The "perfect storm" of bullishness - or not

By now everyone knows that market indices took off like bottle rockets this morning. The Dow, for example:

The reason is that the most important central banks in the world, including the US Fed, agreed to charge each other less interest in dollar swap lines beginning this coming Monday.

The U.S. Federal Reserve, the European Central Bank as well as the central banks of Canada, Britain, Japan and Switzerland agreed to lower the cost of existing dollar swap lines -- or reducing the cost of temporary dollar loans -- to banks by a half percentage point, starting December 5.

The central banks' actions was intended to ensure that starved European banks facing a credit crunch have enough funding as the euro zone's sovereign debt crisis worsens.

Also, China unexpectedly cut bank reserve requirements in hopes of boosting an economy running at its weakest pace since 2009.

Further encouraging investors, the latest economic data suggested the U.S. economy was moving more solidly toward recovery. The U.S. private sector added the most jobs in nearly a year in November, while business activity in the U.S. Midwest grew faster than expected in November surged.

Other data showed pending sales of existing U.S. homes surged in October by the most in nearly a year.

"There's a perfect storm of bullishness. PMI came out better than expected, plus what happened overseas, and ADP was well above consensus," said Donald Selkin, chief market strategist at National Securities in New York, with about $3 billion in assets under management.

It's true that the lates jobs report looks good. Even so, I think the surge will retreat - the move announced today has already weakened the dollar, resulting in higher prices of futures for oil, gold and silver, which are always priced internationally in dollars.

Furthermore, the other side of investment makers don't see what the big deal is:

S&P Equity Futures are up another 3 Percent, Bond Market Yawns

Global equities are sharply higher with this global coordinated action. S&P 500 futures are up another 3 percent and will gap higher.

Meanwhile Spanish 10-year bonds rallied (yields fell) a mere 7 basis points to 6.32%, Spanish 2-year bonds rallied a mere 8 basis points to 5.51%, Italian 10-year bonds rallied 10 basis points to 7.13%, and Italian 10-year bonds rallied 9 basis points to 7.00%.

Whatever the equity markets see, the bond market doesn't. A flight to safety of German bonds is back on, that China needs to cut reserve requirements is a huge sign of weakness (and no it will not stop a hard Chinese landing).

Also bear in mind that on September 15, there was coordinated swap-line action that did nothing.

Here is what happened to the ESI index after the September swap-line action:

The fact is that none of the underlying, weak fundamentals about the Eurozone's or America's economy have changed. The euro is as weak as ever and the dollar is weakening even more. Nothing about the PIIGS' situation is improved. So essentially, today's central banks' action place yet another temporary bandage on a suppurating wound. The markets are reacting to the news that something has been done, but by the beginning of next week, I think that the sane heads on Wall Street will understand that this something isn't amounting to much because basically, nothing has changed.

That's also the assessment of PIMCO's CEO, Mohamed El-Erian, who says that the indices moved so dramatically today because, "Risk markets love liquidity injections, real and perceived." Also,

First, these monetary institutions feel that, again, they have to move because other entities have continued to be too slow and too ineffective; and second, they feel that they cannot, and should not ignore an actual or anticipated need to relieve acute pressures within the banking system.

These two reasons were made even more pressing by last week’s dislocations in the functioning of European financial markets – most notably, the inversion of the Italian yield curve, pressure on government bond markets in core Europe, the growing fragility of the banking system, a drop in market liquidity, and growing hesitation by market participants to warehouse any risk.

The immediate impact on markets unambiguously favors risk assets across the world. The longer-term effect depends on the scale and scope of the follow through from others. This is particularly important as we count down to yet another European Summit on December 9.

The hope is that central banks are acting because, looking forward, they feel confident that other policymakers will finally catch up with a big and spreading debt crisis that has serious implications for growth, jobs and inequality. The fear is that they are acting because they feel that they must again pre-empt yet another set of potential disappointments.

The AP reports that all that happened today is that Europe has delayed "major debt decisions for 10 days." Will policymakers finally catch up to the markets and bankers? To think that is the triumph of hope over experience.

So: Near term: Party! Long term: Head for the hills!

Update, 1:45 p.m.: I predict that there will be a distinct pullback in the Dow by the time the NYSE closes at 4 p.m. today. At Close: Well, I called that the wrong way. The Dow actually closed at 12,029.56, up just under 474 points for the day. Things to look for: Yields on 10-year Italian bonds and the US Dollar Index. If the former drops about a point and the latter rises another three points or so, then the strong market indices will have a longer shelf life because together they will indicate that some sort of real response to the Eurozone's long-term issues has been adopted. But that is pretty problematical.

"It's hard to make things foolproof ...

... because fools are so ingenious."

Except that the managers of McDonald's, Inc. are not fools.

San Francisco's jackboot government has made it illegal, starting tomorrow, for Mickey D's or anyone else to sell a meal that includes a toy unless the meal complies with the city's draconian nutritional standards. That the city's school systems' meals do not meet those standards is ironic and typical of this kind of socialist authoritarianism, but that's another story, I guess.

The ordinance is directed squarely and specifically at McDonald's Happy Meals. The city's objective is to ban Happy Meals altogether because, you see, Happy Meals and nothing else are making S.F. kids obese.

So McDonald's will tomorrow stop selling Happy Meals there - at least, they will stop selling any kind of meal that includes a toy. You will still be able to buy the exact, same menu items in the exact, same Happy Meal box, at the same price. But it will not include a toy.

