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Sign “O” the Times

October 8th, 2015 - 11:50 am

Chart of Doom

Welcome to the Great US Debt Selloff of 2015:

Central banks around the world are selling U.S. government bonds at the fastest pace on record, the most dramatic shift in the $12.8 trillion Treasury market since the financial crisis.

Sales by China, Russia, Brazil and Taiwan are the latest sign of an emerging-markets slowdown that is threatening to spill over into the U.S. economy. Previously, all four were large purchasers of U.S. debt.

But fear not! There are still plenty of buyers for all that debt:

While central banks have been selling, a large swath of other buyers has stepped in, including U.S. and foreign firms. That buying, driven in large part by worries about the world’s economic outlook, has helped keep bond yields at low levels from a historical standpoint.

It’s cool. Central banks can’t run out of other people’s money.

Can PA Come Out to Play?

October 8th, 2015 - 7:21 am
(Chart courtesy Quinnipiac/RealClearPolitics)

(Chart courtesy Quinnipiac/RealClearPolitics)

Quinnipiac published some their first head-to-head matchup numbers in the vital swing states of Florida, Ohio, and… Pennsylvania?

Blue Pennsylvania? The GOP’s will-o-the-wisp for almost 30 years?

That Pennsylvania?

Yes. Pennsylvania.

Note that Hillary Clinton loses to everybody but Trump. Rubio is the next-weakest GOP contender, and yet even he beats Clinton by better than the margin of cheating.

Biden on the other hand — and this really makes you wonder about the timing of the poll — beats everybody except Carson.

And it feels like rubbing it in to mention this, but even Bernie Sanders beats Trump. And he does so by a wider margin than Clinton does.

If PA is in play, it’s difficult to see the Democrats taking OH or FL — FL especially if there’s a Bush or a Rubio on the ticket. In that scenario, MN and WI might even be up for grabs, and Harry Reid’s NV machine doesn’t seem to be what it once was.

I’d like to see the RNC start hitting the PA burbs soon, and hitting them hard.

Sign “O” the Times

September 28th, 2015 - 7:14 am
(Chart courtesy DailyReckoning.com)

(Chart courtesy DailyReckoning.com)

Commercial real estate looks like another bubble ready to pop:

Fitch rates Commercial Mortgage Backed Securities. So it warned: “CMBS cannot afford a repeat of the 2008-2009 experience.”

Commercial property prices in the US rose 1.1% in August from July, and 10.2% from a year ago, according to the Green Street Commercial Property Price Index (CPPI).

They have soared 95% from May 2009 and are now 19.3% higher than they’d been in September 2007, the peak of the crazy commercial property bubble that collapsed spectacularly during the Financial Crisis.

“While commercial real estate values have continued to move higher, the pace of appreciation has slowed compared to earlier in the year,” Green Street Advisors explained to soothe our nerves.

The chart shows how much smaller the prior bubble was than today’s monster. And it wasn’t a bubble either until after it had imploded, collapsing to 2004 levels and taking down CMBS bonds with it. Then the Fed reflated the whole thing to its current glorious state.

How many times can we ride this roller coaster?

Sign “O” the Times

September 24th, 2015 - 9:23 am
(Chart courtesy ZeroHedge)

(Chart courtesy ZeroHedge)

I’m not worried so much about yesterday’s stock market slide (prices fluctuate, as has been famously noted) as I am about the apparent reason:

Wall Street stock prices fell on Wednesday, dragged down by economic reports portraying U.S. factories growth as tepid and China in its worst manufacturing contraction since the global financial crisis.

The data aggravated investor anxieties that global economic growth might be sputtering, sapped a rally in European equities and gave Asian stock markets their worst day in months. Prices of U.S. Treasuries and other safe-haven government debt eased.

The reports, showing U.S. manufacturing growth stayed at a two-year low in September and Chinese factory activity shrinking to a 6-1/2 year low, spurred a selloff in U.S material and industrial stocks.

And today’s news isn’t looking so hot either.

Now about that chart above. Caterpillar’s fortunes have long been seen as a leading economic indicator, but to see just how leading, let’s go to ZeroHedge:

We have been covering the ongoing collapse in global manufacturing as tracked by Caterpillar retail sales for so long that there is nothing much to add.

Below we show the latest monthly data from CAT which is once again in negative territory across the board, but more importantly, the global headline retail drop (down another 11% in August) has been contracting for 33 consecutive months! This is not a recession; in fact the nearly 3 year constant contraction – the longest negative stretch in company history – is beyond what most economists would deem a depression.

Hang on tight, kids.

