Linking ≠ endorsement.
⇧ Pit Bull Attacks – Victims of Dangerous Dog Attacks
DogsBite.org is a national dog bite victims' group dedicated to reducing serious dog attacks. We conduct research on the growing, but underreported, public safety issue of severe and fatal dog attacks inflicted by dangerous dog breeds. We champion the rights of victims through our research, education and advocacy.
⇧ Halliburton Offers Settlements Over Chemical in Wells to Property Owners
Halliburton is offering settlements to dozens of property owners after a chemical compound called ammonium perchlorate showed up in residents' private wells.
⇧ FAA Seeks Largest Fine Yet on Drones in Near-Miss Crackdown – Bloomberg Business
Are you using a UAV (drone) in your real-estate business? If so, read the linked article.
The U.S. Federal Aviation Administration is proposing the largest fine to date against a drone operator as the agency cracks down on the booming use of unmanned aircraft in congested skies over populated areas.
⇧ Solar & Wind Reach a Big Renewables Turning Point : BNEF – Bloomberg Business
As more renewables are installed, coal and natural gas plants are used less. As coal and gas are used less, the cost of using them to generate electricity goes up. As the cost of coal and gas power rises, more renewables will be installed.
The virtuous cycle has begun.
And none too soon.
⇧ Next financial crash is coming — and before we've fixed flaws from last one | Business | The Guardian
The IMF's warning echoes a chorus of others. The Bank of England's chief economist, Andy Haldane, has argued that the world is entering the latest episode of a "three-part crisis trilogy". Unctad, the UN's trade and development arm, would like to see advanced economies boost public spending to offset the downturn in emerging economies. The Bank for International Settlements believes interest rates have been too low for too long, encouraging too much risk-taking in financial markets. All of them fear that the global financial system is primed for a crisis.
Interest rates haven't been too low. The wrong people have received the money from QE is all.
⇧ IMF warns emerging market companies have overborrowed $3 trillion | Reuters
The IMF calculates that there is around $1.5 trillion in embedded leverage in U.S. bond funds through derivatives, which could unwind dramatically if the Fed's normalization process provokes liquidity shocks.
⇧ Underground fire 300 meters from nuclear waste causes St. Louis to hatch contingency plan | The Japan Times
The Environmental Protection Agency is still deciding how to clean up the waste. The landfill was designated a Superfund site in 1990.
Sad but comical at the same time.
⇧ China is selling off U.S. Treasury debt. Should you be worried?
… the bond markets seem to have largely reacted with a big ¯\_(?)_/¯, largely because the treasury market is enormous, and with the global economy in a shaky spot, there are ample buyers out there looking to purchase American government debt as a relatively safe place to put their money.
All of this drives home a very simple point that people who worry about our debt to China tend to overlook: Buying and selling treasuries is how Beijing manages its delicate exchange rate, which is essential to keeping the country's all-important exports flowing. And if it were to actually dump enough of its treasury holdings to cause trouble, the likely end result would be a less valuable U.S. dollar, which would mean fewer Americans buying goods made in China. That would especially be the case if the U.S. Federal Reserve responded by printing money to buy up whatever bonds China sold in order to keep interest rates from jumping, which in this extended hypothetical, is a pretty likely scenario.
The original idea was China dumping not just some but all or nearly all of its Treasurys. Yes, the fearmongers didn't know, or didn't want others to know, the Fed can buy the world. After all, if they can do that, why does anyone have to borrow and pay interest? Simple: keeping the rubes in the dark means keeping the rich richer.
⇧ California Wildfires Will Cost Insurers More Than $1.1 Billion – Bloomberg Business
The Valley Fire, northwest of San Francisco, destroyed almost 2,000 homes, leading to at least $925 million in expenses for the industry and making it the third-most expensive in California history, according to a report Thursday from Impact. The sum for the Butte Fire, southeast of Sacramento, is more than $225 million.
⇧ The Financial Sector is Too Big – TripleCrisis
Philip Arestis and Malcolm Sawyer:
There are many reasons for thinking that the financial sector has become too large. Its growth in recent decades has not been associated with facilitating savings and encouraging investment. It has absorbed valuable resources which are largely engaged in the trading in casino-like activities. The lax systems of regulation have made financial crises more likely. Indeed, and following the international financial crisis of 2007/2008 and the great recession a number of proposals have been put forward to avoid similar crises. To this day, nonetheless, the implementation of these proposals is very slow ….
⇧ Cost of flood expected to top $1 billion, say experts
From the latest storm system, "It appears to be an absolute certainty that the final damage bill is going to be above $1 billion. But until the waters fully recede and homeowners and businesses can take a complete assessment of the damage, we won't know for sure the ultimate price tag," said Steve Bowen of reinsurance broker Aon Benfield's impact forecasting team.
