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- The Internal War Over the Volcker Rule – NationalJournal.com
The so-called Volcker Rule, a provision in the 2010 Dodd-Frank financial-reform law that would ban banks from making risky bets with their own money, was supposed to be ready in 2011. And the federal government did release a lengthy proposal laden with hundreds of questions from Wall Street and chased by thousands of comment letters. Then, the final rule was supposed to be ready in 2012. Now it's supposed to be ready in 2013. "I think that it's close," Mary Miller, the Treasury Department's undersecretary for domestic finance, said last week. Meanwhile, regulators have come and gone in the agencies writing the rule. What, exactly, is the holdup?
"The regulatory system is sort of back in the days of Glass-Steagall [the 1933 law that banned commercial banks from the investment business], where we have our market regulator over here and our bank regulator over there, and the assumption [that] the businesses are very different. But, in fact, they've interpenetrated a lot," says Marcus Stanley, policy director at the pro-reform group Americans for Financial Reform. To oversee modern financial markets, this interagency collaboration is a necessary development, he says.
They've inter-penetrated due to the undoing of Glass-Steagall.
We think Glass-Steagall should not have been undone and that it should be reinstated now rather than going through this Volcker Rule nightmare.
What's your position on this?
"The draft, with all its varied edits, spans about a thousand pages." That's from: http://dealbook.nytimes.com/2013/11/17/p ressure-builds-to-finish-volcker-rule-on -wall-st-oversight/?_r=0, which is another fairly detailed article on this subject.
Why Glass-Steagall was ever undone just makes little sense. Why they don't want to just put it back makes even less sense to us, none at all.
- Plan Bay Area: 'Smart growth' and 'sustainable communities' hurt the poor – San Jose Mercury News
Lawrence J. McQuillan doesn't like the Bay Area's plan.
… "open space" off limits to development.
We've seen what cities look like in other parts of the world where there is no planning: huge, very unhealthy slums.
Do we in the US need to do better for the poor? Absolutely we do, but that doesn't mean we throw planning to the wind. It means we do better planning, not less or none. The extreme alternative is chaos, anarchy.
What's your view on it? All civil comments are welcome. We understand that not all people agree with our view on planned development.
We have our limits on planning too. We don't think any plan should go forth before those being dislocated are handled first and utterly fairly. They need to come out of it better, not just even per the planners/politicians. As an example, we don't think China has been doing it correctly. Many former farmers are now stuck in a degraded lifestyle in shoddy construction.
- Location Affordability Portal: video tutorial – YouTube
A landlord could use this for marketing if the rental is close to public transportation. Before someone moves out due to rising rent rates, a landlord or manager could offer this URL to the tenant as a way of suggesting that maybe the tenant could give up a second car. Also, if the landlord has multiple locations, then a vacancy or soon to become available property somewhere closer to the tenant's place of work or on a public mass-transit route might work out.
The goal of the Location Affordability Portal is to provide the public with reliable, user-friendly data and resources on combined housing and transportation costs to help consumers, policymakers, and developers make more informed decisions about where to live, work, and invest. This video tutorial gives a brief background for the site and demonstrates how to use the two cutting-edge tools — the Location Affordability Index and My Transportation Cost Calculator — being made available on the site for the first time. The tools illustrate from different perspectives how housing and transportation costs impact affordability. (See: http://locationaffordability.info/tcc.as px)
- Krugman, Following Summers, Endorses Asset Bubbles – naked capitalism
Marshall Auerback by way of Yves Smith:
Krugman has been right on so much, and has emphasised the importance of pro-active fiscal policy, so it's hard to see why he has to go back to the bankrupt theory of the liquidity trap to rationalise what is essentially a problem of political dysfunction. The slow recovery has nothing to do with a liquidity trap. It has all to do with a lack of overall spending which means if private individuals are reluctant to spend (for whatever reason) then governments have to fill the gap. There is nothing more simple than that proposition.
This is why we are for fiscal spending on infrastructure right now, for jobs, good jobs at good wage rates, and more. Short of that, we push for charging banks interest on excess reserves, which we do not believe would send banks anywhere but to figure out how to lend to stop the loss they'd be paying to the Fed, which the Fed would pass on to the US government rather than end up with so much in bonds that the Fed can't make its usual payments to the government.
As for the money-market function, shut down charging interest if it seizes up long enough and not as a ruse by the bankers.
There's nothing difficult here. In our view, economics is not nearly as complex as they try to make it.
