Rush Limbaugh whitewashes Republicans' central role in abolishing Glass-Steagall

Are we supposed to believe Rush Limbaugh doesn't know that three Republicans co-sponsored the Gramm-Leach-Bliley Act of 1999 which overturned Glass-Steagall? How did their names get on there, by accident? And that both parties overwhelmingly voted for it in the end after 205 House Republicans and 53 Senate Republicans voted to get it to conference in the first place? Were it not for those Republicans the bill never would have seen the light of day, but here's Rush Limbaugh yesterday, boob extraordinaire, spreading the lies, misinformation and stupidity he's ranting against:

[I]f anybody eliminated regulations on the bank, it wasn't the Republicans. It was good old Bill Clinton and Robert Rubin. Those are the two architects. You could even say that the repeal of Glass-Steagall is what led to the so-called financial crisis in 2008, and there's not a Republican fingerprint on it.  It's all Bill Clinton and Robert Rubin. ... [T]his is just insane, the level of lying, the misinformation and the stupidity of people who accept it and buy it, because we have a corrupt media who is willing or unknowing, could well be they're ignorant, too, spreading all this drivel. ... [T]here's not one Republican fingerprint on that. They might have voted for it in the end, but the whole impetus for it was Bill Clinton and Robert Rubin.

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Amazing.

Obama ranked worst president in post-war in Quinnipiac poll

Quinnipiac University

Uh oh: Antarctic sea ice anomaly looks like a . . . hockey stick!

WUWT

US Debt to GDP ratio, nominal, record date 3/31/14 (3rd estimate of GDP 6/25/14)

$17.6 trillion
-----------------------     = 1.035
$17.0 trillion

Impact of a '94-style bond debacle on today's NAVs of popular Vanguard bond index funds

In November and December 1994, the NAVs of some popular Vanguard bond index funds hit their lowest levels in memory during that year's bond market meltdown. What if we revisited those lows today? How much could you lose, both in value and in time?

On the short end, VBISX at 10.53 to start the week would have to fall to 9.50 to match that debacle low from December 1994, wiping out 9.78% of value. With a duration of 2.7 years, presumably you'd have to sit tight almost three years from such a low to recoup your losses as the fund replaced its maturing issues with higher yielding short-term instruments in the new landscape. 

In the intermediate space, VBIIX at 11.46 now would have to fall to 9.16, the November 1994 low, wiping out 20.07% of value. Your duration-implied wait to recoup your losses there is 6.5 years.

VBLTX in the long term space at 13.59 today would have to fall to the November 1994 level of 8.87 to match the November 1994 low, wiping out 34.73% of value. Could you wait 14.5 years to recover from that?

Consider also VBMFX, the total bond index. At 10.82 this week it would have to fall to 9.15 to match the November 1994 meltdown low. That would wipe out 15.43% of value from here. Time to recovery based on duration of the fund? 5.6 years.

Or VFIIX, the Ginnie Mae fund. Current net asset value started the week at 10.73. That would have to fall to 9.54 to match the November 1994 meltdown low, wiping out 11.09% of value. Duration for that fund is 5.5 years.

Many Americans have fled to bond funds for safety in the wake of the financial panic 6 years ago. By doing so, they have driven NAVs to levels in such funds never before seen in their histories, helping to create a bubble. Exiting from such bubbles is not easy when everyone suddenly wants to do so at the same time.

No wonder market timer Bob Brinker of Money Talk Radio Program fame has recently gone ultra short duration for his fixed income investing. He has picked funds which have durations of about one year. That's it.

The wisdom of the move is not yet well appreciated because of what it is not telling you: that a stock market crash is coming, right after the bond market nose dives. He doesn't want to be caught booking huge bond losses in his portfolios when the opportunity to invest new cash will present itself not long after. In other words, I think this is Brinker's way of raising cash now without saying so.

Not advice. Just my humble opinion.  

Brian Wesbury thinks suspension of mark-to-market rules was a fix

Brian Wesbury thinks suspension of mark-to-market rules was a fix, here:

"The financial system returned to normal once mark-to-market accounting was fixed."

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Proving once again that moral absolutes have no meaning to liberals, who routinely deep six the rules when they become inconvenient or too costly should they break them. The rules are fine when one guy here or there goes bankrupt, but when everybody does then it's, well, "We have to abandon free-market principles in order to save the free-market system." One rule for thee, another for me.

That pretty much sums up in one sentence the difference between us and them. While they have been bailed out and gotten filthy rich by shit-canning the rules, the rest of us who have to live by them in the real world of stop signs and pink slips are left to wallow in an economy growing at an average nominal pace under Obama of $383 billion per annum. Brian Wesbury continues to call that a ploughhorse economy even though under George W. Bush we grew on average 45% better than that every year of his presidency.

