America Becomes France, Shrugs Shoulders Over Disastrous Q1 GDP Of 0.1%, News Media Avoid Story

No major news outlet makes the disaster of GDP under Obama, who owns the absolute worst record in the post-war, the lead story this morning except for business news outlets like CNBC and Marketwatch. ABC's story is a one line headline from AP. That's it! You have to actively go looking for the GDP story under "Money" or "Business" or "Economy" to find it just about everywhere even though it is the story of our time because it's the reason there are no jobs, no income growth, declining living standards and growing income inequality. All brought to you by Barack Hussein Obama, hm hm hm, who has turned America into a slum.

Q1 2014 GDP 0.1%: Consensus 1.2% Only Overestimated By 1100%, That's All!

The median priced existing home is affordable only to the highest reaches of the upper middle class

From an interesting discussion recently about what it means to be middle class, here:

One helpful yardstick to judge whether you're middle class: Median household income was $51,017 in 2012, according to the most recent U.S. census data. Robert Reich, a professor of Public Policy at the University of California-Berkeley and former Secretary of Labor, has suggested the middle class be defined as households making 50 percent higher and lower than the median, which would mean the average middle class annual income is $25,500 to $76,500.

If you're in the middle of the middle, however – not lower or upper-middle class – that would be an income range between $39,764 and $64,582, says Aaron Pacitti, an assistant professor of economics at Siena College in Loudonville, N.Y.

Again, it isn't official. Nobody gets a membership card to the middle class.

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The former spread, $25,500 to $76,500, comes to about 53 million individual wage earners in 2012 according to Social Security wage statistics, out of almost 154 million total. This spread looks like it comes from dividing the total workers into thirds and seeing where the income lines fall . . . in other words, not a wealth driven measure but grading on the population curve. This means a third of wage earners (about 50 million) make less than $25,500 and a third make more than $76,500.

The latter spread, between $39,764 and $64,582, comes to just 20 million individual wage earners in 2012.

Typically, working couples must combine such incomes to enjoy middle class life styles, which usually means homeownership.

Perhaps a better way to measure membership in the middle class is through housing affordability. Often housing is deemed affordable at about 2.6 times earnings on an historical basis, which implies an existing home price to the $39,764 earner at $103,400 or lower, and $167,900 or lower to the $64,582 earner.

Unfortunately the US existing home median sales price in March 2014 was $198,500, which presently requires an income of $76,300 to be affordable. In other words, you've got to have extreme upper middle class household income just to afford the median priced existing home.

But the median household income in 2012 was just $51,017. That only supported an affordable home at $132,600 or less, not much of a home.

Three Cheers For Dana Rohrabacher: Christian Love Is Furthered By Individual, Not Government, Action

Quoted here at 218, the blog of the oligarchy:

"No. 1, a policy of legalizing the people who are here, the sort of easy way out, would in the long run put 40 million new people into our country, which would change the nature of our country, and that would be a bad thing, not to mention breaking the bank, etc."

“Also, my response was that Christian love is not furthered by advocacy of government policy but instead by individual action and commitment."

“Individual commitment is not individual commitment to changing a government policy, it is to come out and help specific people and people who are in need, and if [the pastors] really wanted to help people who are here illegally or in bad situations they, they want to pay for their health insurance and everything, then I would be saying how wonderful that is. But if they are advocating that the government do that, then it will break our bank and destroy our country.”

If Hillary Doesn't Run, Her Marxism Dictates That Chelsea Must . . . For Something: How About Ambassador To Libya To Get Her Started?

Libya accepts pregnant ambassadors, right?

