I ain’t afraid of no ghost

From the WSJ:

Shadowboxing With the Recovery in Home Sales

The salvo of distressed home sales that was supposed to sink the housing recovery hasn’t shown up yet. Perhaps it never will.

The National Association of Realtors said Wednesday that sales of existing (translation: previously owned) homes rose 2.3% in July from May. And, as it has for several months now, the NAR said sales might have been higher if it wasn’t for a shortage of inventory.

It counted 2.1 million single-family homes on the market in July, down from a peak of 3.4 million in July 2007 and near the levels of a decade ago. Foreclosure sales accounted for 12% of total sales versus 17% a year earlier.

The NAR’s statistical acumen has a less-than-sterling reputation; in December, it said that it had overestimated home sales by 14.3% from 2007 to 2010, but what it is saying about inventory and foreclosure sales jibes with what regional real-estate associations and other sources have been saying. With household formation picking up, and new single-home construction running at half its level of 50 years ago (when the U.S. population was half the size it is now), inventory constraints could get tighter.

The major caveat is that there’s an unknown amount of “shadow inventory”—homes that are owned by banks, destined for foreclosure, and so forth—out there. As more of those homes hit the market, they could depress prices, restrain construction and put the nascent housing recovery that lately has been one of the brightest spots in the U.S. economy at risk.

It is worth remembering that worries that shadow inventory would buckle housing are no longer new. The delay merely may be that issues like banks’ unwillingness to accept losses and hamstrung courts have led to unanticipated holdups in distressed homes coming on the market. Or there may be other things going on.

One possible factor is that rather than getting put on the block, many distressed homes are getting converted by banks and investor groups into rentals. Indeed, the number of homes that were rented out in the second quarter was 685,000 higher than a year ago, according to the Census Bureau.

Another possibility: Many distressed homes may not have turned up on the market because they aren’t really sellable, either because of the condition they have fallen into or the neighborhoods they are in.

The shadow inventory problem is starting to look like a shadow of its former self.

This entry was posted in Economics, Foreclosures, Housing Recovery, National Real Estate. Bookmark the permalink.

129 Responses to I ain’t afraid of no ghost

  1. grim says:

    From HousingWire:

    Nearly half of Fannie Mae REO unable to reach market

    Only half of the previously foreclosed homes owned by Fannie Mae are either on the market or being prepared for sale. The remaining properties are currently locked away in some step of the foreclosure system.

    The National Association of Realtors said in its existing home sales report Wednesday that its officials were pressuring government agencies to release more of their REO in markets short of inventory.

    Many market participants long claimed the government – including Fannie, Freddie Mac and the Department of Housing and Urban Development – are deliberately holding these homes off the market in order to get more for them when home prices recover.

    Fannie disclosed for the first time this year where these properties are in the lengthy and complicated REO process. In its second quarter financial filing, the government-sponsored enterprise said 23% of its more than 109,000 repossessed homes are currently available for sale.

    That’s down from 28% at the end of last year.

    An offer has been accepted on another 19%, and 11% have an appraisal pending, Fannie said.

    But 47% of its inventory is unable to be marketed.

    Roughly 14% of Fannie’s entire REO inventory is redemption status, meaning the time frame borrowers and second-lien holders can redeem the property under various state laws. The timelines vary and have come under much change across the country. In Michigan, for example, lawmakers passed a bill last year to extend the redemption period to as much as one year in some cases. The bill was referred back to a state committee in March.

    Fannie said another 13% of its properties are still occupied by the borrower. The eviction process just hadn’t been completed.

    Interestingly, 8% of its inventory – slightly less than 9,000 homes – are being rented as part of its piloted Tenant in Place or Deed for Lease programs, where the home is rented back to the borrower.

    Its other piloted program to sell roughly 2,500 homes to investors, who were approved in recent months to rent the properties out, will close at some point in the third quarter.

  2. grim says:

    From MarketWatch:

    Will short sales hit home prices?

    On Tuesday, the Federal Housing Finance Agency announced new guidelines that are supposed to make it easier for home owners to sell their properties in a short sale — when a home sells for less than the borrower owes on the mortgage.

    In addition, the new guidelines, which kick in on Nov. 1, allow owners with a Fannie Mae or Freddie Mac mortgage to pursue a short sale even if they haven’t fallen behind on their mortgage payments but have a hardship, such as a job loss or divorce.

    Consumer advocates say the changes will help some of the borrowers who’ve been unable to sell the estimated 11 million U.S. homes worth less than the value of their mortgage, according to CoreLogic. However, not all homes would qualify in this new program.

    And while the changes provide new hope to distressed home owners, experts say they could negatively affect prices in neighborhoods that get an influx of new short sales. A rise in short sales will result in “downward pressure on home prices until we clear out the majority of these distressed properties,” said Jack McCabe, an independent housing analyst in Deerfield Beach, Fla.

    Home prices had been rising in recent months, a trend experts say is due to the limited inventory and the smaller number of distressed properties on the market.

    For its part, the Washington-based NAR says it’s called for an expedited short-sales process to help boost inventory. The Federal Housing Finance Agency says that it expects short sales to settle at market prices and that they’ll help avoid foreclosures and long vacancy periods that result in declines in home values.

    Still, data suggest that the impact on home owners who aren’t in distress could be lower values for their properties in the near term. Even if short sales fly off the market, they’ll likely go at a discounted price. According to the NAR, short sales sell at prices that are 15% lower than regular home listings, on average.

    Instead, the benefits for homeowners could be bigger in the long term. “It’s a better idea to clear out the backlog of distressed homes rather than delay the process in the name of supporting [home] values,” said Brad Hunter, chief economist at Metrostudy, a market research and consulting firm.

  3. grim says:

    From Bloomberg:

    U.S. Homeowners With Negative Equity Drop as Prices Rise

    The number of U.S. homeowners who owe more on their mortgages than their houses are worth fell by about 400,000 in the second quarter as prices rose and properties were lost to foreclosure.

    About 15.3 million homeowners, or almost 31 percent of those with a mortgage, had negative equity as of June 30, according to Seattle-based Zillow Inc. (Z) That was a decline of a 0.5 percentage point from the first quarter, the real estate information service said today.

    “It’s a positive signal,” Zillow Chief Economist Stan Humphries said in a telephone interview. “Negative equity has definitely gummed up the workings of the housing market.”

    Underwater homeowners have a higher foreclosure rate and a harder time relocating, because they would lose money in a sale, Humphries said. The problem is greatest among borrowers under age 40, about 48 percent of whom owe more than their homes are worth. That’s slowing the housing recovery by shrinking the inventory for first-time buyers and reducing demand for move-up homes, Humphries said.

  4. grim says:

    From the LA Times:

    Housing chief says little to fear from ‘shadow inventory’

    The Obama administration has little fear of “shadow inventory,” or eminent domain.

    Shadow inventory is the spooky name the real estate industry gives to a secret supply of homes on bank books or headed into foreclosure.

    In a meeting with Los Angeles Times editors and reporters Tuesday, Shaun Donovan, secretary of Housing and Urban Development, said the volume of distressed and lender-owned homes was down at Fannie Mae, Freddie Mac, the Federal Housing Administration (which is part of HUD) and in bank portfolios. With an improving market, the worst appears to be over, he added.

    “It’s hard to see where these properties are hiding,” Donovan said.

    For years, housing experts have worried that a “shadow” supply of homes heading into foreclosure hangs over the market. Although that supply does exist, it appears to be shrinking quickly, recent reports have shown. CoreLogic said in June that shadow inventory stood at 1.5 million units as of April, representing a supply of only four months. That was a 15% decline from the same month a year earlier.

    Listed supply — the kind of properties that show up in real estate agent databases, Redfin and Zillow — has sunk so low that it is comparable to the height of the last housing bubble. The lack of decent homes on the market, and a buying frenzy created by record-low interest rates and a better economy have helped lift prices this year.

    “We are now seeing a full recovery, or a fuller recovery,” Donovan said.

  5. grim says:

    From the NYT:

    Signs of Revival, Slight but Sure, for Home Sales

    Analysts are hailing the beginnings of a recovery in the nation’s housing market. But to beleaguered homeowners, it will not feel like much of one for many months to come.

    The number of existing homes sold rose 2.3 percent in July from the previous month, according to figures released Wednesday. Volume was up more than 10 percent from a year ago.

