Month: December 2020

The Trouble With John Roberts’ Brand of Legal Conservatism

rtrltwelve072915

Writing in The Washington Post, law professor Adrian Vermeule and historian Varad Mehta lambast Chief Justice John Roberts, claiming his “apostasies have demoralized the right” and “emboldened the left.” As they see it, Roberts “has engaged in strategic maneuvering,” casting his lot with the Court’s Democratic appointees in certain high-profile cases solely in order to protect the Court’s reputation. “His goal appears to be to preserve what he takes to be the legitimacy of the Supreme Court, by disproving any suspicion that the justices vote ideologically or otherwise engage in political behavior.” The chief justice is guilty of unprincipled judging, they assert, and his shenanigans are doing damage to the Court’s legitimacy.

It has certainly become commonplace to think of Roberts as a sort of politician in robes, sticking his finger in the air to see which way the political winds blow. The problem with that way of thinking is that it misses something crucial about Roberts and his judicial handiwork. Namely, Roberts does have an underlying judicial philosophy that motivates him in many of these big cases; it just happens that this philosophy has rapidly fallen out of favor among many of his fellow conservatives.

I am referring to the philosophy of judicial deference or restraint, which, in a nutshell, is the idea that people should take their complaints to the ballot box, not to the courthouse. This view once occupied the commanding heights of the American conservative movement, exemplified most famously by the writings of the late conservative legal icon Robert Bork. “In wide areas of life,” Bork argued, “majorities are entitled to rule, if they wish, simply because they are majorities.” That meant that the courts should butt out.

Bork did not invent this view. Rather, he inherited it from certain towering legal figures from the early 20th century. The most influential of them was Supreme Court Justice Oliver Wendell Holmes Jr., who repeatedly preached “the right of a majority to embody their opinions in law.”

That deferential view is not as popular among conservatives today as it once was. But Roberts can still be seen carrying the Holmes/Bork torch.

During his 2005 Senate confirmation hearings, for instance, Roberts tried to put a positive spin on Kelo v. City of New London, a recently decided case that left many conservatives fuming, angry that the Court had shortchanged property rights in favor of a controversial eminent domain scheme. Roberts offered a different view. The Court’s ruling “leaves the ball in the court of the legislature,” he said, “and I think it’s reflective of what is often the case and people sometimes lose sight of, that this body [Congress] and legislative bodies in the States are protectors of people’s rights as well.” (Take your complaint to the ballot box, not to the courthouse.)

And then there is National Federation of Independent Business v. Sebelius (2012), which is perhaps Roberts’ most famous legal judgment. At issue was the survival of the Patient Protection and Affordable Care Act, also known as Obamacare.

Roberts saved the law from destruction. Why did he do it? In their piece for The Washington Post, Vermeule and Mehta cite the Obamacare case as “an early, important example” of Roberts’ “dismaying trend of tactical decisions.” He upheld President Barack Obama’s signature law, in their view, in order to save the Court from scorching liberal criticism.

But Vermeule and Mehta’s take misses what actually happened in Roberts’ Obamacare ruling. Not only did Roberts’ borrow a page from the Holmes/Bork playbook, but he specifically invoked one of Holmes’ most notable statements about the proper role of the courts. “If my fellow citizens want to go to Hell I will help them,” Holmes wrote in 1920. “It’s my job.” Here is how Roberts put it in 2012: “It is not our job to protect the people from the consequences of their political choices.”

Whether or not you agree with the chief justice’s embrace of judicial deference, it would be a mistake to downplay this important facet of his thinking.

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The Trouble With John Roberts’ Brand of Legal Conservatism

rtrltwelve072915

Writing in The Washington Post, law professor Adrian Vermeule and historian Varad Mehta lambast Chief Justice John Roberts, claiming his “apostasies have demoralized the right” and “emboldened the left.” As they see it, Roberts “has engaged in strategic maneuvering,” casting his lot with the Court’s Democratic appointees in certain high-profile cases solely in order to protect the Court’s reputation. “His goal appears to be to preserve what he takes to be the legitimacy of the Supreme Court, by disproving any suspicion that the justices vote ideologically or otherwise engage in political behavior.” The chief justice is guilty of unprincipled judging, they assert, and his shenanigans are doing damage to the Court’s legitimacy.

