News: Real Estate, Risk, Economics. Nov. 2, 2015

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Table of Contents
(Click to sections below.)

1) Some Hotels in Oregon Coastal Town Resist Tsunami Awareness Initiative

2) TsunamiReady Information from NWS

3) Labour governments: more fiscally "conservative" than Conservative ones? — Prime Economics

4) Paris climate deal to ignite a $90 trillion energy revolution – Telegraph

5) China consumer sentiment fell to record low in October, a survey shows

6) Where Republicans are united, divided on the economy | Pew Research Center

7) FRB: Press Release–Federal Reserve issues FOMC statement–October 28, 2015

8) A kink in the Phillips curve – Equitable Growth

9) China Steel Head Says Demand Slumping at Unprecedented Speed – Bloomberg Business

10) Pittsburgh most profitable for home flipping, real estate data shows | TribLIVE

11) Crowdfunding of US real estate deals gains momentum – Business Insider

12) St. Joe Company, former execs settle with SEC over alleged real estate overvaluing | HousingWire

13) Worthwhile Canadian Initiative: Old Keynesian vs New Keynesian fiscal policy

14) December Still Very Much A Live Meeting – Tim Duy's Fed Watch

15) World's tallest timber tower to be built in British Columbia : TreeHugger

16) Economic growth stronger than headline GDP figure suggests, ABC says

17) Growth Falls Off Sharply in Third Quarter | CEPR Blog | Blogs | Publications | The Center for Economic and Policy Research

18) This city is world's riskiest for property bubble: UBS

19) It is already too late to scrap China's one-child policy – Telegraph

20) Big 'I' Opposes Risk Retention Act Expansion

21) More Investors and Businesses Than Ever Before Are Tackling Climate Change, And Governments Are Acting Too — Ceres

22) What US Growth Looks Like Without the Government Spending Slowdown – Real Time Economics – WSJ

23) Real estate is 'overvalued' across much of the country, CMHC warns | Globalnewsca

24) I-Team: Top code violation rental properties – Story | abcactionnewscom | Tampa Bay News | WFTS-TV

25) Worries about the housing market are overblown | HousingWire

26) South Carolina Homeowners Face Expensive Repairs to Unsafe Dams

27) Cleveland man accused of hiring two to set fire to neighbor's house | clevelandcom

28) Rehabbers Beware: How to Avoid Asbestos-Related Health Concerns (& Lawsuits!)

29) Antonio Fatas on the Global Economy: The missing lowflation revolution

30) Trimmed Mean PCE Inflation Rate – Dallas Fed

31) Behind the Numbers: PCE Inflation Update, September 2015 – Dallas Fed

32) Retailers Focus on Large Distribution Centers, Small Urban Warehouses for Fast Delivery

33) Is the Economy Really in Trouble? A Debate – The New York Times

34) Despite Falling Unemployment, Wages Still Lag | Al Jazeera America

35) Janet Yellen just got some pretty bad news

36) The Mystery of the Vanishing Pay Raise – The New York Times

37) Resurrecting Glass-Steagall by Simon Johnson – Project Syndicate

38) Europe Is Our Home, We Need to Fix It — in Handelsblatt, 30 OCT 2015 | Yanis Varoufakis

39) Spotlight: Foreign economists, media positive about China's new Five-Year Plan – Xinhua | Englishnewscn

40) Fed Rate Decision: QE Didn't Quite Cut It, So Now What? – Bloomberg Business

41) Dunstable real-estate attorney guilty of fraud – Sentinel & Enterprise

42) An Interview with Bill Gates on the Future of Energy – The Atlantic

43) Credit Sleuths in China Uncover Bad Debt Dwarfing Official 1.5% – Bloomberg Business

44) Who are the 1%? The answer may surprise you

45) Victory! California guv signs bill to protect clotheslines | Grist

46) 'Ed Snowden of Banking' Refuses to Appear in Swiss Trial – YouTube

47) 5 things you should know about the Republican welfare state – Vox

48) Flood risks rising | Business Insurance

49) Is a Nonseasonally Adjusted Median CPI a Useful Signal of Trend Inflation?

50) ABC: September's nonresidential spending slip no cause for concern

51) Landlords: Forget Being "Nice." THIS is the Key to a Good Tenant Relationship.

52) Larry Summers: Where Paul Krugman and I differ on secular stagnation – The Washington Post

53) Robert Reich (The Rigging of the American Market)

54) Federal Reserve Bank of San Francisco | Economic Research | Are Wages Useful in Forecasting Price Inflation?

55) Partisan Growth Gaps – The New York Times

56) Homebuyers are hitting record credit scores

57) Global recession scare fades as stimulus revives manufacturing – Telegraph

58) Kansas Extends Wastewater Injection Limits Until at Least Mid-March

59) Big Health Insurers Still View Obamacare as Big Opportunity

60) I told you so. Obama right and Europe wrong about way out of Great Recession | World news | The Guardian

61) Foreign Banks Such as Deutsche Using Variant of Lehman "Repo 105" Balance-Sheet Tarting Up Strategy | naked capitalism

62) Global factories struggle as stimulus fails to spur | Reuters

63) Secret tapes, blackmail threat: Luxe real-estate rivalry turns nasty in Miami | Miami Herald

64) New study shows profound impact of tech industry on Bay Area real estate – On The Block

65) Catching the Next Wave of Disruptive Real Estate Technology – Urban Land Magazine

  1.    Some Hotels in Oregon Coastal Town Resist Tsunami Awareness Initiative

    Some hotels on the Oregon coast are resisting a new tsunami awareness initiative.

    The city of Seaside has given hotels key holders that contain warnings of a potential tsunami and evacuation instructions, in an effort to inform visitors about the risks, Fire Division Chief Chris Dugan said.

