Liberal hubris two months ago about Ebola virus may mean death for many Americans

Flashback to late July when you were on the beach. At the time the mendacious CDC said Ebola wouldn't spread "widely" in the US, not that it wouldn't get here, and you went on with your novel and your drink (dateline NBC here):

“It is not a potential of Ebola spreading widely in the U.S. That is not in the cards,” Frieden told reporters on a conference call. “We are not telling people who are essential to leave.” ... “This is a tragic, painful, dreadful, merciless virus. It is the largest, most complex outbreak that we know of in history,” Frieden said. “We at CDC are surging our response along with others. Although it will not be quick and it will not be easy, we do know how to stop Ebola.” ... “We have quarantine stations at all the major ports of entry,” he said. People cannot transmit Ebola to others unless they are sick, and Ebola makes you so sick that it’s pretty obvious pretty quickly, Frieden said. A traveler will be flagged by the flight crew and if someone gets sick after arrival in the U.S. they will almost certainly seek medical care. “Ebola poses little risk to the U.S. general population,” Frieden said. “Ebola is spread as people get sicker and sicker. They have fever and may develop serious symptoms.” Ebola doesn’t spread through the air like measles. People who get sick are family members or healthcare workers in prolonged and close contact with victims. ... “This is a marathon, not a sprint,” he said. “This is going to take at least three to six months, even if everything goes well.”

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If they knew how to stop Ebola, then why is it here two months later? Maybe because liberals couldn't get past their first ideological barrier: their commitment to the idea of world citizenship and thus of nations without borders and of free travel between them. Kind of reminds me of free trade, which has infected America with a disease known as unemployment and underemployment.

Stopping the spread of deadly viral disease requires restrictions on international travel, and contact tracing by every doctor, two things no longer routinely practiced in America nor supported by the health authorities. The latter has been considered "discriminatory" since the AIDS epidemic in the 1980s. And while AIDS has been more or less contained in the US for other reasons, sexually transmitted disease has not. Half the population carries one.

Your doctor is most likely part of the problem, not part of the solution.

US oil refining capacity is mismatched for our boom in light, sweet crude

So we either expand that capacity, or lift the 1975 ban on oil exports. Obama's decision to do nothing except take credit for production from private lands suggests he wants the oil boom to end.

Robert Samuelson, who has basically concluded elsewhere that Obama is lazy, in addition to being phony, tiny and small, here:

"The new oil consists mostly of "sweet, light" crudes, meaning they have a low sulfur content and are less dense than "sour, heavy" crudes. The trouble is that many U.S. refineries have been designed to process heavy, sour crudes and, therefore, aren't suitable for the new oil. At the end of 2013, the United States had 115 oil refineries capable of processing about 18 mbd, according to a report from the Congressional Research Service. About half were fitted for sour and heavy crudes. That's especially true along the Gulf of Mexico coast where more than half of U.S. refining capacity is located.

"The result is that more and more new oil is chasing less and less usable refining capacity. Refineries' bargaining power rises. Producers have to accept price discounts to sell their oil. A second problem is that much of the new production is located in North Dakota with an inadequate pipeline network to transport the crude to refineries. To offset more costly barge and rail transportation, producers (again) have to discount prices.

"Some strains will be eased by refinery expansions and new pipelines. How much is unclear. But as a report from the Brookings Institution argues, producers will be discouraged by an oil market that seems rigged against them. They will react by slowing -- or possibly stopping -- new exploration. The oil boom will ebb or end. Global oil supplies will then be lower than they would otherwise be; prices will be higher. It's a bad outcome for the United States but a good one for Russia, Iran and other producers hostile to us."

The US Dollar Currency Index, .DXY, is up 8.26% since May 6th: Expect pressure on 2nd half GDP from rising imports

Bush GDP vs. Obama GDP, same point in their presidencies

GDP under George W. Bush 5.5 years into his presidency was up nearly 35% nominal. Under Obama GDP is up nearly 18%.

Based on that, evidently, Time Magazine's Rana Foroohar is calling Obama's a 3% economy, without mentioning that Bush's was a 6% economy, nor that these figures are nominal as opposed to the generally reported real, inflation-adjusted numbers, here (it's two ways of making the present less intelligible, not more):

"But we’re now in a 3% economy, and I’m writing the same column [as three years ago]. Only this time, the message is more disturbing. Growth is back. Unemployment is down. But only a fraction of the jobs lost during the Great Recession that pay more than $15 per hour have been found. And wage growth is still hovering near zero, where it’s been for the past decade. Something is very, very broken in our economy.

"It’s a change that’s been coming for 20 years."

