Friday, August 29, 2014

Japanese Economy - Abenomics

Recall how Japanese recycled Prime Minister Shinzo Abe has printed stimulated the Japanese economy to the tune of $116B, all with the goal of course of ending Japan's journey through the economic doldrums (recession), which has been underway now for at least 30 years.  Of course, Abe said that "this time it would be different" as the stimulus would be "targeted" not on infrastructure, but on innovation and technology.  Well, all is not well and this time will be no different (well, at least if you're not counting being worse than before as 'different') than from the other failures in the past: Keynesianism does not work and you cannot borrow or print your way out-of-debt. 

So Abe-san, how's that stimulus working out for 'ya?

Why "This Time Won't Be Different" For Japan In Two Charts by Tyler Durden  [especially interesting is the impact of Japan's decision to shutdown all but one of its nuclear power plants after the tsunami]

Abe Says Fears Of Hyperinflation Are "Mostly" Unfounded As He Urges Companies To Hike Wages by Tyler Durden [last few sentences are all that need to be said]


Japan Food Prices Set To Soar As Government Hikes Wholesale Wheat Prices By 10% by Tyler Durden:
If the past three months have been any indication of what Japan has to look forward to from Abenomics, we have a feeling his tenure will be as short, if not shorter, than all of his recent (and numerous, among which he, himself) predecessors. Because while the stock market may have risen in lock step with the plunge in the Yen, what has also soared are costs. And while a very select few benefit from the transitory surge in the Nikkei, the rising costs, i.e., inflation, hit everyone equally.
But while the "no free lunch" reality has until now mostly been felt by those who need energy, as shown in "You Wanted Inflation, You Got It: Japanese Gasoline Price Rises To Eight Month High" the inflationary impact on Chinese imports is about to hit everyone like a sledgehammer right where it hurts the most: in the stomach, as the inevitable has finally happened, and the agriculture ministry announced that wholesale wheat prices are set to rise by a near-record 9.7% in April, which will shortly thereafter send regular food prices soaring.
And just like that Japan is about to learn that soaring stock prices always have a trade off, a lesson which even GETCO's S&P ramping algos will not be exempt from when the latest bout of soaring food inflation results in central banks scrambling to withdraw liquidity, just as they did in early 2011. The results will naturally be the same.

As for how long Abe's government will remain in power after energy and food inflation sweep through the net importing nation, that is anyone's guess.

Japan: Front-Runner Of Outright Monetization by Ryutaro Kono of BNP Paribas

Japanese Welfare Recipients Hit All-Time High by Tyler Durden

The Abenomics Farce Continues by Tyler Durden

Abenomics Tries To Make Sure Japan Is Going Down Swinging by Wolf Richter

Abenomics Utter Fail: Japan’s Crazy Exploding Trade Deficit  by Wolf Richter

Abenomics Wins: Budget And Inflation Both Jump (Over The Cliff) by Wolf Richter

“We Don’t Feel Any Impact Of Abenomics Here”  by Wolf Richter

Japan’s Frantic Redo Of An Artificial Boom Followed By A Bust  by Wolf Richter

BNP Warns Only 10% Chance That Abenomics "Ends Well" by Tyler Durden

Japanese Consumers, Hammered By Abenomics, Get Gloomier   by Wolf Richter

Cheered on by the OECD, Japan Announces Higher VAT Rate to Enable Bigger Government by Dan Mitchell

What Will It Take To Blow Up The Entire Japanese Banking System? (Not Much, According To The Bank of Japan)  by Wolf Richter

Chart Of The Day: "Japan Has No Alternative But To Print And Print And Print" by Tyler Durden

Abenomics One Year Later by Tyler Durden

Dismal Abenomics Leads To 16th Consecutive Decline In Japanese Wages by Tyler Durden

The Japanese Feel The Heat From The Big Lie Of Abenomics by Wolf Richter  [last for 2013]

*******************   2014 *******************************

Crazy Abenomics Orgy In Japan Is Ending Already – Pounding Hangover Next by Wolf Richter

The Madness Of Abenomics In One (Crazy) Chart by Wolf Richter

Total Abenomics Fail Slams Japan Where It Hurts Most by Wolf Richter

Double Data Whammy For Japan As PMI Tumbles & Industrial Production Misses By Most Since Abenomics by Tyler Durden

The Economic Catastrophe That Is Abenomics Sends Japanese Gas Prices To Five Year Highs by Tyler Durden

Abenomics At Work: Largest Ever Trade Deficit Slams Domestic Wages, Gooses Overseas Corporate Profits by Mike Mish Shedlock

Abenomics At Work: Japanese Consumer Confidence Plummets Due To Rising Prices, Stagnant Wages by Pater Tenebrarum

Abenomics Down The Memory Hole: Maniac Money Printing Has Not Stopped Japan’s Falling Wages by Jeffrey P. Snider

Abenomics At Work: Japan’s April Output And Orders Fall Sharply by Mike Mish Shedlock

Japan’s 10th Round Of QE: Still A Flat-Out Failure by Jeffrey P. Snider

Abenomics: Japan’s Live Fire Test Of Keynesian Central Banking Is A Growing Disaster by David Stockman

Abenomics' Legacy: Japan's Greatest "Misery" In 33 Years by Tyler Durden

Abenomics Nails Japan’s Workers: April Real Wages Down 3% Y/Y by Jeffrey P. Snider

Japan’s Great Keynesian Rebuke: Abenomics Has Wiped Out ItsTrade Accounts—-Exactly Opposite The Theory by Jeffrey P. Snider

The Essence Of Abenomics: Swapping Japan’s Historical Trade Mercantilism For Keynesian Financialization by Jeffrey P. Snider

The Wrath of Abenomics: Sales Collapse, Inflation Soars by Wolf Richter

Abe's Worst Nightmare: Household Spending Collapses As Inflation Spikes by Tyler Durden

Printing Press “Prosperity”: The Complete And Utter Failure Of Abenomics by Andy Sirkis

Japan’s ‘Surge’ Undone: The Abenomics Rebuke To Keynesian Money Printers by Jeffrey P. Snider

The Flame-Out Of Abenomics, in One Crucial Chart by Wolf Richter

 Pity The Japanese: They’ve Been Turned Into Keynesian Lab Rats  by Jeffrey P. Snider

 What Japan’s June Trade Disaster Really Means: Abenomics Is Flaming-Out by Wolf Richter

Abenomics Is Working: Japanese Households On Welfare Rise To Record by Tyler Durden 

The Raging “Success” of Abenomics in one Crucial Chart  by Wolf Richter

New: Japan’s Keynesian Money Printing Experiment Continues To Fail: Jobs, Real Incomes And Spending Plunge Again from ZeroHedge

Different Perspective: There ISN'T a Stock Bubble, Rather, There's a Cash Bubble?

Interesting read from Brad Thomas on what he says is a cash bubble, not a stock market bubble.  My reasoning on why there is a stock bubble is based upon what I believe to be one simple fact: what other investment vehicle is making any returns at all?  Not CDs; not savings accounts; not money market accounts.  ZIRP works both ways, i.e., sure, interest rates on loans, such as mortgages, are low, but so are savings rates.  In today's "new normal", cash in penalized when it sits on the sidelines.  With respect to my 401(k) and other retirement plans, where else can I put the money and make money?  The stock market.  Bonds?  Government bonds are not the safety net they were once considered (my opinion) and corporate bonds, well, I just don't understand the market enough to participate, so I choose to have a minimum exposure to bonds.  As the Fed continues to print money, it can only go in one place for us commoners (the opportunities available to the elites and crony-banking crowd are drastically different) to make something of it: the stock market. 

