Linking ≠ endorsement.
⇧ Carney's City regulation — a tipping point? – YouTube
Bank of England governor Mark Carney has revealed plans to extend penalties for market abuse. Financial editor Patrick Jenkins asks financial regulation correspondent Caroline Binham about the planned sanctions and whether other countries will follow the UK's lead.
The proof is in the pudding.
⇧ Choosing a Good Home Inspector – YouTube
Finding the right home inspector for your property takes time. A proper home inspection requires an inspector with the right knowledge for the property in question.
When starting the search for a good home inspector, you'll want to…
⇧ Public debate could be key to strong economy | EurekAlert! Science News
It's nice to see a study's results corroborate our beliefs.
As it turns out, people who speak their minds loudly and often could be responsible for economic prosperity.
The system that also listens is critical.
⇧ Optimistic Thoughts about Productivity Growth and Secular Stagnation | Uneasy Money
…if the anomalous decline in productivity in the expansion following the 2008-09 downturn has been caused, even if only in part, by a loss of skills by workers who were induced to change jobs or occupations or who experienced long periods of unemployment, that decline is unlikely to be permanent, so that the rate of productivity growth and the rate of growth in real GDP can be expected to pick up somewhat over time. Stagnation may therefore not be as long-lasting as some people fear.
Let's hope so. Let's also hope that we get a guaranteed-living-minimum income for everyone as technology progresses and replaces all human labor.
⇧ Is the Icelandic response to financial crisis generalizable?
Overall, the experience from Iceland, upon closer inspection, is not very easily generalizable. I suspect it receives much of its praise for reasons of mood affiliation — what could sound tougher than putting bankers in jail?
We don't think that most people are looking at the specifics of what Iceland did as being generalizable so much as that Iceland didn't rollover and play dead at the complete expense of its entire citizenry, who weren't responsible in the first place for the excesses of a handful of top banksters operating out of Iceland. The way to not rollover will vary from nation to nation, but not rolling over is, itself, generalizable.
⇧ Tools for dampening housing cycles | VOX, CEPR's Policy Portal
Kenneth N. Kuttner and Ilhyock Shim:
…interesting finding of the Kuttner-Shim research is that changes in the maximum debt-service-to-income ratio appear to be more effective than adjustments to the maximum loan-to-value ratio. One possible explanation is that even with an unchanged loan-to-value ratio, house price appreciation enables a larger volume of borrowing. Thus, loan-to-value requirements are least effective when they are most needed. Debt-service-to-income limits, on the other hand, are unaffected by house price appreciation (although falling interest rates make them less binding). For this reason, capping the debt-service-to-income ratio may be the tool of choice for slowing credit growth during housing booms.
⇧ The Power of Focused Intensity in Real Estate Investing
…let's assume you purchased nine identical properties instead and you take the overall positive cashflow from your entire portfolio and apply it towards the principle on one of the properties while making regular payments on the others. The entire portfolio becomes free and clear in 145 months.
⇧ Finance Minister Schäuble and Merkel Tussle Over Grexit – SPIEGEL ONLINE
We have repeatedly said that Germany is the problem concerning Greece and that Angela Merkel isn't standing up enough to the task of building Europe.
This article makes clear that Germany's Finance Minister, Wolfgang Schäuble, is the main obstacle.
He doesn't understand basic economics and neither do his followers. They are holding things back.
We aren't saying that Ms. Merkel understands economics, but she's apparently somewhat open to other than Wolfgang Schäuble's ideology.
Merkel would like Greece to remain in the euro. Not necessarily at any cost, but she's prepared to pay a high price. Schäuble is not. He is of the opinion that a Greek withdrawal from the euro zone is in Europe's best interests.
He is completely wrong. Europe's best interests would be served by cutting a deal with Greece where Greece would have its humanitarian crisis end overnight. Anyone who truly knows how money is created and what drives overheating price-inflation could pull it off, and anyone with sufficient compassion, wisdom, and power would make it happen.
⇧ [Where's the money going to come from to invest?] 12 everyday items that pay for themselves 10 times over
Depending upon your existing lifestyle, these ideas might help.
When you're trying to live a frugal lifestyle and save money, it can seem counterintuitive to buy anything new.
Yet, that's exactly what many money-conscious people do.
The difference is, those who have mastered the art of frugality don't just buy things; they invest in them. And they don't just invest in "stuff;" they invest in services and tools that actually save them money over time.
⇧ Here's the Research That Could Push Back a Fed September Rate Hike – Bloomberg Business
Fed officials in March estimated this "natural rate" of unemployment at 5 percent to 5.2 percent. Unemployment stood at 5.5 percent in May. A new paper by Fed board staff shakes up this view by suggesting the number could be as low as 4.3 percent.
One standout feature of the recovery is that labor's share of the money made from production and imports is still moving sideways around the lowest levels in records dating to 1947.
"It could mean that one percentage point of tightening per year is too steep in a world where" the rate of full employment is 4.25 percent, Gapen said.
We've been saying for years now that 5.5 is too high, just as we've said that 2% inflation is too low to worry about while the unemployment rate is so high relative to real full-employment.
We think that the Fed should let employment go as low as it wants to and simply watch out for inflation climbing too much too quickly. Only then should the Fed tap on the brakes.
It's a new low-wage world right now, even with higher minimum-wage movements out there.
Globalization of labor will continue. Until the lowest paid people in the world are brought up to first-world standards, that process will continue until there is no "first-world."
⇧ Another Recession on the Way? Say It Ain't So | Commercial Observer
"We are going to replicate the past, because the business we are in has not fundamentally changed, despite Elizabeth Warren's best efforts."
Well, the questions have always been how deep will the next downturn be and exactly what measures will be brought to bear to counteract it at the time. Will we repeat the austerity and too-skimpy stimulus, or will we do a proper Keynesian job of it and ignore the laissez-faire crowd, as we should have done in 2008-9?
⇧ Give to Those at the Bottom? Sure, as Long as They Stay There – NYTimes.com
The authors then tested the proposition on a real-world policy example — the minimum wage — using their own survey data. They found that, while raising the minimum wage was enormously popular over all, support for the increase dropped among those making only slightly more than the minimum. "People who make just above the minimum wage are surprisingly not in favor of raising it," Mr. Norton said.
