News: Real Estate, Risk, Economics. Aug. 22, 2017

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Table of Contents
(Click to sections below.)

1) What Jared Kushner's Rent Overcharging Lawsuit Reveals – CityLab

2) Fed Starts to Wonder If Cornerstone Inflation Model Still Works – Bloomberg

3) Quarry Blasts Send Barrage of Rocks Through Minnesota Neighborhood

4) The neoliberal road to autocracy | International Politics and Society – IPS

5) mainly macro: Japan and the burden of government debt

6) Wisconsin Officials: State Law Prevents Fire Sprinkler Rule Enforcement

7) Florida man sentenced for role in Las Vegas real estate scam – KTNV[dot]com Las Vegas

8) Zillow | Consumer Financial Protection Bureau

9) 'The housing industry is in a time of major transformation': Corelogic US | afr[dot]com

10) Nearly 500 dead in Sierra Leone mudslides, officials say – CBS News

11) Mnuchin Hints at Keeping Carried Interest Tax Break for Some – Bloomberg

12) Carried Interest Taxation | NAIOP

13) Jared Kushner's real estate firm has sought the arrest of more than 100 ex-tenants over unpaid debts

14) Bernie Sanders: Why Medicare-for-All Is Good for Business | Fortune[dot]com

15) Make the Left Great Again – American Affairs Journal

16) IoT Cyber Security Improvement Act looks to bolster US cyber defenses

17) Constitution absent for woman raped in sanctuary city | Anza Valley Outlook

  1.    What Jared Kushner's Rent Overcharging Lawsuit Reveals – CityLab

    This lawsuit adds to the mounting evidence—from New York, New Jersey, and even as far as Baltimore—that, much like his father-in-law, Donald Trump, Kushner is a rule-breaking landlord.

    Well, we'll have to watch for the Kushner team's response. Even if this article is right concerning Kushner's errors, it needs to be said that lax enforcement is a moral hazard.

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  2.    Fed Starts to Wonder If Cornerstone Inflation Model Still Works – Bloomberg

    They've been having such a tough time of it. However, it hasn't been complicated, and it still isn't.

    The pressure to keep wages low has been astronomical relative to the past. The rich have generally been more selfish, greedy, and shortsighted than before the move to kill the New Deal. More people really want work than has been suspected all along. Higher-paid workers are leaving as lower-paid ones are entering. Higher-paying jobs for the middle have been hollowed out. Lower-paying jobs have been competing internationally against China and even lower Vietnam, etc. Automation truly is a factor that is only increasing in ways that aren't being fully captured.

    All of that said, the Phillips Curve is still there and will kick in but just not as strongly. Increase minimum wages will be somewhat offset by fewer hires.

    So, the Fed has been wrong to fret about waiting too long to raise rates. It simply won't take as much to slow things as they currently think. Plus, they really should focus on their mandate and not on bankers' profits.

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  3.    Quarry Blasts Send Barrage of Rocks Through Minnesota Neighborhood

    Quarry blast as proximate cause …

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  4.    The neoliberal road to autocracy | International Politics and Society – IPS

    The 'share' of those living on less than $1 a day, between 1950 and 1970, fell at around the same annual percentage rate as the share of those living on less than $1.90 between 1981 and 2015. If we exclude post-1980 China (whose trend to autocracy is not based on neoliberal policy), we find that the average annual reduction in the percentage share of the extremely poor has been reasonably constant since about 1950.

    Yes, but let's not leave out the "externalities" of massive pollution and now anthropogenic global warming threatening catastrophe if we don't sequester or stop burning. Laissez-faire leaves pollution to the "invisible hand." Adam Smith, by the way, would not.

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  5.    mainly macro: Japan and the burden of government debt

    I don't write enough about Japan, and now that some of my posts are very kindly being translated into Japanese I should try to remedy that. In fact there is currently a very good reason to write about the Japanese economy, and that is a very strong 2107 Q2 performance.

    And that's in the face of those who said that taking the QE and especially the fiscal-stimulus route would prove to be a disaster. Rather than say it would be a disaster, I said Japan should double down on it at the very least. Unfortunately, they jacked up the sales tax at exactly the wrong time. They would have been so much better off had they not done that.

    Don't get me wrong here. I'm not saying that resulting currency wars are good. I'm for worldwide democracy. Japan simply did what it had to, given the foolish global economic system we have.

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  6.    Wisconsin Officials: State Law Prevents Fire Sprinkler Rule Enforcement

    The statute says state agencies can't create regulations that are more restrictive than state law ….

    Correct. So change the law.