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Yes, wage growth has been flat since 2000. The difference is we still had our higher paying jobs with flat wage growth under Bush, but not now. But that, too, is only nominal. Add in inflation and we are 5.9% behind where we were in 2000, and Obama has done nothing to fix that, either. In fact, it got worse since the so-called recession ended in 2009, 3.1%. And dialing the blame back 20 years to further muddy the waters puts us in year two of the Clinton administration, when Clinton famously broke his promise and raised everyone's taxes, which precipitated one of the biggest and deepest waves of home equity borrowing ever to maintain disappearing lifestyles, helping to gut the basis of the American dream.

But that's not mentioned, either.

That's a lot for a financial journalist not to mention.

2Q2014 GDP, third estimate, comes in at 4.6%, 1Q still -2.1%

The third estimate of 2Q2014 GDP comes in at 4.6%, up from 4.2% a month earlier, mostly on revisions to exports and nonresidential fixed investment. Subtract 1.4 points for inventories and you've basically got 3.2%. Not too shabby but not gangbusters like it ought to be at this stage of the game.

Recall, however, that the export picture in 2Q reflects a dollar index trading in the range of 79, whereas the index has been on a tear since mid-July, marching upward beyond 85 today thus making exports very pricey in 3Q compared to then, portending rough news ahead on that front. Exports of goods are running at about $1.6 trillion nominal annualized in 2Q vs. $1.5 trillion a year ago. Imports of goods, however, which subtract from GDP, still swamp our exports by $800 billion net annually and are also up $100 billion year over year at $2.4 trillion nominal annualized in 2Q. To put that $800 billion in context, consider that total nominal GDP year over year is up only $700 billion. Think what we could be if we were an export powerhouse once again.

The Current Asset Allocation of The United States

Allocated to bonds of all types, through 2Q2014:   $38.17 trillion.

Allocated to stocks (current Wilshire 5000 X 1.2): $25.46 trillion.

Allocated to cash (MZM):                                               $12.72 trillion.

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Total:                                                                        $76.35 trillion.

That's 50% to bonds, 33% to stocks, and 17% to cash.

The trend since 2010 has been away from bonds at close to 59% to 50% now, mainly into stocks, while amounts allocated to cash have increased the percentage just a few points.

Total World Stock Market Capitalization Through 2012 Remains 17.5% Below The 2007 Peak

According to The World Bank, here.

Nigel Farage: The West is encroaching on Mr. Putin's space

"We should be viewing Ukraine as a buffer between East and West."

Interviewed here.

Freedom for me, but not for thee?

HEY HO LETS GO

Best reason yet to vote for Terri Lynn Land for US Senate from Michigan

Her Democrat opponent has been endorsed by former Republican governor, William Milliken. To moderate Republicans, like Milliken, compromising with Democrats is always more important than advancing the issues which matter to their constituencies. Republicans who vote for Peters are Republicans in name only.

Mish finally figures out why the part-timing trend caused by ObamaCare doesn't show up in the stats . . . yet

Here:

The BLS defines part time as less than 35 hours. Low wage industries had a lot of part-timers working 32 hours.

Under Obamacare, the threshold of part-time jobs is 30 hours. Obama made that change on purpose to force more businesses to offer healthcare. 

Instead, busiunesses [sic] cut hours. It was the hours of the already part-timers that got cut, and that explains why there was no spike in part time employment.

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Average hours worked overall isn't affected much by part-timers getting their hours cut, since the part-time portion of the workforce is so small to begin with, about 18%.

On an average annual basis, however, average hours worked overall haven't made it above the 35 hour full-time threshold since 1984. Larger forces have been at work to drive average hours down, mainly social revolution leading to the addition of large numbers of women to the workforce in the 1970s, but also a free trade revolution leading to offshoring of manufacturing. The libertarian rout of America has been terrible for its workers.

The verdict on what ObamaCare may do to hours is still not in, however, and won't be for many years because so much of its implementation has been delayed by the regime itself, notably the employer mandate. For large firms mandates do not kick in until 2015, and for medium size firms 2016. 

Food stamp recipient level up 0.6% in June 2014

46,496,145 million Americans received food stamps in June 2014. The level remains down from a year ago, now by 2.6%.

The total cost in June was $5.77 billion.

For the years 2010 through 2013 the average monthly benefit per person has been $133 and change.

Brother, can you spare a dime?

Richard Duncan gets creditism wrong three ways

Richard Duncan gets creditism wrong three ways here for The Daily Reckoning last July in "Creditism and the Threat of a New Depression".

The most egregious error occurs right in the opening paragraph:

"Once we broke the link between dollars and gold, all the constraints on how much credit could be created were removed."

This is simply untrue, for two reasons.

