Morning Report: The Bernank is sanguine on China 5/27/15

Markets are flattish as Greek talks plod along in a directionless fashion. Bonds and MBS are flat.

Mortgage Applications fell for the fifth week in a row, according to the MBA. Rates rose last week so that isn’t a surprise. Purchases were up 1.2% while refis fell 3.9%.

Luxury homebuilder Toll Brothers reported this morning with EPS of 37 cents a share better than the Street estimate of 35 cents, however it looks like the beat was due to a lower-than-expected tax rate. Revenues were light as deliveries declined 1% in dollars and 2% in units. Net signed contracts rose 25% in dollars and average selling prices for net signed contracts increased 13% to $826,000. California demand is “very strong” as well as Texas and NYC. The rental business continues to grow. Overall, the high end of the market continues to perform very well.

Was Elmer Fudd correct about adjustable rate mortgages? Seemed ill advised at the time, right ahead of a rate hike – seriously, with perfect clairvoyance he told people to take out ARMs before rates went up. Well, it required a bursting of the real estate bubble to make it work out. That said, if people move often, ARMs may in fact make sense.

The Bernank doesn’t think China will have a hard landing. Given their real estate bubble, and the fact that their stock market has doubled over the past year, I find that wildly optimistic. It seems like countries that experience decades of fast growth tend to have hard landings (the US in the Great Depression, Japan now). Bull markets are a natural breeding ground for dumb debt-financed investments. Maybe the government wonks that run China’s economy can manage it through heavy-handed intervention in the markets, but it hasn’t been done before.

The Feds are on the trail of massive corruption at FIFA. You mean to tell me there might be some jiggery-pokery going on in soccer?

Venezuela has found a solution to its toilet paper shortage. Make the Bolivar note worth less than toilet paper.

44 Responses

  1. Make the Bolivar note worth less than toilet paper.

    That only works if it is as absorbent as well.

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  2. Denying it or refusing to deal with it endangers our national security. It undermines the readiness of our forces.

    i’m sure he is about to tell DOD to gin up a study discussing how income inequality, insufficiently high marginal tax rates, and not enough investment in Head Start is affecting national security as well…

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  3. Elizabeth Warren: Vulture Investor.

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  4. Question, what can’t the Federal government force a State(s) to do?

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  5. Can the Federal government order a State to spend its own (the State’s) tax dollars? For example, can the U.S. Congress pass a law that orders a State to build a 2000 sqft house for anyone that asks? If not, why can’t they?

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    • can the U.S. Congress pass a law that orders a State to build a 2000 sqft house for anyone that asks? It could pass such a law and President Sanders could sign it and it would be unconstitutional.

      Any federal court, even in the 9th Circuit, would say that property law is generally a state function, that can be infringed upon by the Feds for an effect on interstate commerce, or to halt a prohibited discriminatory practice. But the law you suggest would completely destroy the notion of the existence of state property law, so it could not be upheld.

      Meanwhile, the Supremes are mulling two ssm cases. I think they could logically, without further damaging federal/state relationships, rule in the lesser case that states must recognize ssms that were valid when and where they were entered. The Court could rule that FF&C controls – that the state’s own public policy interest is outweighed by the state’s own obligations to enforce the laws of a sister state. The makeweight arguments would include stability of created families and not creating bastard children after the fact. in fact, were that the only case before the Court, I think that would be the result by a 7-2 or 8-1 margin.

      The Court could then go on to the major case and say that a state can prohibit ssm prospectively, but that it cannot do so retrospectively or by changing its existing recognition of ssm to non-recognition. This would be consistent with its previous cases. If Roberts were so inclined, I think he could get 6 or 7 votes for this position.

      However, the issue is joined on grounds that make me think the major case will go 5-4 in favor of ssm proponents and the minor case will be mooted. Such an opinion will have unforeseen consequences, as has often been noted.

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      • Mark:

        The makeweight arguments would include stability of created families and not creating bastard children after the fact.

        The dissolution of a marriage cannot create a bastard child where it didn’t already exist. Biology dictates that any child born into a SSM is already, by definition, a bastard child.

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      • Mark:

        But the law you suggest would completely destroy the notion of the existence of state property law, so it could not be upheld.