Channeling the thoughts of those who might support boosting the minimum wage modestly but oppose raising it to $15 per hour, he added: "If the increase brings low-wage workers close to my wage, I'm not sure I'm in favor. But if I'm sure they're not going to leapfrog me, then it's fine to give them more."
They can't leapfrog. So, what happens to those who had earned raises up from the minimum wage? They'll get raises to keep them above the minimum. The spread might not be quite the same percentage though.
The minimum wage should be indexed to price inflation to be done with the issue.
⇧ How to Know When to Evict Your Problem Tenant
Pro Tip: Experience teaches that many repayment plans are slippery slopes. Many times if a renter or tenant-buyer needs to create a repayment plan, it is only a matter of time before this resident defaults completely and must move out. In contrast, realize that bad things happen to good people; if your renters start showing effort and keep their repayment plan current, this is a good sign they are serious about keeping the home. While we almost never want an eviction for any of our residents, it is important to act quickly and take immediate action if/when a resident misses his/her payments or simply defaults.
⇧ Bond selloff a wild card that could delay Fed rate hike – Yahoo Finance
…U.S. productivity has mysteriously sagged and wages have not climbed as expected, leaving the economy fragile. Meanwhile, Fed Governor Daniel Tarullo has emphasized the central bank's long-simmering concern that markets may not be liquid enough to withstand a volatile selloff.
⇧ Our Hidden Government Benefits – NYTimes.com
It turned out that 94 percent of those who had denied using programs had benefited from at least one; the average respondent had used four.
Americans often fail to recognize government's role in society, even if they have experienced it in their own lives. That is because so much of what government does today is largely invisible.
Invisible is a polite way of saying that many people simply lack the knowledge.
⇧ Is the UK's austerity myth about to crumble? : Business for Scotland.
So where did this obsession for austerity come from? Keynesianism used to dominate economic thinking and, in a nutshell, it supported increased government spend in time of recession to stimulate growth. This was most aptly characterised in Roosevelt's New deal that is credited with America's longer term recovery from the Great Depression. His focus on the "3 Rs": Relief, Recovery, and Reform contrast starkly with the UK governments 3 C's: Cuts, Caution on investment and Carelessness in regulation. Thatcher certainly raged against public sector waste and I admit it there was low efficiency in increased spend when the public sector was as bloated and badly managed as it was in the 70's. Different era, different public sector.
So summing up, 66% of the UK's leading economists believe that austerity has actually harmed the economy, most of the world's leading economists think austerity is daft. The OECD and the IMF are calling for investment to grow and the original report that suggested austerity was required was just wrong. The UK, however, is committed to austerity and are seeing deflation and low growth, including the biggest slump in service sector performance since 2011 and a widening trade deficit due to the comparative strength of the pound. Will the Tories now reign back on austerity claiming they have sorted the economy so no longer need to cut so deep? If not, then it is Cameron, Osborne and UK treasury that will be left sitting on the lunatic fringe of global economic policy thinking.
Hopefully the final nail will be driven very soon into the coffin lid of austerity.
⇧ Osborne's Balanced Budget Proposal Is A Very Bad Idea
Government can easily (and relatively cheaply compared to households and private businesses who have to borrow at a premium) spend more than its current income. And the burden of being the major (if not sole) infrastructure and public goods provider means that sometimes (for example, when infrastructure is crumbling) major investment is necessary to support growth irrespective of current fiscal revenues. (Remember that the deficit is paid back with future tax revenues which tend to be larger in absolute terms due to economic growth, not current ones, so comparing today's deficit to today's tax revenue is a rather distorted picture).
The key restraint is the market itself, and it is rather shameful that the right neglects this. Markets provide information to show how much slack there is in the economy, and the government's capacity to deficit spend. The most important question is the affordability of government borrowing.
All of that is correct if and only if one assumes a bond-financed currency and government budget. If one switches to a non-bond-financed currency, then the constraints mentioned will not apply. The only real issue will be matching monetary supply to real productivity (including projected).
In the US, that would mean replacing the Federal Reserve System as we know it.
⇧ Why Greece Should Reject the Latest Offer From Its Creditors | Foreign Policy
We agree with the following, which echoes much of what we've been writing for many months now. Philippe Legrain:
They aren't even that bothered about whether the Greek government pays back the money they forced European taxpayers to lend to it, ostensibly out of solidarity, but actually to bail out French and German banks and investors. German Chancellor Angela Merkel and other eurozone policymakers just don't want to admit that they made a terrible mistake in 2010 and have lied about it since. So they want to be seen as standing up for eurozone taxpayers' interests, and they want Greeks to put up and shut up until Merkel and her minions are comfortably in retirement, and it is someone else's problem.
… The sudden focus on reform is primarily about forcing Tsipras to break the promises that got him elected in January.
… The Greek government has now put forward sensible plans for restructuring its debts. Unless its creditors are willing to start negotiating meaningful debt relief, Tsipras should reject any deal on offer.
Merkel ought to be as magnanimous with Greece as the United States was with post-Nazi Germany, when Washington forgave half of the West German government's debts in 1953. But if eurozone authorities won't be reasonable, unilateral default — and even euro exit — is preferable to debt bondage.
We hope Merkel will finally stand up and demand German reforms to bring it into at least 1930's economics rather than be stuck in something that even Adam Smith would call goofy.
⇧ A Greek Suicide? by Anatole Kaletsky – Project Syndicate
On January 22, the ECB took decisive action to protect the eurozone from a possible Greek default. By announcing a huge program of bond purchases, much bigger relative to the eurozone bond market than the quantitative easing implemented in the United States, Britain, or Japan, ECB President Mario Draghi erected the impenetrable firewall that had long been needed to protect the monetary Union from a Lehman-style financial meltdown.
The ECB's newfound ability to print money, essentially without limit, to support both banks and governments has reduced Greek contagion to insignificance. …
Unfortunately for Greece, this has been lost on the Tsipras government. Greek politicians who still see the threat of financial contagion as their trump card should note the coincidence of the Greek election and the ECB's bond-buying program and draw the obvious conclusion. The ECB's new policy was designed to protect the euro from the consequences of a Greek exit or default.
The latest Greek negotiating strategy is to demand a ransom to desist threatening suicide. Such blackmail might work for a suicide bomber. But Greece is just holding a gun to its own head — and Europe does not need to care very much if it pulls the trigger.
