Memo To Larry Kudlow And Other Defenders Of GM/TARP Bailouts: Free Market Capitalism This Is Not

General Motors, bailed out at a loss to the American people in 2009, has now had to recall approximately 2.6 million vehicles according to this story, many built well after the fact:

General Motors is boosting by 971,000 the number of small cars being recalled worldwide for a defective ignition switch, saying cars from the model years 2008-2011 may have gotten the part as a replacement.

The latest move brings the total number of cars affected to 2.6 million. The questionable handling of the problem, including GM's admission that it knew the switches were possibly defective as early as 2001, has embarrassed the nation's largest automaker. The recalls — which are under investigation by Congress and federal regulators — have overshadowed the improved quality of GM's newer cars.

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Improved quality? You mean like the Volt which catches on fire? The Cruze whose steering wheel comes off? If this were a free market capitalist economy, Larry, GM would have been allowed to fail instead of being allowed to keep on selling this garbage to the American people.

GM should have gone through bankruptcy instead of being bailed out. It might have been reorganized as a result, but not as a worthless union shop. Otherwise its assets would have been acquired by the highest bidders who know how to build cars. Unfortunately GM's still here making crummy cars with shitty parts, some of which could kill more people, all thanks to the taxpayers, some of whom are still dumb enough to keep buying the things. Just Google the forums and read the horror stories. I'll bet they're the same ones who don't know Monday is the deadline to sign up for ObamaCare.

I've said it before and I'll say it again: no more GM cars for me, ever. The bailout was a bridge too far.

Ditto Chrysler.

Larry Kudlow's Kudlow Report On CNBC Ended Tonight

CNBC posted the farewells here on the day ending the television show's 5-year run, which wraps up 25 years with the network so far.

Kudlow remains affiliated with CNBC in a senior capacity and will appear daytimes on occasion instead of nightly at 7:00 PM.

Kudlow, 66 and an avid tennis player,  has had back problems requiring surgery in the last year, according to his own remarks on his 10:00 AM Saturday radio program on WABCradio.com, where you can download podcasts.

Ending his television program was reportedly his own choice and was made in the interest of slowing down.

Others have pointed to the show's very poor ratings as the reason for ending it, but the show has an enthusiastic and devoted, if not large, following.

The Reaganite supply-sider is known for his belief in free market capitalism as the best path to prosperity, as well as for strong dollar policy, growth oriented economic policies and a militarily strong America which welcomes and befriends others wishing to be free.

Kudlow credits his conversion to Roman Catholicism with helping him overcome a drug and alcohol addiction.

Incompetent Boob

He can't even make a gimme

WaPo's Chris Cillizza Doesn't Realize The Voters Already Decided Obama Was Incompetent Way Back In 2010

Yeah, Obama was reelected in 2012 and retained the Senate twice, but the House went Republican in 2010 and stayed that way in 2012 despite all the help the press has given Democrats, which is why they all remain so damn angry.

The only reason the House and Senate flipped Democrat under George Bush was the full court press of the press against him, which in the case of Obama has been completely silent on his Hurricane Sandy debacle, just as it has been on the worst GDP record in the post-war . . . under Obama. Scores of other bungles and idles also apply, from the Macondo Blowout to the Fruit of Kaboom Bomber to the Tsarnaevs to JOBS, and most recently Obama's signature debacle, the rollout of healthcare.gov. In every case the response is the same, learned from the Lutheran catechism: put the best construction on everything under Obama.

By comparison the economy and the country was a paradise under Bush, including the successful implementation of the awful Medicare Part D. GDP was 1.7 times better than it is under Obama, and will be even better than that by the time Obama is through. At least George Bush's liberalism was competent.

Cillizza's laughable commentary here.

Obama Is Going To Finish His Presidency With The Worst GDP Performance Since World War Two

The Bureau of Economic Analysis reports here today its third and final estimate of Q4 2013 GDP at 2.6%, up from 2.4% in the second estimate. 2013 overall remains stuck at 1.9%, another paltry sum in the fourth full year after the so-called Great Recession ended.