This being said, Thomas' read makes me think, and hopefully it will do the same for you.  Here's The Bubble is in Cash, Not Stocks…   Now, after reading Thomas' piece, I recommend James Saft's Buffett hoards cash, individuals’ holdings hit 14-year low, which opens with this:
Individual investors have been cutting back on cash in portfolios, the exact reverse of what Warren Buffett has been doing at Berkshire Hathaway.
Who do you think has got it right?

Finally, cap your reading off with Fed's Mission Accomplished, and you're left with ... hmmm? 

Thursday, August 28, 2014

A Week's Worth of Education & Directness from Charles Hugh Smith

Health Repository: Exercise and Medicine

A health repository for superb articles on exercise and medicine.

Newer posts will be at the top, in red.  Check back often - your health depends on it!

New: Nutritional Approaches to Mental Health

New: To Protect Your Heart, Your Sodium to Potassium Ratio Is More Important Than Your Overall Salt Intake

7 Tips to Ignite and Maintain Your Digestive Fire [note: I'm not so keen on #7, i.e., while I support the need for fiber, I'm not convinced of "whole grains" being the best source]

How Sugar Harms Your Brain Health and Drives Alzheimer’s Epidemic (aka "Sugar Kills and You Won't Even Know It - Literally")

Why Do People Gain Weight? (aka "Never Eat in These 11 Situations" - also explains the "freshman 15" though not explicitly)

9 Signs You Need to Eat More Fat

Must Read: Ketogenic diet beats chemo for almost all cancers Note: Doctor Thomas Seyfried is no quack!

Maybe We Don't All Need Annual Physicals

Fasting diets like the 5:2 'can help prevent diabetes by reducing cholesterol after 10 to 12 hours'

Is Alzheimer’s Caused by an Infection?

Are These the Reasons Why You’re Not Losing Belly Fat?

Top Ten Ways the American Health Care System Fails

The Importance of Vitamin D for Normalizing Your Cholesterol Levels

How To Workout At Home Without Equipment Or Weights  I liked this, but the language is unnecessary IMHO.  I guess I'm just getting old.

Hero’s Workout Styles You Can’t Miss My favorite set of exercises.  These come courtesy of Neila Rey's Free Visual Workouts

80% of Strokes Are Preventable

The Best Exercise There Is, Hands Down  easy, here it is:
The single best exercise there is, hands down, is the one you’ll do.

69 Kettlebell Exercises That Quickly Help You Get in Shape

7 Simple Ways To Be Healthy And Avoid Getting Sick [watch the video on sugar!]

7 Benefits of the Bulgarian Split Squat

Can exercising for just 60 seconds a week transform your health? 

How To Lose Fat Fast

Ketogenic Diet Improves Insulin Sensitivity and Numerous Aging Markers

Free Visual Workouts

6 Illustrated Guides To Different Types Of Meditation

Set Goals by Time Instead of Distance or Quantity  [IMHO this is the critical success factor to getting back into an exercise routine.  Don't set distance or quantity goals, i.e., '2 miles' or '20 reps'. It works]

15 Reasons to Sprint More This Year

Placebo Effect Dictates Therapeutic Effect of Headache Medication

Flame Thrower: Top 10 Natural Ways to Reduce Inflammation


Quote of the Day: America's Failing Cities (Philadelphia, Camden, Detroit, ...)

"For years, our major cities were undermined by a confluence of four unhappy factors: 1. higher taxes; 2. defective schools; 3. crime; 4. declining economic opportunity. Together, these weighed much more heavily upon the middle class than upon the very wealthy and the very poor. In the case of Philadelphia, the five counties in the metropolitan area have had a mostly stable population, but the city itself lost more than a quarter of its population between 1950 and 2000 as some 550,000 people fled to the suburbs or beyond. How many people matters, but which people matters, too: They were the ones with the means and the strongest incentive to relocate. Over the same period of time, Chicago lost a fifth of its population, Baltimore nearly a third. Philadelphia is one of the few U.S. cities to impose a municipal income tax (one of the taxes Mayor Rizzo raised), creating very strong incentives to move across the line into Delaware County or Bucks County. This is sometimes known as “white flight,” but that is a misnomer: In Detroit, the white middle class got out as quickly as it could — and the black middle class was hot on its heels. Upwardly mobile people and those who expect to be — i.e., those with an investment in the future — care a great deal about schools, economic opportunity, and safety. And they know where the city limits are." - Kevin D. Williamson, Who Lost the Cities?

No Government Austerity, No Gain

Richard W. Rahn's No Government Austerity, No Gain: [emphasis is mine]

Do you think government has grown or contracted during the past seven years? If you listen to the political class and many of their lackeys in the news media, you would think there have been massive cuts in government spending. The truth is the opposite both in the United States and Europe. As can be seen in the data in the accompanying chart, total government spending in the six years since the beginning of the “Great Recession of 2009” is larger in both real terms and as a percentage of the economy in the United States, Europe, Japan — and even China — than it was before the recession began. The eurozone countries, plus the U.S., Japan and China, account for more than two-thirds of world’s gross domestic product.

image

Keynesian and socialist-leaning economists tend to favor bigger government and more government spending, while classical and Austrian school economists tend to favor smaller government. Once again, a global experiment was tried in the early stages of the Great Recession, when massive increases in government spending occurred in the United States and most other major countries. According to Keynesian orthodoxy, this spending binge was supposed to result in a rapid recovery, high growth (the Federal Reserve and the Obama administration had predicted several years of approximately 4 percent growth in the U.S.), and big increases in employment. It didn’t happen.

The major eurozone countries have stopped growing, including Italy, France and even Germany (which had a better record), and Europe is again teetering on recession. If you listen to the voices of the left in Europe, they claim there was too much austerity (meaning too little government spending). The left wing of the Democratic Party makes similar claims, and one of their gurus, New York Times economist Paul Krugman, blames the poor result on the “stimulus” being too small. One little problem for the Krugman crowd is that they cannot identify any country in the world where government, as a share of GDP, is big enough to produce high growth, high employment and high wages. At times, the socialist and communist economies approached 100 percent government spending, and the only things they produced were shrinking economies and an increase in human misery.

This year, about half of the GDP of the eurozone countries will be accounted for by the government sector. Almost all of many studies of the optimum size of government spending as a percentage of GDP show it is less than 30 percent, and many of these studies, including my own, show it is less than approximately 25 percent. That is, as the size of government increases beyond the optimal level, economic, income and employment growth decline and eventually become negative. This should come as no surprise, given that it is widely recognized that government is most often less efficient and misallocates resources more than the private sector. The increased taxes, regulations and debt necessary to support the bigger government are also disincentives to productive activity.

