News: Real Estate, Risk, Economics. Sept. 23, 2016

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Table of Contents
(Click to sections below.)

1) Ariz. neighborhood wakes up to plane crash

2) Phoenix's uneven real estate recovery slower than Detroit, Flint and El Centro growth

3) Census report of big jump in income is a little too good to be true | Brookings Institution

4) Guess The Last Country Which Still Has Positive Real Interest Rates——Russia! | David Stockman's Contra Corner

5) Russian central bank cuts interest rate further—down to 10 percent

6) A giant problem | The Economist

7) Hard Brexit will cost City of London its hub status, warns Bundesbank boss | World news | The Guardian

8) Homebuilder sentiment jumps to 65 in September, highest level in nearly a year

9) China facing full-blown banking crisis, world's top financial watchdog warns

10) China Relies On Property Bubbles To Prop Up GDP

11) These 10 markets desperately need more housing inventory | HousingWire

12) The hidden costs of affordable housing

13) Heterodox Economics Directory

14) Automation will end rapid economic growth for poorer countries | Guardian Sustainable Business | The Guardian

15) 111 Montgomery County Properties Up for Auction, Down from 400 Last Week | NBC 10 Philadelphia

16) Europe's Next Unnerving Referendum: QuickTake Q&A – Bloomberg

17) Austerity Only Benefits Germany and Destroys Europe, Renzi Says – Bloomberg

18) Backlog Skyrockets for Largest Firms During Second Quarter, But Falls to 8.5 Months Overall

19) Mother Jones Our Hats Are Off To You | The Economic Populist

20) Celebrating the One Percent: Is Inequality Really Good for the Economy? | Michael Hudson

21) FRB: Press Release–Federal Reserve issues FOMC statement–September 21, 2016

22) Paul Krugman, Ross LaJeunesse (Google), Yanis Varoufakis (DiEM25) and Yasheng Huang, economist, M.I.T.

23) International – #BahamasLeaks: Frequently asked questions — and answers

24) America Is Not the Greatest Country on Earth. It's No. 28 – Bloomberg

25) NETHERLANDS: Debate about unconditional Basic Income in Parliament | BIEN

26) House-Flippers Turn to the Crowd for Quick Cash. What Could Go Wrong? – Bloomberg

27) Jason Furman, Obama's Chief Economic Adviser, on Artificial Intelligence – The Atlantic

28) Could Computers Make Communism Work?

29) Oregon Sues People Suspected of Starting 2 Wildfires

30) Hurricane Ike Damaged Roofs to Get Repaired 8 Years Later

31) California Moving to Study Balcony Safety After Fatal Berkeley Collapse

32) Julia Calipo Found Guilty on All Charges in 2015 Arson; Not in C – Erie News Now: News, Weather & Sports | WICU 12 & WSEE

33) New Jersey Office of the Insurance Fraud Prosecutor Announces Launch of 2016-2017 Campaign

  1.    Ariz. neighborhood wakes up to plane crash

    At approximately 7:19 p.m. on Saturday the plane crashed into a home in the 400 block of Baylor Lane near Gilbert and Ray Roads. The two occupants of the home were able to get out uninjured, Gilbert fire officials said. The house caught fire, with plane parts hitting the house and backyard.

    Is it covered by insurance? Typically, look for the term "aircraft."

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  2.    Phoenix's uneven real estate recovery slower than Detroit, Flint and El Centro growth

    Apartment complexes continue to sell, restaurants keep on opening and home builders are even starting to buy some suburban land.
    But real GDP growth in Phoenix was a laggard 1.8 percent last year, according to the Bureau of Economic Analysis.

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  3.    Census report of big jump in income is a little too good to be true | Brookings Institution

    Between 2003 and 2014,…, the income gains in the CPS badly lagged those seen in the national accounts. The Commerce Department's income estimates in the national accounts are derived from income tax returns, earnings records maintained by the unemployment insurance system, and administrative records provided by government transfer agencies. While the data provided by these sources are subject to error, they are almost certainly more accurate in the aggregate than estimates based on household survey responses.

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  4.    Guess The Last Country Which Still Has Positive Real Interest Rates——Russia! | David Stockman's Contra Corner

    Elvira Nabiullina's alleged position is tantamount to saying that Russia can't create its own money. Russia could boom if it were to do some post-Post-Keynesianism. You saw that right: 2 posts: post-post!

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  5.    Russian central bank cuts interest rate further—down to 10 percent

    Sorry, Robert Wenzel over on David Stockman's blog, but this sounds like standard Keynesian monetarism to me, albeit a bit tepid.

