News: Real Estate, Risk, Economics. Nov. 25, 2014

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Table of Contents
(Click to sections below.)

1) How much bang for a buck? Working out the returns on government spending

2) Exclusive: China ready to cut rates again on fears of deflation – sources | Reuters

3) China's Monetary-Policy Surprise by Stephen S. Roach – Project Syndicate

4) Piketty's prophecy comes true: The planet's middle class is rapidly going extinct – Salon com

5) Addressing weak inflation: The European Central Bank's shopping list | Gregory Claeys, Zsolt Darvas, Silvia Merler and Guntram B. Wolff at Bruegel org

6) High marginal tax rates on the top 1% | VOX, CEPR's Policy Portal

7) DC approves fines for people who don't shovel snow – The Washington Post

8) Why John Maynard Keynes's Theories Can Fix the World Economy – Businessweek

9) Top incomes soared as tax rates fell | Al Jazeera America

10) Giving thanks for central banks – YouTube

11) Affordable and reliable, Queens real estate ascends

12) Washington council exploring options for vacant properties | lehighvalleylive com

13) TYSON: Principles for real estate investing success

14) Schafer: Starved for returns, investors turn to real estate | Star Tribune

15) Our View: Pass 'problem properties' ordinance – Opinion – southcoasttoday com – New Bedford, MA

16) Extreme Weather Conditions May Become a Thing of Norm : Science : Design & Trend

17) Home's wall collapses on Glenarm in Denver – YouTube

18) Hartford Courant – 8 Adults, 3 Children, 1 House – And A Big Zoning Dispute In Hartford

19) The Little Reveal | Brownstone Cyclone

20) How's the US economy doing? – with Tim Duy and Dean Baker – YouTube

21) Tenant Trends & Traffic in the Apartment Market – YouTube

22) Keystone PipeLIES Exposed on Vimeo

23) Mel Watt is doing a surprisingly good job – OC Housing News

24) Big investors pull back on housing

25) Obama's executive action on immigration | Jeremie Cohen-Setton at Bruegel org

26) Floods kill at least 32 in southern Morocco

27) Small quake shakes Dallas area, stirring fracking critics | Reuters

28) 4 Litchfield County men indicted on federal fraud charges

29) German Exceptionalism? An Illusion About to be Laid Bare | OUTSIDE THE BOXES: ALTEGRIS BLOG

30) Measuring Europe's investment problem | Gregory Claeys, Pia Huttl, Andre Sapir and Guntram B. Wolff at Bruegel org

31) India's Economic Hotspots by Anu Madgavkar and Rakesh Mohan – Project Syndicate

32) #notinmyname | notebook#notinmyname | notebook

33) In Hong Kong, One-Bedroom Apartments That Could Fit in a Bedroom – NYTimes com

34) Why We Need Our Fiscal Policy Instrument Back

35) Falling inflation a worry for Europe but also the world | Reuters

36) US real estate still attractive to foreign institutional investors – Pensions & Investments

37) Multi-Generational Housing: A Multi-Faceted Issue

38) China research trip – A look at the Chinese property market and shadow banking sector – Bond Vigilantes

39) A deeper dive into the weeds of the CBO household income data | Jared Bernstein | On the Economy

40) ECB bond-buying: last action hero – YouTube

41) Atlanta Fed's Altig: Economy Back on Track – YouTube

42) Galbraith and Palley on big US growth numbers despite longer-term weaknesses – YouTube

43) Wayne Co. starts foreclosing on record 75K properties

44) £10m-plus London properties still popular with Russians, Chinese | Business | The Guardian

45) Yup, the Housing Market is Still Insane: 2014 Edition |

46) 5 ways marijuana legalization affects real estate – MarketWatch

  1.    How much bang for a buck? Working out the returns on government spending

    Efrem Castelnuovo:

    Research that I conducted at the Melbourne Institute with a pool of international co-authors (Giovanni Caggiano, Valentina Colombo and Gabriela Nodari) showed that one dollar of public money spent during the 2007-09 crisis could generate 2.5 dollars of output in five year's time.

    Similarly, UNSW Professor James Morley and coauthors found large and persistent government spending multipliers during periods of considerable economic slack, a finding consistent with the research mentioned above.

    …aggregate output due to such a fiscal policy move is not "counterbalanced" by higher borrowing costs for consumers and firms, as interest rates remain low. And so consumers and firms do not reduce their spending. Technically, no "crowding out" of consumption and investment occurs. This implies that the output effect of a fiscal policy move can be eventually large.

