Linking ≠ endorsement.
⇧ Brussels protests see 100k clash with police in march against EU austerity measures | Daily Mail Online
This didn’t get much coverage in the US media. It’s important though, so we thought we’d include it. Economic stability is at risk due to misguided, backward austerity measures in Europe and elsewhere. Such measures are not only unnecessary, they’re counterproductive. Europe could spend a great deal (the exact opposite of austerity) and not suffer any inflationary problems.
• Fighting broke out after the end of largely peaceful trade union march
• New right-wing government was elected in Belgium last month
• It wants to raise retirement age, cancel wage rises and cut welfare benefits
Violence broke out on the streets of Brussels today as more than 100,000 people marched against EU-enforced austerity.
Water cannons and tear gas were used in the centre of the Belgian capital as riot police tried to bring the situation under control.
Fighting broke out soon after the end of a largely peaceful march organised by trade unions and left wing politicians.
⇧ What the comeback of travel agents says about real estate | Inman News
What the comeback of travel agents says about real estate? Hopefully it says the same thing about independent insurance-brokers.
When discussing the future of real estate, it is curious how often real estate agents are compared with travel agents.
“Is it just a matter of time before real estate agents go the way of travel agents?” Looking back over the last few years, the answer to this question, surprisingly, is yes. Travel agents are experiencing a rebound, and the reason why offers some insight into why real estate agents are here to stay.
…the price deceleration is very pronounced in some markets, but by no means universal. In fact, the slowdown represents continued fallout from the housing crisis. Metros where the past decade’s housing crisis was especially severe (see note) experienced huge price rebounds last year, rates of increase that couldn’t be sustained. On average, these severely hit markets notched almost 20% price gains year-over-year in October 2013, compared with 7.9% in October 2014. Things that can’t last forever, don’t. And double-digit home-price increases are a prime example of something that can’t last forever. By contrast, markets that had a moderate housing bust experienced a gentler rebound in 2013 and slowdown in 2014. Markets that had only a mild housing bust have seen year-over-year price gains ease back just slightly, from 6.8% in October 2013 to 6.2% in October 2014.
⇧ For Whom the Wall Fell? A Balance Sheet of the Transition to Capitalism – The Globalist
Despite philosophers of “universal harmonies” such as Francis Fukuyama, Timothy Garton Ash, Vaclav Havel, Bernard Henry Lévy and scores of international “economic advisors” to Boris Yeltsin, who all fantasized about democracy and prosperity, neither really arrived for most people in eastern Europe and the former Soviet Union.
The Wall fell only for some.
⇧ The Federal Government Now Employs the Fewest People Since 1966 – Real Time Economics – WSJ
As a share of the total workforce, the federal government’s share of civilian employment is the lowest since World War II.
⇧ It’s Official: Spain is Unraveling | Wolf Street
Scathing rebuke of Spain’s current government:
The political establishment is quite rightly blamed for stoking and feeding the country’s biggest ever real estate bubble. Thanks to a change in the property laws enacted in 1997 by the Aznar government, local and regional administrations were encouraged to part-finance themselves through granting authorization for ever larger public and private construction projects, many of which turned out to be white elephants (empty toll roads, high-speed train stations planted slap bang in the middle of nowhere, ghost airports…).
⇧ Measuring (Most of) the Slack in the Labor Market | St. Louis Fed On the Economy
Carlos Garriga, a research officer and economist at the Federal Reserve Bank of St. Louis:
“Compared with previous recessions, the manufacturing sector does not show much slack. The construction sector, on the other hand, is below potential. Using the most optimistic scenario for the recovery in construction, total private sector hours are about 0.7 percent below potential.”
⇧ Can subprime loans solve the credit crunch? | HousingWire
Daren Blomquist and Peter Miller:
The reason we have fewer loans today is not so much that credit is “tight,” it’s because household incomes fell 8.7% between 1999 and 2013, according to the U.S. Census Bureau, while non-mortgage debt increased by $900 billion between 2004 and 2014, according the Federal Reserve Bank of New York.
