News: Real Estate, Risk, Economics. Nov. 20, 2015

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Table of Contents
(Click to sections below.)

1) "What are the economic possibilities for our grandchildren?" — Prime Economics

2) Who are the biggest landowners in the US

3) Central Texas to Get Souped-Up Flood Forecasting System

4) Illinois Budget Mess Leaves Families' Flood Buyouts in Limbo

5) 13 Tips From Income Property's Scott McGillivray on Investing Since Age 21

6) How to Estimate a Rehab: 13 Items to Note on the Interior

7) Declining snowpack, water shortage projected in areas home to 2 billion: study | Reuters

8) Japan's 'quintuple dip' recession delivers a fresh blow to Abenomics | World news | The Guardian

9) Jesse's Café Américain: Nomi Prins: Crony Capitalism and Corruption – An Entirely Rigged Political-Financial System

10) 'Chicagonomics' and 'Economics Rules' – The New York Times

11) Clinton on Glass-Steagall: Right or wrong? – CBS News

12) Is China the new Japan? | Gavyn Davies

13) Shockingly, US Treats Municipalities Worse than Other Countries – Public Banking Institute

14) Stumbling and Mumbling: Keynes' error

15) The Effects of Stimulus Spending on Surrounding Areas

16) El Niño Talk Growing Louder Amid Southern California Storms

17) Denver Market Ranks Among the Best for Real Estate Investors

18) Power Point: Can the Federal Debt Be Repaid? | WEB OF DEBT BLOG

19) Fear Spreads as China's Finance Firms Face Arrests – Bloomberg Business

20) Wall Street Is Running the World's Central Banks – Bloomberg Business

21) Bloom and Bust by Phillip Longman | The Washington Monthly

22) RealTime Economic Issues Watch | A More Inflexible Fed Would Cause More Crises

23) Renters aren't saving to buy a house

24) Finland's depression is the final indictment of Europe's monetary union – Telegraph

25) Another AIG-Style Fed Bailout Is About to Become Less Likely – Bloomberg Business

26) Income Inequality: The Global Haves And Have-Nots In The 21st Century – YouTube

27) Dollar strength destroying global growth | FT Markets – YouTube

28) Multifamily Lending Starting to Level Off

29) Tax Implications for Converting a Primary Residence to Rental Property – US News

30) China Economic Watch | Corporate Debt in China: Above Cruising Altitude

31) Coppola Comment: The European Union must reform before it's too late

32) Multifamily Investment | CCIM Institute

33) Companies grilled by EU politicians over tax dodging | International Consortium of Investigative Journalists

34) Taxing issue: multinationals respond to EP proposals to make them pay their fair share

35) Explaining Inequality | Becker Friedman Institute

36) Do lower taxes encourage investment? | OECD Insights Blog

37) Crowdfunding or Crowdphishing? by Robert J. Shiller – Project Syndicate

38) Unaffordable Housing: A Root Cause of Social Inequality | Housing Finance Magazine

39) You probably can't afford a neighborhood with good schools

40) Protectionism and the fall in world trade | VOX, CEPR's Policy Portal

41) The Eurozone's Minsky Conundrum by Daniel Gros – Project Syndicate

42) Robert F. Dall, Mastermind of Mortgage-Backed Bonds, Dies at 81 – The New York Times

43) Cool temperatures bring hot Phoenix home prices, sales

44) mainly macro: When central bankers should keep quiet

45) IMF programmes: Greece vs Iceland | VOX, CEPR's Policy Portal

46) Rent Increases Slow as New Apartment Buildings Open | Zillow Blog

47) China Has a $1.2 Trillion Ponzi Finance Problem – Bloomberg Business

48) A Hard Landing in China Could 'Shake the World' – Bloomberg Business

49) Here's How the Boring German Housing Market Turned Piping Hot – Bloomberg Business

50) More than 500,000 people homeless in the United States: report | Reuters

  1.    "What are the economic possibilities for our grandchildren?" — Prime Economics

    Ann Pettifor does a nice job of explaining that Keynes was primarily a monetarist, with fiscal stimulus coming in second.

    The fiscal was to be reactive to the business cycle, smoothing it out. Stimulate in the down times via public debt. Pay down, or off, that debt during the up times.

    It worked pretty well (smoothing) after his ideas were mostly implemented. Then laissez-faire types deregulated and worked to undo Keynesianism, which deregulating and undoing led directly to the Great Recession, as proof.

    None of that means I'm in favor of using interest as Keynes was. I oppose interest. It's completely unnecessary and ultimately only serves those who "earn" it as so-called passive income. We certainly don't need it. We could do much better, economically, financially, and especially morally, without it.

    To read Ann's full paper, open the pdf: https://static1.squarespace.com/static/5 41ff5f5e4b02b7c37f31ed6/t/564a1bc0e4b06f d62eb2453a/1447697344068/Keynes.pdf

    Add your comment.


  2.    Who are the biggest landowners in the US

    1. John Malone

    Acreage: 2,200,000

    The Connecticut-based executive and philanthropist was once the CEO of cable provider Tele-Communications Inc. from 1973 to 1996 and is now chairman of Liberty Media. He owns the ranching and beef company Silver Spur Ranches, which has land in Wyoming, New Mexico and Colorado, but the biggest share of of his acreage is a mostly uninhabited forest in Maine.

    Add your comment.


