News: Real Estate, Risk, Economics. Nov. 25, 2015

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Table of Contents
(Click to sections below.)

1) Can China be like Chattanooga? Shifting from industry to services | Brookings Institution

2) The anti-poor effects of large exchange rate devaluations | VOX, CEPR's Policy Portal

3) Trends in oil production | Econbrowser

4) World leaders seek new path to slow warming of planet | Reuters

5) Some Asbestos Left Behind in Montana Town Amid Move to End Cleanup

6) Five Things to Consider when Buying a "Flipped" Home

7) Coppola Comment: Eurodespair

8) The Era of the Boutique Condo Has Arrived – Multifamily

9) Joseph Stiglitz on Canada's Housing Inequality: 'It's Very Disturbing' | The Tyee

10) Study drives a sixth nail into the global warming 'pause' myth | John Abraham | Environment | The Guardian

11) Broken elevator strands disabled Berkeley tenants | Berkeleyside

12) Barbara Yaffe: Time for government intervention in real estate market

13) Homebuying Millennials Are Trying to Find Real Estate Footing – MainStreet

14) Is racism on the rise? More Americans say it's a 'big problem'

15) India Becomes World's Fastest Growing Economy: What Investors Need to Know

16) [Greece] The stage of collapse | Comment | ekathimerinicom

17) Across the Curve – Blog Archive – Rate Hike Mechanics and the Chief Mechanic

18) AirTalk | As insurance companies threaten to leave the Affordable Care Act, a look at its viability | 89.3 KPCC

19) Welcome to Austeria — a nation robbing its poor to pay for the next big crash | Aditya Chakrabortty | The Guardian

20) Experts say scale of George Osborne's cuts to police, education and council budgets 'unprecedented' – Mirror Online

21) Elite funds prepare for reflation and a bloodbath for bonds – Telegraph

22) Tax Research UK – This is the day we say farewell to everything that was good about Britain

  1.    Can China be like Chattanooga? Shifting from industry to services | Brookings Institution

    We were going to open up China economically because doing so would open up China democratically. We hear next to nothing now about China transforming into a democracy not because it can't but because that was never really the plan.

    Here's Ben Bernanke on China and nary a word on democracy.

    Add your comment.


  2.    The anti-poor effects of large exchange rate devaluations | VOX, CEPR's Policy Portal

    Javier Cravino and Andrei Levchenko:

    It is well known that households at different income levels consume very different baskets of goods. A change in relative prices following a large exchange rate change will thus affect households differentially, implying that exchange rate changes have a distributional as well as an aggregate welfare impact.

    The distributional consequences of exchange rate changes are a relatively unexplored consideration for exchange rate policies, in both a normative and a positive sense. If equity considerations are important, optimal policy should take the differential impact of exchange rate changes across income groups into account. By the same token, understanding how large exchange rate changes affect different consumers may be informative about the configuration of political support for policies — such as Grexit or Brexit — that will likely carry significant exchange rate implications.

    "If equity considerations are important…." What do you mean, "If"?

    Just to clarify, I'm sure they care about the poor else they wouldn't have bothered studying the question.

    Add your comment.


  3.    Trends in oil production | Econbrowser

    James Hamilton:

    Production has not fallen as dramatically as many of us had anticipated thanks to remarkable ongoing gains in productivity. Even so, the EIA estimates that U.S. shale oil production will be half a million barrels a day lower in December than it had been in June.

    Add your comment.


  4.    World leaders seek new path to slow warming of planet | Reuters

    Even some OPEC nations are feeling the benefits of falling prices of renewables such as solar photovoltaics (PV).

    "Solar PV is cheaper than gas – even at Abu Dhabi prices," said Ahmad Belhoul, chief executive of the United Arab Emirates green energy firm Masdar.

    What I don't understand is why we can't transmit power from the sunny side of the Earth to the dark side. I realize that power drops over distances, but still.

    Add your comment.


  5.    Some Asbestos Left Behind in Montana Town Amid Move to End Cleanup

    Some worried residents point out that the agency plans to leave asbestos in the walls of houses, underground and elsewhere.

    Add your comment.


