Linking ≠ endorsement.
⇧ George Will's Freedom to Be Unequal Depends a Lot on Government Coercion — FAIR
Dean Baker dismantles George Will's position.
Nor should we pay attention to Federal Reserve Board policies that deliberately slow the economy and reduce the rate of job creation anytime workers are about to get substantial bargaining power. Nor should we pay attention to trade policies that put our manufacturing workers in direct competition with low-paid workers in Mexico and China, but protect our doctors, lawyers and other professionals.
The moral is that the government is part of the economy, whether George Will likes it or not. The battle is over who is likely to be better served by its actions.
⇧ RESPA Rules on Agents | Realtor Magazine
Make sure the language in the purchase contract makes clear that buyers, if they're paying for the title policy, are free to select their own title insurance company.
⇧ ECB survey shows bank sector on mend | Business | ekathimerini.com
The banks are lowering standards, which may not be a good idea in the long run; but, the ECB's conditioning loans is a solid thing, which I advocated for the Fed to do before the ECB ever embarked on QE of any kind.
… it [the ECB] is making cheap funding available to banks via its TLTRO or targeted long-term refinancing operation programme on the condition that the banks will lend the cash on to businesses.
⇧ What Is Glass-Steagall? The 82-Year-Old Banking Law That Stirred the Debate – The New York Times
… the debate over Glass-Steagall reinstatement can be viewed as less about the gritty details of exactly what business lines Citigroup and JPMorgan should be allowed to engage in, and more about the general thrust of how aggressively to regulate Wall Street.
No, it's as much about both.
Bear Stearns, Lehman Brothers, Merrill Lynch, Goldman Sachs and Morgan Stanley were all traditional investment banks heading into the crisis. Fannie Mae and Freddie Mac were government-sponsored housing finance companies. A.I.G. was an insurance company.
Neil Irwin is repeating a long-since debunked notion: that investment banks didn't own and control FDIC-insured, commercial, depositary banks. They did. So did AIG.
A funny thing happened in 2012 after Andrew Ross Sorkin, a financial writer at the New York Times, wrote his spectacularly false narrative telling readers that the repeal of Glass-Steagall Act had nothing to do with the crash because problem firms like Lehman Brothers, Merrill Lynch and AIG didn't own insured commercial banks — which would have been prohibited under the Glass Steagall Act, had it not been repealed in 1999. In fact, all three of the firms did, indeed, own banks insured by the FDIC at the time of the crash. [source: http://wallstreetonparade.com/2015/10/ex clusive-federal-reserve-videos-and-the-g lass-steagall-media-conspiracy/%5D
So, don't buy into the narrative that the repeal of Glass-Steagall had little to nothing to do with the 2008 economic collapse.
⇧ Repeal of Glass-Steagall: Not a cause, but a multiplier – The Washington Post
Imagine a "but for" scenario where Glass-Steagall had not been overturned but the rest of the deregulatory actions had still taken place. Would the crisis have occurred? Without a doubt, yes.
However and as Barry seems to state, "the rest of the deregulatory actions" were part and parcel of the entire ideologically driven cause of the crisis. What needs to be done is to reinstate Glass-Steagall and unwind the other deregulatory schemes that sank the economy. Who cares what the bankers wanted, or still want, vis-a-vis banking in other countries? The object is to wall off deposit banking from speculation, period. The object is to treat deposit banking as a public utility for the good of the non-plutocrats.
⇧ Maysville shocked by fire that killed five
Authorities said the fire started in an enclosed porch in back of one of the row house units. The three row houses that sustained the most damage and where the deaths occurred were rental units with a combined 12-16 units. About 30 residents are without a home.
The homes were very old like much of downtown Maysville, where 200-year-old buildings aren't unusual. But the age of the buildings isn't necessarily responsible for the fire. The original builders built firewalls between each row house, Doyle said.
Later additions and modifications to the attics helped the fire spread, he said.
"The problem is, over the years we add onto these buildings, put holes and access to firewalls which allow that fire to spread from one attic area to another," Doyle said.
⇧ Demand for rental apartments buoys U.S. housing starts – Business Insider
Starts for multi-family projects surged 18.3 percent to a 466,000 unit pace, the highest level since June. Multi-family construction is being driven by demand for rentals, especially by millennials, who cannot afford to buy their own homes because of higher prices and debt burdens.
⇧ Baker markets state properties for housing, economic opportunities – Boston Business Journal
Rep. Russell Holmes, a Mattapan Democrat, said he is particularly interested in the Mattapan Station parking lot, a 2.7-acre site with 240 parking spaces that is only 20 percent used on a typical weekday, according to the state.
Holmes said more than a year ago the state attempted to give the site to a charter school, but he hopes it could be developed into a mixed-use site similar to the Carruth Building in Dorchester's Ashmont neighborhood, with restaurants and retail on the first floor and a mix of affordable and market-rate residential units in the floors above.
⇧ Land bank to sell properties to occupants for $1,000
On Tuesday, the land bank finalized a pilot program to start selling the homes to those occupying them for $1,000 each.
If the people can be employed in jobs paying enough to handle ownership in a sensible manner, more power to them. I wonder if the $1,000 is flat for all properties. Some properties are worth more than others is why I wonder.
⇧ Housing market in Fort McMurray area takes hard punch from depressed oil prices | Calgary Herald
In the heart of Alberta's oil country, the continued depressed price of that commodity is having a significant impact on the housing market.
According to data obtained from the Canadian Real Estate Association, MLS residential sales in the Fort McMurray area plunged in September to 80 transactions, down 39.8 per cent from a year ago. The average sale price was also off by 12.6 per cent to $536,741 [Canadian].