Greek contagion is not only what Anatole Kaletsky has suggested, though we think he's greatly understated the problem by overstating the impact of QE in the short and medium terms. There is another form of contagion. If Greece defaults and manages to create a currency of any kind that works, which would be doable, then every nation that is even slightly insolvent in the union and/or zone could do likewise. We think Ms. Merkel knows this. Yanis Varoufakis certainly does.
⇧ Government Bonds Selling Quickly as Economies Improve | Economy Watch
…the surge in yields could be too much of a good thing for the economy. An extended rise in bond yields could jeopardize overall economic growth in countries with popular bonds (like the US, Japan, and Germany), as it could lead to higher borrowing costs for consumers and businesses. American borrowers have already seen mortgage rates climb slowly because of this trend. The sell-off has also wiped out positive market returns on bond sales, exposing bond investors to possible capital losses. Typical bond market returns (as opposed to bond yields paid at the end of the bond's life) would include bond trading price gains and interest payments.
Still, according to Patrick Maldari, during a recent interview with the Wall Street Journal, "Yields are not going to rise sharply because it remains to be seen whether jobs growth and higher wages will translate into consumption which has been the missing link in the U.S. economy."
There's still plenty of labor slack. There's a labor-skills mismatch. There are huge student debts. The fracking downturn isn't over yet. However, things have gotten slowly better; but, if the Fed fires too soon and too much, that could easily reverse.
⇧ Try as he may, the Chancellor cannot "eliminate the deficit" — Prime Economics
This chart from HSBC Economist Liz Martins shows why Mr Osborne failed to "slash the deficit." He cut spending and public investment, and the outcome was that tax revenues fell, and the deficit rose. The dotted red line shows what Mr Osborne expected would happen to tax receipts if he cut government spending. The red line shows what actually happened.
The black line shows the steep decline in government expenditure as a percentage of GDP.
Which all goes to show: unlike a household, cutting government investment and spending when the private sector is weak, can increase, not eliminate the deficit.
⇧ California Returns as the Seventh Largest Economy in the World | Economy Watch
The lack of water may drain $2.7 billion from the economy in 2015, while slashing 18,600 jobs. The tech field is a prime factor in California's growth, but agriculture is another reason why California is undergoing an economic boom, despite the severe drought plaguing the state. The other good news is that California's agriculture sector only comprises 2.0 percent of the overall economy, and employment on farms has grown at a steady rate in the past decade.
In addition, a report from the University of the Pacific Center for Business and Policy Research notes that the drought will only have a "mild" impact on the economy, according to Capital Public Radio. The drought had a 0.1 percent impact on the economy in 2014, and the drought is expected to have a 0.25 percent effect on the state's GDP.
What will El Nino do to California's drought?
⇧ California drought: El Niño continues to build, bringing increased chances of a wet winter – ContraCostaTimes.com
To be sure, there are still six months to go before California's winter rainy season starts. And many of those are expected to be brutally dry and hot summer months, with a high risk of fire.
Scientists also caution that promising El Niños have fizzled out in the past — most recently last year.
"El Niño is a bad boy, and sometimes he disappoints," said Bill Patzert, a research scientist and oceanographer at NASA's Jet Propulsion Laboratory in Pasadena. "He could abandon us at the altar. It's not a sure thing at this point.
"But it's probably a good idea to clean out the flood control channels in preparation for January."
… In February 1998, four weeks of storms led to mudslides and widespread flooding that killed 17 people and caused 35 California counties to be declared federal disaster areas from the Napa Valley to the Southern California coast.
"Be careful what you wish for," Patzert said.
⇧ Finland's Problem Is The Same As Greece's; Neither Should Be In The Euro As Krugman Says
If a single currency area is too large then when an asymmetric shock hits then the areas badly affected by it must undergo that internal devaluation given that they can no longer devalue their currency. Both methods end up in the same place. Where labour is now repriced and is competitive again. Devaluing the currency takes a week and no one minds all that much. Internal devaluation takes years and requires substantial unemployment to grind wages down.
Question: Is the US too big for the US dollar? Answer: No. So what's the difference between the euro for those who joined it and the US dollar for US states? Answer: Political and fiscal and banking union. What's missing in the Eurozone? Fiscal union and sufficient democracy at the EU level. The European Central Bank seems to have simply asserted itself via quantitative easing, though it's not really enough. So, rather than kick Greece out, reform the entire zone/union.
⇧ The Education Myth by Ricardo Hausmann – Project Syndicate
In an era characterized by political polarization and policy paralysis, we should celebrate broad agreement on economic strategy wherever we find it. One such area of agreement is the idea that the key to inclusive growth is, as then-British Prime Minister Tony Blair put in his 2001 reelection campaign, "education, education, education." If we broaden access to schools and improve their quality, economic growth will be both substantial and equitable.
As the Italians would say: magari fosse vero. If only it were true.
Wow, we think there's way too much comparing apples and oranges in Ricardo's article. Educational levels have always been historically relative.
More importantly though is that we consider training to be education. If someone receives on-the-job training, great. The trainee has thereby received education. If, however, the exact same training were to occur at a school not a part of the trainee's employment (other than indirectly via taxes or what have you), the exact same education/training would lead to much the same productivity, provided the trainee walks out the school door to a job exactly matching the employer who provided the on-the-job training above.
So, education, education, education is definitely right and so is targeting productivity in that education. They are not mutually exclusive.
Now, we didn't address the "equitable" aspect there, but Ricardo really didn't focus on it in his piece but rather focused on growth regardless of equity.
⇧ A New Birth for Social Democracy by Kemal Dervis – Project Syndicate
…a new social contract is needed to account for the increasingly important role that individual preferences, and individual responsibility, play in today's world. Each citizen should feel empowered, not isolated and abandoned, in the face of globalization and technological transformation.
With this approach, social democracy can again drive progress, instead of being stifled by identity politics and market fundamentalism. That would serve not only the cause of social justice, but also the goal of sustaining the skilled, happy, and healthy workforce that a successful economy requires.
There's no monetary constraint. There's only a lack of vision.
⇧ Assets no more: Steve Roberts linked to company that let properties deteriorate in north St. Louis : Business
Walker Moskop did a good job trying to cover this strange story.
On Tuesday [June 16, 2015] in the lobby of the civil courts building, a sheriff's deputy will read a list of hundreds of properties with delinquent taxes for sale. Some will go to the highest bidder, but others will join the thousands of unwanted properties in the city's land bank.
Forty-four properties on the list are owned by Urban Assets, a dissolved company with an unclear purpose, a fake mailing address and no one to claim it.