- China October home prices rise 9.6 pct y/y | Reuters
Not good: Xiaoyi Shao and Jonathan Standing report:
Average new home prices in China's 70 major cities in October rose 9.6 percent from a year earlier, a fresh record growth rate, according to Reuters calculations based on official data published on Monday, marking the tenth straight month of year-on-year increases.
China still faces record home prices despite government measures to calm the market in large part due to a strong view that property remains one of the best investment options and also to local government land sales for much-needed revenues.
- Office-Using Employment Outperforming in Brain Hubs
Andrea Cross reports:
A hallmark of the current economic recovery is the uneven rate at which different metro areas are recovering, with markets containing clusters of intellectual capital, energy and education (ICEE) industries outperforming finance, insurance and real estate (FIRE) markets in terms of job growth and office demand. Looking at office-using employment, markets with the most educated populations are ahead of the curve, underscoring the importance of the intellectual capital and education components of the ICEE trend.
- Craig Allen: Three Reasons to Expect Home Prices to Fall
Straight forward explanation about the impact of interest rates: Craig Allen, president, Montecito Private Asset Management LLC, writes:
Should rates continue to rise, however, we will certainly see real estate prices begin to fall.
While anything is possible, we know that the Federal Reserve has been buying $85 billion in bonds each month for more than a year and is very close [?] to removing this stimulus from the economy.
The purpose of this bond-buying program was to artificially force down long-term interest rates, including mortgage rates. When this stimulus is removed, we should expect long-term interest rates to rise significantly. In addition, as the economy improves, the Fed will eventually need to start raising short-term interest rates, as well.
Rising short-term rates and an improving economy should result in a steepening of the yield curve, meaning that long-term rates should move up at a faster pace and by a larger percentage than short-term rates. This would mean that long-term rates could be driven much higher in a relatively short amount of time. It is hard to imagine real estate prices holding firm in this kind of interest-rate environment.
- China Home Prices Jump as Guangzhou, Shenzhen Lead Advances – Bloomberg
Shenzhen and Shanghai this month raised minimum down payments for second homes to 70 percent, following a similar move by Beijing in March, as local authorities struggle to contain price gains. Housing sales jumped 33 percent in the first 10 months of this year as Premier Li Keqiang refrained from adding new nationwide restrictions that would hurt economic growth.
"On the one hand I can't see the possibility of policy being tightened further to curb prices while on the other hand demand continues to increase as homebuyers expect more price gains," said Dai Fang, a Shanghai-based analyst at Zheshang Securities Co.
- As Part of Reforms, China Moves to Break Down the Rural-Urban Divide, Gradually Dismantle Hukou System – China Real Time Report – WSJ
Farmers will be given greater rights to their land, including being able to mortgage it, according to the plan. The blueprint also promises easing barriers to moving to cities and eventually better access to subsidized public services.
It's an attempt to right policies that often make rural Chinese second-class citizens. Farmers routinely have their land taken from them to make way from urban expansion and industrial development projects, and they are regularly under compensated for it. Forced into cities, many find few employment opportunities. Those that move voluntarily and find jobs often still don't have access to the education and medical care available to city residents.
Another major obstacle addressed by the blueprint is China's unique system of household registration — the hukou system. Designed to keep people from moving to the cities and forming the sort of slums that plague other developing nations, the hukou is issued at birth, fixing Chinese as rural or urban dwellers and defining their access to social services.
There's the slum issue we mentioned above.
We are not convinced that this Chinese plan to cram tens of millions into cities right now is a good idea. The quality of life and services, etc., could have been better improved for many Chinese right where they were. Huge-city life can have serious drawbacks, which seem to be being overlooked in China.
They sure seem to just be winging it a great deal.
We hope it turns out for them. The last thing anyone should want is a totally collapsed, utterly failed China. The suffering and misery would be astronomical.
- Asset Bubbles as the Only Road to Growth – MoneyBeat – WSJ
Are asset bubbles the only way for central banks to boost demand?
No, but try telling them that.
- Foreclosure Picture Improves, but Not in States Hit Hardest by Real Estate Collapse – 24/7 Wall St.
We have a long way to go before full recovery. Douglas A. McIntyre reports:
RealtyTrac, the gold standard of research about foreclosures, reported more evidence that the real estate market continues the process of healing the tremendous damage done to it during the recession. The exception is in the results from states that took the brunt of the catastrophe. While these have shown some improvement, they are still years away from true recovery.
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