  3.    Central Texas to Get Souped-Up Flood Forecasting System

    Come May 2016, turbocharged forecasts capable of faster updates as conditions change will be used to predict flooding on Central Texas rivers, an innovation expected to give emergency managers more lead time to prepare for problems downstream.

    The question is whether the pace of dramatic-weather changes will stay out ahead of advancements in technology (at least for how long).

    Add your comment.


  4.    Illinois Budget Mess Leaves Families' Flood Buyouts in Limbo

    After the Mississippi River flooded…, more than 100 Illinois families agreed…to sell their homes….

    …many owners signed contracts on new homes and started packing….

    Then Illinois lawmakers hit an impasse on a state budget, which may not get solved until next year, leaving the transactions in limbo.

    Add your comment.


  5.    13 Tips From Income Property's Scott McGillivray on Investing Since Age 21

    13 Tips Learned By Building a Real Estate Empire

    1. Start small, where you are, with what you have.

    Add your comment.


  6.    How to Estimate a Rehab: 13 Items to Note on the Interior

    Kevin Perk:

    The inside is usually a lot more complex and thus has more components to inspect. You also have to think about how you want to repair them. How you repair items will often be based upon your intent for the property. Will the property be a retail flip or a buy and hold rental? Obviously, you may go a bit more towards the high end with a retail flip, thus increasing your rehab costs.

    Go up in the attic. You may have to look at HVAC equipment, but if not, go up there anyway. Look for insulation and look at roof joists. Also look for any weird wiring. Old knob and tube wiring, for example, while perfectly functional, is another thing that freaks people out.

    Knob and tube wiring can disqualify your property for insurance coverage too.

    Add your comment.


  7.    Declining snowpack, water shortage projected in areas home to 2 billion: study | Reuters

    If we don't solve human-caused global warming:

    "Water managers in a lot of places may need to prepare for a world where the snow reservoir no longer exists," said Justin Mankin, the study's lead author and a researcher at Columbia University's Earth Institute in New York, in a statement.

    Add your comment.


  8.    Japan's 'quintuple dip' recession delivers a fresh blow to Abenomics | World news | The Guardian

    Private consumption, which accounts for about 60% of the economy, rose 0.5% from the previous quarter, roughly in line with forecasts.

    But capital expenditure fell 1.3%, which was more than expected. External demand added 0.1 percentage point to GDP growth, while domestic demand shaved 0.3 point off growth, the data showed.

    Well, if they hadn't raise the sales tax, this wouldn't have happened.

    Add your comment.


  9.    Jesse's Café Américain: Nomi Prins: Crony Capitalism and Corruption – An Entirely Rigged Political-Financial System

    Nomi Prins talking turkey: an extremely important risk-management issue:

    The connection between democracy and free markets is interesting though. Democracy is predicated on the idea that every vote counts equally, and in the utopian perspective, the government adopts policies that benefit or adhere to the majority of those votes. In fact, it's the minority of elite families and private individuals that exercise the most control over America's policies and actions.

    The myth of a free market is that every trader or participant is equal, when in fact the biggest players with access to the most information and technology are the ones that have a disproportionate advantage over the smaller players. What we have is a plutocracy of government and markets.

    Where have you heard that kind of talk and language before? Right here by yours truly.

    Nomi does a very nice job of explaining the moral hazard that existed and still does.

    You might think I would hate the discussion on Obamacare, but I don't. I'm interested in what's best for the whole economy.

    Add your comment.


  10.    'Chicagonomics' and 'Economics Rules' – The New York Times

    He believed that government had a crucial role to play in a well-functioning economy. It should finance and run good schools, as well as build roads, bridges and parks, he argued. It should tax alcohol, sugar and tobacco, all of which impose costs on society. It should regulate businesses to protect workers. And it should tax the rich — who suffer from "indolence and vanity" — to help the poor.

    Which leftist economist was this? None other than Adam Smith, the inventor of the "invisible hand" and the icon of laissez-faire economics today. Smith's modern reputation is a caricature.

    As for the rest of the article, hmmm.

    Add your comment.


  11.    Clinton on Glass-Steagall: Right or wrong? – CBS News

    Mark Thoma:

    … Hillary Clinton is correct: The evidence points elsewhere. For the most part, the main problems during that crisis didn't involve banks that offered both commercial and investment services. Instead, the problems were primarily at traditional investment banks.

    I see that claim made over and over and over no matter how many times it has been debunked.

    Many banks owned traditional investment banks. The non-investment banks were systemically at risk not simply because the whole economy was at risk but because those non-investment banks had direct exposure via their investments in investment banks and other institutions whose dealings caused the Great Recession.

    No, Hillary Clinton is not right about it.

    Also, how could Glass-Steagall have remained in place while everything else around it was deregulated? It wouldn't have happened. Regardless, repealing Glass-Steagall was a bad idea. The people paid much more than they would have.

    Watch the Nomi Prins video above. She explains it perfectly clearly.

    Add your comment.


  12.    Is China the new Japan? | Gavyn Davies

    Clearly, Chinese exchange rate policy has been determined by its over-arching goal of gaining admission to the SDR — something which seems likely to happen now that the IMF staff has recommended in favour. The US treasury has also said that it will support the move. While there is no official requirement for a currency within the SDR to be "stable" — it only needs to be "widely used" and "freely available" — there have been suspicions that US support would not have been forthcoming if China had embarked on a significant exchange rate devaluation when it moved to a more market determined regime in August.

