Morning Report: Homebuilders overvalued? 8/22/17

Vital Statistics:

Last Change
S&P Futures 2432.3 4.3
Eurostoxx Index 374.4 1.6
Oil (WTI) 47.4 0.0
US dollar index 86.2 0.3
10 Year Govt Bond Yield 2.21%
Current Coupon Fannie Mae TBA 103.09
Current Coupon Ginnie Mae TBA 103.97
30 Year Fixed Rate Mortgage 3.89

Stocks are higher this morning on no real news. Bonds and MBS are lower.

House prices rose 1.6% in the second quarter and are up 6.6% YOY, according to the FHFA House Price Index. The fastest growth was out West, with Washington up 12.4%. The weakest areas were in the Northeast and Mid-Atlantic, particularly CT.

Morgan Stanley is warning that stocks and corporate bonds could be vulnerable once the Fed begins to let its portfolio of Treasuries and MBS run off. A committee of investors and banks hypothesized that corporate credit spreads could widen as much as 135 basis points. Will that have the same effect on mortgage backed securities spreads? Quantitative easing itself didn’t move in spreads all that much, so I cannot imagine something that will amount to a tiny fraction of that having much impact either. The Fed’s balance sheet is now about $4.5 trillion. Pre-crisis it was under $1 trillion. Many market observers think the Fed may never be able to get its balance sheet back down to where it was pre-crisis.

Fed assets bbg

Tensions with North Korea and fears of a debt ceiling standoff have pushed down the market’s assessment of future Fed Funds hikes. The December Fed Funds futures are now predicting a 62% chance of no hike versus a coin toss about a week ago.

The government plans to try and get some sort of tax reform done this year, however it will be difficult. We are much more likely to see some sort of “tax reform light” which probably won’t have a massive impact on the economy in the near term. The first order of business is to fund the government and to get an increase in the debt ceiling. Meanwhile, Bridgewater CEO Ray Dalio is taking off risk due to political polarization and buying gold.

The DOJ ended the Obama Administration’s Operation Choke Point, which was sold as an attempt to prevent banks from funding fraudulent actors, but in reality was just an attempt to prevent banks from doing business with payday lenders, which the Administration opposed on ideological grounds. The idea was to hopefully drive payday lenders out of business by making them unable to find banks to service them.

Luxury homebuilder Toll Brothers reported earnings this morning, and the stock is down a touch pre-market. Average selling prices fell due to a change in product mix. ASPs for signed contracts were flat and contracts were up 25%. Could we be seeing exhaustion, pricing-wise- at the high end of the market? Perhaps, but Robert Toll, Chairman of the Board said: “We believe our industry has room to run. Single-family housing starts, at 811,000, are still well below the 50-year industry average of 1.02 million units. The home ownership rate is on the rise but also still below historic norms. Interest rates remain low, unemployment is low, and more and more buyers are entering the upscale market. Based on these trends, we believe Toll Brothers is well positioned for future growth.”

Despite the lousy housing starts numbers, homebuilder stocks have been on a tear, rising 31% this year. Part of this was due to corporate tax reform – since homebuilders generally have little to no international exposure, a drop in the statutory rate would boost their earnings the most, compared to someone like Apple who has international entities all over the world. Builders have been struggling with their own issues however, especially a shortage of skilled labor. Many of the skilled laborers who worked in homebuilding during the boom either retired or went to work in different industries. Second, construction materials (aka sticks and bricks) are rising as well, and any sort of trade war with Canada will affect framing lumber prices. One thing to remember about homebuilding is that it is a very cyclical business, and during booms, multiples compress. The average homebuilder P/E is about 11 right now, and during the go-go years, it got down to 8.5. In other words, you could be right on earnings increasing, but wrong on the stock price as it goes nowhere while earnings grow. The other side of that argument is that there is so much pent-up demand for housing right now that a slowdown is simply not on the horizon.

A new lending firm claims it can cut the closing process down to 8 days, and the borrower never has to speak to a loan officer. The industry average is 43 days.

122 Responses

  1. What are the odds Antifa kills someone in Phoenix tonight?

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    • What are the odds that the media excuses it if it happens?

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      • Unless it’s a journalist. That would be different.

        That being said, I hope they make idiots of themselves without killing anybody.

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        • No, they’ll take that too. The media will never turn on the left.

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        • Enough of them will. There are definitely folks in the media, and whole networks, that will try to blame the right or racists or characterize it as an accident, but they are only going to take so much abuse of the honored and revered 4th estate.

          They’ll show them a lot more slack than they’d show anyone on the right, but they aren’t going to dismiss the death of a journalist the way they’d dismiss the death of an average citizen. It’s sacrilege! I think it’s a kind of 3 strikes and your out. Sure, stab innocent people sitting in their car because they have the wrong kind of hair cut, that’s fine. But make sure they aren’t a Protector of Freedom and Guarantor of Truth, a Member of the 4th Estate and Good Standing and Supreme Shaper of Thoughts and Beliefs.

          Journalists are fellow travelers, but also the most important ones, and to not do everything in your power to protest and preserve them and let them Bear Witness to History . . . is a moral failure. Not quite the same as being a Nazi. But getting much closer than just “accidentally” killing some “ordinary civilian”.

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        • KW:

          …but they aren’t going to dismiss the death of a journalist the way they’d dismiss the death of an average citizen.

          Famous lefty journalist for The Independent Robert Fisk once got attacked by a bunch anti-American Afghans while he was in Pakistan, and he wrote a column about how the attack was entirely understandable and justified. Never underestimate the willingness of the media to take one for the team.

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        • No, they’ll take that too. The media will never turn on the left.

