Month: January 2021

Authored by Dave DeCamp via AntiWar.com,

On Monday, January 4th, the British judge presiding over the extradition trial of WikiLeaks founder Julian Assange will decide whether or not Assange will be extradited to the US and tried under the Espionage Act for exposing US war crimes.

If extradited, Assange could face up to 175 years in prison. President Trump’s Justice Department indicted the WikiLeaks founder on 17 counts of espionage and one count of conspiracy to commit a computer crime. The charges revolve around documents provided to WikiLeaks by former US Army soldier Chelsea Manning.

There have been rumors that President Trump is considering pardoning Assange, and many are urging him to do so. Assange’s fiancee Stella Moris made her case for the pardon recently on Fox News.

“The consequences of a trial against Julian don’t just affect him or us as a family because everyone agrees this is a terrible, terrible case. It’s a terrible case because it is the end of the first amendment,” she said.

Assange has been held in London’s Belmarsh Prison since April 2019. A UN special rapporteur, Nils Melzer, has likened Assange’s treatment in Belmarsh to torture.

A U.K. judge will rule whether WikiLeaks founder Julian Assange should be extradited to the U.S. after weeks of talk about a possible pardon from Donald Trump https://t.co/q6CmtoyxkQ

— Bloomberg (@business) December 31, 2020

Melzer recently spoke out against the extradition, accusing the US of criminalizing journalism.

“In essence, the United States is trying to criminalize investigative journalism. That’s the purpose of the extradition request, nothing else,” Melzer said.

Meeting for a rare New Year’s Day session, the Senate voted 81-13 on Friday to override President Trump’s veto of the National Defense Authorization Act (NDAA), which Trump said “fails to include critical national security measures, includes provisions that fail to respect our veterans and our military’s history, and contradicts efforts by my Administration to put America first in our national security and foreign policy actions.”

A two-thirds majority was needed to override the veto – which would mark the first in Trump’s presidency. The NDAA authorizes over $740 billion in military programs and construction, as well as 3% pay raises for US troops. It also contains a provision to rename military bases named after Confederate generals.

Trump also wanted to force a repeal of Section 203 protections for social-media companies enjoy due to their constant editorializing of user content, however lawmakers refused to include the provision.

The rare January 1st session comes as the new Congress is set to be sworn in on Sunday.

On Wednesday, the Senate voted 80-12 to begin an official debate on overriding the veto, proving that Congress can act with lightning speed when properly motivated.

Senate Majority Leader Mitch McConnell (R-KY) said on Tuesday that the NDAA is crucial to national defense, and to “deter great power rivals like China and Russia.” The bill “will cement our advantage on the seas, on land, in the air, in cyberspace and in space,” he added.

During Trump’s time in office, he has vetoed eight other bills – several of them focused on foreign policy and national security issues, according to the Wall Street Journal.

The fight over the NDAA also underscored broader tensions over national-security issues between congressional Republicans and Mr. Trump. On foreign policy and national-security issues, many Republicans have readily bucked Mr. Trump during his presidency even as they have stood by him on many other issues.

For instance, the Trump administration’s recent effort to cut troop levels in Afghanistan in half, to roughly 2,500, by Jan. 15, has alarmed some Republicans. The NDAA requires the administration to submit to Congress a comprehensive assessment of the withdrawal before it can use funds to pull out troops. -WSJ

In addition to creating a commission to assess changes to bases, displays, monuments, symbols and other paraphernalia related to Confederate commanders, the bill limits the president’s ability to use emergency military construction funds for other purposes. It also restricts employees or former employees from the military-industrial complex to work directly for the Chinese government or government-controlled companies.

Los Angeles County’s new, embattled district attorney, George Gascón, is facing allegations that his special advisor, Mario Trujillo, offered a backdoor “sweetheart” deal in the case of a gang member charged with murder.

His office issued a brief reply to The Epoch Times denying that Trujillo offered a backdoor deal in the case of Rudy Dominguez.

