Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktVital Statistics:
|
Last |
Change |
Percent |
|
|
S&P Futures |
1676.5 |
-12.9 |
-0.76% |
|
Eurostoxx Index |
2920.1 |
-12.9 |
-0.44% |
|
Oil (WTI) |
102.1 |
0.0 |
0.05% |
|
LIBOR |
0.244 |
-0.002 |
-0.61% |
|
US Dollar Index (DXY) |
80.12 |
-0.017 |
-0.02% |
|
10 Year Govt Bond Yield |
2.61% |
-0.04% |
|
|
Current Coupon Ginnie Mae TBA |
105.4 |
-0.1 |
|
|
Current Coupon Fannie Mae TBA |
104.9 |
0.1 |
|
|
RPX Composite Real Estate Index |
200.7 |
-0.2 |
|
|
BankRate 30 Year Fixed Rate Mortgage |
4.32 |
Markets are weaker after the ECB maintained interest rates at current levels and the ADP jobs report came in disappointing. Mortgage Applications fell .4% last week. Bonds and MBS are higher.
Bonds are rallying (interest rates are falling) on the shutdown. What gives? The shutdown means that the Fed is on hold for QE tapering. Certainly an October move is off the table, and perhaps December is as well. Then we get Janet Yellen, who is an even bigger dove than The Bernank. Maybe, just maybe, we can squeeze in one last refi wave if rates drop below 2.5% on the 10 year.
If the shutdown remains in place, you just got Friday’s all-important jobs report with the ADP number. The economy created 166k jobs last month, while the Street was expecting 180k. The August number was revised downward from 176k to 159k. As we have seen, the financial industry is laying off mortgage origination staff as the refi boom dries up.
The Washington Post gives you the state of play with the shutdown. Punch Line: there are no high level negotiations happening at the moment. Both sides absolutely despise each other and neither one trusts the other further than they can throw them. Republicans are playing a strategy similar to the sequester. Democrats believed that once people started feeling the effects of the sequester (think business travelers and flight delays) that the pressure would bring everyone to the table. That didn’t happen. Instead, Congress passed a bill requiring the FAA to move funds to keep the air traffic controllers on the job. That took the pressure off and the sequester stayed, much to the chagrin of Democrats. Republicans are planning to submit separate continuing resolutions to fund the most popular government activities and daring the Democrats to vote against them. In other words, this could take some time to play out.
Rob Chrisman has a decent analysis of the shutdown and its effects on the mortgage business. Here is another. The highlights
- Lenders needing an executed IRS Form 4506-T only need to have it signed by the borrower not processed by IRS prior to closing. However, the actual 4506-T information must be obtained.
- USDA loans will be on hold as the Department of Agriculture is closed.
- VA will remain open.
- We should also see delays in FHA processing.
- Fully approved FHA and VA loans will be able to close, but there will be delays in insuring
- FHA case numbers will be obtainable if processed automatically. Manual processes will not.
- FEMA flood insurance will not be obtainable
Once we climb continuing resolution mountain, we have to deal with the debt ceiling. Nobody thinks we will miss a principal or interest payment on the debt, but it could potentially affect the economy if the government stops paying some bills. One potential issue is the repo market, which could hit a bump if T-bills become classified as “defaulted securities.” Defaulted securities are unacceptable as collateral for repo transactions (a repo is just a secured loan and is a huge way banks and companies handle cash management). This could start to affect the financial markets and restrict credit.
Filed under: Morning Report |
All Things in Moderation 
Tweet of the Day.
@GPollowitz: ready for this? are you sure? It’s a #micdrop… Obama closer to arresting WWII vets than #Benghazi terrorists.
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Jesus, talk about insecure.
In the past few weeks, Obama has repeatedly reached Boehner by phone — not to negotiate, but instead to remind him that he’s not negotiating.
Did he think he’d forget?
http://m.washingtonpost.com/politics/this-time-its-different-negotiations-have-no-place-in-latest-fiscal-crisis/2013/10/01/d0ef78b6-2aba-11e3-8ade-a1f23cda135e_print.html
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“One potential issue is the repo market, which could hit a bump if T-bills become classified as “defaulted securities.” Defaulted securities are unacceptable as collateral for repo transactions (a repo is just a secured loan and is a huge way banks and companies handle cash management). This could start to affect the financial markets and restrict credit.”