    You may think that it puts off guests, but think about the liability if there is a tsunami and you failed to have informed them about what they should do. If you neglect to have an acceptable earthquake/tsunami-plan meeting your insurance policy's requirements (if any), your insurance carrier might even have proper cause to deny covering claims against you.

    Add your comment.


  2.    TsunamiReady Information from NWS

    Being part of a Weather-Ready Nation is about building community resilience in the face of increasing vulnerability to extreme weather and water events.

    Schools, playgrounds, hospitals, factories and homes are often built in areas vulnerable to tsunamis. The TsunamiReady Program, developed by the National Weather Service, is designed to help cities, towns, counties, universities and other large sites in coastal areas reduce the potential for disastrous tsunami-related consequences.

    Since June 20, 2001, TsunamiReady has helped community leaders and emergency managers strengthen their local operations. TsunamiReady communities are better prepared to save lives through better planning, education and awareness. Communities have fewer fatalities and property damage if they plan before a tsunami arrives. No community is tsunami proof, but TsunamiReady can help minimize loss to your community. Find out what's involved in becoming TsunamiReady.

    Add your comment.


  3.    Labour governments: more fiscally "conservative" than Conservative ones? — Prime Economics

    A date-loaded article:

    The challenge!

    On the BBC Radio 4 PM news programme last Friday, PRIME's Ann Pettifor affirmed, in a debate on the "right size" of the state, that Labour governments have generally been more fiscally "conservative" than Conservative governments. David Smith, the Sunday Times' economics correspondent, asked – fairly enough – on twitter what she meant by this, but seemed not to like the (wholly accurate) response that, for example, Labour governments since 1956 (the start of the ONS database) have on average had lower annual current budget deficits than Conservative governments. A big twitter debate ensued.

    While Ann is, of course, quite correct, the problem is that this sort of "debate" allows the fiscal hawks, who are vastly less democratic, in addition to being wrong and misleading, to continue to frame the debate, as if Labour has ever been right to allow that to happen in the first place.

    I must point out that Jeremy Smith, the author of the post, correctly points out that his post should not be taken as indicative of Ann's or his agreement with any neoliberal/austerity policies then, or now, by Labour.

    Add your comment.


  4.    Paris climate deal to ignite a $90 trillion energy revolution – Telegraph

    Ambrose Evans-Pritchard:

    It is patently obvious that China is not about to sabotage a climate deal. Its submission to the COP21 summit aims for peak greenhouse emissions by 2030, if not before. It plans 200 gigawatts (GW) of wind and 100GW of solar by then, and a reduction in coal use from 2020 onwards. There will be a carbon emissions trading scheme as soon as 2017.

    Technology takes no prisoners. Nor does politics. World leaders have repeatedly stated that they would defend the line of a 'two degree planet', and now they are taking the concrete steps to do so. Fossil investors have been warned.

    Hallelujah!

    However, why does Ambrose "take no view on the science"?

    Add your comment.


  5.    China consumer sentiment fell to record low in October, a survey shows

    Of course:

    "This result openly questions the resilience of the Chinese consumer to the discouraging state of the real economy," said Huw McKay, senior international economist at Westpac.

    Add your comment.


  6.    Where Republicans are united, divided on the economy | Pew Research Center

    A large majority of Republicans (71%) said that government aid to the poor does more harm than good, but there are divisions within the party based on income, according to the February survey. Eight-in-ten Republicans with annual incomes of $75,000 or more say government aid to the poor does more harm than good, as do 71% of those with incomes of $30,000-$74,999.

    The data doesn't support the idea that aid does more harm, not even close.

    The idea that it does is false propaganda spread by privatizers who seek to further enrich themselves at the negative expense of everyone else.

    Add your comment.


  7.    FRB: Press Release–Federal Reserve issues FOMC statement–October 28, 2015

    As it should be:

    To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate.

    Add your comment.


  8.    A kink in the Phillips curve – Equitable Growth

    As Matt Phillips (no relation to William presumably) points out in his Quartz piece [http://qz.com/527844/im-a-phillips-and- even-i-dont-trust-the-phillips-curve/] on the curve, the labor market has changed quite a bit since the mid-1970s. He points specifically to the decline in the unionization rate, which is a sign of the decreasing bargaining power of labor in the economy. A 5 percent unemployment rate when labor is relatively much stronger, for example, is very different from a 5 percent unemployment rate when labor is on the back of its heels. Changes in the labor market might be a reason why increases in wages and salaries don't pass through to overall inflation as much as we might have thought. Back when labor had more bargaining power, wage hikes would bite more into profits and therefore spur companies to raise prices. Now companies have more of a cushion, so a similar wage increase won't necessarily lead to as strong of a price increase.

    Yep, the internationalization of "jobs" has made a huge, huge difference. Until the ultra-rich run out of labor markets to exploit so they, the ultra-rich, can pay themselves vastly more than they used to be able to in the 1950's USA or until they are stopped by international, progressive, pro-worker regulations, they will continue to do just that.

    Add your comment.


  9.    China Steel Head Says Demand Slumping at Unprecedented Speed – Bloomberg Business

    If anyone doubted the magnitude of the crisis facing the world's largest steel industry, listening to Zhu Jimin would put them right, fast.

    Demand is collapsing along with prices, banks are tightening lending and losses are stacking up, the deputy head of the China Iron & Steel Association said on Wednesday.

    Add your comment.


  10.    Pittsburgh most profitable for home flipping, real estate data shows | TribLIVE

    Right from the beginning of the article, I was thinking exactly the following:

    …there may be another reason why investors are not scooping up Pittsburgh properties, said Josh Adamek of Ross-based Synergy Capital. TheRealtyTrac figures are based only on purchase and sale price, and ignore the expense that goes into rehabbing homes before they are sold. The properties around here require a lot more work than in cities with newer housing, Adamek said.

