The State of War in Syria – In Two Charts

Authored by Steve H. Hanke of the Johns Hopkins University. Follow him on Twitter @Steve_Hanke.

The fog of war, coupled with the output from multiple propaganda machines, makes it difficult to determine which side has the upper hand in any conflict. In Syria, it appears from recent reportage from Aleppo that President Bashar al-Assad’s forces are getting the upper hand. But are they?

The best objective way to determine the course of a conflict is to observe black market (read: free market) exchange rates, and to translate changes in those rates via purchasing power parity into implied inflation rates. We at the Johns Hopkins-Cato Institute Troubled Currencies Project have been doing that for Syria since 2013.

The two accompanying charts – one for the Syrian pound and another for Syria’s implied annual inflation rate – plot the course of the war. It is clear that Assad and his allies are getting the upper hand. The pound has been stabilizing since June of this year and inflation has been trending downwards

via http://ift.tt/2gCy1GT Steve H. Hanke

Populist-Nationalist Tide Rolls On: “America Is At A Plastic Time In History”

Submitted by Patrick Buchanan via Buchanan.org,

Now that the British have voted to secede from the European Union and America has chosen a president who has never before held public office, the French appear to be following suit.

In Sunday’s runoff to choose a candidate to face Marine Le Pen of the National Front in next spring’s presidential election, the center-right Republicans chose Francois Fillon in a landslide.

While Fillon sees Margaret Thatcher as a role model in fiscal policy, he is a socially conservative Catholic who supports family values, wants to confront Islamist extremism, control immigration, restore France’s historic identity and end sanctions on Russia.

“Russia poses no threat to the West,” says Fillon. But if not, the question arises, why NATO? Why are U.S. troops in Europe?

As Le Pen is favored to win the first round of the presidential election and Fillon the second in May, closer Paris-Putin ties seem certain. Europeans themselves are pulling Russia back into Europe, and separating from the Americans.

Next Sunday, Italy holds a referendum on constitutional reforms backed by Prime Minister Matteo Renzi. If the referendum, trailing in the polls, fails, says Renzi, he will resign.

Opposing Renzi is the secessionist Northern League, the Five Star Movement of former comedian Beppe Grillo, and the Forza Italia of former Prime Minister Silvio Berlusconi, a pal of Putin’s.

“Up to eight of Italy’s troubled banks risk failure,” if Renzi’s government falls, says the Financial Times. One week from today, the front pages of the Western press could be splashing the newest crisis of the EU.

In Holland, the Party for Freedom of Geert Wilders, on trial for hate speech for urging fewer Moroccan immigrants, is running first or close to it in polls for the national election next March.

Meanwhile, the door to the EU appears to be closing for Muslim Turkey, as the European Parliament voted to end accession talks with Ankara and its autocratic president, Recep Tayyip Erdogan.

In welcoming Muslim immigrants, Germany’s Angela Merkel no longer speaks for Europe, even as she is about to lose her greatest ally, Barack Obama.

Not only Europe but the whole world President-elect Trump is about to inherit seems in turmoil, with old regimes and parties losing their hold, and nationalist, populist and rightist forces rising.

Early this year, Brazil’s Senate voted to remove leftist President Dilma Rousseff. In September, her predecessor, popular ex-President Lula da Silva, was indicted in a corruption investigation. President Michel Temer, who, as vice president, succeeded Rousseff, is now under investigation for corruption. There is talk of impeaching him.

Venezuela, endowed with more oil than almost any country on earth, is now, thanks to the Castroism of Hugo Chavez and successor Nicolas Maduro, close to collapse and anarchy.

NATO’s Turkey and our Arab ally, Egypt, both ruled by repressive regimes, are less responsive to U.S. leadership.

South Korean President Park Geun-hye, her approval rating in single digits, is facing impeachment and prosecution for corruption.

Meanwhile, North Korea, under Kim Jong Un, continues to test nuclear warheads and missiles that can hit all of South Korea and Japan and reach all U.S. bases in East Asia and the Western Pacific.

The U.S. is obligated by treaty to defend South Korea, where we still have 28,500 troops, and Japan, as well as the Philippines, where new populist President Rodrigo Duterte, cursing the West, is pivoting toward Beijing. Malaysia and Australia are also moving closer to China, as they become ever more dependent on the China trade.