It was the worst in the post-war, until Obama.

S&P500 is about 71.77 away from the all-time real high

The real high was August 1, 2000 at 2045.09.

El Diablo: Communists and Christians drink from the same well

"I can only say that the communists have stolen our flag. The flag of the poor is Christian. Poverty is at the center of the Gospel. Communists say that all this is communism. Sure, twenty centuries later. So when they speak, one can say to them: 'but then you are Christian'".

The Ramones didn't know how right they were about Burger King

I don't like playin' ping pong

I don't like the Viet Cong

I don't like Burger King

I don't like anything

And I'm against ...

Well I'm against it

I'm against it

Charles Murray proves my point: Libertarians and liberals are birds of a feather together on the left

Here, where he speaks of the good guys on the left, as if there were such a thing:

As a libertarian, I am reluctant to give up the word "liberal." It used to refer to laissez-faire economics and limited government. But since libertarians aren't ever going to be able to retrieve its original meaning, we should start using "liberal" to designate the good guys on the left, reserving "progressive" for those who are enthusiastic about an unrestrained regulatory state, who think it's just fine to subordinate the interests of individuals to large social projects, who cheer the president's abuse of executive power and who have no problem rationalizing the stifling of dissent.

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Simply stated, liberals are free, free from the "superstitions" of religion and its limiting dogmas and moral codes, and consequently happen to seek to be free also from the state which seeks to pay respect to religion. Libertarianism is born of this, not of the right. It pays no respect to religion, placing the individual at its center, not God and the transcendent moral order which permeates existence. There are many libertarians who deny they are atheists, but they are simply insane, suffering from bipolar disorder as do liberals. 

Market cap to GDP ratios March 2009 vs. March 2014 flash valuation warning

Probably the broadest measure for stock market valuation purposes is total stock market capitalization divided by GDP. Warren Buffett uses it and John Hussman has spoken approvingly of the measure.

But because we have to wait for GDP numbers for at least a month after the quarter end, the ratio cannot be a real-time valuation tool. And given that revisions to GDP can be substantial in the 2nd and 3rd estimates, as well as in the annual summer revisions, precision using the 1st estimate is also wanting. Nevertheless the calculation provides a big picture snapshot of where we have been in the market cycle, and gives forward guidance for long term investors. Presently it appears to counsel taking chips off the table and waiting in cash for a better opportunity to invest. 

For the following I use nominal figures for GDP as revised in the most recent updates from bea.gov and calculate market cap using the popular Wilshire 5000 (level x $1.2 billion) as close to March 31 as practicable.

A comparison of March 2009 to March 2014 is instructive, since March 2009 was a pretty good buying opportunity both in terms of the absolute level of the stock market after its decline and the coincident Shiller p/e valuation which was about 13.3 on March 1. The ratio has almost doubled in the interim, indicating that now is probably not a good time to commit large new sums to stock markets. The current Shiller p/e begins the day at 26.31, which is also nearly doubled from five years ago.

That said, the 10 year Treasury presently pays just 69 basis points more than the dividend yield of the S&P500. At the October 2007 stock market high, the 10 year Treasury paid 276 basis points more than the dividend yield of the S&P500. You could argue the Fed caused the markets to crash by taking rates much too high in 2006 and 2007 and that Janet Yellen is bound and determined not to let that happen again anytime soon, meaning stock markets could have higher to go. Keep in mind that the inflation-adjusted all-time high of the S&P500 was 2045.09 on August 1, 2000. We're at 1962.46 this morning. 

March 30 2009

$10.32 trillion market cap

---------------------------------------------- = 0.72

$14.38 trillion GDP

March 31 2014

$23.99 trillion market cap

---------------------------------------------- = 1.41

$17.02 trillion GDP

Banks probably will need ZIRP until March 2015 to be fully recapitalized from the crisis

In March 2013 Warren Sulmasy estimated that banks had lost $1 trillion in the crisis, and had recapitalized as little as $300 billion of that by that time.

Chris Whalen has estimated that ZIRP yields banks profits of $100 billion quarterly at the expense of savers who are not fairly recompensed for their deposits under the Federal Reserve policy known as zero interest rate policy.

So theoretically by March 2014, one year on from Sulmasy's estimate, banks had recouped an additional $400 billion, with $300 billion yet to go, which should take us to the spring of 2015 before we can say that banks should have been made completely whole from the crisis.

ZIRP should most definitely end by then, or things are worse than we imagine.

Business as usual: a government of the banks, by the banks and for the banks.

Elton John thinks Jesus would have supported gay marriage when he didn't really support normal marriage in the first place

I used teh word normal instead of heterosexual just to piss you off.

Story here.