Your ♡bamaCare!!! Fail of the Day

September 21st, 2015 - 9:41 am
(Chart courtesy Forbes)

(Chart courtesy Forbes)

Chris Conover has the numbers on just how badly ♡bamaCare!!! is underperforming:

The Census Bureau has finally released definitive statistics on the number of uninsured in 2014 and the news is not good for Obamacare (unless, of course, you have abysmally low expectations for government performance). The population-wide uninsured rate fell from 14.5% in calendar year 2013 to 11.7% in 2014. The total number of uninsured dropped from 45.2 million in 2013 to 36.7 million in 2014–a net of 8.5 million who gained coverage [1].

There are 2 things to note about this new number, which is far more definitive than the previous numbers put out by Urban Institute, RAND Corporation, Commonwealth Fund, Gallup or even the CDC’s National Health Interview Survey (NHIS):

•The actual gain in coverage–8.5 million–is well below previously-released estimates of the reduction in the number of uninsured achieved in 2014
•It also is well below official government projections of how many uninsured would gain coverage under ♡bamaCare!!!.

Why is the figure so much more definitive? The Census Bureau figures released today that I’ve cited above come from the American Community Survey (ACS), which is based on a survey of about 3.5 million households (about 8.8 million people). In contrast, the NHIS surveys only 87,500 people and all the other surveys focus exclusively on adults, hence cannot provide an accurate population-wide estimate of changes in the number of uninsured.

Washington spending billions to pay Cadillac prices for catastrophic coverage for a few million people, while taking away doctors and coverage for millions more people who used to pay their own way.



September 2nd, 2015 - 7:21 am
(Chart courtesy Heritage Foundation)

(Chart courtesy Heritage Foundation)

Heritage busts union claims that Right-to-Work laws harm worker:

Unions and their advocates argue that, by reducing their membership, RTW laws reduce wages. They claim that weakening union power reduces the pressure on businesses to pay more.

In its new study, The Heritage Foundation has replicated the research that unions and some economists use to support that claim, and has found it fundamentally flawed, as it only partially controlled for cost-of-living differences among states.[2] Using the same model but fully controlling for price differences shows that RTW laws have no effect on private-sector workers’ purchasing power. Heritage did find that government employees make approximately 5 percent less in RTW states.

Unions remain stuck in the New Deal fallacy that the way to riches is to make everything more expensive.

China on the Brink

September 1st, 2015 - 1:45 pm

ZeroHedge reports on China’s brand-spankin-new currency control:

Overnight, China decided to take steps to reduce “macro financial risks.”

And by that they mean “do something quick to help ease pressure on the yuan” and by extension, on the PBoC’s rapidly depleting FX reserves.

To that end, starting October 15 banks will have to hold the equivalent of 20% of clients’ FX forward positions with the PBoC, where the money will sit, frozen, for a year, at 0% interest.

Obviously, that will drive up the cost of taking speculative positions which the PBoC hopes will help narrow the gap between onshore and offshore yuan and bring down volatility, although the degree to which this will help fill the CNY-CNH spread looks like an open question.

“It’s a move to ease the reduction in foreign-exchange reserves,” Tommy Ong, managing director for treasury and markets at DBS Bank Hong Kong, tells Bloomberg. “It will also remove lots of speculative trades that aim at short-term gains as the reserves have a minimum lock-up period of one year,” adds Stan Chart’s Becky Liu.

Currency controls are a bad, bad sign for any economy. In one the size of China’s…

Buy canned goods and ammo.

Sign “O” the Times

August 21st, 2015 - 5:05 am

The Chairman of the Fed has been called the Most Powerful Man (now Woman) in the World. But maybe not any longer:

The selloff in corporate bonds is deepening and investors are seeking safety in the longest-dated government debt, which does best when the economy does worst. Defaults are rising as oil tumbles and investors are looking for the best ways to hedge against credit losses.

All this comes as the Fed does, well, nothing much. Instead, it’s China that’s taken the lead with new rounds of financial stimulus in the face of slowing growth. But some days it’s a free for all, with even Kazakhstan wielding its influence.

“Financial markets are desperate for the Fed to drive trading themes, but the ‘world’s central bank’ has fallen to the second rank this summer,” or sometimes third, Jim Vogel, an interest-rate strategist at FTN Financial in Memphis, Tennessee, wrote in a note Thursday.

What little “recovery” we’ve “enjoyed” has been based in large part on the Fed being able to manipulate interest rates — but that power is eroding.

We’re in unchartered waters now.

How Business Friendly Is Your State?

August 18th, 2015 - 1:02 pm
(Fully interactive chart available at Thumbtack.com)

(Fully interactive chart available at Thumbtack.com)


Texas, New Hampshire, Utah, Louisiana, and Colorado gave their states the highest rating for friendliness to small business. Small businesses in Manchester, Dallas, Richmond, Austin, and Knoxville gave their cities the highest ratings.