⇧ Antique homes face growing threat from hot real estate market – West – The Boston Globe
The William Farris House in Natick was demolished this year. It was built in 1760.
It wasn't torn down for being beyond restoration.
What do you think?
⇧ Discrimination alleged at 13 Seattle rental properties | The Seattle Times
Billy Pettit, senior vice president at Pillar Properties, which manages the Corydon for MGP 44, LLC, disputed the SOCR's findings "based on the fact that the testers did not ask for the same criteria in their apartment search."
"In particular, the testers conveyed differing interests as it pertained to their desired move-in dates," he said in a statement.
"Our company utilizes a robust revenue management software that provides us with a dynamic pricing model based on a number of variables, including lease terms, move in date, availability and asking rates in the local market. In the case in question, the leasing specialist quoted different prices due to the fact that the testers were asking for different criteria."
Pettit said the Corydon settled with the city because "the time and cost associated with fighting this claim was not in our best interest."
If Pettit is truthful there about the software and the differences in what was asked about (and we have no reason to doubt him), then wasn't Pillar Properties abused by "the system," though they could have fought it?
⇧ Banks annihilating 'zombie' foreclosures
In just the last two months, banks have really ramped up on repossessing homes. These so-called REOs (bank repossessions) are now at a 17-month high. This, as the value of these former zombies rises amid strong housing demand and tight housing supply.
⇧ Guaranteed minimum income – Wikipedia
At a minimum, this is what we advocate.
Guaranteed minimum income (GMI) (also called minimum income) is a system of social welfare provision that guarantees that all citizens or families have an income sufficient to live on, provided they meet certain conditions. Eligibility is typically determined by citizenship, a means test, and either availability for the labour market or a willingness to perform community services. The primary goal of a guaranteed minimum income is to reduce poverty. If citizenship is the only requirement, the system turns into a universal basic income.
In his 1994 "autobiographical dialog" Friedrich Hayek [Margret Thatcher's "libertarian" mentor/hero] stated: "I have always said that I am in favor of a minimum income for every person in the country".
"…and either availability for the labour market or a willingness to perform community services." Please note that, that would be in addition to guaranteed minimum income for those who are unable to work.
As for funding, the article states, "Tax revenues would fund the majority of any GMI proposal." Our readers know that we do not agree with that statement at all in terms of taxes being necessary for funding any governmental programs or spending whatsoever. Taxes, per se (and by any other name) are only necessary to drain excess money from the system to control or eliminate price inflation.
For more information, see: "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/
⇧ The Sorry and the Pity and the Derp
We couldn't agree more.
…we've now had a watershed moment in the long-running Brownback/Kansas budgetary train wreck. The Senator-turned-Governor slashed taxes, with the tax shortfall to be made up by increased revenues driven by tax-cut fueled economic growth. The economic growth didn't happen and the state tumbled in a severe budgetary crisis….
So get rid of taxes on wealthy people's incomes and make the money back with sales taxes on family expenditures on food and clothing.
That was the plan: cut taxes, and when the budget is ruined, cut governmental spending and increase taxes on the poor. Absolutely nothing good generally comes from it, but that doesn't stop those self-centered, greedy ones who do it.
⇧ What happens when tech workers come to town
For every 1 percent increase in technology workers, there's roughly a half percent rise in home prices above the national rate of appreciation, the study found.
Seattle and Boston have the largest growth rates in technology hiring with a year-over-year increase in technology workers of 21 percent and 17 percent, respectively. As a result, Redfin believes that housing prices will increase the most in these areas.
… Denver saw an increase in home prices of approximately 17 percent, Austin 15 percent and Seattle 13 percent.
⇧ US Conference of Mayors to Consider Wall Street Bank Fees & Public Banking | Arizonans for a New Economy
Good article: Pamela Powers Hannley:
At their upcoming meeting on June 19-22, the US Conference of Mayors will be considering hundreds of resolutions on everything from gun safety to tax incentives to jobs and education. Tucked into that long list of resolutions is the "Mayors Resolution on Strengthening Municipal Finances".
This resolution addresses the millions of dollars in fees that Wall Street banks charge cities and challenges mayors to negotiate with bankers to reduce these fees or, alternatively, seek other more affordable means of financing— like establishment of a public bank.
⇧ Banking: A Tale of Two States – Public Banking Institute
Here's another from Arizonans for a New Economy, this one by Jim Hannley:
Powers Hannley's graphs and their underlying data show a startling flight of capital from the State of Arizona. We do not know if these assets were loans, deposits, securities or some combination of these. However, we can draw some conclusions. We know that modern banking runs on "fractional reserve" lending. Under this practice, commercial banks are allowed to lend more than they have on deposit or in other "hard" assets, known as capital reserves. Generally speaking, commercial banks can lend nine times their capital reserves. Therefore, a sharp reduction in bank assets, if most of those are capital reserves, will have a severe impact upon the amount the bank has available to lend (its loan capacity). So, it is safe to conclude that with a severely reduced bank loan capacity, Arizona businesses suffered from a shortage of available credit. Businesses had more difficulty borrowing money on favorable terms for the expansion of products and/or services and the hiring that accompanies business expansion.
Solution? An Arizona Public Bank.
⇧ Four ways Poland's state bank helped it avoid recession | Brookings Institution
Poland's impressive performance has…been driven by a healthy banking sector. Polish banks remained profitable, liquid, and well-capitalized throughout the crisis. They did not need a single dollar of public support. In contrast to most other EU countries, Poland's banks managed to increase lending to the private sector during the crisis, supporting the country's growth.
An overlooked factor has been the counter-cyclical role of PKO BP—a commercial public bank and the largest player in the Polish market with almost a 20 percent market share—in helping to deal with the crisis.
⇧ Geologists Studying Cause of Recent String of Alabama Earthquakes
More than a dozen weak earthquakes have followed in the seven months since in west Alabama's rural Greene County, and geologists are trying to figure out what is causing the seismic swarm in an area of the South more prone to tornadoes than earthquakes.
⇧ Hawaii Homes at High Risk for Lava Flows Can Now Get Insurance
Act 32, which was signed into law on May 5, 2015, requires HPIA to lift any moratorium on the issuance of residential property insurance within lava zones declared to be under a lava flow-related state of emergency by the Mayor of the County of Hawaii.