A toy will set you back another 10 cents, rung as a separate transaction. And if you want to buy a toy at all, you must buy the toyless Happy Meal to do so.

No, Mcdonald's' managers are not fools. But the dictati of San Francisco are.

Here's the link: Happy Meal Ban: McDonald's Outsmarts San Francisco

 

Employment good news

The National Employment Report says that seasonally-adjusted, non-farm payrolls increased by more than 200,000 from October to November. That figure includes the largest gain in construction jobs in five years. Link.

Brits: Prepare for riots in euro collapse

Prepare for riots in euro collapse, Foreign Office warns - Telegraph

British embassies in the eurozone have been told to draw up plans to help British expats through the collapse of the single currency, amid new fears for Italy and Spain. ...

If eurozone governments defaulted on their debts, the European banks that hold many of their bonds would risk collapse.

Some analysts say the shock waves of such an event would risk the collapse of the entire financial system, leaving banks unable to return money to retail depositors and destroying companies dependent on bank credit. ...

Some economists believe that at worst, the outright collapse of the euro could reduce GDP in its member-states by up to half and trigger mass unemployment.

Analysts at UBS, an investment bank earlier this year warned that the most extreme consequences of a break-up include risks to basic property rights and the threat of civil disorder.

“When the unemployment consequences are factored in, it is virtually impossible to consider a break-up scenario without some serious social consequences,” UBS said.

Markets move faster than politicians

Which is one big reason why the Euro crisis is not getting solved.

“Financial markets continue to move faster than politicians,” Mansoor Mohi-uddin, head of foreign exchange strategy for UBS, said. “Fixed income investors are betting that either Germany moves towards a fiscal union with its eurozone partners or that, without the ECB willing to buy unlimited amounts of sovereign bonds in the secondary markets, the eurozone will break apart.”

This gentleman also says that the end of the Euro as the single, unified European currency has already been priced into the markets. But I would add that the markets have not priced it in all the way.

However,

The EU process continues and the politicians clearly feel they have ample time on their hands.

EU monetary history is full of delays and Germany giving in to pressure. Merkel’s position is under pressure and the Bund Yield has become our barometer for pro-EU solutions – for now the trend is clear – we are on-route to Germany giving up and soon.

Europe: Apocalypse now?

Germany told to act to save Europe - FT.com:

Germany is the only country in Europe that can act to save the eurozone and the wider European Union from “a crisis of apocalyptic proportions”, the Polish foreign minister warned on Monday in a passionate call for more drastic action to prevent the collapse of the European monetary union.

The extraordinary appeal by Radoslaw Sikorski, delivered in the shadow of the Brandenburg Gate in the German capital, came as the Organisation for Economic Co-operation and Development called on European leaders to provide “credible and large enough firepower” to halt the sell-off in the eurozone sovereign debt market, or risk a severe recession.

The OECD’s comments came as the organisation slashed its half-yearly forecasts for growth in the world’s richest countries, warning that economic activity in Europe would grind to a near-halt.

If Europe does reach a financial apocalypse and economic activity there grinds to a near halt, the US will topple right behind. A third of the United States' trade is with Europe. Think we can take that kind of hit without crashing ourselves?

More: OECD: euro collapse would have 'highly devastating outcomes' worldwide

The collapse of the euro could send the world's advanced economies into a severe recession, dragging emerging markets with them into the mire, the Organisation for Economic Co-operation and Development warned on Monday. ... Pier Carlo Padoan, OECD chief economist, made plain in the body's latest six-monthly economic outlook that the greatest threat to global economic health comes from the eurozone rather than from the tax-and-spend gridlock in the US Congress. ... His comments came amidst evidence that the 17 eurozone countries are even wider apart on the measures required to staunch the exit of global investors and prevent a credit crunch on an even worse scale than in 2008-09.

This is Europe. The moment of verticality is only
days away. 

There simply is no good news from anyone writing about the Eurozone and its future. The SS Europe is sinking and everyone knows it. But the national governments cannot agree on how to stop it. There is some consensus that Germany has to "save Europe," but the fact is that Germany alone cannot do it.

They say that when a ship sinks and you find yourself in the water, you have to get away from the sinking vessel because the water rushing into the ship will drag you along with it. But there is no economy in the world that can "get away" from Europe's impending and by now almost certain collapse. The recession we entered in 2008 will be like a walk in the park to what is coming. It will be a true depression. Ironically, in the short term America's markets will benefit from an inflow of investors' cash as they run away from the collapsing Euro markets. But that won't last.

How long until the sinking European ship turns vertical? Perhaps less than two weeks.

Falling off the financial cliff

John Williams says that when it comes to inflation, you ain't seen nothing yet.

Severely slashing social programs such as Social Security and Medicare would be the only way it could be avoided. I don’t have any problem per se with Social Security or Medicare, but you can’t bring things into balance without addressing them. If you look at the U.S. annual deficit on a GAAP basis—generally accepted accounting principles—with accounting for the year-to-year change and the net present value of unfunded liabilities in Social Security, Medicare and such, you’re seeing a federal deficit in excess of $5 trillion per year.

Putting that in perspective, if you wanted to raise taxes, you could take 100% of people’s salaries and the government would still be in deficit. You could cut every penny of government spending, except for Social Security and Medicare, and you’d still be in deficit.

You can’t escape the eventual hyperinflation if those programs are not addressed. Originally, I was looking for hyperinflation by the end of this decade. I’ve advanced it to 2014, and it may well come before that. I think we’re already in the early stages of going through what has to happen for this to break.