In contrast, small business owners gave California, Connecticut, Illinois, and Rhode Island an “F,” while Massachusetts, Maryland, and New York earned a “D” grade. Providence, New Haven, Buffalo, Albuquerque, and Hartford were the survey’s worst­-performing cities as rated by their small business owners.

Small businesses in Texas and Utah have rated their states in the top five every year this survey has run, while California and Rhode Island have been rated in the bottom five every year.

State and city governments that promote local business training and focus on ease of regulatory compliance are consistently perceived as being friendliest to small business.

Professionals who weren’t required to have a license judged their cities and states in a more favorable light; however, respondents who were required to carry a license but said that complying with licensing rules was “very easy” were just as favorable towards their government as respondents who weren’t required to have a license at all.

Entrepreneurs’ perceptions of their tax burdens were among the least important factors in judging governments.

No surprises here. Although if there’s a lesson to take away from these results, it’s that a successful state or city can have high taxes or high regulatory hurdles — but not both.

Back to Africa

August 18th, 2015 - 11:31 am
(Chart courtesy Washington Post)

(Chart courtesy Washington Post)

The world is set to get more crowded by 2100, but it might surprise you to learn that almost all the increase is coming to just one continent:

The UN’s projections for Africa are pretty mind-blowing. Africa is expected to more than double its population by 2100. Africa currently accounts for 16 percent of the global population. The UN expects that proportion to rise to 25 percent in 2050 and 49 percent by 2100.

That’s mostly because the continent is so young, and partly because fertility rates are high. Exactly half of the continent’s population was under the age of 24 in 2015. Many of these people will have children of their own in the next few decades, adding greatly to the global total.

In contrast, the chart above shows the UN expects Asia’s population to peak and then begin to fall, since many Asian countries have aging populations. Latin America, Europe, Northern America and Oceania will mostly stay pretty constant.

The challenge is going to be finding enough food and work for that many people. Africa’s infrastructure is inadequate to today’s needs, but the population is set to triple in the next 85 years.

African capitals had better act fast at dropping the aged Marxian anti-colonial gripes, and get serious about establishing competent governments able to ensure the economic growth those three additional billion people will need to survive.

Meanwhile on this Side of the World

August 17th, 2015 - 11:44 am

Chart of Doom

It’s easy and fun to blame China for everything, but we still have plenty of home-brewed economic troubles right here at home. The latest bad news comes from the Atlanta Fed:

While economists continue to search for signs that domestic growth is finally loosening the shackles of the financial crisis, the data suggest otherwise. An initial reading Monday for the third-quarter manufacturing outlook was bleak, and the spending outlook both for consumers and businesses does not suggest rapid improvement anytime soon.

Hence, the result: The Atlanta Federal Reserve’s GDPNow tracking tool, which has been a pretty reliable rule of thumb lately, indicates third-quarter advancement of just 0.7 percent, with the momentum to the downside. The indicator has dropped 0.3 percentage point just in the past week as the model adjusts for a likely decline in inventory build for the three-month period.


Lying Liars Who Lie About the Weather

July 28th, 2015 - 12:15 pm
(Chart courtesy RealClimateScience.com)

(Chart courtesy RealClimateScience.com)

Good lord:

The measured US temperature data from USHCN shows that the US is on a long-term cooling trend. But the reported temperatures from NOAA show a strong warming trend.

They accomplish this through a spectacular hockey stick of data tampering, which corrupts the US temperature trend by almost two degrees.

The biggest component of this fraud is making up data. Almost half of all reported US temperature data is now fake. They fill in missing rural data with urban data to create the appearance of non-existent US warming.

That’s Tony Heller, writing for RealClimateScience.com.

The lies never stop, do they?

Top Men, Top Men

July 6th, 2015 - 10:01 am
Press sanitized for your protection. (AP photo)

Press sanitized for your protection.
(AP photo)

The Clinton Camp has lost count of the number of experts it has on hire:

In the months before she began her second run for the White House, Clinton spent hours quizzing economists, lawyers, educators and activists about everything from executive compensation to the latest research on lead paint.

By last fall, the number of experts she had interviewed hit two hundred and her team stopped keeping track.

“It was like I hadn’t left Harvard,” Roland Fryer, an economist at the university, said of his meeting with Clinton to discuss successful charter school practices. “It was like talking to a colleague and debating over a cup of coffee.”

Can’t keep track of the experts who, after the election, will supposedly keep track of everything in an $18,000,000,000,000 economy made up of 320,000,000 people.

That in a nutshell is everything wrong with “progressive” ambitions.

