Linking ≠ endorsement.
⇧ Billionaire likes bad news. You? Gary Coxe #1423 – YouTube
You may not go in for motivational speakers/training, etc.; but the suggestions in this video are quite true in our view.
No one likes getting bad news, right? WRONG! One billionaire shares why he counts on bad news to grow his empire! Listen to today's video to hear how you can incorporate this mindset to your own success!
⇧ Mortgage volume drops back again after recent gains
Home sales have not been affected by rate so much as by credit availability. The nation's home builders in particular are concerned that tight credit is hampering the housing recovery.
"We can't get mortgages approved and that's really governing demand," Lennar CEO Stuart Miller told CNBC's "Squawk on the Street" Monday.
But that's not all bad. It will prevent the bubble from getting worse and crashing the system when it pops, as they always do under our current methods.
⇧ Air pollution costs EU up to $235 billion: EU agency | Reuters
Air pollution, chiefly from coal-fired power plants, cost society up to 189 billion euros ($235 billion) in 2012 – equal to the gross domestic product of Finland, the European Environment Agency (EEA) said in a report published on Tuesday.
⇧ Fire destroys homes in west Vail – Colorado News
VAIL, Colo. (AP) — A fire in west Vail has forced residents from 11 homes.
⇧ Ferguson: What insurance agents need to know
It's a good article that will help insureds, as well as agents and brokers who need a refresher.
⇧ How can cities better cope with storms? – Forum:Blog Forum:Blog | The World Economic Forum
Flooding is one of the biggest concerns for cities. A September 2013 Nature Climate Change report looked at the average annual cost of flooding across the world's 136 largest coastal cities, and found that costs are increasing at a rapid pace. The average cost of urban flooding globally was around $6 billion in 2005. This is expected to rise to $60 billion in 2050 if cities invest in adaptation strategies, and as much as $1 trillion if they do not.
⇧ LA Times – Regulator OKs some Fannie, Freddie foreclosure buybacks at fair value
The federal regulator overseeing Fannie Mae and Freddie Mac will now allow certain foreclosed borrowers to buy back the homes they lost — so long as they pay the full current value of the property.
That's principal reductions and should make Elizabeth Warren happier and Larry Roberts frown and perhaps, likely, retract some or all of his recent praise of Mel Watt.
⇧ Germany and the European Commission's €315 Billion Infrastructure "New Deal" is Yet More Smoke and Mirrors | naked capitalism
We agree. Yves Smith:
…this is just a "robbing Peter to pay private sector financier Paul" project, with banker financing costs getting what amounts to priority payout. The French sensibly wanted much more in government funds to leverage, on the order of €60 to €80 billion, and all of that in new money, rather than pilfered from other budgets. That would have provided at least some genuine net stimulus, as well as big enough overall package to have more psychological impact. So this is yet another way too little, way too late measure from the Eurozone. The officialdom has been able to see these measures as adequate precisely because they've managed to stave off the worst-case scenarios of a financial crisis and a Eurozone breakup. But that standard of performance is so low as to assure continuing increases in social and political pressure as unemployment festers and economic conditions falter.
⇧ Hey Angelina, here's how to swerve mansion tax – Telegraph
"400 years ago the Government introduced the window tax [a property based tax on the number of windows in one home] and in response people bricked up their window – which is still evidenced on some period homes today. So it's inevitable that people, within the rules, will try to find ways of minimising their tax bill," said Henry Pryor, private buyer.
"Ironically in the 1980s and 1990s many properties were put together to increase a house's value – this is now being unpicked to make two £1.5m flats rather than one £3m pad," he explained.
While it is no longer viewed as laudable by society to mitigate tax, he continued, this could create more homes in the long run that the country needs, referring to the housing supply crisis.
⇧ Apartment rent to outpace inflation next year: NAR – MarketWatch
Rent growth for U.S. apartment dwellers will slightly cool down next year, but still run hotter than inflation, according to a forecast released Monday.
Rent growth is expected to hit 3.9% in 2015, compared with 4% this year, as the "landlord's market" lives on, the National Association of Realtors said. A consensus estimate from economists recently forecast that overall consumer inflation will run at about 1.9% next year.
