News: Real Estate, Risk, Economics. Apr. 19, 2016

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Table of Contents
(Click to sections below.)

1) The Dos and Don'ts of Retouching Real Estate Photos

2) Houston flooding is historic and linked to climate change.

3) Buy-to-let landlord surge ignites chain reaction in housing market | The Guardian

4) Brookfield Raises $9 Billion for Latest Real Estate Fund – Bloomberg

5) The consumer price index continued its slowdown in 2015: energy was the main factor : Beyond the Numbers: US Bureau of Labor Statistics

6) Adjusting to economic shocks tougher than thought | Brookings Institution

7) mainly macro: Its ideology, stupid

8) The bad smell hovering over the global economy | The Guardian

9) Untried, Untested, Ready: Remedies for the Global Economy – Bloomberg View

10) Proposed Restrictions Building in Oregon's Flood Plains

11) Arson in Union Co. was insurance fraud, deputies say

12) Falls man goes to prison for insurance fraud – The Buffalo News

13) Fears of 'THE BIG ONE' as SEVEN major earthquakes strike Pacific region in just 96 hours | Daily Express

14) Why the Great Divide Is Growing Between Affordable and Expensive US Cities – Real Time Economics – WSJ

15) CAN BERNIE DO IT? The View of a Non-Establishment Economist | Alternative Economics

16) Doing God's Work — Why Bernie Matters for New York, America, and the World | Alternative Economics

  1.    The Dos and Don'ts of Retouching Real Estate Photos

    This is a good article for tips on real-estate photography.

    Do: Enlist a professional photographer.

    Make that a professional real-estate photographer.

    What about the two photos in the article? I would have stepped in to avoid that wire. Why? For one, the house on the right makes the neighborhood seem more upscale than the image with the house on the left.

    But, one could also have panned more to the right in the other shot just enough to avoid the gable end of the house on the left and its downspout.

    Your thoughts?

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  2.    Houston flooding is historic and linked to climate change.

    … More than 17 inches of rainfall has fallen in just the past 24 hours in some neighborhoods, with about 1 foot of rain coming just since midnight—already making Monday the rainiest day ever in Houston before noon. …

    An increase in the frequency of heavy rain events has long been considered one of the likeliest consequences of global warming, and a recent comprehensive National Academies report endorsed this link. Blocking weather patterns like this weekend's may be happening more often due to climate change, boosting the likelihood of heavy rainfall events, according to a new study published last week.

    Remember the huge drought before the strong El Nino slowly started kicking in?

    That's what's been predicted: bigger and bigger swings.

    Let's end the carbon-fuel dependency ASAP!

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  3.    Buy-to-let landlord surge ignites chain reaction in housing market | Business | The Guardian

    Rightmove director Miles Shipside said: "There's a whole army of aspiring first-time buyers keen to get on the ladder and they now have a 3% price advantage over the formerly more agile legion of landlords, some of whom have retreated for the time being.

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  4.    Brookfield Raises $9 Billion for Latest Real Estate Fund – Bloomberg

    Brookfield Asset Management Inc. raised $9 billion for its latest real estate fund, exceeding its $7 billion target and doubling its previous fund, as Asian investors and U.S. pension funds piled in to its fundraising efforts.

    The Chinese trying to get their money invested before Xi comes down on them all like Mao? Pensions moving into real estate after leaving hedge funds?

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  5.    The consumer price index continued its slowdown in 2015: energy was the main factor : Beyond the Numbers: U.S. Bureau of Labor Statistics

    Overall price change remained modest in 2015, as the U.S. All-Items Consumer Price Index (CPI) posted the second-lowest increase in 50 years. As in 2014, inflation was limited by declining energy prices. Although food prices still increased in 2015, they did so at a substantially lower rate than in 2014. By contrast, the index for all items less food and energy increased at a faster rate in 2015, due in part to higher shelter prices.