Chris Karr reports that Dominguez is an admitted 18th Street gang member who is charged with the murder of 26-year-old Fernando Rojo Jr., attempted murder of five others, and six counts of discharging a firearm from a vehicle.

In hearing the case on Dec. 15 and Dec. 28, Judge Mark S. Arnold criticized and defied Gascón’s reforms, which would provide leniency in sentencing for Dominguez.

During the Dec. 15 hearing, Dominguez’s defense attorney Traci Blackburn also said Trujillo had offered a backdoor deal that would give the defendant a seven-year sentence. He was otherwise looking at the possibility of life without parole.

Blackburn said, according to a hearing transcript obtained by The Epoch Times, that the offer “was conveyed to me.” Arnold asked “From who?”

“I believe it was Mario Trujillo,” Jefferey Herring, the prosecutor, said.

“I’ve also been told from a separate set of supervisors there is no offer, and that’s why we’re in a conundrum today.”

Blackburn then confirmed the offer came from Trujillo. The matter would be picked back up at the Dec. 28 hearing. At the Dec. 15 hearing, Arnold began his defiance of Gascón’s controversial reform banning most enhancements, which are additional charges or penalties based on the gravity of the crime or the defendant’s criminal history.

Judge Pushes Back on Reforms

Herring said at the hearing enhancements should not be allowed in Dominguez’s case “in the interest of justice.”

“And the interest of justice is met how?” Arnold asked.

Herring explained he’s following the new DA’s position that extended prison sentences are too long, costly, ineffective, and “harm people in underserved communities.”

At that point, Arnold initiated a dialogue with the victim’s four family members who were present.

“What do you think about eliminating all of these allegations that Mr. Herring’s office is looking to eliminate?” he asked America Rojo, the sister of the deceased.

“I’m sorry, I don’t think it’s fair,” she said.

“Are you crying?” Judge Arnold asked. “Why are you crying?”

“I just feel that we need justice,” America Rojo said. “It’s just not fair that he—if he doesn’t get as much years.”

The victim’s mother, Teresa Rojo, echoed the same sentiment.

“It’s not fair that they would lower many years … because somebody who is doing harm to people, they should pay,” she said.

After hearing from the family, the court cited 1975’s People vs. Orin to define what “the interest of justice” means, concluding that, “if courts terminated prosecutions of crimes or enhancements … without adequate reason, it would frustrate the orderly and effective operation of our criminal justice procedure as envisioned by the legislature.”

Arnold denied the motion to dismiss sentencing enhancements or special circumstances.

Despite the court’s denial, when the case resumed on Dec. 28, the prosecution asked for permission to “put specific language on the record,” according to the hearing transcript.

Then, Herring read from a script Gascón issued on Dec. 15 to deputy district attorneys, a portion of which states, “It is the position of this office that [these laws] are unconstitutional … [they] provide no deterrent effect or public safety benefit of incapacitation—in fact, the opposite may be true, wasting critical financial state and local resources.”

After the reading, Arnold said, “This is something you’re reading. These are not your words.”

He proceeded to explain why sections of the script the prosecution read did not apply to Dominguez’s case.

Arnold asked if this reading represented a second attempt to dismiss enhancements, the prosecution said yes, and the court denied the motion for a second time.

“[The motion] does not rise, in any way, shape, or form, to the level of in the interest of justice,” Arnold said.

“[Gascón’s] special directive has no legal authority. … It’s just their view.”

Alleged Backdoor Offer Dismissed

Arnold went on to say he was “puzzled” by the revelation from the previous hearing that an offer of seven years had been made.

At that point, Larry Droeger, head deputy of the Hardcore Gang Division, explained to the court that there is a longstanding, engrained protocol whenever official offers are obtained. He said that this protocol—which he clarified in detail—was apparently ignored in this case.

“There’s a reason why we follow that procedure,” Droeger said. “The reason is to ensure against improper influence or bias in the decision-making process. It’s also so that we have a uniform and fair application of our policies towards all similar situated defendants.”

He added: “If [Trujillo made an offer], I don’t know under what authority he did that.”