          And remember, too, antifa is just a group of noisome protestors, and hardly the entirety of the left. The left engages in purity tests all the time. Insufficiently revering journalists, for journalists, is the failure of the most important purity test (for journalists). They can turn on antifa without having to disavow the larger mission of saving the world and hating on Nazis.

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        • I don’t believe it. The MSM has no left boundary. Everything is OK.

          Liked by 1 person

        • Never underestimate the willingness of the media to take one for the team.

          Maybe so. Perhaps their principles will be victorious in the war against their narcissism. I’m not sure the mostly-white, half-male, almost all-privileged folks who make up AntiFa will necessarily get the same pass People of Color and those historically directly oppressed by America’s Military Industrial complex do. But maybe they will!

          I still think it will be “warning” – “okay, one more warning” – “okay, this is your last warning” and maybe a few more warnings, and then a general turn against them. If they can’t collectively get a clue and avoid hurting journalists.

          Unless they only attack people from Brietbart and National Review. That’d be okay.

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        • Recall this piece about Charlie Hebdo by Gary Trudeau:

          https://www.theatlantic.com/international/archive/2015/04/the-abuse-of-satire/390312/

          They can justify anything based on the hierarchy of victimhood.

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  2. I’m shocked that this wasn’t just lower level people.

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  3. Stamford CT figures out a new way to grab money: No texting, talking or listening while walking…

    http://feeltheliberty.com/connecticut-city-considering-ban-on-texting-and-walking/

    Realy, guys?

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    • “John Zelinsky, a member of the Stamford Board of Representatives, believes “texting and walking” is a dangerous practice and said the intention is to keep people safe.

      Speaking with WABC-TV, Zelinsky said, “My whole objective in doing this is to prevent any more injuries of pedestrians getting injured or killed,” adding, “I don’t want any more injuries or deaths as a result of pedestrians getting hit. We’ve had about four or five within the past three or four years.””

      How many deaths due to the police are they willing to tolerate to enforce this?

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    • Good luck to them. Nobody is gonna want to be banned from listening to music or whatever while walking or jogging, nobody is going to want to be prevented from talking on the phone when the wife calls and they are walking to the store . . . I’d be surprised if this passes, money grab or not.

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  4. Blowback is a bitch.

    “Many speakers called for Signer’s resignation, especially after he declared the meeting canceled and left the room shortly before 9 p.m. He later returned as the meeting continued and took his seat at the dais.

    In response to criticism of the police response to Saturday’s rally, he said: “The mayor in this city has no role with the police whatsoever.””

    https://www.washingtonpost.com/news/local/wp/2017/08/22/charlottesville-city-council-votes-to-shroud-confederate-statues-in-black/

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  5. This smells a little bit like exploiting something for more defense spending. We don’t know what happened, plus, these ships a designed to assess all traffic around the group. That they missed tankers and cargo container ships in known high traffic in less than two months areas seems… seems…, well, weird to call it exhaustion.

    http://nationalinterest.org/blog/the-buzz/the-us-navys-greatest-enemy-might-be-exhaustion-21997

    Liked by 1 person

    • “The Navy needs to expand its numbers with smaller, cheaper surface combatants such a new multi-mission frigate that the can relieve high-end warships such as DDGs from mundane missions such as forward presence.”

      Maybe skimp on the “forward presence” – aka showing the flag – as opposed to skimping on training or maintenance….

      Liked by 1 person

  6. This sums up the Anti-Fa nicely:

    “I can’t say the same for the idiots in the black masks and bandanas whose only apparent purpose was to try and start fights with police so that they all could become YouTube stars.”

    http://www.esquire.com/news-politics/politics/news/a57119/boston-protest/

    Liked by 1 person

    • That’s unfair. A lot of them are thinking only about their Twitter followers, or their Instagram and Facebook posts.

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    • I like what Jonah Goldberg termed as “Selma Envy.” The Millennials are self-righteous crusaders like their boomer parents, but they don’t have the cause like civil rights or the Vietnam War to fight for. So they have to make mountains out of molehills, which is what microaggression issues are all about….

      How many Nazis are in this country? 1,000 tops? But they are the cause celebre and the media is running with it. And everyone will have to put up with rending of garments for a while.

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      • There are a lot more “I’m not a Nazi, but . . . ” types than actually Nazis playing dress-up and reading Mien Kampf. Similar numbers of holocaust deniers I would guess, and even more “the civil war wasn’t about slavery” (this is, imho, not a remotely tenable position, and is ahistorical which offends my sensibilities). But even if you were to count them all up, they would be a small percentage. People who are serious about it (and not just spouting off to seem like have a contrary opinion) probably under 1% of the population?

        I saw it action during the first Gulf War. All the lefties at school were excited that now they had their Vietnam. They were so disappointed when it was over so quickly. They had so many protests planned.

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        • KW:

          this is, imho, not a remotely tenable position, and is ahistorical which offends my sensibilities

          I actually think it is, strictly speaking, true. The correct formulation is that the Civil War was about secession, while secession was about slavery.

          The trouble (on both sides) is the attempt to turn the complexities of the Civil War period into a simple morality tale in which one side is evil and the other as saintly. The fact of he matter is that the South seceded in order to protect the institution of slavery from the North. The North warred against the South in order to prevent secession, not end slavery. Ending slavery was just Lincoln’s way of employing the Rahm Emmanuel principle: never let a crisis go to waste.

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        • Root cause was slavery, but respect to your pedantry. You are right, of course, but that’s not the message of most of the “not really about slavery” folks. Their point tends to be that other issues were at play, and slavery was incidental, which I think is unsupportable.