⇧ Man sentenced for setting fire to get insurance money – News – The Times-News – Burlington, NC
A Burlington man was sentenced Monday for setting fire to a Gibsonville home to collect insurance on the property.
David Glenn Lawless, 48, 3508 Garden Road, pleaded guilty Sept. 9 to fraudulently burning a dwelling. …
A charge of insurance fraud was dismissed in the plea agreement.
⇧ Another quarter of remarkably precise China GDP growth data
It seems implausible that economists, who are often widely panned as a group for failing to predict economic turning points, are uncannily able to nail Chinese GDP within a few tiny slivers of a percentage point each and every time.
Many analysts and investors, including those with plenty of experience covering China, increasingly are challenging the growth data.It seems implausible that economists, who are often widely panned as a group for failing to predict economic turning points, are uncannily able to nail Chinese GDP within a few tiny slivers of a percentage point each and every time.
Many analysts and investors, including those with plenty of experience covering China, increasingly are challenging the growth data.
As they should be.
⇧ The Supreme Court May Weigh In on a Student Debt Battle – Bloomberg Business
This case certainly has a direct bearing on the real-estate sector, as student debt has made it more difficult for people to buy or rent residential and commercial property.
Let's call it Brunner v. the "totality of the circumstances":
Tetzlaff has spent three years battling lawyers for the Department of Education over the right to have his student loans canceled in bankruptcy. On Thursday, he appealed his case to the Supreme Court. If the nation's highest court takes the case on, it will be one of the rare occasions when it has addressed the $1.3 trillion pile of student debt held by 41 million Americans.
As far as I'm concerned, the student-loan industry is a racket.
⇧ More Artificial Unintelligence – The New York Times
Oh, here goes Krugman insulting so-and-so again.
The "low interest rates = price controls" meme is bang-your-head-on-the-table stupid ….
But he's right.
⇧ mainly macro: Linking tax credits and the fiscal charter
The days when deficit fetishism gripped voters are coming to an end. Labour needs to change its rhetoric to reflect this, and paint Osborne into the ideological corner he occupies.
Why hasn't this happened before? Why have progressives been timid for decades?
Well, one reason is that the openness of the Internet has allowed progressives to spread the word despite the corporate-paywall media.
Therefore, make sure you don't let the corporatist close down the open Internet.
⇧ The Myth of Welfare's Corrupting Influence on the Poor – The New York Times
… Actual experience, from the richest country in the world to some of the poorest places on the planet, suggests that cash assistance can be of enormous help for the poor. …
Abhijit Banerjee, a director of the Poverty Action Lab at the Massachusetts Institute of Technology, released a paper with three colleagues last week that carefully assessed the effects of seven cash-transfer programs in Mexico, Morocco, Honduras, Nicaragua, the Philippines and Indonesia. It found "no systematic evidence that cash transfer programs discourage work."
Professor Banerjee suggests the spread of welfare aversion around the world might be an American confection. "Many governments have economic advisers with degrees from the United States who share the same ideology," he said. "Ideology is much more pervasive than the facts."
… welfare provides very tangible benefits. New research shows that more cash welfare early in a child's life improves the child's longevity, educational attainment and nutritional status, and income in adulthood.
When the Great Recession struck, many of the poorest Americans found there was no safety net for them.
⇧ Real estate today: Older buyers, more bathrooms
… new homes that are just being built typically have 2,200 square feet, according to an analysis by the National Association of Home Builders. Potential homebuyers say they want a place that is at least that large.
So what's going into all that extra space?
"Builders are adding more bathrooms. You want a little bit more privacy," says Olsen.
Multi-family homes are also booming as people buy homes as investment properties to rent out. In the late 1980s, people would rent for four years before purchasing their first home. Now it's at least six years.
⇧ How to Fix the Euro Area Without Breaking It | Economic Research, Economics | Bloomberg Professional
The article is very strong on history but extremely weak on solutions.
…implementation would make the currency union stronger by giving national governments an alternative to austerity, providing the private sector with more diversified funding sources, and shoring up national competitiveness.
The problem with such incrementalism is that it's way too weak on educating the masses. The people are smart enough to make the right choices if consistently given enough concise, plain-language information. The plutocrats are withholding it.
⇧ Stumbling and Mumbling: Steel, & austerity denial
Weak demand is being presented as something natural and immutable, rather than what it is – a policy choice.
⇧ China Finds More Discreet Ways to Support the Yuan – Bloomberg Business
Oh brother, nothing like postponing the fundamentals:
… China's large state banks borrowed dollars in the swap market, sold the U.S. currency in the cash spot market and used forward contracts with the central bank to hedge those positions.
⇧ Think your rent's too darn high? Just wait
The vast majority of new supply has been in pricier areas, in particular major urban cores, which has not helped renters in the suburbs or in smaller cities who are in dire need of more affordable rental housing.
"New inventory coming to market is weighted to the high end; it's urban, Class A, with a rich set of amenities, targeting the coveted college-educated millennial," said Sam Chandan, president of Chandan Economics. "Overall, we still have an affordability crisis in the United States with rents rising faster than incomes for the fourth-consecutive year."
… Thirty-five percent of new home starts in 2015 have been multi-unit. That is higher than a year ago and the highest share since 1973. Developers are simply going to where demand is highest and most lucrative.
⇧ COMERS v. Bank of Canada: Canadians Still Fighting to Restore their National Public Bank – Public Banking Institute
Someone then asked: "Why should Canadians care about this?"
"Because," Galati answered, "they're paying $30-40 billion a year in useless interest since 74. $1.1 trillion in useless interest alone. To fraudsters."
Usury/interest is a racket.