Many on the American left, including some in the Obama administration, advocate much greater spending, much higher tax rates and more regulation, including labor regulation that mandates more vacations, shorter workweeks and higher minimum wages, like France. The French now have a government that spends about 55 percent of GDP (paradise for the Keynesians), but growth has stopped, real per-capita incomes are falling, the debt burden is soaring, and the unemployment rate is 10.2 percent.

The Japanese economy is a growing disaster. The economy dropped almost 7 percent in the past quarter (after a major tax increase — surprise, surprise). Government spending as a percentage of GDP is now more than 25 percent higher than in was just seven years ago, and its government debt is the highest in the world. China is the big bright spot with an economy that is still showing 7.5 percent growth, but government spending is also growing rapidly as a percentage of GDP. If the growth in China’s government spending does not slow, in a few years it, too, will be well above the optimum, which will result in a big slowdown in growth.

The word “austerity” should be dropped from the lips of government policymakers, because they both misdefine it and claim they have cut spending when they haven’t. Those who have looked at the data understand the problems are too much government spending that is both wasted and lavished on the politically well connected, regulations that don’t meet a cost-benefit test, and tax levels and rates far above the growth- and revenue-maximizing rates.

Given the lack of political will to do what is needed, most of the people in the rich countries are going to experience what personal bankruptcy feels like. Assets will be seized or inflated away, and real incomes will fall.

Simply Unsustainable, Regardless of Who's Counting

Charles Hughes (note: not Charles Hugh Smith), Years After the Recession, Welfare Rolls Hit New Highs:
New Census data shows that the number of households receiving welfare benefits hit a record high of almost 33.5 million in the fourth quarter of 2012. While part of the surge was due to the recession, the proportion receiving benefits has increased from 25.2 percent to 27.4 percent since the recession officially ended in June 2009. These inflated welfare rolls are not just a temporary response to an economic downturn, and could instead become the new normal. This poses a problem not only for the country as a whole, but for the individuals beneficiaries as well. These welfare programs could eventually become unaffordable as programs for the elderly take up an increasing share of our budget. At the same time, for a record number of beneficiaries the structure of our current system could actually make it less likely they escape poverty for good.

Of particular concern are the households participating in three or more means-tested non-cash programs, which has also increased significantly, rising from 7.3 percent of all households at the end of the recession to 8.6 percent by the end of 2012. Participation in multiple programs is even more commonplace among families headed by a single mother, similar to the case family we used in The Work versus Welfare Trade-off 2013. In that paper, we found that in some states, the welfare benefits package available could be so generous that it could disincentivize work in some cases. One critique of the paper was that not every low-income household qualified for the programs in our benefit package. This is true, and we acknowledged as much in the paper. We even included a scenario where the family only received benefits from a more limited package. However, this Census data shows that cases like the one we examined are becoming increasingly common. Almost 44 percent of households headed by a single mother participated in three or more means-tested non-cash programs in 2012, compared to only 38.7 percent when the recession ended. While the point remains that not every low-income household participates in every welfare program, many do participate in multiple programs, and the proportion has continued to increase years after the recession ended.

These are the people most at risk of becoming caught in a “poverty trap,” in which the very programs intended to help them can actually make if more difficult for them to escape poverty. In these cases, people could find that it is not worth it to enter the workforce or increase their earnings because they face very high effective marginal tax rates. For each additional dollar they earned, they would lose almost as much through the loss of benefits and taxes. A study in the National Tax Journal found that a single parent with two children trying to move from the poverty level to 150 percent of the poverty line faced an average effective marginal tax rate of almost 77 percent. Over that range, these people are keeping less than a quarter of each dollar earned. Through these significant work disincentives, our current system inhibits recipients’ ability to eventually earn enough to transition out of these programs and escape poverty for good. Some of the recent surge in welfare recipients was due to the economic downturn, but the number of beneficiaries has continued to grow years after the recession ended. More families today are participating in multiple programs, and they are more likely to face a poverty trap. These trends reinforce the need to reform our current welfare system because the status quo is clearly not working. Welfare programs do relieve some of the worst forms of material deprivation, but they have proven costly and ineffective. In some cases they actually make it harder for people to lift themselves out of poverty. Clearly, it is time for a change.

Random Thoughts

It's well past time to remove "college" football from its association with college and education.  Billions of dollars are being made, with coaches being rewarded contracts in the millions and yet somehow, this is what college is about?  I do love watching the games, but college should not be the NFL's minor league, especially those institutions that receive any federal money (which is most these days).  The NCAA itself is a sham, and its recent loss in the Ed O'Bannon case is hopefully the tipping point that begins the countdown to this organizations "end of days".


Trash day in Philadelphia: I do not know what's worse, the trash before the city picks it up or the trash after it's collected.  The recyclables are especially an issue as many residents simply use open containers which they fill beyond capacity, resulting in their contents falling on the pavement and into the curb, or, being spilled by the trash truck crew.  Some people use the paper bags from WholeFoods or Trader Joe's (typically hipsters) as recyclable "containers", which so long as it does not rain the night before, or on collection day for that matter, otherwise they break open when the crews pick them up, and who understandably cannot spend the required time to scoop up the contents that now litter behind their truck.  My block is a mess by Thursday morning, and I walk the street picking up all loose cans, bottles, paper, etc.  



Most people, I believe, would agree that dependency on drugs (prescription and/or "illegal") and/or alcohol is generally detrimental to one's health and well-being.  However, what I find remarkable is the overwhelming number of people that see absolutely no problem with dependency on government and government provided "aid" such as welfare, Medicaid, Medicare, etc.


As the world marches towards war, I continue to be alarmed at just how uninformed most Americans are about the world around them.  It depresses me to hear just how readily many Americans are to "go to war", which means most have no problem with sending someone else's child to die, since these warmongering citizens are not volunteering to pick up a rifle and fight. 


Is it me or does anyone else see just how few people it takes to truly f*ck up the world?  Politicians and their teat-sucking cronies.  Hundreds of millions, nay billions of people, whipped up to a frenzy by such a small group of "leaders" who are hell-bent on killing someone in the name of nationalism; a flag, etc. 

Juxtaposition Highlights the Wrongness of It All

August 28, 2014: The front page of today's WSJ contains a photo labeled "Unexpected Guest at the Wedding", which features a bride and groom on the Israeli-Gaza border, with an Israeli battle tank, the "unexpected guest", in the background.  Unfortunately, the picture is behind the WSJ's pay wall (for the moment), so I cannot add it here (yet).  The caption reads "PHOTO OP: Israelis Noga and Moshiko Siho leave an army staging area after taking photos on the Israeli-Gaza border on Wednesday, the first full day of an Israeli-Hamas truce.  The U.S. and Israel hope moderate Palestinian leaders will be strengthened in a multibillion-dollar relief effort." 

Just below the picture, separated by a gray bar, is a section entitled "Terror Group's Riches" with the following headline in much larger print: "The Islamic State's Economy of Extortion". 

Does anyone else see the absurdity in this juxtaposition?

First, in the picture's caption, the paper somehow considers "multibillion-dollar relief" different than the extortion (pirating oil; taking protection payments; taking hostages and seeking ransom, etc.) practiced by the Islamic State.