    "In the city, most properties are over 100 years old, so they require significant renovations," said Adamek, a real estate investor who has flipped homes throughout Allegheny County. "Where, if you go to a market like Phoenix, the average house is 10 to 20 years old tops. There's no foundation issues. There's not water (problems). Those are typical paint and carpet rehabs you can get done in three to four weeks."

    Add your comment.


  11.    Crowdfunding of U.S. real estate deals gains momentum – Business Insider

    The company wants to make real estate investing as easy as investing in stocks, a common industry refrain, but a big hurdle at present is that only accredited investors – those with at least $1 million in assets excluding their home – can invest in the online marketplaces that connect borrowers with investors.

    "We are very eager to one day be able to open our platform to anybody that wants to put $1,000 or a couple hundred bucks into real estate, because let's face it, real estate is one of the best ways to build wealth and you shouldn't have to have a certain net worth to invest in real estate," Athwal said.

    Real problems come when a bubble is building and unsophisticated investors keep pouring in their lifesavings. Therefore, governments ought to compel crowd-funding organizations to remind small investors of the risks (and not in fine print).

    Keep your wits about you. Don't get fleeced. Deal with reputable crowd funders with high standards and proven track records who are transparent, insured, and don't sugarcoat anything.

    Add your comment.


  12.    St. Joe Company, former execs settle with SEC over alleged real estate overvaluing | HousingWire

    "Where specialized accounting rules govern, it is essential that those responsible for the company's accounting and financial reporting be familiar with and properly apply them," said Andrew Ceresney, director of the SEC's Enforcement Division. "St. Joe and its senior executives failed to do so here, and thereby deprived investors of critical information with which to make informed investment decisions."

    Add your comment.


  13.    Worthwhile Canadian Initiative: Old Keynesian vs New Keynesian fiscal policy

    Nick Rowe:

    I first learned macroeconomics in the very early 1970's in the UK. I learned that the macroeconomy was not automatically self-equilibrating, and that the government should use fiscal policy to target "full employment" (aka "potential output"). The government should loosen fiscal policy when the economy was below potential and tighten fiscal policy when the economy was above potential. We didn't pay much attention to monetary policy. And we didn't pay much attention to inflation either, at least in the models, though it was getting harder and harder to ignore in reality. I think we hoped for what we would nowadays call "Divine Coincidence": that if we were successful at targeting "full employment" then inflation would take care of itself. And if it didn't, then maybe we needed some additional policy lever, like wage and price controls.

    That was my understanding back then too.

    Add your comment.


  14.    December Still Very Much A Live Meeting – Tim Duy's Fed Watch

    Tim Duy:

    … my expectation is that only disappointing data prevents the Fed from moving in December.

    I'll say that if things don't improve and if the Fed can't call the stagnation transient and get away with it, they won't raise the rate. I'll also remind everyone that I was surprised when they began tapering and when they continued tapering so radically.

    The real question is whether they can get away with it, which means whether enough people will take their eyes off the ball. The ball is bank-clamoring for high profits via higher rates regardless of whether best for the rest of society.

    Add your comment.


  15.    World's tallest timber tower to be built in British Columbia : TreeHugger

    Fifty years ago, Many apartment buildings were built in the International Style, tall flat slabs of buildings with efficient layouts. Now Acton Ostry Architects are using this iconic 20th century style to build the world's tallest timber tower using a truly 21st century material, Cross laminated Timber (CLT).

    Add your comment.


  16.    Economic growth stronger than headline GDP figure suggests, ABC says

    "The U.S. economy is not quite as bad as the headline GDP number suggests," said ABC Chief Economist Anirban Basu. "Private final demand, an indicator that represents sales to nongovernmental domestic purchasers, expanded by 3.2 percent in the third quarter. Many economists consider this the most telling and persistent aspect of GDP, suggesting that the economy is healthier than some might suspect.

    Add your comment.


  17.    Growth Falls Off Sharply in Third Quarter | CEPR Blog | Blogs | Publications | The Center for Economic and Policy Research

    Dean Baker:

    There continues to be no evidence of inflationary pressures in any sector. The core PCE grew at just a 1.2 percent rate in the quarter. The basic story continues to be one of modest growth with very little inflation.

    Add your comment.


  18.    This city is world's riskiest for property bubble: UBS

    Katy Barnato:

    Will near-history repeat itself? Just eight years after the sub-prime mortgage crisis, banks are warning about the risks from booming real estate markets across the world.

    On Thursday, UBS said that property in all European cities now exceeds fair valuation, with London the most overvalued market on the continent and the city most at risk in the world for another housing bubble.

    Add your comment.


  19.    It is already too late to scrap China's one-child policy – Telegraph

    This article is about economics that nearly ignores the "externalities" of environmental degradation, though China is seeking hard to address the degradation and the article does mention that fact.

    The Chinese Academy of Social Sciences says the fertility rate has collapsed to 1.4 and is nearing the danger line of 1.3, the so-called "low fertility trap" where it becomes culturally self-perpetuating. This has already happened in Japan, Korea and Taiwan, and in some of China's richest cities.

    The rate in Shanghai has fallen to 0.8 for complex social reasons that no longer have anything to do with one-child policy. A relaxation of the rules in 2013 has not led to a pick-up in the city.

    Add your comment.


  20.    Big 'I' Opposes Risk Retention Act Expansion

    Add your comment.


  21.    More Investors and Businesses Than Ever Before Are Tackling Climate Change, And Governments Are Acting Too — Ceres

    To limit warming to below two degrees Celsius, the world needs to invest an additional $44 trillion in clean energy by 2050 — more than an additional $1 trillion — a Clean Trillion — per year for the next 35 years. To avoid the worst impacts of climate change, investors, businesses and governments must act to close the clean energy investment gap. Achieving the Clean Trillion must stay at the top of the world's agenda ….