    … The index for shelter continued to accelerate, rising by 3.2 percent in 2015, after increases of 2.5 percent in 2013 and 2.9 percent in 2014. The 3.2-percent increase was the largest in the index since 2006.

    The rent index grew by 3.7 percent in 2015, while the owner's equivalent rent index increased by 3.1 percent.

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  6.    Adjusting to economic shocks tougher than thought | Brookings Institution

    Mark Muro:

    The general consensus: Workers and local economies will adjust. Dislocated workers will leave distressed regions and move to healthier ones. Jobless rates will revert to the mean.

    … the new research—notwithstanding general "equilibrium theory" and the notion of the business cycle—shows that the reality of adjustment is far from automatic, far from quick:

    … the nation, states, and regions need to do more to retrain displaced or vulnerable workers for jobs in expanding industries. Likewise, the limited wage-insurance program in TAA needs expansion into an omnibus national program through which the government would help workers maintain their wage level while they train for and start new jobs. And maybe the limited reimbursements for moving costs in the TAA should be expanded into a more robust provision of aid to help displaced workers move to cities or states where jobs are more plentiful.

    In this respect, recent calls for a basic income—while not yet part of the thinkable consensus—certainly reflect broader concerns about adjustment in all of its forms as the pace and scale of disruptions grow.

    What have I been saying? The same thing.

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  7.    mainly macro: Its ideology, stupid

    China's smartest move:

    Simon Wren-Lewis:

    China put over $80 billion into the renewable energy sector in 2014. That is nearly 1% of its GDP. It has committed to spend 25 times that amount over the next 15 years on clean energy. Both the US and Europe spent much smaller amounts ($38 and $58 billion respectively), even though their economies are much larger (the US figure is around 0.07% of its GDP). In dollar terms, the Chinese government also spent more on Green R&D than Europe or the US. [1] The scope for US and European governments to spend more on researching and help with developing green technology is huge. Yet in the UK the government has recently cut back its support for renewable energy, even though the UK's need for renewable energy is urgent.

    Climate change may be the most important example, but it is not alone. It is absurd that when the potential for technological change leads people to write about robots taking over, actual productivity growth is slowing everywhere. As an IMF report says, "innovation [is] highly dependent on government policies." I think Brad DeLong, in commenting on Eichengreen's article, has it exactly right when he writes "it is long past time for a frontal intellectual assault on the[se] dangerous and destructive ideologies".

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  8.    The bad smell hovering over the global economy | Business | The Guardian

    Larry Elliott:

    … it would be a toss up between the Fed, which is normally prepared to experiment with something different if the situation is desperate enough, or the Bank of Japan, where — as the Deutsche research reminds us — helicopter money was used successfully in the 1930s to help the country escape the Great Depression with far less damage than to other western nations. So give it a few months then listen hard. The choppers are coming.

    They better.

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  9.    Untried, Untested, Ready: Remedies for the Global Economy – Bloomberg View

    Editorial Board:

    The last resort, if the slump goes on and governments can't coordinate better, might be to combine monetary and fiscal policy in a hybrid known (unfortunately) as helicopter money. Governments would cut taxes and/or spend more, but meet the cost by printing money rather than by borrowing. In one variant, central banks might simply send out checks to taxpayers.

    That's a startling idea, no doubt — but so was quantitative easing not long ago. In one way, helicopter money would actually work better than QE: It acts directly on spending and couldn't fail to stimulate demand. The danger is that it might raise inflation in a way that central banks couldn't then control. Oh, and there is the minor detail that in Europe it would be illegal, while in the U.S. it would merely be politically toxic.

    On one hand, then, you have the prospect of persistently slow global growth, and all the waste of talent and resources that entails. On the other, you have a few untried remedies that governments can't or won't use. Maybe, as the first point sinks in, governments will be willing to take a hard look at the second. Eight years after the crash, the problem sure isn't taking care of itself.