    There's no Ricardian equivalence at play during such circumstances.

    Add your comment.

  2.    Exclusive: China ready to cut rates again on fears of deflation – sources | Reuters

    China's leadership and central bank are ready to cut interest rates again and also loosen lending restrictions, concerned that falling prices could trigger a surge in debt defaults, business failures and job losses, said sources involved in policy-making.

    Add your comment.

  3.    China's Monetary-Policy Surprise by Stephen S. Roach – Project Syndicate

    Stephen S. Roach:

    Given that development strategies typically begin to fail when economies reach middle-income status — a threshold that China is rapidly approaching — China cannot afford to allow mounting cyclical risks to undermine its structural transformation. Modern history shows that the easiest way for a developing country to become ensnared in the dreaded "middle-income trap" is to cling to its old model for too long.

    The fact is that only structural transformation can lift a middle-income developing country to high-income developed status. Fortunately, China's leaders recognize this, and are committed to achieving it.

    Nonetheless, the PBOC's tactical decision is not without potential pitfalls — not least because interest-rate cuts encourage the extension of more credit at a time when China is trying to wean itself from debt-intensive growth. A key challenge will be to avoid escalating credit risk, which could undermine the process of reform and rebalancing.

    From the start, China's leaders knew that the interaction between structural transformation and the business cycle would be complex. As former Premier Wen Jiabao noted nearly eight years ago, China's economy had become increasingly "unstable, unbalanced, uncoordinated, and unsustainable." The longer China delayed addressing its problems, the more intractable the solution became.

    Add your comment.

  4.    Piketty's prophecy comes true: The planet's middle class is rapidly going extinct –

    According to a new report, the richest one percent have got their mitts on almost half the world's assets. Think that's the end of the story? Think again. This is only the beginning.

    The "Global Annual Wealth Report," freshly released by investment giant Credit Suisse, analyzes the shocking trend of growing wealth inequality around the world. What the researchers find is that global wealth has increased every year since 2008, and that personal wealth seems to be rising at the fastest rate ever recorded, much of it driven by strong equity markets. But the benefits of this growth have largely been channeled to those who are already affluent. While the restaurant workers in America struggled to achieve wages of $10 an hour for their labor, those invested in equities saw their wealth soar without lifting a finger. So it goes around the world.

    The bottom half of the world's people now own less than 1 percent of total wealth, and they're struggling to hold onto even that minuscule portion. On the other hand, the wealthiest 10 percent have accumulated a staggering 87 percent of global assets. The top percentile has 48.2 percent of the world wealth. For now.

    …If you look at the Forbes 400 list of the wealthiest people in America, you see a lot more inherited fortunes in the upper ranks than you did a couple of decades ago, when the policies that held inequality at bay began to get dismantled. In today's top 10, there are more scions of the Walton family than entrepreneurs like Bill Gates or Mark Zuckerberg. These people have essentially done nothing of value for society, and yet their undue influence shapes our political landscape with the wave of a wad of cash.

    Add your comment.

  5.    Addressing weak inflation: The European Central Bank's shopping list | Grégory Claeys, Zsolt Darvas, Silvia Merler and Guntram B. Wolff at

    Since currently banks can hold excess reserves on their current account at the ECB at zero interest, a negative deposit rate should be accompanied by the same negative interest rate on excess reserves, to avoid the shifting of all deposits to excess reserves (Figure 5 shows that banks shifted half of their deposits to excess reserves when the deposit rate was reduced to zero). A negative deposit rate would mean that banks pay interest for placing a deposit at the central bank. This would reduce the incentive for banks to hold deposits and excess reserves at the central bank and should therefore promote other uses by the banks of liquidity, such as greater lending to the rest of the economy. However, the sum of banks' deposits and their excess reserves at the ECB is declining fast (Figure 5), and with the normalisation of money markets they may return to their pre-crisis close-to-zero values. This implies that the direct impact of a negative deposit rate, in terms of changing the incentives to hold deposits and excess reserves, would be minimal.

    It is difficult to assess the quantitative impact of a negative deposit rate on credit and inflation, but the example of Denmark does not suggest strong effects. In July 2012, the Danish central bank reduced its deposit rate for banks to -0.2 percent and kept a negative rate until the 24 April 2014. The main motivation for the negative deposit rate was to discourage the inflow of capital into Denmark, because with the intensification of the euro crisis, investors searched for safe assets. The most direct effects were the reduction of Danish treasury-bill yields below zero and a depreciation of the Danish Krona against the euro by about half a percent from 7.43 to 7.46. This change was quite sizeable for Denmark, where the euro exchange rate is kept very stable. A negative ECB de posit rate may lower treasury-bill yields especially of core euro-area countries and weaken the exchange rate of the euro, which would increase inflation.