It has certainly become commonplace to think of Roberts as a sort of politician in robes, sticking his finger in the air to see which way the political winds blow. The problem with that way of thinking is that it misses something crucial about Roberts and his judicial handiwork. Namely, Roberts does have an underlying judicial philosophy that motivates him in many of these big cases; it just happens that this philosophy has rapidly fallen out of favor among many of his fellow conservatives.

I am referring to the philosophy of judicial deference or restraint, which, in a nutshell, is the idea that people should take their complaints to the ballot box, not to the courthouse. This view once occupied the commanding heights of the American conservative movement, exemplified most famously by the writings of the late conservative legal icon Robert Bork. “In wide areas of life,” Bork argued, “majorities are entitled to rule, if they wish, simply because they are majorities.” That meant that the courts should butt out.

Bork did not invent this view. Rather, he inherited it from certain towering legal figures from the early 20th century. The most influential of them was Supreme Court Justice Oliver Wendell Holmes Jr., who repeatedly preached “the right of a majority to embody their opinions in law.”

That deferential view is not as popular among conservatives today as it once was. But Roberts can still be seen carrying the Holmes/Bork torch.

During his 2005 Senate confirmation hearings, for instance, Roberts tried to put a positive spin on Kelo v. City of New London, a recently decided case that left many conservatives fuming, angry that the Court had shortchanged property rights in favor of a controversial eminent domain scheme. Roberts offered a different view. The Court’s ruling “leaves the ball in the court of the legislature,” he said, “and I think it’s reflective of what is often the case and people sometimes lose sight of, that this body [Congress] and legislative bodies in the States are protectors of people’s rights as well.” (Take your complaint to the ballot box, not to the courthouse.)

And then there is National Federation of Independent Business v. Sebelius (2012), which is perhaps Roberts’ most famous legal judgment. At issue was the survival of the Patient Protection and Affordable Care Act, also known as Obamacare.

Roberts saved the law from destruction. Why did he do it? In their piece for The Washington Post, Vermeule and Mehta cite the Obamacare case as “an early, important example” of Roberts’ “dismaying trend of tactical decisions.” He upheld President Barack Obama’s signature law, in their view, in order to save the Court from scorching liberal criticism.

But Vermeule and Mehta’s take misses what actually happened in Roberts’ Obamacare ruling. Not only did Roberts’ borrow a page from the Holmes/Bork playbook, but he specifically invoked one of Holmes’ most notable statements about the proper role of the courts. “If my fellow citizens want to go to Hell I will help them,” Holmes wrote in 1920. “It’s my job.” Here is how Roberts put it in 2012: “It is not our job to protect the people from the consequences of their political choices.”

Whether or not you agree with the chief justice’s embrace of judicial deference, it would be a mistake to downplay this important facet of his thinking.

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The Year Teachers Unions Killed the Goose That Laid the Golden Egg

zumaamericastwentynine174685

I’ve got a great new business model for ya, kid.

We’re going to tell parents of every child between the ages of 5 and 17 that they are required by law to prove that they are regularly—like Monday-through-Friday, eight-months-a-year regularly—consuming a certain category of product. We are further going to offer that product for free (on the consumer end, anyway). Operational funding will vary by geography, but will basically be anchored to property taxes, which tend to grow predictably over time. Additional money is routinely provided on a per-customer basis. In many places, the only entity with access to that funding will be a monopoly. That’s where you come in.

You are in charge of the primary purveyors of this product—the employees of the monopoly, or near-monopoly. You run their guild. Your challenge is to make their working conditions maximally favorable, to grow their ranks, and to make sure nothing disrupts that guaranteed revenue stream. Oh, and in many big cities and heavily populated states, your union has among the most political power of any organized bloc, helping to elect and influence the politicians with whom you negotiate working conditions at the monopoly.

You couldn’t possibly screw this up, could you? Could you?

