Moreover, as the chart shows, if you add in other safety net programs (such as federal unemployment, food stamps, and housing assistance — but excluding Social Security), under Kennedy we spent 7 percent of our federal budget on health programs and safety net programs combined — or $1 for every $7 that we spent on defense.  Under Obama, the share of federal spending that has gone to health programs or safety net programs has ballooned to 36 percent — or $11 for every $7 that we spend on defense.

JEFFREY  GUNDLACH is the CEO and CIO of DoubleLine Capital, named the “Fastest growing Start-Up Company in 25 years” by Strategic Insight. Mr. Gundlach oversees over $25 billion in assets at the firm and is recognized as a leading expert in mortgage-backed securities and asset allocation.

Gundlach opens with a massive portrait of Karl Marx behind him.  Pink tie, pocket square, like a bawse.

Bull markets are about cooperation.  But non-cooperation is the order of the day.

The buildup of debt worldwide took place over years, now the market has decided that this is a problem in real-time.

He hints at the potential for revolt by the unemployed youth in Spain.

Shares of an Invesco Ltd. ETF that invests in leveraged loans had a record one-day inflow on May 10 that boosted its shares outstanding by 25 percent, according to data compiled by Bloomberg. The same day, an investor used State Street Corp. (STT)’s ETF of junk bonds to anonymously obtain as much as $780 million of the debt by swapping shares of the fund.

“Markets are abuzz” over the State Street ETF trade that allowed an unidentified investor to avoid moving prices in the privately negotiated debt market, New York-based CreditSights Inc. analysts Chris Taggert and Nathan Wenger wrote in a report today.

You can see how the problems in Europe are adversely affecting the currencies of emerging economies here. It looks like more investors every day fear the European situation will devolve into a contagion similar to that following the Lehman Brothers bankruptcy. Those who thought the emerging economies would be a safe haven then were wrong, and they don’t want to make the same mistake again. They’re seeking safe havens and fleeing volatile investments.

You will hear each country and the media provide various excuses for the outflows and the corrections in the FX levels. Local banks need dollars, importers need dollars, etc. Also the official net flow numbers will not always reflect the “effective” outflows, particularly when FX forwards are used. But the reality is that global investors are once again aggressively cutting back their BRIC exposures.

Property investment accounts for roughly a quarter of gross Fixed Asset Investment (FAI), and net FAI accounts for over half of China’s GDP growth. As I noted in January, in a back-of-the-envelope thought exercise, if property investment plateaus (growth falls to zero), it could shave as much as 2.6 percentage points off of real GDP growth. If it fell 10% (in real, not nominal terms) it could bring GDP growth down to 5.3%.

Insurers love the Obama version. It requires individuals to buy minimum coverage or face a penalty. It also expands coverage available from the states and federal government. But there are few cost controls. That debate was supposed to come later. The insurers agreed they wouldn’t object to the law if it included coverage mandates and excluded cost controls.

The effects of that are coming out now. A study by Bloomberg Government and reported in The Washington Post found that if the Supreme Court strikes down the law insurers will lose about $1 trillion of revenue between 2013 and 2020. The figure is about 9% of the estimated revenue for insurers over that period. That’s not profit; it’s gross revenue. Much of that money would be paid by the insurers to pay for medical expenses. But they do anticipate making a profit on the coverage.

To put that in perspective, $1 trillion accounts for about 9 percent of all revenue that health insurers are expected to earn in the same period. It’s one-half of a percent of the country’s Gross Domestic Product. Add up the annual revenues of America’s five largest banks – Bank of America, J.P. Morgan, Wells Fargo, Wachovia and U.S. Bancorp- and you’re still about $500 billion short of what health plans can expect to lose if the Supreme Court decides against Obamacare.

“It’s the sheer size of the number that was startling,” says Bloomberg Government health care analyst Matt Barry. “I don’t know if people fully appreciate the stakes involved here. It’s not just politics – there’s a lot of money, and a lot to lose.”