⇧ Overall Property Prices Climb in September, Top 2007 Levels
While pricing for all property types combined finally exceeded the pre-recession peak during September, several subsectors previously had exceeded their past peaks and have since risen further above them. Most significantly, pricing for multifamily nationwide is 17.8 percent above the pre-recession peak reached in November 2007, and in major markets it’s up 34.6 percent.
⇧ Solvency, Lost in the Fog at the Fed – NYTimes.com
Consider the testimony of Timothy Geithner, who later served as Treasury secretary. As president of the Federal Reserve Bank of New York when the financial crisis unfolded, Mr. Geithner had to make the crucial determination of which firms under his jurisdiction (which included Wall Street) were solvent and thus eligible for emergency relief. When questioned by David Boies, the lawyer for Mr. Greenberg, Mr. Geithner struggled to define “solvent.”
“Even the solvent can be illiquid in that context, and that would make them insolvent,” Mr. Geithner testified.
He doesn’t appear to know what he’s talking about there.
The entire issue is “Too Big Too Fail” and versus mark-to-market.
If they had marked to market, they would all have been insolvent. (They were all insolvent.)
Under laissez-faire, they would have been liquidated.
In a more mixed economy than we actually had under the Fed of 2008-9, they would have been reorganized and at least temporarily nationalized.
What we ended up with instead was buying time via QE so assets would supposedly rise enough that the banks would no longer be underwater themselves.
It was a very, very, very bad approach.
It rewarded accounting-control fraudsters and has caused the American people to unnecessarily wait for recovery.
⇧ James Galbraith: Governing With A Higher Purpose To Spur Innovation – YouTube
Economics Professor James Galbraith explains very well why we must not have a laissez-faire/libertarian econoomy but rather, if we aren’t to be full-blown socialists, a well-regulated, mixed economy.
In this interview, Galbraith argues that the real economy has never been entirely free of government support. Indeed, he says, much of the U.S. prosperity dating back to the New Deal was the result of a mix of private enterprise and public institutions. While conservatives have paid lip service to free markets as the solution to everything from health care to global warming, it is clear from the most recent banking crisis and Wall Street upheavals that a lack of federal regulation has led to disaster.
However, government is not always the answer. Indeed, when politicians gain political control of the public sector and use their power in a way that seeks to eviscerate this private-public balance, you end up with the problems that we face today.
The solution is to create a state structure that has a mandate to provide a higher public purpose. When core institutions have been impaired you have to restructure these institutions and change their norms of behavior. If you don’t do this the system ultimately will collapse, contrary to the views of those who worship at the altar of the free market and market fundamentalism.
⇧ Jim Rickards: Obama Ending Alliance with Saudi Arabia and Killing the Petrodollar – YouTube
At the San Antonio Casey Research Summit, Jim Rickards sat down with Alex Daley to talk about the pain ahead for the US Dollar, why we’ll soon see SDRs, and other harbingers of the Death of Money.
The only big issue we have with Jim Rickards here concerns the Fed supposedly being maxed out or near it. It isn’t remotely close to that. If the IMF could turn around and issue SDR’s to the tune of $4 trillion, the Fed could simply double its own balance sheet holdings of bonds.
As a bit of an aside, the Saudis can see the slowdown in China and know that the Chinese have a huge mess on their hands with shadow banking and the South China Sea controversies.
The Saudis may be harming the US by dropping oil prices, but they might be harming Russia (and Iran) more, which the US wants. It remains to be seen.
⇧ What Austerity Hawks Ignore – Steve Keen’s Debtwatch
…let’s compare Belgium and USA government deficits (or rather the change in government debt per year) side by side. The Maastricht Treaty and the “Stability and Growth Pact” made a big song and dance about how important it was to keep the deficit below 3% of GDP. Notice that the USA’s deficit almost hit 15% after the crisis—surely that would lead to economic calamity, according to proponents of austerity?
