News: Real Estate, Risk, Economics. Apr. 29, 2016

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Table of Contents
(Click to sections below.)

1) Homeownership near its lowest in history

2) United States GDP Deflator

3) Germany's Merkel warns of risks to banks from low interest rates | Reuters

4) Joseph Stiglitz Talks About Inequality and the Economy – The Atlantic

5) Another weak quarter for US GDP | Econbrowser

6) Quarterly GDP Growth Slowest in Two Years

7) Texas, Louisiana Residents Sue Toledo Bend Dam Operator Over Flooding

8) Connecticut Gov. Signs Order Strengthening State Building Code

9) Upstate New York couple charged in fatal house fire – SFGate

10) Balcony Collapses Near South Carolina University, Injures 4

11) Kansas Tornado Damages 10 Homes, Destroys Trailer

12) How Mortgage Rates Connect To The Fed Funds Rate

13) A New Look at Bank Capital | Oxford Law Faculty

14) More Funding Needed to End Chronic Homelessness | DC Fiscal Policy Institute

15) Gulfport homes flood; mayor declares state of emergency

16) Clampdown in China Restricts 7,000 Foreign Organizations – The New York Times

  1.    Homeownership near its lowest in history

    … homeownership has actually increased among older Americans. This may be because renting is so expensive, and because the expected migration of baby boomers from their larger houses in the suburbs to rental homes has been slow to take off, due to the recent recession and historic crash in home prices.

    Household formation is now increasing, but two-thirds of it is on the renter side. Just one-third of new households were owner-occupied homes. Homeownership is highest in the Midwest, where houses are cheapest and lowest in the West where homes are most pricey.

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  2.    United States GDP Deflator

    GDP Deflator in the United States increased to 110.48 Index Points in the first quarter of 2016 from 110.29 Index Points in the fourth quarter of 2015. GDP Deflator in the United States averaged 53.12 Index Points from 1950 until 2016, reaching an all time high of 110.48 Index Points in the first quarter of 2016 ….

    So, what's it mean?

    Nominal GDP (Gross Domestic Product not adjusted for inflation) divided by real GDP (adjusted for inflation) x 100.

    Taken alone, it doesn't tell one much. It must be viewed in light of increasing or diminishing capacity, capacity utilization of existing rather than planned capacity, labor slack, and the direction of those things and others, such as technological advancements replacing labor. Then there's the issue of funding costs.

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  3.    Germany's Merkel warns of risks to banks from low interest rates | Reuters

    She still doesn't get it.

    The European Central Bank's ultra-low interest rates could worsen problems for already weak banks in Europe, German Chancellor Angela Merkel said on Wednesday, calling for a tightening of monetary policy.

    If she had a major European fiscal-stimulus plan, that would be different.

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  4.    Joseph Stiglitz Talks About Inequality and the Economy – The Atlantic

    Two things stand out to me: strings attached to lending from the Fed and larger stimulus.

    I called for attaching strings years ago and thought the stimulus was way, way, way too small.

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  5.    Another weak quarter for U.S. GDP | Econbrowser

    The Bureau of Economic Analysis announced today that U.S. real GDP grew at a 0.5% annual rate in the first quarter. That's disappointing, even by standards of the weak growth that has become the norm since getting out of the Great Recession.

    We need fiscal stimulus!

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  6.    Quarterly GDP Growth Slowest in Two Years

    "… While falling energy-related investment and seasonal factors represent important parts of the story, there are indications of a broader malaise."

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  7.    Texas, Louisiana Residents Sue Toledo Bend Dam Operator Over Flooding

    Nearly 240 Texas and Louisiana residents have sued the Sabine River Authority over March flooding that inundated hundreds of homes ….

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  8.    Connecticut Gov. Signs Order Strengthening State Building Code

    "Experts say that every dollar invested in more resilient construction can save $4 in insurance claims, which is a significant return on investment," Malloy said.

    That's mattering more and more as weather becomes more erratic.

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  9.    Upstate New York couple charged in fatal house fire – SFGate

    … police said 44-year-old Joseph Meyers and 37-year-old Iryn Meyers were indicted on charges of arson, murder, attempted insurance fraud and conspiracy.

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  10.    Balcony Collapses Near South Carolina University, Injures 4

    … about 15 people were standing on a balcony that collapsed at a house near South Carolina's Clemson University, injuring several of them.

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  11.    Kansas Tornado Damages 10 Homes, Destroys Trailer

    … damage from a northern Kansas tornado that left two people with minor injuries, damaged about 10 homes and destroyed a trailer.

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  12.    How Mortgage Rates Connect To The Fed Funds Rate

    …. mortgage rates are based on the price of mortgage-backed securities (MBS) and mortgage-backed securities are U.S. dollar-denominated. This means that a devaluation in the U.S. dollar will result in the devaluation of U.S. mortgage-backed securities as well.

    When inflation is present in the economy, then, the value of a mortgage bond drops, which leads to higher mortgage rates.

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  13.    A New Look at Bank Capital | Oxford Law Faculty

    Summarising, bank capital in the range of 15-23 percent of risk-weighted assets would have been sufficient to absorb bank losses in the vast majority (85 percent) of past banking crises in OECD countries. Further increases in bank capital would have been relatively ineffective in preventing additional banking crises.

    Hmmm …

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  14.    More Funding Needed to End Chronic Homelessness | DC Fiscal Policy Institute

    A Seattle study found that permanent supportive housing saved the city almost $30,000 per person, per year.

    Then people turn around and still say, "But who's going to pay for it." Not doing the right thing costs more, not less. Besides, money is just a click away. Just ask the Fed. That's how they do it. It's how all the banks do it.

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  15.    Gulfport homes flood; mayor declares state of emergency

    "The fact is," Biloxi Mayor FoFo Gilich said in a news release, "no system can handle the amount of water that we saw, but we have to make sure we're doing everything we can do.

    "Our job is to protect life and property, and we appreciate the public's cooperation and patience."

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  16.    Clampdown in China Restricts 7,000 Foreign Organizations – The New York Times

    Some officials in Beijing have characterized foreign nongovernment groups as "black hands" working to undermine one-party rule in the country. Those suspicions have grown under Mr. Xi.

    Officials have accused such groups of instigating the pro-democracy Umbrella Movement in Hong Kong and protests in Tibet, as well as trying to quietly usher Chinese society toward Western ways via what Mao Zedong called a "peaceful evolution."

    Beijing is already suspicious of foreign and Chinese nongovernment organizations that receive funding from outside sources deemed politically suspect, like the National Endowment for Democracy and the Open Society Foundations, both based in the United States. Groups that operate here with any financing from those sources will be even more vulnerable under the new law.

    The passage of the law also raises questions of whether more mainstream foreign nongovernment organizations will independently decide to cut certain programs, like initiatives promoting government transparency, or self-censor to secure a Chinese partner and register with the police.

    There's a convenient blurring on both sides. Some NGO's are foreign-government front organizations. Others, however, simply "threaten" the Chinese dictatorship's desired lock on the minds of the Chinese people. Naturally, I'm for real democracy and opposed to the one-party dictatorship of the Chinese Communist Party, especially under Xi, who is quickly becoming the worst Chinese leader since Mao, who was quite bad.

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