  6.    Five Things to Consider when Buying a "Flipped" Home

    Many turnkey rentals are rehabbed properties, so the same things apply as with this linked article. Avoid the worst-case scenarios.

    Environmental considerations are also important. Was there lead paint removed and disposed of correctly? Were there, or are there, issues with asbestos? Was the house a crack house and used to manufacture meth? The list goes on and on. Do your research.

    What sort of warranty is involved and by whom is it backed?

    Understand, there are some very professional flippers out there. Also, some very experienced construction people will flip houses on the side. They may not have flipped as many properties, but that certainly doesn't mean they won't, or don't, do high-quality rehabs.

    Add your comment.


  7.    Coppola Comment: Eurodespair

    Frances Coppola:

    There appears to be no justification for monetary tightening in Germany. So why are a group of German "economic experts" calling not only for the ending of QE, but for its reversal? The clue is in the preceding sentences:

    Low interest rates pose risks for financial stability and erode the business models of banks and insurers over the medium term. Relying only on macroprudential regulation cannot solve these problems.

    Yes, as usual it is all about banks. …

    It is true that persistently low interest rates do reduce banks' net interest margins. So do the flat yield curves created by QE. But against that should be set the benefit for businesses who can obtain credit both from banks and from markets at much lower interest rates than would otherwise be the case. The ECB's bank lending survey somewhat surprisingly suggests that QE has had a significantly positive effect on credit conditions in the Eurozone. Yet even with QE, lending to businesses is still on the floor and lending to households only slightly positive. Without QE, lending could still be falling, to the further detriment of the Eurozone economy. Why should the problems of German banks dictate the direction of Eurozone monetary policy?

    I agree.

    Do they ever answer her directly?

    Add your comment.


  8.    The Era of the Boutique Condo Has Arrived – Multifamily

    Avison Young principal Jim Hanson says one factor keeping today's condo developments smaller is that pre-sales are too risky to find financing. The large condo developments that dominated the previous cycle are no longer cool. Developers don't want to be heavily leveraged in case a downturn occurs.

    Add your comment.


  9.    Joseph Stiglitz on Canada's Housing Inequality: 'It's Very Disturbing' | The Tyee

    Here's a taste:

    Our new federal government says it wants to address inequality. Does anything in the TPP constrain what it could do?

    Oh, everything in it. If you change a regulation — for instance, to prohibit excessive interest rates — you could be sued by an American bank that made an investment and says, 'You've deprived us of our expected profits.'

    When it comes to environmental protection, we know that adverse environmental impacts are worse for the poor. They're exposed to toxic waste and all kinds of things. We know from NAFTA that you can be sued if you say, 'You're not allowed to have a toxic waste dump next to where people will live.' The company will say, 'Sorry, but we bought the property and expected to make profits.'

    [The TPP contains] complicated language that says there's an exception for health and safety. But there are exceptions to the exceptions. One clause may dominate over another. And you have to go to this arbitration panel dominated by private arbitrators paid for by the corporations, and you expect justice? I think you're crazy. There's no appeal, no precedents, no public interest as an overriding concern.

    Add your comment.


  10.    Study drives a sixth nail into the global warming 'pause' myth | John Abraham | Environment | The Guardian

    Anthropogenic Global Warming denial must stop.

    … the bad news is we continue to break records.

    The good news is that the favorite myths from climate-change skeptics have taken a beating this year. Perhaps the best-known myth is the so-called "pause" or "hiatus" in global warming.

    AGW is real. It's happening. If we don't address it rather than deny it, we'll be in extremely deep difficulty (lacking some major technological advancements at the last second or so).

    We have what it takes already to deal with it. The obstacles are greed and the sowing of denial by the forces of greed.

    Add your comment.


  11.    Broken elevator strands disabled Berkeley tenants | Berkeleyside

    A broken elevator at a Berkeley apartment building owned by Equity Residential has left numerous tenants with mobility issues in the lurch this holiday season, and building management has been slow to handle the problem, residents report.

    Bednarska said the couple initially moved into the building because it seemed to be a community that cared about mobility issues and access for all. But she said basic steps — such as overnight or rush shipping for the needed elevator part, and perhaps overtime for repair work — did not seem to have been taken.

