Fair value of the S&P500 in early April: 1033

Doug Short, here:

The regression trendline drawn through the data clarifies the secular pattern of variance from the trend — those multi-year periods when the market trades above and below trend. That regression slope, incidentally, represents an annualized growth rate of 1.75%.

The peak in 2000 marked an unprecedented 150% overshooting of the trend — nearly double the overshoot in 1929. The index had been above trend for two decades, with one exception: it dipped about 12% below trend briefly in March of 2009. But at the beginning of April 2014, it is 80% above trend, up from 76% above trend the month before. In sharp contrast, the major troughs of the past saw declines in excess of 50% below the trend. If the current S&P 500 were sitting squarely on the regression, it would be around the 1033 level. If the index should decline over the next few years to a level comparable to previous major bottoms, it would fall to the vicinity of 500.

Click the link for his charts.

Beware of Greeks bearing gifts . . . of yield

Greece ranks 2nd worst for debt/gdp.

Cyrus Sanati for Fortune here recaps the recent history of the Greek debacle and the success this week of its auction of intermediate term bonds paying just 4.75%:

Thursday's debt offering only illustrates the severity at which the global junk debt bubble has grown and how desperate investors have become in their futile search for yield. Investors have no real confidence in Greece or Europe. Either they have lost their minds or they view Greece as some sort of momentum play in which they will try to cash out right before the bottom falls out of the market. Europe remains an economic basket case, and Greece continues to be the weakest link in a brittle chain.

Food prices are up 9.52% in the last four years, average hourly earnings just 8.28%

And it's gotten worse in March as reported here:

U.S. producer prices recorded their largest increase in nine months in March as the cost of food and services rose, pointing to some pockets of inflation at the factory gate. ... Food prices jumped 1.1 percent, the largest increase since May, after rising 0.6 percent in February. ... Food prices have now risen for a third straight month, in part reflecting a drought in the West.

On top of that, average hourly earnings dropped a penny.

New Yorkers Rejected For Jury Trial Of Occupy Wall Street Protester

Most of the prospective jurors for a trial of an Occupy Wall Street protester accused of felony assault of a policeman are being rejected because they admit they hate what OWS stands for. Another number hates the cops. I think they just hate jury duty for this malcontent, a female, who appears to be being made an example of rather than a truly violent criminal.

The UK Guardian has the story here.

Meanwhile the crazies at Naked Capitalism still fly their OWS sash proudly if not loudly on the upper right of their page even today by the way. But the top story there when you search for "Occupy Wall Street" is dated December 2012. Yves Smith apparently doesn't feel compelled to use a post label so-named to help you find out why you should support this cause.

A 20% correction from the current S&P500 high of 1890.90 would be . . .

. . . 378.18 points! Or 1512.72 on the index.

Bank mergers have doubled annually since 2009 as Dodd-Frank and now new capital rules begin to bite

The Wall Street Journal reports here:

More small banks are selling themselves, and executives say Washington regulations are a big reason why. ... In all, there were 204 bank mergers in 2013 in which the target bank had less than $1 billion in assets, according to financial-research firm SNL Financial. That is about the same as the 206 in 2012 and up significantly from 102 in 2009, before Dodd-Frank was passed in 2010. As recently as 2011, the number was 130. ... Many bankers think smaller banks now must have at least $1 billion in assets to cope with the increased regulatory burden. ... One issue some small banks say they are having a big problem with is the Consumer Financial Protection Bureau's new "qualified mortgage" rules, or QM, which require lenders to make sure borrowers can afford the mortgages they take out. Some banks say following the rules, which took effect in January, has been complicated and time-consuming.

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New capital rules being phased in between now and 2018 will require the largest banks to boost capital to 5% of assets from 3% and include risk assets in the calculations according to the New York Times, here:

Under the rule, banks with over $700 billion in assets will have to raise their capital, measured by the leverage ratio, to 5 percent of their overall assets. The ratio will have to be 6 percent at the banks’ federally insured banking subsidiaries, where many of their riskiest activities are. ... Senator Sherrod Brown, Democrat of Ohio, who has introduced a bill with Senator David Vitter, Republican of Louisiana, that envisions higher leverage ratios than those approved on Tuesday, said, “Today’s rule is a major step forward, but we can and must do more.”

Light on Mars

Pretty dang weird: Rover captures light emanating from the surface of Mars.

Story here.

Osama bin Laden is dead and so are 13 GM car owners

Michiganders in particular remain in denial about the GM bailouts.

Jim Geraghty here for National Review throws some cold water in our faces:

GM continued to make cars with a life-threatening defect during the era of government ownership. Joe Biden liked to boast, “Osama bin Laden is dead and GM is alive!” Indeed he is dead, and so are 13 people who were involved in car accidents linked to a defective ignition switch. ...

The New York Times reported that engineers at GM reviewed data in the black boxes of Chevrolet Cobalts at a meeting on May 15, 2009, and confirmed that the potentially fatal defect existed in hundreds of thousands of cars. The Obama administration and GM’s management finalized the terms of the bailout at the end of that month. It’s not yet clear who at GM knew this shocking and scandalous information, but at least some GM employees knew they were selling dangerous cars at the precise moment they were asking for taxpayer money to stay in business. ...

