Americans haven't saved 10% since 1984

Blaming negative GDP on the harsh winter is already forecast to get worse

The consensus estimate of the third and final report of 1Q2014 GDP, coming out on Wednesday next week, is already 60% worse than the actual second report at -1.6%. What, is the late winter suddenly become worse in the last month?

The first estimate, you will recall, came in at +0.1%, and was quickly downgraded in various places to something ranging between -0.2% and -0.4%. When the second estimate came in at a much worse -1.0%, just about everyone blamed the harsh winter for the pathetic print, including the White House, which incredibly credited GDP from spending on utilities at the same time it debited GDP because people weren't traveling (which isn't true--just examine the government's miles-traveled reports over the winter), weren't vacationing and weren't spending money on hotels and restaurants, and other such drivel.

Having it both ways, it seems, only applies south of the Canadian border, where real GDP was a negative almost $40 billion. North of it real GDP was actually positive, despite the winter, at about $4.7 billion US. A much smaller economy Canada's is, to be sure, but for that reason you'd think it more vulnerable to the harshest winter in decades whereas our much larger, more varied economy ought to be more resilient.

But up against an Obama, you would be wrong. He is secretly happy that things are going as poorly as they are, because it means that the middle class is steadily shrinking and soon will no longer be able to stand in his way, and the Democrat Party's way, of remaking America into a few haves and a lot of have-nots.

In this they are assisted by the libertarians who have successfully infiltrated the Republican Party as conservatives, who see this as their natural mission, too. Politically speaking, they are out to defeat Republicanism just as much as the Democrats are. The successful individual lone ranger is the sine qua non of their vision, after all, whose fabulous wealth is the only object of their affection. And the only thing standing in his way are people who believe in something bigger than themselves.

People who believe in something larger than themselves in America today occupy the extremes of the left and the right, and seem to be getting fewer in number as we speak, a fact noted in a recent article in The New Republic. Between them are a mass of social and economic libertines who are already the slaves of the elites, for whom neither the economic nor the moral restraint of the Protestant founders which built our country are a value. Unless we recover something of the latter the America of the past will cease to exist, if it hasn't already.

And persistently poor GDP proves it.

Tonight's S&P500 remains 4.02% below the August 2000 inflation-adjusted all-time high

2045.09 is the inflation-adjusted all-time high, on August 1, 2000. 1962.87 is the current level of the S&P500, June 20, 2014.

1753.10 is the inflation-adjusted high on October 1, 2007 before the crash. We are currently almost 12% above that.

Your real rate of return with full dividend reinvestment August 2000 to May 2014 is just 1.32% per annum.

Your real rate of return with full dividend reinvestment October 2007 to May 2014 is 3.36% per annum.

Update: And your real rate of return with full dividend reinvestment between August 2000 and October 2007 was -0.51% per annum.

Bank Failure Friday . . . two tonight: the 10th and 11th in 2014

Reported here and here.

The FDIC still insures 6,730 institutions through March 31, 2014.

In February 2007, over 500 bank failures ago, the FDIC still insured 8,743 institutions, meaning about 1,500 additional institutions have succumbed to acquisition by bigger banks which have swallowed them up since the financial panic.

Call it income inequality, banker style.

FISA Court rules NSA can take your metadata for another 90 days, until September 12th

Story here, buried in the tyranny's Friday afternoon document dump.

Robert Kaplan either steals from Plato, or is simply ignorant of him

Here in "The Loneliness of the Tyrant", where he discourses at length on the psychological predicament of many strongmen past and present, but never once mentions Socrates' famous meditation on the soul of the tyrannical man:

"No one should envy a tyrant. His existence is miserable."

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Is not his case utterly miserable? and does not the actual tyrant lead a worse life than he whose life you determined to be the worst? ... 