We’re Next

July 1st, 2015 - 10:26 am
(Chart courtesy Washington Examiner)

(Chart courtesy Washington Examiner)

Go ahead and laugh at the Greeks — while you still can:

With all the chaos unravelling in Greece, Congress would be wise to do what it takes to avoid reaching Greek debt levels. But it’s not a matter of sticking to the status quo and avoiding bad decisions that would put the budget on a Greek-like path, because the budget is on that path already.

A quarter-century ago, Greek debt levels were roughly 75 percent of Greece’s economy — about equal to what the U.S. has now. As of 2014, Greek debt levels are about 177 percent of national GDP. Now, the country is considering defaulting on its loans and uncertainty is gripping the economy.

In 25 years, U.S. debt levels are projected to reach 156 percent of the economy, which Greece had in 2012. That projection comes from the Congressional Budget Office’s alternative scenario, which is more realistic than its standard fiscal projection about which spending programs Congress will extend into the future.

There, with or without the grace of God, go I.

Slightly less glib, the difference between the US and Greece is that we control our own currency — which also happens to act as the world’s reserve currency. We also act as a worried planet’s mattress of last resort. That is to say, when other countries’ economies go to hell, the stash their money in US banks, securities, real estate, etc. So the good news is, we can probably exceed even Japan’s levels of indebtedness (more than 200% of GDP), before the stuff hits the fan.

The bad news is that the CBO’s “alternative scenario” may prove entirely too optimistic regarding how long it takes us to get there.

The End of Antivirus [LINK FIXED!]

June 24th, 2015 - 2:04 pm

John McAfee — yes, that John McAfee — says the real computer security risk comes from lazy or unthinking human beings:

ThreatConnect, typical of the tech studies, posted a four page analysis of the OPM hack. It included discussions of malware packages that were possibly used and means of connecting the hack to the Chinese. It was highly technical, well thought out and cogently presented.

But the phrase “social engineering” was used only once, in the last paragraph, as a near aside to the main threat – suggesting that the hacked data could help socially engineer someone.

This shows the typical lack of comprehension, among the technical crowd, about the craft of social engineering.

Social engineering has become about 75 percent of an average hacker’s toolkit, and for the most successful hackers, it reaches 90 percent or more.
I can easily find an organization chart within OPM giving titles and names with little research. Once I have a target, the target can be “humanly” engaged. Using one example, I find the “dream” love partner, or the ideal friend, not by hacking into a database, but by observing eye movements and other body language over a small course of time and inserting that ideal person into the target’s path. From that engagement and its end products, comes the need for explicit technical materials that I must use to gain what I want. The more sophisticated the social engineering, the less is the need for high technology.

A simple social engineering hack might involve leaving a thumb drive on the pavement close to the driver door of a car. The thumb drive might be labeled “naked photos” or “first quarter profits”. The idea is to influence the driver to insert the thumb drive into his computer. From that point technology takes over and the majority of the remaining hack will be purely technical. On the other hand, the “dream love partner” hack mentioned above would most likely require very few technical resources once the target’s password or other info has been obtained.

Read the whole thing — and up your awareness level if you want to reduce the threat level.

Your ♡bamaCare!!! Fail of the Day

June 10th, 2015 - 10:28 am


To stay in informed and in touch with the man on the street, former NYC Mayor Ed Koch would routinely ask his constituents, “How’m I doing?” And New Yorkers being New Yorkers, he’d often get an earful. After a couple of years, it’s a fair question to ask of the state ♡bamaCare!!! exchanges, which is more or less what Melissa Quinn did for the Daily Signal and summarized in the chart above.

Of the seventeen states (including the District of Columbia) which set up their own exchanges, the results so far aren’t very promising. Just less than half are “functional.” Those are the exchanges in CA, CT, DC, ID, KY, NY, RI, and WA. Currently they have enough customers and enough revenue to stay afloat, although tax dollars are no longer available to the “risk corridors” which help keep them that way.

Maryland and Massachusetts have had to rebuild their sites or merge with tech from another state. Massachusetts is an interesting case because before ♡bamaCare!!!, they’d had a functioning exchange under Romneycare. “First, do no harm,” was never made a part of ♡bamaCare!!!’s language.

Colorado, Minnesota, and Vermont’s sites are are suffering serious technological or financial difficulties, and their fates are all still up in the air. They may soon follow Hawaii, Nevada, New Mexico, and Oregon’s exchanges into oblivion.

So 50 states plus DC were expected to set up their own exchanges, but only 17 did so. Out of those 17, only 11 have survived intact so far, and three of those are expected to fail — for a total of eight functional survivors.

That’s a whole lotta fail.

(Chart courtesy Doug Short, Advisor Perspectives)

(Chart courtesy Doug Short, Advisor Perspectives)

All we’re missing now is a spark:

BTIG’s Dan Greenhaus has one message in his note to clients on Wednesday: Stop worrying about margin debt.