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  6.    A giant problem | The Economist

    Prudent policymakers must reinvent antitrust for the digital age. …

    … In 1860-1917 the global economy was reshaped by the rise of giant new industries (steel and oil) and revolutionary new technologies (electricity and the combustion engine). These disruptions led to brief bursts of competition followed by prolonged periods of oligopoly. The business titans of that age reinforced their positions by driving their competitors out of business and cultivating close relations with politicians. The backlash that followed helped to destroy the liberal order in much of Europe.
    So, by all means celebrate the astonishing achievements of today's superstar companies. But also watch them.

    The article is a huge understatement. We need economic democracy! Without it, we don't have any real democracy. Without it, we, the People as a whole, are not remotely free.

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  7.    Hard Brexit will cost City of London its hub status, warns Bundesbank boss | World news | The Guardian

    "To assume on the basis of the developments so far that there won't be any negative consequences would be to draw false conclusions." …

    Reflecting on the changing status of central banks over the last seven years of the European debt crisis, Weidmann said he shared some concerns, voiced by activist groups such as Occupy, that financial institutions had become more powerful than elected governments.

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  8.    Homebuilder sentiment jumps to 65 in September, highest level in nearly a year

    I think it's an overreaction to the Census data.

    Land is still expensive. Skilled labor is still short. They mentioned commodities (materials are tight price-wise). More expensive housing isn't moving. Foreign investments have slowed some. The Fed is probably not going to raise rates this year, but they'll still do it prematurely. There's still plenty of labor slack.

    Things are slightly better, but the geopolitical situation is very much up in the air and dangerous.

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  9.    China facing full-blown banking crisis, world's top financial watchdog warns

    Ambrose used to be a soothing voice concerning China (at least to the suckers).

    The risk is that a fresh spate of capital outflows will force the central bank to sell foreign exchange reserves to defend the yuan, automatically tightening monetary policy. In extremis, this could feed a vicious circle as credit woes set off further outflows.

    The Chinese banking system is an arm of the Communist Party so any denouement will probably take the form of perpetual roll-overs, sapping the vitality of [the] economy gradually.

    The country was able to weather a banking crisis in the late 1990s but the circumstances were different. China was still in the boom phase of catch-up industrialisation and enjoying a demographic dividend.

    Today it is no longer hyper-competitive and its work-force is shrinking, and [this] time the scale is vastly greater.

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  10.    China Relies On Property Bubbles To Prop Up GDP

    I largely agree, and it's why I've been waiting for a hard landing, political upheaval, and a democracy movement for real.

    Raúl Ilargi Meijer:

    … China can only achieve its 6.5 to 7% annual GDP growth target if the housing bubble(s) persist, and that's the one thing bubbles never do.

    If housing makes up -directly and indirectly, after 'filtering through'- one third of Chinese GDP, which is officially still growing at more than 6.5%, then the effects of a housing crash in the Middle Kingdom should become obvious. That is, if the property market merely comes to not even a crash but just a standstill, GDP growth will be close to 4%. And that is before we calculate how that in turn will also 'filter through', a process that would undoubtedly shave off another percentage point of GDP growth.

    So then we're at 3% growth, and that's optimistic, that would require just a limited 'filtering through'. If the Chinese housing sector shrinks or even collapses, and given that there is a huge property bubble -intentionally- being built on top of the latest -recent- bubble, shrinkage is the least that should be expected, then China GDP growth will fall below that 3%.

    And arguably down the line even in a best case scenario both GDP growth and GDP -the economy itself-, will flatline if not fall outright. Since China's entire economic model has been built to depend on growth, negative growth will hammer its economy so hard that the Communist Party will face protests from a billion different corners as its citizens will see their assets crumble in value.

    Oh, and Ambrose shouldn't have suggested that Xi might have been the author of the mysterious article Ambrose mentioned in his piece (above). Xi did not write it, not even close. He hated it, not that it was right either.

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  11.    These 10 markets desperately need more housing inventory | HousingWire

    NAR's study reviewed new home construction relative to job gains over a three-year period (2013-2015) in 171 metropolitan statistical areas throughout the U.S. to determine the markets with the greatest shortage of single-family housing starts.

    It's not just starts that matter. It's size and many other factors. We need to make housing affordable, or we need to provide housing for everyone. A dog-eat-dog economic system is for dogs, not human beings, who are supposed to be a more-intelligent species.

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  12.    The hidden costs of affordable housing

    Affordable? Not so much.

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  13.    Heterodox Economics Directory

    The Post Keynesians argue that produced means of production within a circular production process cannot be characterized as scarce and that production is a social process; while Institutionalists reject the view that natural resources are not produced or socially created to enter into the production process; and the Marxists argue that the concept is a mystification and misspecification of the economic problem that it is not the relation of the isolated individual to given resources, but the social relationships that underpin the social provisioning process. The three critiques are complementary and integrative and generate the common conclusion that the concept of scarcity must be rejected as well as the mainstream definition of economics as the science of the non-social provisioning process analyzed through the allocation of scarce resources among competing ends given unlimited asocial wants of asocial individuals.