So, let me get this straight: Israel and Hamas kill each other, with Israel obviously inflicting much more death and damage on Gaza than Hamas did to Israel.  Now, with the truce, spending billions of dollars on "relief" is different than taking hostages and demanding payment in what way?  I condone neither practice, and in fact, condemn both, however, are we that conditioned to war and its myriad of outcomes to see a distinction between "relief" spent on seeking Palestinian "moderates" in Gaza and the taking of hostages to fund terrorism?

Must be me.








"Twelve Triple Three": The Executive Order That Started It All

A great read from Cyrus Farivar on The executive order that led to mass spying, as told by NSA alumni.  It's refreshing to read an article that is more journalistic than hype, and, nothing beats learning something while you're at it!

Why Does War, Persist?

Finally, an answer to why humanity continues to pursue the destructive idoicacy that is war.  Then again, it's not all humanity, just a select few with the power to make others die for their desired outcomes.  Please, read Matt McCaffrey's The Economics of Perpetual War:
The 100th anniversary of the beginning of World War I seems like an ideal opportunity to spread a message of peace and economic cooperation; sadly, 2014 has so far been a year of new and renewed conflict far more than one of reconciliation.

By now, talk of the horrors of war is nothing new. Everyone knows about the total destruction war brings; in fact, we’ve known for millennia. As Lew Rockwell points out, “just about everyone makes the perfunctory nod to the tragedy of war, that war is a last resort only, and that everyone sincerely regrets having to go to war”—but war continues all the same. Even classical military strategists like Sun Tzu believed war should only be used only as a last resort, and argued that military campaigns could bankrupt states and ultimately, destroy them. Art of War actually states that “no country has ever profited from protracted warfare,” and cautions generals to “fight under Heaven with the paramount aim of ‘preservation.’” Yet as far back as we have historical records, these sorts of ideas have fallen on deaf ears among governments and military organizations alike.

Economics offers many insights into war making and why it persists, but the most fundamental explanation is an institutional one. It’s tragically simple: warnings about the horrors of war go unheeded because the power to make war—as well as “justify” it in the eyes of those forced to fight and finance it—lies in the hands of the state and its business and intellectual allies. States are monopolists of organized force, and as such decide when and how to use their power on a grand scale, especially when they wish to confront other monopolists.

In fact, economic reasoning tells us that conflict is an integral part of the logic of states, which are inherently prone to warfare and imperialism. That war is an essential and practically inevitable behavior of government has been known since ancient times: for instance, Art of War begins by stating that “War is the greatest affair of state, the basis of [its] life and death, the Tao to survival or extinction.”

The central problem is that government is based on the use of the “political means” rather than the “economic means” of social organization. States are not producers of goods and services in the market; rather, they operate by forcible redistribution. They are therefore founded on a conflict of interest between the rulers and the ruled, especially between the winners and losers of the redistribution process.

Furthermore, because state decisions are not guided by entrepreneurial calculation, they result in the waste and destruction of resources, resources that must be replenished if the ruling class hopes to continue to consume. States therefore search constantly for new sources of revenue to support themselves, and to that end they use traditional methods of public finance: taxation, borrowing, and inflation. But these policies ultimately compound their difficulties, generating poverty and inequality, and intensifying social conflict.

Every way they turn, states face recurring economic problems and the need to distract or suppress the victims of exploitation; war making serves the dual purpose of (a) disguising fundamental social conflicts by refocusing attention and/or blame, and (b) providing economic gains to the state and its allies. This then is one economic explanation of how organized violence on a small scale leads to organized violence on a massive scale.

If we want to understand why war persists, we have to take account of the economic foundation of the state. We can’t reason in an institutional vacuum, like the many people throughout history who believed it was enough to simply point out the obvious calamity of war, while leaving the power to make it in the hands of a ruling class.

Central Banking Smugness

Worthy reads on the recent annual "smugness" convention, aka, Central Banking Summit in Jackson Hole Wyoming.

Trouble at Jackson Hole by Mark Thorton:
Central bankers and their economists had their annual retreat to Jackson Hole Wyoming this past week. Given all of their self-proclaimed success in curing the economic crisis with their Zero Interest Rate Policy (ZIRP) and Quantitative Easing (QE). You would think that the event would have been a big celebration.

However, as we got closer and closer to the Fed’s target unemployment rate of 6.5% the more we have been hearing from Janet Yellen about “labor market imperfections.” She has changed her tune and instead of touting the decreases in the unemployment rate, she is talking about all the people working part-time when they would prefer to work full time and the decline in the labor participation rate. In truth the Fed did not fix the economy. In other words, she is searching for a justification to continue the money printing if the bubbles start leaking again. Several papers were presented about the problems of labor markets.

Jackson Hole: Myth of the All Powerful Central Banker Continues ... For Now:

It is important to remember that central banker’s strategies of ultra loose monetary policies contributed in a significant way to the global financial crisis. Low interest rates by central bankers and Alan Greenspan in particular led to rampant speculation and risk taking on Wall Street, collateralised lending, the sub prime crisis and the stock and property bubbles.

Will a continuation of the same monetary policies that got us into the financial crisis really get us out? Conventional wisdom is that yes it will. However, the jury remains out on that question and time will tell.

History suggests that currency debasement on the scale we are seeing will end in significant inflation. 

Janet Yellen’s Keynesian Blather Is An Insult To Main Street Americans :
Janet Yellen has a serious problem: the story no longer fits. The Fed under Bernanke said in its forward guidance that it would taper if certain job market conditions were met. And now they have been, at least on paper, but Yellen knows only too well that those are not the real numbers.

Krugman’s Keynesian Crackpottery: Wasteful Spending Is Better Than Nothing! :
Janet Yellen has essentially confirmed QE’s demise; good riddance. Unfortunately, I don’t think that is the final end of QE in America, just as it hasn’t been the end time after time in Japan (and perhaps now Europe treading down the same ill-received road). What’s interesting is really watching these central bankers talk themselves in circles about why that is. At the start of each program, there is no ambiguity, largely because of both inordinate faith in regressions and rational expectations theory that posits central bankers’ greatest work is in self-fulfilling prophecy – QE only works if you get people to believe in it.

The Time Warp At Jackson Hole: A Reprise For Leisure Suits, Disco Music And The Phillips Curve :
Janet Yellen’s tenure will apparently be spent concentrating on the labor market, her area of alleged expertise although tenured professor and government employee would not seem the ideal work history for such an “expert”. That the labor market has almost nothing to do with inflation – and therefore monetary policy – is irrelevant to someone who has spent a lifetime studying it. Yellen is determined to make her work relevant whether we find it interesting or not. I just hope that she doesn’t get a result like Bernanke’s where her policies create the very thing she’s trying to avoid.

 New: Yellen Served a Heaping Plate of Waffles and Syrup at the FED's Annual Jackson Hole Junket:
Yellen is as long-winded as Bernanke. She lards her speeches with footnotes, just as he did. She is as evasive as Greenspan, but she uses academic jargon and peripheral statistics to do her work.

Walter E. Williams: Blacks Must Confront Reality

Though racial discrimination exists, it is nowhere near the barrier it once was. The relevant question is: How much of what we see today can be explained by racial discrimination? This is an important question because if we conclude that racial discrimination is the major cause of black problems when it isn't, then effective solutions will be elusive forever. To begin to get a handle on the answer, let's pull up a few historical facts about black Americans.

