Linking ≠ endorsement.
⇧ Amid Seattle's Affluence, Homelessness Also Flourishes : NPR
So why are things getting worse in Seattle when they aren't nationally?
One reason, according to Matulionis: The 10-year plan didn't focus enough on root causes, like the lack of affordable housing in this booming metropolis.
⇧ Munich Re America: Big U.S. Winter Storms – Comparably Lower Insured Loss Estimates; Record Heat and Drought Continue in the West | Business Wire
The cold, snowy US winter of 2014/2015 caused preliminary direct economic losses of US$ 3.2bn and industry-wide insured losses of US$ 2.3bn, compared with US$ 4.4bn direct economic losses and US$ 2.5bn insured losses for the 2013/2014 winter season. The 2014/2015 aggregated winter storm loss data is based on preliminary information from the Munich Re NatCatSERVICE and Property Claim Services (PCS), reflecting the 11 major winter storms identified by PCS.
⇧ Judge Rules $20 Million Insurance Fraud Case Will Move to Trial | Doylestown-Buckingham-New Britain, PA Patch
A District Judge ruled Wednesday that there is enough evidence for a $20 million insurance fraud case involving a prominent Bucks County family to move to trial, according to the Bucks County Courier Times.
⇧ Federal Register | Proposed Collection; Comment for Electronic Filing of Employment Tax Family (94x) Returns
Do you file any employment tax returns? The IRS wants comments.
What do you, your business, or agency see as the main advantages and disadvantages to employers to e-file employment tax returns through a free online filing option offered through a public-private partnership; of the free online filing capability?
⇧ 1 in 5 Employers Has Unknowingly Asked an Illegal Interview Question, CareerBuilder Survey Finds – CareerBuilder
The following questions are illegal for hiring managers to ask; yet, when asked if they knew if these questions were illegal, at least one third of employers indicated they didn't know:
⇧ Bell and Smith Top Allstate's Stormiest Counties List – MarketWatch
Allstate has tallied the top 25 Texas counties affected by severe weather; identifying areas with highest frequencies of wind and hail, and lightning related homeowner property damage claims from 2010 through 2014.
⇧ Insurer Group: Most Midwesterners not Prepared for Natural Disasters
One of the keys to being prepared is having a disaster response plan that includes an emergency supply kit with food, water, first aid, as well as safely storing important documents and having a family communications plan with agreed upon meeting places. …only 16 percent of Midwesterners have taken these steps….
⇧ U.S. forecaster ups El Nino chance to 70 percent for Northern Hemisphere summer | Reuters
A U.S. government weather forecaster on Thursday raised its forecast for the chance of El Nino conditions during the Northern Hemisphere summer to 70 percent, up from a 60 percent chance last month, with a 60 percent chance it lasts through autumn.
⇧ Agriculture and Food | Sierra Club
The Sierra Club supports agricultural policies and practices designed to provide abundant healthy food, fiber and other services for all communities while maintaining the fertility of the soil and protecting the Earth's climate and the native diversity of plants and animals. …
… Common current practices such as large scale mono cropping and concentrated animal feeding systems consume disproportionate amounts of fossil fuels, pollute our water and air, deplete the soil, diminish biodiversity, and emit greenhouse gases. Such practices are neither economically, ecologically nor socially sustainable.
Therefore, we advocate an expeditious transition to farming methods that maximize both cultural and biological diversity, benefit local communities, improve rural livelihoods and preserve natural resources.
The goals stated in the linked article are very detailed and well-thought-out.
⇧ IMF Warns (Again) of Growing Shadow-Banking Risks – Real Time Economics – WSJ
In the wake of the financial crisis, regulators around the world tightened oversight of the traditional banking sector. That bolstered the safety of one part of the financial sector.
But lending—and risks—have since migrated to the shadow-banking industry. The sector, which includes mutual funds, exchange-traded funds, hedge funds and other institutional investors, has ballooned since the financial crisis. It now has over $75 trillion in assets.