[T]he Obama administration’s Departments of Transportation and Justice came down like a ton of bricks on a Japanese automaker about unproven allegations of defects, while the government-owned American company continued to make and sell cars with proven potentially fatal defects, even after the chief of the NHTSA’s Defects Assessment Division twice proposed investigations.

The U.S. government sold its last shares of GM stock in December 2013; some have asked whether the government did so knowing the recall would be announced in February 2014. 

Grand Rapids, Michigan, Ann Arbor and Detroit make top 10 snowiest list

View the full list here.

Will The Phenomenal Gains In The S&P500 Since March 2009 To Date Be Cut In Half By 2019?

John Hussman, here:

Though we don’t have a 10-year figure for actual returns since 2009, investors should also notice that the improved valuations evident in 2009 will indeed have been followed by a decade of 10% S&P 500 total returns even if the total returns for the market over the coming 5 years are somewhat negative (which we view as likely).

The annual real gain for each of the almost five years to date is just under 20%, so a 10% annual return for each of the ten years in the period implies forfeiting half of what has already been made in the next five years.

Hussman has previously indicated that the vast majority of investors is likely to ride the coming decline all the way to the bottom.

Rahm Emanuel Obviously Hasn't Seen The Map Of Middle Class Destruction In Chicago

Rahm Emanuel, quoted here in The New Republic:

"We have very strong middle-class neighborhoods. ... Rather than the exodus of middle-class families to the suburbs, we have reentry into the city. We are at an incredible moment that is actually not momentary."

A time-lapse map of Chicago's disappearing middle class can be seen here.

This is what happens to big cities run by Democrats. Chicago is on its way to becoming Detroit.

2013 was a narrowly "oil investing" year based on the gold/oil ratio

The cumulative average price of gold in 2013 (London fix) was $1411.23 and the average price of Illinois Basin crude was $89.84, yielding a gold/oil ratio of 15.7, a narrowly "oil investing" year.

Gold fell $500 in price in 2013, from about $1700 to $1200.

6 million people aged 25-54 need to be working and can't

Not only did total private employment collapse by 6 million under Obama over the 16 months after his 2008 election, today 6 million people aged 25-54 who used to be working prior to the recession no longer do.

If there's been any recovery for this age group, it's that we're back to only November 2009 levels after four+ years, recovering about 2 million at work from the beginning of 2011 to now.

Think about these people: 2 million lost their jobs from November 2009 to the end of 2010. That's not Bush's fault. That's Obama's fault. And no matter who you blame for this mess, Obama has been a complete failure restoring work to America's core employment class.

The number of participating institutions in the FDIC has dropped over 32% since the year 2000

Between October 2000 and the close of 2013, FDIC insured institutions have dropped from 10,101 to 6,812, a decline of 3,289 or 32.6%.

Of those, 521 were outright bank failures, 497 of which occurred from February 2, 2007 to February 28, 2014. Before that there were just 24 failures going back to October 2000.

The cost of the 497 failures to the FDIC's Deposit Insurance Fund has been $89.26 billion.

The failure of IndyMac Bank FSB of Pasadena, CA in July 2008 was the costliest to the FDIC: $13.2 billion.

BankUnited FSB of Coral Gables, FL was a distant second at $5.9 billion in May 2009.

Colonial Bank of Montgomery, AL cost the FDIC $4.5 billion in August 2009.

WesternBank Puerto Rico cost the FDIC $3.2 billion in April 2010.

And rounding out the top five is Amtrust Bank of Cleveland, OH which cost the FDIC $2.97 billion when it failed in December 2009.

An ambassador is dead under Hillary Clinton's tenure at State, and now $6 billion is missing

Reported here:

The State Department misplaced and lost some $6 billion due to the improper filing of contracts during the past six years, mainly during the tenure of former Secretary of State Hilary Clinton, according to a newly released Inspector General report. The $6 billion in unaccounted funds poses a “significant financial risk and demonstrates a lack of internal control over the Department’s contract actions,” according to the report.

Maybe someone should subpoena Huma Abedin about this.

Climate-change activists are exasperated beyond endurance by the gullibility of the people

So says Clive Crook for Bloombergview here.

It illustrates a more general point, that the vision of the anointed is always frustrated by the lumpenproletariat. The elites' response to them is sometimes hyperbolic, as in Lenin's recourse to a vanguard to foist the revolution on a less than enthusiastic population, or as in a certain Penn State climate scientist's recourse to the courts to shut down his critics.

Old Clive doesn't mention those, but he does mention Secretary of State John Kerry's kooky statements, and adds this:

[T]his cause isn't advanced by exaggerating what is known in order to scare people into action, nor by denouncing everybody who disagrees with such proposals as evil or idiotic.

The scientists themselves -- some of them, at least -- are partly to blame. They chose to become political advocates, no doubt out of a sincere belief that policies needed to change a lot and at once. But scientist-advocates can't expect to be seen as objective or disinterested. Once they're suspected of spinning the science or opining on questions outside their area of expertise, as political advocacy is bound to require, they lose authority.

I'd say Clive is definitely showing signs of mellowing since his association with Bloomberg. Before that he seemed less temperate, although too temperate for Paul Krugman.

The incremental change of good old Fabian socialism is what Clive seems to have settled on, as has Obama after an early explosion of revolutionary zeal in 2008 when the realities of office overwhelmed everything.

Fortunately for those of us who disagree about the climate alarums, the John Kerrys and Penn Staters don't seem to have received the memo and keep doing everything to hurt their cause.  