⇧ Axio: Strongest Apartment Market in 9 Years | Multifamily Executive Magazine | Rents, Rent Trends, Occupancy and Vacancy Rate, Effective Rents, Axiometrics
Add Axiometrics to the list of data firms heralding a record-setting third quarter for the apartment industry (though the feeling isn't universal).
In a recent release, the Dallas-based research firm called the apartment industry's fiscal third quarter the "strongest summer in nine years" as the industry's torrid pace for 2015 continued.
However, it's cyclical.
⇧ 10 amazing markets housing investors really need to consider | HousingWire
Atlanta, Charlotte, Fort Lauderdale, Riverside, and San Diego have been included among the 2015 Best Markets Top 10 List compiled quarterly by HomeVestors and Local Market Monitor.
⇧ L.A. approves nation's toughest earthquake safety rules – LA Times
Los Angeles Mayor Eric Garcetti on Friday signed the nation's strongest earthquake safety laws, requiring that the owners of an estimated 15,000 buildings most at risk of collapse during a major quake make the structures stronger.
The ordinance targets two of the most dangerous types of buildings: brittle concrete buildings and wood apartment complexes with weak first stories, which have killed more than 65 people in Los Angeles' last two major earthquakes.
The mandatory upgrades will be costly. Many wood apartment retrofits can cost $60,000 to $130,000, and taller concrete buildings can cost millions of dollars to strengthen.
Wood apartment buildings will be given seven years to complete construction once an owner is ordered by the Department of Building and Safety to retrofit the building. Owners of brittle concrete buildings will have 25 years to do the work.
Wow! That's a really long time.
⇧ Nashville real estate: Offers thousands over asking price, sight unseen
Her Realtor warned her that the seller was receiving multiple offers and there wasn't time to drive from her office and walk through the house.
"I went $12,000 over the asking price, but it ended up going for $20,000 over the asking price," she said. "I really wanted that one."
Would you buy a house sight unseen?
⇧ Rochester No. 1 in 'zombie' properties, report says
Rochester led the nation over the past three months in the percentage of vacant "zombie" foreclosures as a percentage of all vacant properties, a report released Thursday showed.
The analysis from RealtyTrac showed that 14.3 percent of Rochester homes in the foreclosure process were considered "zombie" homes during the third quarter of 2015 because they had yet to be repossessed by the bank.
⇧ A Liquidity Crisis Hit The Banking System In September | Investment Research Dynamics
Something occurred in the banking system in September that required a massive reverse repo operation in order to force the largest ever Treasury collateral injection into the repo market.
I wouldn't jump to conclusions.
The Fed said it would be testing the facility. That's what could have been going on, as we didn't hear anything about an emergency. [Update: I saw something else on this but didn't snag it to put a link here. The gist of it was that it was various banks dumping money in and then taking it all out, or nearly so, the next day.]
⇧ Former IMF chief economist backs 'people's QE' | Reuters
Blanchard said that this does not mean central banks would buy goods directly. Rather, governments can increase their fiscal deficits by spending on infrastructure projects. Central banks can then buy this debt with newly created money.
Forget the debt. Create the money interest free and then spend it.
The usurers may have shills in high places. I'm not saying Olivier Blanchard is necessarily that, but why in the world wouldn't he discuss debt-free money rather than creating government debts?
They all seem to want to keep "debts" in the mix even if those debts are paid off quickly via new money. Why?
I think it's psychological. I think they don't want people to understand that the governmental debts that have been in place have always been unnecessary (along with a whole host of other things that have been equally unnecessary).
⇧ Still Room for Improvement | Federal Reserve Bank of Minneapolis
I will document that, after several painful years of labor market stagnation, the United States experienced truly historic improvement in labor market performance in 2014. Unfortunately, these labor market gains have slowed markedly in 2015. This may suggest to some that there is little room for further improvement in labor market outcomes. I will argue that current and projected low inflation presents strong evidence to the contrary. There is room for more improvement—but we will only achieve those gains if we make the right monetary policy choices.
… We saw rapid labor market improvement in 2014, but that rate of improvement has slowed noticeably in 2015. Does that mean that the FOMC is close to reaching the top of the hill—that is, close to achieving its maximum employment goal? In my view, the behavior of inflation clearly shows that the answer to this question is no: The FOMC can facilitate further improvement in labor market performance.
Narayana Kocherlakota gets it. His talk pretty much mirrors what I've said on this blog for years now (within the context of the mixed economy and current monetary system, not the additional reforms I advocate). However, the Fed generally is about banking (the industry). The bankers want higher interest rates. They also do not want labor gaining strength, being able to demand higher wages and benefits, etc. The reason for both of these desires by the bankers concerns those bankers' compensation packages. The better it gets for labor, the lower those compensation packages will be relative to the average compensation going to labor (the middle and lower classes in general; I'm including lots of white collar work in "labor").