Mickey Kaus, here:

The Clinton mode of production, then, is running for office or serving in office. That is the material basis for the Clinton Foundation and the Clinton lifestyle and the whole Clinton institutional structure. In order to keep this mode of production from breaking down, the Clintons–one of them, at any rate–must be at least potentially in the running for a powerful office at all times. If Hillary doesn’t really want to run, she can’t admit it in public. She must maintain the facade of candidacy until the last minute–or else the Foundation will have to cut back and Ira Magaziner might need to find a job. If it looks like Hillary might not run–perhaps because of health reasons–the model would predict that another Clinton, presumably daughter Chelsea, would start making noises about launching a political career. Voila! Data point confirmed. The theory is off to a good start. …

h/t Chris

Senate Republicans Kill Provision Requiring Disclosure Of Total Executed Annually By Drone

From The New York Times, here:

The provision, passed by the Senate Intelligence Committee last year as part of its authorization bill, required Mr. Obama to make public an annual report on “the total number of combatants killed or injured during the preceding year by the use of targeted lethal force outside the United States by remotely piloted aircraft.” The provision was the same for civilians killed or injured. But officials said that the provision encountered almost immediate resistance both from intelligence officials and Republican lawmakers, some who have fought against any changes to the way the targeted killing program has been managed.

Beaver Pennsylvania: Home Of The $6.30 Screw Job

From the story here:

A widow was given ample notice before her $280,000 house was sold at a tax auction three years ago over $6.30 in unpaid interest, a Pennsylvania judge has ruled.

The decision last week turned down Eileen Battisti's request to reverse the September 2011 sale of her home outside Aliquippa in western Pennsylvania.

"I paid everything, and didn't know about the $6.30," Battisti said. "For the house to be sold just because of $6.30 is crazy."

Another story here says she owes a lot more than $6.30:

Tax records show that as of last week she has an outstanding balance of more than $20,000, including penalties and interest, for county, municipal and school taxes from 2009 to 2013.

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Beaver PA is the home of Boss Quay.

Papal iniquity: Let him who is without money among you cast the first stone

So the pope has tweeted that inequality is the root of social evil.

The redefinition of terms is startling, as if there were a difference between social evil and individual evil. The classic formulation from 1 Timothy 6 says the love of money is the root of all evil, so what we have here is a pope who is at best unanchored. According to Jesus, you cannot serve both God and Mammon.

Speaking of which, since the cost of Christian discipleship according to Jesus is personal poverty, when the fabulously wealthy papacy and the rest of the world's Catholics become as poor as the poor there will be reason to pay attention, but until then the pontweetification will remain just that, and disappear into the ether.

Next stop, an appearance on The Tonight Show?

New book details liberal disdain for the middle class

From Tom Bethell's review of it here:

Ortega y Gasset’s Revolt of the Masses was published in 1930, but don’t be misled—its author was hostile to the masses. They had attained “complete social power,” and he resented that. The masses “neither should nor can direct their own personal existence.”

Fred Siegel’s Revolt Against the Masses (Encounter Books) takes issue with Ortega and can be seen as a belated corrective. A bracing, well-written reinterpretation of liberalism, Siegel’s new book identifies a political trend that has been in place for decades, yet is rarely noticed or mentioned.

It is subtitled “How Liberalism Has Undermined the Middle Class.” Siegel calls them gentry liberals—our equivalent of old-fashioned Tories and every bit as class-conscious. In the 1960s they took up “the priestly task of de-democratizing America in the name of administering newly developed rights.”

His message, says Michael Barone, co-author The Almanac of American Politics, is that “the roots of American liberalism are not compassion but snobbery.” 

Secretary of State John F Kerry does The Mussolini

The end of oligarchy

Oligarchy ends when the few who rule us become so few in number that they eventually resolve into a singularity, known as tyranny.

Matthew Continetti Thinks He Ought To Hear One Of The Oligarchs Complain About The Oligarchy

Here, in The Washington Free Beacon:

If the business editors of the [New York] Times were aware of the irony of lamenting the political influence of great wealth on one half of their page while handling it with kid gloves on the other, they gave no sign. “Mr. Cohen says he understands the criticism that he has access most citizens do not,” says the article, before handing Cohen the microphone. “But I also don’t believe in unilateral disarmament,” he said. Two paragraphs earlier, he had said, “My priorities in political giving are Comcast priorities. I don’t kid myself. My goals are to support the interests of the company.”