It needs to be just as regulated as the non-shadow sector. In other words, there should be no shadow banking.
⇧ ACEMAXX-ANALYTICS: Interview: Prof. Barry Eichengreen, University of California, Berkeley
What, if at all possible, will the experience of the Great Recession change regarding economic thinking in the future?
The fact is that economic thinking changes only very slowly. Senior professors of economics, with tenure, are set in their ways. They've been at it too long to change how they think even in the face of evidence incompatible with their theories. Better to disregard the evidence in that case, the thinking goes.
The field changes as students graduate and new scholars influenced by the Great Recession, by historical evidence and by Big Data begin to repopulate the field, making economics a more fundamentally empirical and historical discipline. I see at least some signs that this is beginning to happen.
Exactly! That's where we were before the Great Recession. That's why we called it before we heard anyone else do so, not that there weren't some.
⇧ The Eurozone's False Recovery by Philippe Legrain – Project Syndicate
At first glance, the eurozone economy seems like it might finally be on the mend. Stock markets are rallying. Consumer confidence has picked up. Lower oil prices, a cheaper euro, and quantitative easing by the European Central Bank are all expected to boost growth. ECB President Mario Draghi claims that "a sustained recovery is taking hold," while policymakers in Berlin and Brussels latch onto signs of life in Spain and Ireland as proof that their bitter prescription of fiscal consolidation and structural reforms worked as advertised.
On closer inspection, however, it becomes clear that the improvement is modest, probably temporary, and not the result of the policies promoted by Germany. …
… To overcome its balance-sheet recession, the eurozone needs to clean up its banks, reduce the crushing overhang of mostly private debt, redress the huge shortfall in investment, eliminate barriers to enterprise, and tackle the deflationary drag of German mercantilism. And that is why the eurozone will not escape its problems anytime soon.
10 key drivers that will shape China's cities and their real estate markets over the next decade [elaboration removed:]
1. Slower, more sustainable economic growth
2. Moving up the value chain
3. The rise of the consumer class
4. The digital revolution
5. Urbanisation continues
6. City competition
7. Growth of domestic private enterprises
8. Deregulation and reforms
9. Anti-corruption measures
10. A sustainable future?
Click through for details.
⇧ How did the U.S. economy perform under the pre-Fed gold standard? | FRED Blog
…beyond the volatility in the rate of inflation, the pre-Fed era was marked by several recessions, as well as serious banking panics and other financial crises. Thus, the historical evidence indicates that neither a gold standard nor the absence of a central bank guarantees economic or financial stability.
⇧ Dimon warns of volatility in next crisis – YouTube
Let's hope that the taxpayers won't be having to pick up the tab. Let's hope that FDIC will cover all deposits backed by the full faith and credit of the US.
Jonathan Guthrie and Michael Mackenzie on JPMorgan Chase chief Jamie Dimon's complaint that regulators have hamstrung US banks.
⇧ California's New Era of Heat Destroys All Previous Records – Bloomberg Business
What's happening in California right now is shattering modern temperature measurements—as well as tree-ring records that stretch back more than 1,000 years. It's no longer just a record-hot month or a record-hot year that California faces. It's a stack of broken records leading to the worst drought that's ever beset the Golden State.
California has seen droughts before with less rainfall, but it's the heat that sets this one apart. Higher temperatures increase evaporation from the soil and help deplete reservoirs and groundwater. The reservoirs are already almost half empty this year, and gone is the snowpack that would normally replenish lakes and farmlands well into June.
El Nino could break it up, but patterns are going to defy modeling going forward if we don't stop burning carbon or don't sequester it if we do continue burning it.
⇧ Fairdale, Illinois, Tornado Receives Preliminary EF4 Rating, National Weather Service Says – weather.com
The tornado that tore through northern Illinois Thursday night has received a preliminary rating of EF4 based on an initial ground survey of the most heavily damaged area, the National Weather Service reported Friday evening. "Based on early findings, the tornado that tracked from near Rochelle to near Belvidere and impacted the community of Fairdale appears to have been a single long track tornado," notes an NWS statement. "An aerial survey will be conducted tomorrow, weather permitting, to confirm a final rating."