⇧ Critics say Hillary Clinton is pro-Wall Street. Her Wall Street reform plan says otherwise. – Vox
Well, I've included economic plans of a couple of Republican candidates, so here's an article with Clinton's (and with a nod to Sanders').
By the way, I clearly come down on the side of Glass-Steagall. It was a huge error to have ever broken it up. It most certainly should be reinstated if other of my desired reforms aren't instituted in a timely manner.
There are pros and cons to each approach. There's a real sense that slightly higher capital requirements could force the largest banks to reduce their size, a process politically easier than breaking up the banks directly. Depending on specifics, the Clinton tax could do this. There's little reason to do only half a financial transaction tax as Clinton does, especially if it isn't clear the moderate approach would be enough to put a dent in HFT. The continued focus on Glass-Steagall hangs oddly over the debate, since the primary housing and financial crisis occurred outside the traditional commercial banking sector, and future worries are as likely to be in opaque corners of the financial markets.
As for Mike's statement about the housing crash and Glass-Steagall, the psychology and ideology behind breaking up the Act is what was behind all the deregulation that did allow the crash. Reinstating the Act would simply be putting the pieces back together for cause and correction.
⇧ Hillary Clinton's Wall Street Reform Plan Is Right of Bernie Sanders' | The New Republic
The rise of Bernie Sanders as a policy force among liberals has forced Hillary Clinton to lurch left this presidential primary season….
That's a fact, and it shows that it's not her core belief system or if it is, that she's been unwilling for a long, long time to stand up for what she really believes.
I certainly agree with David Dayen about enforcement. Too bad we need the rules and enforcement.
⇧ Big Finance, Demystified – YouTube
This is a perfect follow-up to the link immediately above and my commentary on it.
John Kay shares findings from his new book, Other People's Money, and his insights on changing the financial sector.
⇧ Atlanta, Seattle real estate emerge as growing affluent hubs – Luxury Daily – Research
In the United States metropolitan areas like Seattle, Atlanta, and Houston and Dallas, are emerging as affluent hubs, as are resort towns like Vail, CO ….
⇧ These economies have the best infrastructure – Agenda – The World Economic Forum
Once upon a time, the US was #1. Now it doesn't make the cut. We could change that with infrastructure spending via issuing debt-free currency to pay for the growth expansion, which wouldn't be hyper-inflationary.
⇧ Thousands take to Berlin to protest EU-US TTIP accord | Germany | DW.COM | 10.10.2015
According to the organizers, as many as 250,000 people responded to a call to trade unions, environmentalists and anti-globalization groups, including Germany's opposition Green and Left parties, to protest against what many see as a deal designed with the interests of multinational corporations in mind.
Campaigners are particularly concerned about a provision in the deal that would allow companies to sue governments in special tribunals. Such an arrangement, they fear, would lead to an erosion of labor and environmental protections . TTIP's supporters dismiss such thinking and argue that the deal would boost the EU's economy by removing tariffs and creating common standards.
… for example the North American Free Trade Agreement (NAFTA): In the 1990s, a tribunal ruled that the Mexican government needed to pay a US company $15.6 million because it did not grant permission to build a hazardous waste landfill. [http://www.dw.com/en/ttip-free-trade-at -expense-of-the-environment/a-18773205]
⇧ Leading economies agree plan to fight corporate tax avoidance | Reuters
The Group of 20 major economies have endorsed a package of measures to tackle corporate tax avoidance ….
The ministers reached the agreement against a backdrop of concern about … tax structuring used by companies including Starbucks and Google that have spurred public anger in Europe and the United States in recent years over tax avoidance.
⇧ Iceland: Members of Parliament are calling for a Money Commission – Positive Money (BSD)
Members of the Icelandic Parliament have submitted a motion to review Iceland's monetary system and look at alternative monetary systems.
Last week, a resolution calling for the establishment of a special commission to "carry out a review of the arrangements of money creation in Iceland and to make recommendations for improvements" was submitted by 11 Members of the Althingi, the Parliament of Iceland.
The resolution comes six months after the release of a report commissioned by the Prime Minister of Iceland entitled Monetary Reform — A better monetary system for Iceland that outlined the need for a fundamental reform of Iceland's monetary system.
This report emphasises the limits of the current monetary system and sets out the merits of a Sovereign Money system, as advocated by Positive Money.
The stated plan is more than a bit antiquated (relying on "elite" humans' decisions rather than pure, simple equations and more direct democracy), but it would still be an improvement.