    For several months, economic data and accounts from real estate agents across the country have calmed fears that the overall market could take another big step down, giving prospective home buyers some assurance that prices were stabilizing.

    Yet the nascent recovery is still a convalescent one, with the pace of activity uneven and far below the levels reached before the bubble burst. Home prices remain under pressure in many markets.

    In fact, Wednesday’s report from the National Association of Realtors showed that average sales prices actually dipped slightly from June to July. This seeming contradiction — increasing demand but anemic growth in home values — could represent a new normal in the housing market, experts said.

    Even relatively optimistic observers like Michelle Meyer, an economist with Bank of America Merrill Lynch, foresaw only gradual improvements in home values. She expected home prices to rise 2 percent annually in 2012 and 2013, with momentum gradually increasing later in the decade. At that rate, the average home price would regain its 2006 peak in 2022.

  6. Mike says:

    Good Morning New Jersey

  7. Ernest Money says:

    It’s all going to black. Smoke ’em if you got ’em.

  8. Grim says:

    Claims up 4k to 372k, disappoint.

  9. Mikewaited says:

    Initial Jobless Claims: 372K vs. 365K consensus, 368K prior revised (prior week 366K). Continuing claims +4K at 3.31M.

  10. Mikewaited says:

    Now let me dig up the food stamp numbers to give the whole picture.

  11. raging bull jj says:

    Disappoint makes it sound like a bad thing, more unemployment short term is a great thing. It means QE3, which in turns means lower rates and higher stock prices. Which in turn are good for our three pillars of investing stocks, bonds and real estate.

    The newly employed, aint buying stocks, bonds or RE anyhow. The unemployed are better off if they stay unemployed for just a few weeks more till after Jackson Hole and we get a rip roaring QE3, monetary easing, DC to work on the Fiscal Cliff and Europe to take this seriously. A few extra folks findings jobs in August 2012 is not helping anyone, not even them long term.

    Personally I like to see home sales, home prices take a double dip along with higher unemployment and a short term Stock Market Correction. Nice Fall Sell off like in 2010 and 2011. That would set up a great 2013 for everyone and provide the investors a nice buying opportunity.

    Fall 2012 home prices have several reasons to fall. Cap gains rising in 2013 for vacation homes and investor properties, short sale tax forgiveness not yet extended to 2013 and new short sale stream line rules take effect in a few weeks. That along with usual Thanksgiving to Martin Luther King day slow down. However, if home prices rise, stay stable or even take a dip during year end it is most likely all buy signals, as after this the sell off is long over and although we are already in a 12 month period of steady or rising prices the go ahead and buy signals will be loud and clear once we pass this small hump. Plus cash is piling up for fence sitters like me. Every day the stock market and bond market has been up for around four years. Every day for four years our exposure to stocks and bonds have risen. Yet our exposure to RE has fallen for four years. Even if fence sitters missed getting houses 30K cheaper by waiting till winter 2012 to buy they most likely made an extra 30K during that year and they are buying in clear waters and did not have to guess the bottom.

    Grim says:
    August 23, 2012 at 8:35 am

    Claims up 4k to 372k, disappoint.

  12. Mikewaited says:

    Not to worry all is well, saw these two tidbit links posted one on top of the other & scratched head.

    TOP NEWS

    U.S. stock futures follow Europe higher
    Eurozone PMI points to recession

  13. 3B says:

    #3 A decline of 0.5 is a positive signal? I guess it is not neagtive, but positive?

  14. Mikewaited says:

    JJ 12 you may get your opportunity, but be careful what you wish for.

    “The August preliminary HSBC PMI for China falls to a 9-month low of 47.8 from July’s final read of 49.3. New orders and new export orders both contracted at a faster rate than July, while inventories rose at a speedier pace.”

  15. Mikewaited says:

    3b wasn’t it a decline in homes under water by .5 so yes a negative is a positive per Zillow.

  16. grim says:

    How is China slowing anything but a positive for us? Doesn’t it mean we’re probably buying less crap from them (that we really didn’t need anyway)? Doesn’t it mean they are expanding their manufacturing base less quickly (giving us time to compete)? China exports falling? I say Hoo-rah!

  17. chicagofinance says:

    Ernest Money says:
    August 23, 2012 at 7:20 am
    It’s all going to black. Smoke ‘em if you got ‘em.
    http://www.youtube.com/watch?v=5ChbxMVgGV4

  18. chicagofinance says:

    If they don’t export their crap, then they don’t take in USD which they use to buy UST….and the T ain’t tobacco…..also, scores of US companies have effectively zero growth after inflation and China is their growth market…the most extreme example is KenTacoHut (i.e. YUM!)

    grim says:
    August 23, 2012 at 8:59 am
    How is China slowing anything but a positive for us? Doesn’t it mean we’re probably buying less crap from them (that we really didn’t need anyway)? Doesn’t it mean they are expanding their manufacturing base less quickly (giving us time to compete)? China exports falling? I say Hoo-rah!

  19. Mikewaited says:

    grim17 but from a investment perspective per JJ’s fall correction call it could be worse than he might want. China sells less (Europe the bigger drag than USA) they buy less commodities (prices down for those corps/stocks down), we sell less to Europe also not good for us. Then we sell less to China as they hit the hard landing. Everything gets worse more layoffs negative loop, the offset of less imports may not benefit us at all. Fill the China gap/compete and sell to whom?

  20. grim says:

    As long as China (and India) continue to see double digit wage growth, every quarter that goes by makes them less competitive from a global wage perspective as the primary driver for moving employees/manufacturing there is wage arbitrage.

  21. grim says:

    I’m not denying the seemingly inextricable link between the two, but the dynamic that is driving Yum and American growth in China is wholly different from the export economy. What I’m saying is that it wouldn’t be terrible if an export slowdown focused China on redirecting investment to drivers of their internal economy (where is the consumption economy in China?), and to make them less dependent on global export … as painful as that transition may be.

  22. chicagofinance says:

    Even though evil and demented political hacks like FabMax genuflect at the Obamunists and their Fascist Green Agenda, hydraulic fracking is literally one of the most important, unforeseen and frankly shocking developments in this area. It has come to the point that cheap natural gas (in addition to the recently observed dramatic positive air quality effects) has created an opportunity in re-energizing the depleted U.S. manufacturing base. In addition to wages, the calculus that goes into shipping “crap” to China and back has meant that there strong consideration to just making “crap” here…..good for us…..screw the close-minded Chicago-styled Obamufascists…..

    grim says:
    August 23, 2012 at 9:13 am
    As long as China (and India) continue to see double digit wage growth, every quarter that goes by makes them less competitive from a global wage perspective as the primary driver for moving employees/manufacturing there is wage arbitrage.

  23. grim says:

    24 – Couldn’t agree more

  24. 3B says:

    #16 Mike: Thanks Mike!!

  25. Comrade Nom Deplume says:

    [25] grim,

    Agree about what? The need for Fracking or that Fabmax is evil and demented?

    I’ll go with demented, but evil?

  26. Comrade Nom Deplume says:

    [12] JJ

    I find myself hoping that JJ is right, esp. since I sold and don’t want to be the chump who sold at the bottom. One caveat is that the cap gains on vacation home sales should not hit lower brackets. Of course, most homes aren’t owned by them so who knows. But I have seen that selling in this market is brisk and one wonders if we won’t see a revived Section 1031 trade as a result of the Obamunists.

    JJ, if I keep agreeing with you, will my c*ck grow an inch and hot chicks will start throwing themselves at me?

  27. Comrade Nom Deplume says:

    Trivia Tax Post of the Day: Who said this? (Hint: It wasn’t Arthur Laffer).

    “It is a paradoxical truth that tax rates are too high today, and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the tax rates…. [A]n economy constrained by high tax rates will never produce enough revenue to balance the budget, just as it will never create enough jobs or enough profits.”

  28. Comrade Nom Deplume says:

    Post of the Day Most Likely to Fry Seif’s Onions:

    http://www.politico.com/news/stories/0812/79888.html?hp=r5

    Oh snap, another great talking point viciously murdered by a gang of brutal facts.

  29. raging bull jj says:

    SAN FRANCISCO (MarketWatch) — Treasury prices rose on Thursday, pushing yields down for a fifth straight session, after a report showed U.S. first-time jobless claims increased in the latest week.