In 1950, female-headed households were 18 percent of the black population. Today it's close to 70 percent. One study of 19th-century slave families found that in up to three-fourths of the families, all the children lived with the biological mother and father. In 1925 New York City, 85 percent of black households were two-parent households. Herbert Gutman, author of "The Black Family in Slavery and Freedom, 1750-1925," reports, "Five in six children under the age of six lived with both parents." Also, both during slavery and as late as 1920, a teenage girl raising a child without a man present was rare among blacks.

A study of 1880 family structure in Philadelphia found that three-quarters of black families were nuclear families (composed of two parents and children). What is significant, given today's arguments that slavery and discrimination decimated the black family structure, is the fact that years ago, there were only slight differences in family structure among racial groups.

Coupled with the dramatic breakdown in the black family structure has been an astonishing growth in the rate of illegitimacy. The black illegitimacy rate in 1940 was about 14 percent; black illegitimacy today is over 70 percent, and in some cities, it is over 80 percent.

The point of bringing up these historical facts is to ask this question, with a bit of sarcasm: Is the reason the black family was far healthier in the late 1800s and 1900s that back then there was far less racial discrimination and there were greater opportunities? Or did what experts call the "legacy of slavery" wait several generations to victimize today's blacks?

The Census Bureau pegs the poverty rate among blacks at 28.1 percent.

A statistic that one never hears about is that the poverty rate among intact married black families has been in the single digits for more than two decades, currently at 8.4 percent. Weak family structures not only spell poverty and dependency but also contribute to the social pathology seen in many black communities — for example, violence and predatory sex. Each year, roughly 7,000 blacks are murdered. Ninety-four percent of the time, the murderer is another black person. Though blacks are 13 percent of the nation's population, they account for more than 50 percent of homicide victims. Nationally, the black homicide victimization rate is six times that of whites, and in some cities, it's 22 times that of whites. According to the Bureau of Justice Statistics, between 1976 and 2011, there were 279,384 black murder victims. Coupled with being most of the nation's homicide victims, blacks are also major victims of violent personal crimes, such as assault, rape and robbery.

To put this violence in perspective, black fatalities during the Korean War (3,075), Vietnam War (7,243) and all wars since 1980 (about 8,200) come to about 18,500, a number that pales in comparison with black loss of life at home. Young black males had a greater chance of reaching maturity on the battlefields of Iraq and Afghanistan than on the streets of Philadelphia, Chicago, Detroit, Oakland, Newark and other cities.

The black academic achievement gap is a disaster. Often, black 12th-graders can read, write and deal with scientific and math problems at only the level of white sixth-graders. This doesn't bode well for success in college or passing civil service exams.

If it is assumed that problems that have a devastating impact on black well-being are a result of racial discrimination and a "legacy of slavery" when they are not, resources spent pursuing a civil rights strategy will yield disappointing results.

Must Read: The Committee to Blow Up the World!

Bill Bonner's The Committee to Blow Up the World! is a must read!  It's short and concise - and scary: [emphasis mine]

All over the world stocks are rising. In the US, the S&P 500 rose over the 2,000 mark for the first time in history. The Dow is over 17,000.

And if you want to buy a share of online TV network Netflix, Inc., you will pay $144 for every dollar the company earned over the last 12 months. If you bought the company outright, in other words, you’d have to wait until 2158 to earn your money back.

But this story is playing out from Timbuktu to Taiwan to Texas. Here’s the latest from Bloomberg:
Shares worldwide added more than $2.2 trillion in value since Aug. 7, according to data compiled by Bloomberg. Optimism that central banks will support economic growth sent the MSCI All-Country World Index up 3.8 percent from its low this month. The S&P 500 has risen for 10 of the last 13 days and the Nasdaq Composite Index is about 10 percent from an all-time high. Global markets are surmounting crises in Ukraine, the Gaza Strip and Iraq as investors renew bets that stimulus will revive growth. The Stoxx Europe 600 Index posted its biggest two-day gain since April after European Central Bank President Mario Draghi signaled policy makers may consider introducing an asset-buying plan. Japan’s Topix index is near its highest level since January, rebounding from losses earlier this year.
Put them all together, and publicly traded equities are now worth more than $66 trillion – just shy of total world GDP. That’s $12 trillion more than they were worth in the beginning of 2013… and it’s $30 trillion more than they were worth 10 years ago.

Stocks Up… Growth Down

What has happened during the last 10 years to make stocks so much more valuable?
We remind readers that shares are titles to ownership of real assets and the earnings they produce. And in a competitive economy, they shouldn’t be able to diverge too far from the cost of creating those assets.

Typically, investors have paid from 10 to 20 times annual earnings for shares. But when they are bearish, as they were in 1982 and again in 2009, they will want to pay less than 10 times earnings. And when they are bullish, the sky’s the limit… but seldom more than 20 times.

Currently – except for China and Russia – almost all major country stock markets are closer to the top of the range than the bottom. With the S&P 500 now trading on a Shiller P/E (which looks at the average of 10 years of inflation-adjusted earnings) of 26.5.

What would make investors so bullish? And why would this bullishness extend to practically the entire globe?

After all, corporate incomes depend on corporate sales. And one corporation’s sales can only increase if a) it takes business from other corporations (which would mean no net increase for the world’s sales) or b) the world economy is growing.

But that’s the curious thing. As stocks have gone up… growth rates have come down, from a high of nearly 5% in 2009 to just 2% last year. Last year, in the US, stocks rose 10 times faster than the economy beneath them. Go figure.

The old-timers tell us that “the stock market always knows more than we do.” If that is so, what is it that the market knows that we don’t? Is there another Industrial Revolution coming? Are birth rates exploding?

Not as far as we can tell.

Ready for Mischief

So, what’s behind the big run-up in asset prices?

Here’s our guess: Janet Yellen, Mario Draghi and Shinzo Abe. As Chris wrote yesterday: At the recent central bank meeting in Jackson Hole, Wyoming, Janet Yellen let it be known she was in no particular hurry to let markets discover prices on their own again. Instead, she’ll put prices where she wants them. And that means setting interest rates at vanishingly low levels… and asset prices at in-your-face new highs.

Mario Draghi, meanwhile, is faced with a triple-dip recession in Italy, a flat economy in France and negative growth in Germany. From Bloomberg:
[S]aid Patrick Spencer, head of US equity sales at Robert W. Baird & Co. in London. “Draghi gave clear indication that he’s standing ready with further measures to stimulate growth and that’s helping overall sentiment.”
As for Shinzo Abe, the Japanese prime minister, he seems ready for any sort of mischief in the name of increasing inflation and GDP.

Shinzo, Janet, Mario…

Surely there is a clever magazine somewhere readying a cover story. “The Committee to Blow Up the World,” is the headline we propose. By Bill Bonner, Chairman, Bonner & Partners.

Another Sign That Money is Free

August 27, 2014: From the Marketplace section of today's WSJ:
"Snapchat Now Valued at $10 Billion".

Nothing too outrageous, right?  After all "value" is perceived, so any number is just that: a perception.  However, the subtitle to the headline is this:
"Kleiner Perkins Funding Puts Messaging App Among Most Valuable Startups; Still No Revenue".  [emphasis mine]
Only in this era of the "new normal" would this be considered rational.  Seriously, valuing a startup at $10B without any revenue is just insane.  People convince themselves, and others, that this is perfectly logical in today's "e" world.