⇧ In North America's Costliest City, Rich Chinese Take the Blame – Bloomberg Business
Though no expert on the subject, Hankle, like just about everyone else across the city, is obsessed with the topic and increasingly resigned to never owning a house himself. Standing in Yaletown, a one-time industrial site where nearby two-bedroom apartments can go for C$1.8 million, he calls on political parties competing for his vote to build more low-cost housing and introduce programs to guarantee people a livable minimum income.
The Economist Intelligence Unit has named Vancouver the most expensive city to live in North America and a 2014 study by consultancy Demographia cited it as the second-least affordable housing market in the world after Hong Kong. Rising prices in Vancouver pushed housing affordability to "risky levels" in the second quarter as the costs of owning a bungalow rose to an unprecedented 86.9 percent of household income, an August report by RBC Capital Markets said.
⇧ Chinese investors flooding billions into the Australian real estate market prompt money laundering fears – ABC News (Australian Broadcasting Corporation)
Despite highly credible warnings that large volumes of illicit money leaving China were being laundered in Australia, a Four Corners investigation found no Australian agency was charged with identifying the true source of foreign funds being invested into the economy.
In April, the Financial Action Task Force (FATF) — a global association of anti-money-laundering regulators — criticised Australia for failing to force real estate agents, solicitors and accountants to scrutinise their clients and the source of their money.
This is a provision that has long been in place in other major economies.
Plus, as the article noted, China is bleeding funds needed at home.
⇧ After the wildfires: A tale of 3 Washington towns | The Seattle Times
Usually, this time of year, the butte's dry grasses make it the same tawny color as a cougar. Now, as you look south from Chelan's main drag, one sprawling, blackened mountain stretches from lake to river. Wildfires spreading from the butte and elsewhere on the lake crippled this community with days of panic, sirens, choking smoke, and power outages.
The fire came into the industrial quarter of town, destroying a multimillion-dollar apple warehouse — a building with concrete walls — along with the small Ventimiglia Cellars winery and other businesses. Up to 75 homes burned, including many treasured lakefront retreats near Lake Chelan State Park.
⇧ China's green revolution
Air pollution kills more than half a million Chinese people every year. Runners in the Beijing International Marathon last year had to wear face masks against the smothering yellow haze, and smog alerts routinely force cities to ban driving and temporarily shut down factories. The filth has begun to cause what Chinese authorities fear most: political unrest. China now has more than 50,000 environmental protests a year, mostly local demonstrations against planned factories and waste incineration plants.
But they have responded with a massive green effort.
⇧ mainly macro: One reason why monetary policy is preferred by New Keynesians
Third, another means of achieving the optimal solution, besides monetary policy, is for the government to give everyone the extra money they desire.
No, that wouldn't work. People desire more money than there is supply of goods and services to meet their willingness to spend an inexhaustible stream of on-demand funds. The solution, however, is simple. Give everyone the money he or she first needs and then wants provided the money given matches productivity (including increasing productivity). That way, there would be no inflation even while there is huge growth.
⇧ Most of DC's new housing is in high-rises, which most people can't afford to live in – Greater Greater Washington
Where housing is built influences how housing gets built. That, in turn, determines how much new housing will cost and thus, who can afford to live there. Given how the city is building high-rises, it's no wonder that the resulting housing is expensive….
⇧ China's Monetary-Policy Choice by Zhang Jun – Project Syndicate
… although structural adjustment continues in China, the economy is facing an increasingly serious contraction in demand and continued deflation. The consumer price index (CPI) has remained below 2%, and the producer price index (PPI) has been negative, for 44 months.
In a country with a huge amount of liquidity — M2 (a common measure of the money supply) amounts to double China's GDP — and still-rising borrowing costs, this makes little sense. The problem is that the government has maintained a PPI-adjusted benchmark interest rate that exceeds 11%.
That's right, but the government won't want to lose face.
⇧ The American cities most threatened by rising sea levels
This story is getting old, and it's getting old that hardly a thing is being done about it relative to the enormity of the risks.
Steep cuts in greenhouse gas emissions could lessen the threat that sea level rise poses to iconic American cities during the coming centuries by more than half, according to a new study published Monday.
I'm not being a pessimist though. I really do think the people will rise (pun intended) to the occasion.
⇧ Michael Mann – Attacks On The Global Warming Consensus – YouTube
Dr. Michael E. Mann is an American climatologist and geophysicist, currently director of the Earth System Science Center at Pennsylvania State University. He is Distinguished Professor of Meteorology at Penn State University, with joint appointments in the Department of Geosciences and the Earth and Environmental Systems Institute.
He has pioneered techniques for finding patterns in past climate change and for isolating climate signals from noisy data. Since 1998 when he published the now famous "hockey stick paper" he's been a prime target for attacks from climate science deniers who try to discredit him and his research.
