Linking ≠ endorsement.
↑ Census: Seattle saw steepest rent hike among major U.S. cities | FYI Guy | Seattle Times
Between 2010 and 2013, Seattle renters took a bigger hit to their pocketbooks than renters in any other large U.S. city. The gross median rent here — that is, rent plus utilities — spiked by $113, or nearly 11 percent. That’s the sharpest rise in rent among the nation’s 50 most-populous cities.
↑ U.S. leading indicator rises less than expected in August | Reuters
Economic activity in the United States rose less than expected in August….
The slower-than-expected pace of growth last month, the report said, was driven by dismal applications for housing permits and new orders for non-defense capital goods.
…industrial production registered a slight decrease for the first time in seven months.”
↑ In Scotland and Beyond, a Crisis of Faith in the Global Elite – NYTimes.com
There has been an implicit agreement in modern democracies: It is fine for the wealthy and powerful to enjoy private jets and outlandishly expensive homes so long as the mass of people also see steadily rising standards of living. Only the first part of that bargain has been met, and voters are expressing their frustration in ways that vary depending on the country but that have in common a sense that the established order isn’t serving them.
The Census Bureau said last week that the inflation-adjusted median household income — pay for people at the exact midpoint of the income distribution — was $51,939 in 2013, up just $180 from 2012 and still 8 percent below 2007 levels.
It gets worse. The 2007 peak in real median household income was slightly below the 1999 peak. In other words, a middle-class American family is worse off financially today than it was 15 years ago.
The decades-long march toward a united continent, led by the parties of the center-right and center-left, created a Western Europe in which there was a single currency and monetary authority. But that authority did not have the political, fiscal and banking union that would make it possible for imbalances among those countries to work themselves out without the benefit of currency fluctuations. When it all came to a head from 2008 to 2012, national leaders were alarmed enough by the risks of budget deficits that they responded by cutting spending and raising taxes.
As such, the imbalances that built up over the years in Europe are now working themselves out through astronomical unemployment levels and falling wages in countries like Spain and Greece.
↑ FHA Loans Plunge 19% as Lenders Haggle With Officials – Bloomberg
An FHA review of 6,654 loans in the first quarter found that lenders make a lot of mistakes on applications. The audit revealed that 48 percent of mortgages were deemed initially unacceptable, which means they had a material defect at the time of endorsement. A subsequent audit as of July 1 found just 8 percent of those loans were unacceptable after lenders provided additional documentation.
“I think lenders should do a better job of delivering a higher quality underwritten product, not just say, ‘OK, we’ll pull out of the market and cut out lending,'” said Jim Carr, a senior fellow at the Center for American Progress, and a housing finance, banking and urban policy consultant.
We agree with Jim Carr.
↑ Prometheus unbound? The modest benefits of entry deregulation in Portugal | vox
Lee Branstetter, Francisco Lima, Lowell Taylor, Ana Venâncio:
As our model predicts, we find that the firms whose entry is plausibly induced by the reform tend to be small, owned by relatively poorly educated entrepreneurs, and operate in low-tech industries, and they are less likely to survive over the first two years after entry than the cohorts of entrants that preceded them. These results suggest that the positive (but limited) impact of entry deregulation is constrained, in part, by the low quality of the firms deregulation brings into the market place. Prometheus is not unshackled by these deregulation episodes — the best entrepreneurs and firms enter and thrive even in relatively inhospitable environments. Entry deregulation, even one as sweeping as Portugal’s, does not bring Steve Jobs into the marketplace; it opens another convenience shop around the corner.
Still, it is important that we not oversell the growth benefits of entry deregulation reforms. The best scholars in this literature have always acknowledged the hazards of overreliance on the strong negative cross-sectional relationship between entry restrictions and economic performance at the country level, precisely because countries with overly restrictive entry regulations often suffer from other economic and policy problems (see the discussion in Djankov et al. 2002). Now would be a good time for the policy ‘experts’ and the more responsible journalists in the business press to practice similar caution. Economists across various disciplines have experienced first-hand how overselling the efficacy of our favoured policies can backfire, undermining the credibility and influence of the discipline in the long run. A bit more modesty and honesty in this policy discussion might be not just the right thing for the world, but the right thing for ourselves.