"Low housing inventory and the sizable demand for rentals will continue to spur multifamily construction as well as keep rents rising above inflation through next year," said Lawrence Yun, NAR's chief economist.
⇧ New Mortgage Lending Drops to 13-Year Low – Real Time Economics – WSJ
New figures released by the Federal Reserve Bank of New York on Tuesday show that mortgage lending is running at its lowest level in 13 years, with 2014 on pace to be the weakest for new loans since 2000.
⇧ mainly macro: Understanding George Osborne
Blunt and true: Simon Wren-Lewis:
Osborne's plans are illiterate in macroeconomic terms.
⇧ 10 Myths About Austerity – The People's Assembly Against Austerity
Don't buy the Austerity Lies!
⇧ Keynes is slowly losing (winning?)
Paul Krugman has an interesting blog post arguing that Keynes is slowly winning. But, I must admit, I find it dismaying how little of the contrary evidence is considered. Let's say you set out to write a blog post about Keynes losing, what might you cite?:
You'll note that #3 is handled by the previous post above.
Abenomics made the mistake of the tax increase.
We don't think China is appropriate to the discussion at all.
We don't want to nitpick. We agree that not everyone is getting on board.
The truth is though that the US did way too little fiscal stimulus and what little it did, it didn't do well.
⇧ Calculated Risk: Fannie Mae: Mortgage Serious Delinquency rate declined in October, Lowest since October 2008
Maybe serious delinquencies will be close to normal in late 2016.
⇧ If this drop in long-term interest rates has legs, look for mortgage rates to follow | Inman News
We haven't posted anything by Lou Barnes in awhile.
Long-term interest rates have broken a narrow, monthlong range and are headed down.
The 10-year Treasury note — the driver of the show — is now 2.23 percent. The lowest-fee mortgages are trying to cross below 4 percent, too.
This is a big move, reinforcing a downtrend. However, this is also a holiday week, markets thin, and November jobs data due next Friday may cancel the whole thing.
But I doubt it. I think the move is real
So do we. The rest of the article is quite good.
⇧ Bank reforms will help lift Europe's struggling economy | Finance Watch
According to the British Bankers' Association and the French Banking Federation, requiring too-big-to-fail megabanks in Europe to separate their trading activities would be a "handicap in financing European companies". The empirical evidence suggests the opposite:….
⇧ The Stimulus Program Was a Smashing Success: It Erased Most Middle Class Income Losses in the Recession | Brookings Institution
This is why Keynes was/is right. Gary Burtless:
Millions of laid off workers were clearly made worse off by the recession. But income replacement through the permanent tax and transfer system plus temporary measures to boost families' spendable incomes achieved their intended goal.Millions of laid off workers were clearly made worse off by the recession. But income replacement through the permanent tax and transfer system plus temporary measures to boost families' spendable incomes achieved their intended goal.
As for some of the balance of the article, we suggest you temper it with a re-read of this: http://propertypak.com/2014/11/25/news-r eal-estate-risk-economics-nov-25-2014/#1 1251439
As for why we say the stimulus wasn't well done, we think it should have gone into direct payments on a progressive basis with the highest proportion starting at the bottom (the poorest). It should have been heavily skewed that way. We had other issues with the stimulus at the time, but we'd have to revisit the specifics to comment more effectively.
⇧ Tax Extenders Package Is Fundamentally Flawed — Center on Budget and Policy Priorities
Important anti-austerity information: Chuck Marr and Robert Greenstein:
The emerging "tax extenders" package marks a significant step backward on several key issues facing the nation: long-term budget deficits, high levels of poverty (especially among children), and widening inequality. It would permanently enlarge budget deficits — and, by so doing, increase pressures to cut domestic programs more deeply — while favoring large corporations and leaving out millions of families that work for low or modest wages.
⇧ Radical cures for unusual economic ills – FT.com
The principal high-income economies — the US, the eurozone, Japan and the UK — have been suffering from "chronic demand deficiency syndrome". More precisely, their private sectors have failed to spend enough to bring output close to its potential without the inducements of ultra-
aggressive monetary policies, large fiscal deficits, or both. Demand deficiency syndrome has afflicted Japan since the early 1990s and the other economies since 2008 at the latest. What is to be done about it?
