Daily Archives: June 29, 2012

Scott St. Clair: The ObamaCare Decision; The Only Surprise is That Anyone is Surprised

Obamacare is constitutional, says the United States Supreme Court – now what?

At the outset, I’m neither shocked nor surprised at the outcome. Like most common-sense people I regard Obamacare as an abomination and a one-way ticket to bloating the federal budget even more than it is. But I also know something about courts and the law, so I never expect a court to do what everyone thinks it will or should do – courts do what they do. Welcome to a hard dose of judicial reality.

But in that reality is a great big club – the right club – that will beat the beast to death: The hatred Americans have for being over taxed, especially to the tune of $1.76 trillion. Obamacare is now the largest tax increase in American history.

From my early days in activism I learned that relying on courts for your 

political salvation is a fools’ errand. Political issues can only be decided where political issues are always decided, and that’s in the streets, at the ballot box and in the Legislature, in this case Congress. Obamacare is a political issue, and it ultimately must be decided politically.

By upholding the individual mandate as a tax, Mitt Romney now has a new campaign tag line that will damage President Obama and the Democrats: The Obamacare tax on the middle class
Tax, tax, tax, tax, tax, tax – say it often enough and it will stick.

So, there’s some comfort to be taken from this statement found at the outset of Chief Justice John Roberts’ majority opinion: “We do not consider whether the Act embodies sound policies. That judgment is entrusted to the Nation’s elected leaders.” And I would add it includes the judgment of the voters. 
The court took pains to emphasize its tradition to bend over backwards, if necessary, to uphold a legislative act rather than strike it down. By calling the Obamacare individual mandate a tax rather than a penalty for not engaging in commerce, the Court found a peg upon which to hang its judicial robes. 

In simple terms, I defer to SCOTUSBlog.com, which said:
“There were not five votes to uphold (Obamacare) on the ground that Congress could use its power to regulate commerce between the states to require everyone to buy health insurance. However, five Justices agreed that the penalty that someone must pay if he refuses to buy insurance is a kind of tax that Congress can impose using its taxing power. That is all that matters. Because the mandate survives, the Court did not need to decide what other parts of the statute were constitutional…” 
I’ve read a lot of court opinions in my time that do pretty much what’s described – it’s just that this time, the stakes were much higher.

What made me nervous during the run up to the decision was the proliferation of pundits and amateurs making cock-sure predictions that the law would be struck down. When the like-minded talk exclusively with each other, they convince themselves that their hopes are facts and that their facts control. Courts don’t work that way, and people need to understand that.

Literally, within seconds of the decision and opinion being made public, the Internet was swamped with what I can only call dopey statements from the know-nothing wing of the conservative movement. “Chief Justice John Roberts is now dead to me.” “Impeach the Supreme Court.” 

Perhaps the worst was this one dumped on one of my Facebook posts on the decision: “Bush screws us AGAIN! This is how Progressives work and to say that people wanted Jeb Bush to run as Pres or VP?!” Even people ostensibly on our side of the political fence blame Bush.

Because we’re now faced with the political reality of the survival of Obamacare, it’s a waste of time, and politically lazy, to blame it on judges, Democrats, Congressional Republicans, George W. Bush or anyone but the person we see every morning in the mirror. In other words, let’s screw our courage to the sticking place, quit worrying about what your boss or your neighbor or your kids think about your beliefs, get out into the streets, organize the socks off everyone you know and fight like hell without rest until Obamacare is repealed.