    If China wants to escape from its deflationary trap, it still has the weapons to do so. But it will have to accept some weakening in the exchange rate. And the longer it waits, the more intractable the problem will become.

    What's to prevent China from devaluing after the SDR deal is sealed, threats of tariffs again?

    I accused Chinese leaders of not knowing what they are doing before I saw anyone else doing it. I must also say that I don't see US leadership as inspiring confidence.

    Until the US government stops borrowing to create the currency, all I can see is power continually concentrating into the hands of international banking corporations against democracy.

    Add your comment.


  13.    Shockingly, U.S. Treats Municipalities Worse than Other Countries – Public Banking Institute

    Down with bonds!

    Matt Stannard:

    Other countries support and sustain their cities' budgets. In America, we gamble ours. Even absent derivatives, debt swaps, and the whole Wall Street financial debauchery, the fact that American states and municipalities are coerced into playing the unstable bond market to fund basic goods (issuing close to half a trillion dollars of new bonds every year) is structurally problematic. Markets are only really fair in a world of perfect information, and the bond market barely has any information available to the local governments that play it:

    . . . centralized, standardized, userfriendly, and timely financial information on all of those bond issuers is impossible to find . . . Price transparency is particularly lacking in the market for municipal bonds. One reason is that municipal bonds, unlike stocks and options, trade primarily on over-the-counter (OTC) dealer networks rather than on centralized exchanges . . . most municipal bonds trade infrequently—in fact many never trade in a given year—and investors have little ability to assess the value and prices of their investments. As a result, issuers and individual investors trade through intermediaries with significant advantages in terms of information and sophistication, and must compete with professional and institutional investors on unequal footing. Because investors value and will pay more for securities that are more liquid, the lack of liquidity drives up financing costs for municipal borrowers.

    That's a huge sacrifice made by local governments just so some people can make money by having money. It's a piteously irrational model of financing governance and administration. Municipalities could save enormous amounts of money by borrowing from their own banks instead of being forced to compete in an illiquid bond market.

    Add your comment.


  14.    Stumbling and Mumbling: Keynes' error

    Keynes was wrong about the future concerning hours of work per week and the savings rate.

    He'll likely end up being right about the hours of work per week, as I think they will fall and fall and fall even well below 15 hours. Here, I'm speaking about mandatory hours per week in order to live. I don't think he'll ever be right about the savings rate because I think we'll get to a guaranteed living-income long before people will even be able to save at the rates that were once possible, at least I hope so.

    Add your comment.


  15.    The Effects of Stimulus Spending on Surrounding Areas

    In an article in The Regional Economist, Assistant Vice President and Economist William Dupor explained the "government spending multiplier." In theory, government spending not only combats recessions through directly increasing gross domestic product and hours worked, but also through spillover effects as additional income in workers' hands is spent.

    Dupor concluded in his article: "Besides providing evidence in favor of a government spending multiplier, our results should provide caution to other researchers, as well as to policymakers. Failing to take into account positive spillovers could lead policymakers to underestimate the total social benefit of government fiscal intervention."

    As far as I'm concerned, deliberately ignoring the positive spillovers leads policymakers to deliberately underestimate the total social benefit of government fiscal intervention.

    Add your comment.


  16.    El Niño Talk Growing Louder Amid Southern California Storms

    Strong rains throughout much of California and snow in the mountains earlier this month — the first significant moisture to hit many parts of the state after four years of persistent drought — are being followed by fierce winds this week.

    So far, the extra-wet and windy weather seems to be extending further up the Pacific Coast than last time.

    Add your comment.


  17.    Denver Market Ranks Among the Best for Real Estate Investors

    I have no idea whether the Denver market as a whole will continue to appreciate at the breakneck pace that we've seen over the past few years or whether it will slow down or even begin to see falling prices. It's just too difficult to look into the data and come up with forecasts for appreciation and growth that investors can feel totally confident in.

    That's the first time in a long time that I've read any investor emphasizing appreciation, whether speculative or not.

    Add your comment.


  18.    Power Point: Can the Federal Debt Be Repaid? | WEB OF DEBT BLOG

    It's a PDF, very quick to overview, especially for one who's familiar with the arguments.

    Here is a power point I gave last night at an American Freedom Alliance event in Los Angeles on whether the federal debt can be repaid (yes), how it can be repaid (by simply issuing the money), and why that would stimulate the economy without leading to hyperinflation. Ellen

    I agree with it about 99%.

    I'm glad to see Ellen has come completely around to realizing that usury (interest) is the problem. She did that some time ago, but it was very important in rounding out her economic position.

    It's also nice to see that she believes paying off the national debt could be done in one fell swoop, something I've advocated for many years. The only legitimate concern I've ever seen raised was that there are retirees on fixed income from US Treasurys. As I've mentioned before, that could be taken care of via a guaranteed, livable, minimum income, which is inevitable anyway and leading to a moneyless society, also inevitable.

    Ellen's blog: http://ellenbrown.com/2015/11/18/power-p oint-can-the-federal-debt-be-repaid/

    Add your comment.


  19.    Fear Spreads as China's Finance Firms Face Arrests – Bloomberg Business

    This herky-jerkiness is the direct result of China having rushed into allowing what they didn't understand, all very predictable.

    Economic growth got them all wide-eyed and willing to allow a wild-west type system to develop.