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        • KW:

          but respect to your pedantry.

          I don’t think it is pedantry, especially in the context of current discussions. The secession/Civil War era involved two different points of principle, and to focus on one to the exclusion of the other, as both the “it was all about slavery” crowd, and the “it was all about states rights” crowd would like to do, is what I think is both ahistorical and not very useful.

          Their point tends to be that other issues were at play, and slavery was incidental, which I think is unsupportable.

          I agree that slavery was most definitely not incidental to the Southern states’ decision to secede, at least for most of them (Virginia was complicated). If you read the various states’ declarations on secession, that fact becomes undeniable. Slavery was the motivating factor. But it was incidental to the North’s decision to wage war on the South. Lincoln did not wage war in order to end slavery. He waged war in order to preserve the Union. That, too, is undeniable, I think.

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        • Scott has this exactly correct, IMHO: preservation of slavery led the south and Texas to secession, preservation of the Union and federal supremacy motivated the north and west to engage in the Civil War.

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        • Mark, in your opinion, is secession, in and of itself, worth killing over? Let’s say 67% of CA voters vote to secede, should they be prevented from doing so, using force if necessary?

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        • Yep, if negotiations failed.

          There is actually a loophole for secession in the Constitution with Congressional consent. If the USA is to split up, say into Texas, CA, and the left behinds as three nations, I think it could be achieved through difficult negotiation that preserved the Common Market, free trade, and joint military obligations – like the EU + NATO.

          Of course, I would be a Unionist in any case, but I am stating the notion that if an overwhelming majority in a state truly wanted to secede, but did not fire a shot, that state might actually have chance of doing so, in the current political climate, in which the hard left and hard right do not want to be with each other.

          Texas-OU in the Cotton Bowl during the Fair is non-negotiable, of course.

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        • So, for clarity’s sake, you’re in favor of using lethal force to prevent secession if, say, 2/3’s of CA voters want it but the US Congress refused to allow it?

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        • Yep.

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        • I see no circumstance where the US lets California secede. Tax revenue, obviously, but also ports, military bases, federal lands, and military manufacture. And CA should know that.

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        • KW:

          I see no circumstance where the US lets California secede.

          I think the biggest obstacle to a California secession attempt would come from California itself. The left controls California exclusively because of its dominance in urban centers like LA and SF. If they ever voted to secede from the US, I suspect that most of the rest of California would secede from California, just as western Virginia seceded from Virginia during the secession crisis. (Frankly I don’t know why they haven’t seceded from California already.)

          Beyond that you are probably right about what would happen. But I still marvel at the mindset that holds it as reasonable and acceptable to force people to be in a club they don’t want to be in, just so you can keep taking their money.

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        • Scott: But I still marvel at the mindset that holds it as reasonable and acceptable to force people to be in a club they don’t want to be in, just so you can keep taking their money.

          Entitlement is a very natural human condition. We’ve always had California’s money, we should always have it. There is a perception of a social compact, an implicit contract, that says: whatever we’ve done for you entitles us to what we take from you. Even if it isn’t explicitly written anywhere. We are more than capable of a self-convincing rationalization on that front.

          That being said, I don’t care if all the people and companies of California move it Canada (well, wouldn’t be my first choice, but I would never think we should keep them in CA by federal force). So all the people and companies can secede (and they might be able to pull it off, but it would be a lot of work) and I’m fine with that. But they don’t get to take the coastline, ports, military bases, and other infrastructure.

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        • Why do you assume CA has not yet paid for their infrastructure?

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        • KW:

          Entitlement is a very natural human condition.

          My condition must be very unnatural then.

          But they don’t get to take the coastline, ports, military bases, and other infrastructure.

          With the exception of military bases, why not? It isn’t your property.

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        • “My condition must be very unnatural then.”

          Normalized, at least. You probably take the availability of air for granted, and likely don’t fall over in amazement that you can flip a switch and a light comes on, or that you can get clean water, on demand, from multiple faucets in your home. That you can get hot water to bathe in by stepping into the bathroom and fiddling a little knob.

          The human tendency toward entitlement is why sustainability should be the question of any entitlement program. Much easier to prevent a new entitlement (although even that is not so easy) that to take away one. The majority of people tend to feel entitled to what they have grown accustomed to expecting. And it usually doesn’t take long for them to view their privilege as a right.

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        • KW:

          You probably take the availability of air for granted, and likely don’t fall over in amazement that you can flip a switch and a light comes on, or that you can get clean water, on demand, from multiple faucets in your home.

          Sorry, but I don’t see the connection between taking the existence of air for granted and thinking that one is “entitled” to take money from Californians. As I said, if it is “natural” for people to think that latter, then I must be very unnatural.

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        • It’s an expansion of that same muscle in the brain.

          It makes sense to take air for granted. Or to feel entitled to own your property and have it secured (say, by police or the courts). To feel entitled to the right actually guaranteed by the constitution.

          Natural temperament or life experience might cause one to limit their sense of entitlement to things that are universal, or at least universal in the context of their daily lives. But how many DC politicians don’t feel entitled to other people’s money? There’s a lot of people who feel entitled to stuff that in a purely objective sense they have no right to feel an entitlement to.

          Entitlement is just another form of conditioning. Generally, people who grow up with few boundaries and are given everything tend to feel entitled to everything.

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        • “With the exception of military bases, why not? It isn’t your property.”

          Certainly disputable with declared federal lands, and disputable with Interstates. One of the risks of taking federal largesse, even if it is owed to you, as a state, based on the federal taxes paid.