    Where's the money going to come from? Bond-free currency would be the best source.

    Add your comment.


  22.    What U.S. Growth Looks Like Without the Government Spending Slowdown – Real Time Economics – WSJ

    Eric Morath and Andrew Van Dam:

    … From 2010 through the first half of 2015, year-over-year economic growth was 0.9 percentage point lower, on average, than it would have otherwise been without the government pullback, according to an analysis of Commerce Department data.

    The drag was most pronounced in 2010 and 2013. It came after federal stimulus spending expired and was replaced by spending cuts. At the same time, state and local governments were feeling the full effect of lower postrecession revenues.

    Add your comment.


  23.    Real estate is 'overvalued' across much of the country, CMHC warns | Globalnews.ca

    Canada Mortgage and Housing Corp. says it has detected overvaluation in 11 housing markets, with additional concerns flagged specifically in Toronto, Winnipeg, Saskatoon and Regina.

    Add your comment.


  24.    I-Team: Top code violation rental properties – Story | abcactionnewscom | Tampa Bay News | WFTS-TV

    We went digging into city and county records to find the rental property owners with the most code violations.

    Check out the interactive map below to see who's racked up the most. Find out where the properties are and who owns them ….

    Add your comment.


  25.    Worries about the housing market are overblown | HousingWire

    Mike Fratantoni:

    … the CFPB's Ability to Repay/Qualified Mortgage rules have effectively eliminated the unsustainable lending products and instruments that substantially contributed to the 2005-2007 boom, including no-doc loans, subprime, negative amortization, extended term loans, balloons, ARMs with deep teaser rates, among others.

    Let's hope they don't return in another insane deregulation frenzy.

    Add your comment.


  26.    South Carolina Homeowners Face Expensive Repairs to Unsafe Dams

    People who live around dozens of lakes in South Carolina are under emergency orders to repair or replace dams that ruptured or were deemed unsafe by inspectors after the historic rains this month, and they face staggering bills ranging from thousands of dollars to perhaps millions.

    Surprised by the magnitude of the problems?

    Add your comment.


  27.    Cleveland man accused of hiring two to set fire to neighbor's house | cleveland.com

    Galarza, 44, was asleep in the basement when the an explosion next door ignited his home of 17 years, he told cleveland.com at the scene.

    Eight months later, Galarza sits in a Cuyahoga County jail cell on attempted murder, insurance fraud and arson charges after authorities said he hired two men to light an inferno in neighbor's house that ultimately destroyed three Old Brooklyn houses on West 33rd Street.

    Add your comment.


  28.    Rehabbers Beware: How to Avoid Asbestos-Related Health Concerns (& Lawsuits!)

    The investor was charged with reckless endangerment and second degree unlawful air pollution. He pleaded guilty and was sentenced to 80 hours of community service, two years of probation and $20,200 in fines. He did know there was likely asbestos in the house.

    Add your comment.


  29.    Antonio Fatas on the Global Economy: The missing lowflation revolution

    Antonio Fatas:

    Now we have learned that either all central bankers are as incompetent as the Bank of Japan in the 90s or that the phenomenon is a lot more natural, and likely to be repeated, in economies with low inflation, more so when the natural real interest rate is very low.

    But if this scenario is more likely to happen going forward it might be time to rethink our economic policy framework. Some obvious proposals include raising the inflation target and considering "helicopter money" as a tool for central banks. But neither of these proposals is getting a lot of traction.

    Well, just keep pressing the issue and the traction will appear. Give up, and it won't.

    The obstacle is the greed of the bankers and their mega-corporation fellow travelers.

    Raising the inflation target would boost the power of middle and lower class workers. So would helicopter money and regardless of how it is spent {by government on infrastructure (people's QE) or by households}.

    Add your comment.


  30.    Trimmed Mean PCE Inflation Rate – Dallas Fed

    Runaway inflation isn't in the cards for the foreseeable future, including without a Fed rate hike. It would take a massive, massive fiscal effort to deliberately cause even a doubling of the inflation rate in less than three years. The government would have to cause true full employment (not systemic unemployment of 5% to keep labor weak) and still be throwing money at projects that are less productive in the long run than need be.

    The Trimmed Mean PCE inflation rate for September was an annualized 1.7 percent. According to the BEA, the overall PCE inflation rate for September was -1.0 percent, annualized, while the inflation rate for PCE excluding food and energy was 1.8 percent.

    12-month PCE inflation
    Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15
    PCE 0.2 0.3 0.3 0.3 0.3 0.2
    PCE excluding food & energy 1.3 1.3 1.3 1.2 1.3 1.3
    Trimmed Mean PCE 1.6 1.6 1.7 1.6 1.7 1.7
    NOTE: These data are subject to revision.

    Add your comment.


  31.    Behind the Numbers: PCE Inflation Update, September 2015 – Dallas Fed

    Anyone who has taken note of gasoline prices in October might think gasoline was apt to make another negative contribution to headline inflation when October's PCE data are released. While it's true that prices at the pump have fallen further in October, it turns out that all of that decline can be chalked up to seasonal factors. In fact, compared with the normal price declines we would expect to see in October, gasoline prices have not fallen enough—they are actually up from September on a seasonally-adjusted basis.

    Rent rose at a 4.9 percent annualized rate in September, a postrecession high.

    Keep in mind that stronger regulations are keeping a lid on things compared to the low-or-no regulation pre-recession boom.

    We'll also have to see what Iranian oil will do to global gas prices. If the Russians and others take back Syria's oil fields from IS, that will be a factor too, though it will take time to heal the damage to the infrastructure and financial systems, etc.

    Add your comment.