    Chifi got last of July and August maturities, calls and interest into market yesterday morning. Funny retail last week was plowing into munis after holding off on a buyers strike for a few weeks. For once retail got it right. I am at zero cash. Come year end December/January muni calls and a boatload of Trups with a 12-15 call date I will have a ton of cash again. If we all are getting cash back at once at year end and tax rates are headed straight up maybe great for housing. Good way to shelter income.

    What are you buying? I feel like selling as I am nervous munis and junk have come too far too quick. But I cant sell. No place to put it plus I will be getting out of market anyhow with all the calls. MTA issued for instance boatload of bonds last few months with 3% coupons and they have a boatload of 5%+ coupon bonds callable in Nov/Dec/Jan. I have a bunch, I know they are getting called.

  30. Juice Box says:

    re: # 24 – Chi – too bad fracking is only going to deplete NG reserves faster perhaps as soon as 10 years of so from now. Shale gas drilling is a giant Ponzi scheme. The US does not have a 100 years of recoverable supply of NG. Go long Coal and then go long ammo after that go long bows and arrows and then go long sticks and stones.

  31. raging bull jj says:

    You are correct except it will grow several inches, you will be like Pinocchio in Platos Retreat with a hot girl on your face yelling lie little puppet lie.

    Comrade Nom Deplume says:
    August 23, 2012 at 9:50 am

    [12] JJ

    I find myself hoping that JJ is right, esp. since I sold and don’t want to be the chump who sold at the bottom. One caveat is that the cap gains on vacation home sales should not hit lower brackets. Of course, most homes aren’t owned by them so who knows. But I have seen that selling in this market is brisk and one wonders if we won’t see a revived Section 1031 trade as a result of the Obamunists.

    JJ, if I keep agreeing with you, will my c*ck grow an inch and hot chicks will start throwing themselves at me?

  32. Comrade Nom Deplume says:

    [27] redux,

    On second thought, FabMax is a Gooner. So maybe evil isn’t beyond the pale!

  33. Comrade Nom Deplume says:

    [33] JJ

    Classic. You never disappoint. But then you probably hear that a lot, right?

  34. raging bull jj says:

    OVERPRICED BOND OF THE DAY.
    23833NAG9
    DAVE & BUSTERS INC SR NT 11.00000% 06/01/2018
    Price 112.340 Yield 6.454

    I have to change it from my 2009/2010 bond buy of the day to bond sell of the day. 6.4% for Dave and Busters, seriously?

  35. Comrade Nom Deplume says:

    Last thought of the morning:

    When I heard this, I thought “That’s a nompound in disguise” and I think that there is something to it.

    http://www.sfgate.com/business/bloomberg/article/Billionaire-Koch-Builds-Frontier-Town-All-His-Own-3809682.php

    Now, to me, I think he is overlooking some tax savings angles by opening it up to charitable purpose, but then he probably doesn’t much care about that.

    Just as with that parcel in NY that Essex wrote about. Would be great for a newly formed church that happens to provide a nompound for its “parishoners.”

  36. NJ Toast says:

    24 ChiFi – right now, CNG filling stations for home use cost $5k and take around 8 hours to fuel up the auto. GE and Eaton are aggressively pursing development of home systems that will cost $500 and do the fill up in an hour or so. Per your comments the economic and social impact from all of this could a big part of the big economic boost that our manufacturing base so desperately needs.

  37. Comrade Nom Deplume says:

    Okay, just one more:

    I get castigated by liberals for suggesting that they believe that we the people really shouldn’t “own” anything. I point out that this is manifest in the institutional belief by government that it’s their money, they just let us use it.

    Then I came across this gem in a tax commentary:

    “In fact, we should have a system in which, to the extent possible, Americans pay no “taxes” at all; instead, our wages should simply be lower, while a portion of what we previously thought of (rather absurdly) as “our” money goes directly to the government.”

    http://www.salon.com/2012/08/21/nialls_most_laughable_lie/

    Got that conservatives? The idea that it is “your” money is “absurd.” And sadly, there is something to that.

    (this should draw out seif, cobbler and fabmax)

  38. Juice Box says:

    re# 37 – Nom here is a pic, other than elevation being a bit too high for most people, it has water and a large elk herd. You might be able to grow some stuff during the summer.

    http://www.grownbypeople.com/landexchange/wp-content/uploads/2012/01/Town2.jpg

  39. joyce says:

    (39)

    If you refer to it correctly as “your property” or “your labor”, that article is even more ridiculous.

  40. raging bull jj says:

    More Gains for Treasuries, 10-Year Yield at 1.669%

    yikes, the bond rally continues, didn’t bill gross once again say last week he was selling.

  41. Ben says:

    I used to sit around a table of liberals during grad school. A bunch of engineers on 25k stipend who believe they are politically informed because they listen to NPR and watch John Stewart. One of them claimed socialism works. Another said we should all be paying upwards of 50% in taxes so we could have all these great social services. Another, was from a broken Soviet Republic and lived in poverty until coming to the U.S. He didn’t see anything wrong with people being able to sit around in the old Soviet Republic.

  42. Painhrtz - Yossarian says:

    Nom – your money you didn’t earn that. The government had it on loan to you and wants it back.

  43. Libtard in Union says:

    The problem with taxes is that the government can not achieve economies of scale due to the lack of a profit motive. RR was right when he said the problem with government was its size. You can argue all day about the Laffer or Keynesian economics, but at the end of the day, it’s the the lack of accountability in the public sector that is probably the culprit here.

  44. Happy Renter says:

    [23] “I’m saying that it wouldn’t be terrible if an export slowdown focused China on redirecting investment to drivers of their internal economy (where is the consumption economy in China?), and to make them less dependent on global export”

    I think that when China develops its own consumption economy, and starts selling what it makes to its own internal economy, that will be the end of our Chinese Overlords accepting our worthless paper dollars in exchange for sending us tons of manufactured goods.

    That is going to hit the U.S. like a tsunami. It will be stagflation on steroids for a generation.

    And this is why rising interest rates in the U.S. != a rockin’ U.S. economy.

  45. chicagofinance says:

    Shore Guy: Where are you? Do I sign up for a function here? Do you think the cigar comes with a Lewinsky?

    Old Hickory Riverview Room & Cigar Terrace
    Gaylord National Resort
    National Harbor, MD

    Overlooking the meandering river in our two-acre atrium, Old Hickory
    Steakhouse, Gaylord Hotels’ signature restaurant, features a stylish and
    contemporary design, modeled on the interior of an elegant Georgian
    row house.

    Come feast on excellent food, superb wine and enjoy a cigar rolled
    especially for you!

  46. chicagofinance says:

    Just messing around…..

    Comrade Nom Deplume says:
    August 23, 2012 at 9:45 am
    Agree about what? The need for Fracking or that Fabmax is evil and demented?
    I’ll go with demented, but evil?

  47. chicagofinance says:

    Toast: My comments did not even factor in deploying technology for consumer use. Purely on a commercial basis there can be substantial change with minimal impact to currently ingrained consumer habits and preferences.

    NJ Toast says:
    August 23, 2012 at 10:20 am
    24 ChiFi – right now, CNG filling stations for home use cost $5k and take around 8 hours to fuel up the auto. GE and Eaton are aggressively pursing development of home systems that will cost $500 and do the fill up in an hour or so. Per your comments the economic and social impact from all of this could a big part of the big economic boost that our manufacturing base so desperately needs.

  48. chicagofinance says:

    I openly admit to not being any kind of source of expertise on the matter, but I think what you are saying here may be factually wrong. I think we are the Saudi Arabia of shale natural gas deposits that can be released with fracking, to the point that any such concerns about long-term reserves are not of any real concern. Certainly not in the next 50 years…..

    Juice Box says:

    August 23, 2012 at 10:02 am

    re: # 24 – Chi – too bad fracking is only going to deplete NG reserves faster perhaps as soon as 10 years of so from now. Shale gas drilling is a giant Ponzi scheme. The US does not have a 100 years of recoverable supply of NG. Go long Coal and then go long ammo after that go long bows and arrows and then go long sticks and stones.

  49. yo says:

    #8
    “He’s going to try to hand over the sovereignty of the United States to the U.N., and what is going to happen when that happens?,” Head asked

    And this guy is a Judge? I will be more worried about this countries citizen not being able to think for themselves. Most of O’s spending plan were stopped by the right.Where is the infrastracture spending and the the list goes on. O can not just hand US sovereignity to the UN with out congress voting for it. O have no real power.Everything he wants done has to be approved by both houses.