Or get used to it.
Tell ’em where you saw it. Http://www.victoriataft.com

Pete the Banker: Be Wary of the Rosy Housing Numbers

Be wary of these fluffy mass media headlines, “U.S. single-family home prices picked up for a third month in a row “ and “Annual pending home sales are up 13.3%, while, compared to April 2012, May is up nearly 6%”
Most owner occupied (as distinct from investor)  residential pending sales are subject to financing.  Just because a home purchaser enters an earnest money agreement it doesn’t mean that the purchase will close three months later if it can’t be financed.   Increases in pending sales don’t necessarily translate into actual sales. 
Additionally, investors cash purchases still dominate the residential sales market.  Those markets recently seeing the largest sales increases as reported by both Core Logic and Case Shiller showed a heavy concentration of distressed sales according to Diane Olick of CNBC
Two major problems persist in the housing market.  Distressed sales and potential distressed properties inventory still dominate the market.  The potential home inventory exceeds the stated inventory because of shadow inventory numbers and distressed values of housing.  The National Association of Realtors figures include houses on the market, not potential future inventory.   The estimated shadow inventory is up to 4MM units.   This number is further compounded by underwater borrowers (11 MM by most estimates with Zillow even higher ) who are trapped in existing homes at values less than their mortgage balance as well as by mortgage modifications (some 1MM under HAMP and 4 MM Hope Now) many of which re-default within 12 – 18 months after modification.  Both of these sources will inflate future housing inventory levels. 
The second problem is financing.  Lawrence Yun, NAR chief economist said, “The housing market is clearly superior this year compared with the past four years,”  and  “Actual closings for existing-home sales have been notably higher since the beginning of the year and we’re on track to see a 9 to 10% improvement in total sales for 2012.”  Notice that Yun states that sales will increase 10% this year, yet according to the Mortgage Bankers Association sales are only 20% of total current residential mortgage loan financings.  Refinances, not housing sales, are driving the mortgage financing market.  Even a 10% increase in sales this year belies a healthy housing market.
The Mortgage Bankers Association projects total single family residential financings of $1.2 Trillion this year.  While that is slightly higher than last year’s results and  20% higher than their earlier projection this year, it is still only one half of the total financing volume in 2007.  The financing market is still overly dependent upon Freddie, Fannie and the FHA.  These government entities in the absence of Administration and Congressional reform (the House has passed reform measures, Harry Reid and the Senate seem absent), now provide more than 85% of residential financing.   And with every home refinanced, the archaic GSE model draws additional capital funds from the American taxpayer, a subsidy engineered to perpetuate the government’s failed social engineering.  Until private funds return to the mortgage market (likely requiring higher rates commensurate with risk), financing volume and increasing owner occupied homeownership will languish. 
Washington, DC and this Administration continue to rely upon active Federal interference and artificially low interest rates to magically re-awaken the housing market.  It hasn’t worked over the past 3+ years and it won’t work.  Until the residential housing market is unfettered, hope of a sustained improvement in the housing and housing finance markets will continue to be nothing more than myth!
Pete the Banker is a Portland area banker. And that’s all we’ll say because we know what happens to Portland Businessmen who are more conservative who speak truth to power, er, tyrants.
Tell ’em where you saw it. Http://www.victoriataft.com

Here Come the ObamaCare AtTAX Ads

Within an hour of the US Supreme Court decision on ObamaCare, Romney’s reelection campaign picked up. From New York Magazine,

In less than twelve hours after the Supreme Court delivered its landmark ruling Thursday upholding President Obama’s Affordable Care Act, the Romney campaign raised $3.2 million and counting in donations through its website, according to Romney spokeswoman Andrea Saul. Considering that Romney and the RNC had about $107 million on hand at the end of May, the figure itself may not seem that significant. However, Buzzfeed reports that the donations poured in from more than 30,000 individual donors. By comparison, Romney’s campaign only received 27,661 individual donations during the entire month of May.

And the commercials have hit the web and airwaves:

Tell ’em where you saw it. Http://www.victoriataft.com

Scott St. Clair: The ObamaCare Decision; The Only Surprise is That Anyone is Surprised

Obamacare is constitutional, says the United States Supreme Court – now what?

At the outset, I’m neither shocked nor surprised at the outcome. Like most common-sense people I regard Obamacare as an abomination and a one-way ticket to bloating the federal budget even more than it is. But I also know something about courts and the law, so I never expect a court to do what everyone thinks it will or should do – courts do what they do. Welcome to a hard dose of judicial reality.

But in that reality is a great big club – the right club – that will beat the beast to death: The hatred Americans have for being over taxed, especially to the tune of $1.76 trillion. Obamacare is now the largest tax increase in American history.

From my early days in activism I learned that relying on courts for your 

political salvation is a fools’ errand. Political issues can only be decided where political issues are always decided, and that’s in the streets, at the ballot box and in the Legislature, in this case Congress. Obamacare is a political issue, and it ultimately must be decided politically.

By upholding the individual mandate as a tax, Mitt Romney now has a new campaign tag line that will damage President Obama and the Democrats: The Obamacare tax on the middle class
Tax, tax, tax, tax, tax, tax – say it often enough and it will stick.

So, there’s some comfort to be taken from this statement found at the outset of Chief Justice John Roberts’ majority opinion: “We do not consider whether the Act embodies sound policies. That judgment is entrusted to the Nation’s elected leaders.” And I would add it includes the judgment of the voters. 
The court took pains to emphasize its tradition to bend over backwards, if necessary, to uphold a legislative act rather than strike it down. By calling the Obamacare individual mandate a tax rather than a penalty for not engaging in commerce, the Court found a peg upon which to hang its judicial robes. 

In simple terms, I defer to SCOTUSBlog.com, which said:
“There were not five votes to uphold (Obamacare) on the ground that Congress could use its power to regulate commerce between the states to require everyone to buy health insurance. However, five Justices agreed that the penalty that someone must pay if he refuses to buy insurance is a kind of tax that Congress can impose using its taxing power. That is all that matters. Because the mandate survives, the Court did not need to decide what other parts of the statute were constitutional…” 
I’ve read a lot of court opinions in my time that do pretty much what’s described – it’s just that this time, the stakes were much higher.

What made me nervous during the run up to the decision was the proliferation of pundits and amateurs making cock-sure predictions that the law would be struck down. When the like-minded talk exclusively with each other, they convince themselves that their hopes are facts and that their facts control. Courts don’t work that way, and people need to understand that.