    If modeling the US is their goal, that just goes to show that they still don't realize where they should be heading.

    The more I watch China, the more dis-impressed I become.

    I'm glad they've started taking the environment seriously, but that's very far from enough.

    They still don't know who they are: laissez-faire capitalists or socialists or something else. They claim to still be Marxists, but that's impossible considering their current system and wouldn't be a good idea anyway.

    What they need most is what they fear most: grassroots democracy, bottom-up democracy, not top-down.

    The mix, if any, of market-driven economics versus pure socialism should be a democratic decision, not bureaucratic or oligarchic.

    I hope they find the way. The course they have been on won't work.

    Add your comment.


  20.    Wall Street Is Running the World's Central Banks – Bloomberg Business

    So what does the re-emergence of financiers in the halls of central banks mean for monetary policy at a time when it's set to diverge internationally?
    More Hawkish

    The question for investors is whether the historical relationships still hold. They may not. Draghi is mulling more stimulus for the euro area, Carney this month signaled the U.K. still needs record-low interest rates and Dudley has proven to be one of the most dovish Fed officials.

    Well, some of them know better than do others how far to push the envelope and even when to retreat a bit. Push too far or refuse to give some ground back, and the people will rise up against the bankers.

    Of course, the people need to get wise to this and take the ground they want. The economy does not require commercial or investment banks or bankers, as we know them. A depositary institution? Yes, but that could be the US Treasury (as a public utility) for every deposit in the US.

    Add your comment.


  21.    Bloom and Bust by Phillip Longman | The Washington Monthly

    This is a great article.

    Surprise, the demise of antitrust, the beginning of massive, harmful deregulation, began under President Jimmy Carter:

    By the 1960s, antitrust enforcement grew to proportions never seen before, while at the same time the broad middle class grew and prospered, overall levels of inequality fell dramatically, and midsize metro areas across the South, Midwest, and Far West achieved a standard of living that converged with that of America's historically richest cites in the East. Of course, antitrust was not the only cause of the increase in regional equality, but it played a much larger role than most people realize today.

    Beginning in the late 1970s, however, nearly all the policy levers that had been used to push for greater regional income equality suddenly reversed direction. The first major changes came during Jimmy Carter's administration. Fearful of inflation, and under the spell of policy entrepreneurs such as Alfred Kahn, Carter signed the Airline Deregulation Act in 1978. This abolished the Civil Aeronautics Board, which had worked to offer rough regional parity in airfares and levels of service since 1938.

    With that department gone, transcontinental service between major coastal cities became cheaper, at least initially, but service to smaller and even midsize cities in flyover America became far more expensive and infrequent. Today, average per-mile airfares for flights in and out of Memphis or Cincinnati are nearly double those for San Francisco, Los Angeles, and New York. At the same time, the number of flights to most midsize cities continues to decline; in scores of cities service has vanished altogether.

    Since the quality and price of a city's airline service is now an essential precondition for its success in retaining or attracting corporate headquarters, or, more g enerally, for just holding its own in the global economy, airline deregulation has become a major source of decreasing regional equality. As the airline industry consolidates under the control of just four main carriers, rate discrimination and declining service have become even more severe in all but a few favored cities that still enjoy real competition among carriers. The wholesale abandonment of publicly managed competition in the airline sector now means that corporate boards and financiers decide unilaterally, based on their own narrow business interests, what regions will have the airline service they need to compete in the global economy. (See "Terminal Sickness," Washington Monthly, March/April 2012.)

    In 1980, President Carter signed legislation that similarly stripped the government of its ability to manage competition in the railroad and trucking industries. As a result, midwestern grain farmers, Texas and Gulf Coast petrochemical producers, New England paper mills, and the country's mines and steel, automobile, and other heavy-industry manufacturers, all now typically find their economic competitiveness in the hands of a single carrier that faces no local competition and no regulatory restraints on what it charges its captive shippers. Electricity prices similarly vary widely from region to region, depending on whether local utilities are held captive by a local railroad monopoly, as is now typically the case.

    The next big policy change affecting regional equality was a vast retreat from antitrust enforcement of all kinds. The first turning point in this realm came in 1976 when Congress repealed the Miller-Tydings Act. This, combined with the repeal or rollback of other "fair trade" laws that had been in place since the 1920s and '30s, created an opening for the emergence of super-chains like Walmart and, later, vertically integrated retail "platforms" like Amazon. The dominance of these retail goliaths has, in turn, devastated (to some, the preferred term is "disrupted") locally owne d retailers and led to large flows of money out of local economies and into the hands of distant owners.

    Inequality, an issue politicians talked about hesitantly, if at all, a decade ago, is now a central focus of candidates in both parties. The terms of the debate, however, are about individuals and classes: the elite versus the middle, the 1 percent versus the 99 percent. That's fair enough. But the language we currently use to describe inequality doesn't capture the way it is manifest geographically. Growing inequality between and among regions and metro areas is obvious to all of us. But it is almost completely absent from the current political conversation. This absence would have been unfathomable to earlier generations of Americans; for most of this country's history, equalizing opportunity among different parts of the country was at the center of politics. The resulting policies led to the greatest mass prosperity in human history. Yet somehow, about thirty years ago, we forgot our history.

    Yes, it began mostly under Carter, but the worst was definitely yet to come. Ronald Reagan and Bill Clinton were much worse, and George W. Bush only made matters worse still, in addition to his huge mishandling of the beginning of the Great Recession.