    Some commentators (eg Papadia, 2013) have argued that banks would in fact increase loan interest rates in order to compensate for the loss from their deposits at the ECB. However, the Danish experience also showed that a negative deposit rate does not necessarily have any impact on banks' loan rates to their clients. Another concern is the impact of negative deposit rates on money-market activity. The ECB's decision to cut the deposit rate to zero has already led to the closure of various money-market funds and could drain liquidity in the money markets[7]. In Denmark, however, money-market volumes decreased only slightly after the introduction of the negative central bank deposit rate. Investors exiting money-market funds would need to find other investments, pushing liquidity to markets with characteristics similar to money markets.

    The Danes had no strings attached. We have recommended strings.

    Add your comment.

  6.    High marginal tax rates on the top 1% | VOX, CEPR's Policy Portal

    Fabian Kindermann and Dirk Krueger:

    …households currently not in the top 1% might actually get there in the future. Plus, future generations have a chance of getting there, too, and factor this in when calculating individual welfare.

    Why is it not that much lower? Because the bottom 99% of the population gain along two dimensions:

    1. On average, due to the tax reform they face lower average tax rates and their consumption increases over their entire life cycle.
    2. Consumption inequality (measured as the variance of individual consumption across households) substantially declines as well, at least eventually.

    Figure 1 displays average consumption and the variance of consumption for the bottom 99% of the population over their life cycle, in deviations from their initial status quo values. It shows the benefits for this group from increasing marginal tax rates on the top 1%. While average consumption increases unanimously over the life cycle, inequality increases initially but then rapidly declines at older ages. Not knowing whether one would ever make it into the top 1% (not impossible, but very unlikely), households especially at younger ages would be eager to accept a life that is somewhat better most of the time and significantly worse in the rare case they climb to the top 1%. This type of social insurance via the tax system drives our optimality result.

    Add your comment.

  7.    DC approves fines for people who don't shovel snow – The Washington Post

    It calls for $25 fines for homeowners who don't shovel walks within eight daylight hours after a storm. Business owners who don't remove snow would be fined $150.

    Democratic Councilmember Mary Cheh sponsored the bill, saying it will prevent senior citizens and disabled people "from being stranded in their homes." Opponents had argued that fines might target some of those same people, who may be physically unable to shovel their walks.

    Add your comment.

  8.    Why John Maynard Keynes's Theories Can Fix the World Economy – Businessweek

    We missed this one, but Mark Thoma linked to it. Here's an extended excerpt because it's that good. Peter Coy:

    The Keynesian jolt didn't last long. European governments pivoted to austerity on the theory that doing so would reassure investors and induce a wave of investment, creating growth and jobs. It didn't happen. The U.S. was marginally less austere and grew a bit faster. But even in the U.S., stimulus faded quickly despite continuing high unemployment. Far from priming the pump, changes in government outlays actually subtracted from the growth of the U.S. economy in 2011, 2012, and 2013. The Japanese government has been running big deficits to compensate for chronic hoarding by households and businesses, but in April it faltered, chilling the nation's halting recovery by raising the value-added tax to 8 percent from 5 percent.

    With fiscal policy missing in action, the world's biggest central banks tried heroically to plug the gap. The U.S. Federal Reserve cut interest rates to near zero, and when even that failed it tried some new tricks: buying bonds to bring down long-term interest rates ("quantitative easing") and signaling the market that rates would stay low even after the economy was on the path to recovery ("forward guidance"). The limited effectiveness of those measures is sometimes chalked up as a failure of Keynesianism, but it's just the opposite. Keynes was the economist who demonstrated that monetary policy ceases to be effective once interest rates hit zero and whose recommended policy in those circumstances was tax cuts and spending hikes.

    Enter Lord Keynes. Cutting interest rates is fine for raising growth in ordinary times, he said, because lower rates induce consumers to spend rather than save while stimulating businesses to invest. But where rates sink to the "lower bound" of zero, he showed, central banks become nearly powerless, while fiscal policy (taxes and spending) becomes highly effective as a fix for inadequate demand. Governments can raise spending to stimulate demand without having to worry about crowding out private investment—because there's plenty of unused capacity, and their spending won't lift interest rates.