↑ New York Fed Takes Aim at Bank Culture – Real Time Economics – WSJ
The New York Fed event follows on a speech by Mr. Dudley in November 2013 in which he said stress tests and other regulatory changes “may not solve another important problem evident within some large financial institutions—the apparent lack of respect for law, regulation and the public trust. There is evidence of deep-seated cultural and ethical failures at many large financial institutions.”
↑ The Grumpy Economist: Yellen on the poverty of the poor.
We pillory the libertarian school, but here’s John H. Cochrane asking some very legitimate questions:
…why should housing remain “an important channel for asset building?” Why should Federal Policy so strongly promote and subsidize this idea? Owner-occupied housing is a lousy asset. Bob Shiller, hardly a right-winger, has been loudly producing facts on this point for two decades. The average rate of return is awful, it’s horribly illiquid, it’s full of idiosyncratic risk. People reading this likely live in overpriced houses that seem great in retrospect. But our average low-income household in trouble “built assets” in houses in places like Detroit.
The best possible thing financial policy and “consumer financial protection” should do is move heaven and earth to get low income households to rent, and invest their savings in a nice balanced passive mutual fund instead. Obviously, Ms. Yellen isn’t going to stand up and say that. But we can ask the question.
↑ Is this rock bottom for Virginia real estate? Office owners can only hope. – The Washington Post
This may be the worst time in the past 25 years to own an office building in Northern Virginia. At least one with space to lease.
After mostly uninhibited growth since the early 1980s — a run that produced some of America’s wealthiest counties — there are red flags popping up from Arlington all the way to Stafford County.
Consider: More than one-third of all the office space along Interstate 395 is empty. Thirteen entire buildings sit completely empty along Route 28. In Rosslyn, the biggest building in the region hasn’t found a single taker. Experts say the area is suffering from the same flat leasing environment as the District and suburban Maryland, but with some other heavy factors unique to the commonwealth piling on.
A 20,000-square-foot piece of vacant Lake Erie shoreline in Hamburg is on the auction block.
So, too, will be the site of an auto dealership on Transit Road in Depew.
And a former VFW property in North Collins.
Those — and about 190 other properties — are expected to attract the highest bids Wednesday when Erie County holds its tax foreclosure auction at the Central Library in downtown Buffalo.
↑ 7 trends about the Reno real estate market
After seeing noticeable appreciation on the last couple of years, home prices have reached a plateau in the last few months. Since June, the median price of an existing home in Reno-Sparks have stuck to a holding pattern in the $250,000 range.
“Stabilization is the trend for home pricing in Northern Nevada and Nevada as a whole,” said Peter Counts, a graduate assistant with the Lied Institute for Real Estate Studies at the University of Nevada, Las Vegas. The institute produces a regular housing report with the Nevada Department of Business and Industry.
↑ Getting warmer: Winona-area real estate numbers strong, steady
…once things thawed out and spring arrived, the real estate market picked up and has been gaining steam ever since. Spring was very good for home sales in the southeast region said SEMAR president Casey Hatch, and the supply of homes for sale has had difficulty keeping up with demand.
Things swung at the end of spring and early summer with agents seeing a glut of homes coming onto the market. By late summer, things had balanced out and remained strong through August and into September.
This is the longest incline of the U.S. dollar index since 1973 and it could be the beginning of something big not just big in America but across the globe as greenback shifts affect other currencies.
…lower commodity prices do favor the consumer which could quickly reverse the status and drive sales instead of losses.
If it continues, it will drive sales; however, it will be of imports, not US-made.
↑ King Fire grows to 82,000 acres, destroys at least 10 homes – SFGate
At least ten homes and 22 other structures were consumed by flames as the massive King Fire east of Placerville (El Dorado County) grew to more than 82,000 acres and spewed smoke across the state early Sunday, California Department of Forestry and Fire officials said.
↑ China Beats Europe in Per-Capita Pollution for First Time – Businessweek
Temperatures have already increased by 0.85 of a degree since 1880, and the current trajectory puts humanity on course for a warming of at least 3.7 degrees Celsius, the UN has estimated. That’s quicker than the shift in the climate when the last ice age ended about 10,000 years ago.
Those risks include greater temperature swings, rising sea levels, melting glaciers, more pervasive heatwaves and increased water shortages in areas stressed by drought, industry demands and rising populations.