I report, you decide. But those problems will not be addressed quickly, and probably not even addressed at all. The United States is presently financially suicidal.

Consider Spain, for example, which is now falling off the financial cliff.

Spain’s economy is double the size of Greece’s, Ireland’s and Portugal’s COMBINED.

Spain’s total debts, including mortgages and commercial loans, are large enough to bankrupt all of Europe.

Even if the United States manages to escape a direct contagion attack for a while longer, the impact of Spain’s demise ALONE will explode on global financial markets with a mega-tonnage that’s many times larger than anything we’ve seen so far from Greece.

Worst of all, Spain has simply run out of time. Its death spiral is under way; its plunge into default, virtually unavoidable.

Here are the horrifying facts …

Spain’s unemployment has skyrocketed to 22.6 percent; and among workers under 25, to an astronomical 48 percent!

At least one million people are at risk of losing their homes — the equivalent of nearly seven million people in the U.S.

Homelessness and begging are rampant; labor strikes and street protests, endemic.

And now, the final blow: Global bond investors are dumping Spanish bonds like a hot potato, driving Spain’s borrowing costs through the roof.

In fact, Spain is now having to pay three times as much on its three-month treasury bills than it paid only one month ago. Investment capital is fleeing Spain like proverbial rats and the sinking ship.

But it's not better here.

Almost everywhere in the world, especially in the United States and Europe, the pattern is clear:

First, the government spends everything it has.

Next, the government borrows all it can from its people.

Then, it borrows still more from foreign countries and banks.

Finally, the debts become so onerous that they bring on the contagion — the day of reckoning — we’re witnessing now.

Right now investor money is still coming into US markets because even though the game is crooked, it's the only game in town (or the world) that is still a safe haven. But it's only comparatively safe, and the comparison is like saying that a stage two lung cancer patient is healthy compared to a stage four patient.

I am not posting cheerful stuff here, I know. Jeepers, I sound like Jeremiah, but Jeremiah, for all his gloominess, turned out to be right.

Huge Explosion In Iran's Nuke City

Huge Explosion In IRAN's Nuke City:

Less than two weeks after a mysterious explosion destroyed an Iranian missile development base, and the same day the Israeli Military reported on the effect of that explosion, Iran's official news agency FARS reported that a loud blast was heard in the city of Isfahan at 2:40 pm local time (6:10am EST).

Iran operates a uranium conversion plant near Isfahan, which has a major role in the nuclear weapons process. first went into operation in 2004, taking uranium from mines and producing uranium fluoride gas, which then feeds the centrifuges that enrich the uranium.

Since 2004 (thank you France) , thousands of tons of uranium flouride gas were stockpiled at Isfahan and subsequently sent to the enrichment plant in Natanz. Search and rescue teams called to the scene confirmed the blast, but as of yet no injuries have been reported.

Iran's uranium enrichment plant is located just outside the city of Isfahan – one of Iran's largest cities.

According to the FARS report, a security official confirmed that the explosion had occurred, but refused to give further details.

Which makes these two pieces all the more relevant:

Why the Israeli Air Force will bomb Iran this spring

Why the strikes are likely to succeed

What to say to the grieving

Having corresponded with James Joyner over the years, it was a blow to visit his site early this morning to read that his wife, Kimberly, died suddenly last night from unknown causes. Presumably, the cause will be determined, but now James and his two small daughters are in shock.

Some dozens of readers have left comments of support on the post. They reminded me of a post of mine in July 2003 of what to say, or not, to the grieving. So here it is.

I have had a lot of experience with funerals and people in mourning, both as one whose kin have died and in ministering to the bereaved. Here is a short course in what to say to the next of kin of the deceased.

What not to say
Do not attempt to explain the death. Comments such as, "This is all part of God's plan," or "There is some purpose served here that we don't understand" are not helpful. Just skip them. Grieving parents, widows or widowers are not looking for cosmic wisdom or theology. No matter how helpful you think such things are, or how intensely you believe them, they do not help.

Do not minimize the impact of the death. Deaths of loved ones are consequential, and must be regarded as such. A woman I knew had to bury her three-day-old baby girl. A woman of her church told her, "At least it wasn't a boy." In the recent death of my elderly and long-term ill mother-in-law, several people said to my wife and me, "At least she isn't suffering anymore." These kinds of comments are cruel, not helpful.

Do not talk about the unfairness of life or make the deceased and the family a victim of circumstances. Comments such as, "I don't see why the doctors could not have done more," or "Your wife was such a good woman, I don't see why she had to die" or the like harm rather than help. The deaths of loved ones create chaos in the mental and emotional states of the families. Often, they wonder whether they could have done something more to save the deceased. Don't say anything that could reinforce these feelings.

What to say
Express sympathy and offer support. Be a friend. Be brief and sincere. Here is a template you can use either verbally or in writing a sympathy card:

I am saddened to hear of your loss. Please be assured that my prayers are with you. I know these days are difficult for you. You have many friends who will support you and who are eager to give you aid and comfort. We pray that you will be strengthened through God's grace, and come to find rest and peace. Sincerely, [name].

It is not inappropriate to offer, "If there is anything we can do, let us know," but not many next of kin will let you know. If you truly want to offer more than moral support, just do it. Offer to take their car to be washed before the funeral. Offer to do their laundry or house sit or visit to answer the phone. Be imaginative in discerning what routine tasks you can perform for the bereaved; those are the tasks that tend to be left undone. Never force yourself on the bereaved, of course, but usually a doer is gratefully welcomed while a mere promiser is forgotten.