    It's the closest thing economists have found to a free lunch.

    Keynes came under a cloud starting in the 1970s because his theories couldn't readily account for stagflation—the coexistence of high unemployment and high inflation. Academic economists were drawn to the new theory of "rational expectations," which said that government couldn't possibly stimulate the economy through deficit spending because foresighted consumers would rationally expect that the stimulus would have to be paid for eventually and so would save for future tax hikes, offsetting the initiative. Supply-side economists said Keynes missed how low taxes could stimulate long-term growth by inducing work and investment. "Unsuccessful policies and confused debates have left Keynesian economics in disarray," the Swedish economist Axel Leijonhufvud wrote in 1983 for a conference celebrating Keynes's centennial. A successor theory that evolved in the 1980s and 1990s, New Keynesianism, attempted to inject rational expectations theory into Keynes's worldview while preserving his observation that prices and wages are "sticky"—i.e., they don't fall enough in a slump to equalize supply and demand. New Keynesians range from conservatives such as John Taylor of the Hoover Institution to liberals like Berkeley's DeLong.

    At the time, we thought the stimulus should have been vastly larger: 4 times, even 10 times — whatever it would have taken to get things going again. Unfortunately, the anti-Keynesians (the misguided libertarian-leaning) prevented enough stimulus.

    Add your comment.

  9.    Top incomes soared as tax rates fell | Al Jazeera America

    David Cay Johnston:

    …figures from an IRS report released Friday show how much government policy has helped those at the top amass even larger fortunes thanks to lower tax rates. It also shows how far the United States has moved away from the ancient principle of progressive taxation, born in Athens nearly 2,500 years ago and endorsed by political thinkers and economists from Aristotle and Adam Smith to Alfred Marshall and Milton Friedman.

    Add your comment.

  10.    Giving thanks for central banks – YouTube

    The FT's John Authers reports from New York as the US stocks closed at yet another record on the eve of Thanksgiving week. Of concern in the coming days: rumblings of an Asia-Pacific currency war and a potentially momentous meeting of Opec.

    Add your comment.

  11.    Affordable and reliable, Queens real estate ascends

    Long the Toyota Corolla of New York City real estate — affordable, reliable and unassuming — Queens is finally getting some respect.

    The Michelin Guide just anointed four Queens restaurants with the coveted star. Ridgewood is being heralded as the new Bushwick. And the offerings for apartment hunters are growing as developers and landlords rush to capitalize on the increasing buzz about the borough.

    In already burgeoning Long Island City, more than 10,000 apartments are planned over the next three years, ranging from amenity-laden rentals to family-size condos, according to, a New York brokerage that specializes in the marketing of developments. Hundreds of new apartments are expected in downtown Flushing over the next several years.

    Add your comment.

  12.    Washington council exploring options for vacant properties |

    Council has started reviewing its options in dealing with nearly 80 vacant properties scattered around the borough.

    Council approved a measure earlier this month that would allow the borough to begin fining banks and mortgage companies for failing to maintain or address code issues on foreclosed properties it controls. And the borough attorney last week reviewed procedures officials could use to seize control of condemned and abandoned properties.

    Add your comment.

  13.    TYSON: Principles for real estate investing success

    Lists such as this one often aren't very well done. This one is one of the better ones we've seen. Eric Tyson:

    Although many people can succeed investing in real estate, rental property investing isn't for everyone. Here are some things to consider before you invest:

    Add your comment.

  14.    Schafer: Starved for returns, investors turn to real estate | Star Tribune

    …while real estate prices in some U.S. markets may even have climbed higher than the peak before the Great Recession, Richmond said, a top-of-the-market downtown office building and a 10-year U.S. Treasury may have both paid about 5 percent in 2006.

    With 10-year U.S. Treasury notes now paying less than half that, he said, 5 percent in real estate can look pretty good.

    The result is that by now, institutional investors have picked over the so-called gateway markets like San Francisco and have started to come to second-tier markets like the Twin Cities.

    Add your comment.

  15.    Our View: Pass 'problem properties' ordinance – Opinion – – New Bedford, MA

    Mitchell calls the ordinance the most important crime prevention measure to have come before the city "in ten years," even though it already has been revised to exclude landlords who own buildings that merely violate building codes from being penalized. As it stands now, the ordinance would only hold the landlords accountable for properties at which at least eight criminal complaints have been filed against tenants.
    It also establishes an appeals board for landlords who feel they are being wrongly punished.