“It’s a good thing,” Arnold said, adding that such an offer should not exist given the circumstances.

“Because there’s no way I could look at myself in the mirror and … live with a plea bargain of seven years on this case. … There’s no way I would have accepted that, based on my knowledge of this case.”

Conflict of Interest?

Sam Dordulian, who represented the surviving members of the Rojo family at the hearing, sought to have the DA’s office recused from the case due to a conflict of interest.

He pointed out that the seven-year offer – which, by Blackburn’s admission on Dec. 15, was facilitated by deputy public defender Tiffany Blackwell – represented a conflict of interest because Blackwell is part of Gascón’s transition team and a member of his policy committee.

“The whole purpose of the chain of command that the court just heard is to avoid the specific thing that happened in this case,” Dordulian argued.

“[It’s] to avoid people like Mario Trujillo [going] through the back door [to] give a special offer to Ms. Blacknell, who was the public defender on this specific case, a sweetheart deal that just could not be justified by the facts of the case.”

The court maintained that so long as the seven-year offer was off the table, no conflict of interest existed. Therefore, Dordulian’s request was denied.

“[The] bottom line is they tried to get away quietly with a backdoor, unethical, and improper deal [with] Ms. Blacknell’s client and they got caught,” Dordulian told The Epoch Times via email.

“Thankfully it never materialized, but certainly not for a lack of trying on the part of Mario Trujillo, who was willing to let a gangbanger murderer walk the streets after one man was killed and another injured by a bullet after a few short years.”

He added:

“This is the new face of justice in Los Angeles under George Gascón’s policies.”

The next hearing date is Jan. 27. The trial will commence within 60 days from that date.

But the situation gets worse as The Epoch Times’ Chris Karr reports that  The Association of Deputy District Attorneys (ADDA) for Los Angeles County has filed a civil lawsuit alleging that new policies enacted by Gascón violate California state law and place prosecutors in an impossible position.

“Do we follow our legal and ethical responsibilities and risk getting disciplined, even fired, by our new boss?” ADDA Vice President Eric Siddall said in a statement.

“Or do we follow his policy directives and risk losing our California State Bar Cards and, by extension, our ability to practice law anywhere in the state?”

The suit, filed Dec. 30, argues that Gascón’s directives overstep his executive duty to enforce the law. Specifically, ADDA takes issues with the DA’s Dec. 7 directive prohibiting prosecutors from filing enhancements, which are additional charges or penalties based on the gravity of a crime or the defendant’s criminal history.

In a Dec. 30 statement, Gascón reiterated the same perspective he has expressed on several occasions.

“I have spent my life ensuring those who pose a threat to our community are held accountable and kept away from the rest of us,” he wrote.

“During those years, enhancements and strike allegations have never been shown to enhance our safety. In fact, studies have shown excessive sentences exacerbate recidivism and create more victims in the future.”

He added: “After a summer of unrest, Los Angeles County voters embraced this new, modern approach. The will of the voters must not be mistaken as a commentary on the hundreds of Deputy DAs who labor, day in and day out, to protect the public. … As we’ve seen in recent weeks, this new approach will take some fine-tuning and a tolerance for change.

“Despite today’s legal challenge, I believe a collaborative path exists to achieve these goals based on what research shows, what voters want, and what LA County deserves.”

ADDA holds that a blanket prohibition on enhancements is impracticable and must be based on individual circumstances. The DDAs allege Gascón has essentially taken on the role of a legislative body.

They are seeking a restraining order to prevent Gascón from “putting his personally-held views as to which laws are or are not good policy … above the laws enacted by the state legislature and by the voters,” according to a Dec. 30 ADDA statement.

“While an elected District Attorney has wide discretion in determining what charges to pursue in an individual case, that discretion does not authorize him or her to violate the law or to direct attorneys representing the district attorney’s office to violate the law,” Michele Hanisee, president of the ADDA, said in the statement.

Meanwhile, a trio of legal experts from Northern California released a joint statement criticizing the lawsuit and standing behind Gascón.