I hereby coin a new term for this delusion: self-fulfilling convincing.

Update on August 28, 2014:
Please, read Wolf Richter's How to Rig the Entire IPO Market with just $20 Million.  It explains the "why" behind this "valuation" and pay particular attention to the following and understand its impact on you:
To exit gracefully, investors can sell the company via an IPO mostly to mutual funds and ETFs that are stashed in retirement funds and investment portfolios. Or they can sell it to giants like Facebook or Google that can pay cash (borrowed or not) or print their own currency by issuing shares, both of which come out of the pocket of current stockholders. At the far end of both transactions are mostly unwitting retail investors.

Wednesday, August 27, 2014

The IRS Scandal

So, the IRS has "lost" the emails of Lois Lerner, who is being investigated for the targeting of specific political groups.  Seriously, think about this in juxtaposition with the past year's worth of revelations into the NSA that has just about every word spoken sucked up into a massive database - and the IRS "lost" emails.  You try using this excuse when you get audited by the IRS - yeah, good luck 'wit 'dat.  Below are some of the best writings on the entire sad episode in the declining American state.

The IRS Says It Lost a Bunch of Lois Lerner's Emails.  That Deserves More Scrutiny.

Seven More Pieces on the IRS's emails (note: this post itself contains many additional links)

18 1/2 Minutes vs. 2 Years: Which is Worse

The Dog Ate My E-mails: For Two Years

Hard Drive Containing Ex-IRS Official Lois Lerner’s Emails Reportedly Destroyed. Were There Server Backups?

Missing E-Mail Is the Least of the IRS's Problems

Darrell Issa Fuming Upon Learning Lois Lerner's Hard Drive Was Destroyed

Trail Of Lost IRS Emails Might Lead To White House [What, you're surprised?  Really?]

Archives official: IRS didn’t follow law on missing emails


Who’s Behind IRS Targeting? Don’t Ask NPR

How are Obama and the IRS getting away with a blatant coverup

Clarity on the Missing Emails

The IRS Scandal: Who’s Really Being Gullible?

Lois Lerner Warned IRS Employees to “be cautious about what we say in emails” 

GOP skeptical of Justice IRS probe

Seriously?:Justice Department investigators didn’t know about missing IRS emails until they heard about it on the news

To paraphrase one of our previous presidents: It all depends on the what the meaning of the word "smidgin" is

IRS Official Says Even More Employees Had Computer Problems, May Not Be Able to Comply With Congressional Subpoenas

 IRS can’t get its story straight: Official says he’s not sure whether email backup tapes were destroyed 

Wait...IRS Backup Tapes of Lois Lerner's Email May Exist After All?

Whoa: Disgraced ex-IRS official Lois Lerner really, really hates conservatives  [note: the GOP used the IRS in the same way]

New:  IRS E-mails: The Perfect Storm  [note: let's hope so]

New:  Justice Department confirms the Lois Lerner emails still exist, proving that IRS officials are a pack of liars

New:  Here’s more evidence the IRS really doesn’t want Congress to know what Lois Lerner may have been doing

Tuesday, August 26, 2014

The Middle East Explained

Doug Bandow explains the dynamics involved in the Middle East, and as you can read below, they're complicated to say the least.  Sorry America, we're not equipped for this mess!  Here's Obama Administration Debates Bombing Syria to Fight Islamic State; Instead, Washington Should Allow Syria and Others to Battle Killer Radicals: [emphasis mine]
Until now, President Barack Obama’s foreign policy appeared to be based more on reason than emotion. In contrast to the easily excitable and often angry Sen. John McCain, for instance, the president did not suggest war was the answer to every international problem.

However, the rise of the Islamic State in Iraq and the Levant may have cost President Obama his equanimity. Administration officials are proclaiming this isolated experiment in 7th Century Islam to pose a dire threat to America. After promising to strictly limit the mission in Iraq, Washington is preparing to expand the war to Syria, where the administration has spent years working to overthrow the Assad government—the most formidable force blocking Islamic control over the entire country. Instead, the administration should push other nations into the lead.

Iraq is a catastrophic failure. America’s last four presidents share the blame. Most at fault is George W. Bush, whose ill-considered decision to attack Iraq blew up the nation and ignited sectarian war. Now many of his backers are campaigning for another invasion of sorts, with U.S. ground forces taking on everyone, from ISIL to Iran to Iraq’s Shia-dominated national government. Naturally, these exponents of error neither acknowledge the disastrous consequences of their past policies nor offer evidence that their new proposals would yield better results.

Yet the Obama administration risks falling into war again. The president originally undertook what he said would be a limited bombing campaign to save stranded refugees and protect U.S. personnel. Since then the campaign has been broadened to general support for forces opposing ISIL, though still justified as a “security” measure for Americans. (The president explained to Congress that if ISIL forces held the Mosul Dam, it could fail, threatening the lives of the U.S. staff in Baghdad. Such “reasoning” sets no limits on American involvement in Iraq’s conflict.)

Now officials want to go further. Gen. Martin E. Dempsey, chairman of the Joint Chiefs of Staff, argued that the Islamic State must be “addressed on both sides of what is essentially at this point a nonexistent border” between Iraq and Syria. Operating within Syria would pose a much greater challenge than launching strikes in Iraq, however. Washington’s intelligence capabilities remain limited over the “nonexistent” border. More important, the Obama administration has spent three years attempting to overthrow Syria’s Assad regime. The latter says it would treat U.S. intervention as “aggression” and possesses an air defense system capable of downing American aircraft and drones.

Before putting U.S. personnel and materiel at risk, the administration should reconsider its policy in Syria. The administration appears to have decided that its number one Middle East priority is confronting ISIL. Gen. Dempsey called the Islamic State “an organization that has an apocalyptic, end-of-days strategic vision which will eventually have to be defeated.” Secretary of State John Kerry said simply the group “must be destroyed.”

However, the Syrian government is even more committed than Washington to eliminating ISIL as a geopolitical force. The group controls perhaps a third of Syria and over the weekend captured Tabqa airfield, giving the Islamic State full possession of Raqqa province.

Allied support for the radicals obviously has weakened the Assad government’s ability to fight ISIL. Washington’s preference for less radical groups also has discouraged Damascus from targeting the Islamic State, whose existence inhibits U.S. involvement. In contrast, defeating more moderate forces tends to diminish Western interest and intervention in the conflict.

Reaching a modus vivendi with Damascus would change its calculus. End efforts to oust Assad and he would focus on his most competent and dangerous enemy, ISIL. A U.S. policy encouraging the Syrian government to defeat the group in Syria, including breaking the Islamic State’s hold over both the city and province of Raqqa, would undermine the organization’s capabilities in Iraq, making it more vulnerable to concerted action by both the Baghdad government and Kurdish authorities.

Of course, Assad is no friend of liberty. But Washington must set priorities. ISIL is far more dangerous, an evil organization motivated by an extremist theology and committed to upending the entire region. After U.S. airstrikes the group gained an incentive to launch terrorist strikes on America. The administration’s policy of first supporting and then opposing Assad has been half-hearted and inept, helping to spawn the Islamic State. Washington should reverse course and stop undermining the only military force capable of defeating ISIL in Syria.