The crisis left a grim legacy. The eurozone has done a worse job of dealing with this than, say, the US. But the origins of the crisis are to be found in longer-term structural weaknesses. Policy has to address these failings, too, if exit from the crisis is not to be the beginning of a journey into the next one. The answers are likely to be unorthodox. But so, too, is today's economic condition. Rare ailments need unusual treatments. So look for them.
We have offered them, some along the very lines mentioned by Martin Wolf in his article.
⇧ Something to be thankful for: the US government has finally stopped holding back the recovery | FT Alphaville
More of why austerity is wrong and Keynes is right: Matthew C Klein:
Starting about four years ago, however, government spending cuts began to bite. At its worst, this austerity subtracted about 0.76 percentage points off the real growth rate of the economy between the middle of 2010 and the middle of 2011. If real government spending had remained constant at mid-2010 levels and everything else stayed constant, (yes we know these are big assumptions) the US economy would now be about 1.2 per cent larger.
⇧ Juncker's plan for Europe in 90 seconds – YouTube
Jean-Claude Juncker, president of the European Commission, has provided details of the commission's plans to kickstart investment spending in Europe and seed growth. The FT's Ferdinando Giugliano provides a rundown of the scheme.
⇧ What are bank funding costs? – Quarterly Bulletin article – YouTube
This is rather basic stuff; but if you've never been exposed to even the fundamentals of banking mechanics or just need a refresher, it's well done.
Using an analogy of two buckets balanced on a set of scales, this video explores the dynamic nature of bank funding and bank lending. It focusses on bank funding costs, which are integral to a wide range of economic variables with important implications for both monetary and financial stability.
The buckets analogy is used to illustrate the potential impact of a rise funding costs for a bank's profitability and broader economic conditions.
⇧ County to re-examine policy on auctioning blighted properties – Olean Times Herald: News – County to re-examine policy on auctioning blighted properties: News
The Cattaraugus County Legislature's County Operations Committee plans to meet in early January to re-examine policies on auctioning properties seized for back taxes.
Earlier in the fall, County Treasurer Joseph Keller and Daniel Martonis, director of Real Property Tax Services, met with the County Operations Committee to propose that some homes on properties seized by the county be bulldozed because the county would get more money for a vacant lot.
⇧ Sun Sentinel – Man accused of making false insurance claim
…he had made $40,000 in claims. Officials said he changed receipts to make some of his fixing costs to reflect personal purchases, not businesses purchases.
Insurance fraud committed by others nevertheless raises your rates/premiums.
⇧ Brisbane storm: Insurers count cost of hail damage | Business News | Business and Finance News | | The Courier-Mail
THE toll for insurers from Thursday's Brisbane storm is $109 million and rising.
The Insurance Council of Australia at 3pm said 15,060 claims had already been received.
Home and contents damage accounted for 5710 of the claims and motor vehicles another 9350.
The number of claims will rise as people call in, and has already quadrupled since this morning's tally of an estimated $27 million damage bill and 3200 claims.
The site has an interesting video that is not embeddable.
⇧ Climate change: Global weather predicted to become increasingly extreme despite warnings – Environment – The Independent
The image caption says, "Estimated fractional changes, shown as ratios for the period 2080—2099 relative to the period 1986—2005."
Global weather will become increasingly extreme, with the planet facing rising surfacing temperatures, higher sea levels and flash flooding.
⇧ Japan volcano eruption hits flights | theSundaily
Meteorologists warned volcanic stones and ash could fall in a one-kilometre (half-a-mile) radius of the volcano.
⇧ Oil Tanks After OPEC Fails to Cut Production; US Shale Gas Targeted? | naked capitalism
There goes the Texas real-estate boom. North Dakota and Canada will also be hurt.