Here’s Greenhaus:

“Like the Fast and Furious movie franchise, worries over margin debt have become a frequent occurrence. A new post on Business Insider, which has nearly 40,000 views, is titled ‘Here’s some great news for those who want the stock market to crash.’”

That post, written by Business Insider’s Henry Blodget, highlighted that margin debt is at a record high and could be cause for concern over the stock market.

Blodget adds, “Even after adjusting for inflation, margin debt is now higher than it was at the peak of the great bull market in 2000 and the echo bull market in 2007.”

But back to Greenhaus:

Greenhaus argues that even though margin debt hit $507 billion in April, it’s really small as a percentage of the New York Stock Exchange’s market cap at around 2%.

Greenhaus adds: “And so, the high level of margin debt doesn’t mean this will cause a crash. It just means whenever stocks start to crash, the tumble would be faster as investors scramble to meet their margin calls.”

Think of margin calls as an accelerant for starting a fire. By itself it can’t start a fire, but once a spark is lit it causes the fire to spread too rapidly to be easily put out.

When you sell a falling share you bought with your own money, you’re only out the difference between your buying and selling prices. When you sell a falling share you bought with borrowed money, the lender will make that margin call to get his capital back. Odds are you’ll have to sell other shares to make good on that margin call — if you can. The more shareholders with margin debts, and the bigger the margin debts, the faster the accelerant works on the flames.

I saw a couple of acquaintances lose everything to margin calls when the last two bubbles popped, and their stories were hardly unique. Gambling — and the stock market is gambling — with other people’s money is a dangerous game.

Sign “O” the Times

May 29th, 2015 - 7:08 am

Chart of Doom

“History repeats itself, first as tragedy, second as farce.”
-Karl Marx

Back when I was a young man, way back in the first quarter of 2015, all we got was 0.2% GDP growth — and we liked it!

But then came the downward revision… unexpectedly:

The U.S. economy went into reverse in the first three months of this year as a severe winter and a widening trade deficit took a harsher toll than initially estimated.

The Commerce Department says the overall economy as measured by the gross domestic product contracted at an annual rate of 0.7 percent in the January-March period.

The revised figure, even weaker than the government’s initial estimate of a 0.2 percent growth rate, reflects a bigger trade gap and slower consumer spending.

I don’t happen to worry too much about the widening trade gap. That’s an inevitable result of the strengthening dollar, and there are going to be dislocations as King Dollar returns to his throne. Central Banks around the world have been in a years-long “race to the bottom,” with each country trying to weaken its currency the most. And in chaotic times like this, that’s a race the US is going to lose — people (and central banks) hoard dollars when times get weird. The result is that the dollar appreciates against other currencies, which normally takes a bite out of our exports.

What’s worrisome is that the trade gap is growing while consumer spending is shrinking. Relatively cheaper foreign goods (thanks, King Dollar!) should encourage more consumer spending, or free up more consumer dollars to spend on domestic goods. Gas prices are above their recent lows (although still well below their “new normal” highs), so that can’t be the cause of the consumer slowdown.

Maybe something more fundamental is wrong:

The new data for the first quarter, and signs of only a tepid rebound in the current, second quarter of 2015, are now forcing some economists to rethink earlier assumptions.

“This isn’t the off-to-the-races kind of expansion we envisioned six months ago,” said Scott Anderson, chief economist at Bank of the West in San Francisco. “More and more folks are coming around to the view that the long-term growth rate of the American economy is 2 percent, at best. We can’t sustain 3 or 4 percent growth for very long, so it’s two steps forward, one step back.”

Your typical economic recovery is V-shaped. That is, things come bounding back at about the opposite rate they declined. A short, sharp recession leads to a short, sharp recovery before evening back out at 3-4% growth. A longer but less dramatic recession gives you a longer but less dramatic recovery.

There are only two times in 20th or 21st Century American history that this hasn’t been true.

The first time was during the Great Depression, when the Roosevelt Administration’s response to the financial crisis was to endlessly muck around with the money supply, while foisting reams of new regulations and requirements and taxes on the economy. The second time was the aftermath to the Great Recession, when the Obama Administration’s response to the financial crisis was to endlessly muck around with the money supply, while foisting reams of new regulations and requirements and taxes on the economy.

I know history repeats itself, but I can’t tell if this time is the tragedy or the farce.

Your ♡bamaCare!!! Fail of the Day

May 19th, 2015 - 1:26 pm

It’s becoming more and more difficult to remember when ♡bamaCare!!! was supposed to save every American family an average of $2,500 a year — especially with health care expenses growing so quickly that they may be what’s caused the economy to stall.