⇧ Exclusive Federal Reserve Videos and the Glass-Steagall Media Conspiracy
Repeated from my commentary at article 4 above:
A funny thing happened in 2012 after Andrew Ross Sorkin, a financial writer at the New York Times, wrote his spectacularly false narrative telling readers that the repeal of Glass-Steagall Act had nothing to do with the crash because problem firms like Lehman Brothers, Merrill Lynch and AIG didn't own insured commercial banks — which would have been prohibited under the Glass Steagall Act, had it not been repealed in 1999. In fact, all three of the firms did, indeed, own banks insured by the FDIC at the time of the crash.
⇧ Close to danger: Poor infrastructure, old levees threaten residents near Cali. Delta – YouTube
Growing problems with the Southern California Delta levees and nearly nonexistent infrastructure have fueled local concerns that disasters such as Hurricane Katrina would not only affect residents, but also be detrimental to millions across California. Simone Del Rosario investigates the infrastructural failures and how they could create a catastrophe at a national level.
Where could the money come from? Where should it come from? It shouldn't come from issuing bonds but from bond-free currency.
⇧ Reformers Stymie Obama a Second Time on Wall Street Cronies: Progressive Pick Lisa Fairfax Nominated for SEC | naked capitalism
Democratic commissioners Kara Stein and the outgoing Luis Aguilar have been able to curtail some of the agency's particularly dubious established policies, like giving financial services industry recidivists waivers from sanctions that were mandated by law when they settled for violations of securities laws. …
… it was an important precedent early this year when pro-bank reform Senators, led by Elizabeth Warren, made so much of a stink over Obama's nomination of Lazard international mergers & acquisitions banker Antonio Weiss to a senior Treasury post for which he was not qualified that he withdrew. …
A less-high-profile fight has been underway for the replacement to Luis Aguilar at the SEC. Normally, an SEC commissioner is not a great position for influencing policy, but Kara Stein has made very effective use of her position to call out weak SEC policies, putting her in the unusual position of opposing a commissioner from her own party. …
Thus Obama planned to end Kara Stein's effectiveness as a reformer by getting a pro-bank replacement for Aguilar in place (Aguilar's term ended earlier this year, but he can continue to serve until the end of 2015 if his replacement has not been approved by the Senate). The trial balloon floated was for Kier Gumbs ….
But Rootstrikers, Public Citizen, and other progressives immediately raised a hue and cry about Gumbs, and that took place in concert with ongoing, and well-deserved criticism of Mary Jo White's dereliction of duty by Credo and other activists. That forced Obama to table a nomination for Aguilar's slot considerably to the left of where he wanted to go in nominating Lisa Fairfax.
⇧ Saudi, US Oil Inventories Hit Record High as Demand Fizzles | Wolf Street
… by April, we'll be having oil coming out of our ears!
⇧ Trapped: Few Developing Countries Can Climb the Economic Ladder or Stay There
Maria A. Arias and Yi Wen:
Many poor countries today have a per capita income that is 30 to 50 times smaller than that of the U.S. and sometimes even lower (less than $1,000 per year in 2014). For such countries to catch up to U.S. living standards, it may take at least 170 to 200 years, assuming that the former could maintain a growth rate that is constantly 2 percentage points over the U.S. rate (which is about 3 percent per year). This would be difficult, if not impossible. It is even harder to imagine that such countries could reach U.S. living standards within one to two generations (40 to 50 years), similar to how North American and Western European economies caught up to Britain during the 1800s after the Industrial Revolution. To achieve that speed of convergence today, the developing countries would need to grow about 8 percentage points faster than the U.S. (or about 11 percent per year) nonstop for 40 to 50 years. In recent history, only China came close to this; it was able to maintain a 10 percent annual growth rate (7 percentage points above the U.S. rate) for 35 years, but per capita income in China was still only one-seventh of that in the U.S. in 2014.
Hence, the lack of income convergence and the relative income traps appear to be real problems. …
Comparing the divergent growth paths of Mexico and Ireland in the 20th century suggests that state capacity and industrial policies are critical in explaining the issue, rather than differences in political institutions or vast interests of local monopolies, per se.
The authors applied an insufficient definition of democracy and didn't really treat it over a long enough period or gauge it by its relative degrees. In other words, they were insufficiently granular concerning the issue.
The real problem is that at no time in world history has any nation-state been sufficiently democratic. Therefore, there is no hard data to go by. There are only outlines based upon trends. Furthermore, trends are often cut short by creeping anti-democratic forces, even in the US. Nevertheless, the article is worth the time to read.
⇧ Albuquerque Journal | Skip health insurance, pay $695 fine
… in 2016, the penalty for being uninsured will rise to the greater of either $695 or 2.5 percent of taxable income. That's for someone without coverage for a full 12 months. This year the comparable numbers are $325 or 2 percent of income.
The requirement that individuals get health insurance or face fines remains the most unpopular part of President Barack Obama's health care law, a prime target of Republican repeal efforts. It started at $95 or 1 percent of income in 2014. The fact that it's gone up so much may take consumers by surprise.
But many experts consider the mandate essential to Obama's overall approach, as does the insurance industry. The law forbids insurers from turning away people with health problems, and the coverage requirement forces healthy people into the insurance pool, helping to keep premiums in check. After 2016, the fines will rise with inflation.
⇧ Landscaping and Your Property Appraisal – YouTube
Do you neglect the exterior of your buildings and the property's landscaping? Don't.
This week, my guest is Lance Coyle, current President of the Appraisal Institute. We'll cover a range of topics related to real estate appraisals, starting with the latest on how property appraisers are faring in their efforts to leverage drones as property assessment tools. Then, we'll discuss the importance of landscaping ….
There's value in landscaping that reduces the potential for water damage to buildings and that reduces water and energy usage too. So, do your homework and have fun.
By the way, bad landscaping will cost you in higher premiums (if you can even get coverage from a highly rated carrier).