If the death was tragic (that is, premature, suicidal or violent) then you should understand that support will be needed for many weeks, not just a few days. The level of support required will decrease, but do not expect that after only a week or so the bereavement will just end and the bereaved will get on with life. "Getting over it" is something that may never happen for the families of those who died tragically. Parents who lose children, for example, never get over it emotionally although after a time their routines may appear normal. But they always grieve, even after decades.

Anniversary dates can be particularly difficult. For those who lose spouses, the next Valentine's Day can be very difficult. A card or bouquet on that day will be very helpful. A phone call on wedding anniversaries or birthdays of the deceased will be much appreciated.

It's going to get uglier

Quick embeds of three pieces at Business Insider that are more than merely disturbing. The trends are pretty ugly.







See also my earlier post, "The long decline is just beginning."

"Where do you see yourself in five years?"

Fortunately, I have never been asked this question by a job interviewer or personnel manager, but Graybeard has, and he gave the best answer I have heard of.

True story: I've mentioned before I work for a big company. Like the majority of the herd, we do annual performance reviews, which is a comparison of goals you submitted a year ago, goals you were scheduled to meet, with what you actually accomplished. This year they asked us to submit a development plan. The first question was, "What do you picture yourself doing in three to five years?". In my mind, I wrote, "In the best case, I'm retired, living someplace with dark skies, on 10 acres I own free and clear, with plenty of recreational opportunities, playing to my heart's content. In the worst case, I'm crouched in the rubble that used to be my house, wearing a loincloth that some animal I killed was wearing, and defending my wife and I with a rifle. With two bullets saved for when all other options are gone". Then I decided not to submit the form until they tell me I have to.

Ah, the pleasures of following back link referrals!

Liberals On Government Healthcare Then And Now » American Glob

Liberals On Government Healthcare Then And Now » American Glob

And it's illustrated!

Having fun with gravity!

Play this at full screen!



HT: American Digest

PS - "Don's Version" in the grab does not refer to me, but to the poster on Youtube.

Only three Munchkins remain

Via Michael Silence, I learn that one of the Munchkins of The Wizard of Oz has died: "'Wizard of Oz' Munchkin Karl Slover dies at 93"

DUBLIN, Ga. (AP) — Karl Slover, one of the last surviving actors who played Munchkins in the 1939 classic film, "The Wizard of Oz," has died. He was 93.

The 4-foot-5 Slover died of cardiopulmonary arrest Tuesday afternoon in a central Georgia hospital, said Laurens County Deputy Coroner Nathan Stanley. According to friends, as recently as last weekend, Slover appeared at events in the suburban Chicago area.

Slover was best known for playing the lead trumpeter in the Munchkins' band but also had roles as a townsman and soldier in the film, said John Fricke, author of "100 Years of Oz" and five other books on the movie and its star, Judy Garland. Slover was one of the tiniest male Munchkins in the movie.

Long after Slover retired, he continued to appear around the country at festivals and events related to the movie. He was one of seven Munchkins at the 2007 unveiling of a star on the Hollywood Walk of Fame dedicated to the little people in the movie. Only three remain of the 124 diminutive actors who played the beloved Munchkins.

Yes, Michele Bachmann is a ding-dong

"Look at me! Please! Look at me!
I'll say anything!"

It's sad to see a would-be national political figure flailing about mindlessly in vain, thoughtless (literally) attempts to get attention. But that is what forlorn Republican presidential candidate Michele Bachmann is doing, and doing it harder every day.

First up: "Bachmann: Media, Not Voters, Picking Winners"

Michele Bachmann just weighed in on "Debategate," telling Whispers that the media is trying to pick the Republican presidential winner, cutting voters out of the process.

"There's always a suspicion of maybe a bias and I guess this just confirmed it," she said of a CBS memo before Saturday's debate, which suggested that the Minnesota Republican congresswoman would be ignored during the foreign policy chatfest.

The memo, she said, "demonstrates that the media wants to choose who our nominee will be and who the next president of the United States will be."

Well, you know how it is.

Okay, you have to say that aloud to get it, I guess.

Yes, Michele, the media are going to do everything they can to sway the election the way they want it to go. It's called the First Amendment to the US Constitution. Get used to it. And it's been going on since, oh, John Adam's administration.

Exhibit 2: Bachmann wants to make Iraq pay "millions of dollars" for each American life lost toppling Saddam and stabilizing the country.

"I believe that Iraq should reimburse the United States fully for the amount of money that we have spent to liberate these people. They're not a poor country. They're a wealthy country."

That comes to more than $700 billion, plus, she said, "millions of dollars" for each life lost (troops who were merely gravely wounded apparently get no consideration from her). This is just nitwittery. I mean, I think Great Britain should pay us for burning the White House in the War of 1812 and Japan should pay us for the hundreds of thousands of Americans killed and wounded kicking their Shinto government out.

And pray, Ms. Michele, just how do you propose to make the Iraqis do that? Her answer? Click here (but come back!).

There is no way to do it. She has proposed a solution to a problem that doesn't exist, offered an answer to a question no one is asking. This isn't policy, it's not analysis, it's certainly not political conviction. It's just straw grasping on national TV trying to get campaign traction from a headline - and failing.

Good night, Rep. Bachmann. You are the only Republican woman I can think of in the national media who makes Sarah Palin look good. It's lights-out time for your campaign now. And it was lights out for your potential for national leadership quite a long time ago.