    Add your comment.

  16.    Extreme Weather Conditions May Become a Thing of Norm : Science : Design & Trend

    Extreme weather will soon be so consistent that it might become the "new climate normal", because of global warming. This means more heat waves, more super snowstorms, and more weather extremes that will create an unstable world.

    Add your comment.

  17.    Home's wall collapses on Glenarm in Denver – YouTube

    An excavation project caused a home's exterior wall to collapse in Denver…

    Add your comment.

  18.    Hartford Courant – 8 Adults, 3 Children, 1 House — And A Big Zoning Dispute In Hartford

    HARTFORD — A neighborhood kerfuffle on one of the city's wealthiest residential streets has triggered a cease-and-desist order, fervent appeals and debate over what constitutes a family.

    The controversy centers on 68 Scarborough St., a nine-bedroom brick mansion shared by eight adults and three children — an arrangement among longtime friends who share monthly expenses, chores and legal ownership of the stately home, said Julia Rosenblatt, who lives there with her husband and two kids.

    Add your comment.

  19.    The Little Reveal | Brownstone Cyclone

    When we first started our renovations we pictured the big ta-da moment when everything would be done and we'd move into our perfectly designed, painted and furnished home like on Houzz or HGTV.

    The reality is that we moved in when there was not even a kitchen and now that we have been here for over a year, there is still a punch list that needs to be completed and an endless list of ongoing projects not to mention the rental unit upstairs.

    Add your comment.

  20.    [243] How's the US economy doing? — with Tim Duy and Dean Baker – YouTube

    [@3:32] Erin sits down with Tim Duy, professor of economics at the University of Oregon and blogger at Tim Duy's Fed Watch. Tim gives us his take on whether middle class Americans are better off now than they were 20 years ago. He also has a firm view on whether we're over-reliant on the central bank.

    [@12:16] Erin talks to Dean Baker — co-director of The Center for Economic and Policy Research. Dean tells us why he thinks nominal wage gains have been so weak and gives us his take on consumer debt issues, especially mortgages and student debt.

    We don't see the Fed moving as soon as does Tim Duy. We are more reserved because we see more international problems. We hope the international scene will clear up, but we won't be holding our breath.

    Add your comment.

  21.    Tenant Trends & Traffic in the Apartment Market – YouTube

    Michael is in rare form for this one.

    Cindy Clare, President of Kettler Management, joins the show to discuss trends they are seeing in the multifamily market including tenant traffic, current space demands and design.

    It sound like she knows her business.

    Add your comment.

  22.    Keystone PipeLIES Exposed on Vimeo

    This film is important to those who care about the values of their property/real-estate investments that could be highly negatively impacted by the Keystone Pipeline and associated Canadian tar-sands industry. What part of the Earth won't be impacted?

    This film, produced by the Center for Media and Democracy, debunks the claims of proponents of the Keystone XL pipeline regarding jobs, energy security, gas prices, safety, and climate change.

    Add your comment.

  23.    Mel Watt is doing a surprisingly good job – OC Housing News

    This is why we like reading Larry Roberts. Whether we agree with him or not, he keeps us on our toes.

    On the 20th, we wrote: "We'd like to see Larry Roberts' take on Yves Smith's ripping Mel Watt." He then did it here by going straight at Elizabeth Warren.

    Warning, Larry uses some lightly scattered blue language in his post.

    I was wrong about Mel Watt. Despite my concerns he would use his position to advance a left-wing agenda, at least so far, he's proven a capable administrator of the GSEs. I am a big fan of Ed DeMarco, the man Mel Watt replaced, and perhaps I was not open to change at the GSEs because of my admiration for Mr. DeMarco, but so far Mel Watt has surprised me.

    If we were without any safety net in the US, one would have to conclude that Larry lacks compassion and is rather cold- small- and hardhearted. After all, we think many more people were duped by the entire mortgage process created as a result of Wall Street flooding first Orange County with money and when there was not only a near total lack of oversight from the regulators but the various rating agencies were actually rubber stamping all the toxic derivatives being pumped out and sold around the gullible world, including to some otherwise fairly sophisticated marks (targets of the con-artists).

    We think that Elizabeth Warren has the dupes in mind rather than the Ponzi scheme artists who took full advantage of the lax regulations and bought houses they shouldn't have. etc.

    (We know this isn't lost on Larry. He knows there's a safety net, such as it is.)

    There simply needs to be a way to foam the runway for those who had good intentions and were fleeced by those who may rightly be called banksters.