—

One of the central paradoxes of monopolies is that they rarely last in the long run. Eastman Kodak had 96 percent of the American photographic film market in the 1920s, was on the Dow Jones Industrial Average index for 75 years, but by 2012 had filed for Chapter 11 bankruptcy protection. Microsoft had 94 percent of the web browser market share in 2002; now it’s below 5 percent. Daily newspapers in the U.S. were overwhelmingly monopolistic in their cities between 1960 and 2000, fattening up both profit margins and newsroom budgets.

It’s usually difficult to appreciate in real time, but the very noncompetitiveness that builds monopolistic fortunes seeds their eventual demise. The phrase “captive market” is quite apt: Managers start treating clients like prisoners, always extracting maximum value from a consumer base they treat with increasing indifference or even contempt.

Writing about Kodak and other upended behemoths in the Wall Street Journal back in 2006, William M. Bulkeley observed: “Their business success relied on forcing customers to buy things they didn’t want. Photo companies made customers pay for 24 shots in a roll of film to get a handful of good pictures. Music publishers made customers buy full CDs to get a single hit song. Encyclopedia publishers made parents spend thousands of dollars on multiple volumes when all they wanted was to help their kid do one homework paper. The business models required customers to pay for detritus to get the good stuff.”

As Nick Gillespie and I wrote on the occasion of Kodak’s bankruptcy, “When given real choice, especially the choice to go elsewhere, consumers will drop even the most beloved of brands for options that enhance their experience and increase their autonomy.” But: “No corner of the economy, of cultural life, or even of our personal lives hasn’t felt the gale-force winds of this change. Except government.”

Which brings us to public education in the COVID-scarred year of 2020. Teachers unions, and the (largely Democratic) politicians they back, have relentlessly limited parental choice in the name of maximizing the autonomy of teachers to opt out of classrooms while still getting paid. No other country in the industrialized world has closed schools down to this degree.

Public schools in Los Angeles—mild, outdoors-friendly Los Angeles—have been 99 percent shuttered since March, with no opening in sight. What few big cities that have allowed for in-person instruction, such as New York, operate on maddeningly unpredictable hybrid schedules, subject to the ever-changing whims of a union-feting mayor who “hates” (typically non-unionized) charter schools, even though they educate 10 percent of the children in his system. The remote learning that tens of millions of kids are suffering through nationally is broadly understood to be a disaster.

The results are as predictable as day following night: Parents are pulling their kids out of public schools.

“The school boards association estimated that as many as three million students—about 6 percent of the public school population—are not taking classes right now, and that number could grow,” the New York Times reported in a December 22 piece. “That is potentially a major drain on public school budgets because most states base school funding at least in part on enrollment numbers.”

Whoops.

“Public Schools Face Funding ‘Death Spiral’ as Enrollment Drops,” went the Times headline, and you can see why:

The pandemic has already forced schools to fire non-union employees, spending the money instead on remote learning technology, the retrofitting of buildings, testing and surveillance programs, and other coronavirus-related expenses.…

States mostly have managed to hold school funding steady during the pandemic, but it is not clear how long that can be sustained, said David Adkins, the executive director and chief executive of the Council of State Governments, which tracks state policy nationally. It will be especially hard if enrollment does not rebound.

“We’ll have to see how many of those folks come back home after normalcy can be achieved,” Mr. Adkins said. But if the pandemic accelerates an exodus of affluent families from the public school system, he said he feared that the loss of enrollment and political support could trigger a “death spiral,” further weakening public schools at a time when poor and disadvantaged students are already lagging.

I can see more than a few libertarians rubbing their hands with glee at the sight of the phrases “public school system” and “death spiral” in such close proximity. Which in this case I prefer to wield as a club against the teachers unions: Did you really want to make some of your libertarian enemies happy? Because you totally did.

That does not mean I am happy, at all. To the contrary: I’m furious that public schools have used our money to fail poor kids. It should be a stain on the conscience of everyone who contributed to that terrible outcome.

And the late-breaking reopening noises from American Federation of Teachers President Randi Weingarten, New York City Mayor Bill de Blasio, and President-elect Joe Biden—sentiments that they kept unexpressed until after the electoral defeat of reopening enthusiast and union scapegoat Donald Trump—almost always come as a preamble to the real ask.

