News: Real Estate, Risk, Economics. Oct. 11, 2014

Linking ≠ endorsement.

Table of Contents
(Click to sections below.)

1) "Did financial journalists fail to spot the crisis?" Buttonwood: Scrambled signals | The Economist

2) Great ShakeOut Earthquake Drill set for October 16, 2014

3) 8-year-old survives 6-story fall through garbage chute | Las Vegas Review-Journal

4) Charleston Daily Mail | Winds destroy mobile home, injures 2 in W Va

5) UPDATE: Tornado confirmed in Ringgold; storm caused 'significant damage' | Times Free Press

6) Fire does $20,000 in damage to Milton home – The Washington Post

7) Worcester sleuths tackle case of disappearing gargoyles – Worcester Telegram & Gazette – telegram com

8) Business: Washington Post Business Page, Business News

9) Regulating big American insurers: Questionable claims | The Economist

10) Making Argentina's Debt Debacle a Rarity | Ashoka Mody at Bruegel org

11) QE Has (Nearly) Ended. But How Will The Fed Unwind It?

12) Southern California office leasing market boosted by job growth – LA Times

13) Bill Bronchick – The Role of Insurance in Asset Protection Planning

14) Expected Change in Derivatives Aims to Curb Damage From Bank Failure – NYTimes com

15) Seattle's new waterfront: Latest looks – seattlepi com

16) Is Houston in a housing bubble? Jim Gaines, a residential real estate economist at Texas A&M University, weighs in – Houston Business Journal

17) [Not only do we recommend this, we consider it a Must Watch!] Capitalism, Socialism and Democracy in the Twenty First Century – YouTube

18) The Euthanasia of the Rentier – NYTimes com

19) Warehouse fire destroys 7 buildings in Lima's downtown | The Columbus Dispatch

20) Hacking a big danger for small businesses – SFGate

21) Health of global economy is worrying: Stiglitz

22) Rethinking the Unthinkable: Bankruptcy for Large Financial Institutions – Speech, Jeffrey M. Lacker, October 10, 2014 – Federal Reserve Bank of Richmond

23) Freddie Mac report: Here's why the mortgage refi boom is over

24) New Mortgage Lender Demands Less Documentation – Total Return – WSJ

25) Haruhiko Kuroda: Japan's economy – responding to cautious views

26) Mortgage rates down for third straight week

27) Event: The Shift and the Shocks: What We've Learned–and Have Still to Learn–from the Financial Crisis

28) Does the USA Really Soak the Rich? | Next New Deal

29) Why is the recovery so weak? It's the austerity, stupid. – The Washington Post

30) Top economists: Higher home prices and rising interest rates could hassle Texas homebuyers | Dallas Morning News

31) Fed's Tarullo: Banking scandals more than just a few bad apples – MarketWatch

32) Crews Investigating Cause of Fatal 5-Alarm Fire | NECN

33) Hanke on the disaster in Argentina and Doyle on AIG, bank fraud and regulation – YouTube

  1.    "Did financial journalists fail to spot the crisis?" Buttonwood: Scrambled signals | The Economist

    The picture that emerges is mixed. Did journalists spot that house prices were inflated? Yes, a study found that the Spanish press used the term "real estate bubble" 2,500 times between 2003 and 2008. Did journalists report on the worrying growth of subprime instruments like collateralised debt obligations? Yes, at least in the specialist press. Did they spot that banks were expanding their lending very rapidly? Yes, an oft-cited quote from Chuck Prince of Citigroup about the bank having to keep dancing as long as the music played comes from an interview with the Financial Times. Did anybody tie the whole thing together to predict a seizure in banking and the deep recession that followed? No. But regulators and economists did not foresee that either.

    "But regulators and economists did not foresee that either"? Some did. We did too.

    Readers do not always welcome contrarian views: those commentators who decried the excesses of the dotcom bubble were often told they "just didn't get it".

    That's true, but good journalism is then vindicated when the contrarians prove correct, which they did concerning the run-up to the Lesser Depression we've needlessly suffered through due to shortsighted, greedy, less-intelligent, blanket-deregulation types.

    Add your comment.


  2.    Great ShakeOut Earthquake Drill set for October 16, 2014

    Great ShakeOut Earthquake Drill 3rd Thursday of every October: Drop, Cover, and Hold On

    Great ShakeOut Earthquake Drills are an annual opportunity for people in homes, schools, and organizations to practice what to do during earthquakes, and to improve preparedness.