Responding to our moving NATO troops into Estonia, Latvia, Lithuania and Poland, Putin has begun a buildup of nuclear-capable offensive and defensive missiles in Kaliningrad, its enclave between Poland and Lithuania.

Should we get into a confrontation with the Russians in the Eastern Baltic, how many of our NATO allies, some now openly pro-Putin, would stand beside us?

The point: Not only is the Cold War over, the post-Cold War is over. We are living in a changed and changing world. Regimes are falling. Old parties are dying, new parties rising. Old allegiances are fraying, and old allies drifting away.

The forces of nationalism and populism have been unleashed all over the West and all over the world. There is no going back.

Yet U.S. policy seems set in concrete by war guarantees and treaty commitments dating back to the time of Truman and Stalin and Ike and John Foster Dulles.

America emerged from the Cold War, a quarter century ago, as the sole superpower. Yet, it seems clear that we are not today so dominant a nation as we were in 1989 and 1991.

We have great rivals and adversaries. We are deeper in debt. We are more divided. We’ve fought wars in Afghanistan, Iraq, Syria, Libya, Yemen that availed us nothing. What we had, we kicked away.

America is at a plastic moment in history.

And America needs nothing so much as reflective thought about a quarter century of failures — and fresh thinking about her future.

via http://ift.tt/2gFhgqY Tyler Durden

Trump, Pence To Meet Goldman COO Cohn (After Ex-Goldman Partner Mnuchin Visits Trump Tower)

Following former Goldman Sachs' partner Steve Mnuchin's visit to Trump Tower this morning (as the decision over Treasury Secretary looms), the Trump transition team just announced that Donald Trump and Mike Pence will meet with Goldman Sachs COO Gary Cohn (but provided no details on whatthey would discuss).

As Bloomberg reports, Cohn joins a long line of people who are offering advice or being considered for administration positions.

Vice President-elect Mike Pence will join Trump at the meeting, transition spokesman Sean Spicer told reporters on a conference call.

 

He did not give details about what they would discuss or whether Cohn may be in line for a position in the Trump administration.

For now, Mnuchin sits atop the list of possibles for Treasury Secretary

TREASURY SECRETARY

 

* Steven Mnuchin, former Goldman Sachs Group Inc executive and Trump's campaign finance chairman

* Jeb Hensarling, Republican U.S. representative from Texas and chairman of the House Financial Services Committee

* Tom Barrack, founder and chairman of Colony Capital Inc

* John Allison, former chief executive officer of BB&T Corp

* David McCormick, president of hedge fund Bridgewater Associates LP

Notably, Trump met with John Allison yesterday, the former CEO of the bank BB&T and of the libertarian think tank the Cato Institute. While running the the Cato Institute, Allison wrote a paper in support of abolishing the FedAllison said his “long-term ambition” for monetary policy “would be to get rid of the Federal Reserve and get back to a private banking system.” The Fed is “a scary organization because there’s no control,” he said.

“I would get rid of the Federal Reserve because the volatility in the economy is primarily caused by the Fed,”

 

“When the Fed is radically changing the money supply, distorting interest rates, and over-regulating the financial sector, it makes rational economic calculation difficult,”

 

“Markets do form bubbles, but the Fed makes them worse.”

 

Allison also suggested that the government’s practice of insuring bank deposits up to $250,000 should be abolished and the US should go back to a banking system backed by “a market standard such as gold.”

Should Mnuchin get the nod, it will certainly elevate his former employer, Goldman Sachs, to its traditional level of being pari passu with the US executive and legislative branch when it comes to decisionmaking. It also would mean that the swamp may be about to get a whole lot deeper.

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The Trouble With Trump SCOTUS Contender William H. Pryor

President-elect Donald Trump will soon announce his pick to replace the late Justice Antonin Scalia on the U.S. Supreme Court. Among the 21 potential candidates that Trump has floated so far, one name in particular has many conservatives buzzing with excitement. That name is Judge William H. Pryor Jr. of the U.S. Court of Appeals for the 11th Circuit. In the admiring words of National Review, Pryor “isn’t just regarded as a brilliant legal mind; he is viewed as the most rock-ribbed conservative of any potential Supreme Court appointee.”