    If they can't be allowed to stay where they are, then exactly what should society do?

    Let us be clear here, we aren't opposed to renting. The only problem with rentals right now is that there're aren't enough of them; but then again, landlords don't want the market flooded, driving rents down so much that rental properties become losers for all but those who've paid off all real-estate debts.

    Regardless, we hope you enjoin seeing the different sides of the many issues out there and gain valuable knowledge from the argumentation.

    The moral-hazard issue is very important. We completely agree with Larry on that. Mel Watt agrees too.

    Add your comment.

  24.    Big investors pull back on housing

    "We've seen buying activity slowing down among the largest institutional investors, and some of this activity (is being) replaced by mid-sized companies and individuals looking to buy and rent out single family homes," said Rick Sharga, executive vice president of

    The big fish don't see the huge profit margins anymore.

    Add your comment.

  25.    Obama's executive action on immigration | Jérémie Cohen-Setton at

    Some people believe that what President Obama has done vis-a-vis immigration is an impeachable offense. The argument below is that failing to enforce the law is within his legal authority. All of this matters to landlords because immigrants often rent. As for the constitutionality of his actions, it raises the moral-hazard issue versus compassion for the immigrants and the harm for unemployed and undereducated citizens.

    We'd like to see vastly better jobs programs and a return to and expansion of free college tuitions.

    One way to help stave off deflation and disinflation would be to print new United States Notes and to use those to pay the tuition of college students and to pay off their student debts.

    The White House's Council of Economic Advisers explains that the Department of Homeland Security (DHS) will:

    • Expand the existing Deferred Action for Childhood Arrivals program (DACA) which allows young people who came to the country before turning 16 years old who meet certain education guidelines, such as graduating from high school or attending college, to request temporary relief from removal ("deferred action") and be eligible to obtain work authorization.
    • Establish a similar process for parents of U.S. citizens or Lawful Permanent Residents (LPRs) who have been in the country for five years or more to request deferred action.

    Dara Lind writes that the president doesn't have the authority to give anyone legal status in the US. But the current system gives the executive branch broad authority to decide what it wants to prioritize when it comes to immigration enforcement. It's therefore incorrect to describe the centerpiece of President Obama's executive actions on immigration as a "legalization" program. Although it offers protection from deportation, it does not change those immigrants' legal status (or rather, lack of legal status).

    Add your comment.

  26.    Floods kill at least 32 in southern Morocco

    RABAT, Morocco (AP) — Days of unusually heavy rain pounded Morocco's south and unleashed deadly floods that killed 32 people, the Interior Ministry said Monday.

    Add your comment.

  27.    Small quake shakes Dallas area, stirring fracking critics | Reuters

    "We are guinea pigs in the middle of this fracking experiment. Texas homes are built to withstand wind, not earthquakes," Sharon Wilson, an organizer for Earthworks, an advocacy group, said on Sunday. "Who will pay for the damage to private property?"

    Add your comment.

  28.    4 Litchfield County men indicted on federal fraud charges

    The indictment alleges that Ryan Geddes and Whitten conspired to commit mail and wire fraud based on Ryan's paper transfer to Whitten of a New York vacation property he owned. After an insurance policy was obtained in Whitten's name, the home was destroyed by fire, allegedly in an act of arson, leading to a claim of more than $600,000 on the home by Whitten.

    Add your comment.

  29.    German Exceptionalism? An Illusion About to be Laid Bare | OUTSIDE THE BOXES: ALTEGRIS BLOG

    Bob Barbera:

    The German economy, in stark contrast to most of the rest of Europe thrived, 2010-2012. German successes emboldened their policymakers. Merkel, her finance minister and a succession of Bundesbank members all sternly lectured their European partners. Embrace Germany's magical approach, or continue to suffer, has been the message. The good news for the rest-of-Europe is that Germany's mansion on the hill has always been a sand castle. Two tsunami waves are about to hit. And Germany's economic exceptionalism will be swept away in 2015.

    Add your comment.

  30.    Measuring Europe's investment problem | Grégory Claeys, Pia Hüttl, André Sapir and Guntram B. Wolff at

    Gregory Claeys, Pia Huttl, Andre Sapir and Guntram B. Wolff

    In this post, we have documented a substantial decline in investment, both private and public as well as construction and non-construction throughout the EU.

    The numbers show that the EU is substantially below long-term trends. Given the central importance of investment for growth in the short but also in the long term, this is a very worrying development.

