News Alerts. Oct. 12, 2013. Morning Edition. #RealEstate

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  1. Hasn’t the U.S. defaulted before? – News Alerts. Oct. 12, 2013. Morning Edition. #RealEstate

    Letting the cat out of the bag:

    … U.S. monetary policy has consistently worked to pare the real value of Treasuries over time by promoting low, even negative interest rates on Treasuries which mean that the interest paid doesn’t cover the loss in value of the principal after inflation.

    This is good for the Treasury, bad for bondholders. but it works because bondholders are still sure that on coupon dates (or reasonably close thereafter) and upon maturity they’ll get their money.

    Yep, that’s how it works alright.

    Source …,0,7471121.story

  2. Friday Funding: Banc of California diversifies, operates across all origination channels | REwired News Alerts. Oct. 12, 2013. Morning Edition. #RealEstate

    Interesting thought:

    How will new compliance rules impact your business? What are you doing to stay on top of compliance, i.e. technology, new software, etc.?

    Seabold: As a bank, we already are required to operate our business with a higher level of compliance and controls. In the past, the non-bank lending platforms had a competitive advantage because they didn’t have the additional costs of bank regulation. With the enactment of Dodd-Frank, the CFPB and other new regulations, it is now a level playing field, and in fact I would argue that the bank lending platforms have the compliance and technology advantage. This is especially true at our company, as the culture and costs of these disciplines are already embedded within the organization.

    Regulations can be an advantage if you comply well, comply better than do your competitors.

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  3. The Ravings of Niall Ferguson, the Real World, and the Needless Suffering of Tens of Millions | Beat the Press

    This is a very pointed rebuttal of Niall Ferguson’s economics by Dean Baker [co-director of the Center for Economic and Policy Research in Washington, D.C.].

    First, contrary to what Ferguson claims, the downturn is not primarily a “financial crisis.” The story of the downturn is a simple story of a collapsed housing bubble. The $8 trillion housing bubble was driving demand in the U.S. economy in the last decade until it collapsed in 2007. When the bubble burst we lost more than 4 percentage points of GDP worth of demand due to a plunge in residential construction. We lost roughly the same amount of demand due to a falloff in consumption associated with the disappearance of $8 trillion in housing wealth. (FWIW, none of this was a surprise to folks who follow the economy with their eyes open. I warned of this disaster beginning in 2002, see also here and here.)

    The collapse of the bubble created a hole in annual demand equal to 8 percent of GDP, which would be $1.3 trillion in today’s economy. The central problem facing the U.S., the euro zone, and the U.K. was finding ways to fill this hole. Government stimulus is the most obvious answer. This is where the Ferguson types first began to obstruct efforts to boost the economy. They warned that stimulus would not be an effective way to boost growth and create jobs. We also heard dire tale of exploding interest rates and runaway inflation.

    In fact, the stimulus in the United States went pretty much according to the textbook. It was far too small and too short to get the economy back to full employment (again, this was predictable at the time, see here and here), but it did create around 2-3 million jobs. The problem was that that the economy needed 10-12 million jobs.

    We’ll have to find what people consider Niall Ferguson’s best to post it for our readers. It always pays to get both sides to better understand the arguments, such as they are. If anyone has any suggestions, feel free to supply a link. Thanks.

    Do you think what Dean calls a “three part tirade from Ferguson directed at Krugman” is good enough?

    We watched the first video, and it appears that he’s making the same points he’s made elsewhere.

    The operative word Niall used in our view is “peacetime.” He said that Keynesianism hasn’t worked on a massive scale in peacetime. He said there’s no evidence that it will work. However, it did work in the lead-up to WWII, and what is different about war time? In addition, the US has just gone through at least two wars.

    It appears to be an issue of thick versus thin skin, but we don’t say Niall has no point.

    Paul Krugman was wrong on Greece. He greatly underestimated the power of those termed Austerians (a mix of Austrian School of Economics with austerity; redundant) in Europe.

    We thought there was a strong possibility the Fed would superheat the economy, over shoot, as it were. They did just the opposite, as Dean Baker’s piece makes clear.

    We underestimated the power of the Austrians to make the Fed and US government shy rather than use truly bold stimulus to a fault.

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  4. China Developer to Take Majority Stake in Atlantic Yards – Bloomberg

    Greenland Holding Group Co., a developer building one of China’s tallest towers, agreed to buy a 70 percent stake in New York’s Atlantic Yards, the 22-acre residential and commercial real estate project in Brooklyn.

    Greenland signed a memorandum of understanding with Forest City Ratner Cos. to co-develop the project, including infrastructure and apartment units, the companies said in a joint statement today. The deal excludes the Barclays Center, home of the National Basketball Association’s Brooklyn Nets, and the first housing tower under development.

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  5. Lawmakers to DeMarco: You Can’t Reduce Loan Limits – Developments – WSJ

    How should landlords read this? What’s in it for them?

    To get a sense of how difficult the process of overhauling Fannie MaeFNMA and Freddie Mac will be, witness the latest kerfuffle over whether the companies’ regulator should drop the maximum loan limits.

    In a letter released Thursday, some 66 members of the House of Representatives—59 Democrats and 7 Republicans—called on the Federal Housing Finance Agency to drop previously announced plans to reduce the limits.

    The agency said in August it was considering a reduction in the loan limits, which are set at $417,000 for most of the U.S. but rise to as high as $625,500 in high-cost housing markets such as Los Angeles and New York. Officials had initially said any decline would take effect by Jan. 1, though discussions in recent weeks have suggested that timetable could be delayed, according to people familiar with the matter.

    The letter from lawmakers suggested that Edward DeMarco, the acting director, didn’t have the authority to unilaterally drop loan limits, and it used Mr. DeMarco’s prior testimony before Congress to argue their case.

    Lowering the limit would send more people to “private” equity. Obtaining loans that way, it has been suggested, would be more expensive for those borrowers. If borrowing would be more expensive, then more people would lease. We think, however, that the limits would remain so high even after lowering them that the percentage of buyers not buying on account of higher borrowing costs would be minimal. In addition, it would have a slightly negative impact upon the recovery.

    The issue cuts both ways for landlords but not much for those landlords who don’t cater to the wealthy in the first place.

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