Depression In Real Retail Sales Finally Ends, Beats Old 2006 High

The old high in Dec. 2006 was $180.016 billion. The depression low was $155.927 billion in March 2009, a decline of 13.4% in inflation adjusted retail sales. The new real gain in monthly retail sales, however, is barely $350 million, with an "m".

It remains to be seen if the new higher level of real retail sales can be sustained with increased payroll taxes factored in, presumably taking money out of retail circulation. Velocity of M2 and MZM were already at historic lows in Q4 2012 in the post-war period at the temporary lower payroll tax rate.

Gasoline prices were last consistently below $3.00 a gallon in 2010 and since then have averaged about $3.50 a gallon. At roughly 10% of total retail, sudden spikes in gasoline prices can produce expenditure on gasoline which represents a phantom increase to sales, and also mask the fact that miles-traveled remain in depression, a more concrete, so to speak, decline in velocity caused chiefly by enduring low employment by historical measures.

Update, 4-15-13: While the above graph shows real retail, that is, retail level adjusted for inflation, I have found a better representation of reality by Doug Short, reproduced and referenced here, which also adjusts for population growth and removes gasoline because it is really a form of taxation which obscures the underlying level of true retail activity. Bottom line: real retail is actually still about 8% off the 2005 high measured the same way.

Commentary Magazine Defends Reagan's Liberalism

Peter Wehner, here:

"[I]magine the Norquist and Shirley standard being applied to Reagan in the 1970s. If Jeb Bush’s comments unleashed heated attacks, even given his sterling anti-tax record, think about what Reagan’s support for unprecedented tax increases–including higher taxes on top rates, sales taxes, bank and corporate taxes, and the inheritance tax–would have elicited. The Gipper would have been accused of being a RINO, a pseudo-conservative, unprincipled, and a member of the loathsome Establishment. Fortunately for Reagan (and for America) the temptation to turn conservatism into a rigid ideology was not as strong then than it is now."

Let's face it.

Reagan was a Democrat in recovery who brought a substantial number of Democrats in recovery to the Republican Party, where they met fellow liberals with whom they could forge an alliance around the liberalism bequeathed to them by Wilson and FDR, without the communist fellow traveling. Conservatives got pushed to the side, or taken for a ride.

Reagan defended the welfare state but on a scaled back basis with emphasis on less reliance on government and lower income taxes. The New Deal was not scaled back, nor was The Great Society. Even the ramped up Cold War to defeat the Soviets was interventionist and therefore arguably anti-conservative in its basic impulse. The resulting glorification of the US military would horrify the founders who feared them as instruments of tyranny in the hands of an American Caesar.

And now here we are with an enlarged welfare state in OBAMACARE, and actually having a public kerfuffle about an administration which resisted abjuring the use of said military on American soil to snuff out people it and it alone decides are a threat. You know, like gun owners. Are we really supposed to be charmed by the likes of the Krauthammers of the world who insist what Obama has been doing is entirely consistent with the model of Abraham Lincoln who put fellow Americans Confederates to death based on a private interpretation of the constitution?

Nothing's changed, except for the worse. His truth keeps marching on.

Another Observer Notices The Broken Link Between The Monetary Base And Markets

Kopin Tan, who otherwise believes the Fed has been juicing markets, for Barron's, here:

"[W]hile the Fed tripled its balance sheet, not all that money gushed through to the real economy—one reason why inflation is just 2%—as banks funneled the money to mend their balance sheets, corporations hoarded cash, and Americans paid off loans and saved more.

"Between 1960 and 1999, ratcheting up the supply of money often directly lifted stock prices. In the 1970s, for instance, stocks' annual returns were 70% correlated to the growth in money supply. But that link has recently broken down: year-over-year growth in money supply slowed in 2009 and 2012, but stocks rallied in both of those years."

John Hussman Warns Correlation Is Not Causation

Here in "Two Myths and a Legend":

'This first myth is embodied in statements like “since 2009, there has been an 85% correlation between the monetary base and the S&P 500” – not recognizing that the correlation of any two data series will be nearly perfect if they are both rising diagonally. As I noted last week, since 2009 there has also been 94% correlation between the price of beer in Iceland and the S&P 500. Alas, the correlation between the monetary base and the S&P 500 has been only 9% since 2000, and ditto for the price of beer in Iceland (though beer prices and the monetary base have been correlated 99% since then). Correlation is only an interesting statistic if two series show an overlap in their cyclical ups and downs. ...