Anthony Mirhaydari has the numbers:

The percentage of personal consumption expenditures (in current dollars) spent on health care goods and services has jumped from 20.0 percent last March to 20.8 percent this March, while the percentage spent on gasoline fell from 3.2 percent last June to 2.2 percent this March.

David Rosenberg at Gluskin Sheff echoes Yardeni, noting that the gasoline windfall wasn’t spent “on gadgets and small luxury goods” as was normally the case, but on cyclical services (like bars and restaurants) and health care. He highlights the fact that spending on health care is running at a 6.6 percent annual growth rate as of March.

Thomas Costerg at Standard Chartered is also worried about the drag on spending from changes under Obamacare, charging outright that, “health-care reform is stalling private consumption.” He’s waiting for forthcoming statistics from the Internal Revenue Service to provide specifics, but notes “anecdotal evidence from tax preparers already suggests millions may have had to pay penalties and/or seen their tax refunds reduced.”

It’s time for a tax revolt.

Sign “O” the Times

May 15th, 2015 - 7:29 am


Let’s talk about the recovery, which if it ever existed (it didn’t) ended at least two years ago. Jeffrey Snider writes for Alhambra:

If March was supposed to herald at least the beginning of the anticipated yearly rebound, April put that idea to rest. In terms of retail sales, one of the most important and largest segments of “demand”, April’s figures were mostly the worst of the recovery and some of the worst in the entire series – “beating” out February in every category. Even including autos, total retail sales gained just 0.72% in April more than suggesting there really is a major economic problem brewing.

Among the other segments, the figures are getting truly dire (all numbers are year-over-year not-adjusted): retail & food sales ex autos -0.35%; retail trade incl. autos –0.26%; just retail ex food ex autos -1.80%; general merchandise stores -1.52%. While these numbers are severe on their own, this is a contractionary environment that now stretches at least four months and in some cases five. Recessions are not spontaneous events but rather the accumulation of negative pressures and results. There can be no doubt that consumers in the US right at this moment are acting out of recessionary impulses.

Janet Yellen is gonna need a bigger printing press.

UPDATE: Whatever killed PJM this morning seems to still be messing up some images. There’s supposed to be a chart in that blank spot above — a wicked scary chart. Will get it fixed after I’m finished playing Superdad this morning.

The End of China’s Boom

May 5th, 2015 - 12:18 pm
(Chart courtesy Calafia Beach Pundit)

(Chart courtesy Calafia Beach Pundit)

Scott Grannis writes that foreign investors aren’t buying into China like they once were:

As the chart above shows, China has been buying foreign currency (thus increasing its holdings of foreign currency) for most of the past two decades, AND it has been allowing its currency to appreciate. Until recently, China has been the beneficiary of massive net foreign investment inflows—so massive that even $5 trillion of forex purchases by the Bank of China weren’t enough to stop the yuan from appreciating.

The Bank of China now holds about $4.7 trillion of forex reserves. However—and this is critical—China’s forex reserves have not increased over the past 18 months, and have actually declined by about $300 billion since last summer. This means that China is now experiencing net outflows of currency, and that in turn is a sign that China is no longer a magnet for capital. Foreign investment is no longer flooding into the economy because the opportunities for excess returns in China have diminished significantly. The bloom is off the Chinese rose.

I can’t find it in the archives, but I blogged a story years ago about a conversation between (I think) President George W Bush and (I think) Chinese Premier Hu Jintao. Bush had told Hu that the US economy needed to generate 2 million jobs a year or he’d be out of a job. Hu replied that the Chinese economy needed to generate 25 million jobs a year or there’d be a revolution.

The good news is that Beijing still has that $5 trillion in the bank, which is enough to paper over a lot of problems, and for quite a while.

But what happens if the money runs out?

Your ♡bamaCare!!! Fail of the Day

May 4th, 2015 - 8:34 am


Remember when ♡bamaCare!!! was going to result in fewer people visiting the emergency room for non-emergencies? Would you believe exactly the opposite has happened? Of course you would:

A poll released today by the American College of Emergency Physicians shows that 28% of 2,099 doctors surveyed nationally saw large increases in volume, while 47% saw slight increases. By contrast, fewer than half of doctors reported any increases last year in the early days of the Affordable Care Act.

Such hikes run counter to one of the goals of the health care overhaul, which is to reduce pressure on emergency rooms by getting more people insured through Medicaid or subsidized private coverage and providing better access to primary care.

A major reason that hasn’t happened is there simply aren’t enough primary care physicians to handle all the newly insured patients, says ACEP President Mike Gerardi, an emergency physician in New Jersey.

“They don’t have anywhere to go but the emergency room,” he says. “This is what we predicted. We know people come because they have to.”

