Morning Report: The pro and con case for raising rates this week 9/15/15

Stocks are up this morning as we await the big day Thursday. Bonds and MBS are down.

Retail Sales rose 0.2% in August, just missing the 0.3% Street estimate. The control group (which excludes volatile and price-sensitive goods like autos, gasoline and building supplies) rose 0.4%, which was better than the 0.3% Street estimate. August is the back-to-school month, so overall decent numbers, which bodes well for the holiday shopping season. Big retailers like Amazon.com and Wal Mart are up pre-open.

Industrial Production fell in August by 0.4%, which was lower than the -0.2% estimate. Capacity Utilization fell to 77.6% from 77.8%. Separately, the Empire Manufacturing Survey (which measures manufacturing activity in New York State) was highly negative at -14.7. The strong dollar is taking a bite out of manufacturing activity.

Business inventories and sales rose 0.1%. The inventory-to-sales ratio held steady at 1.36x. The inventory / sales ratio has been ticking up recently, which is a worrisome sign, at least for a cyclical recession. During recessions, it is not uncommon to see a big spike in this ratio. Historically, it has been much higher. You can see on the graph below the latest increase, and also the secular decline in the ratio that began in the mid-80s as manufacturing implemented just in time inventory management.

Tim Duy, an influential Fed-watcher makes the case for not moving this week. His argument: With rates at the zero bound and market turmoil, the Fed has no margin for error since it is more or less out of ammo. Better to wait until the waters are calmer to make a move. FWIW, I tend to agree with those arguments, and I think the Fed is very wary of a 1937 scenario. Inflation is nowhere to be found and while there is a bubble in credit markets, widening credit spreads are acting as a tightening all by themselves (the Larry Summers argument).

The argument for raising rates: – we have bubbles in the credit markets, and certainly in the pre-IPO market. Uber, which earns nothing, and has a market cap similar to Dow Chemical, is indicative of a craziness we haven’t seen since the skyrocketing IPOs of eToys and Pets.com in the late 90s. Stocks are up 200% from the lows in 2009. His point is that we DO have inflation – but it is “too much money chasing too few assets,” not “too much money chasing too few goods.” Imagine if the Fed had raised rates in 2003 and the real estate bubble had popped in 2004. We still would have had a recession, but I seriously doubt the banking system would have collapsed the way it did in 2008. And the recession would have certainly been shorter and less severe than 2008 – 2009. His point: it is time to end the addiction to low interest rates. The economy is strong enough to take a Fed Funds rate of 50 basis points. This argument is highly, highly unpopular in policy circles, so it won’t get any traction. The consensus in Washington (at least on the left, which runs things at the moment) was that policy had absolutely nothing to do with the bubble – it was 100% Wall Street Sharpies that did it, and “smart regulation” will prevent another one from happening.

Note that the one advocating for standing pat is a professor, and the one advocating moving is a trader. So they will look at the issue from two entirely different points of view.

As credit spreads have widened, we have seen some jumbo securitizations pile up at the banks. This probably signals less aggressive jumbo pricing ahead. LOs – something to tell your borrowers, especially if they are thinking of floating right now. Even if the 10 year bond goes nowhere, jumbo rates could be heading up.

67 Responses

  1. Sounds like the Fed wants to take away the punchbowl as soon as the first guest arrives.

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  2. If the Fed raises rates, they go from super-duper accomodating to just super accomodating..

    They aren’t taking away the punch bowl, they are adding a touch of mixer just to reduce the potency…

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  3. ” His point: it is time to end the addiction to low interest rates. ”

    uh, don’t have have a human right to a sub 4% mortgage?

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  4. I’ll give this to Sanders, he’s honest. As long as everyone is worse off together, that’s better than some people getting rich and others not.

    http://www.washingtonpost.com/news/wonkblog/wp/2015/07/13/what-bernie-sanders-is-willing-to-sacrifice-for-a-more-equal-society/

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    • jnc:

      I’ll give this to Sanders, he’s honest.

      Yes. Honest in a childishly ignorant way.

      Where we’ve got to move is not growth for the sake of growth, but we’ve got to move to a society that provides a high quality of life for all of our people. In other words, if people have health care as a right, as do the people of every other major country, then there’s less worry about growth. If people have educational opportunity and their kids can go to college and they have child care, then there’s less worry about growth for the sake of growth.