Brent, can you go into this in more detail? I saw some reporting on it, but I was dismissive of it due to the source.
Why would T-Bills be classified as defaulted securities if they are being redeemed on time and interest payments are made on schedule?
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Brent, I want to know about the supposed T-Bill issue too. Same reason as JNC. There is no scenario in which T-Bills default, right?
ANSWERED WHILE I WAS WRITING! THANX.
Also, Tom Clancy, that guiltiest of guilty pleasures, the bad writer but great story teller, is dead.
RIP
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Good Wonkblog piece on the technical details of the FY2014 sequester. I didn’t know this for instance:
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FYI — i walked through McPherson Square this morning. it is a federal park at 15th an K street. no barricades, just the usual homeless guys. so i guess not everything needs to be shut down. just those at have good optics.
what a vindictive asshole
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Good piece from Steve Pearlstein on the option for a discharge petition.
http://www.washingtonpost.com/blogs/wonkblog/wp/2013/10/02/democrats-can-use-this-one-weird-trick-to-end-the-government-shutdown/
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Washington Monument Syndrome.
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Why not razor wire and machine gun nests ?
@charliespiering: Live from the WWII memorial where park officials are setting up more gates and tape to block visitors http://t.co/XkzBTWFMEE
Fuck ’email. Buncha baby killers anyway.
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HHA!!
they’re in the memorial.
one sign reads: NORMANDY WAS CLOSED WHEN WE GOT THERE, TOO.”
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More:
@charliespiering: Live from the WWII memorial where park officials are setting up more gates and tape to block visitors http://t.co/XkzBTWFMEE
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hearing shutdown is going to get tied up with the debt ceiling.
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Re the repo market, not sure of who would deem Treasuries as “defaulted securities”, assuming it would be someone like SIFMA or one of the ratings agencies.
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@charliespiering: Park official says she was “excepted from furlough” to come to work WWII memorial today</B
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What I see:
1) Shutdown will stay in effect until it wraps the debt ceiling debate into itself. Then it turns really ugly.
2) We aren’t going to get out of this with a CR, it will take a budget
3) You guys obsessing about the memorials being closed on the Mall are missing the point.
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Thank God they didn’t call him something really offensive, like “anarchist.”
“When I read this yesterday, I thought, no one likes to be called a villain,” Reid said, reading aloud definitions of the word that mean “uncouth,” “scoundrel” or “criminal.” “I am not a criminal. I am not a scoundrel. So they better get a different definition of me.”
Read more: http://www.politico.com/story/2013/10/government-shutdown-2013-senate-update-97724.html#ixzz2gaI0dhBD
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What’s not to enjoy about Shutdown Theater?
I want Obamacare repealed and support any legal means to do it. I also want government to get smaller so cutting budgets and preventing further borrowing is a-ok with me as well.
I have stated previously that I am a revolutionary. They are almost always driven by a tiny portion of the population.
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I actually find the idea of shutting it down and then bringing it back piecemeal based on actual complaints attractive. I wonder how much of what we do is digging holes and filling them back up. We’ll see how much is actually missed..
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Fascinating.
@DavidMDrucker: .@SenatorReid says he just spoke w/ @SpeakerBoehner, delivered proposal to join House Rs in budget conference if they pass clean #CR.
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Hold me.
http://m.washingtonpost.com/blogs/the-fix/wp/2013/10/02/21-surprising-effects-of-the-government-shutdown-you-havent-heard-about/
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Breathtaking.
http://www.politico.com/story/2013/10/patrick-murphy-gabby-giffords-97725.html
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5) New distilleries, breweries and wineries won’t open. Certain businesses that manufacture or distribute alcohol — and firearms, ammunition and tobacco products — require permits from the Alcohol and Tobacco Tax and Trade Bureau, which won’t accept new applications during the shutdown.
shit just got real.