Obama's 6 Million: Nancy Pelosi Has Her Holes Mixed Up, Plus 3 Million More Unemployed Than Under Bush

In 2008 from the January 1 peak to the November election, total nonfarm private employment fell by almost 3 million to 113 million.

After the election of Obama, however, it plunged another 6 million until February 2010, 16 long months later.

As usual Nancy Pelosi has her holes mixed up (quoted here):

"I have to note that today we have replaced all of the jobs lost under the Bush economic policies and recession that that took us into," Pelosi told reporters on Capitol Hill. "It's taken this long to build back from that." ... Heidi Shierholz, an economist with the liberal Economic Policy Institute, said the numbers may have political or psychological value, but not much else. There are still nearly 3 million more unemployed people than when the recession started. "I cannot think of anything economically meaningful about passing the December 2007 employment level," Shierholz said.

Unemployment rate remains at 6.7% in March, average year over year job growth slows to 183k monthly, weekly hours recover

The BLS reports here:

"Total nonfarm payroll employment rose by 192,000 in March, and the unemployment rate was unchanged at 6.7 percent, the U.S. Bureau of Labor Statistics reported today. Employment grew in professional and business services, in health care, and in mining and logging. ... Job growth averaged 183,000 per month over the prior 12 months. ... The average workweek for all employees on private nonfarm payrolls increased by 0.2 hour in March to 34.5 hours, offsetting a net decline over the prior 3 months."

-------------------------------------------------

While total nonfarm private payrolls have finally beaten the 1/1/08 peak (by just 96,000 jobs), rising to 116.07 million, neither seasonally-adjusted nor not-seasonally-adjusted total nonfarm employment has yet to surpass the pre-recession peak. Strapped municipalities and states find it difficult to add to government payrolls with reduced revenues due to on-going unemployment and reduced real estate values.

In 2013 job growth's pace averaged 194,000 monthly, which means at the current year over year pace of 183,000 monthly job growth has slowed 5.7% in 2014 to date.

Rising length of the work week arrests a worrisome downtrend for the time being.

Ted Cruz is a disaster on illegal immigration

So says Ann Coulter here.

He'll give us "guest workers" like the rest of the Republicans will, who will in short order be turned into Democrat voters by the Democrats.

She says Rick Perry and Chris Christie are disasters, too.

Time for fruit baskets all around.

Her only good candidate on the issue remains . . . Mitt Romney.

Survey of 7,500 adults says 5.4 million uninsured now have insurance!

Let's see.

The regime says 7.1 million have signed up for ObamaCare.

A new survey of just 7,500 adults says 5.4 million previously uninsured now have it because of ObamaCare. That's right. A survey of 7,500 tells us about millions.

But 6 million actually lost their insurance last year because of ObamaCare because their plans were non-compliant (too bad they weren't all Jewish--at least then we'd never hear the end of it), and had to scramble to replace their coverage, presumably under ObamaCare.

So why isn't the administration reporting 11.4 million signups? Or 13.1 million? Or hundreds of millions?

This farce gets funnier by the minute (does anyone know what Mel Brooks has been up to?).

From the story here:

At least 5.4 million people without health insurance have obtained coverage since last September—and that number will likely climb in coming weeks, a new survey found. ... "This is a great result, it's really exciting, it's really encouraging," said Katherine Hempstead, director of coverage for the Robert Wood Johnson Foundation. The organization helped fund the survey, which was conducted by researchers from the nonpartisan Urban Institute, and questioned 7,500 adults ages 18 to 64.

ObamaCare Has Terrorized Millions Who Did Have Insurance And Lost It

Peggy Noonan in The Wall Street Journal, here:

What the bill declared it would do—insure tens of millions of uninsured Americans—it has not done. There are still tens of millions uninsured Americans. On the other hand, it has terrorized millions who did have insurance and lost it, or who still have insurance and may lose it.

Has America Exported Its Middle Class?

Thomas Edsall for the New York Times here seems to think so, and summarizes a number of studies which say yes and no:

Branko Milanovic, a visiting professor at CUNY who once served as a senior economist at the World Bank, has tracked worldwide changes in income growth from 1998 to 2008.

Milanovic calculates that the middle class in China and India experienced 60 to 70 percent income growth from 1998 to 2008, while growth stalled for the middle and working classes in the United States.

The question then becomes, in Milanovic’s words, “Does the growth of China and India take place on the back of the middle class in rich countries,” especially the United States? Milanovic does not claim a direct causal relationship, but contends that the two “may not be unrelated.”

S&P500 Hits New All Time High At 1885.52 Today

The Shiller p/e hit 25.99, and the spread to the all time real price high of the S&P500 in August 2000 at 2018.27 narrowed to 6.6%.

Godless Libertarian Triumph In MI-3: Justin Amash Is Pro-Gay All The Way, Just Like Brian Ellis His Challenger

There really is no choice for social conservatives between the two Republicans in the MI-3 primary in 2014.

Neither candidate can bring himself to support Republican Committeeman Dave Agema's lonely stand against moral and spiritual decadence in our society. In fact, both candidates attack Dave Agema. The only reason to vote for Ellis in the primary is to spoil the reelection of Amash who is a complete traitor to conservatism and never was a conservative to begin with. Of course this means a Democrat has a winning chance in MI-3. But arguably Republicans should vote for the Democrat in the general that the full measure of God's wrath may be felt here.