Pryor’s brand of conservatism was certainly on full display back in 2003 when the U.S. Supreme Court was weighing the constitutionality of a state law that criminalized “homosexual conduct” in a case known as Lawrence v. Texas. At that time Pryor was working as the attorney general of Alabama (Jeff Sessions was his predecessor in that job). In a state amicus brief he filed at the Supreme Court in Lawrence, Pryor came out firmly in defense of every state’s unbridled power to incarcerate consenting adults for the supposed crime of having same-sex relations in the privacy of their own homes. “The States can and must legislate morality.” To rule otherwise, Pryor’s brief declared, would be to enshrine a “sophomoric libertarian mantra.”

Pryor’s career is replete with that sort of stuff. Indeed, it is his social conservatism for which he is perhaps best known—both in and out of legal circles. But there is something else to know about Judge Pryor. Namely, he is an adherent to the legal philosophy known as judicial deference.

Judicial deference is the idea that because the judiciary is the least democratic branch of government, judges owe extra respect—or deference—to the actions and decisions of the elected branches of government. In practical terms, that means that the courts are supposed to tip the scales in favor of the government in the vast majority of cases. In the words of Progressive era Justice Oliver Wendell Holmes Jr., one of the Supreme Court’s earliest and most influential advocates of judicial deference, “a law should be called good if it reflects the will of the dominant forces of the community, even if it will take us to hell.”

This deferential philosophy has proven to be quite popular in certain quarters of today’s conservative legal movement. The late jurist and scholar Robert Bork, for example, was a thoroughgoing Holmes-ian who insisted that, “in wide areas of life, majorities are entitled to rule, if they wish, simply because they are majorities.” Chief Justice John Roberts has taken a similar view. In 2012, for example, when he cast the deciding vote to uphold the constitutionality of Obamacare, Roberts not only cited one of Justice Holmes’ opinions, he explicitly invoked Holmes’ deferential credo. “It is not our job,” Roberts wrote in National Federation of Independent Business v. Sebelius, “to protect the people from the consequences of their political choices.”

William H. Pryor follows in the deferential footsteps of Holmes, Bork, and Roberts. For example, in a 2007 article published in the Virginia Law Review, Pryor praised the Supreme Court’s famous “switch-in-time” decisions from 1937, in which the Court upheld several sweeping New Deal economic regulations. After pointing favorably to National Labor Relations Board v. Jones & Laughlin Steel Corp., in which the Court adopted an expansive new interpretation of congressional power under the Commerce Clause, and to West Coast Hotel Co. v. Parrish, in which the Court overturned its previous line of cases protecting the fundamental right to liberty of contract, Pryor went on to write, “not every controversy requires a judicial resolution or trumping of the will of the majority.” In those pro-New Deal opinions, Pryor concluded, “the judiciary wisely has acted with restraint.” Justice Holmes could not have said it better himself.

To make matters worse, Judge Pryor’s pro-government deference extends beyond the realm of economic activity. He also has a troubling record of favoring broad judicial deference towards law enforcement. Consider the case of United States v. Shaygan. At issue was the sweeping federal prosecution of a Florida doctor named Ali Shaygan on charges of illegally prescribing pain medication. In 2009, after a jury had acquitted Shaygan of all 141 charges lobbed against him, the U.S. District Court for the Southern District of Florida publicly reprimanded and sanctioned the federal prosecutors in the case for “gross negligence” and misconduct, including for the act of secretly recording Shaygan’s legal defense team. The prosecutors “acted vexatiously and in bad faith,” the district court concluded. Their actions “are profoundly disturbing” and “raise troubling issues about the integrity of those who wield enormous power over the people they prosecute.”

The vexatious federal prosecutors then appealed to the U.S. Court of Appeals for the 11th Circuit. There they found a far more sympathetic audience in the form of Judge William H. Pryor. “The district court abused its discretion when it imposed sanctions against the United States for a prosecution that was objectively reasonable,” Pryor ruled. The district court’s reprimands and sanctions against the offending prosecutors were erased from the books.

Here’s the thing. Federal and state lawmakers have an unfortunate habit of violating constitutional rights by passing arbitrary and unnecessary laws. Likewise, federal and state prosecutors (and police) have an unfortunate habit of violating constitutional rights by employing suspect law enforcement tactics. According to the devotees of judicial deference, however, the courts are supposed to tip the scales in favor of the government in such cases.

Regrettably, judging by his record on these crucial issues, Trump SCOTUS contender William H. Pryor seems to favor the same overly deferential approach.