In this clip Mann talks about the scientific consensus on global warming and the attacks by science deniers trying to undermine this consensus.
Consensus is something to consider as to why there's consensus. Regardless of the consensus status around the issue, the evidence definitely shows anthropogenic global warming is happening. I say these things while happily saying that I like Dr. Mann and his work in the field. He's always been very forthright, including in the face of the infamous false-propaganda that was "Climategate."
⇧ The Real Estate M&A Boom – Forbes
Surprising though it may seem, real estate is poised to be one of the hottest sectors for mergers and acquisitions growth in the coming year. Due diligence activity in real estate during the first half of 2015 was up 57%, according to Intralinks' Deal Flow Predictor which forecasts M&A activity six months into the future, the largest increase for any industry. What's more, our early count indicates deal negotiations in real estate continued strong during the third quarter.
It's not surprising at all, considering that real-estate, contrary to the article, has actually been slowing.
⇧ Fighting to clean up vacant properties – The Washington Post
… get a $1,500 construction permit, and the developer can leave the property untouched at the lowest tax rate — and he can renew the permit year after year.
The District won't go after them.
The developer sits and waits for the market to continue to increase in value until he or she can sell the house at even a higher sale price.
⇧ Real estate appraisers may be endangered | LVB
…If the appraiser's number matches the price agreed to by the buyer and seller, all is good.
Unless, of course, the deal goes bad and the appraiser is sued for providing an inaccurate value. Then he faces all kinds of legal troubles, potential loss of his license or certification and possible civil fines.
On the other hand, if his number comes in low, the appraiser could be pressured to reconsider so the deal gets done. If he declines, he might not be hired the next time.
Is it any wonder veteran appraisers are getting out of the business in droves?
⇧ Euro Deflation And How To Interpret It
The misleading effect of composite price indices is especially serious for the euro zone. First and most obviously, euro zone price indices conceal variations in inflationary pressures across member countries.
In the countries with large economies, e.g. United States, Japan, United Kingdom, Germany and France, the growth-capacity-inflation link was primarily domestic until the share of trade in GDP began to increase sharply in the 1990s. The only notable exception to this pattern occurred in the second half of the 1970s when sharply rising oil prices had the dual effect of undermining growth rates and increasing composite price measures. This combination of recession and "inflation" prompted the term "stagflation".
The recently released statistics on price changes and growth in the euro zone suggest that the term be qualified to refer to two different manifestations of the malady. In the 1970s the advanced market economics suffered from inflation and unemployment, "stag[in]flation"; now, the euro zone — and the global economy according to Summers — suffer from recession and falling prices, "stag[de]flation".
With output stagnating, how can we explain the increases in non-energy prices? The most obvious cause is so-called Quantitative Easing, which fuels domestic and international commodity speculation while doing nothing to stimulate output (Summers is especially clear on the latter).
Stimulating aggregate demand offers the only effective way to exit stag[de]flation. In contrast to fiscal austerity that has inverted the price-output relationship, fiscal expansion would initially combine rising GDP with stable prices as output growth raised productivity and stopped QE.
⇧ The golden age of central banks is at an end — is it time for tax and spend? | Business | The Guardian
Ultra-loose monetary policy, together with tighter supervision of the financial sector, was supposed to minimise the risks of another crash while ensuring that plentiful supplies of cheap money boosted real activity.
The opposite has occurred. Wages, productivity and growth have been poor even as investors have taken bigger and bigger risks in the search for high returns.
I don't see the risk of a crash quite yet. What I have seen is that the intention of the Fed's monetary policy was never to boost the workers (the general economy) but to keep the banks from crashing while keeping labor and economic democracy from becoming strong enough to stop the banking executives from regaining their power over politics and regulations.
⇧ Strauss: 10 qualities your new hire should have
This is quite good.
Q: I am going to be hiring my first employee soon. I know what I think is important, and what has worked for me personally, but I am wondering if there are traits and/or abilities that I may not be considering that other small business owners have found to be valuable. — Nathan
⇧ TPP deal reached | FT World – YouTube
Ministers from 12 countries have agreed an outline deal on the Trans-Pacific Partnership, potentially the world's biggest trade agreement for more than 20 years.
⇧ The drop in the labor force is coming from prime-age Americans, not aging retirees: Examining the 94.6 million Americans not in the labor force.
I noted the following in Walter Kurtz's "The Daily Shot" newsletter of October 12, 2015, which newsletter I like very much:
The final piece of US data I'd like to share is the labor force participation rate. Pundits, the financial media, and even politicians love to discuss falling US labor force participation as an indication of slack in US labor force. The reality is far more complex – although inconvenient for many. While discouraged workers in the US remains a problem, the key factor contributing to falling participation ratio these days is that increasing numbers of Americans simply don't want a job.