Michigan's 3rd Congressional District is hopelessly lost from the Judeo-Christian point of view in any case, for reasons which prevailed long before Brian Ellis and Justin Amash existed. Whatever power traditional Calvinism may have possessed in the area in the past is long since transmuted. At least Vern Ehlers gave the appearance of a Christian. This place is cursed, and deserves everything that's come to it, and is coming.

Justin Amash, Antiochian Orthodox, quoted here in January:

“Defending civil liberties is at the heart of the Republican Party and our Constitution. As I've demonstrated with my words and record, I am trying to grow a new generation of Republicans that includes more gays and lesbians, racial-ethnic minorities, women and young people," Amash said.

And Brian Ellis, an Episcopalian, in the same story:

"Dave Agema’s discriminatory rhetoric gets in the way of sharing our Republican solutions," Ellis said in his statement.

Well, look at it this way. If you are looking for a church to join, you now have two more to cross off your list.

America Lost $10 Billion On The GM Bailout As 2014 Recalls Surge Another 1.3 Million To 6.1 Million

The driver claimed his power steering locked up after hitting a pothole.

The GM recall debacle of 2014 is developing so fast it's hard to keep up.

On Saturday the New York Times announced the weekend's recalls had brought the total in 2014 to 4.8 million, but here we are on Tuesday and GM is adding another 1.3 million to that, bringing the total so far to 6.1 million, I think.

If ever a company deserved to go bankrupt and sold off to the highest bidders, GM is it. The crap it's churned out in the last decade is amazing.

Don't forget it was Obama who insisted on preserving all those union jobs you're so proud of as the steering goes out on your Malibu on the way to buy groceries with your EBT card.

Media Shills Claim Surging Support For ObamaCare Even As Obama Disapproval Surges To New Highs

Now why would Obama set a new record for disapproval if his signature law is so popular?

On the last day for open enrollment in ObamaCare yesterday, the news script on the radio at the top and bottom of each hour was the same: support for ObamaCare is surging, when the fact is that overall it isn't.

Those reports were based on the headline story from WaPo here: "Democrats’ support for Obamacare surges", conveniently leaving out "Democrats'".

As with most infractions against the truth in our society, we major in sins of omission and minor in sins of commission, unless you're the Obama regime, which got a double major. Not only is it more secretive and conniving than Tricky Dick ever dreamed of being, it sends the leader of the free world off to Brazil after sending in the troops to Libya, leaving hapless Dick Lugar trying to find someone to complain to at The White House about not consulting with the Congress first.

The WaPo/ABC poll showing surging support for ObamaCare among supporters (!) started on March 26th, the same day WaPo here headlined "Poll: Obama’s disapproval rating hits a new high", surmising it's due to foreign policy:

Negative views of President Obama have hit a new high, according to a poll. The AP-GfK poll shows 59 percent of Americans now disapprove of Obama -- a point higher than the previous high set in December. Obama's approval rating stands at 41 percent. That's the second-lowest figure the poll has ever found. Part of Obama's problems appear to be related to foreign policy: The poll shows Americans disapprove of his handling of the situation in Ukraine 57-40 and disapprove of how he handles relationships with other countries 58-40.

Foreign policy? Really? Americans never give foreign policy much thought, and even less than they have given to signing up for ObamaCare. Sign-ups supposedly surged yesterday in a rush to beat the deadline, crashing the system, even though people have had six months to sign up and the regime has had three years to build a website that works. Where have they all been living during the PR blitz, under a rock?

Of course, WaPo doesn't tell you about the other "part" of the reason for Obama's record level of disapproval.

But they don't have to. You already know what it is, and so do they, which is why they didn't mention it.

Obama Befriends Illegals: ICE Arrests Plummet 40% Since 2011, 870,000 Deportable Aliens Remain Deep In Country

. . . and these Republicans support him.

The Daily Caller reports here:

Since June 2011, when the first of the Obama administration’s “prosecutorial discretion” policies were put in place, the [Center for Immigration Studies] report adds, interior ICE arrests have declined by 40 percent. ... ICE reports that there are more than 870,000 aliens on its docket who have been ordered removed, but who remain in defiance of the law.

To paraphrase Aristotle, citizens have the back of the king but a tyrant relies on foreigners for protection.

Maryland Junks Its Failed Online Healthcare Exchange, Now If Only The Feds Would Do The Same

Story here:

Maryland is not alone in having deep-seated problems with its health marketplace. Technical issues also have plagued Oregon, Minnesota and Hawaii. But Maryland will be the first to walk away from its site, a particular embarrassment for Lt. Gov. Anthony G. Brown (D), who was placed in charged of implementing health-care reform in Maryland by Gov. Martin O’Malley (D).

Bailed-Out GM Auto Recall Surges To 4.8 Million In 2014 From 0.76 Million In 2013

Top 20 vehicles by sales volume 2013

There's your everyday, run-of-the-mill, garden-variety recall from going automobile companies like Toyota and Honda who recall vehicles and still make a profit, and then there's your government-subsidized, taxpayer-funded, otherwise bankrupt recall like one from General Motors or Chrysler.

Which would you prefer?