The ripple effects hit currency markets and, of course, energy stocks. The Wall Street Journal emphasized the potential upside for the US economy, with lower energy prices giving consumers more money to spend elsewhere. Energy importing countries will also benefit. In keeping with our reaction to Saudi's earlier decision to let oil prices slide [ http://www.nakedcapitalism.com/2014/10/s audis-deploy-the-oil-price-weapon-agains t-syria-iran-russia-and-the-us.html ], more and more commentators are seeing the OPEC refusal to support the market as at least in part designed to target the US shale gas industry. despite official denials [ http://www.telegraph.co.uk/finance/newsb ysector/energy/oilandgas/11258509/Opec-r efuses-to-cut-oil-production-prices-slum p-to-five-year-low.html ]. From the From the Financial Times [ http://www.ft.com/intl/cms/s/0/eda2b8a6- 7645-11e4-a777-00144feabdc0.html ]:
"I wouldn't call it a price war, but it's a very aggressive test for US shale," said Jamie Webster, oil analyst at IHS Energy, a consultancy. "It's a new gambit for Opec to try."…
Amrita Sen, oil analyst at Energy Aspects said: "This is becoming a battle of [who has] the deep pockets and survival of the fittest."…
Although some analysts had thought the cartel may surprise observers with an output cut, others argued that driving prices higher would only encourage US shale drillers and other high-cost producers. All the while, Opec would only continue to lose market share, they said.
"Those producers that have been hardest hit by the oil price drop have been persuaded […] that the only way to counter the surge in US shale oil production is to allow lower prices to pare back supply over time," said Bill Farren-Pri ce, head of Petroleum Policy Intelligence.
We think the Saudis are killing many birds with one stone: Russia, Iran, Syria by way of Russia and Iran, plus punishing the US for not attacking Assad directly.
However, this also harms alternative energy development even while it slows dirtier oil. So in that way, it cuts two ways.
⇧ China has 'wasted' $6.8tn in investment, warn Beijing researchers – FT.com
What a mess!
China is this year on track to grow at its slowest annual pace since 1990, and the report highlights growing concern in the Chinese leadership about the potential economic and social consequences if wasteful investment leaves projects abandoned and bad loans overloading the financial system.
The bulk of wasted investment went directly into industries such as steel and automobile production that received the most support from the government following the 2008 global crisis, according to the report.
Mr Xu and Ms Wang said ultra-loose monetary policy, little or no oversight over government investment plans and distorted incentive structures for officials were largely to blame for the waste.
"Investment efficiency has fallen dramatically [in recent years]," they say in the report. "It has become far more obvious in the wake of the global financial crisis and has caused a lot of over-investment and waste."
Beijing has in recent years sought to move from its investment-heavy, credit-dependent growth model to one that relies more on consumption and services.
But slipping growth rates this year have seen it fall back on loose credit and government-mandated infrastructure investment to prop up the economy and ensure steadily rising employment.
Much of the investment in recent years has been funnelled into real estate projects, but apartment sales and prices have fallen this year, leading to fears of an impending property crash. Most of the industries that feed the real estate sector, such as steel, glass and cement, are awash with overcapacity and have been hit hard by the property downturn.
Misallocation of capital and poor investment decisions are not the only explanation for the enormous waste in China's economy. A significant portion of China's post-crisis stimulus binge was simply stolen by Communist Party officials with direct responsibility for boosting growth through investment, according to separate estimates by Chinese and overseas economists.
For the past two years, President Xi Jinping has been engaged in a wide-ranging anti-corruption inquiry that has engulfed thousands of officials.
Jonathan Anderson, founder of Emerging Advisors Group, the consultancy, estimates that about $1tn has gone missing in China in the past half-decade as a result of weak oversight and the enormous opportunity provided by the investment boom. "That translates into maybe 5 per cent of GDP per year worth of skimming off the top," he says.
"Think about it: every local government wakes up one morning in 2009 and finds that the central authorities have lifted every single form of credit restriction in the economy," he says. "With no one watching the till, it would be awfully hard to resist the temptation to sidetrack the funds, squirrelling them away in related official accounts or paying them out through padded contracts to other connected suppliers and friends."