        McWing’s law would be a pretty brazen attempt, but it’s not like the court has been a reliable bulwark against federal intrusions on state sovereignty in the past.

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      • Mark:

        The Court could rule that FF&C controls – that the state’s own public policy interest is outweighed by the state’s own obligations to enforce the laws of a sister state.

        A couple of questions occurred to me over night. First, is there precedent for the court, under the guise of FF&C, forcing all states to recognize a marriage that it otherwise would not due to it being recognized in another state? For example, did the court ever force states that had outlawed interracial marriages or polygamous marriages to recognize those that had been entered into in states that did not outlaw them?

        Second, before the movement to re-define marriage became fully apparent, many states recognized civil unions between same sex couples. Did the court use FF&C to force states without civil unions to recognize legal civil unions created in other states?

        Lastly, I don’t see how the FF&C clause could be read to require a state to re-define the word “marriage” just because another state chose to redefine it for purposes of its laws. Suppose one state re-defined the word “parent” within its laws to include, for example, sibling relationships. Would the FF&C clause require all other states to recognize brothers and sisters from other states as parents of each other under its own law?

        Basically, I guess, the question is, when one state invents some new kind of legally recognized relationship, are all states required under FF&C to recognize it and, secondarily, is the answer really dependent upon whether or not the inventing state re-defines an existing word in order to characterize the newly recognized relationship instead of using a new word?

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  6. Mark, can the Federal Government force a State to spend its own tax dollars (tax dollars the State collected) on something?

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    • Mark, can the Federal Government force a State to spend its own tax dollars (tax dollars the State collected) on something?

      As Scott suggested, yes, if it is tied to accepting federal aid. For instance, accepting fed highway or medicaid funding requires states to match, at some level.

      Also, yes, in the case of unfunded mandates, although somewhat by indirection.

      I think unfunded mandates suck, fwiw.

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  7. Yeah, Progressives!

    Rusty Hicks, who heads the county Federation of Labor and helps lead the Raise the Wage coalition, said Tuesday night that companies with workers represented by unions should have leeway to negotiate a wage below that mandated by the law.

    In other words, unions aren’t lobbying for higher wages for workers — they are lobbying for monetary punishments on nonunion workers and nonunion employers.

    http://m.washingtonexaminer.com/article/2565109

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  8. That was pretty much the case of Loving vs. Virginia. They had married in Washington DC because it was illegal to in Virginia. Virginia then refused to recognize their marriage. From Wikipedia:

    At the age of 18, Mildred became pregnant, and in June 1958 the couple traveled to Washington, D.C. to marry, thereby evading Virginia’s Racial Integrity Act of 1924, which made interracial marriage a crime. They returned to the small town of Central Point, Virginia. Based on an anonymous tip,[8] local police raided their home at night, hoping to find them having sex, which was also a crime according to Virginia law. When the officers found the Lovings sleeping in their bed, Mildred pointed out their marriage certificate on the bedroom wall. That certificate became the evidence for the criminal charge of “cohabiting as man and wife, against the peace and dignity of the Commonwealth” that was brought against them.

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    • yello:

      That was pretty much the case of Loving vs. Virginia.

      I don’t think so. In Loving v Virginia the constitutionality of a law prohibiting interracial marriages was challenged. It had nothing to do with FF&C requiring recognition of a marriage performed in another jurisdiction, as far as I know. In fact there are no laws analagous to the one contested in Loving because there are no laws prohibiting same sex marriages. This is true because the word “marriage” has always meant, by definition, a man/woman relationship. To even refer to something as a “same sex marriage” would be akin to talking about a square circle. Hence, no laws are/were needed to outlaw it, even if a state was inclined to do so.

      Virginia then refused to recognize their marriage.

      The problem wasn’t that Virginia refused to recognize the marriage. It was that Virginia had criminalized such marriages.

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      • there are no laws prohibiting same sex marriages.

        There are 31 states which have state constitutions which either explicitly or implicitly outlaw same sex marriages.

        http://en.wikipedia.org/wiki/List_of_U.S._state_constitutional_amendments_banning_same-sex_unions_by_type

        Many have these have since been overturned judicially. All of these have been passed since 1998 showing that the concern for explicitly defining a marriage as between one man and one woman is pretty recent.