“We are confident this attempt to obstruct the will of the voters will be struck down,” said Erwin Chemerinsky, dean of the University of California–Berkeley Law School; David Mills, a professor at Stanford Law School; and Michael Romano, director of Stanford Law School’s Three Strikes Project.

The statement says the California Supreme Court has held that “California district attorneys ‘are given complete authority to enforce the state criminal law in their counties.’”

It says the ADDA is being inconsistent because for decades it has remained silent while former DAs “often dismissed enhancements and Three Strikes allegations in the interests of justice.” the Three Strikes law gives defendants a sentence of 25 years to life if convicted of three violent or severe felonies.

“That the Association now claims the practice to be unlawful is more reflective of their longstanding opposition to reform and the will of millions of Angelenos than it is the legality of DA Gascón’s directives,” it states.

“DA Gascón’s policies will enhance health and safety in Los Angeles and begin a much needed process to reduce epidemic levels of mass incarceration.”

Some victims’ families have spoken out against Gascón’s reforms, which give leniency to those who committed crimes against their loved ones. They say enhancements should continue to be allowed, applying additional penalties for suspects whose crimes are especially heinous or who have a serious criminal history.

Gascón has called the application of enhancements a racist practice. He said in a Dec. 16 Zoom meeting they are “unethical” and “racist in application.” He said in a Dec. 18 letter they are “more likely to be applied to defendants who are African American or mentally ill.”

Former Los Angeles DA Steve Cooley is among Gascón vocal critics. He called Gascón’s reforms unconstitutional and unethical in an interview with The Epoch Times in December.

“They’ve taken an ideology and they’re forcing it onto a system of laws,” Cooley said.

The DDAs have spoken out against not only the reforms, but also Gascón’s methods of applying them. He has directed DDAs to read out scripts in any case where enhancements may be applied.

A portion of the script reads, “It is the position of this office that [these laws] are unconstitutional … [they] provide no deterrent effect or public safety benefit of incapacitation—in fact, the opposite may be true, wasting critical financial state and local resources.”

DDAs have also said they are being monitored and intimidated.

Gascón has not responded to The Epoch Times’ inquiries on these matters.

Never let a good scapegoat go to waste. For 2020, the excuse that keeps on giving is definitely Covid-19 – perhaps with a side of “wokeness”…

These are the excuses that banks are likely to lean on when they pull the bonus carpet out from underneath their employees. That’s right: as banks once again tee up large chunks of their own stock to buy back – and while fee revenue, trading revenue and investment banking revenue all scorch to record levels – bonuses are still expected to fall about 30% this year and firms are “considering layoffs to preserve profits”, according to Reuters.

And if the media is going to be complicit in labeling the cuts a result of “Coronavirus stress”, why wouldn’t you take these last few months of the pandemic to throw out everything but the kitchen sink?

Maybe someone should tell Reuters banks had a great year and – for the rich – there is no recession. 

Regardless, a compensation consultant said Wednesday that bonuses could “as much as 40%” and that “Wall Street firms are likely to cut pay for almost everyone and defer more of it to save cash.” 

The consultant, Alan Johnson of Johnson Associates, says “great” employees could see a 15% decline in bonuses with “meaningful deferrals” and that “sub-par” employees could see bonuses drop 50% or more. 

Even Johnson admits, the time is ripe for change: “Now is the time to get rid of the people you probably should have gotten rid of before. The industry has been carrying some extra weight for a while.”

Firms are trying to decide between cutting bonuses and laying off employees, one executive told Reuters. Another exec said that stalled M&A and IPO deals were making it tough for banks to “support the expense base”. 

Meanwhile, as FT noted just this morning, banks have brought in a record $124.5 billion in fees this year.  

The same piece notes that Wall Street’s biggest firms have generated a record $37 billion of investment banking fees in 2020. Here’s how that stacks up over the past decade:

In fact, Jason Goldberg, an analyst at Barclays, said: “It was a “very robust year for underwriting both debt and equity. You saw a bump this year as companies looked to access capital markets to shore up their balance sheets in the face of pandemic-related uncertainty.”