With Saverin’s money paying for the servers, TheFacebook.com went live in February 2004. It was an instant sensation at Harvard. Students from other schools quickly clamored for the site’s expansion, and Mark and his colleagues obliged.

By April, the site was doing so well that Zuckerberg, Saverin, and a third Harvard sophomore named Dustin Muskovitz formed The Facebook as a limited-liability company (LLC) under Florida law.  Two months later, on June 10, 2004, a Harvard commencement speaker mentioned the amazing popularity of thefacebook.com.

It was the high point in the relationship between the cofounders. Things quickly went south from there.

This reality will continue to play out most distressingly in a few European countries where the institutional setup is already under strain. Indeed, politicians will find it increasingly difficult to reconcile what Andy Bosomworth labeled as the requirements of democracy, mutualization and conditionality – thus robbing the region of the type of mutual assurances that are critical to a cooperative orderly solution. With that, allocating balance sheet losses becomes even more difficult, both within and across countries.

Simply put, the status quo is no longer an option for Europe over the three to five year horizon. The higher probability outcome is that the eurozone will evolve into a smaller and less imperfect entity – namely, a closer political union of countries with more similar conditions. We believe that this smaller union would likely include the big four (France, Germany, Italy and Spain) which, together with other remaining members, would be underpinned by much stronger regional coordination and financing mechanisms.

The investment strategies PIMCO derives from its forecast are similar to those we’ve been practicing at Retirement Watch.

In such a world, investors need to retain a claim on the upside while protecting against the downside, including gap risk. They need to be highly differentiated, positioning portfolios for the knowns (both for return generation and for risk mitigation), while also maintaining the right level of optionality in the face of the unknowns. And they must ensure sufficient operational agility to evolve as more data become available, as will inevitably be the case.

And this warning to investors in this time of crisis and volatility:

The bottom line here is a simple one: Wherever you are in the capital structure and in geographical space, be very alert to situations where valuations do not reflect the confiscation risk. And remember, confiscation is not just default.  It is also a function of poor protection against inflation, nationalization or the large preemption of company and currency earnings by governments.

Of course something is now interfering with the usual economic response, because our current recovery is certainly not springing back to normal. I have argued that economic policy is holding the economy back, and I think recent research by Ellen McGrattan and Ed Prescott (on increased regulations) and by Scott Baker, Nick Bloom, and Steve Davis (on policy uncertainty) supports this view. Their work is part of a forthcoming book (Government Policy and the Delayed Economic Recovery) edited by Lee Ohanian, Ian Wright and me.

The change in France is critical. Europe mainly has been ruled by a coalition of France and Germany since the end of World War II. An interesting history of how that developed and how it led us to recent events is available free from Stratfor.

The new President of France has said that the European Central Bank should simply buy the bonds that are causing all the problems. A few statements from German officials since the French election indicated that the Germans reluctantly are accepting the idea of money printing, a declining currency, and perhaps higher inflation. Perhaps the ECB won’t be as open about it as the Federal Reserve has been. But it likely will begin some kind of quantitative easing or money printing program after a lot of heated behind the scenes discussions.

The real issue is going to be: Who takes the losses? The ECB initiated its LTRO program last year that involved making three year loans to banks that were collateralized by the bad debts of European sovereigns. So far, the losses on those loans and the collateral are only on paper. But soon those losses are likely to be real. It’s going to happen soon unless Greece can be persuaded to stick with the program, which is a low probability event.

The open talk of Greece leaving the European Union spread fear through the markets. The consensus in the markets is that Greece’s leaving the Euro could very quickly lead to a financial contagion that would affect all the other debtor nations. Here’s how The Financial Times put it:

The fear was what it has always been: any whiff that Greece was serious about leaving the single currency would lead to a run on its banks, emigration and the risk that depositors in other peripheral countries would think twice about keeping their euros in Portuguese, Spanish and Italian banks.

It was a point Berlin was trying to get across to Mr Hollande. “We’re hoping he’ll understand that a Greek exit from the eurozone will also hit France,” the official said. “I mean, it’ll be French banks that get hit, too … We really hope that message is sinking in.”