      And all of this will be paid for with….fairy dust? Even if your plan is to take it away from some people to give it to others, that first set of people need to actually get it first before you can take it away. In order for them to get it, you need economic growth. This guys is beyond stupid. I mean really. It is the economic mentality of a 6 year old. No serious or sophisticated thought involved whatsoever.

      Unfortunately it is an economic mentality that is shared by a huge portion of the left.

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  5. @jnc4p: I hope Hillary sends Bernie a nice thank you note for handing the primary over to her.

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  6. He’s letting his leftist freak flag fly… At least he is honest about wanting equally shared misery for all…

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  7. I’ve always wondered just how much of Bernie’s campaign was just a desire to keep Hillary from tacking too far right. He seems to have the problem of the dog that caught the car. Like Trump, he has won support by being further to the edge than the other candidates in the field.

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  8. I can think of no reason to support Clinton.

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  9. “I can think of no reason to support Clinton.”

    You could if you were a Democrat. Lots of people can think of all sorts of reasons not to support the Chicago Cubs, but somebody does anyway.

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    • “I can think of no reason to support Clinton.”

      Supreme Court nominees. Not sure how that puts her ahead of any generic Democrat. She is hawkish in the Middle East and pretty cozy with the financial class. She’s practically a RINO.

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  10. you’ve got justice kennedy. what more do you need?

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    • nova:

      you’ve got justice kennedy. what more do you need?

      Kennedy is a lot less meaningful without the Fab Faux “Justices”. And Ginsburg especially could keel over any day. And the progressive project will have a much harder time advancing the cause if they actually have to do it through democratic means. It needs to be able to keep appointing its reps to the court.

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  11. Suppose Kasich won… Could he get through a moderate replacement for RGB? I would imagine the left would go ape-shit if he nominated a conservative…

    Or is the unspoken agreement that we can’t disturb the ideological make-up of SCOTUS?

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    • Brent:

      Or is the unspoken agreement that we can’t disturb the ideological make-up of SCOTUS?

      I don’t think there is an unspoken agreement. I just think the left is willing to play a lot dirtier than the right is. The idea that Robert Bork (42-58 against) or Clarence Thomas (52-48) or Samuel Alito (58-42) were somehow less qualified to sit on the court than the Wise Latina (68-31) or the unethical RBG (96-3) is absurd, and is evidence of the left’s willingness to oppose competence in favor of politics.

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  12. Nobody to the right of Kennedy will ever be confirmed regardless of who controls POTUS AND Congress.

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  13. Well, i don’t think for a second that the progressives would have respected a ruling that had gone the other way. like that lady in KY. only everywhere and more window smashing.

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  14. Scott, doesn’t it make more sense that there are enough Senate R’s that prefer a RBG or Sotomayor to a Thomas or Alito? Wasn’t it Hatch who proposed RBG to Clinton? It isn’t so much that the left fights dirty as that enough R Senators agree with them philosophically.

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    • McWing:

      It isn’t so much that the left fights dirty as that enough R Senators agree with them philosophically.

      It is possible, but only 3 of the R Senators who voted “yes” for Thomas voted “nay” for Ginsberg. The vast majority of R Senators who were in the Senate for both nominations voted “yes” to both. Given the huge gulf in philosophy between, a Clarence Thomas and an RBG, it doesn’t seem to me that a “yes” vote can be seen as an indication of agreement with the philosophy of the nominee, either political or judicial. More likely is that the “yes” vote to both is an indication of deference to the prerogative of the president to choose who he wants. I think the current crop of R Senators may not be quite so solicitous of a D president’s prerogative, as demonstrated by the large majority of R’s who voted against both the Wise Latina and Kagan, but I wouldn’t expect the Kennedy treatment any time soon.

      Plus, of course, the wider progressive movement, beyond the Senate, engaged in massive PR campaigns including personal slander against both Thomas and Bork. The wider conservative movement has done no such thing with any D nominee that I can think of. The toughest the right has ever been on any nominee that I have seen was the Wise Latina, and those attacks consisted mostly of simply quoting her own idiotic words in context.

      The right just doesn’t seem willing to stoop to the same levels as the left in order to influence SCOTUS.