    Obama has been very slow to come around to taking any antitrust actions, but they have been better than nothing at all. Rolling back the deregulation has been more than weak.

    Hopefully the youth of the nation can be taught and learn the truth of it all.

    It is good to see antitrust starting to become a topic again. I remember the "good old days" before the plutocrats grabbed everything. I never thought back then that I'd live to see the day when the people were so severely duped by those plutocrats, where the US economy was so crushed and consolidated into the hands of so few and who mostly do not have the people's general welfare at heart at all.

    It is a very rare billionaire indeed who would happily give up all of his private wealth for the real sake of the people, to give them, the people, the power.

    Add your comment.


  22.    RealTime Economic Issues Watch | A More Inflexible Fed Would Cause More Crises

    Adam S. Posen:

    … there is no room for debate about the sheer economic irrationality of subjugating independent monetary policy to any simple-minded, rigid rule—doing so would bring severe harm to the workers, savers, and investors in the US economy.

    If Adam is referring to the Taylor Rule, I agree.

    I do not, however, agree that the Fed, per se, is the right monetary authority for the future of the nation or world. We can do better, and I don't mean turning over currency-supply real-time decisions to the Congress but rather a supercomputer network designated by the Congress or the people to handle it and to be monitored by Congress or the people directly, as the people may choose to modify the Constitution.

    Add your comment.


  23.    Renters aren't saving to buy a house

    Why they rent:

    When asked about their savings priorities, more renters said they consider saving for emergencies (59 percent), retirement (51 percent) and children's education (50 percent) an "essential/high priority." Only 39 percent said saving for a down payment.

    Add your comment.


  24.    Finland's depression is the final indictment of Europe's monetary union – Telegraph

    Ambrose Evans-Pritchard's progressive side peeking out:

    Finland tops the EU in the World Economic Forum's index of global competitiveness. It comes 1st in the entire world for primary schools, higher education and training, innovation, property rights, intellectual property protection, its legal framework and reliability, anti-monopoly policies, university R&D links, availability of latest technologies, as well as scientists and engineers.

    Its near-perfect profile demolishes the central claim of the German finance ministry – through its mouthpiece in Brussels – that countries get into bad trouble in EMU only if they drag their feet on reform and spend too much.

    The country has obviously been hit by a series of asymmetric shocks: the collapse of its hi-tech champion Nokia, the slump in forestry and commodity prices, and the recession in Russia.

    The relevant point is that it cannot now defend itself. Finland is trapped by a fixed exchange rate and by the fiscal straightjacket of the Stability Pact, a lawyers' construct that was never intended for such circumstances. …

    The question has to be asked in any case: if the euro cannot be made to work for what is supposed to be the most competitive country in the EU, who can it work for?

    The European Union and the euro were very poorly designed. The idea of building it and fixing it later when things become necessary was a mistake. Union is the right course, but it must be deeply integrated and highly democratic.

    The Germans have thought they know what they're doing. They haven't and still don't. They have been missing a golden opportunity. A full, democratic union would be the greatest thing to have ever happened to Germany.

    Add your comment.


  25.    Another AIG-Style Fed Bailout Is About to Become Less Likely – Bloomberg Business

    Okay, this article makes clear that the Fed is under pressure from both the left and right and for obviously different reasons.

    The left is mostly concerned with moral hazard. I agree with that concern. The right, however, seems to want the Fed to ease up on regulations of banks, which even the Fed knows would be counterproductive because in the next severe downturn, if it comes within the living memories of those who've lived through the Great Recession and remember its causes, the people will want the bankers heads and will not agree to any bailout.

    The left doesn't want bailouts either, but the left is more concerned with a stable economy versus letting the speculators take huge risks and then letting the market liquidate the failed banks. The left doesn't want to return to pre-Fed and especially pre-Great Depression booms and busts, which were vastly more severe than after the New Deal up until the Great Recession, which was caused by undoing the New Deal so much.

    Add your comment.


  26.    Income Inequality: The Global Haves And Have-Nots In The 21st Century – YouTube

    Professor Milanovic's scholarship suggests that when split into 'inequality within countries' and 'inequality between countries', the latter accounts for by far the biggest gap. At the turn of the twenty-first century, the richest 5 percent of people receive one-third of total global income, as much as the poorest 80 percent. While a few poor countries are catching up with the rich world, the differences between the richest and poorest individuals around the globe are huge and likely growing.

    This is almost certainly the highest level of relative, and certainly absolute, global inequality at any point in human history. Is there anything we can do to reverse or mitigate this trend?

    Poor people own land too. Often, that land cannot be made productive enough to afford to pay more in taxes. What would be done, take the land of the poor right out from under them and force them to rent something more costly to them since their land had been paid off long ago via wages? Why does land always have to be "productive"?

    I don't like it. Henry George had a good heart, relatively speaking; however, I don't think his is the answer.

    BTW, here's Branko's blog: http://glineq.blogspot.com/

    I've linked to articles of his over the years.

    Add your comment.


  27.    Dollar strength destroying global growth | FT Markets – YouTube

    Interesting perspective:

    The strong dollar is destroying global growth, says Michael Power, strategist with Investec Asset Management. He explains to EM Squared editor Jonathan Wheatley why the IMF's way of measuring growth using purchasing power parity is out of touch with the real economy.

    Add your comment.