He who is the real tyrant, whatever men may think, is the real slave, and is obliged to practise the greatest adulation and servility, and to be the flatterer of the vilest of mankind. He has desires which he is utterly unable to satisfy, and has more wants than any one, and is truly poor, if you know how to inspect the whole soul of him: all his life long he is beset with fear and is full of convulsions, and distractions, even as the State which he resembles: and surely the resemblance holds? ... 

Moreover, as we were saying before, he grows worse from having power: he becomes and is of necessity more jealous, more faithless, more unjust, more friendless, more impious, than he was at first; he is the purveyor and cherisher of every sort of vice, and the consequence is that he is supremely miserable, and that he makes everybody else as miserable as himself.

-- Plato, Republic, Book 9

Rupert Murdoch abandoned Australia for our country, lies about H-1B visas, and calls us the nativists

What else would a traitor to his own do and say?

The POS, here:

"Next, we need to do away with the cap on H-1B visas, which is arbitrary and results in U.S. companies struggling to find the high-skill workers they need to continue growing. We already know that most of the applications for these visas are for computer programmers and engineers, where there is a shortage of qualified American candidates. But we are held back by the objections of the richly funded labor unions that mistakenly believe that if we keep innovation out of America, somehow nothing will change. They are wrong, and frankly as much to blame for our stalemate on this issue as nativists who scream about amnesty."

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The only shortage of workers in America is of the kind which will take the same pay as a cheaper foreign import. The libertarian idea which has infected the Republican Party is best observed in the person of Rupert Murdoch and his many properties such as Fox News, The Wall Street Journal and the NY Post.

Shiller p/e vs. S&P500 p/e: Was either a guide to investing since 2008?

The merit of the Shiller p/e, which is backward looking, for timing investment decisions is cautioned against even by its supporters like John Hussman. It's something of a straw man to attack people like him for using it that way when they really don't use it to time market entry and exit points. Hussman views the indicator as one of a number of things which help him forecast 10-year returns going forward, a point lost it seems on people who don't read him carefully. High Shiller p/e levels in the present are part of an ensemble of indicators which to Hussman forecast low average annual returns over the course of the next decade.

That said, which has been the better indicator for timing a major allocation of monies to stocks in the recent past, the backward-looking Shiller p/e or the simple S&P500 p/e?

Today's Shiller p/e is a very high 26.06, 57.65% above its mean level of 16.53. The S&P500 p/e is 19.32, 24.56% above its mean level of 15.51. By both measures, today would seem to be a costly time to invest new monies in the stock markets.

How about during the March 2009 period when stocks tanked to their lows during the financial crisis?

The Shiller p/e actually told you to invest, hitting 13.32 on March 1, just days before the markets bottomed. In fact between October 2008 and June 2009 the indicator remained at or below 16.38, in other words below mean level, while the S&P500 inverted bell curve fell from 1100 to 683 and rose to 940. With the S&P500 now over 1900, any time during that woeful period looks in retrospect like a great time to buy. The trouble was that people didn't have any money to invest, being fully invested as usual, riding it all the way down after riding it all the way up.

The S&P500 p/e on the other hand was quite high on March 1, 2009 at 110.37, 612% above its mean level! It most definitely told you NOT to buy then, when you should have bought then. This indicator didn't hit its lows for the period, at the 13 level, until the late summer of 2011 and then only briefly, when interestingly enough the S&P500 was trading near 1100 again, in retrospect another very good time to buy. But at that time the Shiller p/e was above mean, at about 20, and you might have been forgiven for not taking the bait. But because you didn't you've missed an 800 point climb in the S&P500.

You have to go all the way back to the late 1980s to get an S&P500 p/e ratio consistently below 15, and even earlier to the mid-1980s for the Shiller p/e. All of which is to say that stocks have been rather expensive for quite a long time in general, coinciding with the generational focus on it as the way to make the big money for retirement.

In other words, we're in a bubble, and we blew it.