↑ How Climate Change Costs Could Soar to the Billions | The Fiscal Times
Unabated global warming will have huge budget and economic consequences for the U.S., potentially draining state and federal coffers of hundreds of billions of dollars in the coming years. That was the dismal warning from White House Budget Director Shaun Donovan on Friday in advance of President Obama’s participation this week at the United Nations Climate Summit.
The new Office of Management and Budget director offered a sobering fiscal scenario for the country as rising temperatures foster worse hurricanes and storms, drought, wildfires, rising sea levels, flooding and other natural catastrophes.
Paying for the fix will actually be a boon to the economy. Not paying for it will end up costing trillions.
What kind of insurance premiums will insurance carriers have to charge?
Thankfully, the Chinese leadership is on board. China already has more alternative energy production than does the US.
The US doesn’t have the excuse anymore that China, a developing country that didn’t want to curb emissions while it was growing and working to eliminate poverty, is refusing to work on global warming. At the current pace in China, if it’s economy doesn’t crash, China will far outstrip the US in clean, sustainable energy production and manufacturing the systems to accomplish it.
We just went through the hottest summer worldwide, right on the heels of a very harsh winter in the US, which is what has been predicted: erratic extremes. The climb in temperatures is going to be an uphill roller-coaster ride. We will have pauses; but if we don’t dramatically curb the carbon, those will become shorter and shorter.
↑ Eight Pseudoscientific Climate Claims Debunked by Real Scientists | Connecting the Dots | BillMoyers.com
We include this article because (highly recommended article) the insurance industry is very concerned about Anthropogenic Global Warming (AGW). We fear huge otherwise avoidable losses for everyone down the road if we all don’t do what it will take to stop AGW and to turn it around.
Most people who deny that human activity is warming the planet just dismiss a massive body of scientific evidence as a big hoax.
But there’s a more sophisticated set of climate “skeptics” who make arguments that, at least to the lay ear, sound like they’re grounded in scientific evidence. And because most of us lack the background to evaluate their claims, they can muddy the waters around an issue that’s been settled in the scientific community.
So, as a public service, we gathered eight of the most common of these pseudoscientific arguments and asked some serious climate scientists — all working climatologists who have been widely published — to help us understand what makes these claims so misleading.
We’d also like to bring to your attention that "Climategate" was not as it was widely reported by AGW deniers. The actual hoax was the other way around. The professional AGW deniers ginned up a mistaken narrative around a few emails. They capitalized on the general masses’ lack of in-depth knowledge about how tree rings began to become an outlier, the only outlier. All the other data from all the other sources matched up. The damage has persisted. Please do what you are able to turn that around. The best climate scientists are not making things up. They are telling it as the data says, and they want the very best data they can get.
The most common misconception regarding this email is the assumption that "decline" refers to declining temperatures. It actually refers to a decline in the reliability of tree rings to reflect temperatures after 1960. This is known as the "divergence problem" where tree ring proxies diverge from modern instrumental temperature records after 1960. The divergence problem is discussed in the peer reviewed literature as early as 1995, suggesting a change in the sensitivity of tree growth to temperature in recent decades (Briffa 1998). It is also examined more recently in Wilmking 2008 which explores techniques in eliminating the divergence problem. So when you look at Phil Jone’s email in the context of the science discussed, it is not the schemings of a climate conspiracy but technical discussions of data handling techniques available in the peer reviewed literature.
If you don’t want your property-insurance premiums going through the roof, if you don’t want that insurance priced out of reach, if you don’t want such insurance simply disappearing when no carriers can afford the risks of huge losses from runaway Global Warming, then stand up against the AGW deniers.
Doing what it will take will not cost us. What will cost us is not stopping AGW. Stopping AGW will mean bringing in new industries, better industries. They will create more new jobs, clean jobs, etc. It will be a net gain for the domestic and global economy.
↑ Existing home sales fall 1.8% in August, vs. expectations of 0.8% gain
Investors who have been propping up the market almost deserted the market last month, accounting for only 12 percent of transactions, the smallest share since November 2009.
↑ Investors leaving housing high and dry
“Investors are concerned with a potential rise in interest rates,” said Lawrence Yun, chief economist for NAR. “It makes it less attractive in a rising interest rate environment.”
We don’t think that’s it. They pay cash. We think the real reason is that prices are too high, and they don’t see enough potential for much appreciation in a slow economy.