⇧ Housing market hasn't peaked yet: Deutsche Bank
Deutsche Bank's analysis comes amid a chorus of investment banks suggesting house prices are set for a fall.
Among the most bearish was Macquarie Group which said it expected a 7.5 per cent fall in prices beginning in March.
Credit Suisse noted house buying conditions had "deteriorated sharply" and said buying a property was now riskier than shares, while Morgan Stanley said the housing had peaked, increasing the risks of a recession in Australia.
The latest Domain House Price Report released this week declared Sydney's house price boom was over, with the growth in median house prices slowing to 3.2 per cent in the September quarter, well down on the 7.7 per cent increase in the June quarter.
"The great Sydney house price boom has ended, with house price growth tracking back sharply over the September quarter," Domain, which is owned by Fairfax Media, said.
But the board minutes for the Reserve Bank of Australia October meeting revealed the central bank was more sanguine about the housing sector.
If it bounces back, it will be a sign of global-slowdown denial.
⇧ Does Seattle have the nation's hottest housing market? – seattlepi.com
Have you tried to buy or sell a home in Seattle recently?
Then you should know that you have been doing that in the nation's hottest real estate market for single-family homes.
⇧ 3 Unbelievable Real Estate Tax Shelters of the Rich
If purchasing 10 acres of rural land, 1031 Exchanges, and Dynasty Trusts are not in your immediate pathway to wealth, but perhaps homeownership and real estate investing are. And as you're on your journey, remember these real estate tax shelters ….
⇧ 2015 Likely to Be Hottest Year Ever Recorded – The New York Times
Now this is the El Niño I was expecting. I was beginning to wonder where it was, but it has certainly shown up.
Global temperatures are running far above last year's record-setting level, all but guaranteeing that 2015 will be the hottest year in the historical record — and undermining political claims that global warming had somehow stopped.
The immediate cause of the record-breaking warmth is a strong El Niño weather pattern, in which the ocean releases immense amounts of heat into the atmosphere. But temperatures are running so far ahead of those during the last strong El Niño, in 1997 and 1998, that scientists said the records would not be occurring without an underlying trend caused by human emissions of greenhouse gases.
For much of the past decade, people who question established climate science have been claiming that global warming had stopped. Their argument depended on picking a particular base year — almost always 1998, the final year of the last strong El Niño — as their starting point.
How many people will admit they have egg on their faces?
⇧ Official Statistics Understate Chinese Unemployment Rate
China's real unemployment rate is much higher than the official rate and, when correctly measured, is much closer to that in other nations at similar levels of development, according to Long Run Trends in Unemployment and Labor Force Participation in China (NBER Working Paper No. 21460). The study estimates that the actual unemployment rate in 2002-09 averaged nearly 11 percent, while the official rate averaged less than half that.
… This paper uses for the first time a nationally representative sample of registered urban residents—the "hukou" population—based on urban household survey data, supplemented with weights derived from the decennial census. The study derives a much different picture of how Chinese unemployment has evolved since the mid-1990s.
I don't trust China's official numbers on anything.
⇧ Killing Off Community Banks — Intended Consequence of Dodd-Frank? | WEB OF DEBT BLOG
At over 2,300 pages, the Dodd Frank Act is the longest and most complicated bill ever passed by the US legislature. It was supposed to end "too big to fail" and "bailouts," and to "promote financial stability." But Dodd-Frank's "orderly liquidation authority" has replaced bailouts with bail-ins, meaning that in the event of insolvency, big banks are to recapitalize themselves with the savings of their creditors and depositors. The banks deemed too big are more than 30% bigger than before the Act was passed in 2010, and 80% bigger than before the banking crisis of 2008. The six largest US financial institutions now have assets of some $10 trillion, amounting to almost 60% of GDP; and they control nearly 50% of all bank deposits.
⇧ Irish biggest losers from financial crash – ECB
The Irish lost more of their personal wealth than any other euro zone country in the aftermath of the financial crash while Germany and the Netherlands gained the most, fresh data from the European Central Bank shows.
In an analysis of the years between 2009 and 2013, ECB experts discovered that Ireland lost more than €18,000 per person ….
⇧ Defiant Portugal shatters the eurozone's political complacency – Telegraph
Antonio Costa, Portugal's Socialist leader and son of a Goan poet, has refused to go along with further pay cuts for public workers, or to submit tamely to a Right-wing coalition under the thumb of the now-departed EU-IMF 'Troika'.
Against all assumptions, he has suspended his party's historic feud with Portugal's Communists and combined in a triple alliance with the Left Bloc. The trio have demanded the right to govern the country, and together they have an absolute majority in the Portuguese parliament.
The currency bloc is in worse shape on almost every metric than it was before the Lehman crisis. Debt levels are 35 percentage points of GDP higher. EMU-wide unemployment is stuck at 11pc. The credibility of eurozone leadership is in tatters.
Let's hope they have more backbone than Alexis Tsipras. At least they have Yanis Varoufakis's outline for creating a parallel currency. They should use it if the Germans and others refuse to budge.
⇧ Even the Cheapest Homes Are Too Expensive for Millennials – Bloomberg Business
Prices for the least expensive previously owned homes — properties at 75 percent or less of the median — were up 10.7 percent in August from a year earlier and now represent the only one of four price tiers to surpass the peak reached during the housing bubble ….
⇧ Lullwater Apartments sustains heavy fire damage in overnight incident | Columbus Ledger-Enquirer
Columbus Fire Marshal Ricky Shores said the 8400 Veterans Parkway apartment, a wood-framed structure, sustained heavy fire damage. One building comprised of 20 units was a total loss, Herring added.
A Lullwater resident said Monday that they're required to have renters insurance.
I bet the tenants are glad of that for sure now.
