News: Real Estate, Risk, Economics. Jan. 4, 2016, Late

Linking ≠ endorsement.

Table of Contents
(Click to sections below.)

1) A Look Ahead Into 2016 – Tim Duy's Fed Watch

2) The 5 Non-Negotiable Traits of Highly Effective Landlords

3) China Halts Stock Trading After 7% Rout Triggers Circuit Breaker – Bloomberg Business

4) Fiscal stimulus via 'helicopter tax credits' | VOX, CEPR's Policy Portal

5) 6 reasons why a flat tax is not a good idea – Don't Mess With Taxes

6) Black Knight: Home prices keep rising, now just 5% off pre-crisis peak | HousingWire

7) NASA | GPM: One Year of Storms – YouTube

8) China leads global markets to bad start! | FT Markets – YouTube

9) Oklahoma regulators take action on Edmond earthquakes | News OK

10) El Niño hits California: These maps tell the story of heavy rains – LA Times

11) Ben Carson Releases Tax Plan, Promises End To Mortgage Interest, Charitable Contribution Deductions – Forbes

12) Kansas tax receipts off by millions | The Kansas City Star

13) Lawyer: Gas well missing valve that could have stopped fumes | The Sacramento Bee

14) UK house prices: Is it RIP to buy-to-let investors after George Osborne tax hike?

15) Foreign Buyers NYC Real Estate | AFIRE

16) Saudi showdown with Iran nears danger point for world oil markets – Telegraph

17) Foreign Policy Diary — 2015, Year of Crisis Escalation. What expected in 2016? – YouTube

18) November Nonresidential Construction Spending Worst Monthly Performance Since April 2015

  1.    A Look Ahead Into 2016 – Tim Duy's Fed Watch

    … declining economic importance of manufacturing in the US economy. Manufacturing now accounts for just 8.6% of jobs.

    … I think 2016 will be the year that economic resources become sufficiently scarce to push inflation back to the Fed's target. I know this may seem like a wildly optimistic call given the persistence of low inflation during this cycle ….

    The global economy is the wild card. The Fed doesn't control geopolitics or the climate. China is far from done economically falling. The US isn't nearly as insulated to the degree many economic pundits have suggested.

    Add your comment.


  2.    The 5 Non-Negotiable Traits of Highly Effective Landlords

    Kevin Perk:

    Effective landlords are resilient screeners who fix things, solve problems and know when to take a stand. Does this describe you? If not, do not worry too much. It did not necessarily describe me either when I got started, which goes to show that a) these traits can be learned and b) you likely have a lot more inside of you than you think. You just have not had to use it yet.

    Add your comment.


  3.    China Halts Stock Trading After 7% Rout Triggers Circuit Breaker – Bloomberg Business

    The worst-ever start to a year for Chinese shares triggered a trading halt in more than $7 trillion of equities, futures and options, putting the nation's new market circuit breakers to the test on their first day [January 3, 2016].

    Add your comment.


  4.    Fiscal stimulus via 'helicopter tax credits' | VOX, CEPR's Policy Portal

    Hmmm, in my view, tax cuts in the form of credits ought not be confused with helicopter money. I'm not sure how the multiplier would work where the fiscal spending actually remains the same. Is this plan just a way of bringing consumer spending forward via more liquidity, as with temporary payroll-tax cuts in the US? How about restructuring the tax tables, as just happened in the US under Obama, so that the richer in society pick up the slack of the credits, which would constitute a redistribution to the working class? Wouldn't the multiplier be more assured that way?

    Add your comment.


  5.    6 reasons why a flat tax is not a good idea – Don't Mess With Taxes

    Kay Bell:

    A recent report on how the rich are able to take advantage of the U.S. tax code to keep their bills lower has (re)generated a lot of talk about replacing our current system.

    That's easier said than done, but lots is still being said about the options. One of the more popular replacement proposals is a flat tax.

    While one rate for all has a certain appeal, our existing multiple progressive tax rates are fairer. And that's just one of six reasons, discussed in more detail below, why a flat tax isn't a good idea.

    Thoughts?

    Add your comment.


  6.    Black Knight: Home prices keep rising, now just 5% off pre-crisis peak | HousingWire

    According to Black Knight's report, October's national home price index of $254,000 puts national home prices up 26.9% since the bottom of the market at the start of 2012, and just 5.3% off the June 2006 peak of $268,000.

    Add your comment.


  7.    NASA | GPM: One Year of Storms – YouTube

    Some people pooh-pooh NASA's ability to see climate change and its causes. Let's all just stop and think about how much NASA's ability to measure, record, and analyze the weather and climate has improved over the decades that various people associated with the oil industry have been sowing seeds of doubt about.