The New York Times reports here:

General Motors announced on Saturday morning that it was recalling 490,000 trucks and 172,000 compact cars, meaning the automaker has now recalled about 4.8 million vehicles in the United States during the first three months of the year. That is about six times the number of vehicles it recalled in all of 2013. ... G.M. recalled about 758,000 vehicles in the United States in 2013, ninth among automakers, according to the National Highway Traffic Safety Administration. Toyota was first, with about 5.3 million vehicles, followed by Chrysler with 4.7 million and Honda with almost 2.8 million.

Taxpayers lost $10 billion on the GM bailout, $1.3 billion on the Chrysler bailout.

Lost For Three Weeks, Malaysian Flight 370 May Join 83 Other Disappearances Since WWII

Bloomberg has a good graphic here of aircraft which have simply vanished in the post-war, about 1.2 per year on average.

Wikipedia now has quite a large page devoted to Flight 370, here.

In addition Wikipedia devotes pages to 33 individual lost aircraft over the years, listed here.

Memo To Larry Kudlow And Other Defenders Of GM/TARP Bailouts: Free Market Capitalism This Is Not

General Motors, bailed out at a loss to the American people in 2009, has now had to recall approximately 2.6 million vehicles according to this story, many built well after the fact:

General Motors is boosting by 971,000 the number of small cars being recalled worldwide for a defective ignition switch, saying cars from the model years 2008-2011 may have gotten the part as a replacement.

The latest move brings the total number of cars affected to 2.6 million. The questionable handling of the problem, including GM's admission that it knew the switches were possibly defective as early as 2001, has embarrassed the nation's largest automaker. The recalls — which are under investigation by Congress and federal regulators — have overshadowed the improved quality of GM's newer cars.

---------------------------------------------------

Improved quality? You mean like the Volt which catches on fire? The Cruze whose steering wheel comes off? If this were a free market capitalist economy, Larry, GM would have been allowed to fail instead of being allowed to keep on selling this garbage to the American people.

GM should have gone through bankruptcy instead of being bailed out. It might have been reorganized as a result, but not as a worthless union shop. Otherwise its assets would have been acquired by the highest bidders who know how to build cars. Unfortunately GM's still here making crummy cars with shitty parts, some of which could kill more people, all thanks to the taxpayers, some of whom are still dumb enough to keep buying the things. Just Google the forums and read the horror stories. I'll bet they're the same ones who don't know Monday is the deadline to sign up for ObamaCare.

I've said it before and I'll say it again: no more GM cars for me, ever. The bailout was a bridge too far.

Ditto Chrysler.

Larry Kudlow's Kudlow Report On CNBC Ended Tonight

CNBC posted the farewells here on the day ending the television show's 5-year run, which wraps up 25 years with the network so far.

Kudlow remains affiliated with CNBC in a senior capacity and will appear daytimes on occasion instead of nightly at 7:00 PM.

Kudlow, 66 and an avid tennis player,  has had back problems requiring surgery in the last year, according to his own remarks on his 10:00 AM Saturday radio program on WABCradio.com, where you can download podcasts.

Ending his television program was reportedly his own choice and was made in the interest of slowing down.

Others have pointed to the show's very poor ratings as the reason for ending it, but the show has an enthusiastic and devoted, if not large, following.

The Reaganite supply-sider is known for his belief in free market capitalism as the best path to prosperity, as well as for strong dollar policy, growth oriented economic policies and a militarily strong America which welcomes and befriends others wishing to be free.

Kudlow credits his conversion to Roman Catholicism with helping him overcome a drug and alcohol addiction.

Incompetent Boob

He can't even make a gimme

WaPo's Chris Cillizza Doesn't Realize The Voters Already Decided Obama Was Incompetent Way Back In 2010

Yeah, Obama was reelected in 2012 and retained the Senate twice, but the House went Republican in 2010 and stayed that way in 2012 despite all the help the press has given Democrats, which is why they all remain so damn angry.

The only reason the House and Senate flipped Democrat under George Bush was the full court press of the press against him, which in the case of Obama has been completely silent on his Hurricane Sandy debacle, just as it has been on the worst GDP record in the post-war . . . under Obama. Scores of other bungles and idles also apply, from the Macondo Blowout to the Fruit of Kaboom Bomber to the Tsarnaevs to JOBS, and most recently Obama's signature debacle, the rollout of healthcare.gov. In every case the response is the same, learned from the Lutheran catechism: put the best construction on everything under Obama.

By comparison the economy and the country was a paradise under Bush, including the successful implementation of the awful Medicare Part D. GDP was 1.7 times better than it is under Obama, and will be even better than that by the time Obama is through. At least George Bush's liberalism was competent.

Cillizza's laughable commentary here.

Obama Is Going To Finish His Presidency With The Worst GDP Performance Since World War Two

The Bureau of Economic Analysis reports here today its third and final estimate of Q4 2013 GDP at 2.6%, up from 2.4% in the second estimate. 2013 overall remains stuck at 1.9%, another paltry sum in the fourth full year after the so-called Great Recession ended.

Obama's average report for the five years 2009-2013 is 1.24%, the worst in the post-war.

Bush's average report at 2.13%, the worst up to the time, was 1.7 times better than Obama's to date.

Even if Obama racks up 3.5% real GDP growth in each of the next three years 2014, 2015 and 2016, he'll still end up with a worse record than Bush and the worst record since World War Two.

What a complete and utter loser.

