The Constitution of the United States says but one thing about contracts.

Article I, section 10, clause 1:

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, expost facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

As Wikipedia states:

The framers of the Constitution added this clause due to fear that states would continue a practice that had been widespread under the Articles of Confederation—that of granting “private relief.” Legislatures would pass bills relieving particular persons (predictably, influential persons) of their obligation to pay their debts. It was this phenomenon that also prompted the framers to make bankruptcy law the province of the federal government.

Knowing that we do that the US Constitution is a document of enumerated federal powers we look to Article 1, Section 8, Clause 4: The Congress shall have Power

To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

It would seem to me that “a proposal, popular among many Democrats, to allow judges to modify mortgages in bankruptcy court.” would be unconstitutional as singling out mortgage contracts as judicially modifiable would make bankruptcy law non-uniform. I doubt they are currently but that would not legitimize this additional infraction.

It would seem to me that “uniform Laws” applies to the topic not simply their reach. Otherwise the Congress could create special exceptions for whomever they wished so long as they group things narrow enough.

Regardless of what the Constitution says I’m still not OK with an arbiter single handedly changing a contract without explicit consent by all parties of that contract. In this case it would obviously be used to help the mortgagor over the mortgagee. One could claim that by going to the government court you are giving consent but I doubt that completely private bankruptcy arbitration is something which is generally accepted. So I’m not sure that there is much of a choice in reality.

Just on CNN:

Woman lives in home for 27 odd years. Has no job. Lives with disabled daughter. Only income is $1200/month in Social Security disability.

Some time before February 2007 she refinances her mortgage to save money. In Feburary her rates go up around $400 and she can no longer afford the monthly payments. Her church helps her with payments for 2 more months and then just stops payment. Now she is being foreclosed on.

They show footage of her fluffy calico cat and her cluttered kitchen. She’s bundled up in a coat because they say she can’t afford to pay for heat and pan to an old electric heater in a room packed with crap.

Then they bring on her lawyer who goes on to explain that she shouldn’t have been able to get the refinanced mortgage because the contract has her income wrong. Zero monthly income from employment on one page (correct, she’s on SSD) and something like $3900/month on some other page.

They then comment on how she’s afraid of losing the house and how it’s run down panning to the attic door which obviously has water damage.

Now here’s the problems no one bothers to bring up but is pretty damn obvious.

1. The contract is void. No good. It needs to go to court to figure out if it was fraud or negligence but either way the contract should be suspended till it’s decided. She hold some responsibility for not catching the error but the bank should have caught it too. Again… either way it’s an invalid contract. If the mistake was intentional than I see no reason not to just let the old contract stand and perhaps the bank would pay punitive damages.
2. She stopped paying the mortgage. Why does she not have money to pay for heat? If she can’t afford it now with the money she hasn’t spent on the mortgage she couldn’t afford it before the rate increase last February.
3. Why the hell, beside to stir emotions, did they mention the house was in disrepair? If she didn’t keep the house in shape after she stopped paying the mortgage I doubt very much she did before the whole thing happened. I know many of people who have home in disrepair. All of them could easily and cheaply repair their home by asking their congregation for help… but they don’t. It doesn’t take much money or effort to replace an attic door. The roof which leaks likely I’ll give you is expensive and difficult to fix but I know personally there are government grants to repair them.

This shit really bugs me. I’m reading John Stossel’s Myths, Lies, and Downright Stupidity right now and it’s full of this kind of crap.

http://www.upi.com/…

Montana officials said its statehood contract will be breached if the U.S. Supreme Court rules only state-run militias can keep and bear arms.

While there’s no secession talk in Montana, 39 elected state officials signed a resolution declaring that if the court rules the Second Amendment to the Constitution is a right of states, not individuals, Montana’s compact would be violated, The Washington Times reported Monday.

“The U.S. would do well to keep its contractual promise to the states that the Second Amendment secures an individual right now as it did upon execution of the statehood contract,” Montana Secretary of State Brad Johnson said in a Feb. 15 letter to the Times.