⇧ Wall Street: A winning presidential punching bag — for both sides – The Washington Post
According to a new Washington Post-ABC News poll, 67 percent of Americans would support a president who favors stricter regulations of financial institutions on Wall Street (compared to 24 percent who want someone who opposes stricter regulations). And that stance is near-universal; there's no large variation by gender, race, age and education level.
⇧ As China weakens, recession stalks North Asia | Reuters
PMI readings are contracting across most of Asia-Pacific, with new orders falling at the fastest pace since early 2009, and inventories piling up, meaning that production may have further to fall before economies shake off spare capacity ….
⇧ Airbnb beefs up liability insurance offering for hosts – CNET
"Some insurance companies may provide coverage if you occasionally rent out a room, but making all or part of your home available for regular rental likely would be considered business use," the Oregon Insurance Division warns in an advisory page that mentions Airbnb by name. "Homeowner policies generally do not provide coverage for business use."
⇧ 26 bankers already sentenced to a combined 74 years in prison | Icelandmag
In two separate rulings last week, the Supreme Court of Iceland and the Reykjavík District Court sentenced three top managers of Landsbankinn and two top managers of Kaupþing, along with one prominent investor, to prison for crimes committed in the lead-up to the financial collapse of 2008. With these rulings the number of bankers and financiers who have been sentenced to prison for crimes relating to the financial collapse has reached 26, and a combined prison time of 74 years.
⇧ Europe adopts American 'multifamily' model – The Investor
Multifamily investment is big business in America. Popular among private equity and pension funds, it offers some of the best returns in American real estate: last year saw record breaking volumes of US$110 billion, topping the 2007 peak. Put simply, it's the business of investing in apartment blocks but the term 'multifamily' hasn't made it into the mainstream financial vernacular in Europe; it's better described as 'buy-to-rent' and it's fledgling in comparison.
⇧ A Lot of Cheap Housing Is About to Get Very Expensive – Bloomberg Business
There are currently about 1.34 million units of affordable housing created by a HUD program known as Section 8 project-based rental assistance, according to a blog post published on Wednesday by Poethig and her Urban Institute colleague Reed Jordan. More than 30 percent of those units are kept affordable by contracts that are set to expire by the end of 2017.
That raises the possibility that property owners, especially in gentrifying neighborhoods, will seek to cash out, wiping affordable units off the books. "Congress doesn't let HUD do new contracts," she said. "Once a project is lost, it's lost."
Most of those contracts are likely to be renewed. Historically, about 8 percent of expiring contracts are allowed to lapse, according to Poethig's blog post.
That figure may understate the current stakes.
⇧ Ask Real Estate – The New York Times
Answers to reader questions about real estate, home buying and renting, mortgages, insurance, leases, condominiums and co-ops and real estate law.
⇧ Housing starts jump but permit decline could signal looming slowdown | HousingWire
While housing starts rose, building permits came in at a seasonally adjusted annual rate of 1,103,000, which is 5% below the revised August rate of 1,161,000.
"A bit of a mixed report ….
"Furthermore, multifamily construction remains the name of the game with the majority of new projects focused on rental, condo, and co-op units, a reflection of both a change in preferences, as well as a declining ability to afford a home with stagnant wages," Piegza added.
⇧ RealTime Economic Issues Watch | What Does China's GDP Reading Mean for the Fed? Depends on Whether They Buy It
… if Fed officials are paying attention to a broader range of Chinese indicators like prices, imports, and exports, they are likely to have a less sanguine view of the outlook, particularly since these are the sectors with greater external linkages.
Importantly, the Fed has indicated it is not just worried about a China slowdown per se but also about its potential ripple effects on other emerging markets, which are already facing headwinds including deep recessions in Russia and Brazil.
⇧ Even corporate America wants campaign finance reform to stop crony capitalism | Zephyr Teachout | Comment is free | The Guardian
Crony capitalism, the report details, leads to "rent-seeking through subsidies or taxes that benefit vested interests at the expense of others, rather than the pursuit of profit through socially and economically productive behavior".
Democracy is the answer, not saving capitalism from itself. Bring on democracy, and let the chips fall where they may. If they fall with a mixed economy, so be it. If not, so be that too.
⇧ Portugal's Center-Right Govt Returns to Power, Despite Risk – The New York Times
LISBON, Portugal — Portugal's president invited the center-right coalition government of the past four years to return to power Thursday after it won a general election, even though it will be outnumbered in parliament by anti-austerity opponents who vow to force it out within days.
The coalition won the Oct. 4 ballot with 38.4 percent of votes and will rule as a minority government. Pedro Passos Coelho, who has overseen deep cuts in pay, pensions and public services and steep tax hikes, is expected to continue as prime minister.
But an unprecedented alliance of left-of-center parties, led by the moderate Socialists and including the Communist Party and radical Left Bloc, has 122 seats in the 230-seat parliament and says it will use that majority to quickly bring down the government and take power itself, with a promise to ease austerity measures that have hurt Portuguese pockets in recent years.
Most socialist and socialist-leaning (mixed-economy/democratic) parties do not know how to increase public spending without causing too much inflation. It can be done, but few research. Those who do often still repeat the mistakes of the past, which dooms them.
⇧ Heavy rain in West Texas floats some travel trailers away | Fox News
Heavy rain in West Texas on Thursday led to flooding that floated several travel trailers and a double-wide mobile home away from an RV park.
⇧ The Realities Of The Real Estate Technology Sprawl | TechCrunch
While I would love to say that tech in the multifamily real estate sector is booming, the fact is that progress and competition is fairly stagnant and the space is thirsty for tech innovations. The key to bringing multifamily real estate up to speed with commercial real estate is simply more comprehensive and open-source solutions.