⇧ A Guide to Investing in Real Estate – US News
"Be prepared. Plan for the best, but prepare for the worst," Alvarez advises. "Insurance is true asset protection. Investors should insure themselves as if the world is coming to destroy them and insurance is their only defense."
⇧ Oil: The Good, the Better, the Ugly – MoneyBeat – WSJ
Current lower gasoline prices relative to the average of the past three years will in effect put an extra $108 billion into U.S. consumers' pockets, according to estimates by James Hamilton at the University of California, San Diego. That's almost a 0.8% bump in disposable personal income.
Of course, what American consumers gain from, American producers lose out on. And with energy imports making up just 15% or so of U.S. consumption, according to the World Bank, the net effect on the economy would be slightly more modest.
The entire article is worth the read.
⇧ The End of Artificially Low Rates – NYTimes.com
For years those of us pointing to low interest rates as evidence that fiscal scolds were all wrong met, over and over again, one stock answer: those low rates were meaningless, because the Fed was buying up government bonds and keeping rates artificially low. There was a big logical problem with that story: How can the Fed do that without causing inflation? There was also the fact that rates failed to spike when the Fed temporarily ended QE in 2011 — one big thing I got right and Bill Gross got wrong. But the story line has persisted nonetheless.
So the Fed ended QE last month. And today long-term rates settled at 2.18 percent, far below historical norms.
Maybe rates weren't artificially low, after all?
The taper started after the Fed had bailed out the banks (kicked the can while the housing market came back somewhat), and price inflation hadn't/hasn't occurred because the banks didn't move the money into Main Street lending.
Meanwhile, fiscal stimulus was anemic.
Unfortunately, the US is facing falling fuel-prices for the wrong reason. For that and other reasons, the Fed will be face by further stagnation while the Congress will be run by fiscal hawks who will make the exact wrong choices: try to cut taxes while also cutting spending, actually in order to cut spending, to further privatize so their crony buddies will reap more while the harvest will shrink across-the-board. It's called being shortsighted and greedy.
If we don't see another dip (recession) as a result, it will be quite a surprised.
If we're going to mistakenly stay with the current Federal Reserve System where the government issues bonds, we'll need post-Keynesians calling the shots if we are to make real headway.
⇧ Labour shares, inequality, and the relative price of capital | VOX, CEPR's Policy Portal
At the risk of posting the obvious: Karabarbounis and Neiman"
Workers in our economy consume their wages each period, whereas capitalists own the entire capital stock and make dynamically optimal consumption and saving decisions.
⇧ Magical thinking at the G20
Frances Coppola schools the G20:
From the G20 Leaders' communique:
The global economy is being held back by a shortfall in demand…
Hallelujah. They recognise the fundamental problem with the world economy.
But wait. The second half of the same sentence runs:
…while addressing supply constraints is key to lifting potential growth.
Oh dear. [hereafter, she says how things really work versus the G20's utter confusion] A demand shortfall means that there is TOO MUCH supply relative to demand. Plenty of goods and services are being produced, but people aren't buying them.
… real wages are stagnant or falling everywhere — and the G20 has nothing to say about this except to hope that supply-side reforms and infrastructure investment will eventually lead to higher wages and therefore higher spending. This is the economic equivalent of sacrificing virgins to the gods in the hope that this will restore the Nile floods.
We take exception, however, to Frances' apparent definition of infrastructure, as we include schools and training facilities, and the like, and the processes/personnel, etc., that run them (a rather broad definition).
Otherwise, Frances' article is brilliant, as usual.
⇧ mainly macro: Do we get the leaders our media deserves?
This is our favorite Simon Wren-Lewis article yet.
One of the many things I enjoyed about the Resolution Foundation meeting I talked about here was meeting for the first time people who I have long enjoyed reading, including fellow bloggers Frances Coppola and Steven Toft (Flip Chart Rick), recent blogger Giles Wilkes and Guardian journalist Polly Toynbee. On the day of the meeting Polly Toynbee wrote a nice column on the attempts by the right wing press to portray Labour as elitist and/or too intellectual and therefore 'out of touch' with the concerns of ordinary people. That column has a sentence that is so apt I'll save it for the end of this post.
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.