The Supreme Court is expected to hear arguments on a federal court decision striking down the District of Columbia’s gun-ownership ban. The high court hasn’t issued a broad Second Amendment ruling in nearly seven decades, including whether it provides an individual right or a state government-held collective right, the Times said.

The Montana statehood contract, preserved as Article I of the state’s constitution, specifies gun ownership as an individual right, reading in part, “The right of any person to keep or bear arms … shall not be called into question.”

I thought the REAL ID would put the states and federal government at major odds first. Seems I may be wrong. This is pretty interesting. You rarely have people in these positions talking in this manner. I doubt very much anything will come of this but it’s fun nonetheless.

There is an issue I have with the Bill of Rights and its application. Through incorporation the federal government says that particular amendments apply to state governments. I have major issues with the fact that these cases where incorporation was cited are effectively random. They seem to create the need for incorporation on the spot instead of there being a blanket statement that in fact full incorporation has occurred. This has allowed for the federal government to cherry pick which it wants to enforce. A notable amendment not incorporated is the 2nd. If incorporation is legit it should be codified clearly by passing a new amendment which states without a doubt that all protected enumerated rights found in the federal constitution also apply to the states and the federal government has the power to pass and enforce laws to do so.

• 10:00AM Sharon Harris from Advocates for Self-Government gave the opening speech this morning. She talked about how the liberty movement needs to start working toward honing our delivery of the freedom message. Libertarians, especially those who are active in the movement, tend to be more abstract thinkers. More logical progression of ideas whereas the majority of people are more emotional “think with the heart” types. We talk about abstract rights and wrongs and less practical examples but we need practical real world examples for those who aren’t generally like us.
• Chris Lawless informs us the hotel doesn’t want us to open carry.
• We ran into Glen Jacobs very briefly. He is better known as Kane from the WWE. He’s fairly well known as a libertarian and recently publicly supported Ron Paul for President. I believe he is also a member of the FSP. We unfortunately didn’t get an opportunity to get a photo with him but if he’s still around tomorrow or Sunday we surely will.
• 12PMish xyz and I checkin to the hotel and while walking out to the car we see the John McCain’s campaign bus. While walking in we discuss stopping Mr. McCain and telling him that after his argument with Romney over whether or not water boarding is torture we decided to try it out ourselves and agreed with him that it indeed torture. As we walk through the automatic doors into the lobby and are talking about this I nearly run into McCain as my head is turned talking to xyz behind me. I got out of the way in time however and diverted my knocking over of a 72y/o presidential candidate which would have been picked up on the camera which was following him.
• 1:00PM xyz and myself attend Gardner Goldsmith’s presentation on immigration. I listen to his radio show so little was new but it’s very enjoyable to interact with fellow Liberty Forum attendees in asking questions and whatnot. Robert Schulz of We the People Foundation also gave a very good lecture I heard. xyz and I did however get a chance to talk with him while waiting in line for dinner.
• 2:30PM I attended Don Gorman’s lecture on Becoming an Effective Activist but it effectively was a sales pitch for the FSP and how easy it is to participate in politics and protest in NH. xyz attended Peter Bagge’s presentation on his work for Reason Magazine and his art in general.
• 4:00PM Thomas Eddlem gave a lecture on how the current administration has been disobeying the Constitution. Particularly the 4th, 6th, and 8th Amendments. He however blew things out of proportion a bit in describing how it could be used against the average citizen. While it’s certainly an issue to say that it’s just as probable that I would be locked up and the key thrown away without trial is the same as some guy picked up who has the same name as a known terrorist and himself has a criminal record is ridiculous.
• Chatted with another Libertarian Party presidential candidate: Michael P. Jingozian. Reminded him that I believe he was invited to the Manhattan LP’s Annual Convention. He said he forgot to look into whether he could attend and took some contact info. We’ll see.
• Nearly had dinner with Gardner but it turned out the table we picked already was filled besides the two chairs we picked. However, those who had reserved those seats were people we had previously had discussions with during the cocktail hour. Including Ed Hudgins from The Atlas Society. Talked about hard money.
  