  32.    Retailers Focus on Large Distribution Centers, Small Urban Warehouses for Fast Delivery

    Industrial properties in urban areas are more prone to be exposed to traffic problems, low-load factors, expensive courier services and dealing with product returns. Amazon has led the way with its delivery service in 16 major U.S. cities that can be as short as one hour from ordering, Hotchkiss says. Amazon's Prime Now properties are smaller, ranging from 50,000 sq. ft. to 75,000 sq. ft., and offer about 25,000 products. Hotchkiss notes other companies are working to adopt this smaller footprint model to fulfill same-day delivery dreams.

    Add your comment.


  33.    Is the Economy Really in Trouble? A Debate – The New York Times

    I don't think we're on the cusp of a bust, but the stagnation is really bothersome because it's so unnecessary what with fiscal possibilities sitting right there that could give the economy a huge boost without dangerous inflation!

    If done correctly, we could have a huge boom without any generalized price inflation at all.

    Given the right quants, software engineers, coders, and hardware/network, it could definitely be done.

    Add your comment.


  34.    Despite Falling Unemployment, Wages Still Lag | Al Jazeera America

    Unemployment held steady at 5.1 percent in September, compared to 5.9 percent the previous year. That represents a steep drop from the recession-era high of 10 percent in 2009 and 2010. But even that substantial drop in unemployment has not translated to higher pay.

    "It's still the case that employers have the bargaining power," Stone said.

    In theory, business owners need to try harder to attract employees as unemployment falls, which should translate into more generous salaries and wages. But because of the large pool of people who are out of work but not actively seeking jobs — as well as those who are working part-time but would prefer full-time work — those who do have jobs have little leverage to ask for higher pay.

    We could easily see 3% unemployment and still very sustainable (relatively low) wage pressure.

    Add your comment.


  35.    Janet Yellen just got some pretty bad news

    Jeff Cox:

    … their eyes more likely will be glued to average earnings data, which last month actually edged lower and now show a 2.2 percent annualized gain. If wage pressures remain muted, the Fed likely will be inclined to hold off on a hike ….

    Add your comment.


  36.    The Mystery of the Vanishing Pay Raise – The New York Times

    Steven Greenhouse:

    Outsourcing, offshoring and imports exert a steady downward tug on wages. Labor unions have lost considerable muscle. Many employers have embraced pay-for-performance policies that often mean nice bonuses for the few instead of across-the-board raises for the many.

    In a study of 1,200 American companies, Aon Hewitt found that 25 percent overwhelmingly emphasize rewards to high performers and give far less or nothing in raises or bonuses to average or poor performers. "Those 25 percent say, 'We're going to give 6 percent to the top performers, 1.5 percent to average performers and we're not going to give anything to below average,' " Mr. Abosch said.

    Because we're going to keep all of that for ourselves regardless of the problem it causes for the overall economy and the general welfare of the people at large.

    Add your comment.


  37.    Resurrecting Glass-Steagall by Simon Johnson – Project Syndicate

    Simon Johnson:

    There are three main arguments against a modern version of Glass-Steagall. None is convincing.

    However, as mentioned last week:

    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/ ]

    Add your comment.


  38.    Europe Is Our Home, We Need to Fix It — in Handelsblatt, 30 OCT 2015 | Yanis Varoufakis

    Yanis Varoufakis spells out more of his Movement:

    Now we have a program that is completely unsustainable. This is why I am talking about a grassroots movement now to change the way we do the political business in Europe, not within Greece but on the whole continent.

    Add your comment.


  39.    Spotlight: Foreign economists, media positive about China's new Five-Year Plan – Xinhua | English.news.cn

    Well, going for an ecologically sane system is wise, but it's also a good excuse for not being able to deliver on growth targets in the not-too-distant future. Please note that the word "democracy" is nowhere to be found in the article. Without it, they'll be very hard pressed.

    Add your comment.


  40.    Fed Rate Decision: QE Didn't Quite Cut It, So Now What? – Bloomberg Business

    Brendan Greeley:

    … people behave differently under the same policy. Economists call those differences in behavior "heterogeneity."

    Sufi cited two recent papers that show that when rates fell in the U.S., households with higher debt burdens—generally the poor—were more likely to spend. His own research shows that for every dollar rise in a home's value, the poorest households borrowed and spent 25¢. The richest 10 percent took out no new loans. And while Yellen's low interest rates made mortgages cheaper to refinance, that didn't necessarily mean more spending.

    The same is true for credit card loans. In theory, low rates make it cheaper for banks to borrow and encourage them to increase credit limits. In a working paper for the National Bureau of Economic Research, a group of researchers looked at 8.5 million credit card accounts. They found that for every 1 percentage point reduction in what it costs banks to borrow, banks extended $127 in credit to families with credit scores below 660. Those families spent 58¢ for every new dollar in credit.

    Under the same conditions, families with credit scores above 740 got $2,203 in extra credit. But they didn't spend a penny of it.

    Yellen knows all of that, but she has the bankers looking over her shoulder and pressing her to raise rates so they can charge more to pay themselves more.

    That doesn't mean she doesn't believe the Phillip's Curve will act as it did many decades ago in the end.

    Add your comment.


  41.    Dunstable real-estate attorney guilty of fraud – Sentinel & Enterprise

    As part of the scheme, Bellerose and her co-conspirators submitted false and misleading documents to numerous banks in an effort to induce them to permit the short-sales — and thereby to release the sellers from their unpaid mortgage debts — while simultaneously inducing the buyers' banks to provide financing for the deals, the press release stated.

    Add your comment.


  42.    An Interview with Bill Gates on the Future of Energy – The Atlantic

    The smartest stuff Bill Gates has said that I know of:

    Those who study energy patterns say we are in a gradual transition from oil and coal to natural gas, a fuel that emits far less carbon but still contributes to global warming. Gates thinks that we can't accept this outcome, and that our best chance to vault over natural gas to a globally applicable, carbon-free source of energy is to drive innovation "at an unnaturally high pace."