          Tactically, I just don’t see giving up the west coast. There’s an argument that California then becomes a buffer zone for an attack, but economically and strategically I just don’t see the US surrendering all the ports and shipping access to an independent California. It would become an existential and economic threat that, irrespective of what the constitution says, the US could not allow to become a separate, potentially hostile nation that could (and probably would) ally with Americas enemies. Having Cuba off the coast of Florida is bad enough.

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        • If it was CA. Those military bases? They practically monopolize the west coast. They going to come up with cash to pay for all the Interstates? And what about the arms manufacturers? I don’t think the government would be sanguine about succession and I can’t blame them.

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        • Vermont is welcome to secede, however.

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        • Mark:

          Yep, if negotiations failed.

          Interesting. The only negotiable thing I can imagine it being worth going to war over would be federal property inside the seceding state. And even then it would depend on the property.

          There is actually a loophole for secession in the Constitution with Congressional consent.

          Is it possible to have a “loophole” to a non-existent law? 😉

          As a practical matter, of course consent is required, not because of the Constitution but because of the government’s ability to bring force to bear. If the feds choose not to use that force, they have in essence consented. But as I have argued in the past, as a purely legal matter there is nothing to prohibit secession.

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        • Scott – no state can have national sovereignty without Congressional consent.

          Section. 10.

          No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

          No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it’s inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul of the Congress.

          No State shall, without the Consent of Congress, lay any Duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay.

          You seem to think that a state could declare itself able to do these things by fiat. “We secede, We are not a state. Constitution dissolved.”

          No. That would have been a theory under the Articles of Confederation. Not under the Constitution forming the more perfect union.

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        • Mark:

          We’ve been down this road before. Section 10 prohibits states from doing many things, but seceding from the Union is not one of them, as the section you have quoted from demonstrates quite conclusively.

          Your reasoning seems to be that since the Constitution prohibits any state that is part of the Union from doing many things that a state which has seceded might do as a sovereign nation, by implication it must be the case that a state cannot ever become a sovereign nation. But, as I have pointed out before, this reasoning simply begs the question. The Constitution’s prohibitions on state activity only applies to states that are a part of the Union. They do not apply, for example, to Mexico, or to Cuba, or to the United Kingdom for the simple reason that those states are not a part of the Union. So before Section 10 can even be applied to any state, it must be established that the state is in fact a part of the Union. A state that has seceded is, by definition, not a part of the Union, unless such secession is not allowed. And since there is nothing in the Constitution that makes state withdrawal from the Union illegal, by virtue of the 10th amendment such withdrawal must therefore be Constitutionally allowed.

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        • “The Constitution’s prohibitions on state activity only applies to states that are a part of the Union.”

          These are the only states we are discussing, Scott.

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        • Mark:

          These are the only states we are discussing, Scott

          You make my point that you are simply begging the question.

          Whether or not a state that has declared itself seceded is still a part of the Union is precisely the question under dispute. As your above claim makes plain, you simply assume the conclusion. Your argument is plainly circular. Virginia can’t unilaterally secede because it is still a part of the Union, and Virginia is still a part of the Union because it can’t unilaterally secede.

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        • Scalia on Secession

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        • I get the appeal to authority, but that’s not an official SCOTUS judgement. Also, fighting one war does not obligate participants to fight another, no?

          would be interesting though if CA declared independence, and Congress declared war based on it being Unconstitutional to unilaterally secede and SCOTUS says it is Constitutional.

          I suppose Congress’s power to declare war is absolute, does that obligate the aececutive to fight that war?

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        • From Texas v. White:

          When, therefore, Texas became one of the United States, she entered into an indissoluble relation. All the obligations of perpetual union, and all the guaranties of republican government in the Union, attached at once to the State. The act which consummated her admission into the Union was something more than a compact; it was the incorporation of a new member into the political body. And it was final. The union between Texas and the other States was as complete, as perpetual, and as indissoluble as the union between the original States. There was no place for reconsideration or revocation, except through revolution or through consent of the States.[7]


          That case also held that the Confederate States remained part of the Union during the war, as a matter of law.

          Whatever you may think of it, the current law of the land as judges read the Constitution is that secession as a legal matter is IMPOSSIBLE without the consent of the Union itself. You are taking a fringe view that a state may do by indirection what it cannot do directly. Or else you are confusing a political reality – a state might declare itself separate – from a legal reality – that declaration has no force in law.

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        • Thanks Mark!

          A lot of my views are exceedingly fringy, hence my support for a VERY unrestricted 1st Amendment.

          I agree that the best way for a state to secede is by mutual agreement. However, if, say, 2/3’s of a state’s voters decide to unilaterally secede, Id be hard pressed to start shooting them, wouldn’t you?

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        • In the case of California, they’d have to vacate the land to avoid a shooting war. In the abstract, people might not care or would prefer California go. Having a sovereign nation that is, by definition, hostile to the Union that then controls our access to the west coast, claims dominion over the water rights of that coast, appropriates our military bases . . . not to mention more generic federal lands, and so on. I don’t see a responsible federal government allowing that. I also don’t see the military industrial complex or the deep state signing off on that.

          And I don’t have a problem with that. If Californians all want to relocate elsewhere in the world, I’m fine with that. The land and coastal access and military bases and Interstates and so on . . . that’s all part and parcel of the US.

          In California, there would also be almost a guarantee than a 2/3rd majority for secession would only be possibly with the tallying of numerous non-citizen votes, which would almost certainly leave any vote for secession highly disputed. Thus the argument could easily be made, and would be entirely credible, that the vote for secession wasn’t valid because a majority-making level of those voters weren’t legitimately US citizens.