That struck me as insufficiently granular (which lack of granularity can happen to anyone; when I discover I've done it, I consider it a growth experience); so, I decided to go looking for the source, etc. I ran into this right away.
Prime-age —don't want a job: This is an odd category and accounts for a large number of Americans not in the labor force. You can have folks that were so exhausted at looking for work that they simply have given up.
Let's look at that in more detail in the next link below.
⇧ Labor Force Participation Dynamics – Federal Reserve Bank of Atlanta
Those who say they don't want a job because they are disabled have a relatively low propensity to subsequently (re)enter the labor force. For some people, saying they currently don't want a job is essentially saying they never want a job. But for others, not wanting a job is a much more temporary state. For example, those prime-aged individuals who say they don't currently want a job because they are in school or training have a relatively high likelihood of (re)entering the labor force. About 40 percent turn up in the labor force the following year, compared to less than 10 percent of people who are disabled or ill, or those who say they are retired.
How much of the rise in the share of the prime-age population is a cyclical response to the Great Recession and tepid recovery is hard to gauge. It is possible that some of the rise in the share of prime-age individuals who say they don't want a job is due to skill erosion during prolonged unemployment or permanent changes in the composition of demand (a different mix of skills and job descriptions). In addition, it is likely that the rise in the share of prime-age individuals not currently wanting a job because they are in school or training is partly a response to the perception of inadequate skills. In general, fewer labor market opportunities result in a decline in the opportunity cost of any of these nonlabor market activities. Thus, it seems reasonable to assume that as the labor market improves and the opportunity costs of nonparticipation increases, there will be some upward pressure on the rate of labor force participation for prime-aged workers. However, the demographic forces of an aging population will likely cause the overall participation rate to still drift a bit lower over the next decade.
Now, that's more granular. "I don't want a job right now considering my particular circumstances and current state of the economy." That's what I thought.
Also, more people are on disability because they were desperate and applied when the thought had never occurred to them before. Lastly, some of them likely have "fudged" the account of their "disability." There's plenty of claim fraud in insurance, including workers comp, is why I more than highly suspect that some are faking their disability.
⇧ mainly macro: A stimulus junkie's lament
When the interests of politics and money collide with straightforward economics, economics does not stand a chance. If the incentives for getting the economics right are weak, the idea that economics loses out to money and politics is also just basic economics.
Ain't it the truth!
⇧ Want a discount on a house? Drive way out of town
Realtors used to say you get $1,000 in savings per mile as you drive outside of the city. The farther you go, the more you get for your money. That is no longer the case, as the nation's urban housing markets have recovered from the recession far faster than the so-called exurbs, or, the areas beyond the close-in suburbs.
⇧ My Top 4 Most Shocking Real Estate Horror Stories: What Are Yours?
So I called the fire department, and they told us verbatim, "Oh yea, man. We know that house! It burnt to the ground LAST NIGHT!"
I lost it!
I bought the house on Monday, and it burnt to the ground on Tuesday. The worst part of it was that because the property was so cheap, and at the time my turnover was typically only a week or two, I didn't bother to get insurance on it.
Lesson I learned: Even though a house is cheap, you might want to get some insurance on it, starting the day you buy it, no matter what!
There's a lesson that comes before that one: Check to see if you can even get insurance on it first. If it's not insurable, walk away. Of course, you have to first visit the property in order to really walk away from it. Okay, so you can "walk away" from a deal without having visited the property, but do visit the property before agreeing to buy it, even if your visit is via a highly trusted proxy.
In case you're wondering, no, I wouldn't send such a property as the one described to the insurance underwriter to even consider because it would be rejected out of hand and the underwriter would wonder what's wrong with me — not the reputation you want your insurance broker to have with the carrier.
Good story though. Sorry Brett "lost his shirt" on it.
⇧ World cannot spend its way out of a slump, warns OECD chief – Telegraph
"We don't have room to inflate our way out of this one. So we go back to the same issue: it's structural, structural, structural."
Yes, it's structural; but Angel Gurria, Secretary General OECD, is putting forth bad ideas for what structural changes should take place. We definitely need banking and monetary reforms on a global basis. We need vastly more economic democracy. We need the money supply to be debt-and-interest free. We also need it to be pegged exactly to democratically decided growth targets. Those are all things that the bankers do not want the voters to even be aware of; therefore, spread those ideas.
⇧ The influence of monetary policy on bank profitability
This paper investigates how monetary policy affects bank profitability. We use data for 109 large international banks headquartered in 14 major advanced economies for the period 1995-2012. Overall, we find a positive relationship between the level of short-term rates and the slope of the yield curve (the "interest rate structure", for short), on the one hand, and bank profitability – return on assets – on the other. This suggests that the positive impact of the interest rate structure on net interest income dominates the negative one on loan loss provisions and on non-interest income. We also find that the effect is stronger when the interest rate level is lower and the slope less steep, ie that non-linearities are present. All this suggests that, over time, unusually low interest rates and an unusually flat term structure erode bank profitability.