    When I first got into this I thought, How well does the Department of Energy spend its R&D budget? And I was worried: Gosh, if I'm going to be saying it should double its budget, if it turns out it's not very well spent, how am I going to feel about that? But as I've really dug into it, the DARPA money is very well spent, and the basic-science money is very well spent. The government has these "Centers of Excellence." They should have twice as many of those things, and those things should get about four times as much money as they do.

    Yes, the government will be some-what inept—but the private sector is in general inept. How many companies do venture capitalists invest in that go poorly? By far most of them. And it's just that every once in a while a Google or a Microsoft comes out, and some medium-scale successes too, and so the overall return is there, and so people keep giving them money.

    The only reason I'm optimistic about this problem is because of innovation. And innovation is a very uncertain process. For all I know, even if we don't up the R&D, 10 years from now some guy will invent something and it'll take care of this thing. I don't think that's very likely, but nobody has a predictor function of innovation—which is weird, because the whole modern economy and our lifestyles are an accumulation of innovations. So I want to tilt the odds in our favor by drivi ng innovation at an unnaturally high pace, or more than its current business-as-usual course. I see that as the only thing. I want to call up India someday and say, "Here's a source of energy that is cheaper than your coal plants, and by the way, from a global-pollution and local-pollution point of view, it's also better."

    Add your comment.


  43.    Credit Sleuths in China Uncover Bad Debt Dwarfing Official 1.5% – Bloomberg Business

    While the analysts interviewed for this story differ in their approaches to calculating likely levels of soured credit, their conclusion is the same: The official 1.5 percent bad-loan estimate is way too low.

    The issue of unreliable data is one that the industry itself is well aware of. In a 2014 survey of bank executives by China Orient Asset Management Corp., one of the nation's bad-loan managers, only 17 percent believed that the official bad-loan data was in line with reality, while 38 percent saw the risks as "severely" underestimated and 43 percent as "slightly" underestimated.

    Add your comment.


  44.    Who are the 1%? The answer may surprise you

    … there are only 123,000 ultra high net worth individuals (defined as those whose assets exceed $50 million) worldwide. As a group, however, they lay claim to 45% of the world's wealth.

    Add your comment.


  45.    Victory! California guv signs bill to protect clotheslines | Grist

    (1) "Clothesline" includes a cord, rope, or wire from which laundered items may be hung to dry or air. A balcony, railing, awning, or other part of a structure or building shall not qualify as a clothesline.

    (2) "Drying rack" means an apparatus from which laundered items may be hung to dry or air. A balcony, railing, awning, or other part of a structure or building shall not qualify as a drying rack.

    Add your comment.


  46.    'Ed Snowden of Banking' Refuses to Appear in Swiss Trial – YouTube

    While you pay your taxes …

    After Herve Falciani leaked more than 100,000 HSBC account records of tax evaders to government tax agencies, the Swiss government has been on a witch hunt says economist James Henry.

    "embedding disabled by request"

    Add your comment.


  47.    5 things you should know about the Republican welfare state – Vox

    What's your position on the following statement?

    Christopher Faricy:

    The GOP trade-off of tax subsidies financed with discretionary spending cuts presents the illusion of scaling back government but in reality maintains the government hand in steering the economy while simply changing the beneficiaries.

    Those in favor of what is said in the article is the GOP approach typically believe that the superrich are the engines of bounty that spreads out and down (trickle-down economics). Do you believe that position is correct, or do you believe that the redistribution from the bottom up is much stronger than any trickling down?

    Add your comment.


  48.    Flood risks rising | Business Insurance

    Video not embeddable: http://bcove.me/84jgty0i

    Add your comment.


  49.    Is a Nonseasonally Adjusted Median CPI a Useful Signal of Trend Inflation?

    Good effort:

    Previous research has mostly used a centered 36-month moving average as a measure of the inflation trend (see, e.g., Bryan, Cecchetti, and Wiggins 1997). However, there are at least two drawbacks to this measure. First, a centered 36-month moving average explicitly includes inflation that is 18 months in the future; but we view 18 months in the future as a little too far away. Why? Because, according to most economists, monetary policy influences inflation at this horizon. As a result, a 36-month "trend inflation" signal will sometimes also implicitly contain the monetary policy reaction to the trend inflation signal, when what may be wanted by a policymaker is a measure of trend inflation that will inform a monetary policy reaction. Second, we believe that an ordinary 36-month moving average allows too much high-frequency noise to enter the trend (see Higgins and Verbrugge 2015).

    The 18-month horizon is too arbitrary for me because the Phillips Curve is not stable. Prediction based upon a stagnate Phillips Curve is becoming weak-cum-misleading and therefore less efficacious and even damaging. The right choice until the Phillips Curve can be dynamically predictive is real-time reaction, which if fast enough, will handle oscillations every bit as well as attempted anticipation. The economy is vastly more controllable at this point than is the weather, though we're working on both.

    Add your comment.


  50.    ABC: September's nonresidential spending slip no cause for concern

    ABC Chief Economist Anirban Basu:

    Although there are many potential forces at work that resulted September's monthly construction spending decline, most are not alarming. With construction materials prices falling, contractors may be able to offer somewhat lower prices for their services, helping to suppress growth in construction value put in place. It is also conceivable that some construction work is being slowed by an ongoing lack of available skilled personnel. This factor has certainly helped to slow residential construction, and it seems reasonable to presume that some nonresidential contractors would face similar issues.

    Add your comment.


  51.    Landlords: Forget Being "Nice." THIS is the Key to a Good Tenant Relationship.

    Kevin Perk says that mutual respect is the key. He also says:

    Always Be Professional

    Personally, a lack of proper respect is unprofessional, but I take Kevin's points.

    Add your comment.


  52.    Larry Summers: Where Paul Krugman and I differ on secular stagnation – The Washington Post

    Larry Summers:

    We are a society whose principal problems — we all up here agree — can be addressed by a change in the printing of money and the creation of infrastructure.