The ER is required by law to see you, unlike doctors who aren’t reimbursed enough under the Medicaid expansion.

Sign “O” the Times

April 29th, 2015 - 11:05 am

In1in5FamiliesNoOneWorks (1)


A family, as defined by the BLS, is a “group of two or more persons residing together who are related by birth, marriage, or adoption. In 2014, there were 80,889,000 families in the United States, and in 16,057,000 of those families, or 19.9 percent, no one had a job.

The BLS designates a person as “employed” if “during the survey reference week” they “(a) did any work at all as paid employees; (b) worked in their own business, profession, or on their own farm; (c) or worked 15 hours or more as unpaid workers in an enterprise operated by a member of the family.”

Members of the 16,057,000 families in which no one held jobs could have been either unemployed or not in the labor force.

The chart accompanying the story shows that the 16-17% range is “normal,” but I cannot in my experience even imagine a household in which not one person earns a living.

That’s one in five households, in other words, which the workers in the other four must also support.

Chart of Doom

That’s not my headline — it’s in quotes because I lifted it directly from WaPo’s Wonkblog.

And isn’t it telling?

Anyway, here’s what Matt O’Brien had to say about those economists who have finally woken up to the reality the rest of the country has been living with during this “recovery” we keep hearing so much about:

Now if you add it all up, this shadow unemployment means our jobs hole is more than three times as big as it looks. That, at least, is what economists Danny Blanchflower and Andrew Levin found when they looked at how low the unemployment rate is versus how low we think it could go, how high the participation rate is versus how high we think it could go, and how many people can only find part-time jobs. That first part tells us how much further unemployment itself could fall, the second how many discouraged workers could come back, and the last how many people would work more if they could. In other words, it shows us the gap between how many full-time jobs we have and how many full-time jobs we need. The result, as you can see above, is that instead of being a million full-time jobs short, like the unemployment rate says we are, we’re about 3.5 million short.

So it’s no surprise that workers still aren’t getting raises. Even though it looks unemployment is low enough that they should have more bargaining power, shadow unemployment is high enough that they don’t.

Longtime Sharp VodkaPundit Readers™ have known all this for years, and so has anybody who’s been looking for work.

And so has anybody who finally gave up looking — and they number in the millions.

So are we supposed to sneer at economists Danny Blanchflower and Andrew Levin for taking so long to recognize the obvious? Are we supposed to cheer them for giving a solid number to the truth the Administration has been hiding for so long? And speaking of so long, what took?

Reading this thing, it’s OK to feel frustrated, relieved, and impatient, all in equal measure.

The Evitable President

April 13th, 2015 - 8:46 am
(Chart courtesy NYT)

(Chart courtesy NYT)

Nate Cohn:

Mrs. Clinton’s weaknesses may not be enough to derail her primary campaign, but it may help ensure that she will not be a juggernaut in the general election. Her favorability ratings, which soared into the 60s while she was secretary of state, have already returned to the mid-40s. Those figures are far more reminiscent of recent polarizing presidential nominees who faced close elections, like Mr. Obama or Mitt Romney in 2012.

Mrs. Clinton’s chances will depend in no small part on national political conditions. The general election is still 19 months away, and much can change, but today’s political environment is consistent with a close election that might tilt slightly toward the Republicans.

This is going to be a tough fight, waged on the Democrats’ part with nothing but money, sex, and phony “War on…” memes.

But that doesn’t mean the GOP can’t win, it just means the party needs to learn how to fight in exactly the way it didn’t in 2008 and 2012.

Driving My Life Away

April 9th, 2015 - 2:35 pm
(AP photo)

(AP photo)

Now I don’t know if Morgan Stanley analyst Adam Jonas is right when he argues that in the future, only the rich will own cars — and even those will be driven by computers. The rest of us he thinks, according to HuffPo, “will be driven by cars that are either a public utility or part of a privately-owned fleet that users subscribe to use.”

Maybe Jonas is right — but I hope not. Getting into your own car and driving it where you damn well please is a liberty, not a luxury. And that freedom of movement is something Americans have enjoyed since horse & buggy days. I don’t mind having computers making us safer drivers, or helping traffic to flow more freely. But a car is a mobile extension of our homes, of ourselves, and “mega-fleets of public vehicles” is a potential tool of tyranny.

Or maybe I’m just hopelessly old-fashioned.

That aside, part of Jonas’s analysis requires a second look:

Over the next decade, rich people will likely swap out the cars they drive for cars that drive themselves. Already, Tesla is planning to roll out a version of its Model S sedan that has limited autopilot features sometime this summer. The latest version of the car, announced on Wednesday, starts at $67,500 after a Federal Tax Credit.

