Thursday, September 26, 2013
Total Credit Market Debt Has Grown Less Than 9% In The Last Three Years
The debt deflationary depression continues.
Total credit market debt owed (TCMDO), now unhelpfully renamed by the Federal Reserve "All Sectors; Credit Market Instruments; Liability" and perfectly Orwellian in doing away with both information-rich terms "debt" and "owed", has grown 8.76% from the recent April 2010 low to April 2013, about $4.64 trillion.
To put that in context, there have been episodes going back to 1949 when this measure has exploded 50% in three years' time so that doubling times for TCMDO have been as short as 6 years. The longest periods between doubling have been around 11 years long, and since 1949 have averaged about 8 years. The last time the metric doubled was in July 2007, at just under $50 trillion. At almost six years out from that date, we could well have been close to witnessing the number double again to $100 trillion by now based on past experience, or certainly something like half the way there, say to $70-$75 trillion. But here we are instead, at less than $57.6 trillion. It's like we hit a brick wall, the brick wall of a repossessed house most likely.
Say what you will against such a debt-based economy, its fundamental immorality, unsustainability and limits, but that's the economy we have, where the real money in the post-war has been in growth in borrowing, not in the money supply. From this perspective we have entered a long debt-deflationary depression, to get out of which borrowing will have to pick up to at least the point where TCMDO doubles at the extreme of the post-war experience, say by 2018, 11 years on from 2007.
Unfortunately for us, if the last three years are indicative of the new normal pattern of very slow debt expansion, it will take until about the year 2042 for TCMDO to double again to $100 trillion, another 29 years, an unprecedented slowdown in the American way of life.
This is what Chris Whalen meant when he warned in 2010 of decades of economic shrinkage ahead.
Q2 2013 GDP 2.5% Annualized In 3rd Estimate, Nearly 11% Lower Than In 2012
The full GDP report from the BEA is here.
Subdued growth in the last three quarterly reports, 0.1% for the last quarter of 2012, 1.1% in Q1 and now 2.5%, in part reflects on-going effects from Hurricane Sandy last November, little remarked in the press since then probably because of all the heat Obama got in 2011 for blaming exogenous events for poor GDP performance, but correctly forecast by Rosie in the instance.
Since about 25% of GDP is government spending at any given time, the real economy is piddling along at about 1.88%.
Wednesday, September 25, 2013
Face It, The Heritage Foundation Has Been And Remains Confused (By Liberalism)
As the photo at left demonstrates but conservatives want to ignore, including Erick Erickson here at Red State, a Heritage Foundation representative was present for the signing of RomneyCare in 2006 because Heritage invented the damn idea way back before HillaryCare raised its ugly head and Heritage was happy to see it made into law (so was Senator Ted Kennedy). That was just seven years ago, but now Heritage would just rather have you ignore all that.
Forcing people to sign up for health insurance at the point of a gun has its analog, of course, in forcing people in distant lands to adopt Western-style democracy, something we heard the heir of Republican conservatism, George Bush, incessantly preach: "The long-term solution is to promote a better ideology, which is freedom. Freedom is universal." (Whether they want it or not). To this day, as Molly Ball's article in The Atlantic points out here, "universal coverage" is still Heritage's position:
In my interviews with them, Heritage officials could recite chapter and verse on why Heritage turned against the individual mandate -- a turn, they claim, that occurred before Romney or Obama adopted the idea. “We still believe universal coverage is a good idea,” [Phillip] Truluck [VP and COO] said. But none of the four Heritage officials I interviewed could tell me offhand how the foundation proposes to reform health care and cover the uninsured if Obamacare is scrapped. (Later, an assistant followed up by emailing me links to Heritage papers on “putting patients first,” regulating the health-insurance market, and Medicare reform.)
The place is universally incoherent, and always has been. It has been against Drugs for Seniors as an expansion of big government, but supported the line-item veto, thus expanding the authority of the executive part of government, even as it once used to warn about the imperial presidency. Today it is famously against the current immigration amnesty plan but was pro-immigration for the longest time. It had a founder who has moved notably left liberal, but now it has a libertarian-friendly leader in Jim DeMint. It was for ObamaCare before it was against it. Something about the Heritage Foundation is really off for it to be the home of so many contradictory currents. If conservatism is the negation of ideology, as Russell Kirk taught us, Heritage knows nothing about it.
Maybe they should just rename the place The John F. Kerry Foundation and be done with it.
Real Clear Markets Has JP Morgan Predicting Either 4% Up Or 31% Down By Year's End
So, it's either going to be a modest 4% rise in the S&P500 by the end of the year to 1775, or a 31% collapse to 1175. My dartboard could predict as much. If I were JP Morgan, I wouldn't be too happy.
Attention to detail . . . what separates the wheat from the chaff.
Healthcare Groundhog Day: Can You Say HMO-bamacare?
So says Scott Gottlieb, MD, for Real Clear Markets, here:
The new health plans offered in the Obamacare exchanges are going to be narrow network, no frills affairs. Obamacare's exchange based plans will be a throwback to the 1990s style of restrictive HMOs. They will give you fewer choices of doctors and hospitals than the kinds of health plans currently sold in the private, commercial marketplace. The doctor networks that Obamacare plans use will resemble Medicaid plans. But it doesn't end there. Pretty soon, these same bare bones health plans will also become standard fare in the commercial marketplace. You'll get them at work.