That's what I said quite awhile ago before it became "news." Toot-toot.
That's my own horn I'm tooting there.
⇧ Higher Interest Rates Would Throw Bank Profits a Lifeline – Bloomberg Business
The conclusion drawn by Claudio Borio, the head of the monetary and economic department at the BIS, and colleagues is that the positive impact of being able to earn income by lending money out for higher rates over time is bigger than the hit of defaults and income that doesn't carry interest.
I commented on this issue last week (http://propertypak.com/2015/10/07/news- real-estate-risk-economics-oct-7-2015/#1 0071552) and have been vindicated here by Claudio Borio. Thank you very much.
⇧ Nobel Economist Showed We're Helping the Wrong People – Bloomberg View
… Deaton [Angus Deaton] has demonstrated that if the goal is to improve people's lives, we ought to be focusing most aggressively on helping people who earn less than $75,000 — and also on helping caregivers, parents of young children, smokers, and people with chronic illnesses. At the same time, the government might want to direct fewer resources toward programs that disproportionately benefit those above that threshold — on the simple grounds that the money is likely to generate a lower return.
Well, the libertarian capitalist will immediately say that the best way to get more money to more people is via deregulation and small government. Therefore, you have to address those statements first and via data.
It has been done, and the results show that deregulation and small government does not lead to greater general-prosperity but rather a greater concentration of income and wealth at the top.
⇧ Cardiff de Alejo Garcia: Deaton on US inequality and the Pareto criterion
Cardiff de Alejo Garcia:
… I'm passing along the most memorable passage on the topic [inequality] that I've come across lately. It's from Angus Deaton's excellent The Great Escape ….
One way of measuring equality of opportunity is to look at the correlation between earnings of fathers and sons. In a completely mobile society, with perfect equality of opportunity, your earnings should be unrelated to what your father earned; by contrast, in a hereditary caste society, in which jobs are handed from one generation to the next, the correlation would be 1.
In the United States, the correlation is 0.5, which is the highest of the OECD countries and is exceeded only by those of China and a handful of countries where there appears to be the least equality of opportunity.
Even if we believe that equality of opportunity is what we want, and don't care about inequality of outcomes, the two tend to go together, which suggests that inequality itself is a barrier to equal opportunity.
If democracy becomes plutocracy, those who are not rich are effectively disenfranchised. Justice Louis Brandeis famously argued that the United States could have either democracy or wealth concentrated in the hands of a few, but not both. The political equality that is required by democracy is always under threat from economic inequality, and the more extreme the economic inequality, the greater the threat to democracy.
If democracy is compromised, there is a direct loss of wellbeing because people have good reason to value their ability to participate in political life, and the loss of that ability is instrumental in threatening other harm.
The very wealthy have little need for state-provided education or health care; they have every reason to support cuts in Medicare and to fight any increase in taxes. They have even less reason to support health insurance for everyone, or to worry about the low quality of public schools that plagues mu ch of the country. They will oppose any regulation of banks that restricts profits, even if it helps those who cannot cover their mortgages or protects the public against predatory lending, deceptive advertising, or even a repetition of the financial crash.
Fantastic observations! Three cheers for Angus.
⇧ FRB: Speech–Brainard, Economic Outlook and Monetary Policy–October 12, 2015
Governor Lael Brainard (https://en.wikipedia.org/wiki/Lael_Brai nard)
At the "North America's Place in a Changing World Economy," 57th National Association for Business Economics Annual Meeting, Washington, D.C.
October 12, 2015
Economic Outlook and Monetary Policy
There is a risk that the intensification of international cross currents could weigh more heavily on U.S. demand directly, or that the anticipation of a sharper divergence in U.S. policy could impose restraint through additional tightening of financial conditions. For these reasons, I view the risks to the economic outlook as tilted to the downside. The downside risks make a strong case for continuing to carefully nurture the U.S. recovery–and argue against prematurely taking away the support that has been so critical to its vitality.
These risks matter more than usual because the ability to provide additional accommodation if downside risks materialize is, in practice, more constrained than the ability to remove accommodation more rapidly if upside risks materialize. The asymmetry in risk management stems from the combination of the likely low current level of the neutral real interest rate and the effective lower bound. …
We should not take the continued strength of domestic demand growth for granted. Although the outlook for domestic demand is good, global forces are weighing on net exports and inflation, and the risks from abroad appear tilted to the downside. Our economy has made good progress toward full employment, but sluggish wage growth suggests there is some room to go, and inflation has remained persistently below our target. With equilibrium real interest rates likely to remain low for some time and policy options that are more limited if conditions deteriorate than if they accelerate, risk-management consider ations counsel a stance of waiting to see if the risks to the outlook diminish.