High On Dope Again, Obama Calls Russia A "Regional Power" Despite Its Nuclear Stockpile Of 8500 Warheads And Hundreds Of ICBMs

A country which can obliterate another nearly 10,000 miles away is not a regional but a strategic power, but as we all know by now, Obama is a little challenged in the spatial reasoning and math departments, which, unfortunately, could get us all killed. 

Obama today, apparently after a few puffs on a doobie, as quoted by WaPo here:

“Russia is a regional power that is threatening some of its immediate neighbors — not out of strength but out of weakness,” Obama said in response to a reporter’s question about whether his 2012 election opponent, Mitt Romney, was right to characterize Russia as America’s biggest geopolitical foe.

Unreliable Conservatism: Judge Bernard A. Friedman, Reagan Appointee, Overturns Michigan's Marriage Amendment

As a Democrat in recovery, Ronald Reagan proved more than once that his journey to conservatism was incomplete.

On the social issues he was full of soothing words to keep the religious rubes in the Republican line at the voting booth, but appointed to the courts people confused by liberalism (the Reagan Democrats), such as Judge Bernard A. Friedman in Michigan, who openly encouraged in 2012 lesbian plaintiffs to challenge Michigan's constitutional amendment of 2004 defining marriage as between a man and a woman. Appointed as Friedman was in 1988, conservatives may wish to console themselves with the thought that Ronald Reagan was already senile in his last year in office and was co-opted by the George H. W. Bush faction. You remember him . . . the same guy who happily signed his name recently as a witness to a lesbian "wedding" in his own dotage.  

And here we are in 2014 and the same judge Friedman has struck down what was passed by the voters with 59% approval just 10 years ago:

In his 31-page written opinion, Friedman said the constitutional amendment known as the Michigan Marriage Act, passed by 2.7 million state voters in 2004, was unconstitutional because it denied gays and lesbians equal protection under the law.

When conservatism admits liberal ideas into its universe, a queer thing known as libertarianism, the rule of law goes out the window because the rules go out the window. Societies form around consensus (culture springs from the cult), and when the consensus breaks down so does the concept of society. Order gives way to chaos, whether imposed from without by judicial usurpation or by voter apathy, acquiescence or decadence.

If capturing the heights through elections has shown us anything it is that sometimes leaders can persuade the people from the ramparts, but unless the laws spring forth organically from the beliefs of the people the future of the idea of one nation remains in doubt.

As many have pointed out, marrying your dog, multiple men or women, a herd of sheep, or minor boys and girls cannot be far behind unless Nature and Nature's God once again capture our imaginations.

"Our outlook continues to be more favorable for Treasuries going forward."

So says Market Anthropology's Erik Swarts, here.

"[O]ur current estimates of prospective S&P 500 total returns are negative on every horizon shorter than about 7 years," says John Hussman, here.

Foreclosure's Ground Zero Finally Shifts To New Jersey And New York After Region Being In "Suspended Animation" For Years

So reports Bloomberg here in late February:

The epicenter of the U.S. foreclosure crisis is shifting to New Jersey and New York, threatening a housing rebound in one of the country’s most densely populated areas. ...

The number of New York and New Jersey homeowners losing their houses reached a three-year high in 2013. Banks in these states have been slowly working through a backlog of delinquent loans that enabled borrowers to skip mortgage payments for years. ...

“It is really a delayed reaction in New Jersey and New York,” said Michael Fratantoni, chief economist for the Mortgage Bankers Association in Washington. “Loans that were made pre-crisis have been in this state of suspended animation for a number of years. And now, we are beginning to see the pace of resolution pick up.”

Keith Jurow has been warning about this since at least early 2013.

All But One Big Bank Would Fail Real Stress Tests, Which Means In An Actual Crisis It's 2008 All Over Again

So says Bloomberg View here, naming Wells Fargo as the only one which would pass:

The results aren’t pretty. Using a start date of Sept. 30, 2013, the same as that of the Fed's latest round of stress tests, the NYU model gives only one of the six largest U.S. banks -- Wells Fargo & Co., Inc. -- a passing grade. The other five -- JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley -- would have a combined capital shortfall of more than $300 billion. That's not much less than they needed to get themselves out of the last crisis.

China Ups The Ante In The Race For Thorium Reactors

The earth is loaded with thorium, but so is the moon.

The South China Morning Post reports here:

A team of scientists in Shanghai had originally been given 25 years to try to develop the world's first nuclear plant using the radioactive element thorium as fuel rather than uranium, but they have now been told they have 10, the researchers said. ... 

Professor Li, director of the project's molten salt chemistry and engineering technology division, said the smog crisis had provided huge impetus for their research. ...

Western countries such as the United States have experimented with thorium reactors but gave up on the technology because of the engineering difficulties.

Analysts have also suggested the US lost interest in thorium as a fuel for reactors because uranium was a more suitable material to produce nuclear weapons.

Interest, however, has been revived in recent years and research projects have been established in several countries, including the United States, France and Japan.

"This is definitely a race," said Li. China "faces fierce competition from overseas and to get there first will not be an easy task", he said.

h/t Ambrose Evans-Pritchard

The Federal Reserve Couldn't Hit A Bull In The Ass With A Sack Of Peaches, Let Alone Target The Inflation Rate

The all items CPI had climbed to 219.016 on July 1, 2008 and didn't surpass that level again until October 1, 2010 at 219.024. The deflationary gale of the Great Recession blew for 27 months.