    Most participants are in one of the Official ShakeOut Regions shown below. People and organizations in other states or countries can also register to be included.

    To register or learn more, click a map below or choose from this list:….

    Add your comment.


  3.    8-year-old survives 6-story fall through garbage chute | Las Vegas Review-Journal

    HONOLULU — An 8-year-old Hawaii boy who fell six stories down a trash chute and was pulled out by a neighbor with a fire hose has suffered only cuts.

    Add your comment.


  4.    Charleston Daily Mail | Winds destroy mobile home, injures 2 in W.Va.

    SPANISHBURG, W.Va. (AP) — A fire official says 2 people were injured when high winds destroyed a mobile home in Mercer County. … Winds moved the mobile home 50 feet off its foundation.

    Add your comment.


  5.    UPDATE: Tornado confirmed in Ringgold; storm caused 'significant damage' | Times Free Press

    An EF-1 tornado touched down in Ringgold, Ga., last night [October 6, 2014], causing significant damage.

    It touched down just north of the city at approximately 7:40 p.m. and caused about seven homes significant damage, according to officials on the scene.

    Add your comment.


  6.    Fire does $20,000 in damage to Milton home – The Washington Post

    Delaware officials say a fire at a home in Milton caused $20,000 in damage.

    The Delaware State Fire Marshal says an investigation determined that the fire was accidental and caused when lint located inside a clothes dryer vent ignited.

    Add your comment.


  7.    Worcester sleuths tackle case of disappearing gargoyles – Worcester Telegram & Gazette – telegram.com

    The church, which is an example of Victorian Gothic Revival architecture, was built between 1895 and 1897. Its main façade features twin towers flanking an entrance consisting of three trefoil arches, above which is a large rose window and an arched arcade connecting the two towers. The upper levels of the towers were open areas surrounded by paired narrow pointed-arch openings and decorated by crenulations and gargoyles.

    We're all for architectural preservation.

    Add your comment.


  8.    Business: Washington Post Business Page, Business News

    Geithner said he discussed the "core conditions" for the AIG bailout with Bernanke and Donald Kohn, then the Fed's vice chairman. He said the rate wasn't forced on the New York Fed and repeated his earlier testimony that he was ultimately responsible for setting it.

    He said the higher rate was to protect the government for its risk in providing the loan and to avoid "moral hazard" by making the terms "tough enough that they were not viewed as attractive."

    The moral-hazard aspect is actually a good reason, but there were better ways of handling AIG and the whole Wall Street fiasco. All the major players who would have gone down without a bailout loan should have been nationalized at least temporarily.

    Add your comment.


  9.    Regulating big American insurers: Questionable claims | The Economist

    AIG has already been given a similar designation, but the company was enthusiastic about the move since the increased regulatory scrutiny helped to restore trust in a brand that had been utterly debased. MetLife, conversely, came through the crisis in good shape and does not need a thorough vetting by regulators to burnish its reputation.

    The hearing is likely to take place this month, with a decision to follow within 60 days. It would be shocking if MetLife prevailed. Prudential Insurance also tried to challenge its SIFI status last year, without success.

    No comment from us on this other than to say that the Independent Insurance Agents & Brokers of America supports MetLife's bid.

    Add your comment.


  10.    Making Argentina's Debt Debacle a Rarity | Ashoka Mody at Bruegel.org

    Ashoka Mody:

    The value of equity held in a private company falls when economic conditions deteriorate. Sovereigns need similar, contractually-transparent leeway to deal with the inevitable adversities. In such eventualities, forgiving some part of the debt makes sense even from the creditor's perspective because that makes it more likely that the rest of the debt will be repaid. That is why bondholders eventually do renegotiate. But, because they can gain by holding out for full repayment, especially when others are likely to do so, the process is chaotic.

    Here is how a more flexible sovereign debt contract may work. The debtor would have the option to defer repayment when, say, the 100-day average risk premium on its debt (the excess interest rate above US treasuries or German bunds) rises above a pre-agreed threshold. Thus repayment obligations would be automatically and predictably eased to handle contingencies, avoiding the angst associated with renegotiating the contract. Such contingent sovereign contracts ("cocos") would be similar to those in increasing use by banks.

    It certainly would be better than what we have now or what is generally planned as politically acceptable/doable.

    Add your comment.


  11.    QE Has (Nearly) Ended. But How Will The Fed Unwind It?

    Frances Coppola:

    So how can the Fed raise interest rates without unwinding QE?