Washington also should emphasize the responsibility of surrounding states to combat the group. The Islamic State’s priority remains creating a “caliphate” stretching across several nations, including Iraq, Jordan, and Turkey. These three governments and the Gulf monarchies should do the heavy lifting in defeating the Islamic State.

The greatest responsibility for the ongoing debacle in Iraq, other than the Bush administration, lies with leading Shia politicians in Baghdad. After years of Sunni domination the newly empowered Shiites, led by Prime Minister Nouri Kamal al-Maliki, pursued their own narrow sectarian course, crippling politics and the military.

Replacing Maliki is a good first step, but not nearly enough. Baghdad must reach a broader understanding with Sunnis and Kurds to strengthen internal forces against ISIL. Indeed, Sunnis need a positive reason to oppose the Islamic State given their unresolved grievances with Baghdad. Otherwise the Shia majority faces an extended civil war in which even victory would be very costly. The administration correctly insists on no U.S. rescue of a narrowly sectarian regime in Iraq.

Ankara, which claims a position of regional leadership, has much at stake as well. The group considers Turkish lands to be part of the “caliphate.” ISIL’s attacks on Kurdistan could spur a rush of Kurdish refugees into Turkey, unsettling politics involving Turkey’s Kurds. Turkey is not at risk of disintegration, but problems created by a growing ISIL would not long remain outside Turkey’s borders.

Jordan is far more vulnerable: a monarchy of dubious legitimacy rules over a population containing many Palestinians and a society overwhelmed by foreign refugees. If the Islamic State becomes a de facto government Amman faces an increased threat of subversion. The Gulf States are more distant, but if Sunni radicals gain more influence the latter are unlikely to leave the corrupt and licentious Sunni royals in peace.

While Turkey, Saudi Arabia, and the others may not be willing to abandon their campaign to oust Assad, they could better target their efforts to support groups not dedicated to destabilizing the entire region. Washington should insist that the Syrian civil war is no excuse for measures which strengthen the Islamic State. Today the administration is considering bombing ISIL weapons paid for by Saudi Arabia, Kuwait, and Qatar, and ISIL personnel allowed to transit by Turkey. There should be no such weapons and personnel to bomb in the future.

Equally important, Jordan and Turkey, both on the Islamic State’s hit list, should deploy their air forces against ISIL fighters. And if ground forces become necessary to combat ISIL, Jordan and Turkey also should step up. As a quasi-government the Islamic State likely would devote more effort to undermining its neighbors than attacking Americans.

Kurdish forces have been pushing back against the Islamic State, but still need better and more weapons, which Turkey could provide. Joint military efforts would offer Ankara an opportunity to strengthen its ties to Kurdistan, which have improved in recent years. Indeed, the Erdogan government could use the opportunity to increase its leverage over an entity which once caused concerns because of the long-running, violent Kurdish separatist campaign within Turkey.

Saudi Arabia and the Gulf States have a different role to play. While military forces would be useful, as Sunni states they might more usefully combat ISIL’s horrendous theology and delegitimize its claim of a new “caliphate.” Saudi Arabia, in particular, has sown the wind by underwriting fundamentalist if not necessarily violent Islamic theologies. This gives Riyadh a special responsibility to confront ISIL’s religious claims.

Even Iran can assist, though that might discomfit Washington. U.S. officials must get over their illusion that they are masters of the universe capable of reordering human affairs to create some Platonic ideal concocted within the Beltway. The Islamic State has explicitly denounced Iran’s leaders as enemies. Tehran will support Baghdad’s Shia government irrespective of America’s preferences, but could best aid anti-ISIL efforts by backing Shia-Sunni reconciliation. While reaching a nuclear deal remains Washington’s highest priority involving Iraq, informal discussions on confronting the Islamic State would be useful.

Finally, European states, most notably France, Britain, and Italy, long have been interested in the Middle East and North Africa. Washington should engage its Western allies about priorities in Syria, and how best to stem the Islamic State’s rise. The Europeans also could help provide weapons and training to the Kurds and others.

The Islamic State is evil. But its capabilities remain limited. Its members are capable of slitting throats of Americans unfortunately captured nearby, but the group does not pose an existential threat to the U.S. Moreover, so far the Islamic has demonstrated only limited terrorist capabilities, especially against the American homeland.

Rather than turn ISIL into a military priority and take the U.S. into war against the group, Washington should use its unique position—allied with many nations in the region and talking with the rest—to organize an Islamic coalition against the Islamic State. Even Gen. Dempsey called for a regional effort to “squeeze ISIS from multiple directions,” but that actually requires Washington to do less militarily. Iraq and its neighbors have the greatest interest in suppressing ISIL. They have the means to do so. They also have the most credibility in doing so. Washington must create greater incentive for them to do so, by no longer making it hard for Syria to act and unnecessary for the others to do so.

President Obama told the American people that he would “not allow the United States to be dragged in fighting another war in Iraq.” He later emphasized that “there’s no American military solution to the larger crisis.” Unfortunately, his actions suggest that he believes otherwise.

Yet ISIL’s rise has set in motion the very forces necessary for its defeat. The group has far more enemies than friends, and as recognition of the seriousness of the threat grows, so will the determination of those opposing the Islamic State. Rather than hinder creation of such a coalition by taking charge militarily, Washington should encourage it by stepping back. Washington already has gone to war twice in Iraq. There’s no reason to believe that the third time will be the charm.

The Sweet Spot of Freedom

A very interesting, thought provoking post from GMU Professor Bryan Caplan entitled The Sweet Spot of Freedom:
No one needs a political philosophy to tell them how to treat people they personally know.  Once human beings forge personal bonds, they understand what to expect from each other.  The main point of political philosophy is to tell people how to treat strangers

In practice, unfortunately, the way we treat strangers has more to do with our personal feelings about strangers than abstract philosophy.  Or to be more precise, the political philosophies we're willing to entertain heavily depend on our default emotions about people we've never met.

Which leads to a libertarian question: Which of these default emotions are most consistent with a free society? 

Obviously, default emotions like hatred and disgust bode poorly for a free society.  If you hate strangers, you're likely to favor government action to make them suffer.  But default emotions like love and devotion are also inimical to human freedom.  If you love every stranger like your own child, the idea of respecting their freedom to make their own mistakes is hard to stomach.  You'll want to give strangers what they need, regardless of what they want.  This yearning makes both paternalism and the welfare state quite enticing. 

If neither hate nor love cohere well with a free society, what does?  Indifference sounds promising.  Imagine trying to sell government persecution or government salvation to an society where the predominant emotion toward strangers is, "Meh.  That's got nothin' to do with me."  But sheer indifference is not ideal.  Free societies generate obvious benefits for your fellow man: prosperity, peace, and choice.  So you'd expect someone who viewed strangers with moderate benevolence to support a free society more enthusiastically than someone who lacked these feelings.

What then is the sweet spot of freedom?  "Moderate benevolence," a friendly cosmopolitan tolerance, is my tentative answer.  If you seek a free society, you should want people to smile upon mankind.  But that's about it.  Stronger feelings - including heartfelt love - turn human beings into demanding busybodies.  And if demanding busybodies predominate in a free society, it won't remain free for long.