⇧ Fiscal Charter Hoopla* obscured big concessions to the City — Prime Economics
We all know how dismally impotent bank compliance officers were in managing and monitoring the activities of their own bank staff in the period before the Great Financial Crisis. Yet today the PRA and Bank of England are effectively restoring to internal compliance officers of big banks the power to agree transfers (or "distributions) between the retail and investment entities of banks.
[Quoting Mark Carney, Governor, Bank of England:]
"More foreign banks operate in the UK than any other EU country, and more than half of the world's largest financial firms have their European headquarters in the UK. The UK has the largest global share of cross-border bank lending, foreign exchange trading, and OTC interest rate derivatives. It has the world's third largest insurance industry and its second largest asset management industry. The UK banking sector is four times GDP and non-bank financial institutions are a similar size while financial services accounted for 8% of output and around 3½% of employment in 2012.
From this real and financial openness flow two important consequences for the UK economy and for the Bank's objectives. …
The flip-side is that openness can change the nature of the unexpected itself, altering the type and scale of shocks hitting the economy.
For example, the complexity of financial linkages can grow and become more opaque, creating new vulnerabilities and more severe shocks.
And openness has the potential to exacerbate existing distortions or inefficiencies. In times of euphoria, foreign capital can flood in and amplify domestic trends. The speed of its flight when passion turns to panic can then deepen the bust that follows boom."
⇧ mainly macro: The last 7 years are an argument against inflation targeting
… the divine coincidence. This is the idea that you do not need to target both output and inflation. Ensuring that inflation is on target in a considered way (by for example looking at inflation two years ahead) will stabilise output as well. While the US central bank has a dual mandate (essentially both inflation and output), central banks that were made independent later (like the Bank of England) have inflation as their primary target. One of the main reasons for this was a growing belief before the Great Recession that the divine coincidence would hold. Target forecast inflation and output will look after itself.
The idea of the divine coincidence has not had a good recession! … We know there are good empirical reasons why the divine coincidence might break down when inflation is low: resistance to nominal wage cuts will mean that monetary policy makers targeting inflation in a recession will overreact to positive inflation shocks like oil price increases and underreact to below target inflation. Add hysteresis, and you can get lasting damage.
So one lesson of the last 7 years must be that relying on the divine coincidence is a mistake. A primary goal of the central bank is to end recessions quickly, and giving it a single primary target of inflation can detract from that.
Yet, we have politicians in the US calling for the Fed's dual mandate to be ended. Now, what they want is little enough inflation to keep labor's power down. That's what it is all about. They'll take higher inflation so long as labor's power is constantly checked. By labor here, I'm not referring to unions (though they are part of labor). I'm referring to all workers who are not also capitalists in the strict sense (meaning they do not own any of the capitalist organization for which they work).
⇧ Debt deflation – Wikipedia, the free encyclopedia
Debt deflation is a theory of economic cycles, which holds that recessions and depressions are due to the overall level of debt shrinking (deflating): the credit cycle is the cause of the economic cycle.
The theory was developed by Irving Fisher following the Wall Street Crash of 1929 and the ensuing Great Depression. The debt deflation theory was familiar to John Maynard Keynes prior to Fisher's discussion of it but he found it lacking in comparison to what would become his theory of liquidity preference. The theory, however, has enjoyed a resurgence of interest since the 1980s, both in mainstream economics and in the heterodox school of Post-Keynesian economics, and has subsequently been developed by such Post-Keynesian economists as Hyman Minsky and Steve Keen and by the mainstream economist Ben Bernanke.
Fiscal stimulus to increase velocity in the main-street economy is the way out.
The problem is two-fold. First is the fact that the argument has historically centered around currency issued as debt (issued with corresponding bonds/governmental debt). Second is the fact that the first problem is ammunition for the deficit hawks.
The truth is 1) the currency could be, and should be, issued debt free and 2) sustainable productivity can be, and also should be, exactly matched in real time to currency supply and its velocity.
It means that we can have, and spend, all the money we want without inflation or deflation so long as we target the spending correctly.
Naturally, the mathematics involved would be designed to anticipate the impact of spending projects. The beauty of the system though is that the money supply would be increased or decreased automatically to speed or slow productivity to adjust inflation and deflation.
It is at once simple but highly sophisticated.
"Monetary-and-Banking-Reform Platform for The United States": http://propertypak.com/introduction-home /articles/monetary -and-banking-reform-platform-for-the-uni ted-states/
⇧ The graphic that shows why 2015 global temperatures are off the charts
Anthropogenic Global Warming (AGW) is a fact.
Climate change sceptics will probably not concede in their battle to avoid action to curb emissions.
Satellite or meteorological data must have been manipulated, the oceans might be producing chemical compounds never detected before that counter carbon dioxide, or perhaps the sun is about to burn a lot less brightly.
Still, they now have one more inconvenient chart they have to find a reason to ignore.
⇧ Washington Wildfire Disaster Declaration Approved by President
President Barack Obama has declared a major disaster exists in the state of Washington following this summer's wildfires and mudslides.
⇧ UPDATE 2-Pulte profit falls as labor shortage hurts home sales | Reuters
Do you know anyone who needs a job and is willing to work? Physically-fit-enough people can start out as laborers or helpers and advance if they pay attention to how things are done and are willing to learn and try new tasks. Remember though: Safety first?
U.S. homebuilders have been grappling with a shortage of qualified construction workers as low wages fail to attract talent.
The median hourly wage for a construction laborer in the United States was $15.12 in 2014, according to the U.S. Bureau of Labor Statistics, compared with $19.64 for carpenters, $23.73 for electricians and $40.24 for construction managers.