⇧ Mayor: Many Will Leave Delmont Due to Tornado
Many residents of tornado-ravaged Delmont, S.D., don't plan to come back, and the community is looking for ways to pull through.
About 200 people live in the town, and "it looks like maybe half will return," Mayor Mae Gunnare told KELO-TV.
⇧ Indiana Prosecutor Says House Blast was a Selfish Plan Gone Awry
A man accused of plotting a deadly explosion that damaged or destroyed more than 80 homes in an Indianapolis neighborhood should have known the scheme could kill people, even if that wasn't his intent, a prosecutor told jurors…as the murder trial began.
⇧ Federal Judge Will Set Chinese Drywall Damages for 2,700 Homeowners
Lawyers for homeowners in seven states say they have a simple way to help the 2,700 who have spent years in what lawyers call a toxic environment caused by Chinese drywall.
⇧ One in Six Atlanta Pool Inspections Result in Closure
If you own a pool for your tenants' use, take note.
Michael Beach, associate director for healthy water at the CDC, said concerned swimmers should purchase pool testing strips or kits to check the water.
Many pools are cited for chemistry violations. Proper chlorine and pH levels guard swimmers from many infections caused by bacteria and parasites.
⇧ Former Deputy Sheriff Sentenced to 13 Years for Mail Fraud and Using Fire to Commit a Federal Felony | USAO-NDIA | Department of Justice
A former deputy sheriff and volunteer firefighter who submitted a fraudulent insurance claim after deliberately setting fire to his vacant home was sentenced today to 13 years in federal prison.
⇧ Court orders Greece to reverse 2012 pension cuts | Reuters
A top Greek court ruled…that the government should reverse cuts to private sector pensions it made in 2012 as a condition of its bailout agreement with the European Union and IMF, court officials said.
The country's top administrative court, the Council of State, ruled that the 2012 cuts violated Greek law and the European Convention on Human Rights because they deprived pensioners of the right to a decent life.
"…deprived pensioners of the right to a decent life." That's what some in Europe seem to care little about if at all.
⇧ May was Wettest Month on Record
Feeling soggy? Last month was the wettest on record for the contiguous United States, according to federal meteorologists.
On average 4.36 inches of rain and snow — mostly rain — fell over the Lower 48 in May, sloshing past October 2009 which had been the wettest month in U.S. records with 4.29….
⇧ Report: 4.5 Million Homes in 13 States at Extreme Wildfire Risk
The states with the highest percentage of households at high or extreme risk of wildfire are Montana (27 percent), Idaho (25 percent), Colorado (16.4 percent), California (15.0 percent) and New Mexico (13.9 percent).
⇧ Weak Euro Attracts Rich Asians Seeking Bargains in Property, Luxury Hotels – Bloomberg Business
Stephen Diggle, whose Singapore-based hedge fund made a profit of $2.7 billion in the depths of the global financial crisis, is visiting the small German town of Flensburg this week in a bet the euro's 12-month slide is almost over.
The euro's decline against every major Asian currency this year has unearthed real-estate bargains for investors from China to Malaysia and Thailand to Singapore. Diggle's fund has already bought more than 1,200 apartments in Germany….
⇧ Europe Is Urged to Prepare for Greek Default as Stances Harden on Debt Deal – The New York Times
Unless they work out a deal, the creditors will not unlock aid payments from Athens's recently extended international bailout, raising the likelihood that Greece will be forced to impose capital controls and default on its loans. That would prompt a new bout of speculation about the long-term viability of the 19-nation currency bloc.
Mr. Gabriel also expressed sympathy for ordinary Greeks, "who so urgently need this help from Europe." But, he emphasized, "Europe and Germany will not be blackmailed. And we will not let German workers and their families pay for the exaggerated election promises of a partly communist government."
"…blackmailed…exaggerated election promises…"? Greece isn't trying to blackmail anyone. Lenders made bad loans to neoliberals long before Tsipras came to power. As for promises, it remains to be seen whether they were exaggerated.
⇧ Is Water Secretly Destroying Your Home Or Rental Property?
Excellent advice from Donna S. Robinson:
…gutters and water control are one of the most important items you may need in your own home, rental properties or vacation home. … Keeping gutters cleaned and free-flowing in conjunction with good water drainage can help you avoid a host of future problems.
⇧ Are we in a property bubble? – YouTube
Should we be concerned about another property bubble? Despite near zero interest rates & a QE-fuelled debt market, Robert Stassen, JLL Head of European Capital Markets Research, explains why buyers are still disciplined and pricing remains rational.
⇧ How Elite Power Brokers Corrupt our Finances, Freedom, and Security – YouTube
From the Tea Party to Occupy Wall Street, however divergent their political views, these groups seem united by one thing: outrage over a system of power and influence that only serves the interests of a small number of corrupt elites.
It really boils down to government versus cronyism. The privatizers (crony capitalists) often deliberately create the compartmentalization spoken of in this video but termed something else: structural unaccountability.
The problem with fixing it is that the Tea Partiers don't believe good government is possible unless the government is extremely limited/tiny, but the same capitalists who are now cronies would still compartmentalize to keep control and to make the most money off the general public by keeping that public in the dark.
⇧ Five Commercial Real Estate Market Trends You Can Bank On | Commentary content from National Real Estate Investor
The inevitable end of the bull market: With this bull market in commercial real estate now five years old (six for public real estate securities), isn't it time to be cautious? The bull market's duration does not, by itself, indicate how long it may last. Only a huge unexpected economic downturn or dramatically rising interest rates could derail the bull market at this point. The commercial real estate market is underpinned by a slow growing but steady economy. Firms are in good shape with high profitability, growing book value, increasing productivity and benign labor cost growth—thus they continue to demand more space. Fundamentals are still good with very low levels of supply except in the case of multifamily in some markets.
⇧ Md. woman sentenced for Prince George's Co. real estate scheme – WTOP
A Maryland woman who moved into a home she didn't own and who sold a second home she also did not own has been sentenced to 8.5 years in prison for convictions related to the property theft scheme.
⇧ Alaska wildfires destroy dozens of homes, menace highway | Reuters
Two fast-spreading Alaska wildfires have forced a series of evacuations, destroyed up to 45 homes and forced authorities to restrict traffic on a major highway connecting two of the state's largest cities, state officials said on Monday.
As many as 200 firefighters have been battling a 6,500-acre fire about 40 miles (64 km) north of Anchorage since Sunday afternoon.