    One wonders how much trouble Equity Residential has had with the elevator contractor and material suppliers. Are service backlogs really bad {stacked up for the contractor(s)}. I'd like to have heard more of the details on what's caused the delays and what Equity has done or tried to do about them.

    Should the building have two elevators and a generator? I'd suggest looking into it.

    Add your comment.


  12.    Barbara Yaffe: Time for government intervention in real estate market

    Is housing just another commodity in a free-market system? Or is it a social necessity, requiring a degree of government regulation? A new Insights West poll certainly suggests people here favour some government intervention.

    Median family income in Vancouver in 2013, according to Statistics Canada, was $73,390. An income of about $150,000 is required for mortgage payments on an $800,000 Vancouver home.

    Where are the nurses, teachers and firefighters supposed to live?

    And nurses, teachers and firefighters are typically pretty well paid compared to an entire economic class below them. Where are the janitors supposed to live? They're people too.

    Add your comment.


  13.    Homebuying Millennials Are Trying to Find Real Estate Footing – MainStreet

    Why they rent:

    "People simply don't have the money for a mortgage down payment or cannot qualify for a mortgage due to high debt to income ratios."

    Add your comment.


  14.    Is racism on the rise? More Americans say it's a 'big problem'

    Even though this is a very mainstream-media outlet's article (CNN), it covers many aspects and angles of this issue of racism, which issue can, and does, impact residential-income properties whether landlords and managers or tenants want to think so or not.

    I certainly don't have all the answers and don't know anyone who does, but it would behoove any landlord and rental manager and firm to be well aware of the issue and especially housing laws against racism and ethnic and other bigotry.

    If you don't study the issue and prepare yourself and your team and contractors properly to handle things with the utmost professionalism and knowledge, you could be opening up yourself and others to otherwise unnecessary legal claims and thereby jeopardize your insurance coverage.

    The best place to start is with federal laws and your state's laws. There can also be county and municipal laws as well.

    You need to know what is, and is not, acceptable throughout the entire rental process from marketing to commenting on past tenants.

    At its most basic, the best rule is to not discriminate against any class of people protected under the US Constitution, as interpreted by US Court decisions, knowing that Supreme Court decisions are the highest.

    Can you argued that some law or even decision is or isn't constitutional? Of course you can, but you should make your decisions based upon the very best legal advice you can obtain or afford.

    This (racism) is not an easy area because many cases can be what we all call close calls going either way. Do your best to avoid getting into legal actions in the first place. Regardless, if you do find yourself in a legal battle, the better your documentation that you care about following the law and do the best you can to do so certainly won't hurt how the court or courts will view you.

    Catherine E. Shoichet:

    In a new nationwide poll conducted by CNN and the Kaiser Family Foundation, roughly h alf of Americans — 49% — say racism is "a big problem" in society today.

    The figure marks a significant shift from four years ago, when over a quarter described racism that way. The percentage is also higher now than it was two decades ago. In 1995, on the heels of the O.J. Simpson trial and just a few years after the Rodney King case surged into the spotlight, 41% of Americans described racism as "a big problem."

    Is racism on the rise in the United States? Has our awareness changed? Or is it a problem that's been blown out of proportion?

    Add your comment.


  15.    India Becomes World's Fastest Growing Economy: What Investors Need to Know

    India is a democracy, unlike China's one-party system, which can mean quicker policy actions to enable growth. …

    A smaller engine – It is important to recognize that while India is the 9th largest economy in the world, it is only one-fifth the size China is today. That means China's slowdown will still have more of a global impact than India's acceleration.
    New risks – Weather may become an increasingly significant factor contributing to global economic growth.

    It doesn't hurt that there are so many English speakers in India either.

    Add your comment.


  16.    [Greece] The stage of collapse | Comment | ekathimerini.com

    Angelos Stangos:

    Greece has fallen way back and time is not only ticking on fast, but the circumstances are made even more difficult by recent international developments.

    Add your comment.


  17.    Across the Curve – Blog Archive – Rate Hike Mechanics and the Chief Mechanic

    Once the Fed announces a hike, we'll be hearing a great deal more about these tools, how they work, and how well they're working.