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“What I see:
1) Shutdown will stay in effect until it wraps the debt ceiling debate into itself. Then it turns really ugly.
2) We aren’t going to get out of this with a CR, it will take a budget”
I agree with #1 but not #2.
It’s going to be CR’s through the mid-terms.
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I get that context is everything, but this is very inarticulate.
http://freebeacon.com/reid-why-would-we-want-to-help-one-kid-with-cancer/
Reid’s gall at being asked the question is telling.
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Wonkblog’s interview with Grover Norquist is quite good. I love this line:
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My 2 cents:
Trying to change existing law when you have only one house in the lege is lawful and might be appropriate sometimes.
I cannot see how it is here because using either the shutdown or the debt ceiling to force the repeal of existing law and getting away with it would set a precedent that would lead to shutting the country down every year when the HoR was in different hands then the Senate and Presidency. We would become like the UK in the 50s, but on an annual basis. So if the POTUS doesn’t cave in this instance and the HoR doesn’t cave, eventually we will destabilize our markets and the world markets as well. Not just this one time, but for the foreseeable future. And I see the dollar threatened, as well.
I do think it is appropriate to use the approach of a Debt Ceiling to open budget negotiations for the next round,as I believe Ryan wants to do.
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Mark:
I cannot see how it is here because using either the shutdown or the debt ceiling to force the repeal of existing law and getting away with it would set a precedent that would lead to shutting the country down every year when the HoR was in different hands then the Senate and Presidency.
In the absence of yet another law aimed at fundamentally changing the landscape of American life and the relationship between the government and citizens, passed in an entirely partisan manner without a single vote from the opposition party (which itself was rather unprecedented until a couple years ago), that seems rather unlikely to me.
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Interesting juicer Twwet.
@JohnEkdahl: LOL. RT @mattyglesias: Tactically speaking, I think Dems are making a mistake by blocking GOP mini-appropriations.
Senate/Whitehouse crack?
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MISSION ACCOMPLISHED
http://www.nationalreview.com/right-field/360196/cancellation-service-academy-football-games-about-optics-greg-pollowitz
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If only.
http://www.cnbc.com/id/101081257
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As I’ve said before, it’s win win in this either way. Obama caves or we default. No Obamacare or difficulty in borrowing. O’care is an existential threat to me. I want to fight now while I can, not in 20 years when I am unable to.
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McWing:
As I’ve said before, it’s win win in this either way. Obama caves or we default.
We will not default no matter what happens with the debt ceiling. Default simply cannot be forced by a failure to raise the debt ceiling. The only reason we would default would be if Obama chose to default.
Debt payments consist of 2 things…principle payments and interest payments. If a principle payment is due, that means that a note is maturing, thereby lowering the amount of debt outstanding and allowing more to be issued in precisely the same amount as the maturing amount. So principle payments can always be met by issuing more debt of the same amount. The US currently averages 10 times more in tax revenues per month than it owes in interest on the debt per month. There is plenty of money to service the debt without issuing more debt. Only if Obama chooses to prioritize other spending over interest payments would we not have enough money to make interest payments. If he prioritizes debt service, there will be no default. So, again, default would be a choice made by the executive, not anything that was forced upon him. The threat of default resulting from a failure to raise the debt ceiling is entirely a political/media myth. It cannot happen.
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McWing, how in the world is Obamacare an “existentiial threat” to you?
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jnc:
I don’t think CRs are going to cut it any more. I watched two jobs with two different agencies go “poof!” Monday night when everything shut down–the only way the government can really get back on its feet is with a budget. Otherwise too many people and things are hamstrung.
Since they’re in a hole anyway, they might as well use the right tool to get themselves out.
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Obamacare changes the nature of the relationship between the citizen and the state. I beleive that the concept of healthcare as a right to be ruinous to our country and by the time I will be in need to quality healthcare, it will not be available.
I realize that my fears seem “crazy” to many here. Never the less, I hold hem in good faith. I am not advocating for any illegal action.
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Does healthcare have to be a “right” in the legal sense to support a universal health care initiative based on the private insurance market? Does paying a tax as an alternative to buying health care create a legal “right”? Does taxpayer subsidization of the poor create a legal “right”?