  28.    Multifamily Lending Starting to Level Off

    Bendix Anderson:

    Lenders will likely originate a total of $224 billion in permanent loans to multifamily properties in 2015, according to MBA. That's a 15 percent increase from the $195 billion they lent in 2014, which in turn marked a 13 percent increase from $173 billion in multifamily originations in 2013. That year marked an 18 percent increase in originations from 2012.

    … low interest rates support high property values, encourage potential investors to buy more assets and existing property owners to refinance. All these factors increase demand for financing. And lenders continue to be eager to lend on apartment properties. Everyone in the business knows apartment loans have experienced relatively few problems with defaults.

    The lenders growing the fastest in 2015 include banks and agency lenders, who make loans to apartment properties based on the programs set by Fannie Mae and Freddie Mac. They increased the amount of mortgage debt they have outstanding to commercial and apartment properties by $15 billion in the second quarter of 2015. Giant loans on large portfolios of apartment properties account for much of the growth. The federal officials who effectively govern Fannie Mae and Freddie Mac also made this growth possible. Halfway through the year, they tinkered with the limits on how much the agencies can lend, so that many loans to affordable and workforce housing properties don't count towards the agencies' caps on lending.

    Lenders will keep busy over the next two years, keeping their volume of apartment lending at about the same level they maintain today. Lenders are expected to originate $225 billion in permanent loans on apartment properties in 2016, roughly the same as in 2015. They are expected to originate $227 billion in 2017, a tiny increase.

    Raising rates would be a huge mistake. I'm glad to see that "Fannie Mae and Freddie Mac also made this growth possible. … they tinkered with the limits on how much the agencies can lend, so that many loans to affordable and workforce housing properties don't count towards the agencies' caps on lending." Yet, some people hate Fannie and Freddie so much that they want to shut them down to replace them completely with private-sector lenders, which lenders could never match the affordability of Fannie Mae and Freddie. What a shame it is that people only want to do what will benefit themselves at the negative expense of others and especially those who can least afford it often at no fault of their own whatsoever.

    Add your comment.


  29.    Tax Implications for Converting a Primary Residence to Rental Property – US News

    Kristin McFarland:

    This is the first of two articles about converting a principal residence to a residential income property. While we will be exploring some of the main considerations for this type of conversion, the tax code is very complex, and it is advisable to work with a certified public accountant who can offer advice based on your personal situation.

    … In my next post, we'll discuss cash flows, tenant rights and other considerations.

    Add your comment.


  30.    China Economic Watch | Corporate Debt in China: Above Cruising Altitude

    China's economy has seen some cyclical scares this year (think stock market and currency), but high corporate debt is a structural issue, potentially leading to a period of slower expansion of credit in an effort to reduce the debt-to-GDP ratio weighing on rapid growth.

    Add your comment.


  31.    Coppola Comment: The European Union must reform before it's too late

    By this article, Frances Coppola shows herself as one who sees a great deal of the bigger picture.

    Where I take very strong exception concerns Frances pulling for true European Union while simultaneously hearkening back to "Germany as the devil" notions.

    Frances, within a true Union, there is no hegemon anyway.

    Germans would be Europeans first and Germans second.

    In the US, we are Americans first and Arizonans or Michiganians or Washingtonians second. No state is the hegemon. Were Europe to truly unify, the same would be true of Europe.

    Germany is no more inherently untrustworthy with power than any other major state. The German people should not be viewed with such inherent suspicions. It is counter-productive and, frankly, ethnically bigoted.

    I like you, Frances, but I strongly disagree with your view about Germans. They have some growing to do as a nation, as a people, but they are very capable of doing it, especially if people don't count them out in advance.

    Add your comment.


  32.    Multifamily Investment | CCIM Institute

    An informative article by Beth Mattson-Teig:

    Many investors are underwriting deals aggressively, anticipating higher rents. Investors look at the going-in cap rate, but what they are really buying is where they think the cap rate is going to be when they get rents to market levels, Knutson adds. For example, he brokered the sale of a 1950s-built apartment building in Oakland, Calif., in May that sold for $5 million or $147,059 per unit. The going-in cap rate was 3.7 percent, but with anticipated rent increases the cap rate will likely be closer to 5.5 percent. In addition, the buyer borrowed money at a rate of less than 4 percent, which will give him good cash flow on a nice asset, Knutson says.

    "We are hearing so much in 2015 that we have become this renter nation. I believe that is going to change," says Bennett. "How long can the rental market sustain 30 percent to 60 percent on rental income when the cost of owning is half or less than half of this number?"

    Who can save for a down payment?

    Add your comment.


  33.    Companies grilled by EU politicians over tax dodging | International Consortium of Investigative Journalists

    Representatives from some of the world's most renowned companies, including Disney, IKEA, Google and HSBC, faced a grilling from European parliamentarians on Monday, part of a probe into corporate tax policies initiated following the publication of ICIJ's Luxembourg Leaks investigation.

    Eleven of the thirteen multinational corporations invited to participate sent representatives to the final meeting of the European Parliament's TAXE Committee.

    The Brussels hearing was slated by Committee chair and Member of European Parliament Alain Lamassoure as a last chance for the companies to have their say, after many had declined previous invitations. The committee was established after ICIJ's Luxembourg Leaks investigation revealed how secret agreements between Luxembourg authorities and some of the world's biggest multinational corporations allowed more than 370 companies – including Disney, IKEA, Pepsi and Deutsche Bank – to avoid billions of euros in taxes on profits channeled through Luxembourg.