One: Total credit market debt outstanding (TCMDO) has been doubling like clockwork in the post-war every six to eleven years, both prior to 1971 and after. The doubling of TCMDO occurred at its fastest pace -- two episodes of six year doubling times -- under Jimmy Carter and Ronald Reagan, five years after the close of the gold window in 1971. Otherwise the doubling has never taken as much as twelve years, whether before 1971 or after.

And two: 1971 is irrelevant. It was not the end of the gold standard. The gold standard ended under Roosevelt. In fact, the close of the gold window under Nixon was the first patriotic act with respect to gold by an American president since Roosevelt. With the stroke of a pen, Nixon single-handedly stanched the outflow of America's gold reserves, which had dwindled under Democrat and Republican presidents alike from 20 tonnes to 8,134 tonnes.

Secondly, because Duncan doesn't understand just how often TCMDO has been doubling in the post-war, he completely misses its needed and now missing rate of growth, and the accompanying fact that under normal circumstances of creditism in the United States, TCMDO ought to be at least $81 trillion by now instead of $59 trillion:

'But at this point, the question is will credit ever begin to grow again enough to drive the economy? We now have such a large base, 59 trillion dollars. If we assume that the inflation rate is two percent, then we need total credit to grow by four percent so that total credit, adjusted for inflation, will hit this “two percent recession threshold”.'

The last time TCMDO doubled in the post-war was in 2007, at $50 trillion. At the slowest pace of its actual growth in the post-war, it should hit $100 trillion by 2018. We aren't going to make it. It is shocking that a former head of equity research for Salomon Brothers is so completely unfamiliar with the Rule of 72. When something doubles in six years, the implied annual rate is between 11% and 12%. When something doubles in eleven years, the implied annual rate is 6%. 4% isn't going to cut it, buddy, and the current rate between 1% and 2% is truly catastrophic by all historical norms.

Thirdly, because Duncan hasn't properly imagined our past, the future also eludes him:

"If you look at all the big sectors of the economy, there are just a few of them. You can see that none of them are going to expand their debt enough to make total credit grow by two percent."

That's right in its way. There is no sector currently capable of driving credit expansion as it did in the past. And the reason is because it was mostly housing in the past which drove the borrowing, and housing is effectively dead for such purposes now because of the way greedy Baby Boomers, whether as homeowners or bankers, fiddled with it to plunder the equity stored there or drive securitization. The effect has been to gut the basis of Americans' wealth and poison the balance sheets of the banking system.

The way out of this mess is so filled with trouble that it is little wonder neither John McCain, Mitt Romney, Hillary Clinton nor Barack Obama have made fixing it a priority. It is the glaring need of our time, a Goliath with no fear of a David anywhere. It is why the economic meltdown remains the leading story of our time. It is why our other over-commitments will be our undoing. Until we settle it upon a firmer foundation as was done in the 1930s, or find a different, surer basis for economic growth, many decades of economic shrinkage await, not just one or two:

"If this collapses now, we’re going to have an equally protracted crash, and it’s not going to be a matter of taking a pain for a couple of years. The consequences of it would, I think, be a replay of the 1930′s and the 1940′s, but this time with nuclear weapons involved."

Employment Situation report records 142,000 added to payrolls in August vs. 212,000 monthly in past year

That's a 33% decline in one month in the pace at which jobs have been added monthly in the last year.

From the report, here:

Total nonfarm payroll employment increased by 142,000 in August, and the unemployment rate was little changed at 6.1 percent, the U.S. Bureau of Labor Statistics reported today. ... Total nonfarm payroll employment increased by 142,000 in August, compared with an average monthly gain of 212,000 over the prior 12 months. In August, job growth occurred in professional and business services and in health care. ... The change in total nonfarm payroll employment for June was revised from +298,000 to +267,000, and the change for July was revised from +209,000 to +212,000. With these revisions, employment gains in June and July combined were 28,000 less than previously reported.

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Meanwhile, hours have been flat for six months at 34.5 and hourly wages climbed at a 2.1% annual pace, meaning there is little sign of an uptick in inflation in labor costs.

Those who work usually part-time declined slightly below last year's summer nadir, another sign ObamaCare is NOT part-timing workers . . . yet.

Those who work usually full-time rose to their summer peak to just over 120 million, but this measure is still 3.1 million off the summer 2007 peak, SEVEN years ago.

The labor participation rate came in at 63.0%, not seasonally adjusted, a level we thought we had said goodbye to permanently in the mid-1980s. The level was first achieved in 1976 in the post-war.

The pace of job creation under Obama remains well below the rates under Reagan and Clinton.

CNBC's headline expectation of "likely" job growth collides with banner indicating terrible August payrolls miss of nearly 37%

Temperature anomaly for Grand Rapids, MI in 2014 falls to -26.3 degrees F through August

This updates the previous post here.