The EF or Enhanced Fujita Tornado Intentisy Scale measures a tornado's impact. The scale goes from 0 to 5, with 5 being a storm that causes incredible damage. An EF4 tornado brings with it windspeeds of 166 to 200 mph and causes "devastating" damage. Estimated peak windspeeds of Thursday's tornado reached 180 to 200 mph. (For more on the EF Scale, here is a detailed article.)
⇧ The robots aren't threatening your job – The Washington Post
It won't happen right away for everyone, but Catherine Rampell simply isn't fathoming the exponential gains that are coming in artificial intelligence.
As our readers know, we are not fearmongers on this issue but have simply been calling for society to get ready to deal with the need for a guaranteed income at a high quality of life for everyone on the planet.
Anyone having to work for compensation is simply going to be phased out of such work-cum-compensation if the intelligent people of the world will just make it happen.
The super wealthy will have to put egos aside. The cooperative, compassionate, sympathetic, and empathic will inherit and rule the Earth. If that's not optimistic, we don't know what is.
⇧ Bernanke-Summers Debate II: Savings Glut, Investment Shortfall, Or Monty Python? – Forbes
Oh, this is what we've been waiting for. Steve Keen weighs in on the Ben Bernanke, Larry Summers, Paul Krugman, et al., debate.
Figure 4: An empirical relationship neither Bernanke nor Summers see
I'll explain this "something completely different", and why Bernanke and Summers and all the graduates of Stanley Fisher's class 14462 can't see it, in my next post.
We mentioned that given the choice between the two sides on this, we lean to the Summers side. However, if you read this blog with any regularity, you know that we don't think that those are the only choices. Steve certainly doesn't either.
We are much more in line with Steve Keen's economics, which is MMT (Modern Money Theory).
However, we go much further than MMT, as you've seen via the Monetary-and-Banking-Reform Platform for The United States: http://propertypak.com/introduction-home /articles/monetary-and-banking-reform-p latform-for-the-united-states/
Now, if you hate spoilers, don't read the next line because we're going to tell you what that other series is in Steve Keen's chart (shown above).
The causal role of the change in debt in aggregate demand identified in this paper implies that there should be a strong empirical relationship between change in debt and macroeconomic data such as the unemployment rate—in contrast to the Loanable-Funds-based presumption that "Absent implausibly large differences in marginal spending propensities among the groups … pure redistributions should have no significant macro-economic effects…" (Bernanke 2000, p. 24). This Loanable Funds presumption is strongly rejected by the data. As Figure 16 shows, the correlation of the change in debt times velocity (divided by GDP) with the level of unemployment since 1990 is —0.92. See: http://www.debtdeflation.com /blogs/2014/02/02/modeling-financial-ins tability/
Focus in on "pure redistributions should have no significant macro-economic effects." Then focus in on "debt times velocity (divided by GDP)."
We have debt (or reserves). What we're missing is velocity (funds moving in the real economy).
That's what we've been saying on this blog all along.
Steve Keen's plan is a debt jubilee, which we favor, though not exactly as Steve wants it, and public spending to take up slack left by private deleveraging, which we also support, though not via issuing government bonds.
⇧ ULI Annual Report | Advising Communities in Need
Established in January 2013, the Cook County Land Bank Authority (CCLBA) is based closely on recommendations made by ULI Chicago on how best to redevelop the region's inventory of vacant land and blighted properties resulting from the 2008 foreclosure crisis.
⇧ China's Slow-Growth Opportunity by Yu Yongding – Project Syndicate
After four disappointing years, Chinese economists have realized that slowing GDP growth — from a post-crisis peak of 12.8% in 2010 to about 7% today — is mainly structural, rather than cyclical. In other words, China's potential growth rate has settled onto a significantly lower plateau. While the country should be able to avoid a hard landing, it can expect annual growth to remain at 6-7% over the next decade.
