Obama Alters His Own Law Of The Land Yet Again, John Fund Says For At Least The 14th Time

Here:

Yesterday the Obama administration suddenly moved to allow hundreds of thousands of people who’ve lost their insurance due to Obamacare to sign up for bare-bone “catastrophic” plans. It’s at least the 14th unilateral change to Obamacare that’s been made without consulting Congress.

Whether It's ObamaCare Or The Gay Mafia, Camille Paglia Detects Stalinism And Fascism

Lesbian Camille Paglia, quoted here:

“To express yourself in a magazine in an interview — this is the level of punitive PC, utterly fascist, utterly Stalinist, OK, that my liberal colleagues in the Democratic Party and on college campuses have supported and promoted over the last several decades. ... This is the whole legacy of free speech 1960’s that have [sic] been lost by my own party. ... I think that this intolerance by gay activists toward the full spectrum of human beliefs is a sign of immaturity, juvenility. ... This is not the mark of a true intellectual life. This is why there is no cultural life now in the U.S. Why nothing is of interest coming from the major media in terms of cultural criticism. Why the graduates of the Ivy League with their A, A, A+ grades are complete cultural illiterates, etc. is because they are not being educated in any way to give respect to opposing view points. There is a dialogue going on human civilization, for heaven sakes. It’s not just this monologue coming from fanatics who have displaced the religious beliefs of their parents into a political movement. ... And that is what happened to feminism, and that is what happened to gay activism, a fanaticism.”

Here's Paglia in October on ObamaCare:

"But the ObamaCare is, to me, a Stalinist intrusion--okay?--into American culture."

Q3 2013 GDP Third Estimate At 4.1%, But Inventories Constitute 41% Of That

The BEA reports 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 4.1 percent in the third quarter of 2013 (that is, from the second quarter to the third quarter), according to the "third" estimate released by the Bureau of Economic Analysis.  In the second quarter, real GDP increased 2.5 percent. The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued on December 5, 2103.  In the second estimate, the increase in real GDP was 3.6 percent (see "Revisions" on page 3).  With this third estimate for the third quarter, increases in personal consumption expenditures (PCE) and in nonresidential fixed investment were larger than previously estimated. ...  The change in real private inventories added 1.67 percentage points to the third-quarter change in real GDP, after adding 0.41 percentage point to the second-quarter change. Private businesses increased inventories $115.7 billion in the third quarter, following increases of $56.6 billion in the second quarter and $42.2 billion in the first.

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That's a huge inventory number compared to the recent past.

Personal consumption expenditures, which in the second estimate came in at a paltry 1.4%, suddenly are revised up 0.6 to 2.0% in the third estimate, also contributing significantly to the up revision of GDP. In the second estimate it looked like the consumer was pulling back by over 20% from the second quarter. In the third estimate it now appears the consumer ramped it up by over 10% in Q3 compared to Q2, quite the reversal.

Someone wanted to go home early: Both reports in html and pdf say "December 5, 2103".

Hey. They're just numbers. Time for a beer. 

The Consumer Has Been Wiped Out By Food And Energy Inflation Since 2007

energy inflation up 7.75%

food inflation up 15%

average hourly earnings up 14.1%

Average hourly earnings for all employees are up 14.1% from November 2007 to November 2013, but energy inflation is up 7.75% and food inflation is up 15% over the same period.

You can't eat a cheaper iPhone.

Economic Stress Continues: Average US Car 11.4 Years Old In August, Another Record

1997 Olds LSS

The story was reported here:

The average age of vehicles on America's roads has reached an all-time high of 11.4 years, according to the market research firm Polk. And that average age is sure to keep climbing, the firm said. ...  In 2002, the average vehicle was 9.6 years old. In 1995, it was 8.4 years.

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While cars are getting better and lasting longer, this may also be a picture of economic stagnation, and perhaps decline.

Deleveraging: Consumers Reduced Debt By Less Than 8% Between January 2008 and July 2012

And household debt is on the rise again since summer 2012, up now to just under $13.1 trillion.

Squawkers everywhere (here and here) are making a big deal of this, but I'm still not convinced. We're only talking $169 billion of borrowing in the last year, July on July.

16 million vehicle sales per year at $15,000 each is $240 billion. Presumably there are some good credit risks buying some of those new vehicles, as there always are. But with the average US car age at 11 years old in summer 2012 increasing to 11.4 years old in summer 2013, record highs, and projections expecting average age to increase still more years down the road, I'd say the very slight increase in indebtedness may have more to do with necessity playing out than with a fundamental return to healthy debt-fueled growth.