The long decline is just beginning

Here is a real bright ray of sunshine over at American Digest about The Ship of State:

The jobs are not coming back. To know that you need to get off the inter-states; off the scenic blue highways that lead to your summer beach retreats. You need to get into the towns that have been passed by; the towns whose main industry has become food stamps and "assistance." These towns are growing in number daily and will continue to grow.

There is no work in these towns. The factories that supported them are long dead or dying. They, like the people they supported, are carbon based life forms and the strange insects that govern us seem to be united in making sure they never return. The checks and the food stamps come, but that's not enough to paint the houses or put in the gardens or do much more than eat too many pizzas and drink too much watery beer. The young would leave but more and more there's no place to go. They spend their time instead deciding on what sort of new tattoo will go well with the previous twenty.

The building of new houses and malls and condos and other large construction projects are not coming back. And even if they did where would we find the workers trained to build them? Old carpenters have moved on to making a living at something other than construction. There's not enough work to bring young ones onto the job and help them to master the skills needed. When a nation stops building it stops having the jobs that can train the next generation of builders. Mexicans, working cheap and off the books, are still in some demand, but there's a limit to repainting and the kind of minor brickwork that makes for a pleasant garden.

The money isn't coming back except at something worth less with every passing day.

No, it is not, and here's the demographic-tsunami reason why.

There are 79 million baby boomers like me. The oldest boomers, born in 1946, have started turning 65 just this year and many are entering retirement. There are 17 years worth of boomers left to retire, on average, 4.3 million per year. (Actually, since boomer births did not peak until 1957, the number of boomers retiring will steadily rise by more than that average. Boomer births passed more than 4 million per year in 1954 and never fell below that number; 1965 was fewer than 4 million, but '65 was not a boomer birth year. See here.)

It will not be until 2025 when median boomer's age will be 70. But boomers' longevity will be years longer. That means that boomers' mortality rate will not start diminishing boomers' numbers significantly for several years, probably at least 10 years. Since for many years now the death rate per 1,000 population has been declining, the margin of error is wide in just when the number of boomers will start falling steeply, probably only when the median age has gone significantly higher than 70.

So: boomers are starting to retire and will do so in accelerating numbers for at least 18 more years - 1964's boomers (the last of the cohort) won't start to retire until 2029. We are living longer. And we are selfish people who are not very much inclined to leave a sizable estate to our kids. The huge wealth transfer we enjoyed from The Greatest Generation has been spent, boyo, because man, do we boomers love our lifestyles.

Don't expect a big inheritance from your boomer parents -- even if they are rich. Less than half of millionaire boomers say that leaving money for their kids is a priority for them, according to a 2011 U.S. Trust study. But 64% of boomers say they plan to use their money to travel and more than one in three say they want to use it to "have fun."

Now, where is all the money to pay for our retirement centers, medical care and vacations in Costa Rica going to come from? It will come from the equity investments we made before we retired. In short, we are going to sell stocks, bonds and mutual funds like crazy starting very soon. And because each successive year adds millions more to the retired ranks, the selloff will accelerate every year into the late 2030s and almost certainly well into the '40s.

The fate of traditional equity markets, beginning, oh,
next year. Found at Boomer Cafe.

The plain fact is that tens of trillions of dollars are going to disappear from the value of the DJIA and other stock indices over the next 20-30 years. And with each year, as the selloff accelerates, the decline in equity-companies' market value will drop even more - because each successive year, boomers will sell more equities than the year before, both as a group and individually, just to stay even.

In fact, if the near-term retiring boomers cash out only $1,500 of equities per month, starting with zero retired boomers and adding about 360,000 every month, then in only six months more than $3 trillion of sold-share value will be reached.

Read this slowly: Three. Trillion. Dollars. Sold off every six months. That's in addition to the previous semiannual's sum. That's $18 trillion of equities sold in just the first 18 months. And it only goes much higher from there. Folks, we are looking at possibly hundreds of trillions of dollars of equity sales over boomers' retirement years.

There are two huge problems with this. First, the total world market's valuation is only $37 trillion. So boomers' simply cannot cash out enough equities to maintain their standard of living because there is literally not enough money in the world to do it, assuming that boomers need only about $1,500 of sold principal per month to make up a shortfall of dividends and interest. Even if you halve the figure, the numbers can't be sustained.

So - we boomers simply are not, as a population group, going to enjoy in retirement the high standard of living we are accustomed to.

The second problem is that Generation X, boomers' successors, doesn't have nearly enough money to match as inflow into equities what we boomers are going to take out. Gen-X is the generation hit hardest by the multi-year Great Recession. Enormous numbers of them have already sold out just to stay afloat financially. And even before the recession hit, they were piling up debt like madmen.

The Gen Xers, generally defined as those born from 1965 through 1980 — now 27 to 43 years old — have even less assurance than the boomers of receiving company pensions and projected Social Security benefits.

In 1979, when the oldest Gen Xers were teenagers, the sole retirement plan for 62% of workers was a traditional pension, according to the Employee Benefit Research Institute (EBRI). By 2005, when most of the Gen Xers had joined the workforce, that number had flipped: 63% of employees found themselves covered only by voluntary 401(k) plans. So much for the corporate safety net.

On top of that, the Gen Xers' life expectancies, and thus their retirements, will likely exceed even the boomers'. They'll need to save more aggressively. Yet, burdened by high housing costs, stifling college debt, stagnating wages and outsize health insurance and gas prices, Gen Xers are saving too little for retirement, just as workplace benefits have shrunk.