[I]n the resurrection whose wife of them is she? for seven had her to wife. And Jesus answering said unto them, The children of this world marry, and are given in marriage: But they which shall be accounted worthy to obtain that world, and the resurrection from the dead, neither marry, nor are given in marriage: Neither can they die any more: for they are equal unto the angels; and are the children of God, being the children of the resurrection.

-- Luke 20:33ff.

The reasons why his followers weren't supposed to marry are complicated, theological and not generally understood by any church, being the same reasons for requiring personal poverty of his followers. On these NT Wright will be of no help to you. 

US company clones 100 cows . . . it's called the . . .

U.S. Senate.

Five years after the recession ended . . .

. . . Democrats are still trying to pass "emergency" unemployment benefits.

It must be a depression, Obama's depression.

More than 7 years after the crisis began, banks are still failing

The Freedom State Bank, Freedom, Oklahoma, failed tonight, costing the FDIC $5.8 million. It's the 12th failure of 2014.

Metropolitan Savings Bank, Pittsburgh, Pennsylvania, kicked off the wave of bank failures in the current crisis on February 2, 2007, with assets of $15.8 million. About $1.2 million in deposits exceeded the FDIC insured limit at the time. It had been the first bank failure in the country since 2004 and the first of a string of failures which now totals 504 banks and close to $89 billion in covered losses.

Stay tuned. 

Supremes unanimously slap down the King of constitutional law in the White House for 13th time

From John Fund here:

"Those decisions are very revealing about the views of President Obama and Eric Holder: Their vision is one of unchecked federal power on immigration and environmental issues, on presidential prerogatives, and the taking of private property by the government; hostility to First Amendment freedoms that don’t meet the politically correct norms; and disregard of Fourth Amendment protections against warrantless government intrusion. These are positions that should alarm all Americans regardless of their political views, political-party affiliations, or background."

The first three months of 2014 were worse than the whole 2001 recession

Jeffrey Snider, here:

"The first quarter of 2014 is worse than anything seen during the 2001 recession – which the worst contraction then was -1.2% in the third quarter of 2001. In raw GDP terms, that would make the first three months of 2014 worse than the whole of the 2001 recession."

Tyler Durden of Zero Hedge is crazy, but you knew that

The website that specializes in the economic wacky, lately popular on the right as a rhetorical club against Obama which Tyler Durden exploits to gain eyeballs, says today here that ObamaCare spending is the cause of the total collapse in 1Q2014 GDP. You know, like ObamaCare is responsible for all you full-timers getting part-timed.

ObamaCare, the heart of all darkness.

That's funny, because in April Zero Hedge maintained ObamaCare spending was the sole cause of the rise in 1Q2014 GDP.

Well which is it?

In other words, in April ObamaCare was the only thing responsible for positive GDP ihao, but in June it is the only thing responsible for negative GDP. This is because we're supposed to believe that healthcare services spending evaporated in the final estimate of GDP (a swing from +$39.9 billion in the 2nd estimate to -$6.4 billion in the 3rd), evidently accounting for $46 billion of lost spending in the Zero Hedge world of weird math between Q4 and Q1. The swing negative caused the personal consumption expenditures collapse, he says, which fell almost $60 billion inflation-adjusted Q4 to Q1.

Of course, that's comparing apples to oranges. Healthcare services spending in Q4 was positive $24.4 billion. That makes the swing barely $31 billion from positive into negative territory, not $46 billion.

From that you wouldn't know that PCE was still positive in the 3rd estimate: $27.7 billion. Nor that goods consumption collapsed $24.5 billion from Q4. Nor that spending on utilities was up a whopping $23 billion because of the cold weather. Nor that the output of nonprofits swang nearly $28 billion into negative territory from positive, while receipts for goods and services of nonprofits suffered a similar swing, $29 billion from positive to negative. Schwing!

Does he read the report?

The inflation-adjusted decline in GDP totaled just over $118 billion, $81 billion of which was from a decline in private domestic investment from positive $16 billion in Q4, mostly inventories, and $58 billion of which was from a decline in net exports of goods and services, from a positive $37 billion in Q4. That's where the real decline was, a total swing of over $190 billion from just those two categories.

Maybe the silliest thing Durden predicts is that all that "lost" ObamaCare spending will magically reappear in Q2.

Which leads us to ask: What if ObamaCare actually did reduce healthcare services spending in Q1? Isn't it conceivable that a bunch of people, now qualifying for subsidies under the program, had significantly reduced costs? Who knows, the $6.4 billion drop might actually be the first and only drop we're ever going to see in healthcare services spending under ObamaCare.

I'll bet on that before I'll bet on a 5% GDP print from Obama.

Obama vs. Bush on GDP

Bush's average quarterly report of GDP: 2.1%. Obama's average quarterly report of GDP through today's final number for 1Q2014: 1.6%.