    A look back at the snowstorms, tropical storms, typhoons, hurricanes and floods captured and analyzed by the Global Precipitation Measurement (GPM) mission from around the globe during 2015.

    The complete list of storms by date and location are as follows:

    1. New England Nor'easter — January 26 — New England, USA
    2. Snowstorm — February 17 — Kentucky, Virginia and North Carolina, USA
    3. Tornadic Thunderstorms in Midwest — March 25 — Oklahoma and Arkansas, USA
    4. Typhoon Maysak — March 30 — Yap Islands, Southwest Pacific Ocean
    5. Rain Accumulation from Cyclone Quang — April 28 through May 3 – Australia
    6. Flooding in Central Texas and Oklahoma — May 19 through May 26 – USA
    7. Hurricane Blanca — June 1 — Eastern Pacific Ocean, Baja Peninsula, Mexico
    8. Tropical Storm Ashobaa — June 8 — Arabian Sea
    9. Tropical Storm Carlos — June 12 — Southwestern Coast, Mexico
    10. Tropical Storm Bill — June 16 — Texas, USA
    11. USA Rain Accumulation — June through July – USA
    12. Tropical Storm Raquel — July 1 — Solomon Islands, South Pacific Ocean
    13. Tropical Storm Claudette — July 13 — North Atlantic Ocean
    14. Typhoon Nangka — July 15 – Japan
    15. Hurricane Delores Remnants Rainfall — July 13 through 20 — Southwestern USA
    16. Typhoon Halola — July 21 – Japan
    17. Typhoon Soudelor — August 5 — Taiwan and China
    18. Hurricane/Typhoon Kilo — August 23 through September 9 — Hawaii and Pacific Ocean
    19. Tropical Storm Erika — August 26 — Caribbean Sea
    20. Tropical Storm Fred — August 30 — Cape Verde
    21. Tropical Depression Nine — September 16 — Ce ntral Atlantic Ocean
    22. Tropical Storm Ida — September 21 — Central Atlantic Ocean
    23. Tropical Storm Niala — September 25 — Hawaii and Pacific Ocean
    24. Tropical Storm Marty — September 27 — Southwestern Coast, Mexico
    25. Typhoon Dujuan — September 22 through September 29 — Taiwan and China
    26. Hurricane Joaquin — September 29 — Caribbean Sea
    27. Typhoon Koppu — October 15 – Philippines
    28. Hurricane Patricia — October 22 — Texas, USA
    29. Tropical Cyclone Chapala — October 28 through November 3 — Yemen and Arabian Sea
    30. Tropical Cyclone Megh — November 8 — Yemen and Arabian Sea
    31. Typhoon IN-FA — November 19 — Western Pacific Ocean
    32. Hurricane Sandra — November 26 — Eastern Pacific Ocean
    33. India Flooding — November 28 through December 4 — Tamil Nadu, India
    34. Winter Storm Desmond — November 30 through December 7 — United Kingdom
    35. Tropical Cyclone 05S — December 9 — Reunion and Mauritius, South Indian Ocean
    36. Super Typhoon Melor — December 12 – Philippines
    37. Tornadoes and Flooding in Midwest — December 21 through December 28 — Midwestern USA
    38. Paraguay Flooding — December 22 through December 29 — Asuncion, Paraguay
    39. Tropical Depression 95P — December 29 — Pacific Ocean
    40. Tropical Cyclone 06P (ULA) — December 30 — Samoa, South Pacific Ocean
    41. Near Real-Time IMERG — December 25 through December 31

    CO2 buildup in the atmosphere is a huge contributor to weather and climate. Human carbon burning is significant enough to be correctly label a driver. Absent human carbon burning, we're left mostly with nature's balancing act. With human burning, we have increases above what happens in just nature. We have artificial inputs that tip the balance toward more and more warming that might (likely) trigger sudden, radical, unexpected changes in unexpected directions that could cause a great dea l of human pain and suffering that would otherwise not have occurred.

    Let's curb burning while we increase sequestration via soil management.

    Add your comment.


  8.    China leads global markets to bad start! | FT Markets – YouTube

    China's 7% market slide and weakening currency hit global markets
    Jonathan Wheatley and Mike Mackenzie discuss how Monday's market fall in China is hitting global trading markets. Worries over the Chinese economy have shifted to commodities stocks, with oil faltering and mining companies among the worst performers.

    Add your comment.


  9.    Oklahoma regulators take action on Edmond earthquakes | News OK

    The Oklahoma Corporation Commission said Monday it has asked operators of five nearby saltwater disposal wells to reduce volumes after a swarm of earthquakes hit the Edmond area in the past week.

    None of the Edmond-area disposal wells targeted by regulators on Monday are operated by SandRidge Energy Inc., which is defying a voluntary directive issued last month to reduce volumes at six disposal wells in Alfalfa County. Commission officials are preparing an administrative case against the company.