  50. joyce says:

    51

    what about executive orders and executive branch regulations? i guess they dont’ carry the force of law… oh wait

  51. yo says:

    Congress was able to overturn an executive order by passing legislation in conflict with it during the period of 1939 to 1983 until the Supreme Court ruled in Immigration and Naturalization Service v. Chadha that the “legislative veto” represented “the exercise of legislative power” without “bicameral passage followed by presentment to the President.”[9] The loss of the legislative veto has caused Congress to look for alternative measures to override executive orders such as refusing to approve funding necessary to carry out certain policy measures contained with the order or to legitimize policy mechanisms

    http://en.wikipedia.org/wiki/Executive_order

  52. yo says:

    Congress may override a veto with a two-thirds majority to end an executive order.

  53. yo says:

    As I said,I am more worried about our citizens not able to think for themselves. just relying on word of mouth.But will vote many times at an American Idol

  54. Painhrtz - I am a meat popsicle says:

    yo – The point you miss is a good portion of the country thinks this way and while your busy felatiating then getting r aped by big daddy government. They are lock and loading.

    While most of us here contend that americans are too fat and lazy to get off their respective couches to do anything of this sort. The early part of this nations history had been rife with little insurections. We could see something along the lines of the whiskey rebellion, out and out open warfare on a large scale against the government probably not.

    There is a reason police forces have been militarized, it was long ago gamed out that in the event of a within borders insurrection American troops would most likely side with those going against the government by either not firing on citizens or siding with them. this is generally based on how the military skews and their views on upholding the intent of the constitution. The local police on the other hand have no problems wiping their respective rears with that document and rather like beating on their fellow citizens.

    Ask yourself this question does Sparta Township need a swat team and a tank? Now multiple that across the country.

  55. joyce says:

    Leaving aside the fact that wikipedia is such a ‘great’ source… why didn’t you include the last sentence of that paragraph?

    “It has been argued that a Congressional override of an executive order is a nearly impossible event due to the supermajority vote required and the fact that such a vote leaves individual lawmakers very vulnerable to political criticism.[10]”

  56. yo says:

    This all happens when a majority of a countries population is in poverty and when most of its resources is divided to chosen few.Revolt is the only answer.Over 50% of our population are now classified as poor,do not pay fed tax.This were once considered middleclass.Widen the gap more and what you say can happen.

    “There is a reason police forces have been militarized, it was long ago gamed out that in the event of a within borders insurrection American troops would most likely side with those going against the government by either not firing on citizens or siding with them. this is generally based on how the military skews and their views on upholding the intent of the constitution. The local police on the other hand have no problems wiping their respective rears with that document and rather like beating on their fellow citizens. “

  57. yo says:

    The fact is a President is just a symbol with no real power if Congress,Senate and the Supreme Court goes against him.The only time a President gets all the power is during a Martial law.Even at this ,the military has to back him up

  58. 3B says:

    #40 Juice: OT.Are you familiar with Waldwick in Bergen Co. Considering expanding my search, but not familiar with the town at all.

  59. Juice Box says:

    Chi – Obama declared we have 100 years reserves. Who is factually correct? Him or the industry insiders?

  60. chicagofinance says:

    nom….will you be in Philly-area by September 19th?……I had a client cancel on me for a Cornell function…..e-mail me…..

  61. chicagofinance says:

    The stuff I hear is not from the administration.

    Juice Box says:
    August 23, 2012 at 12:24 pm
    Chi – Obama declared we have 100 years reserves. Who is factually correct? Him or the industry insiders?

  62. chicagofinance says:

    Front page WSJ

    POLITICS

    Vow to Tame Partisan Rancor Eludes Obama Four Years In

    By LAURA MECKLER

    The night Barack Obama won the White House, he tried to summon forth the spirit of national unity he often invoked as a candidate, urging Americans not to think of themselves as fractured into “red states and blue states.”

    “While the Democratic Party has won a great victory tonight, we do so with a measure of humility and determination to heal the divides that have held back our progress,” he told the throng gathered in Chicago and millions more watching on TV.

    Almost four years later, few think those rifts have been healed. One of the central tenets of the 2008 Obama campaign was a promise to usher in an almost post-partisan era in Washington, but by most measures the capital’s divisive tone has grown worse. The rancor has bled into the campaign, which has been marked by unusually negative rhetoric from both sides.

    There are multiple explanations. The divisions are well-entrenched, and Mr. Obama’s Democrats insisted at the outset on pursuing their own long-stymied priorities. Mr. Obama’s initiatives have been blocked repeatedly by a unified GOP, including a Senate leader whose avowed top priority is denying Mr. Obama a second term.

    Still, even many of the president’s supporters acknowledge that Mr. Obama lost opportunities for consensus-building.

    Critics point to his personal style: Mr. Obama dismisses the kind of political gestures that build relationships but that he can regard as insincere.

    The fissures also deepened after two early decisions to champion top Democratic concerns—the economic stimulus package and a lesser-known children’s health measure—over outreach to opponents.

    The problem was inherent in his 2008 campaign, when he ran as both someone who would change Washington and as a fighter for Democratic programs, said William Galston, an adviser to former President Bill Clinton who is now at the nonpartisan Brookings Institution in Washington.

    “The president made a clean choice. I respect clean choices, but when you choose, you reveal what you care more about,” he said.

    Partisanship, and lofty promises to end it, certainly didn’t begin with Mr. Obama. His predecessor, former President George W. Bush, pledged to be a “uniter, not a divider.” But a poll released in June by the Pew Research Center found that over the Bush and Obama terms, the electorate has become increasingly polarized on a range of issues and values.

    Meanwhile, the rise of the tea party sharpened anti-Obama sentiment, and the Internet and social media have made it easy for voters to have their own beliefs echoed back to them in 140-character bursts.

    Mr. Obama made some efforts to establish bipartisan patterns early on. He kept on board Mr. Bush’s defense secretary, Bob Gates, and made Gen. James Jones, a friend of his 2008 opponent, John McCain, his first national security adviser.

    He also chose a former Republican House member, Ray LaHood, to join his cabinet as transportation secretary and made former Utah Gov. Jon Huntsman his ambassador to China.

    Even so, Mr. Obama neglected to set out a broader strategy to bridge divides, his detractors and some supporters say.

    The president has said that he didn’t pay enough attention to tone, calling that his greatest frustration. “I haven’t been able to change the atmosphere here in Washington to reflect the decency and common sense of ordinary people—Democrats, Republicans and independents—who I think just want to see their leadership solve problems. And there is enough blame to go around for that,” he said last month in an interview with CBS News.

    Some of the problems have roots in Mr. Obama’s personal approach. He doesn’t seem to enjoy socializing with legislators, nor does he routinely call them when there isn’t a pressing issue at hand. He plays golf most weekends with friends, none of them involved in the legislative give-and-take of Washington.

    “Relationships have a lot to do with trust, and trust has a lot to do with your ability to negotiate, and your ability to negotiate has a lot to do with getting things done,” said former Senate Majority Leader Tom Daschle, a Democrat who is close to Mr. Obama.

    Other presidents have more actively wooed members of Congress. President Ronald Reagan in July 1981 flew 14 Democratic members of Congress to Camp David for a barbecue to convince them to vote for his tax cut; their votes became crucial to its passage. Mr. Clinton had a penchant for calling members of Congress of both parties, as well as a host of others, day and night. Mr. Bush occasionally invited members of both parties to the White House theater to watch new-release movies and relied on the support of a handful of Democrats in the run-up to the war with Iraq.

    Some of Mr. Obama’s friends have tried to persuade him to open up more to both friends and foes in Congress. Republicans pointedly complained that after he was elected, Mr. Obama didn’t meet one-on-one with either Senate Minority Leader Mitch McConnell or House Speaker John Boehner for nearly two years. After election losses in 2010, White House officials considered inviting Republicans to Camp David but never did so.

    White House officials blame Republicans for the sour tone. On the night of Mr. Obama’s inauguration, senior Republicans resolved over a steak dinner to broadly oppose the new president and begin attacking vulnerable Democrats in an effort to win back the House, according to an aide to one of the participants. Members of Congress have called Mr. Obama a soc!alist, and one shouted from the House floor, “You lie!” during a presidential address to Congress, a rare breach of protocol.

  63. chicagofinance says:

    continued….

    One Democratic ally who has repeatedly raised the issue of personal relationships with the president said Mr. Obama sees such gestures as “phony.”