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Incredible opportunities in a hidden corner of the world

[Editor’s note: This email was written by Peter K, a former McKinsey consultant and securities analyst who now leads the private investment division at Sovereign Man.]

Simon Black sent me to the former Soviet republic of Georgia to spend some time on the ground conducting due diligence on some potential private investments.

Georgia is a fantastic country that Simon has been to several times, and the opportunities here are simply amazing.

It’s not that Georgia has more opportunities than Europe, the US, and the rest of the world. Investment opportunities are everywhere.

The difference here is that Georgia is totally off the radar of most investors.

It’s a tiny country of 4 million people with a GDP of roughly $36 billion. That’s about half the size of the economy of New Hampshire.

And the total stock market capitalization is just a fraction of Uber’s most recent market value.

This means that it’s very difficult for large, institutional investors to put money to work in this country.

They need big scale… economies where they can easily deploy billions of dollars. There simply aren’t enough of those supersized opportunities here.

That’s why you won’t see a bunch of hedge fund managers on CNBC talking about their investment positions in the Republic of Georgia. It’s too small for them.

But for individual investors, Georgia is ripe with opportunity.

Since Georgia is a growing economy devoid of any significant investor base, there’s a significant shortage of capital here… which means rates are quite high.

Businesses are borrowing money (in US dollars) at 10% interest or more… and they consider that a good deal because the interest rates in local currency are even higher.

Simon recommended a safe, conservative, well-capitalized local bank to his premium subscribers a few years ago, and many of those readers are still earning over 7% on their US dollar deposits.

I’ve spent the last week looking at a number of private investment opportunities across multiple sectors– agriculture, technology, healthcare, and more.

It was shocking. The contacts that Simon Black put me in touch with here opened more doors than I could have possibly imagined.

I’ve met with a number of high-growth, profitable businesses seeking investment capital to expand.

I have very strict investment criteria; but even after substantial scrutiny, I’ve concluded that nearly every one of these businesses is a potential home run investment.

Yet I was the ONLY investor who came out here to meet with any of them.

I love being the only fish in the pond.

If this were Silicon Valley, any 16-year old kid with an idea to build an app that makes fart sounds would have investors lining up around the block to shower him with cash.

That’s very much the case in most developed economies, especially these days.

There’s intense competition among investors who are bidding against each other trying to buy into the next Facebook or Google.

But not in Georgia. There’s some incredible talent here and a multitude of great businesses. Yet almost no one is looking.

I was also pleased to see how easy it is to do business here.

Georgia has a very simple tax regime; instead of a tax code that goes on for thousands of pages, the corporate tax rate is a flat 15%, and the individual tax rate is 20%.

(It’s interesting to note that when the Georgian government abolished its previous Byzantine tax code and adopted a simple, low, flat tax model, government tax doubled.)

It’s also incredibly easy to start a business in Georgia.

You can register a local company in a couple of hours for less than $100, and as a foreigner, there are very few investment prohibitions.

Permitting and licensing is also much faster and more straightforward than in most advanced economies.

And corruption is minimal.

Police and public officials don’t take bribes, and I found the government workers to be surprisingly professional and efficient.
This combination of high interest rates, incredible local talent, business friendly laws, and a complete lack of foreign investor interest means that a nimble individual investor can do very well in Georgia.

Georgia is a fantastic example of what Simon routinely discusses: it’s a big world out there.

And if you expand your thinking beyond your own borders, you’ll find some extraordinary opportunities and pockets of incredible value out there.

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Obama Creates New Al-Qaeda Out of Thin Air to Justify His Somalia War

screen-shot-2016-11-29-at-7-34-28-am

An article published in The New York Times this past Sunday perfectly demonstrates how out of control and unconstitutional America’s foreign policy has become. It highlights the latest war being perpetrated by the Obama administration, which is expanding with very little scrutiny from the press or the government branch supposedly in charge of waging war, the U.S. Congress.

The latest growing battlefield is in Somalia, and it threatens to spiral out of control just like so many other undeclared war zones before it. From the NY Times:

WASHINGTON — The escalating American military engagement in Somalia has led the Obama administration to expand the legal scope of the war against Al Qaeda, a move that will strengthen President-elect Donald J. Trump’s authority to combat thousands of Islamist fighters in the chaotic Horn of Africa nation.