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        • KW:

          Having a sovereign nation that is, by definition, hostile to the Union…

          I reject with the premise. Just because California residents no longer want to be a part of the US doesn’t make them hostile to the US. Canadians don’t want to be a part of the US, but that doesn’t make them hostile neighbors.

          …that then controls our access to the west coast…

          The west coast is bigger than the California coast. Canada doesn’t control our access to the west coast. Neither would an independent California.

          The land and coastal access and military bases and Interstates and so on . . . that’s all part and parcel of the US.

          So you reject the idea of individual property rights?

          In California, there would also be almost a guarantee than a 2/3rd majority for secession would only be possibly with the tallying of numerous non-citizen votes, which would almost certainly leave any vote for secession highly disputed.

          You are assuming that such a vote would be a popular referendum, which is not how it has been done before. Historically votes for secession were done by elected representatives at a state convention.

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        • Also, there’s a more paternalistic question: would an unrestrained California become Sweden, or Cuba? Or Venezuela? I’m thinking Venezuela.

          California patriates would vacate in a hurry once their taxes quadrupled, or a wealth tax was instituted, or combustion engines were outlawed, or any number of things the victorious California El Presidente decreed.

          The federal government would likely see themselves as morally responsible to prevent California from destroying itself. Might even have to destroy it to save it!

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        • One of the strains of argument in Texas v. White is that the Union owes a constitutional obligation to guarantee a republican form of government in the states, as well as various other obligations.

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        • Mark:

          One of the strains of argument in Texas v. White is that the Union owes a constitutional obligation to guarantee a republican form of government in the states, as well as various other obligations.

          Again, this is premised upon the assumption that a state that has unilaterally seceded is still a part of the US, which is the very question in dispute.

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        • Mark:

          When, therefore, Texas became one of the United States, she entered into an indissoluble relation.

          On what, exactly, is this assertion based?

          Whatever you may think of it, the current law of the land as judges read the Constitution is that secession as a legal matter is IMPOSSIBLE without the consent of the Union itself.

          As always, I am more interested in what the Constitution actually says, not in what judges have read into it. If the argument from authority that judges cannot be wrong in their Constitutional rulings was taken seriously, Plessy would still be the current law of the land.

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        • Mark:

          If there was ever a constitutional issue resolved by the Civil War…

          This is just a might makes right argument. Constitutional issues are resolved by the Constitution, not by who can kill more people.

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        • Scalia’s makeweight argument, not mine. Just thought you would like to know what Scalia thought.

          If I were defending a secessionist charged with treason in court, my first argument would be that a non-American cannot be guilty of treason, and upon secession the defendant ceased to be an American.

          That argument was rejected by the Supreme Court.

          When, therefore, Texas became one of the United States, she entered into an indissoluble relation.

          On what, exactly, is this assertion based?

          Purpose clauses of the Articles of Confederation and the Constitution.

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        • Mark:

          Just thought you would like to know what Scalia thought.

          I’m always interested in what Scalia says, but I admire Scalia because I usually find his arguments to be persuasive, not vice versa. Bad arguments are bad arguments, even if Scalia makes them.

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        • Mark:

          That argument was rejected by the Supreme Court.

          So was the argument made in Brown. Until it wasn’t.

          FYI: https://en.wikipedia.org/wiki/List_of_overruled_United_States_Supreme_Court_decisions

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        • Let’s say CA unilaterally secedes and the Federal government attempts to arrest the governor and try him for treason. However, 250,000 Californians surround the governors mansion and the state capital to prevent their capture. The Californians are unarmed, but their numbers make it impossible for Federal authorities to arrest the governor. Do you send in Federal troops and start shooting Californians if they won’t yield?

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        • The logistics are beyond my E5 USN OC pay scale.

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        • C’mon, that’s a dodge. Would you shoot unarmed civilians guarding the governor? If not, why not? How would you assert Federal authority otherwise?

          If you’re unwilling to shoot unarmed civilians then secession become a fait acompli, no?

          Like

        • Well, when SC tried to use Calhoun’s nullification doctrine in the 1830s, Jackson sent troops to the border of SC and then SC gave it up. So I suppose the measured response would be to use the Navy and Army to close the ports and borders of CA to any traffic that could be considered aiding the insurrection, Then I think the National Guard would be federalized, and whether it agreed to be federalized or announced its loyalty to the governor would determine the next step.

          No matter what, escalating economic isolation of CA over a period of months would probably precede direct seizure that risked thousands of civilian lives. It could escalate to retaking CA by force, but that would not likely be the starting point, except for enforcing restricted trade and commerce across borders and from ports.

          Remember that CA, unlike Texas, is dependent on the grid. It could be made to go dark for escalating periods of time.

          Like

        • Mark:

          Remember that CA, unlike Texas, is dependent on the grid. It could be made to go dark for escalating periods of time.

          There is no doubt that the federal government has the ability to prevent secession, through various means including raw, overwhelming, physical force. My question is much more basic: Why would you want to? If a group of people want to disassociate themselves from the US, what is the moral justification for compelling them to stay?

          Like

        • “Why would you want to? If a group of people want to disassociate themselves from the US, what is the moral justification for compelling them to stay?”

          The people can disassociate themselves any time they want. Apply for a visa. Get out of the country. Buy a house in Vancouver. Done!

          They don’t have to stay, in almost any scenario. The land does, however.

          Like

        • KW:

          The people can disassociate themselves any time they want.

          Again, I believe in property rights, so I do not equate a disassociation from a government with a disassociation with one’s property. To say that someone can disassociate themselves from the US provided they turn over their property is, to me, quite different from saying that they can disassociate themselves from the US “any time they want”.