According to the EBRI, more than one in three workers ages 35 to 44 aren't setting aside any money for retirement. Among those ages 25 to 34, 45% aren't saving.

In short, the traditional US equities markets - the Dow, the S & P and the NASDAQ - are heading over the falls and there is nothing they can do about it. Anyone younger than 50 today is going to get clobbered if they keep investing for retirement with the old "buy and hold" method of investing in funds or stocks.

The US economy is not coming back even to the 1980s level of performance, and as for that of the '90s and middle Oughts, only in your dreams.

What we boomers have done is left an incredibly bollixed up legacy to our children, and we captain the ship of state happily off the falls because, hey, we'll be dead by the time it crashes onto the rocks, so what's it matter? But our kids and grandkids will be crushed by what we have done. Fact is, we never grew up and we never will.

Drudge sticks it to Cain

Exactly what is Matt Drudge trying to communicate here?

The most brutal Perry/Paterno comments | No Silence Here | knoxnews.com

The most brutal Perry/Paterno comments | No Silence Here | knoxnews.com

Examples:

"Rick Perry to drop out of race "to spend more time w/my wife Anita and 3 children Griffin, Sydney and... Griffin and..."

"Now hoping Nebraska beats Ped State this weekend."

What about saving souls?

The 'Christian socialist' clergymen praising the Occupy protests are more socialist than Christian. What about saving souls? – Telegraph Blogs

The religious Left doesn't believe in saving souls. They don't believe there are any souls to save in the first place, and that there is nothing to be saved from in the second.

The British Left was surprised but supportive when Canon Giles Fraser quit his position at St Paul’s Cathedral in protest at its handling of the Occupy crowd squatting on its door. Fraser’s rebellion was a rather confusing one: he didn’t think that the occupation should stay, he just opposed the use of force to move it on. Nevertheless, the anarchists in the street welcomed what looked like a revival of radical Christian witness. The eloquent Canon Fraser said: “I think that, in a sense what the camp does is that it challenges the church with the problem of the Incarnation – that you have God, who is grand and almighty, [who] gets born in a stable, in a tent. You know, St Paul was a tent maker. I mean, if you looked around and you tried to recreate where Jesus would be born – for me, I could imagine Jesus being born in the camp.”

But Fraser’s benediction of the occupation should be qualified by the fact that he is a very odd Christian. For a start, judging by one of his Thought for the Day broadcasts, he doesn’t seem to believe in life after death. The hope of “life eternal” is really Christianity 101: it’s the hope that defeats suffering and keeps us all from dying in despair. What does Fraser say to his parishioners on their deathbeds, one wonders? Obviously not, “We’ll meet again”. Working on the basis that if there’s only one life you may as well live it to the max, Fraser also endorses gay marriage. He promotes his views through The Guardian, The Socialist Worker and Radio 4. Not that he does any of this for the money! He doesn’t need to: until recently, Canon Fraser lived in a 17th-century grace and favour house.

Meanwhile, on this side of the pond, "radical Washington DC cleric Fr Thomas Reese" has called for the “redistribution of wealth and the regulation of the world economy by international agencies.”

To which I respond the same as Milton Friedman: "Where do you find the angels" to do that?



If there is anything that we know about international agencies, it is that angelic they ain't.

Fork. Perry. Done.

» Most Brutal Debate Video and Tweets Ever - Le·gal In·sur·rec·tion

Here's the video:



Comment from the Youtube site:

"At approx. 0:05 in the clip, you can see where Ron Paul is using the Jedi Mind Trick.

"These are not the agencies you are looking for..."

You have just witnessed the death of the Perry campaign, although the funeral will not be held for some time yet. Meanwhile, Newt's star is rising.

Grade inflation and higher education

The Volokh Conspiracy » Reforming Higher Education: Incentives, STEM Majors, and Liberal Arts Majors – the Education versus Credential Tradeoff.
The pernicious bubble in higher education is not the near-runaway attendance costs, but average undergraduate GPAs that approach 4.0.

Chart from gradeinflation.com

While there is no grade inflation in the technical courses (Science, Technology, Engineering and Math, or STEM), it's shot through the roof in the humanities. Why one and not the other?
Basically, STEM schools or departments are in worldwide competition with each other, and their reputation rests on their top-performing graduates. Hence, introductory STEM courses are designed to weed out the poor and average performers, and that means the classes are conducted at a pace that students with merely above-average math skills can't keep up. (I also wonder whether STEM professors know they can't curve grades for people who might be designing long-span bridges, power plants or airliners.)

This is not to say, however. that STEM schools have been immune to grade inflation over time.