Is it “a move that will strengthen President-elect Donald J. Trump’s authority to combat thousands,” or is it a move that will allow Trump to also engage in endless, unconstitutional war?

The administration has decided to deem the Shabab, the Islamist militant group in Somalia, to be part of the armed conflict that Congress authorized against the perpetrators of the Sept. 11, 2001, terrorist attacks, according to senior American officials. The move is intended to shore up the legal basis for an intensifying campaign of airstrikes and other counterterrorism operations, carried out largely in support of African Union and Somali government forces.

continue reading

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The Trouble With Trump SCOTUS Contender William H. Pryor

President-elect Donald Trump will soon announce his pick to replace the late Justice Antonin Scalia on the U.S. Supreme Court. Among the 21 potential candidates that Trump has floated so far, one name in particular has many conservatives buzzing with excitement. That name is Judge William H. Pryor Jr. of the U.S. Court of Appeals for the 11th Circuit. In the admiring words of National Review, Pryor “isn’t just regarded as a brilliant legal mind; he is viewed as the most rock-ribbed conservative of any potential Supreme Court appointee.”

Pryor’s brand of conservatism was certainly on full display back in 2003 when the U.S. Supreme Court was weighing the constitutionality of a state law that criminalized “homosexual conduct” in a case known as Lawrence v. Texas. At that time Pryor was working as the attorney general of Alabama (Jeff Sessions was his predecessor in that job). In a state amicus brief he filed at the Supreme Court in Lawrence, Pryor came out firmly in defense of every state’s unbridled power to incarcerate consenting adults for the supposed crime of having same-sex relations in the privacy of their own homes. “The States can and must legislate morality.” To rule otherwise, Pryor’s brief declared, would be to enshrine a “sophomoric libertarian mantra.”

Pryor’s career is replete with that sort of stuff. Indeed, it is his social conservatism for which he is perhaps best known—both in and out of legal circles. But there is something else to know about Judge Pryor. Namely, he is an adherent to the legal philosophy known as judicial deference.

Judicial deference is the idea that because the judiciary is the least democratic branch of government, judges owe extra respect—or deference—to the actions and decisions of the elected branches of government. In practical terms, that means that the courts are supposed to tip the scales in favor of the government in the vast majority of cases. In the words of Progressive era Justice Oliver Wendell Holmes Jr., one of the Supreme Court’s earliest and most influential advocates of judicial deference, “a law should be called good if it reflects the will of the dominant forces of the community, even if it will take us to hell.”

This deferential philosophy has proven to be quite popular in certain quarters of today’s conservative legal movement. The late jurist and scholar Robert Bork, for example, was a thoroughgoing Holmes-ian who insisted that, “in wide areas of life, majorities are entitled to rule, if they wish, simply because they are majorities.” Chief Justice John Roberts has taken a similar view. In 2012, for example, when he cast the deciding vote to uphold the constitutionality of Obamacare, Roberts not only cited one of Justice Holmes’ opinions, he explicitly invoked Holmes’ deferential credo. “It is not our job,” Roberts wrote in National Federation of Independent Business v. Sebelius, “to protect the people from the consequences of their political choices.”

William H. Pryor follows in the deferential footsteps of Holmes, Bork, and Roberts. For example, in a 2007 article published in the Virginia Law Review, Pryor praised the Supreme Court’s famous “switch-in-time” decisions from 1937, in which the Court upheld several sweeping New Deal economic regulations. After pointing favorably to National Labor Relations Board v. Jones & Laughlin Steel Corp., in which the Court adopted an expansive new interpretation of congressional power under the Commerce Clause, and to West Coast Hotel Co. v. Parrish, in which the Court overturned its previous line of cases protecting the fundamental right to liberty of contract, Pryor went on to write, “not every controversy requires a judicial resolution or trumping of the will of the majority.” In those pro-New Deal opinions, Pryor concluded, “the judiciary wisely has acted with restraint.” Justice Holmes could not have said it better himself.

To make matters worse, Judge Pryor’s pro-government deference extends beyond the realm of economic activity. He also has a troubling record of favoring broad judicial deference towards law enforcement. Consider the case of United States v. Shaygan. At issue was the sweeping federal prosecution of a Florida doctor named Ali Shaygan on charges of illegally prescribing pain medication. In 2009, after a jury had acquitted Shaygan of all 141 charges lobbed against him, the U.S. District Court for the Southern District of Florida publicly reprimanded and sanctioned the federal prosecutors in the case for “gross negligence” and misconduct, including for the act of secretly recording Shaygan’s legal defense team. The prosecutors “acted vexatiously and in bad faith,” the district court concluded. Their actions “are profoundly disturbing” and “raise troubling issues about the integrity of those who wield enormous power over the people they prosecute.”