The August 2014 temperature anomaly for Grand Rapids comes in at +0.2 degrees F, which lifts the total temperature anomaly for the eight months January through August from -26.5 to -26.3.

Eleven days with high temps of 80 or above in the second half of August helped turn the anomaly positive from -1.4.

The average anomaly per month has been -3.2875 degrees F. 

Jobless claims in August fall to 253,000 weekly on average

Jobless claims have fallen in August 2014 to 253,000 weekly on average, not seasonally adjusted. The rate is equivalent to 13.1 million claims annually, a very low level. The level averaged 280,000 weekly in August 2013, equivalent to 14.6 million annually, meaning the current month is an improvement of 10% from one year ago.

Last month the average weekly level was 310,000 first time claims for unemployment, and in the first half of the year claims averaged about 326,000 weekly. So with the first two months of the second half of 2014 coming in well below that, the trend remains very positive, but it should be remembered that summer is peak full-time employment season and that many of the seasonal jobs will drop off with the start of the school year.

PIMCO's Bill Gross wakes up to the wall hit by TCMDO, but not fully

Others saw this in April 2013.

Here's Bill Gross in September 2014:

The current outstanding total [credit] approximates $58 trillion and has been expanding at an average annual rate of 2% for the past five years, and 3.5% for the most recent 12 months. Put simply, if credit needs to expand at 4.5% per year, then the private and public sectors in combination must create approximately $2.5 trillion of additional debt per year to pay for outstanding interest. They are underachieving that target in the U.S., which is the reason why GDP growth struggles at 2% real or lower and nominal GDP growth seems capped at 4.5% or lower. Credit creation is essential for economic growth in a finance-based economy such as ours. Without it, growth stagnates or withers.

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What Bill Gross doesn't seem to appreciate is the gravity of this slowdown historically to total credit expansion of just $1.14 trillion annually. TCMDO, total credit market debt outstanding, in the post-war DOUBLED every 6 to 11 years until 2007. That implies that normal credit expansion until 2007 was between 6% and 11% PER ANNUM. At 8.5%, an average level, TCMDO should grow well in excess of $4 trillion annually at these levels. 4.5% isn't going to cut it. And the actual 2% or even 3.5% is a catastrophe compared with the historical record.

By 2013, according to historical norms, TCMDO could have already reached $100 trillion if it matched the fastest pace on record under Jimmy Carter and Ronald Reagan. Instead it's stuck at $58 trillion in 2014.

The system has hit the wall. Decades of economic shrinkage, to borrow Chris Whalen's phrase, lie ahead, and we're already in the first one.

Incidentally, nonfinancial corporate debt has grown on average $567 billion annually between 2010 and 2014, accounting for about 50% of the average increase in TCMDO. And in 2013, corporations bought back something like $600 billion worth of their own stock. 

The broad US stock market presently is valued 58.5% higher than at the end of 2002

At the end of 2002, the Wilshire 5000 (x 1.2) divided by the nominal GDP for the year stood at 0.912. As of June 30, 2014, the same calculation yields 1.446.

You have been warned!

Total Market Capitalization To Nominal GDP Ratios, Selected Years

I have used the Wilshire 5000 level at year end multiplied by 1.2 as a proxy for total stock market capitalization (except where noted by the month), and the latest summer revisions for calendar nominal GDP, in summer 2014 for the period back to 1999, and in summer 2013 for the period back to 1971.

A ratio close to 1.0 indicates the market is fairly valued relative to GDP. A ratio less than 1.0 indicates the stock market is "on sale" to some extent (for example, a ratio of 0.48 indicates the market is trading at a 52% discount). A ratio of more than 1.0 indicates the stock market is expensive and may be considered overvalued for investment purposes (for example, a ratio of 1.72 indicates the stock market is as much as 72% too expensive).

1971   .975

1981   .480

1987   .595

1990   .622

1994   .745

1997 1.296

1999 1.715
2000 1.420
2001 1.209

2002   .912

2003 1.125
2004 1.170
2005 1.147

2006 1.234

2007 1.228

2008   .740

March 2009   .676

2009   .962

2010 1.071

2011 1.019

2012 1.113

2013 1.410

March 2014 1.407

June 2014    1.446

Historically considered, valuation of the stock market by the end of 2008 made then a much better investing opportunity than was late 2002 and early 2003, almost 20% better. And valuations have remained reasonable throughout 2010-2012 and only became expensive in 2013. The four year period beginning in late 2008 has been an excellent opportunity for those with cash to invest.

I maintain that a primary driver of conditions in 2013 was the midnight hour 2012/2013 resolution of tax uncertainty, in the form of making the Bush tax cuts and alternative minimum tax rates permanent, ending the tinkering with Social Security, and reaching a compromise on capital gains tax rates.

All hail John Boehner.