Literally, within seconds of the decision and opinion being made public, the Internet was swamped with what I can only call dopey statements from the know-nothing wing of the conservative movement. “Chief Justice John Roberts is now dead to me.” “Impeach the Supreme Court.” 

Perhaps the worst was this one dumped on one of my Facebook posts on the decision: “Bush screws us AGAIN! This is how Progressives work and to say that people wanted Jeb Bush to run as Pres or VP?!” Even people ostensibly on our side of the political fence blame Bush.

Because we’re now faced with the political reality of the survival of Obamacare, it’s a waste of time, and politically lazy, to blame it on judges, Democrats, Congressional Republicans, George W. Bush or anyone but the person we see every morning in the mirror. In other words, let’s screw our courage to the sticking place, quit worrying about what your boss or your neighbor or your kids think about your beliefs, get out into the streets, organize the socks off everyone you know and fight like hell without rest until Obamacare is repealed.

Or get used to it.
Tell ’em where you saw it. Http://www.victoriataft.com

Pete the Banker: Be Wary of the Rosy Housing Numbers

Be wary of these fluffy mass media headlines, “U.S. single-family home prices picked up for a third month in a row “ and “Annual pending home sales are up 13.3%, while, compared to April 2012, May is up nearly 6%”
Most owner occupied (as distinct from investor)  residential pending sales are subject to financing.  Just because a home purchaser enters an earnest money agreement it doesn’t mean that the purchase will close three months later if it can’t be financed.   Increases in pending sales don’t necessarily translate into actual sales. 
Additionally, investors cash purchases still dominate the residential sales market.  Those markets recently seeing the largest sales increases as reported by both Core Logic and Case Shiller showed a heavy concentration of distressed sales according to Diane Olick of CNBC
Two major problems persist in the housing market.  Distressed sales and potential distressed properties inventory still dominate the market.  The potential home inventory exceeds the stated inventory because of shadow inventory numbers and distressed values of housing.  The National Association of Realtors figures include houses on the market, not potential future inventory.   The estimated shadow inventory is up to 4MM units.   This number is further compounded by underwater borrowers (11 MM by most estimates with Zillow even higher ) who are trapped in existing homes at values less than their mortgage balance as well as by mortgage modifications (some 1MM under HAMP and 4 MM Hope Now) many of which re-default within 12 – 18 months after modification.  Both of these sources will inflate future housing inventory levels. 
The second problem is financing.  Lawrence Yun, NAR chief economist said, “The housing market is clearly superior this year compared with the past four years,”  and  “Actual closings for existing-home sales have been notably higher since the beginning of the year and we’re on track to see a 9 to 10% improvement in total sales for 2012.”  Notice that Yun states that sales will increase 10% this year, yet according to the Mortgage Bankers Association sales are only 20% of total current residential mortgage loan financings.  Refinances, not housing sales, are driving the mortgage financing market.  Even a 10% increase in sales this year belies a healthy housing market.
The Mortgage Bankers Association projects total single family residential financings of $1.2 Trillion this year.  While that is slightly higher than last year’s results and  20% higher than their earlier projection this year, it is still only one half of the total financing volume in 2007.  The financing market is still overly dependent upon Freddie, Fannie and the FHA.  These government entities in the absence of Administration and Congressional reform (the House has passed reform measures, Harry Reid and the Senate seem absent), now provide more than 85% of residential financing.   And with every home refinanced, the archaic GSE model draws additional capital funds from the American taxpayer, a subsidy engineered to perpetuate the government’s failed social engineering.  Until private funds return to the mortgage market (likely requiring higher rates commensurate with risk), financing volume and increasing owner occupied homeownership will languish. 
Washington, DC and this Administration continue to rely upon active Federal interference and artificially low interest rates to magically re-awaken the housing market.  It hasn’t worked over the past 3+ years and it won’t work.  Until the residential housing market is unfettered, hope of a sustained improvement in the housing and housing finance markets will continue to be nothing more than myth!
Pete the Banker is a Portland area banker. And that’s all we’ll say because we know what happens to Portland Businessmen who are more conservative who speak truth to power, er, tyrants.
Tell ’em where you saw it. Http://www.victoriataft.com

Here Come the ObamaCare AtTAX Ads

Within an hour of the US Supreme Court decision on ObamaCare, Romney’s reelection campaign picked up. From New York Magazine,

In less than twelve hours after the Supreme Court delivered its landmark ruling Thursday upholding President Obama’s Affordable Care Act, the Romney campaign raised $3.2 million and counting in donations through its website, according to Romney spokeswoman Andrea Saul. Considering that Romney and the RNC had about $107 million on hand at the end of May, the figure itself may not seem that significant. However, Buzzfeed reports that the donations poured in from more than 30,000 individual donors. By comparison, Romney’s campaign only received 27,661 individual donations during the entire month of May.

And the commercials have hit the web and airwaves:

Tell ’em where you saw it. Http://www.victoriataft.com