Krauthammer on IRS scandal: Nixon was missing only 18 minutes, Lerner is missing two years

CHARLES KRAUTHAMMER: Nixon was missing only 18 minutes. Lerner is missing two years. Nixon is a piker compared to this administration when it comes to concealment, hiding or pretending that they can't find stuff.

@BarackObama: We never said record Antarctic sea ice is made of cheese

If the Iraq War had been about getting the oil, it wasn't a very good deal

DoD direct spending on the war in Iraq was $758 billion.

Iraqi exports, mostly oil, reached $94.2 billion in 2012, and have totaled barely $441 billion from 2004 to 2012. We blow more than that on gasoline in a single year.

At the current US gasoline average price of $3.648/gallon, the 134.51 billion gallons of gasoline consumed in the US in 2013 is the equivalent of spending $490.7 billion.

The problem with free-market ideology in our time isn't about the tax code, it's about patriotism

Free-marketeers in our time want to wipe away the favors of the tax code, many of which go to the middle class in the form of credits and deductions, and to end the taxes on capital which they say deprive the middle of opportunity. 

That seems to be the upshot of the libertarian attempt to co-opt the meaning of the Dave Brat victory over Eric Cantor as expressed by Kim Strassel of the Wall Street urinal, for one. Central to that thesis is poo-poo-ing the importance of the immigration stance of Eric Cantor, which was attacked by Brat with the support of anti-amnesty conservatives, especially Laura Ingraham, and complaining about "the insane complexity of taxes".

What the kerfuffle shows is that Dave Brat is a mighty conflicted person, as are all libertarians, some more some less, a condition they share with liberals, and that he may end up being worse than the man he now replaces. Brat spent much of the campaign talking about closing loopholes and simplifying the tax code, but opposed more immigration because Americans are having massive trouble finding work. The better angels of his nature, all Christian, were at work there. But to his free-market self, there should be no reason why citizenship shouldn't be free. Why should there be a law restricting it to those born here? The federal government has no role "making my life work", he has said. See how well your life works when there's no army to stop an invasion, and there's no will to create one. Just ask Arizona.

Immigration is an issue which ought to direct the attention of the American right toward the bigger picture of what has happened to this country since the Reagan revolution slashed taxes, but hasn't because the right is now obsessed with principles over people. It has become as "ideologized" as any leftist camp. In fact the political discussion on the right deliberately obscures how libertarianism has already impoverished the many and rewarded the few. Some of its adherents today actually foresee an American future more starkly drawn that way, as did Ayn Rand. It isn't capitalism which is to blame for all the income inequality, it's libertarianism.

With the permanently lower tax regime in the US since Reagan also came a headlong plunge into global free trade which has created vast middle classes abroad where there were none before, at the expense of our own. The anchor manufacturing industries of the middle class in this country were exported to places where labor was cheaper, leaving the hollowed out shell of a service industry economy behind to pick up the pieces here.

Where's the patriotism, I'd like to know? Neither side wants to touch the trade argument, mostly because they are all profiting from the new status quo while we are fed a bunch of lies about who are the real conservatives. The answer is none of them are. They've all betrayed us and joined the global investor class where borders no longer matter.

To be a conservative in our time is to be for families with children here, for good jobs here, and for tax and trade policies which prop up those things here and put Americans first, not foreigners and disloyal Americans and disloyal American businesses.

If that's too complicated for you, maybe you shouldn't be in office.  

Glenn Beck thinks we have an actual democracy to export

When the dim bulbs of our time start interviewing each other, you know it's almost over.

Here with Sean Hannity:

BECK: We don't have the resources to deal with it anymore. We should have gone in after September 11th, taken care of the bad guys, killed them, not rebuilt them. I think it's real hubris to think that we can bring our democracy and peace to a region that doesn't want it. Freedom is something I truly believe you have to earn.