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  7.    Florida man sentenced for role in Las Vegas real estate scam – KTNV.com Las Vegas

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  8.    Zillow | Consumer Financial Protection Bureau

    I'm reserving judgment because I just don't know enough about this and the specific law(s) and regulations. How about you?

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  9.    'The housing industry is in a time of major transformation': Corelogic US | afr.com

    This article is about the US more than about Australia.

    If housing prices and rent rates continue going up, up, up due to grossly insufficient supply in the face of growing demand and stagnant wages and lower-tier salaries, the entire economy will suffer needlessly. Landlording is better when things are better balanced. Support sustainable rent rates. Support subsidized development and construction of affordable housing. Support subsidized rent payments. We'll all be better off than leaving it to the heartless "market."

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  10.    Nearly 500 dead in Sierra Leone mudslides, officials say – CBS News

    Mudslides are usually not at the forefront of people's minds when considering weather-related causes of loss.

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  11.    Mnuchin Hints at Keeping Carried Interest Tax Break for Some – Bloomberg

    Carried interest is the portion of a fund's profit — usually a 20 percent share — that's paid to private-equity managers, venture capitalists, hedge fund managers and certain real estate investors.

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  12.    Carried Interest Taxation | NAIOP

    … the proposed partnership tax law change would disproportionately impact the real estate industry since real estate partnerships comprise over 46 percent of all partnerships and many use a carried interest component in structuring development ventures. Such a change would result in a dramatic tax increase on real estate partnerships using carried interest.

    The more we use taxes as a form of promoting or discouraging behaviors, the more complicated the laws become and the more difficult it becomes to balance competing interests. To be clear, the progressive income tax is not to promote or discourage but adjust for inequalities (all other things being equal, which they never have been).

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  13.    Jared Kushner's real estate firm has sought the arrest of more than 100 ex-tenants over unpaid debts

    I'm not including this for political reasons but only because it is a legitimate real-estate-investing legal issue. Is there no place for these "body attachments" in the industry?It appears that most landlords do fine without them. Do the exceptions make the "remedy" fundamentally fair and moral? Thoughts?

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  14.    Bernie Sanders: Why Medicare-for-All Is Good for Business | Fortune.com

    No American should die or suffer because they lack the funds to get adequate health care. But it is more than that. A Medicare-for-all single-payer system will be good for the economy and the business community.

    Bernie Sanders is the junior U.S. senator from Vermont.

    It will actually be good for the insurance industry as a whole. Also, if we provide the rest of a proper safety net, nobody currently in the private health-insurance sector should truly suffer as a result of the transition to single-payer. I realize that's surprising coming from a private-insurance broker, but the truth is the truth. I'm not in it just for the money.

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  15.    Make the Left Great Again – American Affairs Journal

    The article attempts to make the case for the leftist nation-states taking back power from globalized, anti-democratic capital. I largely agree with it. It is correct about austerity and Modern Monetary Theory. However, I disagree that democracy cannot be had on the supranational level. In fact, I say it's ultimately the only path and that we should be promoting it.

    The EU was a great idea except that its founders based it upon technocracy rather than democracy. Most of the problems the EU ran into with the Great Recession were due to the fact that the EU was not a "United States of Europe." The US could do, and did do, things the EU could not "legally" do under EU agreements. The US was more spared as a result. Of course, the US made the gigantic error of reverting to austerity via fiscal hawkishness that (runaway government spending and resulting hyper-price inflation) was never really a genuine concern.

    Given neoliberalism's war against sovereignty, it should come as no surprise that "sovereignty has become the master-frame of contemporary politics," as Paolo Gerbaudo notes.4 After all, the hollowing out of national sovereignty and curtailment of popular-democratic mechanisms—what has been termed depoliticization—has been an essential element of the neoliberal project, aimed at insulating macroeconomic policies from popular contestation and removing any obstacles put in the way of economic exchanges and financial flows. Given the nefarious effects of depoliticization, it is only natural that the revolt against neoliberalism should first and foremost take the form of demands for a repoliticization of national decision-making processes.

    The fact that some visions of national sovereignty are defined along ethnic, exclusivist, and authoritarian lines should not be seen as an indictment of national sovereignty as such. History attests to the fact that national sovereignty and national self-determination are not intrinsically reactionary or jingoistic concepts—in fact, they were the rallying cries of countless nineteenth- and twentieth-century socialist and left-wing liberation movements.

    Even if we limit our analysis to core capitalist countries, it is apparent that virtually all the major social, economic, and political advancements of the past centuries were achieved through the institutions of the democratic nation-state, not through international, multilateral, or supranational institutions. Rather, global institutions have in many ways been used to roll back those very achievements, as we have seen in the context of the euro crisis, where supranational (and largely unaccountable) institutions such as the European Commission, Eurogroup, and European Central Bank used their power and authority to impose crippling austerity on struggling countries.