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  10.    Proposed Restrictions Building in Oregon's Flood Plains

    The government published the recommendations, called a biological opinion, in response to a lawsuit from environmental groups.

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  11.    Arson in Union Co. was insurance fraud, deputies say

    42-year-old Donna Kay Johnson was arrested Friday and charged with third degree Arson and Burning Personal Property to Defraud Insurer.

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  12.    Falls man goes to prison for insurance fraud – City & Region – The Buffalo News

    A Niagara Falls man, convicted of trying to defraud an insurance company of $32,458 in a burglary claim, was sentenced … to 1½ to 4½ years ….

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  13.    Fears of 'THE BIG ONE' as SEVEN major earthquakes strike Pacific region in just 96 hours | Science | News | Daily Express

    A detailed article:

    SCIENTISTS fear a monster earthquake could be about to strike after a seventh quake in just 96 hours struck the Pacific region, killing hundreds of people.
    By Jon Austin

    Friday's quakes take the total to nine across Asia in a period of just over three and a half months – nearly three every month.
    ..
    "The accumulation of stress is going on everywhere. But where it will reach the elastic limit, we don't know nor also when. But what we do know is that it is happening everywhere."

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  14.    Why the Great Divide Is Growing Between Affordable and Expensive U.S. Cities – Real Time Economics – WSJ

    Mr. Romem's research reads on its face like an argument for suburban sprawl, which has come under fire both for its environmental consequences and tendency to lead to oversupply that can lead home prices to crash.

    Mr. Romem said ideally cities would relax regulations and build upward rather than outward. But, he said, promoting development on empty fields is more politically feasible than building apartment towers in single-family neighborhoods, and thus likely to ease affordability pressures more quickly.

    I mentioned sprawl and building up in our previous edition.

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  15.    CAN BERNIE DO IT? The View of a Non-Establishment Economist | Alternative Economics

    The following is an extensive excerpt from L. Randall Wray's article:

    Financial affordability is not the issue—what matters is the impact on the private sector should the government's efforts require withdrawing resources from private use. If the government takes too many resources, this could set off a bidding war and cause inflation.

    But even if policy makers, elected representatives, and voters at large fail to understand this, it strains credulity to believe that Bernie's programs would not "pay for themselves". All one needs to do is to look at history to remind oneself of the substantial—and continuing—pay-offs from previous efforts on the scale proposed by Bernie Sanders.

    Does anyone seriously doubt whether Roosevelt's New Deal paid for itself? In 1929 the US was a broken, under-developed country, unprepared for the 20th century. When Roosevelt took over, income and wealth inequality was the worst the US had ever seen. Unemployment and poverty had skyrocketed. The nation's infrastructure was inadequate—much of the country lacked even basic paved roads, electrification, and indoor plumbing, let alone adequate schools, public buildings, dams, and airports. The 13 million workers of Roosevelt's New Deal jobs programs built that infrastructure—much of it still in use today. …

    The New Deal jobs programs employed 13 million people; the WPA was the biggest program, employing 8.5 million, lasting eight years and spending about $10.5 billion. (Taylor 2008, 3) It took a broken country and in many important respects helped to not only revive it, but to bring it into the twentieth century. The WPA built 650,000 miles of roads, 78,000 bridges, 125,000 civilian and military buildings, 700 miles of airport runways; it fed 900 million hot lunches to kids, operated 1,500 nursery schools, gave concerts before audiences of 150 million, and created 475,000 works of art. It transformed and modernized America (Taylor 2008, 523—4).

    Roosevelt al so fixed the banking system. He declared a banking holiday—shutting down all the banks—and put Jessie Jones in charge of reopening them. Jones demanded letters of resignation from the top management—and where he found evidence of shady practices, he accepted those letters before reopening the banks. Finance was downsized and constrained—for two generations it was kept under lock and key.