As I pointed out from a source in the earlier post on this subject, many more of the new car loans are subprime, higher loan to value to be able to afford the down payment, and longer term than they used to be. The quality of the increased indebtedness is nothing to be happy about, and tells a tale of continued economic stress, not of economic recovery.

Libertarians At Forbes Completely Misrepresent The Mortgage Interest Deduction

Here:

The mortgage interest deduction (MID) is the largest personal tax deduction on the books and is widely considered one of the most sacrosanct tax benefits in the country because it is seen as making homeownership more affordable for middle-class Americans. Our new Reason Foundation research suggests, though, that the average benefits from the MID are not enough to be the difference between renting and home owning for a household.

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If there's a sacrosanct tax benefit in this country, which by the way benefits mostly upper income people who also pay most of the taxes, it's reduced rates of taxation on dividends and long term capital gains, which the Joint Committee on Taxation says costs the federal government $596 billion in lost revenue between 2012 and 2016. The mortgage interest deduction, by contrast, will cost the feds $364 billion. Leave it to Forbes not to mention that.

The mortgage interest deduction may or may not be "the largest personal" deduction, but in the big picture of revenue forfeited by the feds due to tax preferences, which is categorized as "tax loss expenditure", the mortgage interest deduction represents just 6.9% of the revenue lost out of the largest 21 line items in the JCT's report representing $5.25 trillion in tax loss expenditures for the period mentioned (here).

Preferential treatment of income from stocks isn't the biggest preference either (11.4%), but it is much bigger than the preference given to mortgage interest. But businesses do get the biggest preference. When employers provide healthcare contributions, health insurance and long term care insurance, they get to deduct all of that. Cost to the feds? A whopping $706.6 billion (13.5%). And that figure will only grow under ObamaCare.

And how about retirement plan contributions? Cost of excluding both defined benefit and defined contribution plans comes to $505.3 billion over the period (9.6%).

Compared to these, the mortgage interest deduction comes in a distant fourth (in fifth is the earned income tax credit at $319.7 billion).

The much-maligned charitable deduction, meanwhile, which was the original basis for the standard deduction in the tax code, at $172.4 billion represents just 3.3% of the lost $5.25 trillion in revenue from 2012 to 2016. It comes in fourteenth.

There's lots of things wrong with the world, but changing the home mortgage interest deduction isn't going to fix them. For libertarians to focus on it as they do should tell you there's more going on here than meets the eye: an ideological bias against home ownership because it limits "freedom". Millions beg to differ.

Largest Sums Of Federal Revenue Forfeited Because Of The Tax Code, Joint Committee On Taxation, 2012-2016

$706.6 billion: exclusion of employer contributions for healthcare, health insurance premiums and long term care insurance premiums.

$596.0 billion: reduced rates of taxation on dividends and long term capital gains.

$505.3 billion: net exclusion of pension contributions and earnings to defined benefit/contribution plans.

$364.0 billion: mortgage interest deduction.

$319.7 billion: earned income tax credit.

$305.0 billion: exclusion of Medicare Parts A&B benefits.

$289.4 billion: credit for children under 17.

$259.2 billion: deduction of nonbusiness state and local government income taxes, sales taxes and personal property taxes.

$239.7 billion: deferral of active income of controlled foreign corporations.

$236.1 billion: exclusion of capital gains at death.

$184.3 billion: subsidies for participation in healthcare exchanges.

$182.8 billion: exclusion of interest on public purpose state and local government bonds.

$175.8 billion: exclusion of benefits provided under cafeteria plans.

$172.4 billion: deduction for charitable contributions.

$172.1 billion: exclusion of untaxed Social Security and railroad retirement benefits.

$153.8 billion: exclusion of investment income on life insurance and annuity contracts.

$143.0 billion: property tax deduction.

$124.1 billion: exclusion of capital gains on the sale of a home.

$119.1 billion: credits for tuition for post-secondary education.

The Market Goes Irrational Whether The Fed Pumps, Stands Pat Or Tapers

Today the Fed announced a reduction of MBS and Treasury purchases of $10 billion, from $85 billion to $75 billion a month.

Usually when the Fed has announced things are still weak and that purchases will continue as planned, the market has rallied strongly. Same with announcements of new asset purchases.

Today the Fed announced the opposite, intending to scale back purchases, and the market rallied huge.

If you are looking for stupid pills at Walgreens, they're all out. Anyway that's what my broker said.

Vanguard Precious Metals And Mining Down Over 70% In Last 6 Years

click to enlarge

Ouch, and down 75% from the 2008 high.