That's one sharp cookie (if I may respectfully refer to her as such).
⇧ Macro and Other Market Musings: People's QE Has Been Tried Before and Failed
… let's imagine Jeremy Corbyn becomes Prime Minister and the BoE engages in People's QE with its current 2% inflation target. Investment spending would initially begin to grow, but quickly run up against the inflation target and force the BoE to either pull back on or start sterilizing its purchases.
That's absolutely not necessarily true. It all depends upon exactly the level of sustainable productivity achieved by the monetary injections. If the injections are properly targeted, there will be no demand/supply imbalance resulting in any price inflation or deflation.
Get up to speed and with the program, David Beckworth (I write with a positive spirit toward him).
Japan simply did it wrong. Their experience does not have to translate to the UK or anywhere else. In fact, Japan could try again with greater calibration in mind. Frankly, I believe they're quite capable.
⇧ Fed Struggles With The High Water Mark – Tim Duy's Fed Watch
A very considered piece by Tim Duy:
Don't expect communications to become much clearer. October is off the table (despite what Lacker might believe). They first need to decide if the last two months of jobs data were aberrations or signals of slowing job growth. They can't do that before October. And I am not confident they can do so by December. If we get two more reports hovering around 200k a month between now and December, matched with generally consistent data across other indicators, then December is on the table. That would indicate the economy is not coming off its high water mark without some help from the Fed. If jobs growth slows to 100k a month, again with a broad swath of generally consistent data, then we are looking at deep into 2016 before any hike. Around 150k is the gray area. They won't know if the economy is poised to head lower on its own, or if that is sufficient to contain inflationary pressures. They don't know if they should be tapping on the breaks or not. Risk management under the assumption of constrained inflation suggests they push off action until January or March. But they would not send such a clear message. Indeed, I suspect that more numbers like the last two will make the December meeting much like September's. That I fear is my current baseline – another close call in which the Fed concludes to take a pass.
Personally, I believe the Fed's hawkish-side is masking working for the bankers behind the Phillips-Curve excuse with a directly negative impact upon the un- and underemployed and underpaid.
We all know that if needs be, the Fed could slam on the brakes of any overheating economy. It's proportional, perhaps on a curve but still.
I would rather err on the side of employing people at higher wages than giving the bankers a pay raise and supposedly harming those on fixed-income investments. The bankers won't be starving and the retirees could be, and should be, taken care of by other means (if we only had the collective heart).
⇧ Birmingham councilwoman wants fines, jail time for owners of run-down properties | AL.com
Landlords who let Birmingham properties fall into disrepair or don't oversee tenants should be fined or even face jail time, a city councilwoman says.
"We're still paying for them to be slumlords," she said.
"They should be fined, and I'm not talking about $500," Tyson said. "It should be $5,000. And if they don't pay their fine, their license should be pulled and time in jail.
⇧ Full text: McDonnell's letter to Labour MPs on opposing fiscal charter | LabourList
John McDonnell MP
The divisions over the cuts in tax credits to working families are just the first example of what we can expect as the cuts in other departments are exposed and the failure to find additional resources to bridge the growing expenditure gap in service areas like the NHS is revealed.
So I believe that we need to underline our position as an anti-austerity party by voting against the Charter on Wednesday. We will make clear our commitment to reducing the deficit in a fair and balanced way by publishing for the debate our own statement on budget responsibility. We will set out our plan for tackling the deficit not through punishing the most vulnerable and damaging our public services but by ending the unfair tax cuts to the wealthy, tackling tax evasion and investing for growth.
⇧ We must challenge Austerity and the Deficit Lies | TLE
Oh, the times they are a changin.
It is so fantastic to see that the prophecy that what is contained in the link piece would end up common knowledge is being fulfilled!
Professor Mary Mellor has done a very commendable job of summing up the position. Let's keep the knowledge flowing.
The Labour U-turn to vote against Osborne's fiscal charter 'trap' is welcome, but it cannot stop there — Labour needs to open up a real debate about public access to money in a modern economy. Osborne's aim to enshrine in law that States must not run deficits is profoundly undemocratic. It reflects the demand of neoliberal 'handbag economics' that the public sector cannot and should not 'create money' by running a deficit. This denial of the right of the public to create and use its own money is profoundly undemocratic because it leaves the public economy mired in debt, in hock to the speculators of the financial sector.
Does that remind you of what you've been reading on this blog for a long, long time? I hope it does.
Thank you, Mary. Keep driving it home.
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