Obama's average report for the five years 2009-2013 is 1.24%, the worst in the post-war.

Bush's average report at 2.13%, the worst up to the time, was 1.7 times better than Obama's to date.

Even if Obama racks up 3.5% real GDP growth in each of the next three years 2014, 2015 and 2016, he'll still end up with a worse record than Bush and the worst record since World War Two.

What a complete and utter loser.

High On Dope Again, Obama Calls Russia A "Regional Power" Despite Its Nuclear Stockpile Of 8500 Warheads And Hundreds Of ICBMs

A country which can obliterate another nearly 10,000 miles away is not a regional but a strategic power, but as we all know by now, Obama is a little challenged in the spatial reasoning and math departments, which, unfortunately, could get us all killed. 

Obama today, apparently after a few puffs on a doobie, as quoted by WaPo here:

“Russia is a regional power that is threatening some of its immediate neighbors — not out of strength but out of weakness,” Obama said in response to a reporter’s question about whether his 2012 election opponent, Mitt Romney, was right to characterize Russia as America’s biggest geopolitical foe.

Unreliable Conservatism: Judge Bernard A. Friedman, Reagan Appointee, Overturns Michigan's Marriage Amendment

As a Democrat in recovery, Ronald Reagan proved more than once that his journey to conservatism was incomplete.

On the social issues he was full of soothing words to keep the religious rubes in the Republican line at the voting booth, but appointed to the courts people confused by liberalism (the Reagan Democrats), such as Judge Bernard A. Friedman in Michigan, who openly encouraged in 2012 lesbian plaintiffs to challenge Michigan's constitutional amendment of 2004 defining marriage as between a man and a woman. Appointed as Friedman was in 1988, conservatives may wish to console themselves with the thought that Ronald Reagan was already senile in his last year in office and was co-opted by the George H. W. Bush faction. You remember him . . . the same guy who happily signed his name recently as a witness to a lesbian "wedding" in his own dotage.  

And here we are in 2014 and the same judge Friedman has struck down what was passed by the voters with 59% approval just 10 years ago:

In his 31-page written opinion, Friedman said the constitutional amendment known as the Michigan Marriage Act, passed by 2.7 million state voters in 2004, was unconstitutional because it denied gays and lesbians equal protection under the law.

When conservatism admits liberal ideas into its universe, a queer thing known as libertarianism, the rule of law goes out the window because the rules go out the window. Societies form around consensus (culture springs from the cult), and when the consensus breaks down so does the concept of society. Order gives way to chaos, whether imposed from without by judicial usurpation or by voter apathy, acquiescence or decadence.

If capturing the heights through elections has shown us anything it is that sometimes leaders can persuade the people from the ramparts, but unless the laws spring forth organically from the beliefs of the people the future of the idea of one nation remains in doubt.

As many have pointed out, marrying your dog, multiple men or women, a herd of sheep, or minor boys and girls cannot be far behind unless Nature and Nature's God once again capture our imaginations.

"Our outlook continues to be more favorable for Treasuries going forward."

So says Market Anthropology's Erik Swarts, here.

"[O]ur current estimates of prospective S&P 500 total returns are negative on every horizon shorter than about 7 years," says John Hussman, here.

Foreclosure's Ground Zero Finally Shifts To New Jersey And New York After Region Being In "Suspended Animation" For Years

So reports Bloomberg here in late February:

The epicenter of the U.S. foreclosure crisis is shifting to New Jersey and New York, threatening a housing rebound in one of the country’s most densely populated areas. ...

The number of New York and New Jersey homeowners losing their houses reached a three-year high in 2013. Banks in these states have been slowly working through a backlog of delinquent loans that enabled borrowers to skip mortgage payments for years. ...