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  15. Disagree. I think the GOP desires a larger government but can’t say it for fear of alienating their electorate. Their actions and their lack of stopping things (such as nominations demonstrate that.

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    • McWing:

      Their actions and their lack of stopping things (such as nominations demonstrate that.

      For Kagan’s nomination the R’s had 41 votes in the Senate and for the Wise Latina’s they had 40. They couldn’t have stopped either one no matter what they did. On the Kagan nomination 36 of the 41 R’s voted against, and on the Wise Latina 31 of the 40 opposed. It would have been nice if the counts were 41 and 40 against, but the outcome would have been the same regardless.

      I guess it is possible that most of the R’s secretly wanted to have Kagan and the Wise Latina on the court, and only voted “nay” to deceive the R electorate knowing that the nominations would pass anyway, but I know of no evidence to suggest it. And such a belief seems to beg for an explanation of why, then, the same R Senators who prefer the Kagan and Wise Latina philosophy also chose to vote in favor of the Alito nomination.

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  16. In all sincerity, why should this bother us?

    Let them expend their resources.

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  17. I’m pretty sure in both cases that a filibuster would have held because either Kennedy or Byrd or both were to sick to vote, they chose not to filibuster knowing that would result in Kagan and Sotomayor passing.

    You give the GOP far too much benefit of the doubt.

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    • McWing:

      I’m pretty sure in both cases that a filibuster would have held…

      Not only would a filibuster have required unanimous R support, but it would have been unprecedented. I suppose one can view a reluctance to take unprecedented steps to derail a SCOTUS nomination as an indication of a secret desire to see those nominations approved. But it could also be an indication of a conservative mindset, ie one that has respect for and is wary of upsetting long-existing rules, traditions, and processes.

      You give the GOP far too much benefit of the doubt.

      Perhaps, but it doesn’t make much sense to me to view a tendency to do the conservative thing, ie avoid upsetting long-standing traditions, as evidence of hidden progressive desires. It is certainly possible that such conservatism is self-defeating (I would argue that the principles the right professes definitely do disadvantage it politically), but that doesn’t make it evidence of a secret desire for progressivism.

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  18. @scottc1: “Even if your plan is to take it away from some people to give it to others, that first set of people need to actually get it first before you can take it away. In order for them to get it, you need economic growth. ”

    It’s the problem with having “equality” as a goal. It’s a bad goal, because “equally bad for everybody” is not actually desirable. And the proposal tends to be is: I want to make everything worse for everybody, but, eventually, we will all be equally bad off, so it will be fair. And this is desirable because . . . you know, justice and stuff.

    The correct answer for a liberal is: “But helping the poor and a living wage and building the middle class will grow the economy! In fact, the economy has gotten better after every tax hike, always!” . . . and so on. You don’t actually suggest it might be okay if the economy stagnated so long as things were more fairly miserable.

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  19. @mcwing: “You give the GOP far too much benefit of the doubt.”

    The Republicans are the Politicrat party, by and large. DC is a place to pursue their personal ambitions rather than advance conservatism. Or anything, really. They run to win and then govern to secure their fiefdoms (and also grease palms for future favors, in case they need a job outside of government after the next election).

    They chose not to filibuster because they were worried about the optics, and worried about giving critics ammunition against them, worried about facing off a woman and a Latina and the optics of that . . . when they ran in 2010 (and won) the platform was, like, 100% jobs. Job creation! Now, I don’t think the government is deeply involved in creating jobs (mostly, it just stifles the creation of jobs, if anything) . . . but I’m not sure the word “jobs” came out of an elected Republican’s mouth after 2010.

    The Tea Party proved that the seductive powers of DC and the importance of the GOP kingmakers is ultimately far more important than whatever a particular candidate ran on or planned to do before winning. And, as Rush Limbaugh has pointed out for years, the Republicans have to play nice on certain things or they won’t be invited to the right cocktail parties (which will make their spouses very unhappy with them!).

    I think many Republicans head into politics and into Washington with the idea of accomplishing some sort of ideological goal or with specific policy improvements in mind, and then are assimilated into the Politicrat collective shortly after being sworn in. Then it’s just theater.

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  20. My point exactly, the GOP lies to its voters to stay elected.

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    • McWing:

      My point exactly, the GOP lies to its voters to stay elected.