“We need a Marshall Plan for our schools,” went the headline on a Washington Post op-ed co-bylined two weeks ago by the superintendents of the (closed) Los Angeles, (closed) Chicago, and (mostly closed) New York school districts. “And we need it now.” And no, the $82 billion in the recently enacted COVID relief omnibus is not nearly enough.

Chances are, they’ll get at least one more big bailout from a newly union-friendly White House. Unless the public gears up the same kind of backlash that de Blasio and New York teachers union officials faced from wrathful parents when they shuttered all public schools in mid-November based on an arbitrarily low community testing rate for the whole city. Do they really want us to reward their bad management? To increase funding while they voluntarily decrease service?

Public schools have, or should have, literally just one job: teaching students. We’ve known since at least early July, based on observation and data worldwide, that group settings of young kids are disproportionately safe (at least until/unless the newer strains behave differently). Yet in an overabundance of both caution and political muscle, unions and their allies have made America a global outlier in keeping schools shut, driving parents away from the systems, and some cities, in droves.

We have seen previously what happens to school systems and cities alike when swaths of parents flee. It ain’t pretty. And in the ultimate of ironies, the same guilds that have such a concentrated amount of power are soon going to find themselves having to explain to the rank and file just why there aren’t as many jobs anymore.

We gave them a great business model. And they treated us like captives.

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Georgia Judge (Sister Of Top Democrat) Orders End To Voter Roll Clean-Up

Georgia Judge (Sister Of Top Democrat) Orders End To Voter Roll Clean-Up

Authored by Zachary Stieber via The Epoch Times,

A federal judge on Monday ordered two counties in Georgia to stop the removal of thousands of voters from voter rolls.

Election boards in Ben Hill and Muscogee counties did not appear to have received written confirmation that the voters whose statuses were challenged had changed their addresses, District Judge Leslie Abrams Gardner—the sister of former Democrat gubernatorial nominee Stacey Abrams—wrote in her order.

If true, that means the pending removal of over 4,000 voters would violate the National Voter Registration Act, Gardner said.

There’s also “a substantial likelihood of success on the merits” regarding the plaintiffs’ claim that the challenge to a group of voters less than a month before the Jan. 5, 2021, Senate runoff elections appears to be a type of “systemic” removal prohibited by the act.

“While the court acknowledges that an injunction may burden defendants in their role managing the ongoing election, the harm to voters whose right to vote is wrongfully impeded or denied is far greater,” Gardner wrote, guaranteeing that the voters in question can cast ballots in the runoffs.

The decision came five days after Majority Forward, a nonprofit, and voter Gamaliel Warren Turner Sr., who it described as a government contractor temporarily living in California, filed an emergency action, asking the court to block the removal from the voter rolls.

Former Georgia gubernatorial candidate Stacey Abrams speaks during a conversation about criminal justice reform at the New York Public Library in New York City on April 10, 2019. (Drew Angerer/Getty Images)

“These flagrant and partisan attempts at voter suppression are part of a well-publicized attack on over 360,000 voters across the State of Georgia, initiated by True the Vote, a Texas-based organization, which has partnered with challengers in Ben Hill, Muscogee, and other counties to submit lists of registered voters whose names purportedly appear in the United States Postal Service’s National Change of Address (“NCOA”) database,” the filing stated.

“What they fail to mention is that NCOA matching is notoriously unreliable and the appearance of a voter’s name on an NCOA list cannot provide the basis for a lawful challenge to a voter’s eligibility.”

True the Vote announced on Dec. 18 that it was partnering with Georgians to call into question the legitimacy of hundreds of thousands of voters through an Elector Challenge.

Georgia law permits a voter to challenge the eligibility of any other voters.

“It is our hope that this historic challenge marks the beginning of the great awakening of American voters to serve our democracy by getting involved in the process,” Catherine Engelbrecht, the group’s founder, said in a statement.

True the Vote said it identified 124,114 registered voters who no longer reside in the county of record and 240,427 voters who no longer reside in Georgia, citing NCOA filings and supporting commercial databases.