    Even though this is "research," the Commission knows as an absolute fact that this aspect of the fracking industry is causing earthquakes. What's being researched is not whether but rather how much backing off on injections will be necessary to arrive at some "acceptable" level of anthropogenic seismic activity.

    Add your comment.


  10.    El Niño hits California: These maps tell the story of heavy rains – LA Times

    California is about to be hit by the first El Niño storm of the year. It's the beginning of what could be a week of rain in the drought-battered state.

    In Southern California, the heaviest storm is expected Tuesday, when up to two inches of rain is forecast to drop on the coast and valleys and up to four inches could pour onto the mountains and foothills. Forecasters expect four storms to hit the Southland by Friday ….

    The runoff will be huge. Mudslides will be a large risk. Extra caution will be necessary in areas that experienced fires where the vegetation hasn't grown back.

    Add your comment.


  11.    Ben Carson Releases Tax Plan, Promises End To Mortgage Interest, Charitable Contribution Deductions – Forbes

    This is on Forbes? Forbes ran for President on the flat tax.

    The real estate lobby is too strong; realtors sell homes and drive the real estate market by dangling in front of potential buyers a tax benefit that simply isn't available to a renter: the mortgage interest deduction. Do away with that deduction — limited as it is — and suddenly the "rent versus buy" decision becomes much more clouded. And if real estate brokers aren't moving homes, they are not going to be happy.

    The same is true of charitable organizations. There is simply too much at stake for the tax-exempt lobby for them to allow Congress to do away with the contribution deduction. After all, if you eliminate the deduction, you're asking taxpayers to donate their hard-earned money out of genuine philanthropy, rather than their thirst for a tax break.

    What rate would be required to result in no increase in the fiscal deficit? Second, where would the income tax need to kick in so that those getting tax credits because they are poor would not suffer any increase in taxes?

    What would the rate have to be so that there would be no income taxes on the first $100 K? That $100 K would also need to be indexed to price inflation too.

    What about starting from the other end? Say the rate were set at 90%, where would the cutoff occur? The middle class would probably love it, and the Realtors would probably sell more houses.

    It wouldn't be progressive, but it would be simple.

    Charities would be crushed though. The fiscal budget would have to go up to offset the losses in charities helping the poor and others. Would that be a good idea, or should the charity deduction remain? Should there be a distinction between mere non-profits and charities that do, in fact, help the poor?

    The whole thing would cause a major disruption in jobs. Whole industries would disappear. The people put out of work would need assistance transitioning.

    Add your comment.


  12.    Kansas tax receipts off by millions | The Kansas City Star

    This is what happens when you cut taxes on the rich.

    The state revenue picture took a hit in December, with individual income tax receipts about $26 million below projections.

    … "It's more evidence that the Brownback tax experiment isn't working, and it never will."

    Add your comment.


  13.    Lawyer: Gas well missing valve that could have stopped fumes | The Sacramento Bee

    Southern California Gas Co. confirmed that its well at the Aliso Canyon Underground Storage Facility did not have the deep subsurface valve, the Times reported Monday ….

    It reminds me of the lack of a sufficient blowout-preventer system on the Deepwater Horizon: https://en.wikipedia.org/wiki/Blowout_pr eventer

    There's no reasonable excuse for a lack of proper laws, regulations, inspections, and enforcement actions that would prevent these leaks.

    Add your comment.


  14.    UK house prices: Is it RIP to buy-to-let investors after George Osborne tax hike?

    Has George Osborne slain the buy-to-let dragon? After the chancellor unveiled plans to hike taxes a major new survey of landlords suggests as many as 200,000 now plan to quit the market — potentially releasing hundreds of thousands of extra properties for first-time buyers.

    In his July 2015 budget, Osborne put buy-to-let investors in his crosshairs by scrapping a tax relief that allowed them to offset the interest on their monthly mortgage repayments against their income tax bills on the rent they receive. Then in his November 2015 Spending Review he went one further by hiking stamp duty on purchases of additional residential properties — adding 3% on top of the standard rates. There is an exemption for big institutional investors, whose buy-to-let investment is seen as important to getting more homes built.

    "First-time buyers" my eye. You just read above that "big institutional investors" are exempt! Who will have the cash to buy up all the properties that will go up for sale? Osborne's move is not about helping the average citizen but rather those very "big institutional investors."

    You see also that rents will go up, not down. How will the strapped middle class be able to save a down payment and compete against the huge corporations with tons of cash?

    Look, I'm not faulting every corporation that will buy. It's the system that's flawed. Large buyers in the US got the ball rolling again, but they were able to do that because the average owner was crushed by the whole deregulation scheme that had occurred.

    Add your comment.