      I thought your point was that they actually harbored a desire for liberal policies. It is one thing to avoid steps that might prevent an objectionable outcome (say, the appointment of the Wise Latina) because one fears unwelcome personal consequences like getting kicked out of DC. It is quite another to avoid steps to prevent a seemingly objectionable outcome because one secretly finds the outcome desirable. The former is an act of cowardice which, I would agree, infects much of the GOP (and politicians, and really people, in general). The latter is an act of treachery, for which I do not see much evidence.

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  21. I see it as a desire for power and to distribute the favors to constituencies that help them stay in power.

    I’m pretty sure either Alito or Roberts was filibustered by D’s. And I think Fortas was filibustered by R’s for CJ. Not unprecedented.

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    • And I think Fortas was filibustered by R’s for CJ.

      Alito and Roberts are on the bench so if there was a filibuster, it wasn’t very successful. Only the one against Fortas worked.

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      • yello:

        Alito and Roberts are on the bench so if there was a filibuster, it wasn’t very successful.

        There was no filibuster for those two, but I think that is primarily because they were replacing justices who were already seen to be conservative, and so their appointment didn’t increase the chances of progressive court victories being overturned. If, say, RBG keeled over in January 2017 after Jeb Bush took the oath of office, I rate it a dead certainty that a minority D party in the Senate would filibuster a nominee on the order of Thomas, Scalia, or Alito.

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  22. “Kevin S. Willis, on September 15, 2015 at 9:52 am said:

    @jnc4p: I hope Hillary sends Bernie a nice thank you note for handing the primary over to her.”

    I don’t see that at all. I think that a majority of Democratic primary voters actually agree with Sanders that reducing inequality is more important than economic growth.

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    • jnc:

      I think that a majority of Democratic primary voters actually agree with Sanders that reducing inequality is more important than economic growth.

      I think you are absolutely right.

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  23. I thought your point was that they actually harbored a desire for liberal policies.

    Goes to giving them the benefit of the doubt, I see no reason to.

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  24. Alito was (unsuccessfully) filibustered.

    http://www.politifact.com/truth-o-meter/statements/2010/apr/11/jon-kyl/obama-criticized-supreme-court-filibuster-alito-ev/

    It wasn’t unprecedented, the R Senators could have stopped either Kagan or Sotomayor and chose not to.

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  25. Why didn’t they filibuster Kagan and Sotomayor?

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    • McWing:

      Why didn’t they filibuster Kagan and Sotomayor?

      Obviously because not 100% of the R Senators were on board, and they needed 100% for it to be successful. Which of course begets the question why couldn’t they get all R’s on board? I have no way of knowing the minds of all the R Senators, but I would imagine whichever one’s weren’t on board had various reasons. Perhaps some of them feared being excommunicated from the Georgetown social scene. Perhaps some of them were afraid of the electoral consequences. Perhaps some of them are truly conservative by nature and believed that it is wrong to violate the tradition of no filibusters of SCOTUS nominees. I suppose it could even be that some of them really are engaged in a huge deception and are actually closet progressives. But I discount that last one as a widespread reason not only because of Occam’s Razor but also because if it were true it becomes harder to explain their votes for non-progressive things. What’s the point in being a closet progressive if every time you get to exercise power you have to do non-progressive things in order to remain in the closet?

      BTW, I’m not sure it is right to say that Alito was filibustered. I think all Senate debate ends with a vote for cloture. Just because some people vote against cloture doesn’t mean a filibuster has taken place. A filibuster has taken place when a cloture vote fails to get enough votes to pass. That did not happen with Alito, even if Chuck Schumer wanted it to.

      Edit: not sure if that is correct, ie that all Senate debate ends with a cloture vote. Trying to figure out the Byzantine Senate rules now.

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  26. A filibuster can either delay or prevent, according to wiki. YMMV.

    https://en.m.wikipedia.org/wiki/Filibuster

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    • McWing:

      A filibuster can either delay or prevent, according to wiki.

      I don’t think either happened to Alito. (Well, obviously not prevent, but I don’t think he was delayed either.)

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    • The opposition Senators generally do not vote against a POTUS’s Supreme Court choice as a matter of tradition.

      It has never quite been a rubber stamp, but most appointees that have widespread support in the legal community, regardless of their philosophies, get huge majorities.