About 137 miles (220km) south of Anchorage, crews are fighting a much smaller, but equally dangerous blaze that threatens nearly 200 homes.
⇧ Attackers Stole Certificate From Foxconn to Hack Kaspersky With Duqu 2.0 | WIRED
We covered the first part of this story here: http://propertypak.com/2015/06/12/news-r eal-estate-risk-economics-june-12-2015/# 06121520
It's an important computer-security story because at the level of sophistication of the attack, nearly any computer network could have been infected.
Perhaps it makes one feel more than a bit helpless, but it raises the bar for the hackers now that the type of attack has been clearly identified.
The best one can do is to keep security software as up-to-date as possible and software in general, as many ordinary software companies rightly issue security patches, etc.
The nation-state malware used to hack the Russian security firm Kaspersky Lab, as well as hotels associated with Iranian nuclear negotiations, used a digital certificate stolen from one of the world's top electronics makers: Foxconn.
One "moral of the story" is monitoring traffic to and from the network, certainly not an easy thing for a small organization not part of the computer-security industry.
We commend WIRED for running the articles in a manner that is neutral regarding the various nation-states involved, as such malware can be exploited by hostile actors of all stripes costing the general, global public many billions of dollars in addition to many, many other problems.
⇧ Why aren't more homes being built?
The supply of existing homes for sale is incredibly short, and while builders are starting to construct more homes than they did a year ago, they are still producing well below normal volumes. It begs the question, why aren't builders building more houses? One reason: Land.
"You have to find the land, you've got to be able to buy it and you've got to persuade someone to let you develop it. The one you hear the most about is the last one," said Paul Emrath, vice president of survey and housing policy research at NAHB.
This is why government must step up to the plate to help develop more affordable housing. Developers and landlords are typically capitalists (some are non-profits, but those represent a small minority). They aren't going to want to build, own, or run what doesn't earn them a profit. The problem of affordability is a societal issue. The solution must be a shared one; otherwise, society will become weaker and weaker and eventually rather dysfunctional at best.
⇧ A new wealth-creating agenda for the Labour Party | Science | The Guardian
"Mariana Mazzucato is RM Phillips Professor in the Economics of Innovation, Science Policy Research Unit (SPRU), University of Sussex":
…there was no serious effort to develop a story on why running a deficit now could hold the key to future growth. (Look at the US, that ran a 10% deficit in 2009, and is today growing more than any European country that has been running a surplus). And there was no serious story on why immigration has actually been one of the key strengths of the UK economy….
…productive capitalism is one in which business, the state, and the working population work together to create wealth. …revolutions in all the key sectors that have created decades of growth in recent times (from the internet to biotech, nanotech and today's emerging green-tech industry), have all relied on an active and strategic network of different public sector organisations willing to take on the biggest risks and uncertainty before the private sector was willing to enter. …
…the call by both Osborne and the Labour leadership to run surpluses during periods of growth, which Umunna this weekend claimed was the 'right thing to do', makes little sense. …
This stronger narrative about a nation's wealth that is created by all is essential, not only for creating public-private 'innovation systems', but also for building a stronger foundation for the welfare state — something that has historically increased the pool of possible innovators precisely because it increases education and training opportunities for all. These vital roles of the state should be funded by the willing taxpayer and by a more equal division of the shared profits that result from the labours of all wealth creators. Until then, we face an increasingly unequal and stagnant economic future. And future losses by Tory-light politicians.
Wow, are we on the same page with Mariana Mazzucato, as our consistent readers undoubtedly readily see.
⇧ A Billion-Dollar Bank Fraud in Moldova, and 20,000 Opaque British Corporations | naked capitalism
Opaque shells inside opaque shells inside…:
There are only 90,000 active LPs and LLPs in the UK, all told. In other words: pick a currently active UK LP or LLP at random, and you have nearly a one-in-four chance of lighting on an entity perfectly configured for financial crime. If you narrow your choice to Scottish LPs alone, it's much worse again: you have a better-than-even chance of hitting a dodgy one.
…a partnership formed by persons unknown, at an improbable location, and with untraceable ownership and control. We don't know who formed Hansa Investment LP, but, even without the activity documented in the Kroll report (pp. 55-60), we can easily guess why they did. Latvian banks aren't quite so savvy, to put it excessively politely. Hansa Investment LP managed to convince the easily-convinced Privatbank of Latvia that it was entirely on the level. PrivatBank duly opened a bank account for Hansa Investment LP that was duly used as a channel for loan proceeds from one of the doomed Moldovan banks.
If you can't determine who it is you're supposedly contracting with, should you go through with the deal? If you do, you're going to be taking quite a risk, aren't you? How often do such deals come back to haunt even legit and reputable entities?
⇧ Up The CRIC Without A Paddle: Understanding China's Economic Fits and Starts – China Real Time Report – WSJ [hog cycle]
The cycle has a name and is hardly unique to China. Known as CRIC, short for crisis-response-improvement-complacency, the term was coined in Japan in the late 1990s in a bid to track the interaction of politics, economics and human nature. Tokyo-based economist Robert Feldman says he came up with the idea when he and his colleagues at Morgan Stanley were trying to forecast Japan's economic movements during its long slide and realized it tended to move in fits and starts rather than a straight line.
These stages, Mr. Feldman says he noticed, resembled an economic model developed in the 1930s known as the pig or hog cycle to explain pork prices: Pork prices rise. Farmers over-produce. Pork prices fall. Farmers under-produce. Pork prices rise again. Cycle repeats.
⇧ Growth's Secret Weapon: The Poor and the Middle Class | iMFdirect – The IMF Blog
The IMF substantiates our constantly stated position:
…we find that making the rich richer by one percentage point lowers GDP growth in a country over the next five years by 0.08 percentage points—whereas making the poor and the middle class one percentage point richer can raise GDP growth by as much as 0.38 percentage points (Chart 2). Put simply, boosting the incomes of the poor and the middle class can help raise growth prospects for all.
⇧ The Hype On U.S. Shale Growth | EconMatters
The gains are already slowing as a result of the drop in rig counts. There have been some weekly declines recently, and the Energy Information Administration (EIA) is projecting a 91,000 bpd drop over the next month.
… Shale oil production growth is going to continue to slow (if not decline), while global demand growth will start to outpace the new supplies coming online. By leaving the production quotas unchanged OPEC is letting growing demand catch up to North American output growth, and counting on this to prevent an extended slump.