'In the case of quantitative easing, much of what we observe as “causality” actually runs the wrong way. Market declines cause QE in the first place, and the result is a partial recovery of those declines.'

Depression In Oil Consumption Continued In 2012 At 18.56 million Barrels Per Day

US Petroleum Consumption '80-'11, eia.gov

Reuters had the story here on Feb. 27:

Oil demand for the year was at 18.56 million bpd, down 2.08 percent compared with 2011, with petroleum use falling in every month in 2012 except May.

Consumption in 2011 was 18.95 million bpd according to the Energy Information Administration, here.

Peak consumption was in 2005 at 20.8 million bpd, so 2012 is still 10.8% off the high reached eight years ago.

Consumption in 2012 is almost equivalent to consumption in 1997 when it stood at 18.6 million bpd.

The decline in 2008 to 17.06 million bpd represented a decline in petroleum consumption of a whopping 18%.

TSA Feels Up Claire McCaskill, Senator Upset

Story here.

Airports, where even the senators get treated like criminals by the TSA. But in that case the TSA would be right.

Corporations Have Been Considered Persons Since At Least 1775

And not only have corporations been considered persons since at least 1775, the original 13 American Colonies were considered corporations who like individuals subject to their king also owed everything to him.

To wit, one Samuel Johnson, harmless drudge, in "Taxation No Tyranny" (1775) here:

An English colony is a number of persons, to whom the king grants a charter, permitting them to settle in some distant country, and enabling them to constitute a corporation enjoying such powers as the charter grants, to be administered in such forms as the charter prescribes. As a corporation, they make laws for themselves; but as a corporation, subsisting by a grant from higher authority, to the control of that authority they continue subject. ...

To their charters the colonies owe, like other corporations, their political existence. The solemnities of legislation, the administration of justice, the security of property, are all bestowed upon them by the royal grant. Without their charter, there would be no power among them, by which any law could be made, or duties enjoined; any debt recovered, or criminal punished. ...

It is, say the American advocates, the natural distinction of a freeman, and the legal privilege of an Englishman, that he is able to call his possessions his own, that he can sit secure in the enjoyment of inheritance or acquisition, that his house is fortified by the law, and that nothing can be taken from him but by his own consent. This consent is given for every man by his representative in parliament. The Americans, unrepresented, cannot consent to English taxations, as a corporation, and they will not consent, as individuals. ...

A corporation is considered, in law, as an individual, and can no more extend its own immunities, than a man can, by his own choice, assume dignities or titles. ...

That corporations, constituted by favour, and existing by sufferance, should dare to prohibit commerce with their native country, and threaten individuals by infamy, and societies with, at least, suspension of amity, for daring to be more obedient to government than themselves, is a degree of insolence which not only deserves to be punished, but of which the punishment is loudly demanded by the order of life and the peace of nations.

So in one sense the American revolution was a throwing-off of the corporate yoke and the deliberate breaking of a business contract the terms and conditions of which had fallen into dispute, with the added overlay of political philosophy lately inclined to view monarchy as tyranny.

And we thought crony capitalism was a late invention of fascist Italy when America was actually born of it.

New Food Stamp Record Set In December 2012: 47.79 Million Americans

Libertarian Mish Apologizes For Spelling "Dike" "Dyke"

Gee, that's a first. Of all the misspellt wurds on Mike Shedlock's improbably famous blog which he has never apologized for let alone corrected, and they are LEGION, he not only apologizes for this one, but corrects it. As I've pointed out over and over again, people who can't spell are dangerous.

Libertarians would not be caught dead offending dykes, but the rest of us English-spelling-Nazis have to take it, well, like men! 

Here in "Not Enough Fingers to Contain the Leak in the Dike":

"Apologies for originally misspelling dike as dyke. It was not intentional. I rushed a post, heading out the door for a party."

Dykes everywhere agree: there are never enough fingers.

Nancy Pelosi: Let's Make Elections Less Important!

The anti-democratic Democrat Rep. Nancy Pelosi strikes another blow against that sorry thing, the American voter, here:

“All of us come here to get a job done for the American people, and certainly that is the case with the president of the United States,” Pelosi told CNN chief political correspondent Candy Crowley. “I think that these meetings are not something to say, ‘Well, I’ll do this with you now and do that with them later.’ I think it is, ‘Let’s get some things done together to make elections less important.’”