We were the first to mention the potential 30% bonus cut figure as far back as May of 2020, when – 7 months in advance – we wrote about how bonuses could fall “as much as 30%” this year. In October, we followed up, stating that bonuses were still expected to fall despite record trading revenue. 

In December, we noted that Deutsche Bank was likely going to be paring back bonuses and not even a week ago, we noted that Credit Suisse had all of a sudden “grown a conscience” and that bonuses would be down at the bank. Credit Suisse’s CEO had no problem blaming bonus cuts on taking the moral high-ground, as he said this week that “it’s too early to say, but generally you have to expect that bonuses will be down compared to last year and this is part of our solidarity and social responsibility. This is a challenge, but it’s something the whole industry is facing.”

 

That news came just days after we reported that bonuses at Goldman could wind up jumping 20% for some employees – namely its trading division – this year. Other divisions at Goldman would likely see cuts, the report noted. Traders who were able to navigate the volatility associated with Covid during the year are more likely to earn fatter bonuses than those who worked in sales, maintaining client relationships, we wrote.

Authored by Jeffrey Tucker via The American Institute for Economic Research,

The paper of record in 2020 shifted dramatically to the most illiberal stance possible on the virus, pushing for full lockdowns, and ignoring or burying any information that might contradict the case for this unprecedented experiment in social and economic control. This article highlights the exceptions. 

The first shocking sign of the placing of a persistent bias was a podcast with reporter Donald McNeil on February 27. This was the beginning. It was grossly irresponsible. He asserted that half the American public would get this disease and that it would have a case fatality rate of 2.5%, or 25 times as deadly as flu, hence 4.8 million dead people. No consideration of demographic gradients in risk and no knowledge of viral basics such as the tradeoff between severity and prevalence. Even if you leave aside the fog of fatality misclassification, he exaggerated the risk by 12 times but still spoke with a sense of certainty designed to create panic. 

Host Michael Barbaro himself seemed shocked:

“I thought you were here to bring calm, Donald.”

“I’m trying to bring a sense that if things don’t change, a lot of us might die,” he said.

“If you have 300 relatively close friends and acquaintances, six of them would die.”

The primal fear of disease is thus thrown into massive overdrive, following 100 years in which public health tried to bring rationality to the topic.

That podcast was followed by an op-ed by the same journalist/pundit: “To Take On the Coronavirus, Go Medieval on It.” It seemed incredible that such a responsible outlet would advocate the overthrow of a century of public-health wisdom and even immunological basics, but that’s what they did. At this point, the New York Times was fully committed to the narrative that we must dismantle society to save it. And there it has been for nearly a year of unbearably biased coverage. 

Even within the blatant and aggressive pro-lockdown bias, and consistent with the way the New York Times does its work, the paper has not been entirely barren of truth about Covid and lockdowns. Below I list five times that the news section of the paper, however inadvertently and however buried deep within the paper, actually told the truth. 

1. Your Coronavirus Test Is Positive. Maybe It Shouldn’t Be. 

Byline: Apoorva Mandavilli

I’m still stunned that the paper did a study that confirmed what people have suspected, namely that a high cycle threshold used on PCR testing was creating the appearance of a pandemic that might have long receded. The testing mania was generating wild illusions of millions of “asymptomatic” carriers and spreaders. How severe was the problem? Read this and weep:

In three sets of testing data that include cycle thresholds, compiled by officials in Massachusetts, New York and Nevada, up to 90 percent of people testing positive carried barely any virus, a review by The Times found.

On Thursday, the United States recorded 45,604 new coronavirus cases, according to a database maintained by The Times. If the rates of contagiousness in Massachusetts and New York were to apply nationwide, then perhaps only 4,500 of those people may actually need to isolate and submit to contact tracing.

The implications of this revelation are incredible. A major reason for the ongoing lockdowns are due to the pouring in of positive case numbers from massive testing. If 90% of these positive tests are false, we have a major problem. The whole basis of the panic disappears. All credit to the Times for running the article but why no follow up and why no change in its editorial stance? 