There you have it: A wealthy Democratic donor admits he funds candidates to improve his bottom line. And yet I hear from the Senate floor no denunciations of his attempts to buy American democracy, no labeling of him as un-American. I have not received a piece of direct mail soliciting donations to fight David L. Cohen’s hijacking of the political process, nor do I wake up every day to investigations of the Cohen political and charitable network. Why?

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Matthew needs to re-read that George Orwell line with which he starts the story, get his nose out of the Times and aim it in the direction of the Congress:

“To see what is in front of one’s nose,” George Orwell famously wrote, “needs a constant struggle.” 

I'll say.

The whole point of representation is that it be adequate to the task of balancing the influence of competing interests which all from time to time display the same shortcomings of human nature. Continetti's faith in the goodness of the Senate is shockingly naive. It especially misses the fact that the oligarchy it itself constitutes works hand in glove with the oligarchy of business by which it was captured long ago after state legislatures lost their right of electing them. The founders wanted the Senate to be an oligarchy of the interests of the states qua states, balanced by a House of the people which grew in size as the country did, but we willingly gave that up long ago when Senators became popularly elected and Congressmen fixed their number based on the population level of the 1920 US Census. Now every important issue hangs in the balance depending on what just one or two men or women can do in government, as when a Biden, a McConnell or a Boehner, a Pelosi or a Reid brokers some deal to get legislation passed. And almost always bad legislation.

Talk about oligarchy. Wherever two or three are gathered together in the name of government these days, there is one.

It is counterintuitive that in order for the people to have more control of their government, government has to be bigger, just not the part that's already too big, which it is precisely because the part that isn't anywhere near big enough is as small as it is.

Repeal the 17th Amendment, and expand the US House to its constitutional proportions: 10,566. It won't be perfect. It's not a panacea. Some measure will have to be taken to preclude the House and Senate from doing what they did before in concentrating power in their few hands. But there is no other alternative if we are to rescue ourselves from the miserable few who now tyrannize us routinely, as with ObamaCare. If we don't, the next step is a true tyranny of one.

Another reason why "The American Conservative" isn't conservative

They didn't used to be "AmConMag.com" for nothing.

Seen here over the weekend:

"American democracy is rife with troubling inequalities, but calling it an oligarchy is a step too far."

This is the dingbat sort of stuff you expect people without any historical sense to say, not conservatives.

Alarums against oligarchy were already afoot in the debate over the constitution in 1787, whence these excerpts from Brutus to the New Yorkers:

[I]n reality there will be no part of the people represented, but the rich, even in that branch of the legislature, which is called the democratic. — The well born, and highest orders in life, as they term themselves, will be ignorant of the sentiments of the midling class of citizens, strangers to their ability, wants, and difficulties, and void of sympathy, and fellow feeling. This branch of the legislature will not only be an imperfect representation, but there will be no security in so small a body, against bribery, and corruption — It will consist at first, of sixty-five, and can never exceed one for every thirty thousand inhabitants; a majority of these, that is, thirty-three, are a quorum, and a majority of which, or seventeen, may pass any law — so that twenty-five men, will have the power to give away all the property of the citizens of these states — what security therefore can there be for the people, where their liberties and property are at the disposal of so few men?

It will literally be a government in the hands of the few to oppress and plunder the many. You may conclude with a great degree of certainty, that it, like all others of a similar nature, will be managed by influence and corruption, and that the period is not far distant, when this will be the case, if it should be adopted; for even now there are some among us, whose characters stand high in the public estimation, and who have had a principal agency in framing this constitution, who do not scruple to say, that this is the only practicable mode of governing a people, who think with that degree of freedom which the Americans do — this government will have in their gift a vast number of offices of great honor and emolument. The members of the legislature are not excluded from appointments; and twenty-five of them, as the case may be, being secured, any measure may be carried.