          Like

        • Why do they have to turn over their property? Normally, when people leave, they sell their property at market prices. I would fully expect anybody desperate to leave the US would sell their property at market value to someone less desperate to leave the US. Some folks would have to do a fire sale, maybe, but then they have to prioritize. What’s more important? Escaping the oppression of the USA or getting full dollar for their property?

          Like

        • Is your position that the Union is indivisible in all circumstances or that secession is only allowed when both parties reach a mutually agreed upon terms of exit?

          Like

        • Mine? My position is it’s not going to successfully happen, and I’m not going to worry about it overmuch. There are practical, tactical, and logistical reasons from the US point of view that California could not be allowed to secede (or would have to be conquered and annexed immediately, if it did). And something to prevent the secession or re-acquire California would happen, and it’s predictable, and reasonable from the point of the view of the interests of the US.

          And while it’s unusual for politicians to put the interests of the United States first, I think they’d manage to do it in this case.

          I think it’s a non-issue. A real campaign for 2/3rd to vote in favor of secession would be hard to make happen. A lot of people would view secession as an ultimate negative. Even among the libs, they aren’t all Michael Moore. I don’t think they’d ever manage it, and if they did, the results of the election would immediately be challenged in court.

          If they reached mutually agreed upon terms of exit, I can’t imagine an objection. I don’t see that happening, but if it did, I can see no moral obstacles and only predictable real-world obstacles (even if agreed upon, such a thing would be complicated and expensive).

          Like

        • McWing;

          Is your position that the Union is indivisible in all circumstances or that secession is only allowed when both parties reach a mutually agreed upon terms of exit?

          This is an interesting point in light of Mark’s argument that secession is unconstitutional due to the “perpetual” nature of the Union as proclaimed by the Articles of Confederation. If we take that argument seriously, it would mean that even a mutually agreed upon exit would not be legal. Which strikes me as absurd result.

          Like

        • A mutually agreed upon exit could be ratified, yes? Is there any real reason that it would take anything more than a law passed by the congress and ratified by the senate? Which could presumably happen, if terms of the exit were mutually agreed upon?

          Like

        • KW:

          A mutually agreed upon exit could be ratified, yes?

          I don’t know…I don’t accept the Articles of Confederation as relevant in the first place. I was just presenting what seemed to be the consequence of accepting that argument.

          Like

        • I think such issues end being moot, if all parties are mutually agreed. They could both determine a way to dot the i’s and cross the t’s to everybody’s satisfaction.

          Like

        • KW:

          I think such issues end being moot, if all parties are mutually agreed.

          Agreed, which just shows that references to a “perpetual” union, even if the Articles were relevant law, was just a rhetorical flourish, not a legally binding reality.

          Like

        • That is not an argument that I ever made.

          The purpose clause of the Constitution calls for a more perfect union. More perfect than what?

          More perfect than the AoC provided.

          That is what the Supremes said.

          Just the fact that the Constitution provides for a union and for supremacy of federal laws is enough for me.

          But I have also argued that the Union can voluntarily dissolve under the Constitution [if Congress agrees] and that I think negotiated secession is possible under the Constitution [negotiated with the Congress].

          You know this and you seem to have purposely misrepresented this. Which disappoints me.

          Like

        • Mark:

          That is not an argument that I ever made.

          Sure it is. You made it explicitly the last time we had this discussion:

          If I understand you, you think a state could announce it secedes, and that would then permit it to recognize law other than federal law, or fight a war against the US, because it would not be under the Constitution any more. Is that the substance of what you are saying? That the right is extra-constitutional?

          If so, my view is that you are elevating form over substance. Recall that the Articles of Confederation were entered into to form a “perpetual union” and that the Constitution was entered into to form a “more perfect union”. Does that imply the rejection of “perpetual” to you?

          And your more recent comments seemed to be alluding to precisely the same argument, since you referred to the “purpose clause” of both the Articles and the Constitution, which is where the references to a “perpetual union” and a “more perfect union” can each be found.

          (BTW, my response to the above argument can be found here.)

          That is what the Supremes said.

          It seems to me that when, in a discussion about the legality of unilateral secession in which you have clearly been advancing the position that it is not constitutional, as refutation of the opposing position you present an argument made by the Supreme Court, it is perfectly reasonable and fair to assume you are endorsing that argument, and to subsequently refer to it as an argument that you have made.

          You know this and you seem to have purposely misrepresented this.

          I don’t think I have misrepresented anything, and I know I have not done so purposely. The fact that you have presented many disparate arguments against the legality of secession doesn’t mean that when, in a single post, I focus on one of those arguments to the exclusion of others, I am somehow purposely misrepresenting what you have argued. I think I have fairly and honestly both presented and addressed all your arguments, and I think your accusation is entirely unfair and unfounded.

          Like

        • KW:

          Why do they have to turn over their property?

          Don't ask me. It's what you would require, not what I would require.

          I would fully expect anybody desperate to leave the US…

          Like Mark, you are equivocating between the US as a geographic region and the US as as a political entity. Secessionists do not want to leave a geographic region. They want to leave a political entity.

          Like

        • “Secessionists do not want to leave a geographic region. They want to leave a political entity.”

          Which can be accomplished by selling your house and moving to another geographic region with a different political entity as governing body. In a sense, they want to have their cake and eat it, too. They already have options to not be part of AmeriKKKa, they just don’t want to move. And they want to impose their desire to secede on the likely significant minority of people who do not want to secede (who would then have to move, geographically, if they wanted to remain part of the US).