    The last time the Fed raised rates was in 2006. It historically has done so by reducing banks' reserves of money by selling them Treasurys from its portfolio. With less money on hand, banks would pay more to borrow in the federal-funds market, pushing up the Fed's benchmark for short-term rates.

    The problem now is that years of effort to stimulate the economy have left banks with more than $2.6 trillion in reserves, a thousand times more than before the crisis and too much to absorb with Treasury sales without crushing the U.S. bond market. So, the Fed has come up with new tools.

    One is to pay banks a higher interest rate on reserves they park at the Fed. The other uses "reverse repos"—temporary trades in which the Fed borrows from money-market funds and some other lenders by selling them Treasurys that it agrees to repurchase, or "repo," the next day.

    Add your comment.


  18.    AirTalk | As insurance companies threaten to leave the Affordable Care Act, a look at its viability | 89.3 KPCC

    How will other small insurers step in to fill the gap left by UnitedHealth? Does the Act need to change in order to stop insurers from leaving? Or do these complaints say more about the insurance companies, instead of Obamacare?

    Add your comment.


  19.    Welcome to Austeria — a nation robbing its poor to pay for the next big crash | Aditya Chakrabortty | Comment is free | The Guardian

    Aditya Chakrabortty:

    The chancellor who promised to sort out the bankers is now doing the opposite.

    He is making bank bosses less, not more, accountable for their errors, he has yanked tough-talking regulator Martin Wheatley out of his job, and he has appointed as his top central banker a man who wants the UK to have a banking sector as big as Iceland's before its crash. Since Big Finance always means Big Crash, the rest of us will have to go without funding for schools, local government and the rest of the public sector.

    In 2008 Britain's bankers plunged the rest of the country into a crisis. What followed was austerity: the policy where those most responsible for the huge bill looked for the working and middle classes to pay for it. By the end of this decade, that policy will have become a regime, Austeria. In it most of us have to make do with less money in our pockets and dilapidated public services, to allow those at the top to continue as though nothing has happened. Because for them, very little has.

    Add your comment.


  20.    Experts say scale of George Osborne's cuts to police, education and council budgets 'unprecedented' – Mirror Online

    Chancellor George Osborne will this week take the axe to police, councils and welfare as he unleashes the most brutal cuts in history.

    He will brush aside warnings from police chiefs by pressing ahead with the reductions to their budgets when he unveils his spending review on Wednesday.

    Funding to local government, transport and higher education will also be slashed — and experts said the scale of the cuts was unprecedented.

    Some people think Osborne doesn't know what he's doing. He knows exactly what he's doing. He's gutting the state and welfare so the elites will have a larger portion of the pie, which pie will be based even more on London's version of Wall Street speculation.

    Will that be good for the UK? If allowed to stand, it will become a disaster.

    Add your comment.


  21.    Elite funds prepare for reflation and a bloodbath for bonds – Telegraph

    Ambrose Evans-Pritchard:

    Professor Charles Goodhart from the London School of Economics says the entry of China and eastern Europe into the world economy after 1990 doubled the work pool of the globalised market at a stroke. It lead to a surfeit of labour and a quarter century of wage compression. The rich got richer. Deflation became entrenched.

    This episode is over. The old age dependency ratio is about to rocket. Labour will soon be scarce again. Wages will rebound. Prof Goodhart thinks it will push real interest rates back to their historic norm of 2.75pc to 3pc. "We are on the cusp of a complete reversal," he says.

    All the stars are aligned for an end to the deflationary supercycle, and therefore for an end to the 35-year bull market in government bonds.

    You mean the Capitalists will be unable to find unemployed people in poor countries to replace Chinese labor? What a strange idea. Why would they simply stop exploiting the poorest of the poor?

    Are there new international laws to protect those poor people from sweatshop tactics? There are social pressures, but are those what Charles Goodhart thinks will stop the Capitalists?

    Add your comment.


  22.    Tax Research UK – This is the day we say farewell to everything that was good about Britain

    After reading this linked article, you might think I read it before writing what I did above and in earlier posts. It's that close to what I wrote, even down the choice of words.

    Britain sure could use more Richard Murphys.

    Add your comment.


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