Brent Nyitray
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Let the mutherfuker burn!
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Kevin S. Willis
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yellojktVital Statistics:
| Last | Change | Percent | |
| S&P Futures | 1455.0 | -2.1 | -0.14% |
| Eurostoxx Index | 2690.8 | -20.4 | -0.75% |
| Oil (WTI) | 92.82 | -0.3 | -0.32% |
| LIBOR | 0.305 | 0.000 | 0.00% |
| US Dollar Index (DXY) | 80.16 | 0.317 | 0.40% |
| 10 Year Govt Bond Yield | 1.84% | 0.01% | |
| RPX Composite Real Estate Index | 192 | 0.2 |
Stock markets are giving back a little after yesterday’s relief rally on the fiscal cliff deal. Mortgage Applications fell 10.4% last week. 2013 forecasts are starting to trickle in from strategists – suffice it to say 1H13 looks rough, with the economy basically at stall speed.
There is quite a bit of economic data this morning. ADP forecast that 215k private sector jobs were created in December. Challenger and Gray reported that announced job cuts fell in December to 32,556. Initial Jobless Claims came in at 215k. The NY ISM came in at 54.3, indicating the outlook is barely positive. Later this afternoon, we will get the minutes from the Dec FOMC meeting.
Corelogic reported that shadow inventory – properties that are seriously delinquent, in foreclosure, or are REO that are not listed for sale – fell 12% in October to 2.3 million units, representing 7 month’s supply. Almost half of the properties are delinquent and not foreclosed. The real question is how much this inventory will depress prices. Given that many of these units are in judicial states, the supply will be dripped out slowly. Also, if a home has been vacant for several years, it develops problems that make the repairs more than the property is worth. So, while it is in inventory, it is probably worth very little and isn’t competing with the homes that most normal homebuyers are focused on.
So now that we have the fiscal cliff uncertainty out of the way, the markets should continue to rally, right? We, according to business leaders, no. And since the deal does not reduce debt, we are in danger of a downgrade, according to Moody’s. The debt ceiling also was a taste of what is to come, with 3 gating items in the near future – the debt ceiling, the continuing resolution, and the sequestration. Obama has already laid a marker down saying that it can’t be “all spending cuts.” Given that Republicans have already made the tax hike concession, they are likely to take a tough negotiating stance on these items. So it could get ugly.
How did Obama get Boehner on board for tax increases? A simple warning. Stop opposing higher taxes for top earners or I will dedicate my second term to blaming Republicans for the global recession. And, blame is one of Obama’s many talents.
Latest investment outlook from Bill Gross – Money for Nothin’ Writing Checks for Free. The basic idea is that right now, the government is financing its deficit more or less for free. Why? Because the Fed is buying the treasuries (or at least 80%) through QE, and by statute, it gives its profit or losses back to the government. So the government is basically (in a roundabout way) paying interest to itself. Bill goes on to point out that this has been done before, and it has always ended badly. In the long run, inflation will rear its ugly head. Of course Paul Krugman would echo Keynes and say “in the long run, we are all dead.” Bill also makes the good Austrian point – that Krugman has no answer for – that the unintended consequences of QE include mal-investments that will sow the seeds for the next bust. You can view this debate here.
Filed under: Morning Report |
All Things in Moderation 
“So now that we have the fiscal cliff uncertainty out of the way, the markets should continue to rally, right? We, according to business leaders, no. ”
I assume this should read:
“Well, according to business leaders, no.”
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“Of course Paul Krugman would echo Keynes and say “in the long run, we are all dead.”
Even Krugman is starting to voice concern that some people (i.e. the MMT’ers) may be taking the “free money” thing a bit too far.
http://krugman.blogs.nytimes.com/2013/01/02/debt-in-a-time-of-zero/
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Boehner caved on rates because he had to. It was a deal breaker otherwise. I’m surprised the final deal ended at $400/450. I would have guessed $450/500 as the compromise number.