          I don’t think they have to turn over their property. In either case, secession or moving, I don’t see them turning over their property, although there will be arguments over compensation and who has domain over what. That would be mostly federal lands and other government real property, either directly managed by the federal government or historically funded by.

          Like

        • KW:

          Which can be accomplished by selling your house and moving to another geographic region with a different political entity as governing body.

          Not wanting to leave a geographic region cannot be accomplished by selling your house and moving to another geographic region.

          In a sense, they want to have their cake and eat it, too.

          Not at all. Again, you are conflating the US as a geographic region with the US as a political entity. Unlike wanting to both have a cake and eat it at the same time, there is nothing about wanting to disassociate oneself from a political entity that is contrary to not wanting to disassociate oneself with a geographic region. In fact, the very concept of secession exists to fulfill both of those at the same time.

          And they want to impose their desire to secede on the likely significant minority of people who do not want to secede (who would then have to move, geographically, if they wanted to remain part of the US).

          No. The minority can themselves secede if they want. Not only did that actually happen when Virginia seceded, it is exactly what I, just this morning, suggested would probably happen should CA ever actually secede.

          Like

        • Persons who do not want to live in the USA are free to leave.

          American states cannot take on the trappings of nationhood by saying “I divorce thee” three times while looking east.

          I make no moral argument to force people – millions of people or tens of people or an individual – remain in the USA.
          That might be immoral, IMHO, or more likely amoral.

          I take states to be political entities, subordinate in most respects to the federal government, which is also a political entity. The principles that bind political entities are legal. Their conduct as entities is bound by law.
          In our system, the laws that bind these entities is based on our understanding of what state conduct is acceptable, not personal morality.

          Again, anybody who wants to leave the USA should not be discouraged by any level of government from doing so. That is part of the agreement we have among ourselves about citizenship.

          Like

        • So, you would shoot unarmed civilians?

          Like

        • Shouldn’t be necessary. Might be starving them out, and shutting down their electricity. Which could cause some deaths indirectly.

          Might send troops in to shut down nuclear plants and secure nukes and armories, but unless the Californians were shooting, the troops would have no need to shoot unarmed civilians.

          Like

        • I’m saying that the mass of humanity blocking access to, say, Camp Pendleton would legitimize crushing them to death?

          Also, you’d cut off power? Really?

          Like

        • If they seceded? Sure, why not? They want power, all they have to do is revoke the secession and the power comes back on.

          I feel like the mass of humanity surrounding Camp Pendleton would all be antifa. They might have to think about it, but I suppose they could wedge their way in with tear gas and rubber bullets.

          Like

        • Heck, Hollywood has already have re-located to Vancouver. They should just stop going to Georgia and North Carolina, and move the whole shebang there. Get Silicon Valley to move to Canada or Sweden or someplace, and everyone who wants to secede will pretty much be gone.

          Like

        • Mark:

          Persons who do not want to live in the USA are free to leave.

          As you know, secession is not an issue of where one wants to live. It is an issue of which authority one wants to submit oneself to. In this context, when I speak of disassociating oneself with the US, I am talking about disassociating oneself with a governmental authority, not a location in space.

          American states cannot take on the trappings of nationhood by saying “I divorce thee” three times while looking east.

          You keep asserting this, but that is precisely the thing under question. Repeatedly asserting it is not a persuasive argument to me. Why can’t they?

          The principles that bind political entities are legal. Their conduct as entities is bound by law.

          I agree entirely. Which is why I think the conduct of the federal government with regard to a seceding state is bound by the Constitution. Since the Constitution does not grant the federal government the authority to prevent withdrawal from the Union, and it does not prohibit a state from withdrawing from the Union, then as per the 10th amendment, I think States are legally allowed to withdraw from the Union.

          In our system, the laws that bind these entities is based on our understanding of what state conduct is acceptable, not personal morality.

          The moral question arose not in regard to what is legally acceptable, but rather what actions you as an individual would endorse. And that is always a question of morality. What is legal is not always moral, and what is moral is not always legal.

          I know that you are generally more comfortable talking about what the law is than you are talking about what you think the law ought to be. But to me the business of self-rule and democracy is all about the latter, not the former. And since the law, by definition, implies the use of force, I think morality is almost always relevant to those decisions.

          Like

        • Eh, commerce clause. Afterward Wickard v. Filburn, the commerce clause covers everything. Calfornia seceding would effect the interstate cost of wheat, so, ergo, the federal government can forbid it!

          Which is why I think the conduct of the federal government with regard to a seceding state is bound by the Constitution. Since the Constitution does not grant the federal government the authority to prevent withdrawal from the Union

          In contemporary sensibilities it does not forbid the federal government from preventing, or appropriating the powers to prevent it. While states may be legally capable with withdrawing from the union, it doesn’t seem to me such a thing could be settled unless a specific law was written or the secession case was taken to court and California, in essense, sued from divorce from the US in front of SCOTUS. I doubt they’d find in favor of secession, so then it may be bad law but its highly likely it will generally be regarded as legally settled, thus making it permissible to declare the secession illegal.

          Also, nothing really seems to prevent us from immediately engaging in a war of imperial conquest with California, legally, and then annex them back into the US, perhaps as a territory.

          Like

        • KW:

          In contemporary sensibilities…

          As ever, I am much more interested in arguments about what the Constitution says and means than I am in a recitation of what current judges have said or might say it means.

          If the question were “How would today’s SCOTUS rule on the constitutionality of secession”, then I agree with you and there is little to talk about. But the question that I find much more interesting is “Is secession constitutional?”

          Also, nothing really seems to prevent us from immediately engaging in a war of imperial conquest with California, legally, and then annex them back into the US, perhaps as a territory.