“It is really a delayed reaction in New Jersey and New York,” said Michael Fratantoni, chief economist for the Mortgage Bankers Association in Washington. “Loans that were made pre-crisis have been in this state of suspended animation for a number of years. And now, we are beginning to see the pace of resolution pick up.”

Keith Jurow has been warning about this since at least early 2013.

All But One Big Bank Would Fail Real Stress Tests, Which Means In An Actual Crisis It's 2008 All Over Again

So says Bloomberg View here, naming Wells Fargo as the only one which would pass:

The results aren’t pretty. Using a start date of Sept. 30, 2013, the same as that of the Fed's latest round of stress tests, the NYU model gives only one of the six largest U.S. banks -- Wells Fargo & Co., Inc. -- a passing grade. The other five -- JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley -- would have a combined capital shortfall of more than $300 billion. That's not much less than they needed to get themselves out of the last crisis.

China Ups The Ante In The Race For Thorium Reactors

The earth is loaded with thorium, but so is the moon.

The South China Morning Post reports here:

A team of scientists in Shanghai had originally been given 25 years to try to develop the world's first nuclear plant using the radioactive element thorium as fuel rather than uranium, but they have now been told they have 10, the researchers said. ... 

Professor Li, director of the project's molten salt chemistry and engineering technology division, said the smog crisis had provided huge impetus for their research. ...

Western countries such as the United States have experimented with thorium reactors but gave up on the technology because of the engineering difficulties.

Analysts have also suggested the US lost interest in thorium as a fuel for reactors because uranium was a more suitable material to produce nuclear weapons.

Interest, however, has been revived in recent years and research projects have been established in several countries, including the United States, France and Japan.

"This is definitely a race," said Li. China "faces fierce competition from overseas and to get there first will not be an easy task", he said.

h/t Ambrose Evans-Pritchard

The Federal Reserve Couldn't Hit A Bull In The Ass With A Sack Of Peaches, Let Alone Target The Inflation Rate

The all items CPI had climbed to 219.016 on July 1, 2008 and didn't surpass that level again until October 1, 2010 at 219.024. The deflationary gale of the Great Recession blew for 27 months.

The collapse in prices in the five months from July 2008 through November 2008 was 3.48%, after rising in 2007 by 4.29%, a spread of 7.77 points.

So much for inflation targeting by the Federal Reserve, which couldn't hit a bull in the ass with a sack of peaches.

In 2012 and 2013, despite explicitly targeting the rate at 2%, the Fed could only come up with 1.6% and 1.56% respectively, suggesting that deflationary winds remain a problem.

Bonds Beat Both Stocks And Cash For The Last 15 Years 1999-2014

The return from cash in the Vanguard Prime Money Market Fund has been 2.3% per year for the last 15 years, according to Morningstar. Note that the return over the last one, three and five years of that period has been effectively zero, which is what you get also from gold at all times and in all places . . . plus the shine.

The return from stocks in the Vanguard S&P500 Index Fund has been 4.2% per year for the last 15 years, according to Morningstar. Note that the one, three and five year returns have been three to five times the 15 year return. The S&P500 is currently very richly valued, and in real terms its level is about 7.1% off its all time high in August 2000.

The return from bonds in the Vanguard Total Bond Market Index Fund has been 5.15% per year for the last 15 years, according to Morningstar. At the current NAV of 10.71, the price of the fund is richly valued, about 2% above what looks like the historical high end of normal at around 10.50 per share.

Your 15 Year Real Return From The S&P500: Just 2% Per Year 1999-2014

The inflation-adjusted return from an investment in the S&P500 from January 1999 to January 2014 is just 2% per year.

At that rate it takes 35 years to double your fortune in real terms.

Calculate your return here.

Americans Still Earn Way Too Little To Afford The Median Priced Home

The national median price for an existing home in December 2013 was $196,300.

Median household income at the end of 2013 had reached $52,297.

That's a ratio of 3.75:1, which is even higher than the 3:1 ratio which prevailed a year ago, and 44% higher than the recommended ratio of 2.6:1.