    “He’s a little defensive about it,” the ally said. “He thinks it’s sort of an artificial thing that people do just to get their way.”

    White House officials offer a list of social and other events in which Mr. Obama engaged Democratic and Republican legislators from the outset, including c-cktail receptions, a dinner for committee leaders, parties to watch sporting events and meetings.

    By several objective measures, the split has worsened. Last year, House Republicans voted with their leadership 91% of the time on average, tying a record for party-line voting, while Senate Democrats set a record with 92% party unity, according to data compiled by Congressional Quarterly.

    In the Senate, minority Republicans have routinely invoked their right to filibuster. In 2009 and 2010, senators filed cloture motions, which are used to try to break a filibuster, 137 times, up from 68 just four years earlier.

    Mr. Obama’s signature domestic-policy initiative, his overhaul of health care, passed the House with zero Republican votes. Last month, meanwhile, the latest Republican effort to repeal it attracted just five Democratic votes.

    A pair of crucial decisions early in Mr. Obama’s presidency also may have undermined his stated goal of bipartisanship.

    His first significant piece of legislation, the $787 billion stimulus package, was shaped by the incoming administration late in 2008 amid fears the nation was on the brink of a depression. That made it hard, officials said, to spend a lot of time thinking about overtures toward Republicans.

    Three days after his inauguration, Mr. Obama met with congressional GOP leaders. He shut down a dispute over how the tax cuts should be structured with a blunt reminder of the election results. “I won, so I think on that one, I trump you,” he told them, congressional aides recalled.

    Soon after the election, Mr. Obama met with Mr. McCain and his close friend, Sen. Lindsey Graham. After that, Mr. Graham (R., S.C.) worked closely with the White House on national security and other matters.

    But he said he was rebuffed after suggesting to then-Chief of Staff Rahm Emanuel there was a deal to be had somewhere between a stimulus number Mr. McCain had posed, about $480 billion, and Mr. Obama’s higher figure. A spokeswoman for Mr. Emanuel, now the mayor of Chicago, confirmed the account.

    “He never built the kind of broad bipartisan support through presidential outreach that would have been essential,” said Sen. Olympia Snowe of Maine, one of three Republicans who ultimately voted for the bill. “It got the presidency off on the wrong foot and began to set the tone.”

    Democrats say the package included many Republican ideas—about one-third of the money went for tax cuts—and should have received GOP support. United opposition “was a shock to me,” said Sen. Charles Schumer (D., N.Y.). “At a time really of national crisis, when we could have fallen into a depression, he got virtually no support.” Afterward, many Democrats complained the final package was actually too small.

  64. Juice Box says:

    60- 3B – Small town lots of pass through traffic on the way to RT 17 from Wyckoff etc, few streets let out onto Rt 17 directly, and they have a weird little section that should really be a part of Saddle River.

    They got hit hard in Irene too, that babbling HoHokus brook became a class three rapid. You may want to check the listing to make sure they weren’t flooded last year.

    There are a few videos on the flooding last year on you tube

    http://www.youtube.com/watch?v=_O2lnQxlCg0

  65. chicagofinance says:

    more….

    Another opportunity for bridge-building very early in the Obama term received less public attention. Mr. Bush had twice vetoed bipartisan legislation to expand the Children’s Health Insurance Program, and in early 2009 some Republicans as well as virtually all Democrats wanted to reverse that decision.

    Democrats, who controlled the White House and Congress, wanted to make changes to the bill, including expanding eligibility for legal imm!grant children. That upset two crucial Republicans, Sens. Charles Grassley of Iowa and Orrin Hatch of Utah, who had defied their party’s leadership by voting to override the Bush veto. They supported the legislation but not the changes.

    Mr. Grassley, the top Republican on the Finance Committee, made a quiet offer to Democrats: Move the bill out of committee without the imm!gration provision and then restore it with an amendment on the Senate floor, according to aides. That would let Mr. Grassley, and maybe others, go on record against the imm!grant provision while supporting the overall legislation.

    Senate Finance Committee Chairman Max Baucus, a Democrat, supported the idea, partly as an effort to build good will, aides said. Democrats were counting on both men as possible backers of more consequential health-care legislation coming later that spring. But the incoming White House squashed it, according to multiple aides in both parties. The White House directed Mr. Baucus to incorporate the changes into the legislation.

    Messrs. Grassley and Hatch voted no on the bill, which passed just days after the inauguration. A White House official said the Grassley plan was rejected because it wasn’t clear whether Democrats had the 60 votes needed to add the amendment.

    The decision had consequences. Republicans would bring the story up whenever Mr. Grassley suggested working with the White House, particularly on health care, GOP aides said.

  66. Anon E. Moose says:

    Yo [51];

    O can not just hand US sovereignity to the UN with out congress voting for it. O have no real power.

    I would have thought that it would take an act of congress to grant amnesty to illegals; to roll back statutory work requirements of federal welfare; to exempt certain organizations from requirements of Obamacare. It turn out that any and all of those thing only require the nod of the liege (aka, “Executove Order”). For that matter, you have to wonder when they bothered with legistlation for Obamcare in the first place if simple Executive Orders are so powerful. No mucking around with the opinions of the representatives. I guess his O-ness learned that lesson in 2009-2010, and said “To hell with Congress: I’ll be like Nike and ‘Just Do It’.”

  67. 3B says:

    #66 Juice: Thanks for all the information.W with that information, I would still consider it, just have to be careful where I would buy.Going to check it out this weekend Other than those issues you pointed out, is it a nice town? Was/still looking in Midland Park, very little inventory, and just not feeling the love there. Sorry do nto mean to be a snob, but it had a hillbilly feel to it.

  68. Comrade Nom Deplume says:

    Hmmm, no guesses as to who uttered the quotation in 29? I’m disappointed. Surely, there are any number of Austrian School believers who come to mind?

  69. joyce says:

    Kennedy?

  70. Anon E. Moose says:

    Nom [70];

    Oooo… Oooo… I know… I know.

    Down the memory hole for Dems, however, as they (unironically) gripe about how radicalized the Republican party has become and beholden to its extrmists.

  71. Comrade Nom Deplume says:

    [68] moose,

    And let’s not forget the de facto nationalization of Fannie and Freddie. I’m pretty sure there was no Congressional approval for that, although some authority may be inferred somewhere if you squint hard enough.

    http://www.bloomberg.com/news/2012-08-17/treasury-accelerates-withdrawal-of-fannie-freddie-backing.html

    I have enough experience with government at all levels and on both sides to know that if you are small, isolated, or alone, the government can and will run roughshod over you, whether you are right or not. And if you don’t like it, get a court order.

    It isn’t just the Jersey way.

  72. Comrade Nom Deplume says:

    [29] redux

    Ding, ding, ding, we have a winner.

    That Lafferian wet dream was uttered by none other than John Fitzgerald Kennedy.

  73. chicagofinance says:

    nom….we don’t have a revenue problem (on the individual tax side), we have a spending problem….

  74. Comrade Nom Deplume says:

    [72] moose,

    Whenever I point out that by today’s standards, JFK would be to the right of GWB, I get sneers and hisses from democrats.

    Yet the record speaks for itself.

  75. yo says:

    To date, U.S. courts have overturned only two executive orders: the aforementioned Truman order, and a 1995 order issued by President Clinton that attempted to prevent the federal government from contracting with organizations that had strike-breakers on the payroll.[8] Congress was able to overturn an executive order by passing legislation in conflict with it during the period of 1939 to 1983

  76. Comrade Nom Deplume says:

    [75] chi fi

    Uh, clearly you didn’t get the memo from 1600.

    After November 6, you will be re-educated. Bring a toothbrush.

  77. Libtard in Union says:

    Nom,

    Is it the same guy responsible for the first income tax cuts since the great depression?

  78. Painhrtz - I am a meat popsicle says:

    Yo we have the only poor people in the world who drive to the poor house. I would not worry about them revolting. they are well taken care of.

    Chi, Nom any way Chairman O slices it, his presidnecy has been a failure of proffesorial elitism. I am the professor, therefore I’m right ,so get in line. Those who don’t are ignored or punished. Remeber all those fun campaign planks about human rights, illegal surviellance, unfetered war, Gitmo. All of which were to go away. Well after 4 years; Gitmo still open, Patriot act gets reaffirmed, we have drones flying over US borders, the police state has gripped itself tighter and we are all a little less free than we were 4 years ago.

    romney will do the same just at a slower pace.