As for humanities departments, there is no inter-school competition. Harvard's history department does not compete with Oxford's, or for that matter with State U's. If a student wants to get a BA in history - or philosophy or English Lit, whatever - it really is not much relevant what the name of the school is. The reason is that humanities departments have become almost useless for graduating bachelor holders who are immediately employable in their major. So undergraduate humanities schools are really just prep schools for Master programs or law schools. 
That explains the grade inflation in humanities departments. Grade inflation has not corrupted the system, grade inflation is the system. And the more comparatively worthless a bachelors humanities degree is for postgraduate employment, the higher its average GPA is. That's how those departments justify their existence to the larger university and how they attract students to select those departments as majors. 
Grad schools don't care where their applicants matriculated. Grad schools consider nothing at all about a student except his/her GPA. A 4.0 at State Cow College in global civilization studies is far more credentialing for admission to a grad school than a 3.5 in physics from MIT. Grad schools don't care where the 4.0 came from or what its major was. They just want the high GPA. 
So a college student choosing a major should determine real quick whether he is grad school bound, and if so, select a major with the strongest record and reputation for grade inflation. That such a major is almost certainly going to be worthless for job seeking and will usually be free of intellectual content (like, oh, womyns studies) is irrelevant. Just get as close to a 4.0 GPA as possible. It's all that matters.
That's a short summary, of sorts, of prof. Volokh's assessment. But it's not altogether in line with a more in-depth study online here. However,

The author believes that the resurgence of grade inflation in the 1980s principally was caused by the emergence of a consumer-based culture in higher education. Students are paying more for a product every year, and increasingly they want and get the reward of a good grade for their purchase. In this culture, professors are not only compelled to grade easier, but also to water down course content. Both intellectual rigor and grading standards have weakened. The evidence for this is not merely anecdotal. Students are highly disengaged from learning, are studying less than ever, and are less literate. Yet grades continue to rise.

Then there's this:

To avoid getting an "incomplete" for the course, Ms. Zhou withdrew before the lab ended. Since switching majors she has earned almost straight A's instead of the B's and C's she took home in engineering.

Students who drop out of science majors and professors who study the phenomenon say that introductory courses are often difficult and abstract. Some students, like Ms. Zhou, say their high schools didn't prepare them for the level of rigor in the introductory courses.

Overall, only 45% of 2011 U.S. high-school graduates who took the ACT test were prepared for college-level math and only 30% of ACT-tested high-school graduates were ready for college-level science, according to a 2011 report by ACT Inc.

Women marrying down

Intelligent women forced to 'dumb down' and find a less-educated man to marry | Mail Online

A lot of this going around. And since most women are hypergamous, it's a problem.

See also: "Sex, marriage and exchange of value"

"Why "man up" isn't working"

Say goodbye to the EU

The thing is that the European Union is doomed financially. And that means it is doomed politically. CNBC reports.

Christine Lagarde, head of the IMF, warned Europe's debt crisis risked plunging the global economy into a "lost decade," and said it was up to rich nations to shoulder the burden of restoring growth and confidence.

But the rich nations are only rich relatively, not absolutely. They are facing the same demographic and monetary challenges that the off-the-cliff countries have, but the rich nations are not as close to the cliff. But they are headed there and they know it. And there is no one to bail them out.

Christmas tree tax: About, face!

That Drudge man, he be powerful! When you get 100 million hits or so per month, you sway opinion whether you are trying to or not. Remmeber this morning's Christmas Tree Tax?

The administration has folded. Obama Administration to Delay New 15-Cent Christmas Tree Tax.

The U.S. Department of Agriculture is going to delay implementation and revisit a proposed new 15 cent fee on fresh-cut Christmas trees, sources tell ABC News. The fee, requested by the National Christmas Tree Association in 2009, was first announced in the Federal Registry yesterday and has generated criticism of President Obama from conservative media outlets. ...

White House spokesman Matt Lehrich told ABC News that despite some media coverage, “I can tell you unequivocally that the Obama Administration is not taxing Christmas trees. What’s being talked about here is an industry group deciding to impose fees on itself to fund a promotional campaign, similar to how the dairy producers have created the ‘Got Milk?’ campaign.”

Nonetheless, the criticisms have apparently had an impact as the program is now being delayed.

“USDA is going to delay implementation and revisit this action,” Lehrich said.

If members of an industry group want to assess a 15-cent fee upon each item they sell, no problem. What I don't understand is why the federal government needs to be involved at all. Of course, that's a dumb question to ask when it concerns this administration.

Where is the ACLU when you need it?

Officially promoted by the Obama administration!

Heritage's blog, The Foundry: "Obama Couldn’t Wait: His New Christmas Tree Tax"

President Obama’s Agriculture Department today announced that it will impose a new 15-cent charge on all fresh Christmas trees—the Christmas Tree Tax—to support a new Federal program to improve the image and marketing of Christmas trees.

In the Federal Register of November 8, 2011, Acting Administrator of Agricultural Marketing David R. Shipman announced that the Secretary of Agriculture will appoint a Christmas Tree Promotion Board. The purpose of the Board is to run a “program of promotion, research, evaluation, and information designed to strengthen the Christmas tree industry’s position in the marketplace; maintain and expend existing markets for Christmas trees; and to carry out programs, plans, and projects designed to provide maximum benefits to the Christmas tree industry” (7 CFR 1214.46(n)). And the program of “information” is to include efforts to “enhance the image of Christmas trees and the Christmas tree industry in the United States” (7 CFR 1214.10).

To pay for the new Federal Christmas tree image improvement and marketing program, the Department of Agriculture imposed a 15-cent fee on all sales of fresh Christmas trees by sellers of more than 500 trees per year (7 CFR 1214.52). And, of course, the Christmas tree sellers are free to pass along the 15-cent Federal fee to consumers who buy their Christmas trees

But wait! It's not actually a tax, you see:

Acting Administrator Shipman had the temerity to say the 15-cent mandatory Christmas tree fee “is not a tax nor does it yield revenue for the Federal government” (76 CFR 69102).

The 15 cents, you see, goes to a board, established by the SecAg, that promotes Christmas trees by "carrying out the program established by" the SecAg. No wonder OTB headlines it, "A Christmas Tree Tax? No, Just Good Old Crony Capitalism."

