Secession revisited

Last week was the 151st anniversary of the beginning of the Civil War, and yesterday was the 151st anniversary of Virginia’s declaration of secession from the United States. The outcome of the Civil War itself seems to have put an end to any questions about the constitutional legitimacy of secession, but there is no reason it should have. Might, as the cliche goes, does not make right, and so the constitutional question of whether the federal government is acting within its rightful powers to prevent a state from peaceably withdrawing itself from the Union cannot have been settled simply because the federal government was able to do so successfully. And of course, the Confederacy did itself and the underlying question no favors by firing on Fort Sumnter, making the withdrawal not so peaceable and providing Lincoln with a justification for sending in the troops. But I think the question still remains: Does the constitution prevent states from seceding from the Union?

It is interesting to note that between December 20, 1860 and April 12, 1961, the day on which Confederate troops fired on Fort Sumnter, 7 states declared secession from the Union, and neither President Buchanan nor President Lincoln, despite his rhetoric, took any official action against the seceding states. Following the war, Jefferson Davis was arrested for treason, but was never in fact tried, and while there were plenty of political reasons for the blanket pardon granted to those in the Confederacy, uncertainty about the lack of constitutional legitimacy of secession was certainly among them. And the southern states were not even the first to contemplate secession. During the War of 1812, a delegation of Federalist representatives from New England broached the subject of seceding, with the Massachusetts governor even considering coming to terms of a separate peace with Great Britain.

Certainly, in any event, it is difficult to square a view of the constitution as prohibiting secession with the foundation of the United States itself, of which an animating feature was the very presumption that a people could, by right, “dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the laws of nature and of nature’s God entitle them”. Indeed, reading the Declaration of Causes of Seceding States, one can’t help but hear the echo of the original Declaration of Independence, upon which they were so obviously modeled.

So, putting aside the moral question with which the secession movement of 1861 was inextricably linked, ie slavery, was the Federal government justified in waging war against the South, and does a proper reading of the constitution really grant it the power to wage such a war?

Morning Report

Vital Statistics:

Last Change Percent
S&P Futures 1381.5 -2.1 -0.15%
Eurostoxx Index 2331.1 -35.9 -1.52%
Oil (WTI) 104.3 0.1 0.06%
LIBOR 0.466 0.000 0.00%
US Dollar Index (DXY) 79.78 0.307 0.39%
10 Year Govt Bond Yield 1.99% -0.01%
RPX Composite Real Estate Index 172.2 -0.2
Equity markets are slightly weaker this morning on a disappointing earnings report from Intel. IBM and Yahoo also reported last night.  Abbott Labs and Halliburton beat estimates this morning. Spanish bond yields are lower. Bonds and MBS are slightly higher. No economic data this morning.
Part of the reason for the strong market rally yesterday was a strong Spanish bond auction. Many have noted that the Spanish banks have been large buyers of Spanish government debt. Bill Gross called the market “artificially controlled” on CNBC, and he doesn’t trust it. Bloombergnotes the bad debt exposure for Spanish banks, and the possibility for the government to take on contingent liabilities. Spain has the 12th largest GDP in the world (Greece is something like 35th), so don’t think a crisis would be a repeat of last fall.
Housing advocates are worried that a President Romney will take aim at HUD. Of course HUD could remain as the alphabet soup of government housing agencies get re-organized. For all intents and purposes, the US mortgage market is nationalized, and while the GSEs may go away in name, their function will be handled by some other entity. It would take roughly 500 billion to fully capitalize the GSEs and that kind of money can’t be raised in the private sector.
US Bancorp is noting that demand for credit is increasing. CEO Richard Davis told CNBC yesterday that mortgage demand was the highest in the bank’s history. The Minneapolis-based bank had reported better than expected numbers earlier that morning. So, this is one positive data point to throw in the mix of negative ones we have been seeing lately.
Ever done a quick fix on your home with the intention of doing a full repair later, but never got around to it? Here are some good ones (note the uses of hockey pucks)