2. Scientists See Signs of Lasting Immunity to Covid-19, Even After Mild Infections.

Byline By Katherine J. Wu

Gone missing this year in public commentary has been much at all about naturally acquired immunities from the virus, even though the immune system deserves credit for why human kind has lasted this long even in the presence of pathogens. That the Times ran this piece was another exception in otherwise exceptionally bad coverage. It said in part: 

Scientists who have been monitoring immune responses to the virus are now starting to see encouraging signs of strong, lasting immunity, even in people who developed only mild symptoms of Covid-19, a flurry of new studies suggests. Disease-fighting antibodies, as well as immune cells called B cells and T cells that are capable of recognizing the virus, appear to persist months after infections have resolved — an encouraging echo of the body’s enduring response to other viruses….

Researchers have yet to find unambiguous evidence that coronavirus reinfections are occurring, especially within the few months that the virus has been rippling through the human population. The prospect of immune memory “helps to explain that,” Dr. Pepper said.

3. Why You Shouldn’t Worry About Studies Showing Waning Coronavirus Antibodies.

Byline Apoorva Mandavilli

Reinforcing the solid point above:

Data from monkeys suggests that even low levels of antibodies can prevent serious illness from the virus, if not a re-infection. Even if circulating antibody levels are undetectable, the body retains the memory of the pathogen. If it crosses paths with the virus again, balloon-like cells that live in the bone marrow can mass-produce antibodies within hours.

4. Schoolchildren Seem Unlikely to Fuel Coronavirus Surges, Scientists Say.

Byline: Apoorva Mandavilli

It’s still a shock that so many schools closed their doors this year, partly from disease panic but also from compliance with orders from public health officials. Nothing like this has happened, and the kids have been brutalized as a result, not to mention the families who found themselves unable to cope at home. For millions of students, a whole year of schooling is gone. And they have been taught to treat their fellow human beings as nothing more than disease vectors. So it was amazing to read this story in the Times: 

So far, schools do not seem to be stoking community transmission of the coronavirus, according to data emerging from random testing in the United States and Britain. Elementary schools especially seem to seed remarkably few infections.

5. One-Third of All U.S. Coronavirus Deaths Are Nursing Home Residents or Workers.

Byline Karen Yourish, K.K. Rebecca Lai, Danielle Ivory and Mitch Smith

Another strangely missing part of mainstream coverage has been honesty about the risk gradient in the population. It is admitted even by the World Health Organization that the case fatality rate for Covid-19 from people under the age of 70 is 0.05%. The serious danger is for people with low life expectancy and broken immune systems. Knowing that, as we have since February, we should have expected the need for special protection for nursing homes. It was incredibly obvious. Instead of doing that, some governors shoved Covid patients into nursing homes. Astonishing. In any case, the above article (and this one too) was one of the few times this year that the Times actually spelled out the many thousands times risk to the aged and sick as versus the young and healthy. 

Notable Opinion columns 

The op-ed page of the paper mirrored the news coverage, with only a handful of exceptions. Those are noted below. 

Is Our Fight Against Coronavirus Worse Than the Disease? 

Op-ed by David Katz 

I am deeply concerned that the social, economic and public health consequences of this near total meltdown of normal life — schools and businesses closed, gatherings banned — will be long lasting and calamitous, possibly graver than the direct toll of the virus itself. The stock market will bounce back in time, but many businesses never will. The unemployment, impoverishment and despair likely to result will be public health scourges of the first order.

Worse, I fear our efforts will do little to contain the virus, because we have a resource-constrained, fragmented, perennially underfunded public health system. Distributing such limited resources so widely, so shallowly and so haphazardly is a formula for failure. How certain are you of the best ways to protect your most vulnerable loved ones? How readily can you get tested?

Quarantine May Negatively Affect Kids’ Immune Systems.