⇧ IMF raises tempo in inequality debate – FT.com
This is a sea change not because it is new information or new knowledge. It isn't. It's a sea change because it's come out from the IMF, which was a bastion of neoliberal economics, of the Washington Consensus, of the Chicago School and Austrian School.
What it does is squarely place the IMF in the more progressive camp and out from under the ideological, data-rejecting laissez-faire camp.
It means the IMF is now vastly more mixed-economy oriented and due to actual data and proper interpretation of same. It means the IMF, if it is to be true to its new found awareness, must at the very least, openly advocate social democracy.
Nicolas Mombrial, head of Oxfam International's office in Washington DC, said: "The IMF proves that making the rich richer does not work for growth, while focusing on the poor and the middle class does.
"By releasing this report, the IMF has shown that 'trickle down' economics is dead; you cannot rely on the spoils of the extremely wealthy to benefit the rest of us."
He added: "The IMF has set off the alarm for governments to wake up and start actively closing the inequality gap. The message to them is pretty clear: if you want growth, you'd better invest in the poor, invest in essential services and promote redistributive tax policies."
Absolutely correct! Austerity is bad. Now, explain it to the German leadership, and start helping the Greeks and others to get out from under.
⇧ Toxic algae bloom off West Coast might be largest ever: scientists | Reuters
A toxic algae bloom in the Pacific Ocean stretching from California north to Washington state might be the largest ever detected off the U.S. West Coast, scientists said on Tuesday.
Scientists will try to determine whether the massive size of the bloom is linked to this year's warmer-than-average water conditions from Washington to Southern California, the agency said.
⇧ World's 'Thinnest' Light Bulb, Made From Graphene, Debuts
…later this year, a graphene-coated LED that lasts longer and uses less energy than a typical LED is expected to enter the marketplace—the result of research at Britain's University of Manchester. It's not, though, a pure graphene light bulb.
⇧ How I Went From Zero to DIY Hero (& How You Can, Too!)
About 15 or so years ago, I had zero do-it-yourself (DIY) skills. I was just a white collar guy working as a computer programmer at the headquarters of a major retailer. My hands were soft and callous-free. This all changed shortly after I purchased my first home.
I've saved well over $100,000 with my DIY skills over the several house flips.
An issue is the "time is money" adage. Could he have made more than he saved by having someone else do the labor while he did something else? We can't say from here. Anyway, having DIY skills certainly doesn't hurt in any case (except for losing fingernails and getting puncture wounds, etc.: Safety First!).
⇧ Is It Too Hard To Get a Mortgage? | Zillow Blog
Good on Zillow for pinpointing deregulation and securitization for causing the crash.
"By Erin Lantz on 30 Oct 2014":
Brief history of the mortgage industry
The global financial crisis that began in August 2007 was set off by bad mortgage lending.
⇧ Top Dollar Sages See Rally Resuming as U.S. Growth Outperforms – Bloomberg Business
Okay, but just keep in mind that this process is tapping on the brakes. If the Fed applies the brakes too soon, even if the Fed supplies too much forward guidance that it will apply soon, things will slow more than the Fed expected.
⇧ APRA could crush property markets: Craig Turnbull
Why not just apply macro-prudential controls (restricting lending) to Sydney only?
⇧ PIMCO | Viewpoints – A Look at Rising Household Debt in Australia and the Implications for Policy?
Analyzing household behavior
In a recent speech (April 2015), RBA Governor Glenn Stevens touched on the vulnerabilities created by household leverage: "Household leverage starts from a high level… the extent to which further increases in leverage should be encouraged is not easily answered." He described dwelling prices as having "already risen considerably from their previous lows, at a time when income growth has been slowing," adding that "it is hard to escape the conclusion that Sydney prices — up by a third since 2012 — look rather exuberant." He also acknowledged the importance of financial stability issues: "The conduct of monetary policy can't allow these financial considerations to dominate the 'real economy' ones completely, nor can it simply ignore them. A balance has to be found."
⇧ Job losses, recessions and the U.S. labor market moving forward – Washington Center for Equitable Growth
During 1981 to 1983, the job loss rate was 12.8 percent. In 2007 to 2009, it was 16 percent, a 25-percent increase in the rate.
Put another way, during the early 1980s, about 1 in 8 workers lost a job, but during the Great Recession 1 in 6 workers were laid off.
Looking to the unemployment rate alone would miss out on this difference….
⇧ The IMF's "Tough Choices" on Greece by James K. Galbraith – Project Syndicate
We saw above that the IMF knows that austerity is actually counter-productive. So, when will the right hand know what the left hand is up to at the IMF?
This is a rather short article by James Galbraith, but it is so good and so important that we've done what constitutes a relatively extensive excerpt given its size. You really need to read the whole article to get the full context though.
The IMF and Greece's other creditors have assumed that massive fiscal contraction has only a temporary effect on economic activity, employment, and taxes, and that slashing wages, pensions, and public jobs has a magical effect on growth. This has proved false. Indeed, Greece's post-2010 adjustment led to economic disaster — and the IMF's worst predictive failure ever.
Blanchard should know better than to persist with this fiasco. Once the link between "reform" and growth is broken — as it has been in Greece — his argument collapses. With no path to growth, the creditors' demand for an eventual 3.5%-of-GDP primary surplus is actually a call for more contraction, beginning with another deep slump this year.
But, rather than recognizing this reality and adjusting accordingly, Blanchard doubles down on pensions. …
…Greece has a credible debt proposal. First, let the European Stabilization Mechanism (ESM) lend €27 billion ($30 billion), at long maturities, to retire the Greek bonds that the European Central Bank foolishly bought in 2010. Second, use the profits on those bonds to pay off the IMF. Third, include Greece in the ECB's program of quantitative easing, which would let it return to the markets.
Greece would agree to fair conditions for the ESM loan. It does not ask for one cent of additional official funding for the Greek state. It is promising to live within its means forever, and rely on internal savings and external investment for growth — far short of what any large country, controlling its own currency, would do when fa cing a comparable disaster.
Blanchard insists that now is the time for "tough choices, and tough commitments to be made on both sides." Indeed it is. But the Greeks have already made tough choices. Now it is the IMF's turn….
⇧ Contagion Is Back as Greece Risks Trump QE on Europe's Periphery – Bloomberg Business
Ah, this is exactly part of the contagion we pointed out above.
Other nations ought to follow Greece if the Austerians in Germany get their way.