  79. grim says:

    Waldwick is one odd cookie for sure, it’s weird. I for sure don’t understand it. I say weird because given it’s location, it should command property values higher than it does. Most other agents will have similar comments, most people don’t care for the “feel” of it (can’t get more subjective than that). Could be the density (more similar to Midland Park than to Wyckoff for example), or it could be the schools (neighbors rank much higher). I’ve known lots of folks that have preferred Midland Park to Waldwick, especially areas of MP that are closer to the Ridgewood downtown. It’s usually on the exclusion list for anyone looking in the general area. There are some nice neighborhoods and the housing stock isn’t all that bad (in fact I’ve seen some nice properties sell at what look to be great prices).

  80. Libtard in Union says:

    Judging Obama: Like every president before him, he got into office and wasted nearly a trillion dollars paying back his campaign financiers. I knew it was over long before he even got going. On the bright side, there are some birds in the San Francisco Bay that are doing much better today than when he took office in 2009. Also, the wooden arrow market is booming.

    Baa. Baa.

  81. raging bull jj says:

    what is with all the politics talk. I just spent an hour in the gym wondering how come lady traders have great butts and all you guys are thinking about is politics. Folks who are running are two catholics, a morman and a guy who cant figure out what religion he is. Sounds more like the start of a bad joke than folks who should be in the half white half black house.

  82. Libtard in Union says:

    Keep in mind, the middle class lost way more of their wealth percentage-wise to the housing collapse than did the upper class. The lower class rents.

  83. Painhrtz - I am a meat popsicle says:

    One part of the article that struck me

    The causes of this middle-class decline are many, from globalization (jobs being shipped overseas), to the decline of private-sector unions, to the wholesale embrace of a “shareholder value” religion that values profit over everything else that companies produce.

    I think someone’s fairness is showing. It could be argued that private sector unions led to the demise of such industries such a steel, or put them on life support US automakers. Weird to state that companies value profit over everything else. Are they supposed to lose money for their investors? Isn’t that what shareholders are? honestly the people who write this tripe are probaly the same ones who wear the Che Guerra shirts cause he was a revolutionary and such a great guy.

  84. 3B says:

    #82 grim: Thankyou for your insight. I guess Waldwick for some people is like my feeling for Midland Park, not sure if I like it or not. I know there has been talk about Midland Park merging it’s HS with either Waldwick or Northern Highlands (Allendale), only 70 Seniors graduated from MP HS this past June. I am surprised however how little inventory there is in Midland Park, just around 20 SFH’s or so for the entire selling season, (and more than a few with no basements, deal breaker for me) Waldwick is as you say surrounded by all nice towns, which also as you say could indicate higher prices. Of course it does not have the prestige factor like USR, Allendale, Ho-Ho Kus etc. and perhaps that is a turn off for some buyers . I don’t care about any of that, I just do not want to be in Hillbilly country. Quick look at the taxes indicates they are very reasonable for Bergen Co. As far as High Schools this year the school ranked 54 out of the top 100, far better than River Dell’s 104.

  85. Comrade Nom Deplume says:

    [82] libtard,

    “Also, the wooden arrow market is booming.”

    Aside from me, I wonder who else got that reference?

  86. Anon E. Moose says:
  87. yo says:

    The decline of the middleclass is due to a selective sector of the economy that was put in competition against the third world due to lack of own lobbyist.Remove the lobbyist from the Doctors,Lawyers,CEO’s and open the US border to this class in competition to our own.See how fast their jobs will disapear and salaries go down.

    Now this is Globalization.Putting certain sector against low paying countries while protecting a certain sector due to lobbyist is not Globalization.

  88. Jill says:

    3b re: Waldwick: Yeah, we looked there too back when we were looking. Lots of housing in your (our) price range (we are not in JJ’s socioeconomic class, I guess). At the time (and that was 16 years ago), I liked that the lots in WT were bigger (75′ wide vs. 50′) and it just seemed like a nicer town. WT is in sad shape right now and as more drips out about Bob Schroeder, the more we know why. I’m starting to wonder how much tax money went to keep him afloat.

    I think the side of Waldwick East of Franklin Turnpike is nicer than what’s west, but that’s just my opinion. Counterintuitive, yes, because the west side is closer to Wyckoff. But when we were looking, at least, that was the case.

    I don’t hear anything about the town’s local government, which means maybe it’s not as much of an utter joke as WT’s is.

  89. chicagofinance says:

    repost

    chicagofinance says:
    August 23, 2012 at 12:26 pm
    nom….will you be in Philly-area by September 19th?……I had a client cancel on me for a Cornell function…..e-mail me…..

  90. chicagofinance says:

    WSJ
    HEARD ON THE STREET
    August 22, 2012, 6:04 p.m. ET

    Shadowboxing With the Recovery in Home Sales

    The National Association of Realtors said Wednesday that sales of existing (translation: previously owned) homes rose 2.3% in July from May. And, as it has for several months now, the NAR said sales might have been higher if it wasn’t for a shortage of inventory.

    It counted 2.1 million single-family homes on the market in July, down from a peak of 3.4 million in July 2007 and near the levels of a decade ago. Foreclosure sales accounted for 12% of total sales versus 17% a year earlier.

    The NAR’s statistical acumen has a less-than-sterling reputation; in December, it said that it had overestimated home sales by 14.3% from 2007 to 2010, but what it is saying about inventory and foreclosure sales jibes with what regional real-estate associations and other sources have been saying. With household formation picking up, and new single-home construction running at half its level of 50 years ago (when the U.S. population was half the size it is now), inventory constraints could get tighter.

    The major caveat is that there’s an unknown amount of “shadow inventory”—homes that are owned by banks, destined for foreclosure, and so forth—out there. As more of those homes hit the market, they could depress prices, restrain construction and put the nascent housing recovery that lately has been one of the brightest spots in the U.S. economy at risk.

    It is worth remembering that worries that shadow inventory would buckle housing are no longer new. The delay merely may be that issues like banks’ unwillingness to accept losses and hamstrung courts have led to unanticipated holdups in distressed homes coming on the market. Or there may be other things going on.

    One possible factor is that rather than getting put on the block, many distressed homes are getting converted by banks and investor groups into rentals. Indeed, the number of homes that were rented out in the second quarter was 685,000 higher than a year ago, according to the Census Bureau.

    Another possibility: Many distressed homes may not have turned up on the market because they aren’t really sellable, either because of the condition they have fallen into or the neighborhoods they are in.

    For whatever reason, the results of large public home builders don’t square with a looming threat of distressed sales flooding the market. Without exception, they have seen orders rising sharply. The latest: Toll Brothers, TOL -1.31% which said Wednesday that net orders for new homes in the quarter ended in July were 57% higher than a year earlier.

    The shadow inventory problem is starting to look like a shadow of its former self.

  91. 3B says:

    #91 Jill: Thank you for your insight; I appreciate it. I know nothing about Waldwick, so cannot comapre it to WT, but it does have a train which is a plus, and “reasonable” taxes Property size is not much of an issue, but not having a basement would be. We will check it out over the weekend, and compare to WT, and go from there. Or we could see what the fall out will be from the NJ school rankings issue will be and perhaps scoop something up in Oradell if prices fall further there. I will certainly use that fact if we see anything worthwile looking at there. Right now anything decent in Oradell is extremely over priced IMO. As far as JJ and his socio-economic class, well lets just say he is a “little” louder about his socio-economic class than I.

  92. chicagofinance says:

    Let me make this clear to the FabMaxes out there….just because I am posting the following does not mean that I fully endorse every point contained…..GOT IT? I do not care about the absolute levels of taxation, but rather that they be consistent. However, spending needs to be cut in short order….I hope the Elite 140 can understand the gutteral mouthbreathing of this feudal serf…..

    WSJ
    REVIEW & OUTLOOK
    August 22, 2012, 7:20 p.m. ET

    The Cliff the Keynesians Built

    Temporary tax cuts created the fiscal threat to growth..

    ‘A stimulus program should be timely, targeted and temporary.”
    —Lawrence Summers, January 29, 2008

    Well, well. So the folks who have run U.S. economic policy since 2008 are alarmed about the peril of the 2013 “fiscal cliff.” Too bad they didn’t worry about that when they were creating the very ledge they now lament.