Op-ed by Donna L. Farber and Thomas Connors

During the Covid-19 pandemic, the world is unwittingly conducting what amounts to the largest immunological experiment in history on our own children. We have been keeping children inside, relentlessly sanitizing their living spaces and their hands and largely isolating them. In doing so, we have prevented large numbers of them from becoming infected or transmitting the virus. But in the course of social distancing to mitigate the spread, we may also be unintentionally inhibiting the proper development of children’s immune systems.

What Has Lockdown Done to Us?.

Op-ed by By Drew Holden

Our mental health suffers, too. The psychological effects of loneliness are a health risk comparable with risk obesity or smoking. Anxiety and depression have spiked since lockdown orders went into effect. The weeks immediately following them saw nearly an 18 percent jump in overdose deaths and, as of last month, more than 40 states had reported increases. One in four young adults age 18 to 25 reported seriously considering suicide within the 30-day window of a recent study. Experts fear that suicides may increase; for young Americans, these concerns are even more acute. Calls to domestic violence hotlines have soared. America’s elderly are dying from the isolation that was meant to keep them safe.

On December 16, Fed Chair Jerome Powell was specifically asked if he is seeing any signs of “valuation pressures” in the US housing market which according to the latest Case Shiller data was surging at the fastest pace in 6 years.

Predictably, Powell was not concerned about the recent surge in home prices and he said as much during the Q&A: “I would say from a financial stability standpoint, housing prices are not of a level of concern right now. That’s just reflective of a lot of demand. And builders are going to bring forth supply…. Housing prices themselves are not a financial stability concern at the moment. We will watch that carefully. But in the near term, I wouldn’t think that that’s an issue that we’d be concerned about.”

Needless to say, we disagree because one place where the trillions in newly created liquidity has ended up…

… is the housing market as the following stats and charts from Goldman reveal:

• -100bp: 30-year mortgage rates fell by 100bp between 2019Q4 and 2020Q4.
• +29%: single-family housing starts increased by 29% nfrom October 2019 to October 2020.
• +7.0%: the Case-Shiller US house price index has grownn by 7.0% from 2019Q3 to 2020Q3.
• 80%: 80% of outstanding conventional 30-year mortgage borrowers have a 50bp or larger refinance incentive as of 2020Q4 (up from 50% in 2019Q4).
• $2.8tn: agency MBS issuance YTD has totaled $2.8tn (up from $1.4tn YTD in 2019).
• $800bn: Federal Reserve agency MBS holdings increased by $800bn over the past year.

With that in mind, here is Goldman’s housing activity tracker. If this isn’t a bubble…

Not convinced? Virtually every data series is experiencing a V-shaped recovery.

As demand soars, prices have no way to go but up because supply is plunging:

As are mortgage rates, which hit rock bottom records over a dozen times in 2020…

… thanks to the Fed which has been on an MBS buying spree, purchasing more than $100 billion in mortgage backed notes in November alone:

Meanwhile getting a loan remains quite easy despite some recent tightening in lending standards:

Surging home prices of course mean that young Americans can’t afford to buy, and a record 34% of them now live with their parents…

… even as household formations are rising…

… forcing most younger workers to rent, pushing the rental vacancy rate to all time lows…

… even as other age cohorts leave cities and buy, pushing the homeownership rate sharply higher.

While high prices may be ultimately unsustainable, the recent burst in stimulus payments means that the ratio of household financial obligation payments to disposable personal income is at an all time low…

… as is the debt service ratio, mostly thanks to record low rates.

Finally, while there has been a modest drop in forbearance plans, the fact that so many Americans continue to live mortgage free – indefinitely – is yet another factor pushing prices up.

So between the plunge in supply, the surge in demand, and the ongoing stimulus booster shots, the effect on prices is quite clear: as the chart below shows, the median prices of new and existing single-family homes is at or near all time highs…

 … which has dropped the percentage of mortgage properties with negative equity to the lowest it has been on record…

… while the annualized Q/Q home price appreciation is the highest since the financial crisis.

In short: between the Fed’s record low rates, Congress’ fiscal stimulus checks, record debt-fueled demand, and historically low supply the housing market is now even hotter than it was during the peak of the 2006/7 housing bubble.