We seriously doubt that it's a plateau and that China can expect annual growth to remain at 6-7% over the next decade. We think they'll be extremely fortunate not to fall below 5% during the next three years.
A new plateau, barring a war or major monetary and banking reforms not of the Austrian School type, will likely be 3.5% on the high side.
Miracles do happen though.
The balance of the article isn't bad. He does make a case. We just don't see China being able to get a handle on it well enough to stay were it is on growth for 10 years. We wouldn't mind being pleasantly surprised though.
⇧ Older workers: What age means for the labour force
"…economies that have a labour force that is older on average are likely to have accelerations in growth. Older workers are seen as giving a boost to an economy because of their greater work experience and that might help them to judge more accurately for instance whether a new technology will be beneficial to work processes. But, when the labour force itself is rapidly ageing, there might be skill mismatches that cost more to deal with, as companies need to shift the workplace to the needs of older workers."
In general, older workers may be inclined to adopt new technologies given that technological progress often works in their favour, letting them replace physically demanding jobs with cognitive tasks, and they may be better suited to these than younger colleagues.
So how will countries offset their ageing supply of labour? Ekkehard says older workers should be enticed to stay in jobs.
⇧ Event Highlight: The Case Against Secular Stagnation – YouTube
These fellows all came down on Bernanke's side, but David Stockton did the best job of qualifying his statement.
Four PIIE experts say that, contrary to the arguments of some experts, the world economy is not afflicted by "secular stagnation," and that significant untapped economic potential in Europe and China combined with better fiscal policies can spur economic growth.
You see, we think they've missed Larry Summers' position. Larry hasn't been saying that there isn't anything that can be done. He's been saying that unless we take steps, we may be looking at being stuck much longer than otherwise. He'd rather take the steps than simply gamble that the markets are all self-healing quickly enough.
⇧ Teaching real-world economics to undergraduates – YouTube
FT's Mark Vandevelde talks to Ferdinando Giugliano about how some universities have started to teach economics courses based on lessons learnt after the financial crisis.
⇧ LeFrak Celebrates Major Milestone in Ongoing Capital Improvement Program – YouTube
The West Courtyard facility, located at the corner of Junction Boulevard and 57th Ave., is officially opened.
⇧ Sacramento City Council approves urban farm ordinance | The Sacramento Bee The Sacramento Bee
NIMBY or go for it?
In a 6-1 vote, the city effectively opened the door to minifarms on private properties and in vacant lots that would be able to sell produce out of urban farm stands, despite reservations from some council members about urban beekeeping and how urban agriculture may affect those who live close to the new farms.
Go for it.
⇧ The Pacific Ocean may have entered a new warm phase — and the consequences could be dramatic – The Washington Post
The picture emerging is one where the positive phase of the PDO from 1976 to 1998 enhanced the surface warming somewhat by reducing the amount of heat sequestered by the deep ocean, while the negative phase of the PDO is one where more heat gets deposited at greater depths, contributing to the overall warming of the oceans but cooling the surface somewhat.
The alleged "pause," say Trenberth and Fasullo, coincided with a negative phase of the PDO in the 2000s.
That's why Trenberth has further argued that the new apparent shift back into the PDO's positive phase may mark the beginning of a temperature ramp-up.
⇧ Factbox: State of Blackstone's real estate empire | Reuters
Blackstone Group LP is the largest private real estate investment business in the world, with funds focused on opportunistic transactions, debt, core assets and a publicly traded real estate investment trust, Blackstone Mortgage Trust.
Blackstone and Wells Fargo & Co confirmed on Friday that they were buying most of the assets of GE Capital Real Estate for about $23 billion.