The collapse in prices in the five months from July 2008 through November 2008 was 3.48%, after rising in 2007 by 4.29%, a spread of 7.77 points.

So much for inflation targeting by the Federal Reserve, which couldn't hit a bull in the ass with a sack of peaches.

In 2012 and 2013, despite explicitly targeting the rate at 2%, the Fed could only come up with 1.6% and 1.56% respectively, suggesting that deflationary winds remain a problem.

Bonds Beat Both Stocks And Cash For The Last 15 Years 1999-2014

The return from cash in the Vanguard Prime Money Market Fund has been 2.3% per year for the last 15 years, according to Morningstar. Note that the return over the last one, three and five years of that period has been effectively zero, which is what you get also from gold at all times and in all places . . . plus the shine.

The return from stocks in the Vanguard S&P500 Index Fund has been 4.2% per year for the last 15 years, according to Morningstar. Note that the one, three and five year returns have been three to five times the 15 year return. The S&P500 is currently very richly valued, and in real terms its level is about 7.1% off its all time high in August 2000.

The return from bonds in the Vanguard Total Bond Market Index Fund has been 5.15% per year for the last 15 years, according to Morningstar. At the current NAV of 10.71, the price of the fund is richly valued, about 2% above what looks like the historical high end of normal at around 10.50 per share.

Your 15 Year Real Return From The S&P500: Just 2% Per Year 1999-2014

The inflation-adjusted return from an investment in the S&P500 from January 1999 to January 2014 is just 2% per year.

At that rate it takes 35 years to double your fortune in real terms.

Calculate your return here.

Americans Still Earn Way Too Little To Afford The Median Priced Home

The national median price for an existing home in December 2013 was $196,300.

Median household income at the end of 2013 had reached $52,297.

That's a ratio of 3.75:1, which is even higher than the 3:1 ratio which prevailed a year ago, and 44% higher than the recommended ratio of 2.6:1.

Either housing is still much too high or wages are much too low to support ownership of the median priced home in the United States. It is more likely that both things are true.

And forget about buying a new house on such an income.

The median new house price reached a new record in December at $270,200, vaulting the ratio to 5.17:1.

Housing prices have continued to rise because of deliberate government policy to reinflate the housing bubble.

Sellers should sell and buyers should beware. 

Like The Size Of The Civilian Labor Force, Average Weekly Hours Have Stopped Their Recovery

Edward Lazear for The Wall Street Journal here has called attention to two months of back to back declines in average weekly hours, using the seasonally adjusted figures.

average weekly hours, not seasonally adjusted, quarterly average

It got me to looking at the not seasonally adjusted figures, which do not show the same thing. In fact, they show that we've been flirting with the 34.3 level quite a bit in 2013, but also even since before the Great Recession, and before ObamaCare and the recent spate of nasty winter weather. But what is interesting is that the quarterly average of the figures shows that we failed to make a new high in average weekly hours last summer, breaking a pattern of ever higher highs in 2010, 2011 and 2012 which had developed after the lows in late 2009, early 2010. You'll also notice a pattern had developed of higher lows in the measure at the beginning of 2011 and 2012,  but broken at the beginning of 2013.

civilian labor force level, not seasonally adjusted

This is interesting because you can see this same pattern in the level of the civilian labor force. The post-recession level bottomed at the beginning of 2011 and made higher lows at the turn both to 2012 and 2013, but not to 2014, which appears to signify more than seasonal shrinkage. Similarly there's been a pattern of ever higher highs in the summers in 2011, 2012 and 2013, but if the pattern doesn't hold in the summer as it hasn't in the winter, we'll not beat the 2013 summer level in the summer of 2014.

It stands to reason that as the civilian labor force recovers and grows, which it has, average weekly hours should rise, which they have, until recently. But the recent weakness in hours probably goes hand in hand with recent weakness in the size of the labor force, not with something else, like ObamaCare or the weather. And that probably has more to do with flagging demand in the economy than anything else.

What This Country Needs Is A Good 5-cent Dollar

Which would be an improvement of 25%.

Between March 5-12 Someone (Russia?) Yanked $104.5 Billion In US Treasuries From US Custodial Supervision

Peter Coy has the story here:

There’s circumstantial evidence that Russia may have yanked tens of billions of dollars in assets out of a custodial account at the U.S. Federal Reserve, possibly to keep it from being frozen by U.S. authorities in case of heightened conflict in Ukraine.

LA Employment Agencies Place Illegal Chinese In Jobs All Over America

The LA Times reports here:

Here in this bare room, where a map of the U.S. is one of the only decorations on the walls, a young man newly arrived from northeast China can find work washing dishes in Minnesota or Utah for 12 hours a day, six days a week. ...

"You can call from any part of the country to get a nanny or a restaurant worker sent to you," said Xiaojian Zhao, a professor of Asian American studies at UC Santa Barbara who has studied the employment agencies. "They are like labor distribution centers for the ethnic economy." ...

"We have been the portal, the Ellis Island, of Asian immigrants for 30 years," said Talbot, the [Monterey Park, California] city manager. "We see people walking down the sidewalk with suitcases. They've just landed. I don't know how they get here from the airport, but they get here."

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Politically the area has in the past routinely elected Democrat notables such as Judy Chu and Hilda Solis.



h/t Mickey Kaus

Bet You Didn't Know Japan Has 44 Tons Of Plutonium

I didn't either.