Middle class tax dollars paying to make it more affordable for the rich to enjoy being semi-chauffeured around by electric cars — I’m telling you, the fix is in.

PolitiFact: Providing Cover Since 2009

March 31st, 2015 - 7:44 am

PunditPress ran the numbers behind PolitiFact’s so-called fact-checking, and they ain’t pretty:

PolitiFact’s Obameter has been ongoing for six years now. I remember looking at it in 2009 and thinking about how it would stand near the end of Obama’s term in office.

Today, looking at the chart, there are many more “promises kept” than there are “promises broken.” Yet anyone who has been paying attention over the last few years would surely see that Mr. Obama had broken a tremendous amount of promises.

So why does PolitiFact still have Mr. Obama’s promises kept at nearly twice those broken? I decided to take a look.

The first thing I did was see what promises were considered broken. It’s a fairly hefty list, but some of the very largest are completely missing. The biggest, and most famous, broken promise is that “if you like your doctor, you can keep you doctor.” That was proven irrefutably to be a lie.

According to PolitiFact, that wasn’t a broken promise. In fact, that promise doesn’t exist; it’s no where to be seen on their “promise broken” page.

Read the whole, devastating thing.

How’s That Workin’ Out for Ya?

March 31st, 2015 - 5:20 am

Obama has allowed Iran to run wild through the Middle East in hopes of making a deal with them regarding their “peaceful” nuclear program.

Your ♡bamaCare!!! Fail of the Day

March 17th, 2015 - 5:05 am


If you’ll recall, it was just last week I speculated that the declines in consumer spending, for three months running and despite falling fuel prices, might have something to do with ♡bamaCare!!!’s tender mercies.


Deductibles are an element of any insurance product, but as deductibles have grown in recent years, a surprising percentage of people with private insurance, and especially those with lower and moderate incomes, simply do not have the resources to pay their deductibles and will either have to put off care or incur medical debt.

The chart above, based on a Kaiser Family Foundation study published Wednesday, shows that about a quarter of all non-elderly Americans with private insurance coverage do not have sufficient liquid assets to pay even a mid-range deductible, which at today’s rates would be $1,200 for single coverage and $2,400 for family coverage. We found that more than a third don’t have the resources to pay higher deductibles. Among low- and moderate-income households, even fewer are able to meet deductibles. It’s no wonder that collections for medical debt represent half of all bill collections. The estimates are conservative because they assume that people have all of their liquid assets available to pay their health-care bills. But most people must tap into their liquid assets to meet other obligations, such as their rent or mortgage, car repairs, or educational costs.

It’s difficult to spend more when you’ve got to pay more for basic medical services — and Lord help you if you get really sick. ♡bamaCare!!! plans basically provide catastrophic coverage at Cadillac prices.

The theory behind increased deductibles and copays is to force people to have more skin in the game, and to shop around more for better prices. The problem is, that just doesn’t work under a insurance-for-everything system.

There’s not much of an incentive to shop around when the savings go to the insurance companies rather than to the customers. And how exactly are we supposed to shop around when ♡bamaCare!!! creates narrower and narrower coverage networks from which to choose?

Imagine insurance covered grocery shopping — I’m sure there’s a liberal with some boneheaded scheme very close to that already. Anyway, the same plan will pay for choice meats at Whole Foods, or for the sad, wilted vegetables at Walmart. Any savings you get while shopping at Walmart go directly to your “food insurer,” and the deductible and the copays remain the same at either place. There are other grocery stores in town less expensive than Whole Foods and with a better selection than Walmart, but they’re outside of your grocery network.

Are you going to go for the grass-fed ribeye at Whole Foods, or those turnips at Walmart that look like they hit their sell-by date over a week ago?

That’s essentially the system ♡bamaCare!!! has set up. It’s expensive for you and for me, but Whole Foods and the organic beef producers just love it.

Sign “O” the Times

March 12th, 2015 - 12:05 pm

Chart of Doom

Consumer spending still sucks:

The Commerce department reported that in February, retail sales missed once again and missed big and across the board, the third big miss in a row, with the headline print coming at -0.6%, far below the 0.3% expected, and in line with the -0.8% drop last month. Putting the headline numbers in context: December -0.9%, January -0.8%, February -0.6%. Surely a great time for the Fed to hike.

Excluding the volatile autos and gas, sales dropped once again, sliding -0.2%, below the 0.3% expected – in fact below the lowest estimate – and worse even than last month’s downward revised -0.1% decline. And with that the worst run in retail sales since Lehman is now in the record books.[Emphasis in original]

Falling gas prices were supposed to spur more spending on other things — so what’s happening?

I have several guesses, none of them good, and a few of them involving ♡bamaCare!!!.