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        • yello:

          There are 31 states which have state constitutions which either explicitly or implicitly outlaw same sex marriages.

          No, they are not “outlawed”. No one is going to jail for performing, entering into, and/or living as if they have entered into a same sex “marriage”. Such “marriages” simply are not recognized under state law.

          All of these have been passed since 1998 showing that the concern for explicitly defining a marriage as between one man and one woman is pretty recent.

          Such a concern is, of course, only as recent as the effort to define it differently. Why would there be any concern about making it explicit in the law at a time when it was already perfectly understood by everyone? To pretend that to understand marriage as being between a man and woman is some recent phenomenon is highly disingenuous.

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        • Such “marriages” simply are not recognized under state law.

          Which is why they run afoul of the Full Faith and Credit Clause.

          Next month I am going to a Jewish vegan lesbian wedding in Philadelphia. May I pass on to the brides any of your concerns about them redefining “marriage” in a way that somehow affects you?

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        • yello:

          Which is why they run afoul of the Full Faith and Credit Clause.

          I question whether there is a history of the FF&C clause being applied in such a manner, so I am skeptical. Again, I doubt the FF&C clause can be sensibly read to require all states to recognize any and all new legal relationships invented by another state, even they do label it with a word that refers to an already existing type of legal relationship.

          Next month I am going to a Jewish vegan lesbian wedding in Philadelphia. May I pass on to the brides any of your concerns about them redefining “marriage” in a way that somehow affects you?

          Sure. Tell them that redefining marriage via judicial fiat rather than via the democratic process is an abuse of both power and the constitution that affects, and should be troubling to, every thinking person.

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        • Tell them that redefining marriage via judicial fiat rather than via the democratic process is an abuse of both power

          Same sex marriage was allowed by referendum in Maryland and by legislation in Delaware. Should they just move the wedding venue? And what would happen to them in your federalist utopia when they decided to move to Pennsylvania where hypothetically their marriage wouldn’t exist since the PA state ban on same sex marriage was over-turned judicially rather than legislatively?

          How can people be married in one state but not be married just by crossing a border? To complete an analogy, just substitute “free” for “married” in the above rhetorical question.

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        • yello:

          Same sex marriage was allowed by referendum in Maryland and by legislation in Delaware.

          That is the way it should be done.

          Should they just move the wedding venue?

          I don’t understand why you are asking me this.

          And what would happen to them in your federalist utopia when they decided to move to Pennsylvania where hypothetically their marriage wouldn’t exist since the PA state ban on same sex marriage was over-turned judicially rather than legislatively?

          Then Pennsylvania laws regarding marriages wouldn’t apply to them in Pennsylvania.

          How can people be married in one state but not be married just by crossing a border?

          Anyone who can conceive of two people of the same sex being “married” surely has a vivid enough imagination to imagine what it could mean to be married in one state but not another.

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        • I missed this:

          To complete an analogy, just substitute “free” for “married” in the above rhetorical question.

          We actually have many historical instances of a person having a legal condition in one state but not another. Your example of being a slave in one state but free in another is one. Another would be a person who was legal to drink at 18 in one state but not in another. A lawyer might be licensed to practice law in one state, but not in another. I am a bit surprised that you find it so difficult to imagine how it might be that a person could be married in one state but not another.

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        • BTW…will the vegans be serving meat to the guests?

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  9. Next month I am going to a Jewish vegan lesbian wedding in Philadelphia. May I pass on to the brides any of your concerns about them redefining “marriage” in a way that somehow affects you?

    Why would they care what Scott’s opinion is? I’m truly curious.

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  10. BTW…will the vegans be serving meat to the guests?

    Nope. Entire wedding reception menu will be vegan. But it does include a cocktail hour, which puts it above the far too many dry Baptist weddings I’ve been to. I will be having barbecue or cheesesteak for lunch before going to the ceremony,

    This happy couple also has very strongly held opinions on the Palestinian question but I never read deep enough into their Facebook posts to quite figure them out.

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    • yello:

      Nope.

      Very inconsiderate of them. You should invite them over for dinner and only serve meat and dairy dishes. See how they like it.