      An R POTUS could appoint the Volokh crew and they would all be consented to. Unless the tradition finally erodes.

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      • Mark:

        An R POTUS could appoint the Volokh crew and they would all be consented to. Unless the tradition finally erodes.

        Given that at least half of the opposition party has voted against 6 of the last 9 appointees, and all of the last 4 (2 each from both a D and an R prez), I think it is safe to say the tradition has finally eroded. As usual the R’s were a bit late in recognizing that the D’s had ditched the tradition, supporting both RBG and Breyer by large margins even after the Bork and Thomas fiascos. Happily the R’s seem to have finally woken up.

        Of course it was inevitable that the tradition would go the way of the dinosaur once the court was transformed from a legal institution into a political one. That being the case, I think it is also safe to say that there is a zero percent chance that the Volokh crew would be consented to by a majority of D’s in the Senate. In fact given the policy making role that the court has taken on, I daresay that any R nominee to the court that could garner a majority of D votes should be immediately withdrawn from consideration. The lessons of the Souter and Kennedy nominations ought not need to be re-learned.

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      • Mark:

        It has never quite been a rubber stamp, but most appointees that have widespread support in the legal community, regardless of their philosophies, get huge majorities.

        How do you measure support in the legal community?

        Bork, Roberts, Alito, Sotomayor and Kagan all received a “well-qualified” rating from the ABA, yet none of them received a huge majority, and Bork was actually rejected. (Of course, there is some question as to whether the ABA ratings are themselves politically biased.)

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        • jnc:

          An op-ed in the WSJ today that touches on a topic we have discussed at length in the past. Unfortunately behind the firewall, but here is an excerpt:

          http://www.wsj.com/articles/more-defendants-wanted-1442358758?cb=logged0.8072235775180161

          In a departmental memo last week and a subsequent speech at New York University’s law school, Ms. Yates laid out new guidance for prosecutors intended to ensure “best efforts” to hold accountable the individuals responsible for corporate and financial malfeasance.

          Upon seeing this news, we were initially tempted to cheer. These columns have long urged prosecutors to punish employees who break the law, rather than demanding cash settlements from their employers, which really means punishing shareholders who are often victims unaware of wrongdoing.

          But a close reading of the Yates memo and her remarks at NYU have us wondering if the point of this exercise is not better targeting of prosecutions but simply a desire to take more corporate scalps to appease the progressive left. This crowd has never forgiven former Assistant Attorney General for the Criminal Division Lanny Breuer for not jailing more bankers after the financial crisis.

          The truth is that responding to ill-conceived government incentives to take on mortgage risk is not a crime. But the Elizabeth Warren crowd wants to see the suits in shackles. And the new guidance from Justice suggests that the goal is not so much to charge alleged criminals instead of the shareholders who had the misfortune to employ them, but in addition to the investors who may have been victimized.

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    • McWing:

      It’s about time!

      I would love to see the language of the congressionally passed law that the EPA uses to justify arbitrarily deciding how much water a dishwasher can legally use. Who can possibly think it is remotely constitutional for the federal government at all, much less a regulatory agency, to tell people how much water their dishwasher can use? Insanity.

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  27. It’s a living document.

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  28. I just nutted.

    “This is a continuation of the strange virus that’s running through the Republican Party, which I define as a weird form of right-wing Marxism where people are using Saul Alinsky-type tactics,” said Rep. Devin Nunes (R-Calif.), a Boehner confidant, likening the conservatives to the late radical activist from the 1960s.

    No one should feel safe and these are the tactics that can make Freidman’s advice come to life.

    Some conservatives now articulating a shutdown strategy voiced regret after the 2013 shutdown, including Meadows, who told a local TV interviewer that Congress needs to “make sure it doesn’t happen again.”

    Can someone explain the political and electoral cost Republicans paid for the last shutdown?

    http://www.washingtonpost.com/politics/boehner-and-his-allies-prepare-fall-battle-with-conservative-gop-critics/2015/09/15/be7b23dc-5bab-11e5-8e9e-dce8a2a2a679_story.html

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    • McWing:

      Can someone explain the political and electoral cost Republicans paid for the last shutdown?

      I think that is a good question.