Story here:

Japan now has 9 tons of plutonium stockpiled at several locations in Japan and another 35 tons stored in France and the U.K. The material is enough to create 5,000 nuclear bombs. The country also has 1.2 tons of enriched uranium. ...

It also has plans to open a new fast-breeder plutonium reactor in Rokkasho in October. The reactor would be able to produce 8 tons of plutonium a year, or enough for 1,000 Nagasaki-sized weapons.

FDIC Sues 16 Big Banks Saying LIBOR Rigging Hurt 38 US Banks Which Eventually Failed

CNBC reports here:

The FDIC said the defendants' conduct caused substantial losses to 38 banks that the U.S. regulator had taken into receivership since 2008, including Washington Mutual Bank and IndyMac Bank.

Among the banks named as defendants include Bank of America, Barclays, Citigroup, Credit Suisse, Deutsche Bank AG, HSBC Holdings, JPMorgan Chase, the Royal Bank of Scotland Group and UBS.

Sink Sunk In FL 13 By Libertarian Spoiler In Low Turnout Special Election Where Fixing ObamaCare Got No Traction

Flashback to November 2010 when Eric Cantor already said he wanted to keep the good parts of ObamaCare and not repeal the thing outright. Eric Cantor never saw the Republican blowout in 2010 as a resounding verdict against ObamaCare, even though the Republican sweep of the House was history making. Newsmax reported Cantor's remarks here.

Today, repeal of ObamaCare is much more appealing than keeping it as is, by almost 2:1 in December polling by Gallup, here. Those who want to scale it back or expand it somehow to fix it are evenly divided in the polling data and together represent 40% of those polled. The polling overall, however, is negative on ObamaCare by 52% to 37%.

The narrowly won Florida 13 District seat this week by a Republican was a test of the Democrat strategy of running on a platform of fixing ObamaCare. It didn't work.

Politico reports here:

Democrats had hoped that defeating Jolly would show that they could beat the GOP’s anti-Obamacare offensive. Sink had embraced the national Democratic Party’s “fix it, don’t repeal it” mantra, which candidates across the country are expected to adopt this year.

Election results at 10 News WTSP here show that a libertarian spoiled the race for the Democrat Alex Sink. Usually libertarians ruin elections for Republicans, not Democrats. The libertarian strongly supported marriage equality and liberalization of marijuana laws.

Turnout was low in the narrowly Republican majority district where older voters weren't particularly engaged by ObamaCare, as reported separately, here.

San Fran Gay Rights Activist Sentenced For Child Porn

Just remember people, homosexuality is completely unrelated to child sexual abuse. Completely.

Vivian Ho of The San Francisco Chronicle reports here:

Veteran gay rights advocate and former San Francisco Human Rights Commission staff member Larry Brinkin was sentenced to one year in county jail Wednesday for possessing child pornography. ... Brinkin, who worked as a senior contract compliance officer with the rights commission until his 2010 retirement, was arrested in June 2012 after e-mail attachments were found on his AOL subscriber's account that contained images of toddlers engaged in sex acts with men.

h/t Savage

Here come the Chinese industrial bankruptcies: Officials to respond with a mixture of capitalism and Keynes

The Chinese premier's comments are discussed here in The UK Guardian:

Premier Li Keqiang told lenders to China's private sector factories they should expect debt defaults as the world's second largest economy encounters "serious challenges" in the year ahead. ... Li's warning followed the failure of Shanghai Chaori Solar Energy to make a payment on a 1bn yuan (£118m) bond last week. The default was the first of its kind for China and widely seen as pointing to the end of 11th-hour government bailouts for troubled enterprises. Some analysts said the decision to let some indebted firms collapse was a sign the authorities had learned from the Japanese boom and bust experience of the late 1980s and early 1990s. Tokyo was plunged into two "lost" decades of stagnation after it prevented zombie companies from declaring bankruptcy – even blocking petitions from bondholders in the courts - when a property collapse exposed debts many times the value of their businesses.

------------------------------------------

If only we could get Americans to practice some similar capitalism by letting companies and banks fail instead of bailing them out.

China can afford the Keynesian stimulus, however, unlike the US. They've got the savings Keynes prescribed, in the form of massive foreign reserves.

Too bad America has no such savings.

Malaysia Still Can't Find Boeing 777 Missing For 5 Days

Amazing. Maybe they should start looking on the ground, like in Pakistan.

FERC Study Warns Sabotage Vs. 0.01% Of Electrical Grid Could Blackout The Nation For Months

Reported here:

A study by the Federal Energy Regulatory Commission raises concerns about the seriousness of electricity grid vulnerability, The Wall Street Journal reports.

The study found that if saboteurs attacked just nine of the country's 55,000 electric-transmission substations, the country's power network would collapse. An ensuing nationwide blackout could last weeks or even months, the newspaper said.

Uh Oh, A Lot More Than The 1% DON'T Worry About The Economy

Gallup, here.

Incidentally, precisely 59% of American wage earners in 2012 made less than $35,000 per year. You need to make about $80,000 to reach the top 11%.

January Margin Debt Was 5th Record High In A Row

Reported here:

Margin debt hit record levels at the end of January, according to New York Stock Exchange data. Margin debt at the end of January reached $451.3 billion, its fifth record month in a row. Margin debt returned and surpassed record levels set in July 2007 back in April when it topped $384.37 billion.