    … The essence of the secular stagnation and hysteresis ideas that I have been pushing is that there is no assurance that capitalist economies, when plunged into downturn, will, over any interval, revert to what had been normal. Understanding this phenomenon and responding to it seems the central challenge for macroeconomics in this era.

    Any analysis that assumes restoration of previous equilibrium is, from this perspective, missing the main issue. I was glad to see Paul recognize this point recently. I suspect it will lead to more emphasis on fiscal rather than monetary actions in depressed economies.

    And that's something he would not have been able to easily promote as Fed Chairman. There would have been political hell to pay, and the bankers would have wanted to eat out his heart.

    That said, Janet Yellen's recent hawkishness after such dovishness during her appointment/nomination hearings and the beginning of her tenure has been nothing short of quite disappointing. So, I'm torn when looking back at my advocating Yellen over Summers for Fed Chair. However, Summers did have a worse track record when considering his deregulation-mania participation and facilitation.

    When he was "running" for Fed Chair in the media, he should have repented aggressively, but then the bankers would have heaped scorn upon him. Damned if you do, and damned if you don't.

    Add your comment.


  53.    Robert Reich (The Rigging of the American Market)

    Here's more on the trickle-up theme but from less a tax-redistribution perspective as opposed to a regulatory issue.

    Robert Reich:

    Much of the national debate about widening inequality focuses on whether and how much to tax the rich and redistribute their income downward.

    But this debate ignores the upward redistributions going on every day, from the rest of us to the rich. These redistributions are hidden inside the market.

    What's Robert's ultimate solution or position: Short of public utilities, capitalism with strict limits on market share of any one entity? If Ma Bell hadn't been broken up, would we be ahead or behind where we are now technologically speaking? When does the number of choices become a burden rather than a blessing?

    There's no doubt in my mind that the superrich rig the system in favor of themselves, but where do we draw the lines?

    A purely capitalistic market is inherently undemocratic and not truly merit-based, unless one considers sociopathy meritorious.

    Why can't we have a totally democratic economy? Why must we vote with our dollars rather than voting via our non-dollar votes? Why can't our non-dollar votes translate into dollars distributed to then be "spent" in the "markets"? Why must money come before democracy rather than money serving democracy?

    Add your comment.


  54.    Federal Reserve Bank of San Francisco | Economic Research | Are Wages Useful in Forecasting Price Inflation?

    "Rhys Bidder is an economist in the Economic Research Department of the Federal Reserve Bank of San Francisco":

    … elaborate approach to this question is to examine if wages "Granger-cause" prices. Intuitively, this is a question of whether wages contain useful information about future price inflation that isn't contained in other variables, particularly current and past price inflation.

    There is also considerable uncertainty over the steady-state balance between labor and business owners, captured in labor's share of income. This share was once thought fairly stable over time, despite some transitory variation. However, over the past 25 years it appears to have drifted downwards. This secular decline has been attributed to businesses adopting technological advances that undercut labor and also to the influences of globalization, as in Elsby et al. (2013). [and greed]

    These results do not imply that wages and prices are unrelated. Certainly they are tied together in the long run, and wage data will surely contain some information for future price inflation. However, after incorporating information from prices and activity measures, the marginal additional benefit of using wage data appears small.

    … rising wage measures might simply increase labor's share of the fruits of production and squeeze profits without much effect on price inflation. [Ownership and top executives will see to it that, that doesn't happen unless we have a dramatic change in regulation to benefit labor.]

    Add your comment.


  55.    Partisan Growth Gaps – The New York Times

    Paul Krugman:

    One constantly hears assertions that Ronald Reagan achieved economic and job growth never matched before or since, when the reality is that Bill Clinton surpassed him on both measures.

    Okay, but let's be brutally honest. Clinton ushered in as much or more deregulation as any Republican president, and he set up the economy, via Alan Greenspan, et alia's, easy monetary policies, for quite a dip that was the dot-com-bubble bursting. George W. walked right into that, but he only compounded the problems that Obama walked into. As for Obama, his fiscal policy was less than anemic: way too small! Nevertheless, given some stimulus to stop the fall, how could he have not seen improvements over such a long time?

    No doubt, Krugman would agree with much or all of that; but right now, he's about the business of electing a Democrat (large-D).

    Add your comment.


  56.    Homebuyers are hitting record credit scores

    "Ben Graboske, senior vice president of Black Knight's data and analytics division":

    "Sure, regulatory changes have tightened the credit box, but as the result has been the best-performing mortgages we've ever seen, that's inarguably a good thing."

    That's the whole point behind higher standards: borrowers who can weather an economic downturn/underwater house (if that even happens under such higher standards).

    Add your comment.


  57.    Global recession scare fades as stimulus revives manufacturing – Telegraph

    Ambrose Evans-Pritchard:

    The first green shoots of global manufacturing recovery are emerging as Europe, the US and Japan shake off the recession scare, and China comes back to life after a deep industrial slump.

    The JP Morgan/Markit index of global factory orders rose to a seven-month high of 51.9 in October and output rose to 51.4, fuelled by a wave of monetary stimulus across the world and an end to fiscal austerity in the West.

    Fears that the world's fragile economy is being sucked into deflationary vortex appear overblown as a fresh mini-cycle gathers strength. "Global growth is holding up much better than many seem to fear," said Andrew Kenningham from Capital Economics.

    In the United States, new factory orders and output both jumped in October for the first time since the summer downturn, a sign that US industry has at last overcome the most powerful exchange rate shock since the mid-1990s. "There are signs of stabilisation," said James Knightley from ING.

    A focus on a "mini-cycle" at the exclusion of any discussion of debt overhang and hidden debt seems rather rah-rah.