John Hussman Is Right: High Valuations Since The Late 1990s Have Coincided With Smaller S&P500 Returns

Here's Hussman:

Yes, several reliable valuation measures have hovered at much higher levels since the late-1990’s than were generally seen historically. But that in itself is not evidence that these historically reliable valuation measures are “broken.” It matters that those high valuations have been associated with a period of more than 13 years now where the S&P 500 has scarcely achieved a 3% annual total return.

Here's Ironman's chart of S&P500 returns for the 15 years ended October 2013 showing a real, that is inflation-adjusted, total annual return with dividends fully reinvested of . . . 2.88%:

click to enlarge

Here's Morningstar's chart showing how much better you'd have done in intermediate term bonds like Vanguard's VBIIX, 5.88% nominal per year over the last 15 years (roughly 3.4% real), and that's including this year's bond slaughter:

click to enlarge

Here's the Shiller p/e as of this morning, clearly and excessively above the mean level of 16.50 for most of the time from the 1990s:

click to enlarge

Hussman says investors should expect poor returns from stocks going forward:

[S]tocks are currently at levels that we estimate will provide roughly zero nominal total returns over the next 7-10 years, with historically adequate long-term returns thereafter.

Greedy Democrats Have Used Medicaid Since 1993 To Take Your Assets, Now It Ramps Up Under ObamaCare

Signing up for Medicaid may be signing away everything you own.

From the story here:

The Omnibus Reconciliation Act of 1993 [under Bill and Hillary Clinton and a Democrat Congress] requires states to pursue Medicaid asset recovery from persons who receive benefits at age 55 or older. At first, this applied mainly to nursing home benefits, but at state option, it could now include any items or services provided under Medicaid. ... A potential for greatly expanded use of estate recovery was created in Obamacare, as pointed out in an anonymously authored, well-documented article distributed by economist Paul Craig Roberts. Obamacare increases the number of people eligible for Medicaid by dropping the asset test for enrollment (Page 162 of Obamacare). ... Medicaid, supposed to be a program to help the poor, has become a cash cow for multibillion-dollar, managed-care companies, who milk federal and state taxpayers. Expanding Medicaid to persons with modest assets will enable estate recovery to become a cash cow for states to milk the poor and the middle class.

Is The S&P500 Still 13% Below Its Previous Peak?

Adjusted for inflation, the current level of the S&P500 has still not bested the 1999-2000 level, meaning there are bubbles, and then there are bubbles.

That said, the last "bubble" in 2007 has been surpassed already.

American Killer Obama Shakes Hands With Cuban Killer Castro

The outrage is that Obama's still our president, not that he shook hands with a fellow murderer.

Story here.

Former MT Governor Democrat Brian Schweitzer Calls Obama A Corporatist

The story, here, is attracting quite a discussion in the comments section about how a lefty like Obama could possibly also be a fascist, since Schweitzer characterizes Obama's entire presidency as a move to the right.

The true believers are furious with Obama.

Global Public Debt Is Up 72% Since 2007, Just Six Years Ago

Get Over It: Santa's Been White Since 1881

Actually, he was white before 1881, but this image by Thomas Nast for Harper's Weekly in 1881 became dominant in America from that time.

Bank Failure Friday: The 24th Bank To Fail In 2013 Is In Texas

Texas Community Bank, National Association, The Woodlands, Texas, failed today, costing the FDIC $10.8 million.

6,891 banks remain in the insured system of FDIC banks and savings institutions.

Over Two Times As Many Getting Stuck With Medicaid Vs. Insurance Under ObamaCare

"Coverage" does not equal care.

The Detroit News reports here:

Nationwide, 1.9 million people completed online applications in October and November, but just 365,000 selected an insurance plan. Those planning to buy on the health insurance marketplace — healthcare.gov — must enroll by Dec. 23 to have a policy in effect by Jan. 1. ... An additional 803,077 Americans were found eligible for Medicaid or the federal Children’s Health Insurance Program. That number includes 7,363 residents of Michigan, one of 25 states and the District of Columbia that expanded Medicaid under the Affordable Care Act.

Wow, Jobless Claims Surge +146,241 To A Level Worse Than This Week Last Year: Sudden ObamaCare Effect?

The report is here.

This number is stunning. We haven't seen a level like this in 2013 except for once in July (410k) and three times way back in January to start the year.

Are companies letting people go in advance of ObamaCare kicking-in full-force about a year from now, to comply with the one-year look-back period?

Major market indices declined for a third straight day on the news, the DOW by 2/3rds of a percent.