    The plan is to use the rate of interest on excess reserves (IOER) to influence the Fed Funds rate indirectly. I've explained before how this might work, but here is Potter's explanation:

    The IOER rate is the rate of return on a riskless overnight deposit held at the Fed. As such, it may be thought of as the opportunity cost of making an alternative investment, such as a loan or the purchase of a security. Accordingly, if all money market participants were eligible to earn interest on reserves, money market rates would likely be at least as high as the IOER rate; no institution would want to lend to a private entity at a lower rate. Even without universal access to IOER, in the absence of frictions, competition would be expected to lift money market rates up to the level of the IOER rate, since banks would make an arbitrage profit on any funds they borrow at a lower rate and deposit at the Fed. Because the investment with the Fed is riskless, little or no economic capital would be needed to support such arbitrage by banks. In this way, the IOER rate should theoretically form a "floor" beneath short-term interest rates, allowing the Fed to achieve its target for the fed funds rate even with a very high level of reserve balances.

    To summarize: because it acts as an interest rate floor, raising the IOER should force up other short-term rates, including the Fed Funds rate.

    However, there are several problems with this:

    • many lenders in the US money markets are not banks , so cannot earn IOER
    • although bank lending to the Fed for IOER is risk-free, lending to banks above the FDIC insurance limit is not risk-free, so lenders limit the amount of funds they will place with banks, reducing the arbitrage opportunity
    • banks incur regulatory costs from higher reserves that in effect reduce the interest rate they receive on IOER

    Because of this, IOER tends to sit slightly above, rather than below, other short term rates. Raising the IOER should still pull other short-term rates upwards — Potter describes it as like a "magnet". But there is a risk that raising IOER would simply increase the spread between IOER and other rates. For this reason, the Fed is proposing to use an additional tool to put a firmer floor on interest rates — the overnight reverse repo.

    Overnight reverse repos allow certain types of non-banks to place short-term funds directly at the Fed rather in the way that banks can, although they are structured as a securities purchase and sale rather than an overnight deposit. In effect, they enable non-bank lenders in the US money markets to earn an equivalent of IOER. Clearly, the Fed offering deposit facilities to non-banks puts them in direct competition with banks, so the rate offered will be significantly below the IOER rate that banks can earn, in order to make it possible for banks to offer better deposit rates. There will also be a cap on the total amount available for borrowing on any given day. The point of the exercise is not to crowd out bank deposit-taking, but to discourage lending in the US money markets at rates below those targeted by the Fed.

    Add your comment.


  12.    Southern California office leasing market boosted by job growth – LA Times

    This is actually something to note. However, it doesn't necessarily mean that discretionary-spending constraints are easing for all economic classes. We need to work on that.

    Job growth in Southern California finally produced a robust quarter of leasing for office landlords, who were able to fill long-vacant space and push up rents.

    Office leasing is a lagging indicator of the economy; many tenants curtailed the size of their offices in recent years to reflect cuts they made during the economic downturn. Now that trend is reversing as expanding entertainment, media and technology tenants are filling up empty office spaces.

    "There was a dramatic shift in the third quarter with explosive growth that elevated market fundamentals to an unprecedented level," said real estate brokerage Cushman & Wakefield, which compiled the office market data.

    …the net gain in occupied office space, known as absorption, which during the first three quarters tripled over last year to 4.2 million square feet, the largest expansion since 2006. By year end, gains are expected to surpass those of the last 13 years.

    Add your comment.


  13.    Bill Bronchick – The Role of Insurance in Asset Protection Planning

    Bill Bronchick:

    When I present seminars on the topic of "Asset Protection," a common question I hear is "now that I am incorporated, should I cancel my insurance?" To the other extreme, a common remark made by ignorant tax professionals and attorneys is, "don't bother with corporations, just buy a lot of insurance." Both of these approaches are dangerous.

    We completely agree.

    Add your comment.


  14.    Expected Change in Derivatives Aims to Curb Damage From Bank Failure – NYTimes.com

    Under derivatives contracts, Lehman's trading partners had the right to immediately terminate their derivatives trades when the company declared bankruptcy. All of a sudden, Lehman's derivatives trades had to be unwound quickly and chaotically, causing huge new losses for the company and disruption in the wider market.