The rulers of this country must be composed of very different materials from those of any other, of which history gives us any account, if the majority of the legislature are not, before many years, entirely at the devotion of the executive — and these states will soon be under the absolute domination of one, or a few, with the fallacious appearance of being governed by men of their own election.

The more I reflect on this subject, the more firmly am I persuaded, that the representation is merely nominal — a mere burlesque; and that no security is provided against corruption and undue influence. No free people on earth, who have elected persons to legislate for them, ever reposed that confidence in so small a number. The British house of commons consists of five hundred and fifty-eight members; the number of inhabitants in Great-Britain, is computed at eight millions — this gives one member for a little more than fourteen thousand, which exceeds double the proportion this country can ever have: and yet we require a larger representation in proportion to our numbers, than Great-Britain, because this country is much more extensive, and differs more in its productions, interests, manners, and habits. The democratic branch of the legislatures of the several states in the union consists, I believe at present, of near two thousand; and this number was not thought too large for the security of liberty by the framers of our state constitutions: some of the states may have erred in this respect, but the difference between two thousand, and sixty-five, is so very great, that it will bear no comparison.

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Can anyone today deny that Brutus' warnings were wrong? He has been entirely vindicated by subsequent events, which we call a precious American history but he would have called a mockery of the original vision they had for the country. Yet Brutus, already horrified in 1787, would no doubt have been struck dead on the spot were he still alive in the 1920s to have witnessed this long-standing paltry representation further prohibited from growing and frozen at 435, the number we still have today. And instead of the 10,000 representatives we should have in Congress, we have 10,000 registered lobbyists instead.

No, the seeds of our present discontents were sown at the founding, but today conservatism is so unthinking and emotionally reflexive that it only means to preserve the baby in its dirty bath water while chiding the nursemaid for sensibly wanting to drain it.

A little satire on French economist Thomas Piketty, by yours truly

Thomas Piketty has written a big book,

whose thesis is rickety says Bloomberg's Clive Crook,

mistaken about wages both minimum and higher,

for which Diana Furchtgott-Roth says he's a liar.

Entitled Capital in the Twenty-First Century,

its accumulators he'd put in a penitentiary,

while millions now equal (in the theory of this novel),

would no doubt end-up together in a hovel.

We petits rentiers are his "fairly disturbing" problem,

the progeny of capitalism (for Marxists the hobgoblin),

successfully multiplying left and right like rabbits,

Oui! because of our unequal work ethic and habits.

Bank Failure Friday April 25th 2014: The 6th Of 2014

Allendale County Bank, Fairfax, South Carolina, failed on Friday costing the FDIC $17.1 million.

It was the sixth bank failure of 2014, and the 498th since February 2007.

FDIC insured institutions number 6,812 through 12/31/13.

Calculated Risk reports on the unofficial problem bank list and statistics here:

For the week, there were nine removals and one addition that leave the list at 513 institutions with assets of $167.3 billion. A year ago, the list held 775 institutions with assets of $285.3 billion.

One reason why Americans have lost their passion and don't seem to care about very much

One reason why Americans have lost their passion and don't seem to care about very much is that they are taking large quantities of psychotropic drugs, many of which level their moods so that they are not too happy and not too sad.

In 2011 the top 25 psychiatric medication prescriptions numbered a staggering 391 million. Most of these prescriptions are for drugs such as SSRIs, SARIs, SNRIs or NDRIs for depression, anxiety and other mental disorders, with just 33 million of the prescriptions intended solely for attention deficit disorder.

Data here.

Real Median Annual Household Income Remains In Depression Measured Since Both 2007 And 2000

The report from Sentier Research is here:

The March 2014 [real] median [annual household income of $53,043] was 5.7 percent lower than the median of $56,271 in December 2007, the beginning month of the recession that occurred over six years ago. And the March 2014 median was 6.9 percent lower than the median of $56,950 in January 2000, the beginning of this statistical series.