The vexatious federal prosecutors then appealed to the U.S. Court of Appeals for the 11th Circuit. There they found a far more sympathetic audience in the form of Judge William H. Pryor. “The district court abused its discretion when it imposed sanctions against the United States for a prosecution that was objectively reasonable,” Pryor ruled. The district court’s reprimands and sanctions against the offending prosecutors were erased from the books.

Here’s the thing. Federal and state lawmakers have an unfortunate habit of violating constitutional rights by passing arbitrary and unnecessary laws. Likewise, federal and state prosecutors (and police) have an unfortunate habit of violating constitutional rights by employing suspect law enforcement tactics. According to the devotees of judicial deference, however, the courts are supposed to tip the scales in favor of the government in such cases.

Regrettably, judging by his record on these crucial issues, Trump SCOTUS contender William H. Pryor seems to favor the same overly deferential approach.

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Obama Creates New Al-Qaeda Out of Thin Air to Justify His Somalia War

screen-shot-2016-11-29-at-7-34-28-am

An article published in The New York Times this past Sunday perfectly demonstrates how out of control and unconstitutional America’s foreign policy has become. It highlights the latest war being perpetrated by the Obama administration, which is expanding with very little scrutiny from the press or the government branch supposedly in charge of waging war, the U.S. Congress.

The latest growing battlefield is in Somalia, and it threatens to spiral out of control just like so many other undeclared war zones before it. From the NY Times:

WASHINGTON — The escalating American military engagement in Somalia has led the Obama administration to expand the legal scope of the war against Al Qaeda, a move that will strengthen President-elect Donald J. Trump’s authority to combat thousands of Islamist fighters in the chaotic Horn of Africa nation.

Is it “a move that will strengthen President-elect Donald J. Trump’s authority to combat thousands,” or is it a move that will allow Trump to also engage in endless, unconstitutional war?

The administration has decided to deem the Shabab, the Islamist militant group in Somalia, to be part of the armed conflict that Congress authorized against the perpetrators of the Sept. 11, 2001, terrorist attacks, according to senior American officials. The move is intended to shore up the legal basis for an intensifying campaign of airstrikes and other counterterrorism operations, carried out largely in support of African Union and Somali government forces.

continue reading

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The Trouble With Trump SCOTUS Contender William H. Pryor

President-elect Donald Trump will soon announce his pick to replace the late Justice Antonin Scalia on the U.S. Supreme Court. Among the 21 potential candidates that Trump has floated so far, one name in particular has many conservatives buzzing with excitement. That name is Judge William H. Pryor Jr. of the U.S. Court of Appeals for the 11th Circuit. In the admiring words of National Review, Pryor “isn’t just regarded as a brilliant legal mind; he is viewed as the most rock-ribbed conservative of any potential Supreme Court appointee.”

Pryor’s brand of conservatism was certainly on full display back in 2003 when the U.S. Supreme Court was weighing the constitutionality of a state law that criminalized “homosexual conduct” in a case known as Lawrence v. Texas. At that time Pryor was working as the attorney general of Alabama (Jeff Sessions was his predecessor in that job). In a state amicus brief he filed at the Supreme Court in Lawrence, Pryor came out firmly in defense of every state’s unbridled power to incarcerate consenting adults for the supposed crime of having same-sex relations in the privacy of their own homes. “The States can and must legislate morality.” To rule otherwise, Pryor’s brief declared, would be to enshrine a “sophomoric libertarian mantra.”

Pryor’s career is replete with that sort of stuff. Indeed, it is his social conservatism for which he is perhaps best known—both in and out of legal circles. But there is something else to know about Judge Pryor. Namely, he is an adherent to the legal philosophy known as judicial deference.

Judicial deference is the idea that because the judiciary is the least democratic branch of government, judges owe extra respect—or deference—to the actions and decisions of the elected branches of government. In practical terms, that means that the courts are supposed to tip the scales in favor of the government in the vast majority of cases. In the words of Progressive era Justice Oliver Wendell Holmes Jr., one of the Supreme Court’s earliest and most influential advocates of judicial deference, “a law should be called good if it reflects the will of the dominant forces of the community, even if it will take us to hell.”