    Clearly, what was needed was a "circuit breaker" for derivatives when companies fail. …

    Last year, the Financial Stability Board, an international group of regulators headed by Mark J. Carney, the governor of the Bank of England, called on the industry to add language to derivatives contracts that would allow for such a delay. United States regulators added pressure this year, asserting that the delay was needed as part of their so-called living will overhaul, which tries to make it simpler to wind down problem banks. The International Swaps and Derivatives Association, a trade group that provides a template for derivatives contracts, has agreed to the delay, known as a stay in the legal world. It could, for example, last for one business day.

    Even after the change, derivatives will enjoy superior rights. The new provision would still allow a derivative to be terminated early if the entity directly on the other side of a derivatives trade went into a bankruptcy proceeding like Chapter 11.

    "It is indefensible that derivatives get preferential treatment over all other creditors," Mr. Kelleher said. "That becomes a key accelerant in spreading a financial crisis."

    Mr. Kelleher is absolutely correct.

    Add your comment.


  15.    Seattle's new waterfront: Latest looks – seattlepi.com

    This will make America's most pedestrian-safe big city all the more walkable and dramatically enhance tourism and property values in the area.

    Seattle's waterfront won't get its glamorous makeover for another few years, but plans are well underway. They call for transforming 26 city blocks with new waterfront paths, plazas, hangouts and a giant swimming pool barge, after the Alaskan Way Viaduct [elevated freeway] comes down.

    Add your comment.


  16.    Is Houston in a housing bubble? Jim Gaines, a residential real estate economist at Texas A&M University, weighs in – Houston Business Journal

    We need to get back to a sustainable and supportive level of price growth level relative to population, job and income growth."

    If Houston is in a housing bubble, it's because of the economic prosperity in Houston's oil and gas renaissance and not because of lax lending regulations and subprime mortgages that lead to the 2007 recession, Gaines said.

    Correct, and that's why we've said that when the fracking ends, the real estate boom ends (unless there's something to put in fracking's place).

    Add your comment.


  17.    [Not only do we recommend this, we consider it a Must Watch!] Capitalism, Socialism and Democracy in the Twenty First Century – YouTube

    One of the best lectures we've ever heard.

    Professor Garnaut will look forward to where the global economy is headed across a diverse range of nation-states (using Australia, China, Indonesia and Papua New Guinea as exemplars). The challenges that fertility rates and climate change pose for the global economy will also be considered.

    Ross Garnaut is an economist whose career has been built around the analysis of and practice of policy connected to development, economic policy and international relations in Australia, Asia and the Pacific. He has held senior roles in universities, business, government and other Australian and international institutions. He is a professorial research fellow in economics at The University of Melbourne.

    Add your comment.


  18.    The Euthanasia of the Rentier – NYTimes.com

    Paul Krugman:

    What struck me, looking at what Keynes wrote, were his remarks on interest rates and the return to capital: low rates of interest, he suggested,

    would mean the euthanasia of the rentier, and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity-value of capital.

    Actually, for now at least profits remain high — but bond yields are very low.

    What Keynes didn't say, but now seems obvious, is that the rentiers are unlikely to accept their euthanasia gracefully.

    "…the cumulative oppressive power of the capitalist to exploit the scarcity-value of capital." — Keynes. That's why we advocate for bond-free United States Notes and a new monetary authority, a very specific computer program, to replace the Federal Reserve.

    Add your comment.


  19.    Warehouse fire destroys 7 buildings in Lima's downtown | The Columbus Dispatch

    LIMA, Ohio — Authorities say a massive warehouse fire in northwest Ohio destroyed all seven buildings on the site.

    Add your comment.


  20.    Hacking a big danger for small businesses – SFGate

    NEW YORK (AP) — It's not just big businesses like JPMorgan Chase, Target and Home Depot that get hacked. Small companies suffer from intrusions into their computer systems, too.

    The costs associated with computer and website attacks can run well into the thousands and even millions of dollars for a small company. Many small businesses have been attacked — 44 percent, according to a 2013 survey by the National Small Business Association, an advocacy group. Those companies had costs averaging $8,700.

    No system is hacker-proof, but there steps, some of them inexpensive, businesses can take to shore up defenses and mitigate damage from attacks that get through:

    — Buy insurance to cover financial losses. Premiums can be as low as $1,000 a year for $1 million in coverage.

    Add your comment.


  21.    Health of global economy is worrying: Stiglitz

    The euro zone is "very much" at risk of a recession and U.S. continues to struggle with a mediocre recovery, said Nobel Prize-winning economist Joseph Stiglitz, sounding the alarm on the deteriorating global economy.