Nothing Else Is Working, So The US Federal Reserve Should Be QEing Gold Instead Of Treasuries

So said Christopher T. Mahoney, a former Vice Chairman at Moody's, for Project-Syndicate last June, here, just not in so many words:

It may be that when rates are at the zero bound and the banking system is broken, the appropriate policy instrument may not be to buy bonds from banks, since buying them doesn’t seem to affect the price level. Bernanke was certainly correct that the Fed could create inflation by dropping money on citizens from helicopters, but that would be a rather blunt instrument.

It seems to me that the Fed needs to buy something besides Treasury and agency bonds. The obvious alternative to Treasuries would be foreign government bonds, or gold. Since the former would constitute a “currency war”, that would seem to leave gold.

I have no doubt that if the Fed were to announce that it will buy gold until it has achieved 2% inflation and 6.5% unemployment, it would get there. It would disrupt the gold market (and enrich some of the wrong people) but that is a small price to pay. No foreign government could object to the Fed buying gold; it’s been doing it for 100 years.

But I said it more or less three times a year ago this month, here, here and especially here:

The United States at present is in the throes of a deflationary collapse of monetarist making, not of dollar currency but of credit money, and it is the principal reason for the collapse of GDP. One of the largest sources of the "currency" of credit money in recent years has been mortgages, which are now effectively unacceptable as collateral because of the rot permeating the system in the form of defaults and underwaters.

Federal Reserve policy has actually been removing such collateral from circulation, along with US Treasuries, by placing it on its balance sheet. But since there is nothing "real" behind the dollars the Fed replaces this collateral with, there is no corresponding expansion of credit in size to match the former vigor of the process.

So perhaps the Fed should QE gold instead of MBS and Treasuries to provide something real behind the money created which would give that money a surer basis in collateral.

Central banks around the world have been buying gold in quantities not seen in 30 years in order to fill the collateral gap. The Fed should join them.

Housing is a store of value, not an investment

Catherine Rampell for WaPo puts the long term real compound annual gain from housing at 0.3%. For the 100 years up to 1990, i.e. before the housing bubble, Robert Shiller has put it at 0.2% per annum, 33% less!

Here is Rampell:

Over the past century, housing prices have grown at a compound annual rate of just 0.3 percent once one adjusts for inflation, according to my calculations using Shiller’s historical housing data. Over the same period, the Standard & Poor’s 500-stock index has had comparable annual returns of about 6.5 percent.

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Housing's ability to retain its value has made it an attractive target for securitization as mortgage-backed securities which have been highly liquid and trade in large denominations just like US Treasury securities, facilitating transactions.

The rapid rise of income inequality in the US dates from the close of the gold window

From The New York Sun, here:

The top decile's share of income went from something like 33% in 1971 to above 47% by 2010.

Hmmm. What could account for that? ...

Before this date, unemployment was, by today’s standards, low. ... From 1947 to 1971, unemployment in America ran at the average rate of 4.7%; since 1971 the average unemployment rate has averaged 6.4%. Could this have been a factor in the soaring income inequality that also emerged in the age of fiat money? ...

It doesn’t take a Ph.D. from MIT or Princeton, however, to imagine that in an age of fiat money, the top decile would have an easier time making hay than would the denizens of the other nine deciles, who aren’t trained in the art of swaps and derivatives. ...

[H]onest money ... works out better for more people. And there is a moral dimension to the question of honest money. This was a matter that was understood — and keenly felt — by the Founders of America, who almost to a man (Benjamin Franklin, a printer of paper notes, was a holdout), cringed with humiliation at the thought of fiat paper money. They’d tried it in the revolution, and it had been the one embarrassment of the struggle. They eventually gave us a Constitution that they hoped would bar us from ever making the same mistake.