          Well, nothing except the same thing that prevents us from engaging in a war of imperial conquest with Canada and doing the same thing to it.

          The idea that, while the US can and does have a peaceful and respectful relationship with people in other existing nations, we should treat a seceding state as if it were sworn enemy, just baffles me.

          Like

        • “Well, nothing except the same thing that prevents us from engaging in a war of imperial conquest with Canada and doing the same thing to it.”

          Tradition!

          I don’t think there’s a legal limitation to doing it, though. Are we constitutionally forbidden from annexation by force?

          I mean, generally, we won’t. We’d be thinking imminent domain in the case of California, where we would not be with Canada.

          But I always thought we should have just annexed Cuba. I realize there are diplomatic reasons we did not. But it would have given us, like, a second Florida.

          Like

        • KW:

          Tradition!

          I’m pretty sure that isn’t the reason we don’t engage in imperial conquest by force over other nations. In fact if tradition were the dominant factor, we probably would.

          Are we constitutionally forbidden from annexation by force?

          No. The reason we don’t do it is because culturally we have come to view it as contrary to the principles of a right to self-determination, principles upon which our nation itself was founded. Although perhaps I should say “principles”, since they don’t seem to apply in inconvenient cases such as secession. (Despite the fact that our own founding was essentially a secession.)

          Like

        • Assets could be frozen as well. It’s a power that the federal government has over California that CA does not have over the federal government.

          They could move quickly to print their own money, but I don’t know how that would work out, if the federal government forbid exchange of California currency, or declared it essentially counterfeit US money.

          As a practical matter, the US government would not have to shoot anybody, unless California started shooting. I would expect, if it was a sudden secession, that we’d send in troops to secure military bases, armories, nukes, and perhaps nuclear plants. Based on US security interests. That could lead to some shooting. But even then, probably not.

          Like

        • Mark:

          Purpose clauses of the Articles of Confederation and the Constitution.

          Again, we have been down this road before. Not only was/is the Articles of Confederation not controlling law, Texas never actually signed onto the Articles even when it was controlling law. And the Preamble to the Constitution says nothing at all about the Union being indissoluble.

          Like

        • “”I saw it action during the first Gulf War. All the lefties at school were excited that now they had their Vietnam. They were so disappointed when it was over so quickly. They had so many protests planned.””

          I remember this exactly the way you do. They wanted it to be another Vietnam to “prove that war is never the answer” and that American military power could never be used successfully.

          The protests erased the line between warning about massive American casualties and actually wanting them to happen to prove their point.

          Liked by 1 person

        • In the end, legality is irrelevant to secession. It will be decided politically or by force of arms, not by a court.

          Like

        • jnc:

          In the end, legality is irrelevant to secession. It will be decided politically or by force of arms, not by a court.

          It seems to me it is relevant in two ways.

          First, the legality of secession would be, or ought to be, a primary consideration for those deciding whether or not to employ force of arms against a seceding state. Unlike Mark, I would not favor the use of arms against a seceding state in almost any circumstances precisely because I think a state has the Constitutional right to withdraw from the Union.

          Second, if it is ultimately prevented by the force of arms, whether or not secession is Constitutional is relevant to any subsequent charges of treason that might be brought against individuals who fought on behalf of secession.

          Liked by 1 person

        • “whether or not secession is Constitutional is relevant to any subsequent charges of treason that might be brought against individuals who fought on behalf of secession.”

          No, it’s actually not. It will be a political decision based on the outcome and perceived needs of the moment.

          Just like it was during the Civil War. Among other things, legality didn’t matter when it came to recognizing West Virginia as a state after the Civil War. It was justified ex post facto, regardless of what the Constitution said.

          Like

        • jnc:

          No, it’s actually not.

          If I were defending a secessionist charged with treason in court, my first argument would be that a non-American cannot be guilty of treason, and upon secession the defendant ceased to be an American. By definition, then, the issue of the Constitutionality of secession would become relevant.

          Just like it was during the Civil War.

          The decision of whether or not to try Southerners on charges of treason was a political decision. Since they chose not to do so, it cannot be an example of what is or is not relevant should someone be tried for treason.

          Like

  7. For once, women and minorities weren’t hardest hit:

    “On August 21, 2017, a total solar eclipse will arrive mid-morning on the coast of Oregon. The moon’s shadow will be about 70 miles wide, and it will race across the country faster than the speed of sound, exiting the eastern seaboard shortly before 3 p.m. local time. It has been dubbed the Great American Eclipse, and along most of its path, there live almost no black people.”

    https://www.theatlantic.com/science/archive/2017/08/american-totality-eclipse-race/537318/

    Like

    • How is one guy going to heal those divisions? Aren’t the people acting hysterical at some point responsible for the divisions they are experiencing, and usually embracing? Why is that the president’s job at all?

      “Stoked”. People who want to be tribal and engage in identity politics hardly need to be stoked. Tribal divisions are like weeds across every visible surface. Everybody has to be weeding, but nobody needs to plant or water them to make them come up. Lazy people don’t weed, and most people are kind of lazy.

      At worst, Trump took advantage of the fact it’s a very weedy country. He didn’t plant the damned things.

      Like

  8. I miss Andrew Breitbart.

    h/t Ace

    Liked by 1 person

  9. Even the Satanists are PC now.

    “I’m a founder of the Satanic Temple. Don’t blame Satan for white supremacy.”

    https://www.washingtonpost.com/news/posteverything/wp/2017/08/23/im-a-founder-of-the-satanic-temple-dont-blame-satan-for-white-supremacy/

    Like

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