While some counties dismissed the challenges, the Ben Hill County Board of Elections and Registration found probable cause to sustain challenges to the eligibility of 152 voters and the Muscogee County Board of Elections and Registration found the same for 4,033 voters.

Requests for comment from the boards weren’t returned.

The board in Muscogee County had earlier Monday called for Gardner to recuse herself, noting that Abrams has been heavily involved in efforts similar to the lawsuit that was filed. Abrams is linked to a group that recently filed a separate suit taking aim at True the Vote.

Abrams’ involvement “is sufficient to satisfy the standard for mandatory judicial recusal,” the board alleged.

Gardner wrote in a footnote in her order that the court “has reviewed the motion and finds no basis for recusal.” An order detailing why is forthcoming, she said.

Tyler Durden
Tue, 12/29/2020 – 13:20

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Poor Demand For 7Y Treasury In Ugly, Final Auction Of 2020

Poor Demand For 7Y Treasury In Ugly, Final Auction Of 2020

After two mediocre Treasury coupon auctions priced on Monday in the crammed first day of the holiday shortened week, moments ago the US Treasury held its final auction for the year which was a doozy: coming in at $59 billion, it was not only the biggest 7Y auction on record some $3 billion bigger than November, but was roughly double the average auction size for much of the past decade.

Just like the week’s past two coupon auctions, this one was hardly pretty, stopping at 0.662% which was a 0.2bps tail to the 0.660% When Issued and printing above November’s 0.653%, it was the highest yield since March.

The Bid to Cover also deteriorated, dropping from 2.374 last month to 2.315, below the 2.41 six auction average.

Internals were also ugly with Indirects dropping from 65.4% to 60.3%, the lowest since January, and below the 64.0% recent average. And while Directs rose modestly in keeping with their tick up in the 2Y and 5Y auctions, from 15.12% in Nov to 16.98%, Dealers also ended up holding to more of the auction, or 22.7% vs 19.5% last month.

Overall, an ugly auction to conclude the week’s trifecta of coupon sales, and a fitting tribute to the debt sales of 2021 where the only thing that is certain is that the amount of debt that Uncle Sam has to sell each and every month will continue to grow in perpetuity.

Tyler Durden
Tue, 12/29/2020 – 13:19

via ZeroHedge News https://ift.tt/3hra1DA Tyler Durden

The Year Teachers Unions Killed the Goose That Laid the Golden Egg

zumaamericastwentynine174685

I’ve got a great new business model for ya, kid.

We’re going to tell parents of every child between the ages of 5 and 17 that they are required by law to prove that they are regularly—like Monday-through-Friday, eight-months-a-year regularly—consuming a certain category of product. We are further going to offer that product for free (on the consumer end, anyway). Operational funding will vary by geography, but will basically be anchored to property taxes, which tend to grow predictably over time. Additional money is routinely provided on a per-customer basis. In many places, the only entity with access to that funding will be a monopoly. That’s where you come in.

You are in charge of the primary purveyors of this product—the employees of the monopoly, or near-monopoly. You run their guild. Your challenge is to make their working conditions maximally favorable, to grow their ranks, and to make sure nothing disrupts that guaranteed revenue stream. Oh, and in many big cities and heavily populated states, your union has among the most political power of any organized bloc, helping to elect and influence the politicians with whom you negotiate working conditions at the monopoly.

You couldn’t possibly screw this up, could you? Could you?

—

One of the central paradoxes of monopolies is that they rarely last in the long run. Eastman Kodak had 96 percent of the American photographic film market in the 1920s, was on the Dow Jones Industrial Average index for 75 years, but by 2012 had filed for Chapter 11 bankruptcy protection. Microsoft had 94 percent of the web browser market share in 2002; now it’s below 5 percent. Daily newspapers in the U.S. were overwhelmingly monopolistic in their cities between 1960 and 2000, fattening up both profit margins and newsroom budgets.

It’s usually difficult to appreciate in real time, but the very noncompetitiveness that builds monopolistic fortunes seeds their eventual demise. The phrase “captive market” is quite apt: Managers start treating clients like prisoners, always extracting maximum value from a consumer base they treat with increasing indifference or even contempt.

