The controversial mortgage interest deduction is still in play if you follow the back and forth in DC, and the picture for housing is still rather cloudy. There is a lot which could change depending on what Congress tries to ram through reconciliation in terms of the House and Senate tax sausage. Regardless of what Congress and the GOP approve, you can rest assured it won’t stimulate job growth and it won’t contribute to long-term economic growth. What we are seeing play out in the halls of DC and Wall Street right now is a pure money grab, plain and simple.

In terms of the housing market, there is much that has yet to be reconciled. The vaunted mortgage interest deduction is still in play. I know this because an email from NAR was hitting my inbox this morning. Everyone wants a carve out, and the wealthy and well-connected are the best positioned to receive it if you follow recent developments. Should the mortgage interest deduction be saved? If you are talking about homeowners, and particularly middle-class homeowners, the answer is an unequivocal yes! I would agree with Professor Anthony Sanders that the MID should be kept in place with the exception of vacation homes.  He makes another interesting point that the current 479-page debacle coming out of the Senate “is all about special interest/corporate careveouts and not about middle-class Americans.” This will have long-term ramifications for the housing market if left uncorrected.

Inequality in America is off the charts and growing. The GOP plans for tax “reform” will only make the situation worse. Both Congress and the Federal Reserve have demonstrated a complete dereliction of duty to the American public in terms of managing the economy. A national debt in excess of $20.5 trillion along with basement-level interest rates and a bloated Fed balance sheet are hallmarks of the ineptitude and deceitfulness of America’s “leadership”. Rather than saviors and champions of the people, we have knaves and career profiteers looking to cash in on their next turn at the trough.

A  lot could happen in the next two weeks. In the meantime we can watch the yield curve continue to collapse. It will be interesting to see if our supposedly populist Fed chair has the stomach to take the yield curve one step closing to inversion next week. That collapsing yield curve is looking more and more like the collapsing credibility of America’s elite leadership. Janet is of course conveniently headed for the exits, sure to enjoy a nice retirement I’m sure. The December 6 SOMA (System Open Market Account) report shows a paltry $2.5 billion reduction from the previous week. At this rate it will only take the Fed 1685 weeks to fully unwind their balance sheet.