Europe's peripheral nations are facing the highest borrowing costs in at least six months as investors shun the issuers that may be most at risk if Greece defaults.
⇧ Goldman Sachs and J.P. Morgan Can't Agree Why the Economy's Productivity Has Slumped – Real Time Economics – WSJ
If the wonders of Silicon Valley are increasingly replacing humans or opening up new frontiers of production, then productivity ought to be skyrocketing, not in a historic slump.
Enter two of Wall Street's best-regarded economists: Jan Hatzius, the chief economist of Goldman Sachs, and Michael Feroli, the chief U.S. economist of J.P. Morgan Chase, with dueling views.
A third view: People don't have the money to buy the "cupcakes," so industry doesn't spend the money on automation.
⇧ FOREX-Dollar drops after Fed signals later move on rate hikes | Reuters
Well, the Fed shouldn't have been sending out so many mixed signals.
The dollar dropped on Wednesday after the Federal Reserve signaled that interest rate increases may start later than many have anticipated and trimmed its U.S. economic forecasts.
… "Yellen and the Fed in general are waiting for inflation to show its head, and they don't believe it's there yet."
⇧ SQFT Launches To Disrupt The Real Estate Industry With Mobile – Forbes
A new application launching today…. SQFT [http://sqftx.com/] is a free, fully transactional mobile application that allows homeowners to list, search, negotiate and purchase homes using only their smartphone. In doing so, SQFT believes that its platform reduces agent commission costs by two-thirds.
The application is available nationwide in the U.S. on launch, with real estate partners in 17 states. Using SQFT, homeowners can create a listing on their smartphone which is then posted to multiple listing services including Trulia and Zillow. SQFT also allows users to schedule showings, make offers and complete the transaction using the SQFT platform.
⇧ Anti-Gentrification Protesters Vs. Brooklyn Real Estate Summit: Gothamist
Cohen said the renewal of the 421-a tax break was needed to guarantee enough affordable housing for all who demand it. His view, like Mayor Bill de Blasio's, is that the city must continue to incentivize market-rate housing, and that affordability will eventually trickle-down.
"I think the concerns about displacements are temporary if we can develop more," he said. "If we can't develop more, these concerns will get bigger and bigger because there will not be enough housing."
It isn't a question of just enough housing. It's a question of enough of the right kind of housing. Sure, if you build 300 million mansions, mansions will be cheap enough for the poor; but, the odds of doing that under our mixed economy are likely zero. Every new development ought to include a very strong component for affordable housing and local jobs for the lower classes.
⇧ Mayor: Balcony collapse points to water-damaged wood
Water-damaged wood beams appear to be the primary cause of the balcony collapse that killed or seriously injured several Irish exchange students at a party early Tuesday, the mayor of Berkeley said Wednesday.
Investigators believe the support beams of the concrete-floor balcony were not sealed correctly during construction….
⇧ Quantitative Ease by Carola Binder: Wage Increases Do Not Signal Impending Inflation
When the Phillips Curve isn't:
If the Fed follows a non-accommodative monetary policy and keeps inflation low, then firms may not be able to pass along excessive wage gains in the form of higher product prices." Mehra finds that "Wage growth no longer helps predict inflation if we consider subperiods that begin in the early 1980s…The period since the early 1980s is the period during which the Fed has concentrated on keeping inflation low. What is new here is the finding that even in the pre- 1980 period there is another subperiod, 1953Q1 to 1965Q4, during which wage growth does not help predict inflation. This is also the subperiod during which inflation remained mostly low, mainly due to monetary policy pursued by the Fed."
⇧ America's hiring paralysis – The Washington Post
…today's workers simply don't possess the qualifications necessary for the jobs available. Absent additional training, a recently laid-off construction worker can't easily fill a nursing slot; a newly idle travel agent is unlikely to pass muster as a software engineer.
Companies themselves are indeed reporting difficulty acquiring talent.
So, we need high-skills training both via government directly and via on-the-job subsidies. What are we waiting for? We're waiting for the laissez-faire ideology to be pushed aside.
⇧ June FOMC Recap – Tim Duy's Fed Watch
The FOMC meeting ended largely as expected with a nod toward recent data improvement but no change in policy. It is still reasonable to believe that lift-off will occur in September, but only if incoming data removes any residual concern about the sloppy data from earlier this year. Still, as Federal Reserve Chair Janet Yellen emphasized today, the lift-off itself is less important than the subsequent path of rates. That path remains subdued.
…the Fed has turned more dovish as the timing of lift-off is delayed. Even with unemployment falling to current estimates of full employment next year, they do not believe the economy needs (or maybe could withstand) a rapid pace of hikes. Persistently low inflation and wage growth is taking its toll on policy expectations. And even the most hawkish participants are falling in line with this story.
⇧ Global City Rankings – JLL Cities Research Center – YouTube
What are the world's largest real estate markets? Which cities attract the most real estate investment relative to their size? Where are office rents growing fastest? JLL Cities Research Center — uncovering opportunities in cities around the world.
However, things can change rapidly globally. This is a snapshot of how things were, not how they will be.
⇧ eBay Security Chief Outlines 3 Main Drivers of Hacker Activity
⇧ Red Springs woman accused of insurance fraud – Robesonian – robesonian.com
Raleigh, North Carolina:
Earline Francine Johnson, 38, of College Street, is charged with committing insurance fraud and obtaining property by false pretense, according to a statement from the Department of Insurance.
⇧ Lincoln, Nebraska OKs $1M to Help Victims of Sewer Backups
The City Council in Lincoln, Neb., has approved a $1 million disaster assistance program to aid Lincoln residents whose homes were damage by raw sewage that backed up during heavy rains, but some of the victims are still considering suing the city.
⇧ Fraud Fighters Gain Two Laws in Minnesota
Minnesota has added new powers to lodge civil actions against insurance fraudsters and kick swindlers out of the insurance system, the Coalition Against Insurance Fraud announced.
⇧ Another Alaska Wildfire Prompts More Evacuations
On Monday, Gov. Bill Walker took an aerial tour of the fire, which has burned at least 25 homes and up to 20 other structures including sheds and outhouses.
⇧ If You Ever Hope to Reach Financial Freedom, Master This
There is one major prerequisite to becoming a successful real estate investor or entrepreneur that any aspiring person must master. That prerequisite is the deferral of gratification. Namely, to live below your means.
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