Writing about Kodak and other upended behemoths in the Wall Street Journal back in 2006, William M. Bulkeley observed: “Their business success relied on forcing customers to buy things they didn’t want. Photo companies made customers pay for 24 shots in a roll of film to get a handful of good pictures. Music publishers made customers buy full CDs to get a single hit song. Encyclopedia publishers made parents spend thousands of dollars on multiple volumes when all they wanted was to help their kid do one homework paper. The business models required customers to pay for detritus to get the good stuff.”

As Nick Gillespie and I wrote on the occasion of Kodak’s bankruptcy, “When given real choice, especially the choice to go elsewhere, consumers will drop even the most beloved of brands for options that enhance their experience and increase their autonomy.” But: “No corner of the economy, of cultural life, or even of our personal lives hasn’t felt the gale-force winds of this change. Except government.”

Which brings us to public education in the COVID-scarred year of 2020. Teachers unions, and the (largely Democratic) politicians they back, have relentlessly limited parental choice in the name of maximizing the autonomy of teachers to opt out of classrooms while still getting paid. No other country in the industrialized world has closed schools down to this degree.

Public schools in Los Angeles—mild, outdoors-friendly Los Angeles—have been 99 percent shuttered since March, with no opening in sight. What few big cities that have allowed for in-person instruction, such as New York, operate on maddeningly unpredictable hybrid schedules, subject to the ever-changing whims of a union-feting mayor who “hates” (typically non-unionized) charter schools, even though they educate 10 percent of the children in his system. The remote learning that tens of millions of kids are suffering through nationally is broadly understood to be a disaster.

The results are as predictable as day following night: Parents are pulling their kids out of public schools.

“The school boards association estimated that as many as three million students—about 6 percent of the public school population—are not taking classes right now, and that number could grow,” the New York Times reported in a December 22 piece. “That is potentially a major drain on public school budgets because most states base school funding at least in part on enrollment numbers.”

Whoops.

“Public Schools Face Funding ‘Death Spiral’ as Enrollment Drops,” went the Times headline, and you can see why:

The pandemic has already forced schools to fire non-union employees, spending the money instead on remote learning technology, the retrofitting of buildings, testing and surveillance programs, and other coronavirus-related expenses.…

States mostly have managed to hold school funding steady during the pandemic, but it is not clear how long that can be sustained, said David Adkins, the executive director and chief executive of the Council of State Governments, which tracks state policy nationally. It will be especially hard if enrollment does not rebound.

“We’ll have to see how many of those folks come back home after normalcy can be achieved,” Mr. Adkins said. But if the pandemic accelerates an exodus of affluent families from the public school system, he said he feared that the loss of enrollment and political support could trigger a “death spiral,” further weakening public schools at a time when poor and disadvantaged students are already lagging.

I can see more than a few libertarians rubbing their hands with glee at the sight of the phrases “public school system” and “death spiral” in such close proximity. Which in this case I prefer to wield as a club against the teachers unions: Did you really want to make some of your libertarian enemies happy? Because you totally did.

That does not mean I am happy, at all. To the contrary: I’m furious that public schools have used our money to fail poor kids. It should be a stain on the conscience of everyone who contributed to that terrible outcome.

And the late-breaking reopening noises from American Federation of Teachers President Randi Weingarten, New York City Mayor Bill de Blasio, and President-elect Joe Biden—sentiments that they kept unexpressed until after the electoral defeat of reopening enthusiast and union scapegoat Donald Trump—almost always come as a preamble to the real ask.

“We need a Marshall Plan for our schools,” went the headline on a Washington Post op-ed co-bylined two weeks ago by the superintendents of the (closed) Los Angeles, (closed) Chicago, and (mostly closed) New York school districts. “And we need it now.” And no, the $82 billion in the recently enacted COVID relief omnibus is not nearly enough.

Chances are, they’ll get at least one more big bailout from a newly union-friendly White House. Unless the public gears up the same kind of backlash that de Blasio and New York teachers union officials faced from wrathful parents when they shuttered all public schools in mid-November based on an arbitrarily low community testing rate for the whole city. Do they really want us to reward their bad management? To increase funding while they voluntarily decrease service?