    Add your comment.


  34.    Taxing issue: multinationals respond to EP proposals to make them pay their fair share

    Proposals for a fairer tax system

    After eight months of work, Parliament's tax rulings committee adopted on 26 October its recommendations. Multinationals should pay their taxes where they make their profits, while competition between countries to offer corporations the lowest taxes is harmful, said MEPs.

    Add your comment.


  35.    Explaining Inequality | Becker Friedman Institute

    "The idea that that I'm going to index the tax structure to changes in prices [and wages] is the worst idea in world," Murphy responded. "It stifles the supply and demand response." Even without the indexing, "if you tax capital, you stop growth and you will lock in place the returns to labor," he said. But if you allow capital to respond to the opportunity of profits, investment creates more opportunity and wage growth for workers. "That's been the case for a long, long time," Murphy added. "The return to capital hasn't changed much over 100 years, but the returns to labor have increased. "If you're worried about inequality, don't want to get to a world where you are taxing one group, giving money to other group that doesn't. That gets you more inequality," Murphy said. "And inequality goes beyond income; it involves the environmental things and interactions Steve talks about. We have to find a way to keep the other segments of society engaged."

    Piketty stressed that education reform and progressive taxation were not substitutes; complementary approaches that work together. But, he added, the idea that we need to resist taxation to keep incentives and productivity growth "just doesn't square with the facts."

    Durlauf said measurement is tough because it's increasingly clear that psychological and sociological as well as economic factors are involved, and there are methodological challenges in parsing out causal factors. The good news is that the research he cited is moving us toward emerging fields of psychological economics and sociological economics, but they're still in their infancy.

    I already liked Thomas. I'm quite impressed with Steven Durlauf's heart and emphasis upon cross-disciplinary approach, which I too have advocated.

    It was nice to see that this discussion was held at the freshwater bastion.

    Add your comment.


  36.    Do lower taxes encourage investment? | OECD Insights Blog

    Getting set up to crack down and none too soon:

    Conventional wisdom holds that countries with lower taxes attract higher levels of foreign direct investment (FDI). At first glance, this intuitive assumption seems to be supported by the evidence. Some tiny jurisdictions with low or no taxes on foreign investment do seem to attract more FDI than major economies, but "investment" is the wrong term for billions of dollars that flow in and out of these places as part of the strategies multinationals use to pay less tax.

    A new methodology for calculating FDI has been developed at the OECD to provide a clearer and fuller picture of FDI flows.

    Add your comment.


  37.    Crowdfunding or Crowdphishing? by Robert J. Shiller – Project Syndicate

    In my new book with George Akerlof, Phishing for Phools: The Economics of Manipulation and Deception, we argue that unscrupulous behavior has to be factored into economic theory in a fundamental way. The economic equilibrium we live should be regarded, above all, as a phishing equilibrium, in which small-time individual dishonesty can morph into something more systemically important when it is carried on by business organizations under intense competitive pressure. Yes, competition rewards the sharp and hardworking. But it also often compels them to keep the frontiers of subtle deception in view.

    Add your comment.


  38.    Unaffordable Housing: A Root Cause of Social Inequality | Housing Finance Magazine

    Richard F. Burns and Thomas G. Vaccaro:

    Since the 1980s, wages have failed to keep up with the cost of housing, whether one rented or owned. During the late 1990s and early 2000s, housing prices were rising 10% to 20% or more per year, depending on where in the country one lived. Yet, according to the Economic Policy Institute, wages have grown only 6% since 1979, after accounting for inflation. In more recent years, real income for the median household has been level or declining each year since the recession that began in 2008, according to the U.S. Census Bureau. In 2014, that number remained 6.5% lower than it was in 2007. More than 55% of American adults—approximately 138 million people—are struggling financially, reports the Stewards of Affordable Housing for the Future. Unless wages begin to rise or affordable rents become more available, there will be no housing relief in the foreseeable future for millions of families.

    Add your comment.


  39.    You probably can't afford a neighborhood with good schools

    To live near the highly rated Encinal Elementary School …, parents would be faced with a median home price just north of $6 million, which translates to monthly payments near $37,000, according to housing data provider RealtyTrac. That's a mere 412% more than the average monthly wage of $8,953 for the area.

    Harvey is located in Cook County, just south of Chicago. While it calls itself "a new city rising," it has been plagued by high crime and reported corruption, according to the Chicago Tribune.

    Nevertheless, its Whittier Elementary School gets high marks. And with a rock-bottom median home price of $21,000 — or just $128 a month — that compares quite favorably to the $5,547 in average monthly wages reported for the county.

    Add your comment.


  40.    Protectionism and the fall in world trade | VOX, CEPR's Policy Portal

    Simon J Evenett and Johannes Fritz:

    The report pours cold water on the benign interpretation that the global trade slowdown is merely a combination of the rising US dollar, falling commodity prices, and retrenchment of supply chains involving China (Constantinescu et al. 2015, WTO 2015).

    That seems to be an overstatement to me.

    Add your comment.


  41.    The Eurozone's Minsky Conundrum by Daniel Gros – Project Syndicate

    Daniel Gros:

    In deciding its next move — whether to initiate more bond purchases, lower interest rates even further, or do both — the ECB must recognize that any positive impact on demand probably will be limited to the eurozone's weaker economies — that is, the economies that can least afford it.