    We urge the European Commission to present an ambitious plan to re-invigorate growth and jobs in the EU.

    Add your comment.

  31.    India's Economic Hotspots by Anu Madgavkar and Rakesh Mohan – Project Syndicate

    Anu Madgavkar and Rakesh Mohan:

    MUMBAI — India's economy could soon be on the move again. The new government is re-establishing fiscal discipline and energizing the bureaucracy, fueling optimism that rising business confidence will re-activate investment, particularly in infrastructure. But India's overall growth prospects conceal a patchwork of economic opportunities that exist within states, districts, cities, and even towns — opportunities that companies can uncover only with careful research.

    India's economic data are promising. Annual average GDP growth is forecast to range from 6.4% to 7.7% until 2025. This compares favorably with last year's 4.7% rate, and is close to the 7.7% average recorded in the decade up to 2012. Moreover, it contrasts sharply with the expectations of secular stagnation in the developed world. This acceleration would place India among the world's fastest-growing large economies and increase the number of Indian consumers who can afford discretionary items from 27 million in 2012 to 89 million in 2025.

    Add your comment.

  32.    #notinmyname | notebook

    We have to understand that the offshore system deepens inequality by creating endless possibilities to hide money "elsewhere". This undermines the capacities of states throughout the world to collect tax revenue which is indispensable for the socio-economic development of their countries. We must in ask ourselves whether we agree to be a part of such a system, which, at the end of the day, works only for very few people — and certainly not in the interest of sustainable development.

    Add your comment.

  33.    In Hong Kong, One-Bedroom Apartments That Could Fit in a Bedroom –

    There are breathtaking views of Victoria Harbor from a 23rd-floor apartment that recently sold for $722,000 in the new Le Riviera building. The high-end German appliances and marble countertops evoke European luxury. In the entrance of the building, colorful wire mesh sculptures by Spanish artists hang from the ceiling.

    There is just one catch. The apartment is only 275 square feet, with a bedroom just large enough to accommodate a double bed.

    Add your comment.

  34.    Why We Need Our Fiscal Policy Instrument Back

    Excellent: Simon Wren-Lewis:

    …the idea that you could — and when monetary policy became ineffective should — use fiscal policy to stimulate the economy became lost. Even in 2009 it had been a difficult policy to sell publicly: why should government be increasing debt at a time that consumers and firms had to reduce their own debt? For those who had not done an undergraduate economics course (which included most political journalists), politicians of the right who said that governments should act like prudent housewives appeared to be talking sense. Greece and the subsequent Eurozone crisis just seemed to confirm this view. Deficit fetishism became pervasive.

    We need fiscal stimulus!

    Add your comment.

  35.    Falling inflation a worry for Europe but also the world | Reuters

    With so many central banks having eased or prepared for possible easing over the last several months, it is becoming increasingly doubtful that the Federal Reserve will raise its benchmark rate from a record low by the middle of next year.

    That's what we've been saying for months and months and then some.

    Add your comment.

  36.    U.S. real estate still attractive to foreign institutional investors – Pensions & Investments

    Foreign capital is flooding into U.S. real estate despite lower return expectations.

    Money managers are taking advantage of this source of cash — expected to surpass $39 billion by year-end — by partnering with foreign investors on direct deals and collecting capital for separate accounts.

    But the capital tsunami has a dark side: It is pushing prices skyward for all real estate investors.

    We see this trend dying down in the coming year due to China having problems and the Chinese needing to sink more of their money into paying down their debts. They may even have to sell US holdings.

    If China does a major currency devaluation to match or beat the Japanese, all bets are off because Chinese debt will become vastly cheaper and the Chinese wealthy will want to put their money into assets that will seemingly retain more real value, be more stable. Of course, if Japan and China really go into a hyper currency-war, the US will have to fight deflation in the US with everything it can.

    The real wild card though is Germany. It is suffering due to Japanese inflation, the Chinese slowdown (not buying so much from Germany), sanctions on its trading partner Russia, and austerity at home.

    Germany will either wake up and smell the coffee in time to reverse its austerity program for itself and Europe or it will crash and crash hard.

    Add your comment.

  37.    Multi-Generational Housing: A Multi-Faceted Issue

    Multi-generational housing is not a new concept, but a concept long forgotten while households made the shift towards nuclear families living in separate homes. Recently, data released by the U.S. Census Bureau, Pew Research, Generations United, and the National Association of REALTORS® suggests a trend of moving back to multi-generational households is now underway. While there are no doubt societal implications of this trend, this article will focus on the housing implications and will attempt to make sense of the data.