Public schools have, or should have, literally just one job: teaching students. We’ve known since at least early July, based on observation and data worldwide, that group settings of young kids are disproportionately safe (at least until/unless the newer strains behave differently). Yet in an overabundance of both caution and political muscle, unions and their allies have made America a global outlier in keeping schools shut, driving parents away from the systems, and some cities, in droves.

We have seen previously what happens to school systems and cities alike when swaths of parents flee. It ain’t pretty. And in the ultimate of ironies, the same guilds that have such a concentrated amount of power are soon going to find themselves having to explain to the rank and file just why there aren’t as many jobs anymore.

We gave them a great business model. And they treated us like captives.

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Home Prices Soar At 3 Times The Fed’s Inflation Target Across All US Cities

Home Prices Soar At 3 Times The Fed’s Inflation Target Across All US Cities

The Fed’s most frequent lament is that no matter how many trillions in bonds (and stocks and ETFs) it buys or how much liquidity it forehoses into the market, it just can’t push broader inflation higher.

Well, here’s an idea: maybe all the central-planning megabrains at the Marriner Eccles building and 33 Liberty Street can take a break from whatever circle jerk they are engaged in right now, and look at the latest Case Shiller numbers which showed not only that home prices surged at the fastest pace in six years, rising nearly 8% compared to a year ago…

… but that for the first time since the financial crisis, the annual price increase in every major US MSA (and according to Case Shiller there are 20 of them) rose by at least 6% Y/Y (in the case of New York) and as much as 12.7% in Phoenix, meaning that the average home prices across all of the US is now rising at three times the Fed’s own inflation target.

Why does this matter? Simple: Because if – as Joseph Carson mused last month – CPI measured actual house prices, inflation would be above 3% right now.

For those who missed it, here again is the explanation:

“Actual” consumer price inflation is rising during the recession. That runs counter to the normal recessionary pattern when the combination of weak demand and excess capacity works to lessen inflationary pressures.

The main source of faster consumer price inflation is centered in the housing market. The Case-Shiller Home Price Index posted a 7% increase the last year, more than twice the gain of one-year ago.

The sharp acceleration in house price inflation represents the fastest increase since 2014 and runs counter to the patterns of the past two recessions. During the 2001 recession house price inflation slowed by one-third, while in the Great Financial Recession housing prices posted their largest decline in the post-war period, falling over 12% nationwide.

The consumer price index (CPI) does not show in house price inflation because it uses a non-market rent index to capture the trends in housing inflation. The Bureau of Labor Statistics (BLS) estimates that the non-market rent index has increased 2.5% in the past 12 months, or 450 basis points below the rise in house prices.

If actual house prices were used in place of rents core CPI would have registered a 3% gain in the past year, nearly twice the reported gain of 1.6%.

If aggregate price measures did not exist house prices would be one of the most important measures to gauge inflation and the proper setting of official interest rates. That’s because house price cycles include easy credit/financial conditions, excess demand, and inflation expectations, three key ingredients of inflation cycles.

Rising consumer price inflation is added to the list of unique features of the 2020 recession. Others include an increase in corporate debt levels instead of debt-liquidation and rising equity prices instead of share price declines.

If the 2020 recession has economic and financial features that normally appear during economic recovery what does that imply for the next growth cycle? The debt overhang at the corporate and federal debt should impede the next growth cycle. And if the cyclical rise in housing demand is occurring in recession it can’t be repeated during recovery.

The next economic cycle will be filled with unique tipping points, and no one should assume that policymakers can control or offset them.

Tyler Durden
Tue, 12/29/2020 – 13:00

via ZeroHedge News https://ift.tt/3nWWbve Tyler Durden

Intel Shares Surge As Reuters Reports Hedge Fund Third Point Urges Company To Explore “Deal Options” 

Intel Shares Surge As Reuters Reports Hedge Fund Third Point Urges Company To Explore “Deal Options” 

Intel Corp shares have surged more than 4% after hedge fund Third Point urges the semiconductor company to explore deal options, reported Reuters.