  15.    Foreign Buyers NYC Real Estate | AFIRE

    "This is a very strong response," Jim Fetgatter, the group's chief executive, told Bloomberg. Given slowdowns in China, Brazil and Europe, he said, "the U.S., at the moment, really is the safest place for them to go."

    Add your comment.


  16.    Saudi showdown with Iran nears danger point for world oil markets – Telegraph

    Speaking of geopolitics that the Fed cannot control, Ambrose Evans-Pritchard does a good job here of broadly outlining the Middle East crisis.

    The US and the EU told Riyadh repeatedly that his execution would be a grave error: the Shia world warned it would be an act of war. The decision to go ahead anyway bears the hallmarks of Mohammad bin Salman, the headstrong 30-year-old deputy crown prince who has amassed all power in the Kingdom and listens to nobody.

    If it is true that he "listens to nobody," it may well be that it won't be long before he is nothing but a has-been (if he survives).

    Anyway, this could easily lead to the premature showing of the oil price shock Ambrose has written of.

    I can't think that the Russians and Iranians would be sorry to see oil prices jump. US frackers wouldn't cry about it either, far from it. Which oil producer would?

    It appears the Saudis are playing with fire and gasoline right in their house, not bright, not good risk management.

    The Saudis are leaving themselves wide open to those who will want stealthily to skin the cat.

    Al Qaeda and IS are surely smelling the potential blood in the waters. Each would love to overthrow the "Royal Family."

    Talk about isolating oneself.

    If the Saudis don't quickly wake up, the US won't be sorry to lose them as "allies" either. After all, the US knows that Putin and his team are vastly saner and comprehend limits on all sides.

    I suspect that the Obama administration will somehow make clear to the Saudis that the "Royal Family" is painting itself into a corner where nobody, absolutely nobody, will go in to extricate them.

    Add your comment.


  17.    Foreign Policy Diary — 2015, Year of Crisis Escalation. What expected in 2016? – YouTube

    This video is by a decidedly anti-US outlet. Nevertheless, it does point up some huge potential problems worth considering regardless of which side one comes down on.

    Add your comment.


  18.    November Nonresidential Construction Spending Worst Monthly Performance Since April 2015

    "While it is rarely a good idea to place too much emphasis on one month of data, there are some ominous indications in today's report," said ABC Chief Economist Anirban Basu. "After experiencing significant spending momentum early last year, that momentum has softened considerably in recent months. Recent surveys of construction executives have been a bit more downbeat of late.

    "Economic news generally has not been very positive with the glaring exception of the U.S. labor market, often viewed as a lagging economic indicator. Profit margins at many companies are being squeezed by rising wage and healthcare costs, and the losses experienced by energy suppliers have been well chronicled. Softer global economic growth and a stronger U.S. dollar are also making their mark. The world suddenly feels considerably riskier. That frequently translates into diminished capital availability, which ultimately translates into weaker construction spending.

    Add your comment.


If you are an investor in 1-4 unit properties in Arizona, California, Nevada, Oregon, Utah, or Washington, please do the financially responsible thing and make sure you have proper Landlord Insurance with PropertyPak™. We love focusing on real estate and the economy in general, but we are also here to serve your insurance needs.

Hill & Usher (PropertyPak™ is a division) has many insurance offerings. See our menu above for more info and links.

Did this post help you? Let us know by leaving your comment below.

Note: This blog does not provide legal, financial, or accounting advice. Seek professional counsel.

Furthermore, we, as insurance producers, are prohibited by law from disparaging the insurance industry, carriers, other producers, etc. With that in mind, we provide links without staking out positions that violate the law. We provide them solely from a public-policy standpoint wherein we encourage our industry to be sure our profits, etc., are fair and balanced.

We do not necessarily fact checked the contents of every linked article or page, etc.

If we were to conclude any part or parts of our industry are in violation of fundamental fairness and the legal standards of a state or states, we'd address the issue through proper, legal channels. We trust you understand.

The laws that tie our tongues, so to speak, are designed to keep the public from losing confidence in the industry and the regulatory system overseeing it. Insurance commissioners around the country work very hard to analyze rates and to not allow the industry to be damaged by bad rate-settings and changes in coverages. The proper way for people in the industry to deal with such matters is by adhering to the laws, rules, and regulations of the applicable states and within industry associations where such matters may be discussed in private without giving the industry unnecessary black eyes. Ethics is very high on the list in the insurance industry, and we don't want to lose the people's trust. That said, the industry is not perfect; but what industry is?

For our part, we believe in strong regulations and strong regulators.

We welcome your comments and ask you to keep in mind that we cannot and will not reply in any way or ways where any insurance commissioner could rightly say we've violated the law of the given state.

We are allowed to share rating-bureau data/reports and industry-consultant opinions but make clear here that those opinions are theirs and do not necessarily reflect our position.

Subscribe