Either housing is still much too high or wages are much too low to support ownership of the median priced home in the United States. It is more likely that both things are true.

And forget about buying a new house on such an income.

The median new house price reached a new record in December at $270,200, vaulting the ratio to 5.17:1.

Housing prices have continued to rise because of deliberate government policy to reinflate the housing bubble.

Sellers should sell and buyers should beware. 

Like The Size Of The Civilian Labor Force, Average Weekly Hours Have Stopped Their Recovery

Edward Lazear for The Wall Street Journal here has called attention to two months of back to back declines in average weekly hours, using the seasonally adjusted figures.

average weekly hours, not seasonally adjusted, quarterly average

It got me to looking at the not seasonally adjusted figures, which do not show the same thing. In fact, they show that we've been flirting with the 34.3 level quite a bit in 2013, but also even since before the Great Recession, and before ObamaCare and the recent spate of nasty winter weather. But what is interesting is that the quarterly average of the figures shows that we failed to make a new high in average weekly hours last summer, breaking a pattern of ever higher highs in 2010, 2011 and 2012 which had developed after the lows in late 2009, early 2010. You'll also notice a pattern had developed of higher lows in the measure at the beginning of 2011 and 2012,  but broken at the beginning of 2013.

civilian labor force level, not seasonally adjusted

This is interesting because you can see this same pattern in the level of the civilian labor force. The post-recession level bottomed at the beginning of 2011 and made higher lows at the turn both to 2012 and 2013, but not to 2014, which appears to signify more than seasonal shrinkage. Similarly there's been a pattern of ever higher highs in the summers in 2011, 2012 and 2013, but if the pattern doesn't hold in the summer as it hasn't in the winter, we'll not beat the 2013 summer level in the summer of 2014.

It stands to reason that as the civilian labor force recovers and grows, which it has, average weekly hours should rise, which they have, until recently. But the recent weakness in hours probably goes hand in hand with recent weakness in the size of the labor force, not with something else, like ObamaCare or the weather. And that probably has more to do with flagging demand in the economy than anything else.

What This Country Needs Is A Good 5-cent Dollar

Which would be an improvement of 25%.

Between March 5-12 Someone (Russia?) Yanked $104.5 Billion In US Treasuries From US Custodial Supervision

Peter Coy has the story here:

There’s circumstantial evidence that Russia may have yanked tens of billions of dollars in assets out of a custodial account at the U.S. Federal Reserve, possibly to keep it from being frozen by U.S. authorities in case of heightened conflict in Ukraine.

LA Employment Agencies Place Illegal Chinese In Jobs All Over America

The LA Times reports here:

Here in this bare room, where a map of the U.S. is one of the only decorations on the walls, a young man newly arrived from northeast China can find work washing dishes in Minnesota or Utah for 12 hours a day, six days a week. ...

"You can call from any part of the country to get a nanny or a restaurant worker sent to you," said Xiaojian Zhao, a professor of Asian American studies at UC Santa Barbara who has studied the employment agencies. "They are like labor distribution centers for the ethnic economy." ...

"We have been the portal, the Ellis Island, of Asian immigrants for 30 years," said Talbot, the [Monterey Park, California] city manager. "We see people walking down the sidewalk with suitcases. They've just landed. I don't know how they get here from the airport, but they get here."

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Politically the area has in the past routinely elected Democrat notables such as Judy Chu and Hilda Solis.



h/t Mickey Kaus

Bet You Didn't Know Japan Has 44 Tons Of Plutonium

I didn't either.

Story here:

Japan now has 9 tons of plutonium stockpiled at several locations in Japan and another 35 tons stored in France and the U.K. The material is enough to create 5,000 nuclear bombs. The country also has 1.2 tons of enriched uranium. ...

It also has plans to open a new fast-breeder plutonium reactor in Rokkasho in October. The reactor would be able to produce 8 tons of plutonium a year, or enough for 1,000 Nagasaki-sized weapons.