Elections with less importance are elections which are easier to win. You know, as in if the election isn't that important, we don't really need your votes. Which is just voter suppression of the opposition. Damn straight she'll get her side out.

Democrats. Always trying to impose their vision:

"We will go through the gate. If the gate is closed, we will go over the fence. If the fence is too high, we will pole vault in. If that doesn’t work, we will parachute in. But we are going to get health care reform passed for the American people for their own personal health and economic security and for the important role that it will play in reducing the deficit." -- Nancy Pelosi, March 2010, here

And Bill Kristol says worrying about tyranny is kooky.

Jeb Bush doth protest too much.

Jeb Bush appears on five or six shows on Sunday and accuses the media of being obsessed with politics.

Uh huh.

Only Kooky People Say America Is Hurtling Toward Tyranny

So says, who else?, Bill Kristol, here:

"On the other hand, Paul’s political genius strikes us as very much of the short-term variety. Will it ultimately serve him well to be the spokesman for the Code Pink faction of the Republican party? How much staying power is there in a political stance that requires waxing semihysterical about the imminent threat of Obama-ordered drone strikes against Americans sitting in cafés? And as for the other Republican senators who rushed to the floor to cheer Paul on, won’t they soon be entertaining second thoughts? Is patting Rand Paul on the back for his fearmongering a plausible path to the presidency for Marco Rubio or Ted Cruz? Is embracing kookiness a winning strategy for the Republican party? We doubt it. ...

"And while Obama’s a bad president, and America’s got many problems, it isn’t, as Paul sometimes seemed to suggest, hurtling towards tyranny."

A substantial part of the English speaking world in 1776, notably in America itself, found the following sentiments from the Declaration of Independence equally hyperbolic:

The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. ... In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people.

It's good to know who's the loyalist, and who the patriot.

Rep. Amash Is A Fake Conservative

Rep. Amash is getting increasingly bold in his use of code words which show that he is a fake conservative. I think he's triangulating in this way in order to get ready for a Senate run.

He stresses "independence" to distance himself from the Republican brand discredited among the young and to find support among people who thus vote Democrat by default.

He stresses "moderation" to distance himself from conservative social issues which are increasingly viewed as extreme, rebranding them as "federal" issues to escape criticism from the Christian right.

The past has nothing to teach us, especially "positions that were popular in the 1990s". Will he soon repudiate the Two State Solution? I'm sure that will please voters in Dearborn.

"Individual liberty" is code for moral license, which includes same sex marriage and legalized drugs, flying under the banner of states rights.

And perhaps most importantly, what better way to get some street cred with Democrats and liberals than to play the race card against Sen. John McCain? A wise man might have let the senator simply self-destruct. But an ambitious, grasping man, on the other hand, sees an opportunity in piling on. Who is the has-been Sen. McCain to the lowly Rep. Amash, anyway? Wouldn't Justin Amash be happier in the Democrat Party where race is at the center of politics? That's where libertarianism comes from, after all. Success to libertarians is defeating Republicans, and taking over the Republican Party and not the Democrat Party from which they came. When's the last time a libertarian defeated a Democrat, anyhow? But in 2012 libertarians gloried in defeating a number of Republicans.

If Republicans were smart they'd wise up and realize they have a little fifth column problem. But they won't. They're the stupid party, after all.

February Unemployment Rate Drops To 7.7%

The full BLS report is here in pdf.

The official number of the unemployed has dropped from 12.8 million a year ago to 12.0 million in February 2013.

Multiple job-holding is up 4.5% year over year. Full-time with an additional part-time job is up 10% year over year. Part-time with another part-time job is up 5.6% year over year.

Total non-farm employment remains 3 million off the January 2008 peak of 138 million even though today the country is larger by 11 million souls.

The depression in employment continues.

Sen. Lindsey Graham Must Be A Prophet: He Is The Wrong Guy

The prophet, Sen. "Illegal Alien" Grahamnesty, speaks, here:

“If I can’t go have dinner with the president of the United States to talk about the problems that face our nation, I shouldn’t be running,” Mr. Graham said. “If you want to elect me and for me to promise you I’ll never talk to any Democrats or to the president about solving our problems, you’re voting for the wrong guy.”