Tuesday, September 24, 2013
Sole Proprietorships 2009-2011
2009 22.7 million
2010 23.0 million
2011 23.4 million
The number of sole proprietorships is up 3.1% over the period. Total revenues have gone from $1.2 trillion to $1.3 trillion over the period, an increase of 8.3%. That's about $55k per sole proprietor in 2011.
33% Increase In Dutch Euthanasia Misreported As 13%
The figure for 2011 was 3,136, meaning the 2012 increase to 4,188 is 33%, not 13% as reported here by The UK Telegraph.
Monday, September 23, 2013
Oops! JP Morgan Chief Strategist Predicts S&P500 To 1775, Real Clear Markets Says 1175!
Video here.
And you have to listen incredulously to nearly the whole thing with all its happy talk to confirm the headline's typo.
Update: Added the headline from the front page just so you understand my surprise.
Update: Added the headline from the front page just so you understand my surprise.
Should Chief Justice John Roberts Have Recused Himself On ACA Because Of Epilepsy?
Should Chief Justice of the Supreme Court John Roberts have recused himself from the ObamaCare case because he has epilepsy? He had a seizure as early as 1993, and another in 2007.
You know, a guy with a pre-existing condition like that may have felt compelled to help other people with pre-existing conditions by upholding ObamaCare. His own condition may have interfered with his judgment on the merits of the Affordable Care Act.
Striking it down would have meant that that provision of the Act guaranteeing coverage to people with pre-existing conditions such as his would have gone down with it.
The Rise Of Patents From The 1980s Is Basically A New Protectionism, Reducing Innovation
So says Jeffrey Snider, here:
Contrary to popular belief, again assuming I am correct in interpreting it, patents are not about innovation at all. The rise in patent applications was not a proxy for a new wave of innovation, but an era of protectionism. A patent is a legal form of destroying competition. Ostensibly, that is assumed to be a cost to the system worth bearing because we largely believe that patents encourage innovation by giving the innovator some protection to reap the benefits of trying to innovate. But is that really the case? Would innovation suffer from competition at the earliest stages?
Markets develop because market demand exists, and I happen to believe that innovation would be better served with competition right from the start. But to the question at hand, the sharp rise in patent applications starting in the 1980's was likely far more related to reducing competition than signaling the continued advancement of technology revolution.
Saturday, September 21, 2013
Bond Mutual Fund Prices Remain Expensive, Returns Negative: Cash Has Been King
Bond mutual fund prices remain expensive by historical standards despite the recent carnage, while returns have been negative. For a safe haven, cash has been the place to be over the last year, such as it is.
For example, the short duration bond index fund from Vanguard, VBISX, finished the week at 10.51, 1.05% above the high end of normal (10.40). Vanguard reports returns down -0.27% for this fund in the last year.
The intermediate duration total bond index fund from Vanguard, VBMFX, a mixture of short, intermediate and long bonds, finished the week at 10.61, 1.04% above the high end of normal (10.50). Vanguard reports returns down -2.77% for this fund in the last year.
The pure intermediate duration bond index fund from Vanguard, VBIIX, finished the week at 11.24, 2.18% above the high end of normal (11.00). Vanguard reports returns down -3.66% for this fund in the last year.
Meanwhile the long duration bond index fund from Vanguard, VBLTX, finished the week at 12.51, 4.25% above the high end of normal (12.00). Vanguard reports returns down -10.01% for this fund in the last year.
Add in the insult of all items inflation of 1.5% to these miserable returns over the last year and cash was the place to be for safety even though it is also down because of inflation (gold, by the way, has fallen, per the London Fix, from 1758.50 on September 20th, 2012 to 1349.25 on September 20th, 2013, a decline of 23.3%).
Clearly such bond funds have farther to fall before they become attractive safe havens once again.
Friday, September 20, 2013
WaPo Finally Demotes The Leader Of The Banana Republic To Lecturer
When you lose The Washington Post, you've really lost it.
The comment at the left was seen here in the comments section to an article in The Washington Post which, among other things, omits Obama's use of the term "Banana Republic" in his address in Kansas today, but does finally demote him to the mere lecturer that he was at the University of Chicago:
Obama at times sought to belittle GOP lawmakers. “The most basic constitutional duty Congress has is to pass a budget,” said the president, a former constitutional law lecturer. “That’s Congress 101.”
----------------------------------------------------------------------------------
The demotion from "professor" is interesting in the light of the omission of "Banana Republic" since America pretty much qualifies as one by the definition in Wikipedia if you remember that the bank and automobile maker bailouts enriched private enterprise by socializing the losses on the backs of the taxpayers:
Better, apparently, to deflate his credentials than face his fascism.
Economic Stress: Middle Class Can't Eat Out On Friday Night . . .
. . . neither at Red Lobster nor at Olive Garden:
"Outside Darden's niche in casual dining, limited-service eateries that don't require tipping are gaining ground."
Read more, here.
----------------------
Tonight's menu at your blogger's home? Baked Steelhead lemon pepper trout filet, Jasmine rice, and steamed broccoli with butter. Serves three tonight for $10.
Subscribe to:
Posts (Atom)