I pose this because even though I prepaid into Medicare for many years and still pay more in than it pays out on my behalf I doubt whether I have an enforceable right to its
continuancecontinuation.As you say, George, I ask this in good faith.
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Mark:
Does healthcare have to be a “right” in the legal sense to support a universal health care initiative based on the private insurance market?
If the “universal health care initiative” is designed to provide health care, well, universally, regardless of ability to pay, then yes, I think it has to be a legal “right”.
Does paying a tax as an alternative to buying health care create a legal “right”? Does taxpayer subsidization of the poor create a legal “right”?
That depends on what the law actually says, I suppose. Subsidization in itself doesn’t create a legal right, but whatever the law is that provides access to the subsidy may indeed create a legal right.
I pose this because even though I prepaid into Medicare for many years and still pay more in than it pays out on my behalf I doubt whether I have an enforceable right to its continuance.
The right to the “continuance” of a legal right is different than a legal right itself. Obviously no one can ever have an enforceable right to the “continuance” of a legal right because, by their very nature, legal rights can be changed at the whim of the government. However, as long as the law grants a right, that right is legally enforceable.
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Ah…continuation.
And not a legal right if the government can change it by fiat. Not comparable to a contract right or a constitutional right. Not a legal right. A benefit that can be changed at any time.
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McWing:
Given that Obamacare is not going to kill you or wipe out your family, I fail to see it as an “existential” threat. You simply don’t like the idea. Fine. We can disagree on whether or not that’s crazy, but existential it is not.
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Only if Obama chooses to prioritize other spending over interest payments would we not have enough money to make interest payments. If he prioritizes debt service, there will be no default. So, again, default would be a choice made by the executive, not anything that was forced upon him.
racist
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lol
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Does healthcare have to be a “right” in the legal sense to support a universal health care initiative based on the private insurance market?
I don’t exactly know what you mean. If the federal government is undertaking a Universal Coverage Health Care initiative that controls what kind of Health Care I am forced to purchase and punishes me for not doing so in the prescribed manner, then it seems to me that the Federal government has “decided” that Health Care is a right and that it can define that right. I argue back that the Constitution as I understand it does not allow such a Federal initiative without properly amending it.
I pose this because even though I prepaid into Medicare for many years and still pay more in than it pays out on my behalf I doubt whether I have an enforceable right to its continuance.
There is no “pre-paying” of Medicare (or Social Security). What you pay in Medicare (or SS) withholding pays the benefit of those currently receiving Medicare (or SS) and Congress can simply deny you said benefit if they want. It is a ponzi scheme disguised as a tax and sold (and continues to be sold) as “Insurance”. It also reinforce the notion that the Federal government is somehow responsible for it’s citizens retirement and health care (their comfort?) in their older years. That concept has led to, what I believe, a larger dependency on SS as a sole means of survival than would have other wise occurred along with breathtaking waste of the Opportunity Cost of that money. It also, in it’s surplus, has provided the Federal government money to waste of various moronic endeavors to the tune of billions of dollars in SS IOU’s that now require the issuing of more debt/increased taxes to make good on those IOUs, in other words, a mega attractive nuisance.. It also removes from us an (significant?) amount of money to provide for one’s own retirement. Ditto Medicare, which has had the added effect of driving up the price of health care for everybody. Finally, both these programs require a robust and growing economy as well a population to keep ahead of the ponzi’s collapse.
We are now reckoning with the inevitable collapse of these ponzi schemes.
These are not the proper activities of the Federal government. If a community wants to engage in them, either amend the Constitution or do it on a state level.
Given that Obamacare is not going to kill you or wipe out your family, I fail to see it as an “existential” threat.
I believe you.
You simply don’t like the idea. Fine.
I also do not like the idea.
We can disagree on whether or not that’s crazy, but existential it is not.
I believe I have laid out what I think it does to (my) health care in the future. I believe that a number of factors that result from it will significantly deteriorate the quality of health care in this country that will jeopardize my access to effective and/or life saving health care in the future . Given that I believe this, how could I not believe it to be a existential threat?