    Add your comment.

  38.    China research trip — A look at the Chinese property market and shadow banking sector – Bond Vigilantes

    Matthew Russell (M&G Fund Manager) and I went to Beijing on a research trip to find out more about the current state of the Chinese economy. In particular, we wanted to develop a better understanding of two areas which are often looked upon as potential trouble spots: China's property market and its shadow banking sector. We've put together a video to share some of our thoughts on these and related issues.

    A bit overly optimistic in parts.

    Add your comment.

  39.    A deeper dive into the weeds of the CBO household income data | Jared Bernstein | On the Economy

    Oh, are we ever glad they did this! Jared Bernstein and Ben Spielberg:

    One motivation for our report was to correct the record of those who claim that the trend of increasing income inequality is significantly reduced when accounting for government taxes and transfers. In fact, as we show, between 1979 and 2011, inequality measured by the Gini coefficient rose 24% based solely on market outcomes and by 22% based on CBO's comprehensive, post-tax and transfer income data.

    So, "welfare" has not made up the loss. That's important to know.

    Now, if someone will just handle the idea that just because some of the poor have some access to technology, those poor ones are necessarily okay to ignore in terms of their relative share of global incomes and accumulated wealth: that, therefore, income and wealth inequality really aren't important.

    Just exactly when in the progress of technology did it become okay to leave the vast majority at or near the bottom (which is where they/we are headed under the current trend that has been in operation pretty much since the beginnings of the Ronald Reagan and Margaret Thatcher governments)?

    Add your comment.

  40.    ECB bond-buying: last action hero – YouTube

    The European Central Bank began its purchases of asset-backed securities to stimulate the eurozone economy on Friday. But it is already looking at doing more. Lex's Oliver Ralph and Joseph Cotterill discuss what may come next.

    Just issue bond-free currency directly into the real economy via government spending on productive things.

    Add your comment.

  41.    Atlanta Fed's Altig: Economy Back on Track – YouTube

    In a recent ECONversations webcast, our research director notes that growth averaged a strong 4 percent in the second and third quarters. His outlook is for a 3 percent pace of growth for the year.

    Add your comment.

  42.    [244] Galbraith and Palley on big US growth numbers despite longer-term weaknesses – YouTube

    [@4:26] Erin sits down with James Galbraith — professor of economics at the University of Texas in Austin and author of "The End of Normal." Professor Galbraith tells us what encouraged him to write his new book and gives us his take on why longer-term weaknesses in the US growth model may mean secular stagnation.

    [@14:36] Edward talks to Thomas Palley — Washington DC economist and research associate at the Economic Policy Institute. Dr. Palley tells us how he thinks the US economy is doing and gives us his take on wage growth and income inequality.

    Add your comment.

  43.    Wayne Co. starts foreclosing on record 75K properties

    Detroit — — Wayne County has begun tax foreclosure proceedings on nearly 75,000 properties, a record number that includes thousands of delinquent accounts that officials have ignored for years.

    Treasury workers last month began posting notices on the properties that the county plans to auction in fall 2015 if owners don't pay taxes or agree to payment plans. In Detroit alone, 62,000 properties owing $326.4 million in taxes, interest and fees are set to be foreclosed.

    More than half of those Detroit homes — 37,000 — are occupied….

    Add your comment.

  44.    £10m-plus London properties still popular with Russians, Chinese | Business | The Guardian

    The number of £10m-plus London homes sold by upmarket estate agent Knight Frank has leapt by a third this year as rich Russian and Chinese buyers invested in the capital's "super-prime" property market.

    Add your comment.

  45.    Yup, the Housing Market is Still Insane: 2014 Edition |

    Despite some anecdotal accounts that San Francisco's real estate market has cooled slightly due to "buyer's fatigue," a look at the numbers tells a more straightforward story. Based on data provided by, most signs indicate that for much of San Francisco's housing market, including the Mission, things are unambiguously white hot.

    Add your comment.

  46.    5 ways marijuana legalization affects real estate – MarketWatch

    As marijuana becomes legal in more parts of the country, those in the real-estate industry are finding the new laws have implications for properties of every variety, from residential to industrial to retail.

    Some of the issues pertain to the growing and processing of the plants; others pertain to the use of it in a rental property or one governed by a homeowner's association. There are also some things that home buyers need to be aware of, to ensure they know what they're purchasing.

    Add your comment.

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