The problem here isn’t that the Federal Government is imposing a “tax” on Christmas trees, but that it’s doing so to finance a program that it shouldn’t be implementing to begin with. The reason that the Christmas Tree growers want a program like this is because natural trees have been steadily losing market share to artificial trees in recent years. ... It’s a choice consumers are making in increasing numbers apparently, and the natural tree industry obviously doesn’t like it.So, they decided to get the government involved in “promoting” natural Christmas trees. ...

Why, then, do we need a government program to promote their sale?

We don’t, of course, and in reality the government shouldn’t be involved in product promotion of any kind. That’s not their job, it’s the job of the industry itself. If tree growers want to create a promotional campaign, then they can do so through their trade association. This simply isn’t something that the government should be doing, especially for a product that is sold primarily in a domestic market. Instead of doing that, though, they lobbied the government to create a program to do it for them.

What we’ve got here, then, is another example of crony capitalism, with the government putting its finger on the scale to benefit the natural tree industry at the presumed expense of the artificial tree industry and, most likely, the taxpayers (that 15 cent a tree fee is unlikely to be enough to fund the program completely). That’s crony capitalism, folks.

This administration hardly originated crony capitalism but Obama et. al. have perfected it to a high art.

However, clearly this program is unconstitutional because it violates the First Amendment! As we all know, the government with its partner, the ACLU, has been waging a War on Christmas Trees.

Okay, snark off. Actually, there are all manner of industries that use the government to promote their businesses and this sort of fee is by far from uncommon - as even DefendChristmas.com reports, "Akin to similar programs that promote milk, beef and cotton, the new Christmas tree program will impose on U.S. domestic producers and importers an initial fee of 15 cents per tree." However, it is still accurate to describe the fee as a tax because it is remission of revenue to the federal government by force of law, spent for purposes that are spelled out in law and regulation, carried out by an executive department.

The ACLU's web site is not terribly informative about its stance on Christmas trees per se. It does say that the government must not be in the business of promoting one religion over another or of promoting religion at all.

I hardly think that a program to strengthen the natural-tree growers is an endorsement of Christianity itself.  So no Constitutional line has been crossed. That doesn't mean that the program is wise or desirable. That no one in the government had a second thought about implementing it only shows how deeply rooted these back-scratching programs are in our polity. That's the problem, not 15 cents.

Wal-Mart math

Okay, first there was the Volvo dealer who thinks you discount cars by raising the price. Now Wal-Mart shows its corporate math and marketing skills:

I blame George W. Bush.

Europe's problems explained in four seconds

It's simple, really.

Flight 1549 3D Reconstruction

An amazing computer-3D reconstruction of the flight and river landing of the fabled USAir Flight 1549, smoothly piloted by Capt. Sullenberger ontothe Hudson River after bird strikes shut down both engines.

Let's lie about college Republicans

Vandy College Republicans Demand Apology from Tennessean | Blue Collar Muse:

Reporting on a visit to Occupy Nashville by Vanderbilt College Republicans (VCR), it included four photos, in an 11 photo gallery, of inflammatory signs presented so as to suggest the sign holders are part of the VCRs. In two of the photos, it actually stated the signs belonged to VCR members. As it turns out they were displayed by persons trying to discredit the VCRs. The Tennessean got it wrong – very wrong.

And not by accident, I am sure. It was a hit job, pure and simple.

Can't pass up a deal like this!

Some discount (click image for larger view):

Not standing with the 99 percent - at least not downwind

Mark Steyn, as usual, just nails it:

I don’t “stand with the 99%,” and certainly not downwind of them. But I’m all for their “occupation” continuing on its merry way. It usefully clarifies the stakes. At first glance, an alliance of anarchists and government might appear to be somewhat paradoxical. But the formal convergence in Oakland makes explicit the movement’s aims: They’re anarchists for statism, wild free-spirited youth demanding more and more total government control of every aspect of life — just so long as it respects the fundamental human right to sloth. What’s happening in Oakland is a logical exercise in class solidarity: The government class enthusiastically backing the breakdown of civil order is making common cause with the leisured varsity class, the thuggish union class, and the criminal class in order to stick it to what’s left of the beleaguered productive class. It’s a grand alliance of all those societal interests that wish to enjoy in perpetuity a lifestyle they are not willing to earn. Only the criminal class is reasonably upfront about this. The rest — the lifetime legislators, the unions defending lavish and unsustainable benefits, the “scholars” whiling away a somnolent half decade at Complacency U — are obliged to dress it up a little with some hooey about “social justice” and whatnot. ...

At heart, Oakland’s occupiers and worthless political class want more of the same fix that has made America the Brokest Nation in History: They expect to live as beneficiaries of a prosperous Western society without making any contribution to the productivity necessary to sustain it.

get that? Only the criminal class is actually honest about what it is up to.

The .001 percent

It makes me think of how many of the OWS frauds are of an age where they could enlist in the military, or for the college graduates crying about their loans, could apply for officer candidacy. Quite a few, I bet.

I scorn them even more when I recall that Friday, my second son drove 180 miles round trip to take his US Air Force entrance physical in exploration of attending medical school under the Air Force's medical-school scholarship program.

Photo found on American Digest.

"Where do we find the angels?"

Milton Friedman tutors Phil Donohue in 1973. Milt speaks directly across the decades to exactly the issues troubling us today. This is the long version, more than 10 minutes. A 2-1/2 minute snippet is here.