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Mark:
And not a legal right if the government can change it by fiat.
I’m not sure I understand. Don’t workers have a legal right to a minimum wage? Cant’t that right be changed by the government at its whim? I don’t understand why the government’s ability to change the law means that the law can’t be said to grant a legal right. That seems odd to me.
Certainly the process by which a legal right can be changed can vary from right to right. Obviously constitutional rights can’t be as easily changed as others, but in principle they are all the same. They exist as enforceable rights as long as, and only as long as, the government allows them to be.
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Don’t workers have a legal right to a minimum wage?
I see your point.
A Medicare analogy might be that if I pay my monthly premium to Medicare it will pay some doc 80% of what it deems my cost should be for care? My point about Medicare was that I had been paying in for many years in return for a completely unenforceable “promise” from the government.
Is an ACA analogy that I can now purchase insurance from a carrier bound to a 15% profit and OA level or else pay a nominal tax for refusing coverage? Doesn’t sound the same.
I agree that there are many legal rights that are enforceable by me until the government says they are not. They are writ smaller than contract rights, of course. But I am missing how most of the ACA is premised on a legal right to health care. It seems premised on making it painful not to choose to buy insurance, on the one hand, and expanding taxpayer paid care to poor people on the other. I get that one philosophical underpinning for tax paid care for the poor is that many people think the poor should have access to health care. The “should” implies a moral right, although some might argue it is merely an economic decision, or more cynically, a political one.
The law requiring hospitals not to turn away patients who cannot pay strikes me as not based on a rights argument, but rather on a responsibilities argument. These could be two sides of a coin, I guess. But I think health care professionals view pro bono at some personally manageable level as their responsibility.
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Mark:
I agree that there are many legal rights that are enforceable by me until the government says they are not. They are writ smaller than contract rights, of course.
I don’t think they are writ smaller than contract rights. In fact contract rights are among those rights that are enforceable by you until the government says they are not. I think the trouble comes in considering how one makes an enforceable contract with the governme itself. Generally speaking enforceable rights are enforceable via the government. But that obviously poses a problem when the party against which the right must be enforced is the government itself, because as the enforcer, the government can unilaterally alter what it considers enforceable rights.
But I am missing how most of the ACA is premised on a legal right to health care.
I wouldn’t say it is based on a legal right to health care. In fact I don’t think it makes sense to say that any law is premised on a “legal right”. Laws create legal rights, they aren’t premised on them. What they are often premised upon is the existence of a moral right, and as you suggest I think that is the case with laws aimed at establishing universal health care. Many if not most advocates of ACA somehow think people have some kind of natural right to health care which the government is obligated to enforce.
The law requiring hospitals not to turn away patients who cannot pay strikes me as not based on a rights argument, but rather on a responsibilities argument. These could be two sides of a coin, I guess. But I think health care professionals view pro bono at some personally manageable level as their responsibility.
I think a “responsibility” argument necessarily implies a “rights” argument. If I owe a moral responsibility to someone, that implies that the someone has a right to whatever it is I have a responsibility to provide.
As an aside, some religious thinking gets around this implication by proclaiming that the responsibility it owed to God. That is, even if a person does not have a moral right to my action in a particular circumstance, I nevertheless have a responsibility to God to act. But obviously such an argument will not be persuasive to a non-believer.
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Local radio is running stories of furloughed feds.
it’s rather annoying. i can’t believe they laid us off. it’s not fair, type stuff.
welcome to the party, pal.
in 2008, 50 people showed up to work at my old firm and at the end of the day they were out of a job. from partners to the library staff. pack your stuff and get out.
and they didn’t get legislation introduced to have their back pay reinstated.
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Curious, has there ever been a shutdown in which they did not get back pay?
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I don’t know. I’d have to look that up. I’d bet no, but that would just be a guess.
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“Michigoose, on October 2, 2013 at 4:38 pm said:
jnc:
I don’t think CRs are going to cut it any more.”
And I don’t see any evidence that the chasm in the two negotiating positions can be bridged with a large deal with this Congress. I was much more optimistic at the beginning of the year.
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