    China is finding it harder and harder, and their demographics look bad if they are going to stay so capitalistic versus democratic. Plus, the hawks at the Fed will just shoot all of us in the feet as soon as they have enough cover to feign that they aren't raising rates and taking other such measures to boost the bankers' profits.

    Add your comment.


  58.    Kansas Extends Wastewater Injection Limits Until at Least Mid-March

    The number and intensity of earthquakes in the area peaked in this March, just as the KCC imposed its restrictions. Since then, the number of earthquakes have declined and none at or above magnitude 4.0 have happened since June.

    But it's not conclusive. Really? My money is on that it is.

    Add your comment.


  59.    Big Health Insurers Still View Obamacare as Big Opportunity

    Bertolini expects the exchange markets to stabilize because the government, over time, has improved other programs like Medicare Advantage by continually shaping or adjusting it. He'd like to see that done for the exchanges, but he said the political environment in Washington doesn't currently allow for that type of compromise.

    Add your comment.


  60.    I told you so. Obama right and Europe wrong about way out of Great Recession | World news | The Guardian

    Larry Elliott:

    When the history books are written, the economic blunders Europe committed in the name of sound money will be right up there with Britain's decision to go back on the gold standard in 1925.

    Jason Furman, the chairman of Obama's council of economic advisers, who was visiting London last week, said "there is a massive, massive shortfall" in eurozone output relative to what it would have produced with more expansionary policies.

    … Germany is running a whopping budget surplus, which it should run down through tax cuts and spending increases that would raise domestic demand across the eurozone. At the same time, Berlin and its allies at the European commission should cease to impose draconian measures on the struggling countries on the eurozone periphery, such as Greece, and ease up on those countries, such as France and Italy, that are not currently in crisis but soon could be in the event of a modest downturn.

    [A very to-the-point paragraph:] This is textbook Keynesian stuff. Unemployment is high, which means businesses are reluctant to invest. The lack of investment means that demand for new loans is weak. The weakness of demand for loans means that driving down the cost of borrowing through QE will have little impact. Therefore, it is up to the state to break into the vicious circle by investing itself, something it can do cheaply and — because there are so many people unemployed and businesses working well below full capacity — without the risk of inflation.

    It should not be for the Americans to remind the Europeans of their own history, but sadly that does seem to be the case. In the 1930s, the countries, such as France, that stuck with the gold standard suffered the longest slumps. Those countries, such as Britain and the US, that abandoned orthodoxy sooner recovered more quickly.

    … George Osborne quietly abandoned his original deficit reduction targets when the deleterious impact of an over-aggressive austerity strategy became apparent. [But George won't admit it.]

    And the US could have done twice as well with twice the stimulus and three times better with three times the stimulus, but we had the fiscal and deficit hawks standing in the way for the sake of the plutocrats who did not want labor gaining the benefits of any such growth/recovery.

    Add your comment.


  61.    Foreign Banks Such as Deutsche Using Variant of Lehman "Repo 105" Balance-Sheet Tarting Up Strategy | naked capitalism

    We've seen with Deutsche Bank that not only are they the most seriously leveraged major dealer bank, but their risk control metrics have been sorely wanting. For instance, Deutsche's failure to model the cost of a gap option on the biggest trade in its derivatives book led it to overstate its Tier One more than €8 billion during the crisis. Marking it properly would have also put the bank's capital below the 8% minimum required by German regulators.

    What with this and VW (and Porsche, Audi, …), one wonders whether Germany is a Teflon nation. I'm confident that their ordoliberal economics has come back to haunt them though.

    Add your comment.


  62.    Global factories struggle as stimulus fails to spur | Reuters

    These fellows don't see it the same way Ambrose Evans-Pritchard does (above). The glass is half empty.

    Jonathan Cable and Wayne Cole:

    Massive monetary stimulus from Chinese and European central banks has done little to spur factory growth, moving a debate over more easing up the agenda and raising doubts over whether U.S. interest rates will rise this year.

    A crop of industry surveys out on Monday pointed to October as another subdued month. Activity in China's colossal factory sector shrank as global demand stuttered while euro zone factories again resorted to slashing prices to drum up trade.

    No rose-colored glasses, wishful thinking, or short-termism there.

    Add your comment.


  63.    Secret tapes, blackmail threat: Luxe real-estate rivalry turns nasty in Miami | Miami Herald

    This is not the typical story we cover, but unethical market-manipulation is real and so is blackmail. Risk management dictates that one be aware and as prepared as possible, which includes never engaging in either for starters.

    The Jills said that a staffer — unnamed in the document — overheard the call and "indicated that, in the future, a client's property could be kept off a list known as the 'Hot Sheet,' " which Realtors scoured for new business. From then on, the Jills acknowledged, they would "from time to time" keep other unsold properties off the collection of the expired listings, according to the response.

    Bergendahl, Tomlinson's lawyer, said it was incomprehensible that the Jills didn't understand the consequences of the data manipulation: "How can two people with a combined 50 years of experience not understand the magnitude of their actions?"

    Add your comment.


  64.    New study shows profound impact of tech industry on Bay Area real estate – On The Block

    Probably the only thing we didn't already know here is just how much and how deeply the tech boom has impacted local real estate. If you're qualified to work for these companies, you're likely qualified to buy and/or rent homes nearby. Other people, however, may be thoroughly priced out.

    Ah, I knew that. I think my readers did too.

    Add your comment.


  65.    Catching the Next Wave of Disruptive Real Estate Technology – Urban Land Magazine

    In the coming years, it will be possible to access mountains of aggregated market data and do real-time valuations for industrial, retail, and office properties, and buildings will be traded online the way that stocks are traded now. That is the world envisioned by a panel of real estate information technology providers at ULI's 2015 Fall Meeting in San Francisco, and they expect to see it happening in the next few years, thanks to IT innovations of the sort that have reshaped other industries.

    Add your comment.


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