⇧ Industries at a Glance: Specialty Trade Contractors: NAICS 238
The Specialty Trade Contractors subsector comprises establishments whose primary activity is performing specific activities (e.g., pouring concrete, site preparation, plumbing, painting, and electrical work) involved in building construction or other activities that are similar for all types of construction, but that are not responsible for the entire project. The work performed may include new work, additions, alterations, maintenance, and repairs. The production work performed by establishments in this subsector is usually subcontracted from establishments of the general contractor type or operative builders, but especially in remodeling and repair construction, work also may be done directly for the owner of the property. Specialty trade contractors usually perform most of their work at the construction site, although they may have shops where they perform prefabrication and other work. Establishments primarily engaged in preparing sites for new construction are also included in this subsector.
⇧ Existing-Home Sales Capacity Decreases 0.1 Percent In September
Mark Fleming, Chief Economist, First American:
Price appreciation fueled by low interest rates is driving market capacity for existing-home sales above actual existing-home sales
… The seasonally adjusted annualized EHS-C estimates the historical relationship between existing-home sales and the U.S. population demographic data, income and labor market conditions in the U.S. economy, price trends in the U.S. housing market, and conditions in the financial market. … seasonally adjusted, annualized rates of existing-home sales below the level of the EHS-C indicate market turnover is underperforming the rate fundamentally supported by the current conditions.
So, capacity went down while actual sales still didn't catch up. Are demographics, income, and labor enough variables? Interest rates are mentioned, but what about debt principle and savings rates?
⇧ Jerome H Powell: The evolving structure of US treasury markets
Speech by Mr Jerome H Powell, Member of the Board of Governors of the Federal Reserve System, at the Federal Reserve Bank of New York, New York City, (via pre-recorded video), 20 October 2015.
… Episodes such as October 15, in which Treasury prices fluctuated wildly with no obvious reason, threaten to erode investor confidence. The growing list of similar events in equity and other markets underscores this concern.
It all has a direct bearing on real-estate-interest rates.
⇧ Inflation expectations and global risks: the need for ECB action | Bruegel
Guntram B. Wolff:
One can debate endlessly whether or not the Chinese political system will manage to engineer a soft landing of China's economy. But unless we are a 100% certain that China will[,] economic policy should manage that risk. We have shown before that a sneeze of China has implications for Europe's stock markets through simple trade channel effects. The ECB should therefore follow the lead of the Fed and carefully consider the risk China poses to fulfilling its price stability mandate.
⇧ The Mirage of Structural Reform by Dani Rodrik – Project Syndicate
Let's be hyper-optimistic and suppose that structural reforms enable Greece to double its potential income over three years — pushing Greek per capita GDP significantly beyond the European Union average. Applying convergence math, this would produce an annual growth boost of only about 1.3%, on average, over the next three years. To place this number in perspective, remember that Greek GDP has shrunk by 25% since 2009.
So, if structural reforms have not paid off in Greece, it is not because Greek governments have slacked off. Greece's record on implementation is actually pretty good. From 2010 to 2015, Greece climbed nearly 40 places in the World Banks's business-environment rankings. Instead, the current disappointment arises from the very logic of structural reform: most of the benefits come much later, not when a country really needs them.
⇧ China home prices rise for fifth month in September, more cities see gains | Reuters
Price gains in China's bigger cities may have passed their peak, economists at Nomura said, noting price growth in Tier-1 cities eased to 2.0 percent in September month-on-month from 2.1 percent in August.
Stabilizing home prices may only imply that housing demand has returned to more normal levels after being driven higher by earlier policy easing, Nomura said, noting growth in property sales has also been easing from its recent July peak.
"This reinforces our view that property investment growth may turn negative in 2016," they said.
"Stabilizing home prices may only imply that housing demand has returned to more normal levels …," or the Chinese leadership has managed to kick the can down the road a bit (which is what I think has happened).
⇧ China cuts rates again as growth engine stalls | Reuters
The PBOC said on its website that it was lowering the one-year benchmark bank lending rate by 25 basis points to 4.35 percent, effective from Oct. 24. The one-year benchmark deposit rate was lowered by 25 basis points to 1.50 percent.
The reserve requirement ratio (RRR) was also cut by 50 basis points for all banks, taking the ratio to 17.5 percent for the biggest lenders, while banks that lend to agricultural firms and small companies received another 50-basis-point reduction to their RRR.
"We're still waiting for clear evidence of an economic turnaround," analysts at Capital Economics said in a note to clients.
"We are retaining our forecast that benchmark rates and the reserve requirement ratio will both be cut once more before the end of the year, with a further move in both early in 2016."
⇧ Lessons learned — and ignored — from a fire that destroyed 3,000 homes – MarketWatch
… a sense of complacency has set in after nearly 25 years. Despite frequent warnings and even fines by the city's fire department for Oakland residents, many homeowners continue to let dangerous brush accumulate next to and over their homes, especially during California's historic five-year drought. …
And disagreements continue over how to best combat nonnative tree species like pine and eucalyptus which proved so dangerous in 1991. …
… while the local fire departments added fire stations in the hills, as well as new reservoirs and improved radio communications, the large size and proximity of the new homes to each other is the primary concern.
⇧ Money flows again to the US – YouTube
John Authers reports on how easier monetary policy from China helped drive a further rebound in world stock markets. The biggest beneficiary seems to be the US.
⇧ The Great Negative Rates Experiment – Bloomberg Business
Sweden has been attempting to create inflation.
… Sweden's inflation has seesawed.
… "real rates for real people were actually never negative," says Jesper Rangvid, a professor of finance at the Copenhagen Business School. The same is true for Sweden ….
… in Sweden, it's too early to tell whether negative rates have created inflation.
Just to clarify, it's not only to "create inflation" that negative rates may be used but also to hold off disinflation or to slow its momentum.
⇧ Permafrost warming in parts of Alaska 'is accelerating' – BBC News
In Alaska, the warming of the permafrost has been linked to trees toppling, roads buckling and the development of sinkholes.
