitalist business ventures. So it should come as no surprise that American capitalism after independence has become more crony than capitalist as it has gotten so very long in the tooth. You can take the Tory out of England, but you can't take the England out of the Tory. Jeffrey Immelt of GE in his admiration for the Chicoms is no different than Henry Ford in his for Hitler.

Lastly, it is troubling to me that a person such as Dennis Prager, who is a student of communism, doesn't mention the fundamental bloodthirstiness inherent in all socialisms, whether communist or fascist. The "unique" evil of Nazism shouldn't blind us to Stalin's anti-German crimes anymore than it should blind us to Stalin's crimes against Ukraine and the millions "disappeared" during his purges. And where is the serious reflection on left socialism's responsibility for the many millions of Chinese who perished at the hands of Mao, who specifically imitated Stalin? And perhaps more to the point for us, the fact that as fascist socialism advances in America millions of unborn children have paid and continue to pay everyday the price for it, all in the name of "freedom"?

Unlike Past Identifiable Tyrants, Today's Monsters Are Faceless Multinationals

So says Andrea Lunardelli, quoted here at CNBC.com:

"It's history, not propaganda," Andrea Lunardelli insisted during an interview on a warm August morning in his family's modest wine cellar where a lone employee was busy attaching labels — Hitler giving the Nazi salute; a portrait of Hitler with his autograph; another portrait with the motto "Ein Volk, ein Reich, ein Führer" (one people, one nation, one leader) — on bottles waiting to be boxed and shipped. ... Bottles with labels from what Mr. Lunardelli, the son of the company owner, Alessandro Lunardelli, describes as the "historical line of products" occupied a shelf on a wall. The discriminating buyer could choose among Mussolini, Lenin and Stalin, indicating that when it comes to despots, Lunardelli wines are equal-opportunity merchandizers. ... These products "are a way of not forgetting history and the monsters it produced, ensuring that they never return," he said. At least the past had identifiable tyrants, he added. "Today's monsters are faceless multinationals." ... Only Che Guevara popped corks when it came to leftist figures. ... Nazi bottles, he acknowledged, are among the company's best sellers. "Eighty percent of the sales are Hitler," he said, or around 20,000 bottles a year, about a quarter of Lunardelli's total production, which consists mostly of table wines using local variety grapes. ... Despite years of complaints about his labels, Mr. Lunardelli pointed out that the law was on his side. Several lawsuits and investigations by public prosecutors have failed to prove in court that the wines are an apologia for fascism or Nazism, which is against the law in Italy.

Obama Draws A Red Line In Syria

Mortgage Securitization Only Works At The Expense Of Taxpayers And Banks

So says Arnold Kling for The American, here, who provides a useful summary of crony capitalist rent-seeking since World War II:

At this point, all signs point to victory by two of the biggest culprits in the mortgage crisis — the mortgage bankers (firms that originate loans to distribute, not to hold) and the Wall Street investment banks. Both depend on securitization if they are to participate in the mortgage lending process. However, securitization has only been able to compete with traditional bank lending when securities are backed by guarantees from the taxpayers and when bank capital requirements punish banks that hold their own loans.

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Arnold Kling is otherwise famous for his firm grasp of the obvious: "Most home owners are not libertarians."

Once Again, It's The Banks Doing The Money Printing, And The Bubble Blowing, Not The Feds

Jeffrey Snider, here:

That is not to say that paper dollars are issued by banks; they are not. Paper currency still takes the form of Federal Reserve Notes, but in the marginal monetary and banking system they are largely irrelevant. Dollars in the banking system, what is called liquidity, are created and dispersed by bank balance sheet accounting. These marginal liquidity units are digital representations of currency, ledger balances that shift daily, even by the minute. Bankruptcy and insolvency are not when you run out of Federal Reserve Notes in your bank vault, they come when you have to settle your accounts with the liquidity provider and there are no positive numbers on the right side of the computerized ledger (or when your ledger does not match your counterparty's, and that counterparty happens to be JP Morgan).

Given that global banks are the primary "money printers" in the dollar trade system (and the dollar swap standard), the Fed's role under interest rate targeting is to backstop the wholesale money markets where banks obtain short-term funding from each other. The implicit promise of interest rate targeting had been enough for the global dollar fraction to expand through accounting, regulatory and derivative leverage, providing the financing for the myriad bubbles of recent decades. The Fed did not create the bubbles directly, just provided the conditions for banks to do it for them.

Actually Obama's Been This Way Since He Was 25, Not 52

Don't you find that comforting knowing his finger is on the nuclear button?