This deferential philosophy has proven to be quite popular in certain quarters of today’s conservative legal movement. The late jurist and scholar Robert Bork, for example, was a thoroughgoing Holmes-ian who insisted that, “in wide areas of life, majorities are entitled to rule, if they wish, simply because they are majorities.” Chief Justice John Roberts has taken a similar view. In 2012, for example, when he cast the deciding vote to uphold the constitutionality of Obamacare, Roberts not only cited one of Justice Holmes’ opinions, he explicitly invoked Holmes’ deferential credo. “It is not our job,” Roberts wrote in National Federation of Independent Business v. Sebelius, “to protect the people from the consequences of their political choices.”

William H. Pryor follows in the deferential footsteps of Holmes, Bork, and Roberts. For example, in a 2007 article published in the Virginia Law Review, Pryor praised the Supreme Court’s famous “switch-in-time” decisions from 1937, in which the Court upheld several sweeping New Deal economic regulations. After pointing favorably to National Labor Relations Board v. Jones & Laughlin Steel Corp., in which the Court adopted an expansive new interpretation of congressional power under the Commerce Clause, and to West Coast Hotel Co. v. Parrish, in which the Court overturned its previous line of cases protecting the fundamental right to liberty of contract, Pryor went on to write, “not every controversy requires a judicial resolution or trumping of the will of the majority.” In those pro-New Deal opinions, Pryor concluded, “the judiciary wisely has acted with restraint.” Justice Holmes could not have said it better himself.

To make matters worse, Judge Pryor’s pro-government deference extends beyond the realm of economic activity. He also has a troubling record of favoring broad judicial deference towards law enforcement. Consider the case of United States v. Shaygan. At issue was the sweeping federal prosecution of a Florida doctor named Ali Shaygan on charges of illegally prescribing pain medication. In 2009, after a jury had acquitted Shaygan of all 141 charges lobbed against him, the U.S. District Court for the Southern District of Florida publicly reprimanded and sanctioned the federal prosecutors in the case for “gross negligence” and misconduct, including for the act of secretly recording Shaygan’s legal defense team. The prosecutors “acted vexatiously and in bad faith,” the district court concluded. Their actions “are profoundly disturbing” and “raise troubling issues about the integrity of those who wield enormous power over the people they prosecute.”

The vexatious federal prosecutors then appealed to the U.S. Court of Appeals for the 11th Circuit. There they found a far more sympathetic audience in the form of Judge William H. Pryor. “The district court abused its discretion when it imposed sanctions against the United States for a prosecution that was objectively reasonable,” Pryor ruled. The district court’s reprimands and sanctions against the offending prosecutors were erased from the books.

Here’s the thing. Federal and state lawmakers have an unfortunate habit of violating constitutional rights by passing arbitrary and unnecessary laws. Likewise, federal and state prosecutors (and police) have an unfortunate habit of violating constitutional rights by employing suspect law enforcement tactics. According to the devotees of judicial deference, however, the courts are supposed to tip the scales in favor of the government in such cases.

Regrettably, judging by his record on these crucial issues, Trump SCOTUS contender William H. Pryor seems to favor the same overly deferential approach.

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US Home Prices Rise Above July 2006 Levels, Hit New Record High

Almost exactly ten years after the last housing bubble burst, unleashing a dramatic crash in US real estate prices – something Ben Bernanke had said in the mid-2000’s would be unprecedented – today Case Shiller reported that as of September, its Index covering all nine U.S. census divisions, surpassed the peak set in July 2006 as the housing boom topped out, and in doing so the average home price has now climbed back above the record reached more than a decade ago, bringing to a close the worst period for the housing market since the Great Depression.

The average home price for September was 0.1% above the July 2006 peak in nominal terms. The National index reported a 5.5% annual gain in September, up from 5.1% last month. The 10-City Composite posted a 4.3% annual increase, up from 4.2% the previous month. The 20-City Composite reported a year-over-year gain of 5.1%, unchanged from August.

The gains have been unequal: just 34 of the largest 100 metropolitan areas have seen starter home prices recover to their previous peak, while 56 areas have seen high-end homes reach or surpass previous highs, according to home-tracker Trulia, confirming that the upper end of the market has been instrumental for the “recovery.”