⇧ Real estate may be cheap, but mortgages are very hard to come by – Fortune
Obviously, we don't want to return to the lax standards of the housing bubble, nor should taxpayers be put on the hook for poorly underwritten loans. But we should be able to find a happy medium between the reckless housing bubble years and today, when few but the most creditworthy can secure a home loan.
Please note that this article didn't address the lack of affordable housing and high-enough wages.
⇧ New report: D-FW housing market gets bad marks for soaring prices | Dallas Morning News
Speaking of affordability:
"The big negative is house price growth vs. income growth.
"These markets are becoming unaffordable."
⇧ Martinez Signs Civil Asset Forfeiture Reform; Read Her Letter On The Issue | KRWG
Owners of real property sometimes have their real estate taken from them without due process of law, which is a violation of the 4th Amendment of the US Constitution. We back an end to such unconstitutional takings.
Governor Susana Martinez has signed legislation that reforms civil asset forfeiture in New Mexico.
⇧ A historical look at deflation | VOX, CEPR's Policy Portal
Concerns about deflation — falling prices of goods and services — have loomed large in recent policy discussions (see e.g. Cochrane 2014, Muellbauer 2014, The Economist 2015). The debate is shaped by the deep-seated view that deflation, regardless of context, is an economic pathology that stands in the way of any sustainable and strong expansion.
However, the almost reflexive association between deflation and economic weakness is not so obvious. Seen as a symptom, deflation need not only arise from an aggregate demand shortfall, but also from greater supply, which would boost output. And seen as a cause, while it may be damaging — by pushing up real wages and unemployment, raising the real value of debt (debt deflation), or inducing consumers to delay spending — it may also be beneficial, by raising real incomes and wealth and making export goods more competitive. The cost of deflation is ultimately an empirical question.
We agree. That's why we, along with many others, referred to good versus bad deflations (types by areas and economic sectors, etc.).
⇧ How the End of GE Capital Also Kills the Core Conservative Talking Point About Dodd-Frank | Next New Deal
Good question: Mike Konczal:
A very influential theory of the financial crisis is that there were financial firms acting just like banks but without the normal safeguards that traditionally went with banks. There was no public source of liquidity or backstops through the FDIC or the Federal Reserve, a public good capable of ending self-fulfilling panics. There was no mechanism to wind down the firms and impose losses outside of the bankruptcy code. There weren't the normal capital requirements or consumer protections that went with the traditional commercial banking sector.
Though we now call this regulatory arbitrage, at the time it was seen as innovation. …
Conservatives…argue that SIFI status is a de facto permanent bailout and claim that firms will demand to be designated as SIFIs because it means they will have a favored status. This status gives them easy crony relationships with regulators and allow them to borrow cheaply in the credit markets.
… ask any financial press reporter or analyst, and they'll tell you that GE is very sincere when it says it doesn't want to be designated as risky anymore, and is willing to take appropriate measures to remove the designation.
If that's the case, what's left of the GOP argument?
⇧ Multifamily Keeps the Swagger – Daily News Article – GlobeSt.com
"Renter growth remains at historic highs and for the fourth time in the last five years, we saw an increase of more than one million new renters."
Over the past decade, in fact, the number of renters increased by more than eight million, the highest such figure on record dating back to the 1960s.
⇧ Administration Touts Export-Driven Jobs in Quest for Support on Trade – Real Time Economics – WSJ
Some 11.7 million jobs were supported by exports last year, with almost 10% of those jobs coming from Texas, according to a report released by the Obama administration on Thursday.
The state-by-state look at the benefits of exports was another blast in the administration's concerted campaign this week to build support for its trade agenda as Congress begins to debate whether to grant President Barack Obama expanded trade promotion authority in coming weeks.
The fast track legislation faces opposition from many Democrats, labor unions and environmental groups.
Texas has been fracking. There will be a huge shakeout if the current trend continues.
Also, this article didn't mention the corporate-centered arbitration procedures that most people think are in the planned agreement. Such procedures are a terrible development for sovereign nations protecting their environment and economy.
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.