Prof Romanovsky says that the current evidence indicates that in parts of Alaska, around Prudhoe Bay on the North Slope, the permafrost will not just warm up but will thaw by about 2070-80.
"It was assumed it would be stable for this century but it seems that's not true any more," he told BBC News.
He says the current permafrost evidence has convinced him that global warming is real and not just a product of natural variation.
⇧ The $6 Trillion Men – The New York Times
Why, it's almost as if Republicans never cared about deficits, and were just using the issue to attack Obama and pave the way for cuts in social insurance programs.
Krugman's catching on.
⇧ Roger Farmer's Economic Window: A Bridge Too Far?
It's going mainstream.
Buy back long term government debt and refinance it by printing money. …
… Build a bridge if it is needed; but make sure that it goes somewhere first. More importantly; finance the project by printing money: not by issuing thirty year bonds.
⇧ Keynes Comes to Canada – The New York Times
Toooo bad Paul hasn't completely caught on yet.
Now come Justin Trudeau's Liberals, who are finally willing to say what sensible economists (even at places like the International Monetary Fund) have been saying all along. And they weren't punished politically — on the contrary, they won a stunning victory.
So will the Liberals put their platform into practice? They should. Interest rates remain incredibly low: Canada can borrow for 10 years at only 1½ percent, and its 30-year inflation-protected bonds yield less than 1 percent. Furthermore, Canada is probably facing an extended period of weak private demand, thanks to low oil prices and the likely deflation of a housing bubble.
Let's hope, then, that Mr. Trudeau stays with the program. He has an opportunity to show the world what truly responsible fiscal policy looks like.
To hell with governmental borrowing, Paul.
⇧ Eurozone crosses Rubicon as Portugal's anti-euro Left banned from power – Telegraph
Bravo!, Ambrose Evans-Pritchard:
Mr Cavaco Silva is effectively using his office to impose a reactionary ideological agenda, in the interests of creditors and the EMU establishment, and dressing it up with remarkable Chutzpah as a defence of democracy.
The Portuguese Socialists and Communists have buried the hatchet on their bitter divisions for the first time since the Carnation Revolution and the overthrow of the Salazar dictatorship in the 1970s, yet they are being denied their parliamentary prerogative to form a majority government.
This is a dangerous demarche. The Portuguese conservatives and their media allies behave as if the Left has no legitimate right to take power, and must be held in check by any means.
These reflexes are familiar — and chilling — to anybody familiar with 20th century Iberian history, or indeed Latin America. That it is being done in the name of the euro is entirely to be expected.
Greece's Syriza movement, Europe's first radical-Left government in Europe since the Second World War, was crushed into submission for daring to confront eurozone ideology. Now the Portuguese Left is running into a variant of the same meat-grinder.
Europe's socialists face a dilemma. They are at last waking up to the unpleasant truth that monetary union is an authoritarian Right-wing enterprise that has slipped its democratic leash, yet if they act on this insight in any way they risk being prevented from taking power.
Brussels really has created a monster.
⇧ Owners of Home Destroyed by Wyoming Landslide File Suit Against Contractor
Development associated with the Walgreens at the base of East Gros Ventre Butte made the slope unstable and ultimately led to the landslide, the Budges say in the lawsuit.
⇧ Florida Couple Charged After Receiving Sinkhole Settlement, Selling Home
Hernando County, Florida deputies say a Brooksville couple faces mortgage fraud charges after selling their home and failing to notify the buyers about sinkhole activity.
⇧ BRFD arrests two on arson, insurance fraud charges – WSMV Channel 4
Baton Rouge fire officials say that 36-year-old Alfred Oxley Jr.'s home burned down on July 4, 2015, causing $100,000 in damage. Fire investigators say they found evidence of arson that was traced back to Oxley's girlfriend, Sheena Garcia.
If you are an investor in 1-4 unit properties in Arizona, California, Nevada, Oregon, Utah, or Washington, please do the financially responsible thing and make sure you have proper Landlord Insurance with PropertyPak™. We love focusing on real estate and the economy in general, but we are also here to serve your insurance needs.
Hill & Usher (PropertyPak™ is a division) has many insurance offerings. See our menu above for more info and links.
Did this post help you? Let us know by leaving your comment below.
Note: This blog does not provide legal, financial, or accounting advice. Seek professional counsel.
Furthermore, we, as insurance producers, are prohibited by law from disparaging the insurance industry, carriers, other producers, etc. With that in mind, we provide links without staking out positions that violate the law. We provide them solely from a public-policy standpoint wherein we encourage our industry to be sure our profits, etc., are fair and balanced.
We do not necessarily fact checked the contents of every linked article or page, etc.
If we were to conclude any part or parts of our industry are in violation of fundamental fairness and the legal standards of a state or states, we'd address the issue through proper, legal channels. We trust you understand.
The laws that tie our tongues, so to speak, are designed to keep the public from losing confidence in the industry and the regulatory system overseeing it. Insurance commissioners around the country work very hard to analyze rates and to not allow the industry to be damaged by bad rate-settings and changes in coverages. The proper way for people in the industry to deal with such matters is by adhering to the laws, rules, and regulations of the applicable states and within industry associations where such matters may be discussed in private without giving the industry unnecessary black eyes. Ethics is very high on the list in the insurance industry, and we don't want to lose the people's trust. That said, the industry is not perfect; but what industry is?
For our part, we believe in strong regulations and strong regulators.
We welcome your comments and ask you to keep in mind that we cannot and will not reply in any way or ways where any insurance commissioner could rightly say we've violated the law of the given state.
We are allowed to share rating-bureau data/reports and industry-consultant opinions but make clear here that those opinions are theirs and do not necessarily reflect our position.