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      • Obama talking now. I really can’t even bear to listen to him, he is so disingenuous. “Budget negotiations should be about spending and funding, not ideological issues like shutting down Planned Parenthood.” Ummmm…whether or not PP receives federal tax dollars IS a question of spending.

        This should be the official song of Obama’s term in office:

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  29. I don’t even listen to obama any more. I am not his audience. He is talking to the far left and their sycophants in the media..

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    • Brent:

      I don’t even listen to obama any more.

      The guy who sits next to me is a big lefty (archetypal northeastern, elitist, limousine liberal ). He always turns up the sound whenever CNBC is showing Obama, so I can’t avoid it without leaving the office.

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  30. @mcwing: “Can someone explain the political and electoral cost Republicans paid for the last shutdown?”

    Democrats and pundits in the MSM said bad things about them. It was terrible.

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  31. I’m sure you’ve seen this, @mcwing:

    http://theothermccain.com/2015/09/16/why-do-feminists-hate-sex-robots/

    Feminist hate sex robots because they might make some men happy. Truth!

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  32. @scottc1:

    “Budget negotiations should be about spending and funding, not ideological issues like shutting down Planned Parenthood.”

    What do you expect him to do? Mount a defense of organ harvesting from aborted fetuses? Because, ultimately, that’s what the attempt to defund Planned Parenthood is about.

    “We’ve just been working with people who want particular tissues, like, you know, they want cardiac, or they want eyes, or they want neural,” says Dr. Westhoff to a prospective fetal organ buyer. “Certainly, everything we provide–oh, gonads! Oh my God, gonads. Everything we provide is fresh.” Westhoff continues, “Obviously, we would have the potential for a huge P.R. issue in doing this,” before offering to introduce the buyers to “national office abortion people” from Planned Parenthood.

    “Is this really worth getting–I don’t even know what in general, what a specimen generally brings in?” VanDerhei later asks a prospective buyer. When she is told $100 per specimen, she remarks, “But we have independent colleagues who generate a fair amount of income doing this.” VanDerhei suggests that Planned Parenthood goes to great lengths to avoid leaving a paper trail about their fetal tissue activity: “It’s an issue that you might imagine we’re not really that comfortable talking about on email.”

    It’s not as if Planned Parenthood is naive about the implications of exposure. Vanessa Cullins, their VP for external medical affairs, warns the undercover “buyers” to be careful about discussing organ sales, lest it “destroy” everyone involved:

    Vanessa Cullins, the Vice President of External Medical Affairs, seems fully aware of the criminal exposure that fetal body parts sales present to Planned Parenthood: “This is important. This could destroy your organization and us, if we don’t time those conversations correctly,” she tells a prospective buyer.

    But, no doubt, those quotes from the videos are all taken “out of context” and therefore are 100% fake!

    http://hotair.com/archives/2015/09/15/new-cmp-video-abortion-industry-exec-admits-clinics-make-a-fair-amount-of-income-from-organ-harvesting/

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    • KW:

      What do you expect him to do?

      Since I see his lips moving, I expect him to lie, lie, lie.

      Mount a defense of organ harvesting from aborted fetuses?

      If he is in favor of it, and apparently he is, then yes, that is exactly what he should do.

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  33. @Scottc1: “I would love to see the language of the congressionally passed law that the EPA uses to justify arbitrarily deciding how much water a dishwasher can legally use. Who can possibly think it is remotely constitutional for the federal government at all, much less a regulatory agency, to tell people how much water their dishwasher can use? Insanity.”

    It would make sense if water was toxic, like plutonium or nuclear waste or something. It would also make sense if water was a limited resource in reality, and not just because environmentalist object to the creation of reservoirs where they are obviously needed. Or, it would make some sense, at least.

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    • KW:

      It would make sense…

      I’m not even talking about whether it makes sense. My question is whether it is constitutional. A plain reading of the constitution suggests it is not, even if one does think such regulations make sense.

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  34. @scottc1: “If he is in favor of it, and apparently he is, then yes, that is exactly what he should do.”

    That would be impolitic!

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  35. A plain reading of the constitution suggests it is not, even if one does think such regulations make sense.

    A more perfect union, bagger… its promoting the common welfare!

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  36. What happens to women if men can fuck robots instead?