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Hilarious:
““This does settle the issue of rates for individuals,” Rep. Allyson Schwartz (D-Pa.) told POLITICO. “That’s good. That certainty and predictability is one of the gains” of the fiscal cliff legislation.
Michigan Rep. Sander Levin, the top Democrat on the tax-writing Ways and Means Committee, agreed. When asked whether more rate increases are in the offing, he responded, “I don’t foresee that.””
Unpossible!:
““A lot of us are disappointed that we didn’t get more revenues as part of this package,” said Rep. Peter Welch (D-Vt.), who argued that revenue will be needed to support entitlement programs. “Democrats are going to have to be candid that this is not going to be solved simply by raising rates on the top 2 percent.””
http://dyn.politico.com/printstory.cfm?uuid=EC387C25-3576-471C-8B36-E9D099189283
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George Will lecture that may be of interest here:
http://rap.wustl.edu/event/2012-fall-keynote-george-will/
Transcript:
Click to access George-Will-lecture-text.pdf
Main thesis:
“Certainly many Americans – perhaps a majority of them – agree that democracy, or at least our democracy, which is based on a belief in natural rights, presupposes a religious faith. People who believe this cite, as Eisenhower did, the Declaration of Independence and the proposition that all people are endowed by their creator with certain unalienable rights.
But there are two seperate and related propositions that are pertinent to any consideration of the role of religion in American politics. One is an empirical question: Is it a fact that the succcess of democracy, meaning self-government, requires a religious demos – religious people governing themselves by religious norms.
The second question is a question of logic: Does belief in America’s distinctive democracy – a limited government whose limits are defined by the natural rights of the governed – entail religious belief?
Regarding the emiprical question: I believe that religion has been, and can still be, supremenely important and helpful to the flourishing of our democracy. I do not, however, believe it is necessary for good citizenship.
Regarding the question of our government’s logic, I do not think that the idea of natural rights requires a religions foundation, or even that the Founders uniformly thought so. It is, however, indubitably the case that natural rights are especially firmly grounded when they are grounded in religious doctrine.”
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George Will seems to disregard the fact that many of the founding fathers were Deists which was about as close to atheism as you could get in the 18th century.
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The important point is that the unalienable rights are not granted by charter or law, but are a preexisting condition.
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nova:
The important point is that the unalienable rights are not granted by charter or law, but are a preexisting condition.
Absolutely. And it is a premise that I imagine several people right here at ATiM probably reject.
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I’ll bite just to be your stalking horse. Nobody was much aware of the unalienability of these rights for the first 5000 years or so of civilization. It sure took us a long time to get around to discovering them. They are a philosophical construct being overlayed on social hierarchy which is in turn based on our evolutionary group structures.
Nor do these rights seem to be theologically based despite all the name-checking of a Creator (Jahweh or Flying Spaghetti Monster) within the boilerplate. Nobody had given much thought to them until the secular components of the Renaissance took firm root and pretty much demolished the Divine Right of kings. It wasn’t until those were discarded that individual rights came to the forefront.
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A role in which you excel.
“pretty much demolished the Divine Right of king”
do you think that it was demolished? i think that such authoriatrain rule is never quite gone.
Admittedly, as you note, these rights have been trampled on in the past. and if we are lax about protecting them, they will be in the future. but that doesn’t mean there not there. (or something like that)
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“yellojkt, on January 3, 2013 at 12:20 pm said:
George Will seems to disregard the fact that many of the founding fathers were Deists which was about as close to atheism as you could get in the 18th century.”
No he doesn’t. He addresses it directly in the piece along with the issue of maintaining a public morality vs what they actually believed.
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“yellojkt, on January 3, 2013 at 1:13 pm said:
I’ll bite just to be your stalking horse. Nobody was much aware of the unalienability of these rights for the first 5000 years or so of civilization.”
Yes, but that doesn’t undermine Will’s point that the the inalienability of certain pre-existing rights is the entire premise of the Declaration of Independence, the American Revolution and subsequent American system of limited government.
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“[former] American system of limited government.”
I fixed it for you.
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