America Goes To War

August 26th 2014: The headline in today's WSJ reads "U.S. Lays Groundwork for Syria Strike".  The opening paragraph:
The Pentagon is preparing to send surveillance aircraft, including drones, into Syrian airspace to gather intelligence on Islamist targets, laying the groundwork for a possible expansion of the limited U.S. military air campaign beyond Iraq, senior U.S. officials said. 
Allow me a few points of commentary: First and foremost, Syria, however reprehensible the country may be, is a sovereign nation, and any breach of that sovereignty is an act of war Period.  The United States would not tolerate any nation violating its airspace, and yet somehow our state considers it within their right to do so to others.  How convenient it is that Obama will get his Syrian invasion after all, and of course, this will be praised by the likes of John McCain and his ilk.  The horrific decapitation of reporter James Foley, tragic as it was, now serves the purpose of America's political elite:
The Obama administration's posture toward the group calling itself the Islamic State has toughened markedly following the grisly video released last week showing the killing of American journalist James Foley.
To read "toughened" is connection to the death of Foley is disgusting.

Next, allow me to parse the phrase " ... expansion of the limited U.S. military air campaign ..."  It's awkward at least, dubious at best, to use the words "expansion" and "limited" in the same sentence, but then again, this is simply the continuation of the Obama administration's meme of demonstrating some degree of restraint.  Next, I can't help but think of the civilian deaths that are associated with "expansion" and "limited U.S. military air campaign."

Lastly, I am truly disheartened by the overwhelming number of my fellow Americans who so casually accept war, or kinetic action or whatever is today's popular euphemism for war, especially when most of these same people will not be risking their own skin, but so readily support sending someone else's son or daughter into harm's way. 

Tell me: when will this all end? 

Monday, August 25, 2014

2013 Index of Dependence on Government

The 2013 Index of Dependence on Government is available, and the data is, as expected, not good.  Here's a link to the 2012 version.

Quote of the Day: On Campus Activism

"Campus activism is, by and large, the world of make-believe.  Whenever students occupy a president’s office, Tinkerbell is not far away.  Whenever faculty demand a boycott, Professor Dumbledore winks at Professor Snape." - Peter Wood, Campus Activism: the Fight for Imaginary Victories

It's a must-read piece!!

Must-Read: Communism's Victims Deserve a Museum

Yes, they most certainly do!  Communism's Victims Deserve a Museum is a superb read from James Kirchick.  It concerns me greatly that there are people, especially young people, who believe that communism is a great system but so far, it simply hasn't been implemented by the "right" people, with "right" meaning "more intelligent".  Horrifying really given the obvious history available for all to read.

I recommend reading Thomas Sowell's book Intellectuals and Society, and, remember the classic George Orwell quotation from Animal Farm: "All animals are created equal, but some are more equal than others."

Communism and socialism are quite different systems for those in power versus those under the rule of those in power.

Communism as viewed from inside the Kremlin was quite different from the life of those living under the system outside the guarded gates.

For an American example, Obamacare is perfect as seen from the perspective of millionaire politicians (who actually know better, but that is the condescension of the political class/elite), but rest assured, neither they nor their families will ever experience it the way lower and middle class Americans will.

Yet Another Directive from the Department of WTF!!!

Nothing wrong with this picture, nope, nothing at all!  126 Million Live In Households With Mean-Tested Transfer Payments—-40% Of US Population:

As a result of Obamacare Medicaid expansion coupled with means-tested Obamacare assistance, I estimate welfare rolls expanded from 35.4% of the population in 2012 to  about 40% in 2014.

Let’s go through the math to see how I make that estimate.

The latest welfare statistics are from year-end 2012. Those figures show 35.4 Percent: 109,631,000 on Welfare.
109,631,000 living in households taking federal welfare benefits as of the end of 2012, according to the Census Bureau, equaled 35.4 percent of all 309,467,000 people living in the United States at that time.
When those receiving benefits from non-means-tested federal programs — such as Social Security, Medicare, unemployment and veterans benefits — were added to those taking welfare benefits, it turned out that 153,323,000 people were getting federal benefits of some type at the end of 2012.

Subtract the 3,297,000 who were receiving veterans’ benefits from the total, and that leaves 150,026,000 people receiving non-veterans’ benefits.

The 153,323,000 total benefit-takers at the end of 2012, said the Census Bureau, equaled 49.5 percent of the population. The 150,026,000 taking benefits other than veterans’ benefits equaled about 48.5 percent of the population.

In 2012, according to the Census Bureau, there were 103,087,000 full-time year-round workers in the United States (including 16,606,000 full-time year-round government workers). Thus, the welfare-takers outnumbered full-time year-round workers by 6,544,000.

Breakdown by Category
  • 82,679,000 Medicaid
  • 51,471,000 Food Stamps
  • 22,526,000 Women, Infants and Children Program
  • 20,355,000 Supplemental Security Income
  • 13,267,000 Public Housing or Housing Subsidies
  •   5,442,000 Temporary Assistance to Needy Families
  •   4,517,000 Other Forms of Federal Cash Assistance
Breakdown by State (2013 estimates)
  • California 38,332,521
  • Texas 26,448,193
  • New York 19,651,127
  • Florida 19,552,860
Those four states alone total 103,984,701, a mere 5,646,299 short of the 2012 total.
It’s safe to say what direction this is headed.

Full Time Employment



BLS figures show 115.735 million “usually” working full time at the end of 2012. There are currently 118.489 million “usually” working full time.

Obamacare Welfare Expansion

Inquiring minds may be asking “How did Obamacare effect welfare numbers?”
Let’s take a look.

Anyone making up to 400% of the federal poverty minimum is eligible for some assistance. That’s about 17 million according to the Kaiser Family Foundation.

Also note that 28 states expanded Medicaid under Obamacare: AZ, AR, CA, CO, DE, DC, HI, IL, IA, KY, MD, MA, MN, MA, NH, NV, NJ, UT, NM, NY, ND, OH, OR, PA, RI, VT, WA, WV.

On June 4, the US Department of Health and Human Services reported Medicaid Enrollment Shows Continued Growth in April.

As of the end of April, 6 million more individuals were enrolled in Medicaid or the Children’s Health Insurance Program (CHIP) as compared to the period before the initial open enrollment under the Affordable Care Act started.

In addition to regular expansion of welfare, it’s safe to conclude Obamacare expanded the welfare rolls by at least 23 million.

More will come.

Welfare vs. Full-Time Employment

Let’s take the 2012 welfare total of 109,631,000 and add the 6 million Obamacare Medicaid expansion and the 17 million who get Obamacare subsidies and you have a minimum of 126 million receiving some sore of means-tested welfare vs. 118.5 million who “usually” work full time.

Welfare vs. Population

The 2013 US Population Estimate is 316 million.

Using 316 million as a rough estimate of the 2014 population (it would likely be higher) and 126 million on welfare (that number is also higher, perhaps way higher),  about 40% of the country is on some form of means-tested welfare, up from 35.4% at the end of 2012.

Over 50% of the country gets welfare or some other form of non-means-tested assistance. I estimate about 56% or so.