    Austerity is the wrong prescription for repairing the euro zone economy and underlies economic stagnation, he said.

    There is a lot of slack in the U.S. economy, Stiglitz said.

    Furthermore, a stronger U.S. dollar may prove to be a bane for the economy, putting the country's exporters at a competitive disadvantage, he said.

    Easy monetary policy isn't the answer to problems in the U.S. and European economies, he said, "What we really need is fiscal stimulus."

    Exactly.

    Add your comment.


  22.    Rethinking the Unthinkable: Bankruptcy for Large Financial Institutions – Speech, Jeffrey M. Lacker, October 10, 2014 – Federal Reserve Bank of Richmond

    Jeffrey M. Lacker, President, Federal Reserve Bank of Richmond:

    …interventions created widespread expectations of government support if a large financial institution were to become troubled. These expectations dampened incentives to contain risk-taking, thus encouraging higher leverage and more reliance on short-term funding. These expectations, along with the relaxation of constraints on consolidation, promoted financial firms of greater size, complexity and interconnectedness, making bankruptcy seem even more impractical. And so we had the beginnings of a vicious cycle: Successive generations of policymakers felt compelled to handle financial firm failures outside of bankruptcy, which further eroded financial firms' incentives to structure their affairs in a way that facilitated an orderly bankruptcy. The result was more risky behavior predicated on ad hoc rescues rather than on clearly defined resolution processes.

    If we do the hard work to make the plans credible, and if regulators and policymakers commit publicly to using them, I believe we will begin to see a healthy realignment of private sector expectations regarding the likelihood of government intervention and a concomitant improvement in the incentives facing financial firms and their investors. Of course, that realignment may not be complete until commitment is demonstrated by actually letting a big financial firm file for bankruptcy.

    I also believe, however, that as long as regulators retain the discretion to intervene with government funding, the credibility of resolution plans will be at risk. Seemingly urgent short-run considerations will threaten to overshadow the value of establishing and preserving a record of precedents that keep market expectations well-anchored. This is a particular danger for central banks, whose independent balance sheets place their fiscal actions beyond the scope of the legislative appropriations process.15 Credible commitment to orderly unassist ed resolutions thus may require eliminating the power of governmental entities to provide ad hoc rescues. This would mean repealing the Federal Reserve's remaining emergency lending powers and further restraining the Fed's ability to lend to failing institutions. And once robust and credible resolution plans are in place, we would be able to responsibly wind down the FDIC's Orderly Liquidation Authority and related financing mechanisms.

    Conclusion

    This afternoon, I have discussed several valuable aspects of the bankruptcy process, including its ability to provide relatively consistent and predictable outcomes and to address the common-pool problems that arise when a firm has multiple creditors. In addition, bankruptcy promotes a collective interest in limiting risky financial arrangements. For these reasons, bankruptcy would seem to be especially advantageous for financial firms. Yet regulators have repeatedly chosen to handle distressed firms outside the bankruptcy process, which has led to a buildup of expectations of government support when large financial firms become troubled. These expectations, in my view, were a major contributing factor to the financial crisis.

    In my view, living wills offer us the only realistic path to dismantling those expectations and ending "too big to fail." While they have not received as much attention as other regulatory and legislative responses to the crisis, they may be the most critical, and I applaud the hard work that is being done to make them credible. It will be a long journey, and we should expect resistance to the changes that will be required. But the costliness of those changes is a measure of the subsidies inherent in the bailout-dependent too-big-to-fail regime, a regime that is unworkable, unsustainable and unfair. The health and stability of our financial system depends on rethinking the once-unthinkable possibility of bankruptcy for large financial firms.

    We should have forced the banks through nationalization and reorganization (bankruptcy). It could have been done. The banks could have remained open. The depositors could have been reassured concerning the FDIC being backed by the full faith and credit of the US, etc. Banking staff that had no hand in making the terrible securitization errors and other errors could have continued on with their jobs running the banks, keeping the funds flowing in the economy.

    That didn't happen, so Jeffery Lacker's ideas must be implemented or an even better way established.

    Add your comment.


  23.    Freddie Mac report: Here's why the mortgage refi boom is over

    One big reason the boom is over: Most homeowners who can save by refinancing already have done so. Though the yield on a 10-year Treasury note has fallen from 3 percent to about 2.4 percent this year, it's still well above the 1.5 percent bargain basement trough reached two years ago. Those low rates sparked a surge of refinancing from homeowners who locked in rates lower than they would find today.