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  11. Very inconsiderate of them. You should invite them over for dinner and only serve meat and dairy dishes. See how they like it.

    And perhaps I should only have hamburgers if I invite a Hindu friend over (I’m actually not sure if my Hindu friend avoids beef and we have had dinner out many, many times).

    The food actually sounds quite interesting and delicious.Here is the menu from their wedding app site:

    Cocktail hour hors d’oeuvres
    Tomato bruschetta topped baked potato bites with basil and sweet garlic
    Mini seitan tortilla cups with cilantro chimichurri and smokey chipotle cream
    Rice paper summer rolls with tofu, cukes, mint, and sweet chili-peanut dip
    Summer vegetable frittata bites
    Potato-corn fritters with black bean pico de gallo
    Potato and caramelized onion knishes
    Veggie platters with crackers, breads and homemade hummuses

    Dinner
    Locally made dinner rolls with herbed butter
    Caesar salad with homemade sunflower-lemon caesar and coconut bacon
    Peach, strawberry, arugula and tomato salad with coconut milk mozzarella and lavender dressing Summer pappardelle: tossed with fresh off-the-ear corn, basil, spinach, artichokes, zucchini ribbons, heirloom tomato and chantarelle mushrooms
    Artichoke “crab” cakes with horseradish aioli
    Wild mushroom and tarragon seitan – grilled with herbs in a light gravy
    Grilled Asparagus and kale with white beans, fennel and shallots

    Oddly, there is an “after-party” after the reception at a pizza place whose menu is decidedly not vegan. I’m not sure what that is about.

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    • yello:

      And perhaps I should only have hamburgers if I invite a Hindu friend over

      I don’t think it is a good comparison, unless you are known to your friend as a person who eats beef as a regular part of every meal. If you were such a person, then I think common courtesy would indeed call for the Hindu to make arrangements for your requirements should the Hindu invite you to a dinner.

      As a host I try to cater to the tastes of my guests, not just my own tastes, and so I always strive to serve at least something that I know they enjoy eating even if I don’t enjoy those things. I think it is very self-centered, particularly of people who have extremely narrow tastes in food for whatever reason, to host an eating event and impose that narrowness on other people. (Unless, of course, the whole point of the event is the food being served. I wouldn’t expect an event designed to promote veganism to be serving some kind of surf and turf.)

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  12. a person who requires beef as a regular part of every meal.

    I’m confused by what type of person that would be. A militant Atkinsite? A paleo-vangelist?

    I think it is very self-centered, particularly of people who have extremely narrow tastes in food for whatever reason, to host an eating event and impose that narrowness on other people.

    I’m their guest. I’m going to eat what is served. Or I do without. I look few gift horses in the mouth, whether they are real horsemeat or not. As I hinted above, I have been to waaay too many dry Baptist weddings where there were no accommodations made for non-teetotalers. But I respected their values and didn’t make a big deal out of it and demand they serve liquor just for me.

    And the menu was distributed far enough in advance that I could make adjustments if this was important to me. My only problem with vegan food is when it tries to ape meat-based food too closely. Tofurkey is an abomination in the eyes of the Flying Spaghetti Monster (bless His noodley appendage).

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    • yello:

      I’m confused by what type of person that would be. A militant Atkinsite? A paleo-vangelist?

      No idea. I was just speculating on the kind of person it would take to make your analogy relevant.

      I’m their guest. I’m going to eat what is served.

      I agree, but the issue we were discussing was was not how guests should behave, but rather how hosts should behave.

      BTW, an apt discussion given that, for reasons I cannot fathom, today is national hamburger day.

      http://nationaldaycalendar.com/days-2/national-hamburger-day-may-28/

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  13. The most relevant precedent for FF&C as regards to marriage is the Reno divorce from earlier days where any marriage could be ended much quicker in Reno than if they were covered by whatever state’s law that they happened to previously have residence in.

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  14. “Any federal court, even in the 9th Circuit”

    I disagree. You can’t predict what kind of BS the 9th can be persuaded to uphold in the name of social justice.

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  15. They sound like a super tolerant couple. I bet they’re fun a parties.

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  16. Wouldn’t concealed carry be analagous?

    Like

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