    The latest warning comes from the Congressional Budget Office, which estimated in its mid-year budget outlook Wednesday that the economy will return to recession in 2013 if taxes rise and spending falls on schedule in January. “Such fiscal tightening will lead to economic conditions in 2013 that will probably be considered a recession,” say the CBO sachems, “with real GDP declining by 0.5 percent” from this year’s fourth quarter to the final quarter of next year and unemployment rising to about 9% from 8.3%.

    Yes, a year of falling output would “probably be considered” a recession, especially if you are one of the 9% jobless.

    One point to keep in mind is that CBO’s economists are as true-blue Keynesians as exist on the planet. Like the Obama White House and Treasury, they believe in the “multiplier” that $1 of federal spending somehow creates $1.50 in greater GDP. Thus they plug large spending cuts into their economic models, and, presto, they find a recession.

    One remarkable (and highly dubious) note in the CBO report is that the budget gnomes predict a big surge in tax revenues in 2013—to 18.4% from 15.7% of GDP—despite the recession they also predict. CBO simply doesn’t think taxes matter much to taxpayer behavior, so it applies the higher rates to its current predictions of income and pretends revenues will roll in like the tides. But this will be a fantasy if enough Americans find ways to hide their income or work less, or if they simply earn that much less thanks to the recession.

    The larger policy point is that this is the fiscal cliff the Keynesians built. The 2008 quote above from Larry Summers, the Harvard economist who later became President Obama’s chief economic adviser, sums up the mindset that has dominated policy for most of the last decade and especially since 2008.

    Rather than provide predictable, consistent policy for the long term, the Summers-Obama-Geithner-Krugman theory goes that government should jolt the economy with spending and tax cuts that are targeted and temporary. The jolt will drive the economy out of recession, rapid growth will resume, and the wizards of Harvard Yard can then tell us the precise moment when the stimulus can be withdrawn and taxes should rise again.

    Or, if the jolt doesn’t work, then order up another jolt, which makes the tax cliff even steeper.

    The last decade has provided as clear a market test of this proposition as one can get. First, the Bush Administration had to accept a temporary window for its 2001 and 2003 tax cuts to pass the Senate’s crazy budget rules. Its tax rebate of 2001 was such an economic bust that without the more ambitious and better designed 2003 tax cut Mr. Bush might not have been re-elected. But even the 2003 cut had to be temporary to pass Congress.

    Then came the Summers-George Bush-Nancy Pelosi $168 billion tax rebate and spending stimulus of February 2008. That goosed GDP for a quarter as temporary consumer and government spending showed up in the national accounts, but growth quickly sputtered even before the autumn 2008 financial panic.

    Then came the $830 billion stimulus of February 2009, followed by other “targeted and temporary” measures like cash for clunkers and the first-time homebuyer’s tax credit. GDP rose modestly as the economy recovered, albeit at a historically slow pace considering the depth of the recession. The rate of growth has since sputtered in each of the last three years.

    That didn’t stop Mr. Obama, who tried still another temporary tax fix after Republicans captured Congress in 2010. He agreed to extend the Bush tax rates for another two years, but only in return for an additional temporary payroll tax cut for one year. When that didn’t spur faster growth in 2011, the President demanded and won another one-year payroll-tax extension for 2012. First half GDP growth this year fell again to 1.7%.

    ***

    So here we are now facing the expiration of all of these temporary measures at the same time. And that’s not all. You have to add the higher tax rates that Mr. Obama has proposed in his budget, such as the 30% “Buffett rule” tax rate on capital gains. And don’t forget the new 3.8% surcharge on investment income that is part of ObamaCare and also starts in January.

    The nearby table compares current tax rates with those that arrive next year with the tax cliff, as well as Mr. Obama’s budget proposals and Mitt Romney’s tax reform plans. Mr. Romney is proposing an across-the-board rate cut, while Mr. Obama would keep rates the same only for those earning less than $250,000. Everyone else would see a huge tax increase, one of the largest in history.

    Republicans are pointing to the CBO report as proof of Mr. Obama’s policy failure, and it is. But rather than gawking at the potential for another recession, they ought to explain the folly of “temporary, targeted” tax and spending stimulus. The fleeting tax elixir does little to change incentives to work or invest because everyone knows its impact is temporary. It also creates tremendous uncertainty as expiration nears, which can also harm incentives and growth.

    The problem is political, but more important it is intellectual. The Keynesians and their allies who have dominated tax policy for most of the last decade (the 2003 bill excepted) need to be exiled back to Harvard, Princeton and Wall Street. And the Romney-Ryan Republicans need to understand and not repeat the Bush mistakes of 2001 and 2008.

    Instead of “timely, targeted and temporary,” tax policy should include lower rates (and fewer loopholes) that are applied as broadly as possible and are permanent. These were the principles that guided the Reagan policy of the 1980s, and they need to be revived.

    A version of this article appeared August 23, 2012, on page A12 in the U.S. edition of The Wall Street Journal, with the headline: The Cliff the Keynesians Built.

  93. Comrade Nom Deplume says:

    Gawker has the latest “expose” on Romney’s finances.

    http://gawker.com/5936394

    What Gawker calls “the latest on Romney’s tax-dodging schemes” (among other hyperbole) is nothing more than audited financial statements from funds that he purportedly invests in. And the only reason they know he invested in them is because he disclosed it.

    But the following occurs to me: The threshold question isn’t being asked by anyone on the left. That question is whether Romney failed to disclose these investments, and whether he failed to pay taxes on any taxable gains or income. Unless the answer to either question is yes, this entire line of attack is comparable to calling him a “known extrovert” who “habitually practices celibacy.”

    http://en.wikipedia.org/wiki/George_Smathers

    I guess that is why this issue is getting no traction in any tax blogs. Rachel Maddow can do the Smathers speech all day long on MSNBC. The educated know better.

  94. Comrade Nom Deplume says:

    [92] chi

    you have mail

  95. Comrade Nom Deplume says:

    [96] redux

    Okay, there are two threshold questions. So much for proofreading.

  96. joyce says:

    Comrade,

    Do you just watch/read the ‘left’ news outlets all day long?

  97. raging bull jj says:

    Bunch of BS, my whole household income in 1981 was 9k. A family of five. My first job out of school paid get this, 14,300 in 1985. Due to messing around and partying most of late 80s and mid 90s and a recession I was earning peanuts at work, did not care. Had a bs job where I got home at 5:15 every day and could show up hung over, you try dating three girls, hitting 10 bars a week, skiing hamptons with a real job. Impossible. Believe it or not the day that will live in infany until I managed to get a low level job at a place I had no business working at. I decided to bust my but for eight years straight and put as much effort I had put into partying into working, guess what four promotions and my income rose a few hundred grand. The middle class stays middle class cause like the beastie boys they fight for their right to party. But guess what at some point you have to get that graduate degree some certifications and bust your butt for a decade or so to get up the ladder and job hop. Most wont or cant. I actually was not middle class for very long, I was dirt poor most of life, short period middle class then well off. Middle class is like trying to eat a half a bag of potato chips.

    yo says:
    August 23, 2012 at 2:33 pm

    The decline of the middleclass is due to a selective sector of the economy that was put in competition against the third world due to lack of own lobbyist.Remove the lobbyist from the Doctors,Lawyers,CEO’s and open the US border to this class in competition to our own.See how fast their jobs will disapear and salaries go down.

    Now this is Globalization.Putting certain sector against low paying countries while protecting a certain sector due to lobbyist is not Globalization.

  98. Comrade Nom Deplume says:

    [99] joyce

    No.

  99. POS cape says:

    3B:

    If you found Midland Park too hillbilly I doubt Waldwick would be much different. In fact maybe more so.

  100. 3B says:

    #102 POS: I thought as much regarding Waldwick. I may just have to get over myself, and hope for the best. Nice block, decent neighbors etc.

  101. Juice Box says:

    3B buy one of the homes on the Saddle River border. This way you can say MJ Blige and Russel Simmons are your neighbors and JJ will show up to your barbecue so we can all find out how much of a Heifer or a Bull he really is.

  102. raging bull jj says:

    Actually glad to be alive today, went to NYSC on wall street today to work out. Cant be a Heifer. Anyhow just missed the NYSE truck outside 55 Broad that goes back and forth to let cars go back and forth went out of control and ran over and squeeshed a person to death, really yuky all the blood with a police chalk around it. Truck was actually pretty dented as guy had a sudden acceleration thing and crashed it with guy pinned under.

    jap tourists got a lot of photos.