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  14.    Automation will end rapid economic growth for poorer countries | Guardian Sustainable Business | The Guardian

    I'm sorry if you're offended by my view that this article is positively reactionary.

    High taxes and more of certain kinds of jobs is just not going to cut it at all, neither are they necessary.

    Money does not come from taxes. Governments do not need to tax in order to have money to operate. Taxes are only to suck money out so there isn't too much price inflation and also it's too make the given currency the one people want to use.

    We can control price inflation via real-time money-supply controls, and we can mandate the use of one currency by law (because it just makes sense to have one, and only one, currency).

    We need to supply every human being with a very decent income regardless of jobs or human labor or work.

    The sooner we get on with it, the better.

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  15.    111 Montgomery County Properties Up for Auction, Down from 400 Last Week | NBC 10 Philadelphia

    … properties were removed from the list if their taxes were paid in full, an agreement with the county was reached or the owner declared bankruptcy. In the case of numerous other properties, their auctioning off was postponed until Dec. 8.

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  16.    Europe's Next Unnerving Referendum: QuickTake Q&A – Bloomberg

    What might be the consequences of a No vote?

    Political and economic turmoil, the likes of which haven't been seen since Renzi took office in early 2014. Renzi has pledged to resign. There would be calls for electoral reform before any new elections are held, potentially paralyzing Italy's decision-making. The Five Star Movement, which is virtually tied with Renzi's Democratic Party, would press its call for a referendum on continued Italian membership in the euro. Business lobby Confindustria says the economy could fall back into recession. "Any outcome of the referendum that is seen as destabilizing the status quo could add to the headwinds for the Italian economy and the euro," said Valentin Marinov, a strategist at Credit Agricole SA in London.

    If Germany is going to continue its ordoliberalism, then dropping the euro makes perfect sense.

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  17.    Austerity Only Benefits Germany and Destroys Europe, Renzi Says – Bloomberg

    Renzi is right about Germany and Merkel and especially Wolfgang Schäuble. They stand in the way of a proper democratic union of Europe.

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  18.    Backlog Skyrockets for Largest Firms During Second Quarter, But Falls to 8.5 Months Overall

    "While a handful of commercial construction segments continue to be associated with expanding volumes, for the most part, the average contractor is no longer getting busier," said ABC Chief Economist Anirban Basu. "While backlog is hardly collapsing, the period of growing in nonresidential construction spending appears to be ending. In fact, nonresidential construction spending data indicate that growth has been slowing for a number of months, something that prior weak CBI readings suggested would occur.

    "There are a number of potential explanatory factors regarding the lack of growth in backlog, the most obvious of which is the continued slow growth of the economy," said Basu. "Financial regulators have begun to express growing concern regarding possible bubbles forming in certain real estate segments in certain cities, which may have rendered the developer financing environment somewhat more challenging. A slowdown in business investment, including in energy-related sectors, has undoubtedly also played a role."

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  19.    Mother Jones Our Hats Are Off To You | The Economic Populist

    Paul Craig Roberts:

    Whenever you hear "privatization," you are hearing the formation of a scam that will create riches for insiders while taking the public to the cleaners.

    My sentiments exactly!

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  20.    Celebrating the One Percent: Is Inequality Really Good for the Economy? | Michael Hudson

    Michael Hudson:

    In a certain way I find Deaton's analogy with the movie The Great Escape appropriate. The wealthy have escaped. But the real issue concerns what have they escaped from. They have escaped from regulation, from taxation (thanks to offshore banking enclaves and a rewriting of the tax laws to shift the fiscal burden onto labor and industry). Most of all, Wall Street banksters have escaped from criminal prosecution. There is no need to escape from jail if you can avoid being captured and sentenced in the first place!

    A number of recent books — echoed weekly in the Wall Street Journal's editorial page — attribute the wealthiest One Percent to the assumption that they must be smarter than most other people. At least, smart enough to get into the major business schools and get MBAs to learn how to financialize corporations with zaitech or other debt leveraging, reaping (indeed, "earning") huge bonuses

    The reality is that you don't have to be smart to make a lot of money. All you need is greed.

    It's true.

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  21.    FRB: Press Release–Federal Reserve issues FOMC statement–September 21, 2016

    … the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives.

    Voting against the action were: Esther L. George, Loretta J. Mester, and Eric Rosengren, …

    Rosengren recently dramatically flipped (some might say flipped out.)