    … the UK's Labour government of James Callaghan (1976—9) bears a very heavy responsibility. In an (in)famous speech in 1976, Callaghan justified the government's program of spending cuts and wage restraint by declaring Keynesianism dead, indirectly legitimizing the emerging monetarist (neoliberal) dogma and effectively setting up the conditions for Labour's "austerity lite" to be refined into an all-out attack on the working class by Margaret Thatcher. Even worse, perhaps, Callaghan popularized the notion that austerity was the only solution to the economic crisis of the 1970s, anticipating Thatcher's "there is no alternative" (TINA) mantra, even though there were radical alternatives available at the time, such as those put forward by Tony Benn and others. These, however, were "no longer perceived to exist."

    Moreover, neoliberalism has been (and is) associated with various forms of authoritarian statism—that is, the opposite of the minimal state advocated by neoliberals—as states have bolstered their security and policing arms as part of a generalized militarization of civil protest. In other words, not only does neoliberal economic policy require the presence of a strong state, but it requires the presence of an authoritarian state at both the domestic and international levels, particularly where extreme forms of neoliberalism are concerned, such as the ones experimented with in periphery countries. In this sense, neoliberal ideology, at least in its official anti-state guise, should be considered little more than a convenient alibi for what has been and is essentially a political and state-driven project. Capital remains as dependent on the state today as it did under "Keynesianism"—to police the working classes, bail out large firms that would otherwise go bankrupt, open up markets abroad (including through military intervention), etc. The ultimate irony, or indecency, is that traditional Left establishment parties have themselves become standard bearers for neoliberalism, both while in elected office and in opposition.

    … in the European debate, where, despite the disastrous effects of the EU and monetary union, the mainstream Left—often appealing to exactly the same arguments used by Callaghan and Mitterrand more than a generation ago—continues to cling to these institutions. Despite all evidence to the contrary, the mainstream Left asserts that these institutions can be reformed in a progressive direction, and dismisses any talk of restoring a progressive agenda on the foundation of retrieved national sovereignty as a "retreat into nationalist positions," inevitably bound to plunge the continent into 1930s-style fascism.14 This position, as irrational as it may be, is not surprising, considering that the European Monetary Union is, after all, a brainchild of the European Left. However, such a position presents numerous problems, which are ultimately rooted in a failure to understand the true nature of the EU and monetary union. First of all, it ignores that the EU's economic and political constitution is structured to produce the results that we are seeing: the erosion of popular sovereignty, the massive transfer of wealth from the middle and lower classes to the upper clas ses, the weakening of labor and more generally the rollback of the democratic and socioeconomic gains that had previously been achieved by subordinate classes. The EU is designed precisely to impede the kind of radical reforms to which progressive integrationists or federalists aspire.

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  16.    IoT Cyber Security Improvement Act looks to bolster US cyber defenses

    The Internet of Things Cyber Security Improvement Act of 2017, co-sponsored by Senators Mark Warner (D-VA), Cory Gardner, (R-CO) Deb Fisher, (R-NE), Rob Wyden, (D-OR), and Steve Daines, (R-MT) looks to bolster government cyber defenses by demanding new security requirements for all devices. If implemented in full, the bill would require IoT device sellers to ensure that all products are patchable upon release, would prohibit hard set, have unchangeable passwords, and would demand devices be free of any presently known security vulnerabilities. Additionally, the bill would require all executive agencies to develop and maintain a publicly available database that lists all IoT devices in use and the names of their manufacturers. The bill also provides protection from criminal prosecution for "Good Faith" hackers who expose and report any potential device vulnerabilities.

    That's vastly better than nothing, which is what we have now.

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  17.    Constitution absent for woman raped in sanctuary city | Anza Valley Outlook

    The recent brutal rape of a 19-year—old woman in Burien, Washington, a Seattle suburb and a declared sanctuary city, has refocused attention on the constitutionality of a city protecting an illegal immigrant.

    In a technical reading of the US Constitution, I can't see where Harold Pease is wrong here. What liability does the complex where they lived have in the matter? That's why I bring it to your attention and not to make a statement on immigration or on the concept of the "living Constitution."

    As a disclaimer, I'm a strong advocate of political- and war-refugee rights (domestic and global). There are economic refugees, many of them completely innocent little children. That's why I push for global economic reforms that will lift everyone.

    In the meantime, landlords need to remain informed and to find out and practice proper tenant-screening policies and procedures. What right as a landlord does one have to ask about immigration status and for documentation concerning it? Does the US government protect such landlords from state and local laws that seek to protect all immigrants regardless of federal law? Consult your attorney.

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