    Juice Box says:
    August 23, 2012 at 4:08 pm

    3B buy one of the homes on the Saddle River border. This way you can say MJ Blige and Russel Simmons are your neighbors and JJ will show up to your barbecue so we can all find out how much of a Heifer or a Bull he really is.

  103. relo says:

    22: Chi,

    She made it her own personal Jesus.

  104. chicagofinance says:

    The End Is Nigh (Childcare Edition):

    Sign that you’ve hired a bad babysitter: She tells cops she has no idea where your 5-year-old son is – while lying t-pless in a parking lot.

    The boy’s mother went to gamble Thursday in Melbourne, Fla., and left him at the River Palm Hotel in the care of 47-year-old Stacey Kerres, Florida Today reported.

    Hotel staffers called police after the kid was left alone for nearly an hour.

    After talking with the boy, the cops went looking for the babysitter, and didn’t have to look far because she was in the middle of the hotel parking lot.

    Kerres, identified by the cops by a rose and dagger tattoo, was described by officers as lethargic and incoherent.

    “I don’t even know where [the boy] is right now,” she reportedly said.

    Cops found no sign of the child’s mom, but booked Kerres on child neglect charges.

    The Florida Department of Children and Families is investigating the boy’s mother.

  105. chicagofinance says:

    well done

    relo says:
    August 23, 2012 at 5:46 pm
    22: Chi,
    She made it her own personal Jesus.

  106. A.West says:

    JJ,
    come on, some of these story lines aren’t fitting together. You’ve been making several hundred K’s per year since the early 90s, yet you live in some small shack so cramped that your neighbor peeks at your pool, and it’s your wife who has to stop you from upsizing?
    The only thing I’m confident of is that at some point, you worked for a place that deals in bonds, sounds like a trading desk in the80s/ 90s when most work was done by phone and all the dirty jokes/stories got communicated that way, and that you didn’t get very good grades in college.

  107. joyce says:

    It’s called lying (or fantasy)

  108. yo says:

    Oil is a global commodity.How can increasing production in the US and drilling more lower the price of gasoline? If price of oil around the globe is $115/barrel,how can the US pay less? Unless the government will subsidize this to it citizen and pay the difference.
    Romney is promising drill everywhere.I would like not to depend on other country for consumption but a promise of lower prices does not make sense.

    http://www.businessweek.com/ap/2012-03/D9TL1BO00.htm

  109. chicagofinance says:

    Crude oil in Europe is called Brent….crude oil in the U.S. is called West Texas Intermediate, or WTI. WTI comes from the Gulf, Central and Southern America and by pipeline from points north, such as Canadian oil sands and the Bakken fields in the U.S…….in the Northeast, we receive a combo of Brent and WTI……however, crude oil IS NOT gasoline…it must be “cracked” or refined…..refiners get squeezed when the price of crude goes up, but gasoline goes stagnates due to malaise in the economy…..

    As an example of the separate markets, when hurricane Katrina wrecked oil refining in the Gulf in 2005, do you remember the gasoline price spike? The price of crude oil really didn’t change…….crude oil and gasoline are related markets, but they are not the same market.

    There are plenty of people on these threads that know much more that I do on this topic, so I will shut up now…….

    yo says:
    August 23, 2012 at 6:16 pm
    Oil is a global commodity.How can increasing production in the US and drilling more lower the price of gasoline? If price of oil around the globe is $115/barrel,how can the US pay less? Unless the government will subsidize this to it citizen and pay the difference.
    Romney is promising drill everywhere.I would like not to depend on other country for consumption but a promise of lower prices does not make sense.

  110. chicagofinance says:

    To add…Brent and WTI are related markets, but not the same market…..there was a massive spread between the two in 2011 that has closed somewhat in 2012. If Iran were not shut the Strait of Hormuz, it would affect Brent greatly, but you could not with certainty predict the impact on WTI…..

  111. chicagofinance says:

    were not shut the Strait of Hormuz = were to shut the Strait of Hormuz

  112. yo says:

    Chi,
    I can understand all that.what I don’t understand is,even if we produce 50% more of what we have now.It will not make a big dent on the world market price.Read the link I posted with it at #111

  113. yo says:

    Unlike natural gas or electricity, the United States alone does not have the power to change the supply-and-demand equation in the world oil market, said Christopher Knittel, a professor of energy economics at MIT. American oil production is about 11 percent of the world’s output, so even if the U.S. were to increase its oil production by 50 percent — that is more than drilling in the Arctic, increased public-lands and offshore drilling, and the Canadian pipeline would provide — it would at most cut gas prices by 10 percent.

  114. Juice box says:

    LOL – who will buy this one?

    n a forthcoming interview with Parade magazine, Romney revealed a new reason why he’s hesitant to release more returns: He does not want to make public his donations to the LDS Church.

    Here’s what Romney told Parade, according to The Salt-Lake Tribune:

    “Our church doesn’t publish how much people have given. This is done entirely privately. One of the downsides of releasing one’s financial information is that this is now all public, but we had never intended our contributions to be known. It’s a very personal thing between ourselves and our commitment to our God and to our church.”

  115. Comrade Nom Deplume says:

    I was watching a story about the special operations personnel that were criticizing Obama. they have been linked to the birthers.

    Then I had an epiphany: the birthers think that Obama is hiding something because he will not release his birth certificate. And the left things Romney is hiding something because he won’t release his tax returns.

  116. The Original NJ ExPat says:

    [119] Soylent Green is PEOPLE!

    I was watching a story about the special operations personnel that were criticizing Obama. they have been linked to the birthers.

    Then I had an epiphany: the birthers think that Obama is hiding something because he will not release his birth certificate. And the left things Romney is hiding something because he won’t release his tax returns.

  117. The Original NJ ExPat says:

    {118] Gee Davey…

    In a forthcoming interview with Parade magazine, Romney revealed a new reason why he’s hesitant to release more returns: He does not want to make public his donations to the LDS Church.

  118. Mikewaited says:

    Expat 121 I think you & I and maybe one or two others remember that show.

  119. The Original NJ ExPat says:

    [112] WTI has been a bogus propaganda number for upwards of two years. Brent is some other sort of animal, not sure how it trades, but for years and years and years and years Brent was $2 less that WTI and now it’s often $20 more despite it’s higher sulfur content. The closest metric to follow gasoline price is RBOB which is essentially the price of gasoline before taxes and ethanol are added. For some strange reason that nobody seems to report on, RBOB is more expensive now than when “crude oil” was $145/barrel. http://www.oilngold.com

  120. Mikewaited says:

    I have an idea we could show that round the clock at Guantanamo no water boarding needed they will talk.

  121. The Original NJ ExPat says:

    [123] LOL Mike! Hope you’re moved in semi comfortably, still Vernon? Anyway, you know someone has to do a claymation video soon with Goliath on top of the car.

    “Oh no, Davey! Goliath is scared and he’s pooping too!”
    “Don’t worry Sally! Dad will hose it off and Goliath will be just fine when we get to Canada.”

  122. relo says:

    What’s with the JJ criticism? Never chase the patsy from the poker table.

  123. Mikewaited says:

    Expat big move this Sunday been running stuff all week, guys painting & stuff. Not Vernon one town over Sussex but daughter still goes to same HS.

  124. Mikewaited says:

    Expat I always watch the spread between RBOB & price at the pump something fishy going on there.

  125. The Original NJ ExPat says:

    [100] JJ – I’ll stipulate for the record that $14.3K in NY was an average starting salary for a college grad circa ’85. I knew guys with great GPAs and business degrees who started above the fray at $16K in ’84. Meanwhile engineers in NJ & MA & CA and elsewhere working at Defense firms started at $26K and they couldn’t find enough engineers to fill all the spots that Reagan’s defense spending was creating. I guess the best way to bring that to modern day terms is to multiply by 10 and divide by 2:

    Wall Street 1984 starting salary: $80K ($16K x 10)/2
    Engineering 1984 starting salary: $130K ($26K x 10)/2

    In addition, if you were a valuable engineer you were allowed to work overtime. You had to a.) be approved and b.)work at least 10 hours of overtime a week. This was like a 25% bonus that you could elect for yourself.

    Bunch of BS, my whole household income in 1981 was 9k. A family of five. My first job out of school paid get this, 14,300 in 1985. Due to messing around and partying most of late 80s and mid 90s and a recession I was earning peanuts at work, did not care.

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