The news was enough to lift iShares PHLX Semiconductor ETF SOXX (which has a 7.55% weighting in the ETF basket) up 1% but still down .4% on the session following news Senate Majority Leader Mitch McConnell blocked Senate Minority Leader Chuck Schumer attempt to fast-track $2k stimulus checks.

Developing…

Tyler Durden
Tue, 12/29/2020 – 12:43

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Mexican State Adds New Tax On Foreign Tourists

Mexican State Adds New Tax On Foreign Tourists

By Matt Hochberg of Royal Caribbean Blog

One state in Mexico has announced it will increase its tourist tax, which may have an impact on cruise ship guests. The Mexican state of Quintana Roo, which is where the popular ports of Couzmel and Costa Maya are located, announced new $10 tourist tax on foreigners. This news was first reported by the Riviera Maya Times and does not mention cruise ships in the article.

There are no details yet on how the tax will be collected, nor if it applies to cruise ship visitors or not. Typically, cruise lines pay the port a per-passenger tax already when ships visit a port.

The new tourist tax would go into effect beginning April 1, 2021, and is intended to help make up the deficit the area has seen as a result of fewer tourists visiting in 2020 due to the global health crisis.

The tourism industry in Quintana Roo have said they are against this new tax, because they fear it will lead to less tourists willing to visit and opting to go elsewhere. Of course, government bureaucrats are never swayed by logic. In a document signed by Cuitláhuac Gutiérrez Martínez, country manager of IATA Mexico, and Luis Noriega Benet, president of National Air Transport Chamber (Canaero), asked to reconsider this proposal contemplated in the 2021 tax package.

Quintana Roo is located on the eastern portion of the Yucatan peninsula, and two popular cruise ports are within the state.  The other port in Mexico that Royal Caribbean cruise ships visit, Progreso, is in the state of Yucatan.

The number of cruise passengers that visited Cozumel has steadily grown over the last few years, and saw 4.57 million passengers in 2019. The island is the third-busiest cruise ship port in the world, and is visited by about 1,250 cruise ships each year.

In November 2019, Cozumel announced its first tax on cruise ship passengers with a 65 cent per passenger tax to pay for security, environmental and civil defense projects.

Tyler Durden
Tue, 12/29/2020 – 12:40

via ZeroHedge News https://ift.tt/3mYHMgW Tyler Durden

Is The ARKK Starting To Sink: Innovation ETF Inflows Break December Uptrend

Is The ARKK Starting To Sink: Innovation ETF Inflows Break December Uptrend

We have been following the “unicorn” that has been ARK Funds over the last couple weeks, noting the firm’s massive inflows and questioning whether or not its astronomical run would continue, given numerous “law of large number” problems that Bloomberg’s Eric Balchunas pointed out the fund could face (not to mention Tesla’s S&P inclusion potentially taking a gamma squeeze thesis off the table).

Noting the most recent data on ARKK fund flows heading into the last few trading days of 2020, it appears a trend of cash pouring into the fund may have reversed in a meaningful way. ARKK inflows appear to have made a lower low:

This suggests the obvious: that we may have witnessed a blowoff top of cash pouring into the ETF this month.

In addition to inflows potentially drying up, the beta trade isn’t helping ARKK out during Tuesday’s session either. It appears that ARKK may have peaked alongside of the NASDAQ this month:

Which means if inflows dry up at the same time the NASDAQ finally decides it wants to correct, ARKK holders could be in for a rough start to 2021. 

Recall, last week we published a report highlighting Bloomberg’s ETF expert Eric Balchunas’ take on how ARK Funds could wind up becoming victims of their own success. 

Many of Balchunas’ assumptions pointed out sustained massive inflows into the ARK family of ETFs – notably its ARKK ETF – which we noted last week was seeing inflows of about $400 million per day. In fact, ARK’s haul has been so massive that Balchunas noted that it has a chance of taking in more cash than Blackrock in December. The funds are on pace to bring in $11 billion, he said last week.

“This one ETF has more in assets than the other 240 actively managed equity ETFs combined,” he pointed out.

And as we know, what goes up, must come down…

Tyler Durden
Tue, 12/29/2020 – 12:20

via ZeroHedge News https://ift.tt/2JtMXI3 Tyler Durden