    However, for the sake of argument, let us concede that Bernie's programs might not "pay for themselves". What if we break-up and downsize the banks, jail the banksters, tax the rich, create jobs for the unemployed, raise the minimum wage, build infrastructure, restore democracy, reverse Citizens United, get money out of politics, stop droning and bombing our neighbors, and bring a united America into the 21st century.

    But the budget deficit and debt rise.

    Would it have been worth it? Only a fool would claim otherwise.

    I, personally, do not support Bernie's propensity to link taxing the rich to his spending programs. The rich should pay more taxes because they are too rich. This has nothing to do with making his spending programs affordable. Uncle Sam does not need the money of the rich in order to pay for spending on the poor. Besides, Bernie's spending programs will pay for themselves—just as New Deal programs paid for themselves as they created our middle class. [Bravo, Randy!]

    Bernie rightly points his finger at the "financialization" of the economy as a major source of our nation's ills: "We need a political analysis as well as a moral and anthropological analysis to understand what has happened since 1991. We can say that with unregulated globalization, a world market economy built on speculative finance burst through the legal, political, and moral constraints that had once served to protect the common good. In my country, home of the world's largest financial markets, globalization was used as a pretext to deregulate the banks, ending decades of legal protections for working people an d small businesses. Politicians joined hands with the leading bankers to allow the banks to become "too big to fail." The result: eight years ago the American economy and much of the world was plunged into the worst economic decline since the 1930s. Working people lost their jobs, their homes and their savings, while the government bailed out the banks."

    Can Bernie do it? Yes, but as he has insisted, he cannot do it unless tens of millions carry the Revolution forward.

    I've argued with Randy about "debt-money," which he thinks all money is, and whether money is a medium of exchange. He says it isn't. That said, I frankly agree with pretty much all of Randy's ideology except that Randy doesn't care whether the money is borrowed or the government is funded via "money financing" or what so many of us call debt-free money (money issued without any bonds being issued).

    Anyway, Bernie will come around to seeing (the sooner, the better) that he doesn't have to rely upon taxing the super-rich, just as I've been writing on this blog for months and obviously as Randy Wray knows quite well.

    In the interest of disclosure, I did not learn from Post-Keynesians that governments can issue their money. I figured out Post-Keynesianism on my own and only afterwards discovered the Post-Keynesians and their writings, which I found highly cryptic. They've vastly improved since then.

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  16.    Doing God's Work — Why Bernie Matters for New York, America, and the World | Alternative Economics

    Gotta love Nomi.

    JPM Chase, the largest US (and New York-based) bank, cared so little about Dodd Frank's tepid requirement for a "living will" (a 'what-happens-now-plan' for after a crisis hits, liquidity dies and people are screwed anyway) that along with four other big banks, it didn't even bother to spend time putting a plan together. Think about that. Dodd-Frank is not pre-emptive security to begin with, and yet, a bank that benefitted from acquiring two other banks during the crisis, doesn't care about even pretending to be concerned with an emergency plan that doesn't involve government support.

    Bernie was criticized for not pointing to a "single" law over which to prosecute big banks in his Daily News interview. Bernie did far more – he underscored the systemic criminality intrinsic to each Wall Street settlement that centers on multiple manifestations of fraud through misleading investors and the public (which is against SEC laws). Not to mention the felony counts that New York-based JPM Chase and four other banks copped to regarding foreign-exchange rate rigging. These cases are settled because banks can afford to settle them, not because the lawsuits weren't predicated on criminal enterprise. They were. Since 2012, Attorney General, Eric Schneiderman's working group has agreed to $45 billion worth of settlements — with just New York-based banks.

    If you break up a bank, you break up its ability to scam the public, to stuff loans into fraudulently presented toxic assets and trade them to unsuspecting pension funds. That's what Glass Steagall prevented for decades. You also reduce the cost of investigation and settlements. You reduce the possibility of anyone's deposit account or mortage loan or insurance contract being held hostage during the next government bailout. You reduce the power inequality that spawns economic inequality. You create longer-lasting global stability.

    Add your comment . Including the article/link number will help.


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