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  22.    Paul Krugman, Ross LaJeunesse (Google), Yanis Varoufakis (DiEM25) and Yasheng Huang, economist, M.I.T.

    Is democracy good for business, and is business good for democracy? Do the inclusive institutions of democracy promote entrepreneurship, leading to more growth and job creation, or do they constrain it? Are entrepreneurs a natural constituency for democratic change, or do they use their power and influence to shape the rules of the game in their favor?

    Ross LaJeunesse doesn't appear to appreciate the ethical problems associated with the "revolving door" and regulatory capture. There are huge conflict-of-interest issues, and it's not just with appearances. If we really need "experts" from business working as regulators who will return to the same businesses they just regulated, what does he suggest to balance the foxes watching the chicken coop? The concept of citizen members on regulatory boards and corporate boards hasn't been well received by those "foxes."

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  23.    International – #BahamasLeaks: Frequently asked questions — and answers

    For years now, international experts have called for a global transparency registry that would record the names of true company owners. This information could then be used to make the right people liable for crimes committed.

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


  24.    America Is Not the Greatest Country on Earth. It's No. 28 – Bloomberg

    Iceland, which barely edges out Singapore and Sweden for the No. 1 spot, is credited for aggressive anti-tobacco policies and its publicly funded universal health-care system.

    Of course, it depends upon what's being measured and how one values the thing. One thing is for sure. If Iceland can "afford" publicly funded universal health-care, the USA sure as Hell can too. Frankly, I think it's quite clear it's more societally costly not to have it.

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  25.    NETHERLANDS: Debate about unconditional Basic Income in Parliament | BIEN

    Klein states, the research on the impact on the state's budget done so far, has been incomplete regarding the domains in which the effect of basic income can be expected. He questions the conclusions of previous research on the effect of a Basic Income on the state's budget and formulates a list of examples of positive side effects that were not included in the calculations (i.e. effect on health, housing market, executional costs, increased entrepreneurship and participation in labour). He asks for new research where these effects will be included.

    Oh, don't do that. Don't allow research that might (would) show that a universal income is better than not.

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  26.    House-Flippers Turn to the Crowd for Quick Cash. What Could Go Wrong? – Bloomberg

    In the second quarter, 39,775 investors bought and sold at least one house, the most since 2007, according to ATTOM Data Solutions.

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  27.    Jason Furman, Obama's Chief Economic Adviser, on Artificial Intelligence – The Atlantic

    A different trajectory is unlikely to emerge this time around because even though AI has the potential to replace certain human tasks, it will likely also create entirely new fields of jobs.

    That's visionless. Of course new jobs will crop up. However, more and more new jobs will be taken by automation. It's a curve.

    I'm more than beginning to wonder whether the vast majority of naysayers have some desire to keep the human race from transcending mandatory "labor." It seems clear to me that they do. Why do they? It's a great question for the psychologists. I'd ask about ego.

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  28.    Could Computers Make Communism Work?

    This article doesn't understand what communism is. First of all, it uses a capital c ("Communism"). That's the political party.

    Lower-case communism is one of two things. The Marxian view is that communism is what comes after socialism, and socialism is the public ownership of the means of production. The other view is that communism is socialism. I subscribe to that second view.

    Now, the most important thing to grasp right from the outset is that public ownership of the means of production is silent on centralized planning (top-down).

    There are two ways to decide "price discovery." One is via money. The other is via moneyless voting. I subscribe to that second method as the best one.

    Money today is the result of "earning." Money tomorrow could be, should be, and will be, nothing more than a thing used to vote and that isn't "earned" via working or investing but simply by being a member of the human race.

    How much money is created and to whom it goes will be decided democratically (bottom-up), not by bankers.

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  29.    Oregon Sues People Suspected of Starting 2 Wildfires

    Dry weeds or grass snagged on the vehicle's exhaust system, and smoldering debris fell from the vehicle onto 2-foot-tall grass he drove across, igniting fire ….

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  30.    Hurricane Ike Damaged Roofs to Get Repaired 8 Years Later

    Tackling "the blue tarp problem" …

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  31.    California Moving to Study Balcony Safety After Fatal Berkeley Collapse

    … the collapse could have been avoided … builder's previous defect settlements.

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  32.    Julia Calipo Found Guilty on All Charges in 2015 Arson; Not in C – Erie News Now: News, Weather & Sports | WICU 12 & WSEE

    The jury's decision comes after about an hour of deliberations on day three of the trial. It started with what prosecutors called "a slight delay" after the defendant failed to show up at 9:30 a.m ….

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  33.    New Jersey Office of the Insurance Fraud Prosecutor Announces Launch of 2016-2017 Campaign

    "Insurance fraud is often thought of as a victimless crime. However, it costs the average New Jersey family an estimated $1300 per year. …

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