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  37. @mcwing: Actually, dudes that don’t screw robots will likely have an easier time with real world women, who will have fewer dating options (thanks to the competition introduced by sex robots). So they will have to compete harder for higher quality men.

    For the ladies who hate men anyway, it means they will have to spend less time around them or being pursued by them, and they will have to worry less about men looking at them as objects because they will already have objects at home they can look at as objects. Everybody wins!

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  38. @Scottc1: “I’m not even talking about whether it makes sense. My question is whether it is constitutional. A plain reading of the constitution suggests it is not, even if one does think such regulations make sense.”

    Dish washers have to cross state lines at some point. Commerce clause!

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    • KW:

      Dish washers have to cross state lines at some point. Commerce clause!

      Yes, but water going into and out of a dishwasher during a cleaning cylce cannot, in any honest understanding of the English language, be characterized as “commerce”. You wouldn’t ask an appliance salesmen “How much commerce takes place during a cleaning cycle.” Therefore, it can’t honestly be said that regulating the water flow in a dishwasher is an example of regulating commerce.

      Besides which, the commerce clause calls for regulating commerce “among the several states”, not “among citizens of the various states”. And at the time “regulating commerce” meant imposing duties/tariffs on “commercial” acts, meaning the barter and exchange of goods and property. The commerce clause as written gave, and was understood to have given, the federal government the authority to manage such duties and tariffs, and to prevent individual states from imposing their own duties/tariffs on goods travelling through on their way to other states. It did not mean (and therefore does not mean) placing arbitrary restrictions on the kinds of goods and property that could be bartered or exchanged by a citizen in one state with a citizen in another.

      Madison, from Federalist 42:

      The defect of power in the existing confederacy, to regulate the commerce between its several members, is in the number of those which have been clearly pointed out by experience. To the proofs and remarks which former papers have brought into view on this subject, it may be added, that without this supplemental provision, the great and essential power of regulating foreign commerce, would have been incompleat, and ineffectual. A very material object of this power was the relief of the States which import and export through other States, from the improper contributions levied on them by the latter. Were these at liberty to regulate the trade between State and State, it must be foreseen that ways would be found out, to load the articles of import and export, during the passage through their jurisdiction, with duties which would fall on the makers of the latter, and the consumers of the former. We may be assured by past experience, that such a practice would be introduced by future contrivances; and both by that and a common knowledge of human affairs, that it would nourish unceasing animosities, and not improbably terminate in serious interruptions of the public tranquility. To those who do not view the question through the medium of passion or of interest, the desire of the commercial States to collect in any form, an indirect revenue from their uncommercial neighbours, must appear not less impolitic than it is unfair; since it would stimulate the injured party, by resentment as well as interest, to resort to less convenient channels for their foreign trade. But the mild voice of reason, pleading the cause of an enlarged and permanent interest, is but too often drowned before public bodies as well as individuals, by the clamours of an impatient avidity for immediate and immoderate gain.

      The necessity of a superintending authority over the reciprocal trade of confederated States has been illustrated by other examples as well as our own. In Switzerland, where the Union is so very slight, each Canton is obliged to allow to merchandizes, a passage through its jurisdiction into other Cantons, without an augmentation of the tolls. In Germany, it is a law of the empire, that the Princes and States shall not lay tolls or customs on bridges, rivers, or passages, without the consent of the Emperor and Diet; though it appears from a quotation in an antecedent paper, that the practice in this as in many other instances in that confederacy, has not followed the law, and has produced there the mischiefs which have been foreseen here. Among the restraints imposed by the Union of the Netherlands, on its members, one is, that they shall not establish imports disadvantageous to their neighbors, without the general permission.

      The whole point of the commerce clause was to prevent onerous restrictions, in the form of state duties/tariffs, on commercial trade from state to state. It was not to give the federal government carte blanche to impose onerous restrictions on what kinds of commerce could and could not be engaged in by individuals. Quite nearly everything the government currently does under the guise of the commerce clause is unconstitutional.

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  39. Wait for the feminist left to demand the robots all look like Bella Abzug and repeat passages from Scum Manifesto…

    Like

  40. obama invites the kid with the “clock bomb” to the white house… why am i not surprised?

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  41. A kid gets suspended for making a “gun” out of a pop tart, and the left shrugs its shoulders…

    It is fascinating to watch and see the things the left gets excited about…

    Like

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