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If freedom isn't the natural state of humanity, then there isn't any freedom anywhere. Someone who has to earn his freedom is a slave. And if someone is a slave, that someone is owned by someone else. And as the ancients taught us, the owner is but the slave turned inside out, who is as miserable as the one owned.

The real hubris is mistaking this oligarchy for a democracy in the first place, and that we have any freedom to export.

Food stamps go to 46.098 million Americans in March 2014, down 3.4% from a year ago

Year over year the numbers are down overall, but the number of recipients is up in a number of states, for example, in California 3.7%, 3.9% in Connecticut, 6.9% in Nevada and 3.7% in West Virginia. 

Larry Kudlow must be kidding: "if the 11 million illegals who live here obey the law . . ."

Here:

And if the 11 million illegals who live here obey the law, pay taxes, learn English, and understand the Constitution, they deserve legal status. Citizenship is an issue way down the road. And yes, we must include border security, where unfortunately Obama's lax policies have contributed to the calamitous surge in illegal-immigrant children. But temporary visas or work permits should be part of a sensible reform package. The E-Verify system can work.

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Ahem . . . illegals have already broken the law, Larry. So sorry to see the amnesty fanatics have abandoned the first conservative instinct, the love for law and order. There will be no free-market without it.

Sen. Rand Paul learns nothing from Cantor loss, joins immigration amnesty fanatics lead by Grover Norquist

Libertarians of a feather quack together.

Story here:

A top Paul aide confirmed the alliance of Mr. Paul and Mr. Norquist on immigration reform, after The Times received a copy of an email sent to Republicans, Democrats, independents and others thought to be open to some kind of reform.

Hillary Clinton's top achievement as Secretary of State was . . .

. . . doubling the Department's liquor budget.

Cantor's opponent Brat won without money, especially Tea Party money, and was outspent 20-1

The Hill reports here that Cantor spent over $1 million on the primary and that Tea Party groups did not fund Brat at all:

Brat defeated Cantor, a six-term incumbent, despite having no experience in elected office and being outspent by nearly 20-to-1. ... Unlike elections in Mississippi and Kentucky, major conservative and Tea Party groups did not flood Cantor’s district with money and rallies. ... Cantor spent more than $1 million on the primary and attacked Brat for serving on an advisory board for former Gov. Tim Kaine at a time when the Democrat was pushing tax increases.

USA Today story about Tea Party defeating Cantor is total crap

The story here quotes some law professor who claims the Tea Party strongly supported Brat when no major Tea Party group supported Brat at all:

"Brat ran an aggressive campaign with strong Tea Party support and perhaps some voters felt that Cantor was not doing enough for those in his home district," said Carl Tobias, a University of Richmond law professor who resides in Cantor's district.

No major Tea Party groups played a role in Eric Cantor's defeat: they were caught by surprise at leadership dinner

Cantor's defeat had to do with his immigration amnesty activism, and the Tea Party is soft on the issue, which is why it didn't endorse Brat.

Reported here:

It was supposed to be a casual dinner of tea party and conservative movement leaders at the Virginia home of ForAmerica chairman Brent Bozell to talk about upcoming races in 2014.

But while the group was still nibbling on cheese and crackers, Tea Party Patriots President Jenny Beth Martin checked the early returns in Tuesday’s GOP primary pitting House Majority Leader Eric Cantor against a little-known challenger. ...

One of the most stunning aspects of Mr. Brat’s victory was that none of the major tea party groups apparently played a role. Most are currently focused on the runoff hundreds of miles away in Mississippi pitting incumbent Sen. Thad Cochran against state Sen. Chris McDaniel. Talk show hosts Laura Ingraham and Mark Levin helped to rally the troops in Virginia, Ms. Martin said. ...

Matt Kibbe, the president of FreedomWorks for America, which did not endorse Mr. Brat, said that Mr. Cantor’s defeat proves the rules of politics are changing. Some grassroots leaders in Virginia, he said, have more Facebook contacts than some county Republican leaders.