For all his faults, Sen. Rand Paul's filibuster over the drone threat to America was right, and Sen. Graham's and Sen. McCain's opposition to it was wrong.

While Sen. Paul was on the Senate floor doing his job, his Republican colleague squishes were yucking it up with Obama.

FoxBusiness Is Full Of Baloney About The Monetary Base

Throughout 2007, when the stock market reached its previous all time high in October of that year, the adjusted monetary base of the United States was very stable and averaged just $851 billion.

During the financial crisis month of September 2008, however, the base leaped up from that vicinity between September 10th and September 24th to $949 billion, and by Thanksgiving 2008 had skyrocketed all the way to $1.5 trillion, near which level it remained even as late as March 2009, when the stock market plummeted to its historic lows since 2002-2003.

The increase in the monetary base was a whopping $718 billion, most of it in response to bank failures and panic on Wall Street during a narrow window of two months in the fall of 2008, but the stock market tanked 56% from the October 2007 highs anyway by the following spring.

Now FoxBusiness is arguing, here, that the increase in the monetary base from March 2009 to today, $1.3 trillion, is somehow responsible for "juicing" the stock market's remarkable 134% rise since that low.

Nevermind the stable and relatively low monetary base had nothing to do with the 2007 highs, nor did the rapid expansion of the base by $718 billion forestall the dramatic collapse of the market in 2009, but FoxBusiness wants you to believe anyway that piling up the monetary base since March 2009 by $1.3 trillion is the reason the stock market is at its lofty heights today, $11.2 trillion higher in total market cap than in March 2009.

That's embarrassingly wrong. The expansion of the monetary base has been irrelevant to the stock market, but it is an important part of keeping the banking system solvent, which is what this entire episode has been about but no one really wants to discuss anymore even as the velocity of money makes new lows, for the obvious reason that if the banks go under, everything goes under, so ixnay on the anksbay, OK?

This Is Obama's Driver For Jobs

Rush Limbaugh Still Blames The Republican Base, Not The Candidate

Here, yesterday:

"That's why we're losing, 'cause we keep nominating moderates.  You know, Mitt Romney is one of the most decent men ever to run for the presidency in my lifetime, and probably in many people's lifetimes, a totally decent guy.  But four million Republicans didn't vote in 2012.  Four million fewer than did in 2008.  The Republican conservative base stayed home.  Had they voted, we wouldn't be talking about Obama's second term.  There wouldn't be one."

Why blame conservatives for not voting for liberals, Rush?

The margin of victory wasn't 4 million. McCain lost the election in the swing states, by 1.4 million votes. Romney cut that in half, losing by 770,000 votes.

If anyone is to blame, it's the libertarians, the followers of Ron Paul and Sean Hannity, who were not on board, not the conservatives. And we haven't heard one conservative pundit say so yet even though libertarians were responsible for big losses for Republicans in Senate and House races in 2012. 

Have FoxBusiness And EMAC Gone Just A Little Bit Nuts?

Elizabeth MacDonald writes here that FoxBusiness has proof, proof!, that the Fed is juicing the markets.

Am I the only one who thinks this is crazy?

We're supposed to believe that the value of the total stock market is up $11.2 trillion since March 2009 because the Federal Reserve expanded the monetary base by . . . $1.2 trillion during that time?!

Talk about a money multiplier. That's a ratio of 9.3:1. Obviously the Congress should get us on this program right away. They could have taken our nearly $3 trillion in the Social Security Trust Fund and turned it into $28 trillion by now. Pikers.

Between Sequester Cuts And Payroll Tax Hike, Expect 41% Hit To Nominal GDP

Between the sequester spending cuts and the payroll tax rate going back up by 2 percentage points, I'm expecting a decline in nominal GDP of as much as 41%.

The sequester cuts come to $85 billion.

The payroll tax hike will remove conservatively $96 billion from American paychecks. Based on payrolls in 2011 of $6,239 billion, about $1,459 billion was exempt from Social Security taxation. Taking 2% of the remaining $4,780 billion yields a payroll tax hike of $95.6 billion using 2011 payrolls, the last available from SocialSecurity.gov.

Nominal GDP increased between October 2008 and October 2012 by $1,769.5 billion. That's been an average of $442 billion a year, nominal, over the last four years.

Subtracting the sequester cuts and the payroll tax increase (conservatively $181 billion) from that means cutting nominal GDP by about 41%.