↑ Nikkei Crash a Risk Seen by Posen If Abe Blinks on Tax – Bloomberg
As disappointment with Abe’s structural deregulation pledges mounts, he also is weighing whether to raise the sales levy, which was enacted by the previous government. With a decision set by year-end, what’s giving the prime minister pause is the damage inflicted by the initial bump in April — the sharpest economic contraction in more than five years.
To Posen, delaying the tax measure would test the patience of international investors who have backed Abe’s efforts to both propel his economy from 15 years of deflation and restore fiscal order to a nation where government debt now tops 240 percent of gross domestic product.
Were those investors banking on the April crash? We don’t think so. They were betting on everything else Abe did. They didn’t think the tax hike would result in what we predicted long before April: a severe downturn.
Abe should not only not do the second increase, he should roll back the first and increase the stimulus while allowing in all the young foreign workers Japan needs to rev up.
…only rising real wages will return us to sustainable growth.
↑ China risks ‘balance-sheet recession’ as stimulus impact wanes – FT.com
The theory of a balance-sheet recession implies that when impaired corporate balance sheets weaken the private sector’s appetite for borrowing and investment, the government must fill the gap with fiscal spending.
China dabbled in this approach earlier this year, as the fiscal deficit briefly spiked amid increased spending on rail and other areas. But if private spending weakens further, Chinese policy makers may be forced to overcome their traditional aversion to big fiscal deficits and adopt more muscular stimulus.
Why are they running a deficit in the first place?
They don’t understand how to tie fiscal stimulus to real productivity gains that offset inflation. They don’t know how to do that without borrowing. Why not?
It’s because what capitalism they have has been learned from people who don’t know how to do it either or don’t want to do it and regardless, certainly wouldn’t want to teach the Chinese how.
It isn’t because it’s not doable.
Authorities in Cape Cod, Massachusetts say a young boy has died in a fast-moving fire in a small storage shed where neighbors say children were playing behind a house.
Cape and Islands District Attorney Michael O’Keefe said Monday night the boy was about 8 years old. He did not identify the child. He said the fire wasn’t suspicious.
How did the fire start?
↑ Marshalls pleads for climate action | Radio New Zealand News
Mr Kijiner says parts of the land are now underwater, underground wells are being tainted by salt, people are having to move away from the shoreline and extended droughts affect the area regularly.
↑ China’s cities dump real-estate curbs, hoping to juice market – MarketWatch
The results have been mixed. NBS data show that 68 of the 70 cities it monitors saw home prices fall in August compared with the previous month, including many that had lifted their purchase restrictions.
Wenzhou, an entrepreneurial hub in the eastern province of Zhejiang, was the only city that saw its home prices in August remain the same as in July. The city government removed all buying restrictions in July, the 36th straight month of declining prices.
Only Beijing, Shanghai, Guangzhou, Shenzhen, Guangdong’s Zhuhai and Sanya, in the southern island province of Hainan, have kept their restrictive policies in place.
But their markets are also under pressure.
↑ For Investors, China Real Estate Remains Big Gamble
Stay away from China real estate developers, Prudential economists and bond analysts warned in a six page white paper published last week.
“We don’t foresee a hard landing scenario in China over the near term, (but) we still have strong sector views, such as our inclination to avoid most property developers and banks,” said Gerwin Bell, Prudential’s chief economist for Asia.
According to the report, “the real property risk is that Chinese authorities will provide too much stimulus to prop up growth, making the inevitable unwind of the bad investments all the more painful. This scenario could result in further stress in the banking system.”
↑ Student loan debt curbs housing market by $83 billion, study says – LA Times
There’s been lots of debate lately in housing circles about the impact of student debt on home ownership.
Now there’s a new study out that attempts to put a number on that impact: 414,000.
That’s how many home sales will not happen this year because of high levels of student loan debt, according to a report from John Burns Consulting, an Irvine-based firm that advises home builders. That’s equal to about 8% of all home sales, and enough to dent the housing industry by $83 billion a year.
↑ City Rental Housing Market Improves | Albuquerque Journal News
Albuquerque is one of the best metros in the Southwest to own rental housing, ranking higher than places like Austin, Oklahoma City and Phoenix in rankings for the second quarter released by Seattle-based All Property Management.
The Albuquerque metro area placed second in the four-state region consisting of Arizona, Oklahoma, New Mexico and Texas. It trailed only Dallas, and ranked 27 among 75 metros across the country.