“The new peak set by the S&P Case-Shiller CoreLogic National Index will be seen as marking a shift from the housing recovery to the hoped-for start of a new advance” said Case Shiller’s David Blitzer said. “While seven of the 20 cities previously reached new post-recession peaks, those that experienced the biggest booms — Miami, Tampa, Phoenix and Las Vegas — remain well below their all-time highs. Other housing indicators are also giving positive signals: sales of existing and new homes are rising and housing starts at an annual rate of 1.3 million units are at a post-recession peak.

It is also worth noting, that when adjusted for inflation, the index remains about 16% below the 2006 high. 

The new record caps a four-year recovery from the trough of 2012, when prices sat 27% below the peak after a crash that caused more than nine million American families to lose their homes.

As a reminder, the data is as of September, when interest – and mortgage rates – were stuck near all time lows. A lot has happened since then, most notably the advent of Trumpflation and a surge in mortgage rates. As we reported over the weekend, the recent “Increase In Mortgage Rates Has Shocked Consumers“, once again putting the US housing market in peril.

For now, however, looking at 2 month old data, “the sky is the limit” as the WSJ puts it: while housing has lagged behind some sectors of the economy in recent years, there are signs of gaining strength: Single-family housing starts rose 11% in October, according to the Commerce Department, and the number of starts remains well below the historical average, suggesting there is room for acceleration.

Likewise, the share of first-time buyers rose to 33% in October from 31% a year earlier, inching closer to the historical average of 40%. The lack of first-time buyers had been a drag on the market because, without a deep pool of ready buyers of starter homes, owners of those homes have a harder time trading up.

Robert Shiller, an economist at Yale University who co-developed the index, said the record provides a significant psychological boost for homeowners, some of whom are finally seeing their homes above water after four years of recovery.

 

“It creates an atmosphere that the sky is the limit,” he said. Some economists are surprised by the magnitude of the home price gains in recent years given the more moderate pace of wage growth.

Others, pointing the discrepancy between the 5% annual growth in home prices and the far more subdued wage growth in recent years, are less optimistic: “It’s not clear with the degree of [economic] growth that we’ve had that we should have expected prices to rise this much,” said Doug Duncan, chief economist at mortgage company Fannie Mae. “We have a caution light on.”

Of course, it is easy to explain the delta when considering the historic debt bubble of the past decade. One reason home prices have risen so quickly is a prolonged period of ultra-low interest rates. However, as the WSJ again warns, rates have jumped about half a percentage point since earlier this month, and while they remain near historic lows, a sustained rise could slow price gains particularly in expensive coastal markets.

Putting the move in context, last week housing expert Mark Hanson warned that for end-buyers who rely on mortgages to purchase a house, “Houses have never been more expensive to end-user, mortgage-needing shelter buyers. The recent rate surge crushed what little affordability remained in US housing. It now it requires 45% more income to buy the average-priced house than just four years ago, as incomes have not kept pace it goes without saying. The spike in rates has taken “UNAFFORDABILITY” to such extremes that prices, rates, and/or credit are now radically out of scope. “

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But even before the recent spike in rates, not all was as rosy as the headline would make it seem: about 12% of homeowners who have a mortgage now owe more than their home is worth, down from more than 30% at the bottom of the market, according to Zillow. “Personally I wouldn’t be throwing confetti because my house is worth what I paid for it back eight years ago,” said Nela Richardson, chief economist at real-estate brokerage Redfin.

Still, in many parts of the country that were battered by the crash, a return to near-normal conditions has come as welcome relief, and faster than many expected. The median home value in Lehigh Acres, Fla., on the eastern edge of Fort Myers, bottomed at about $61,000 after peaking at $230,500 in July 2006, according to Zillow. Today, the median home price has risen to about $140,000, a level officials say is closer to what the area can sustain in an era of tight mortgage credit. In fact, Fort Myers now has a shortage of starter homes, said Mayor Randall Henderson.

In short: today’s report was good news for housing; however the real test for the US housing market will be what happens as the recent “renormalization” in rates takes hold; absent a similar rebound in wages, the latest all time high in home prices will prove to be short lived. Finally, one can’t ignore the political component: housing peaking just as Obama leaves. We have a feeling it will have a far more turbulent time under president Trump…

via http://ift.tt/2gt2rIS Tyler Durden