    Add your comment.


  24.    New Mortgage Lender Demands Less Documentation – Total Return – WSJ

    Social Finance, a peer-to-peer lender often referred to as SoFi, rolled out mortgage lending in five states—New Jersey, North Carolina, Pennsylvania, Texas and Washington—and the District of Columbia on Tuesday. The San Francisco-based lender began offering mortgages in California in August.

    The firm has specialized in student loans since it launched in 2011. The move into mortgages comes as SoFi prepares to file to raise $200 million to $250 million in an initial public offering early next year, according to its chief executive Mike Cagney.

    SoFi's mortgages will be geared toward borrowers with high credit scores, though other criteria will be less onerous than what most other lenders require. The firm isn't requiring tax returns to verify applicants' income or proof of funds to verify the source of borrowers' down payments—requirements that most lenders have had in place since the housing downturn.

    We think that's exactly the wrong thing to do.

    Add your comment.


  25.    Haruhiko Kuroda: Japan's economy – responding to cautious views

    Haruhiko Kuroda, Governor of the Bank of Japan:

    …there has recently been concern that Japan's economic recovery might have been losing momentum, reflecting the recent weak economic indicators due partly to the effects of the consumption tax hike. In particular, the GDP statistics released last month showed that real GDP in the April-June quarter fell substantially at a rate of 7.1 percent on an annualized quarter-on-quarter basis, garnering people's attention.

    The substantial decline in the April-June quarter followed the front-loaded demand in the January-March quarter, in which real GDP had grown significantly at a rate of 6.0 percent, and thus was expected in advance. Excluding such fluctuation of the front-loaded increase and the subsequent decline in demand prior to and after the consumption tax hike, the annualized growth rate of real GDP in the January-June period this year over the July-December period last year is 1.0 percent. It is not necessarily a high growth rate, but exceeds Japan's potential growth rate, which is estimated to be around 0.5 percent.

    Japan's potential growth rate in the late 1990s that is estimated to be about 2 percent has thereafter been declining gradually due to such factors as aging, the declining population, and the slowdown in capital stock accumulation during the period of protracted deflation. Those facts are well recognized, and both government and private entities are making efforts to raise the potential growth rate. As a growth strategy to stimulate private investment, the government formulated the Japan Revitalization Strategy and revised it in June. The Bank strongly expects that the measure will be steadily carried out, and thereby firms will aggressively undertake initiatives.

    Raising medium- to long-term economic growth potential is basically an issue of the supply side of the economy and thus monetary policy does not play a main role in that regard, but it can make important contr ibutions. That is, by dispelling the deflationary mindset.

    "supply side"? That helps explain why hiking the consumption tax wasn't seen as the problem it was.

    It was a bad idea, and they better cancel the next one.

    Add your comment.


  26.    Mortgage rates down for third straight week

    Mortgage rates are falling as the housing market has cooled off. Average price growth has slowed, rising just 6.4% in August compared with a year ago, according to real estate data provider CoreLogic. That's down from annual average gains of as much as 12% toward the end of last year.

    Add your comment.


  27.    Event: The Shift and the Shocks: What We've Learned–and Have Still to Learn–from the Financial Crisis

    Martin Wolf, chief economics commentator for the Financial Times, presents his new book, The Shift and the Shocks: What We've Learned—and Have Still to Learn—from the Financial Crisis, on October 9, 2014, at the Peterson Institute for International Economics. …
    The Shift and the Shocks provides an in-depth analysis of the causes of the financial crisis, which Wolf attributes to a complicated relationship between ongoing globalization, tremendously destabilizing global imbalances, and a precarious financial system. He explains what he considers to be erroneous beliefs that shaped monetary and financial policy and proposes radical reforms to be implemented in order to prevent future financial crises.

    At the very end of his talk [which ends at the 45 min. mark], he just mentions 100%-reserves banking. We supported the National Emergency Employment Defense Act (NEED Act), which didn't make it out of committee is our understanding. It is based upon what is known as the Chicago Plan from the 1930's. We couple aspects of that act with Public Banking as one bank, namely the US Treasury; bond-free United States Notes; and a new monetary authority, mentioned above, in the form of a computer program. The result would be no taxes and no inflation or deflation and no limitation on funding for democratically desired projects.

    Add your comment.