And since the Fed won’t do anything to address this – as per Powell’s comments – and the Fed will certainly not hike rates, one wonders what will happen some time in 2021 or 2022 when we will live through the collective bursting of both the biggest stock market and housing bubble at the same time. Actually no – there in no need to wonder: all of this is set to take place right around the time the Fed switchs to digital dollars…

… effectively ensuring that it can deposit digital money to everyone, any time and anywhere, guaranteeing that nothing will ever pop the world’s biggest asset bubble.

Access to the full report available to all professional subscribers

Authored by Charles Hugh Smith via OfTwoMinds blog,

Choose wisely, America, or the options for a positive outcome will vanish like mist in Death Valley on a clear July afternoon.

From the point of view of evolution, the most hopeful scenario for 2021 is the sudden and complete collapse of everything that is obsolete, inefficient, ineffective and sclerotic. When obsolete systems and entities pass away quickly, the cost and pain are processed and absorbed quickly as well: enterprises go bankrupt and their assets are liquidated, failed ventures close, and schemes that didn’t yield the desired benefits are scrapped.

This is the evolutionary process. Whatever has lost its selective advantages will succumb to selective pressures and fade away.

The problem arises when self-serving insiders siphon resources to keep their obsolete, inefficient, ineffective and sclerotic gravy-train protected from selective pressures. Keeping a terminally ill human alive is an analogy: it’s possible to extend the life of a terminally ill person at enormous expense and effort, but the patient isn’t restored to their previous health or vigor–that is no longer even a possibility. They are no longer their previous self, and this is why people choose to avoid extraordinary interventions in their final phase of life.

Economically obsolete / terminal entities, on the other hand, always choose extraordinary monetary interventions to keep their gravy-train alive, even if they bleed the rest of the economy dry in the process.

If the buggy-whip industry existed today, Congress would grant it billions of dollars in low-interest loans, tax breaks and direct subsidies so those who made fortunes in the buggy-whip industry would continue to prosper, not from a productive activity but from subsidies and loans that ultimately weaken the entire economy and society.

The problem here is that it’s effortless and initially costless to conjure trillions of dollars out of thin air and use it to keep obsolete, inefficient, ineffective and sclerotic industries, sectors, agencies and schemes on life support. The eventual costs, consequences and risks are transferred to the entire economy, all to keep politically protected insiders and schemes well-funded even as their fundamental value proposition has collapsed.

This politically expedient “solution”–printing / borrowing trillions to stave off Natural Selection–is inevitably the first choice of corrupt, failed governments and central banks, and just as inevitably, this expedient “fix” eventually brings the entire economy to its knees.

Recall that risk cannot be made to vanish, it can only be transferred to others. By printing / borrowing trillions of dollars to prop up doomed zombies, the state and central bank (the Federal Reserve) have transferred the soaring risks of their mismanagement to the entire economy and society.

This politically expedient “solution”–saving the most inefficient and costly sectors because of the political power of insiders– is always the first choice of weak and/or corrupt leadership, for whom this is isn’t just the first choice, it’s the only choice.

History is emphatic: over-borrowing and devaluing the currency by over-issuing “money” leads to decay and collapse. The lucky few decay into tourist destinations as the remnants of their past glory retain a nostalgic glow of artistry and power.

The unfortunate many simply decay and collapse. Thus the most hopeful scenario for 2021 is that the obsolete, inefficient, ineffective and sclerotic sectors and agencies, no matter how sacrosanct, collapse or downsize quickly. This drastically reduces the cost and pain to levels that the economy as a whole can absorb.

The worst-case scenario is our weak and/or corrupt government and central bank keep all the doomed zombies on life support, a process that bleeds the economy of adaptability, flexibility, innovation and resilience. The path of least resistance, the politically expedient path–over-borrowing and devaluing the currency by over-issuing “money”–leads to decay and collapse. There is no other possible result, no other possible outcome.

Choose wisely, America, or the options for a positive outcome will vanish like mist in Death Valley on a clear July afternoon.

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