    I'm sorry, but that makes no sense to me. The countries that are struggling the most can least afford to be benefited by actions that will benefit them the most. What is that? They are either benefited or they are not. If it is beneficial, then their economies will strengthen.

    Look, zero interest rates aren't the problem. The ZLB, per se, is not a Minsky/Ponzi situation. Low demand and supply are the problems along with the goofy EU/euro system/structure.

    Do I think the ECB's method is the best? I absolutely do not think it. However, Europe's legal structure is so bad that the ECB barely even managed to get started with the program it has.

    The idea of simply letting the "markets" sort it out, that that would be best, and the idea that there is some sort of real natural rate of interest are both fantasies.

    There is no such thing as a capitalistic equilibrium, never has been and never will be.

    Add your comment.


  42.    Robert F. Dall, Mastermind of Mortgage-Backed Bonds, Dies at 81 – The New York Times

    Robert F. Dall, an investment banker and a pioneer of the mortgage bond market on Wall Street, died on Sunday in Manhattan. He was 81.

    His son Matthew said the cause was complications of pneumonia.

    While at Salomon Brothers in the 1970s, Mr. Dall oversaw the first sale of bonds backed by American home mortgages to large private investors.

    "If I didn't believe in the capitalist system, I could never accept what happened," Mr. Dall said in an interview with The New York Times in 1987. "But I do believe in it: The fittest moved ahead."

    I don't know the man's heart, but I can say that mortgage-backed securities was a terrible idea.

    Just because a mutation seemingly "works" for a while doesn't prove it is going to survive on the merits.

    Add your comment.


  43.    Cool temperatures bring hot Phoenix home prices, sales

    … most price increases will be driven by a growing number of buyers trying to purchase a shrinking number of houses priced below $300,000, said Mike Orr, director of the Center for Real Estate Theory and Practice at the W. P. Carey School of Business.

    "The biggest problem we face is a huge mismatch between supply and demand below $300,000," he said. "This is likely to keep prices rising strongly and fastest for areas where the vast majority of homes are under the median sales price of $225,000."

    It looks like rentals won't be threatened anytime soon.

    Add your comment.


  44.    mainly macro: When central bankers should keep quiet

    Simon Wren-Lewis:

    … Willem goes too far in criticising Bernanke's support for fiscal stimulus in 2009. It is a great pity that more central bankers did not say in 2009 and later that hitting the zero bound for interest rates seriously compromised their ability to do their job, and that fiscal stimulus would have been effective in increasing output. Saying that this was political, and therefore out of bounds for monetary policy makers, is a bad argument. Anything can be labelled political. Some people think global warming is political. But is also a fact, and therefore central bankers are quite right to treat it as a fact when discussing its implications for financial sector stability, for example.

    Add your comment.


  45.    IMF programmes: Greece vs Iceland | VOX, CEPR's Policy Portal

    Margarita Katsimi and Gylfi Zoega:

    The reasons for the success of Iceland's programme and the hitherto failure of the Greek programme can be traced to a set of interrelated factors.

    First, Iceland's external debt was de jure private, Greece's external debt was sovereign debt.

    Second, Iceland has its own currency and hence the reversal of capital flows creates a current-account surplus through a lower exchange rate almost overnight.

    These two factors contribute to the third, which is that the government of Iceland took full ownership of the IMF programme, which was not the case in Greece.

    Finally, weak ownership of the Greek programme contributed to the fear of Grexit fuelling expectations that another major economic disturbance may be around the corner for Greece, a factor that was absent for Iceland.

    Add your comment.


  46.    Rent Increases Slow as New Apartment Buildings Open | Zillow Blog

    Even though rental appreciation is slowing, renting is still unaffordable for many residents across the U.S. "It will take a lot more supply, and a lot more renters-turned-homeowners, to fully reverse this trend," said Zillow Chief Economist Svenja Gudell.

    Add your comment.


  47.    China Has a $1.2 Trillion Ponzi Finance Problem – Bloomberg Business

    "Some Chinese firms have entered the Ponzi stage because return on investment has come down very fast," said Shi Lei, the Beijing-based head of fixed-income research at Ping An Securities Co., a unit of the nation's second biggest insurance company. "As a result, leverage will be rising and zombie companies increasing."

    Add your comment.


  48.    A Hard Landing in China Could 'Shake the World' – Bloomberg Business

    The bottom line: World growth would "slow sharply," in a China hard-landing scenario, according to Oxford Economics. Close trading partners and commodity exporting countries would bear the brunt, and advanced economies would be significantly affected too, with deflationary pressures intensifying.

    Add your comment.


  49.    Here's How the Boring German Housing Market Turned Piping Hot – Bloomberg Business

    Germany's housing market is hot.

    Rents are rising in big cities including Berlin and Hamburg as young people seeking work move there from rural areas and elsewhere in Europe. Construction, however, has been slow to catch up, which has led to housing shortages and made leasing apartments a bonanza for landlords.

    Add your comment.


  50.    More than 500,000 people homeless in the United States: report | Reuters

    This is a national disgrace. How can we have a single billionaire while we have a single homeless child who wants a home?

    More than 500,000 people – a quarter of them children – were homeless in the United States this year amid scarce affordable housing across much of the nation, according to a study released on Thursday.

    Add your comment.


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