  28.    Does the USA Really Soak the Rich? | Next New Deal

    Mike Konczal:

    Let's graph out two ways of soaking the rich. Here's Rich Uncle Pennybags in America, and Rik Farbror Påse av Mynt in Sweden, as well as their respective tax bureaus:

    When average people usually talk about soaking the rich, they are talking about the marginal tax rates the highest income earners pay. But as we can see, in Sweden the rich pay a much higher marginal tax rate.

    Add your comment.


  29.    Why is the recovery so weak? It's the austerity, stupid. – The Washington Post

    Matt O'Brien:

    The tragedy isn't that stimulus didn't work. It's that it was barely tried.

    We concur. We were very surprised at how small the stimulus packages were and that they stopped issuing them and even started calling for slashing the budget. It's amazing how people don't see it when their ideology is debunked by reality.

    Add your comment.


  30.    Top economists: Higher home prices and rising interest rates could hassle Texas homebuyers | Dallas Morning News

    "Those price increases are going to catch up with us in affordability," Gaines said.

    The rising home costs and a lack of homes available for buyers have put a lid on Dallas-Fort Worth home sales this year.

    Through the first nine months of the year, sales are down 1 percent from the same period in 2013.

    "Home sales are not coming back up," Gaines said. "Even the upper price ranges are starting to level out."

    Until builders start more houses or more sellers decide to list their properties for sale, inventory levels will be tight, Gaines said.

    Add your comment.


  31.    Fed's Tarullo: Banking scandals more than just a few bad apples – MarketWatch

    The plethora of banking scandals cannot be written off as just the work of a few bad actors, Federal Reserve Governor Daniel Tarullo said Saturday.

    "You can't just be telling yourself that there are a few apples. There is something about the structure of incentives and expectations within firms that needs to be addressed," Tarullo said. "I think a lot of boards, and management, know it needs to be addressed."

    Tarullo is the Fed's point man on bank regulation.

    Add your comment.


  32.    Crews Investigating Cause of Fatal 5-Alarm Fire | NECN

    One person has died in a five-alarm blaze that tore through a three-story, six-family home in Boston's Roxbury section Friday night, an official says.

    Add your comment.


  33.    [213] Hanke on the disaster in Argentina and Doyle on AIG, bank fraud and regulation – YouTube

    [@ 15:16] Erin talks to Larry Doyle, author of "In Bed With Wall Street" and managing partner at DM Income Advisors, to get his take on the AIG lawsuit and bank fraud.

    Add your comment.


If you are an investor in 1-4 unit properties in Arizona, California, Nevada, Oregon, Utah, or Washington, please do the financially responsible thing and make sure you have proper Landlord Insurance with PropertyPak™. We love focusing on real estate and the economy in general, but we are also here to serve your insurance needs.

Hill & Usher (PropertyPak™ is a division) has many insurance offerings. See our menu above for more info and links.

Did this post help you? Let us know by leaving your comment below.

Note: This blog does not provide legal, financial, or accounting advice. Seek professional counsel.

Furthermore, we, as insurance producers, are prohibited by law from disparaging the insurance industry, carriers, other producers, etc. With that in mind, we provide links without staking out positions that violate the law. We provide them solely from a public-policy standpoint wherein we encourage our industry to be sure our profits, etc., are fair and balanced.

We do not necessarily fact checked the contents of every linked article or page, etc.

If we were to conclude any part or parts of our industry are in violation of fundamental fairness and the legal standards of a state or states, we'd address the issue through proper, legal channels. We trust you understand.

The laws that tie our tongues, so to speak, are designed to keep the public from losing confidence in the industry and the regulatory system overseeing it. Insurance commissioners around the country work very hard to analyze rates and to not allow the industry to be damaged by bad rate-settings and changes in coverages. The proper way for people in the industry to deal with such matters is by adhering to the laws, rules, and regulations of the applicable states and within industry associations where such matters may be discussed in private without giving the industry unnecessary black eyes. Ethics is very high on the list in the insurance industry, and we don't want to lose the people's trust. That said, the industry is not perfect; but what industry is?

For our part, we believe in strong regulations and strong regulators.

We welcome your comments and ask you to keep in mind that we cannot and will not reply in any way or ways where any insurance commissioner could rightly say we've violated the law of the given state.

We are allowed to share rating-bureau data/reports and industry-consultant opinions but make clear here that those opinions are theirs and do not necessarily reflect our position.

Subscribe