• The keynote speaker for the evening was Bernard von NotHaus of the Liberty Dollar. He came out dressed as the ghost of a Revolutionary solder, Capt. Roughseas, who was sent by the Founding fathers informing us to take care of this fiat money system that’s corrupted the US. Complete with sabre. It was a bit odd but generally entertaining. Nothing that probably more than half of them in attendance hadn’t heard before.

Dave Ridley’s Ridley Reports from the first night:

http://www.ballot-access.org/…

On January 3, the New Jersey Senate passed A4225 by a vote of 22-13. It is the National Popular Vote Plan. The bill now goes to the Governor, who is expected to sign it.

You can read more about it at their website: NationalPopularVote.com. I commented on this when it passed the Assembly back on the 14th of December.

Demo Rep makes a good point that this could violate US Constitution Article 1, Section 10, paragraph 3 which states:

No State shall, without the Consent of Congress, lay any duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay.

We’re from the Government, and We’re Here to Help You Buy a House

There has been some good analysis of this week’s much-hyped agreement between the U.S. Treasury Department – which facilitated the meeting, we are told, but didn’t use any form of coercion – and mortgage lenders to bail out assist homeowners in danger of being slammed with a much higher monthly payment on their subprime mortgage come January. But there are some elements of the deal that haven’t been greeted with much skepticism – or, indeed, haven’t been reported much at all.

When the market started to melt down a few weeks ago one firm released a statement about their multi-billion dollar write off to the affect: “In the financial field you have to make calculated risks… and this time we lost.” It infuriated me. These people knew damn well that what they were doing was extremely risky and there was a very high chance of failure. As the first article cited in the above there are NINJA loans. Now while that may sound really cool (unless you are a pirate supporter) it’s really an amazingly stupid business transaction. NINJA stands for “No Income, No Job or Assets.” A hobo who’d taken a shower could have gotten a loan for a few hundred thousand dollars and the lender wouldn’t have bothered to even check if any of the info provided was accurate. Why would these otherwise reasonable businesses take such great risk?

Because of the corporate nanny state. For nearly 100 years the Federal Reserve has been the lender of last resort, the link between government debt and the banking system and the controller of interest rates. These all distort the market and redistribute wealth. Wall Street knew that all these risks could ultimately be pawned off. Sure they may take a hit but by lowering interest rates and inflating the money supply the contraction and resulting deflation that should be happening… and needs to happen… will be pushed out into the future. Perhaps the biggest issue here is the obviousness of the corporate bailout. This can only add to the existing deflated risk by allowing investors to believe the government will so easily provide a way out when they dig themselves a hole. Reminds me of the suspension of specie payments enacted by the federal government throughout our history. The banks didn’t have the specie on hand to cover the redemption requests so the government allowed for the redemption contract that is a paper bank note to be postponed.

So now we have this secondary bailout. This time by the federal government on behalf of those debtors who are at risk of defaulting on their loan. While they claim it won’t cost tax payers money… this CATO article shows how that could change. Worse than that however is that the government will now be seen by the public as the great protector when they make poor investments in housing too. It creates a moral hazard and will only lead to more bad investments and dependency. Also the stepping in to request contracts be rewritten is an affront to contract law. Down the road this disrespect will only worsen. This nanny state response will be thrown on the stack of other ’safety nets’ like SSI, Medicare, etc. and become an expected role of government. Seems to me the next step is more explicit government  subsidies for the average individual looking to own a home and after that government granted or guaranteed homes.

Looks like I’m not the only one who thinks this is a bad idea. Also Dick Army of FreedomWorks can be seen arguing Hillary Clinton’s plan on CNBC.

While I have money invested in the market and would rather not lose a large chunk of it to this adjustment, it needs to happen. We have a couple hundred years of evidence showing how the distortion of the market creates these problems and more government interference almost always results in more.  When will they learn? Perhaps Rothbard’s A History of Money and Banking in the United States should be required reading for members of our government.