No: in fact it helped revive the private sector, and unemployment in the USA is now well below crisis levels (see Figure 6). I am a cynic about how long that will last, since the growth is predicated on another debt boom and nowhere near enough deleveraging actually took place, but that’s an issue for another post.
There is definitely a “silver lining” when it comes to the demand for apartment living, Gary Goodman, SVP of acquisitions at Passco Cos. tells GlobeSt.com. “As job growth improves, those that were forced to double up during the recession are now parting ways, and are getting their own places.” In addition, he says, “those in the Gen X and Millennial generations are now moving out of their parents’ homes to rent for the first time. Interestingly, we are also seeing an increasing number of baby boomers who are selling their homes and moving into apartments, driving additional multifamily demand.”
⇧ The Economics of Inclusion by Ricardo Hausmann – Project Syndicate
Brilliant analysis by Ricardo Hausmann:
Inclusiveness should not be seen as a restriction on growth to make it morally palatable. Viewed properly, inclusiveness is actually a strategy that enhances growth.
⇧ Shale Drillers Idle Rigs From Texas to Utah Amid Oil Rout – Bloomberg
“The market needs to see much more significant reductions in the rig count on a steady, sustained basis for it to have any impact on production and prices,” he said by telephone from New York yesterday. “Growth is so strong now that it’s going to take a long time and many months for it to actually peter out and turn into negative growth.”
Lynn Doan didn’t mention the geopolitical tentions: US, Saudi Arabia, Russia….
Why has Saudi Arabia dropped oil prices? It’s a double-edged sword to say the least.
⇧ Look out below! Oil is not done falling
“I think these prices are going to remain under significant pressure into the OPEC meeting, and I think it’s going to go very badly. It’s going to set us up for another leg lower, possibly into the 50s in the first quarter,” Kilduff said.
When the US wasn’t producing much oil, lower prices were a boon. Much of the economic growth of late, however, is based upon US fracking. When prices drop, it helps some aspects of the economy while harming the domestic oil sector.
We think the Saudis are up to vastly more than harming the US or simply holding onto market share. We think Iran, Syria, Shia Iraq, and Russia have everything to do with the Saudi decision beyond slapping the US while maintaining Saudi market share.
The huge question is whether the US will see the harm done to Iran, etc., as more than offsetting the harm to US domestic oil production.
Without being behind the closed doors with the Saudis and US, it’s difficult to know whether the US and the Saudis planned the move together.
We haven’t heard the Obama administration complaining about the Saudi regime or the neocon camp calling for regime change in Saudi Arabia (yet). They wouldn’t want an Arab Spring result. They’d want an oil puppet. Who would do that in that country?
⇧ Real estate investor: Broker Shoot ripped me off – Herald Bulletin: News
Brian Clark thought he was in good hands while searching for investment property to buy in Anderson earlier this year.
Clark’s brother-in-law recommended he hire Roger Shoot, an old college friend, to help. Clark was immediately impressed by Shoot’s personality and credentials, as well as his thoroughness and dedication to doing quality work.
“He’s (Shoot is) very soothing and calm,” said Clark, a paramedic for the film industry who owns a rental property in the Los Angeles area. “I felt when I talked to him, ‘Yeah, he really does know,’ and I thought I knew about real estate.”
Several months later, local police are investigating Clark’s fraud allegations against Shoot, who is already facing 31 criminal charges for a variety of alleged transgressions related to his local real estate dealings.
…these companies’ overseas investments are inseparable from support from Chinese banks. Under China’s current conditions, certain companies have been able to obtain government support and large sums of low-cost capital to create the conditions for their overseas expansion.
But because of China’s political and market factors, real estate firms in particular are the ones feeling the least safe.
Read the full article: Will China Repeat Japan’s 1980s Foreign Real Estate Bust?
Worldcrunch – top stories from the world’s best news sources
⇧ BBC News – ‘Too big to fail’ bank rules unveiled by global regulators
Mark Carney, FSB chairman and governor of the Bank of England:
“Instead of having the public, governments, [and] the taxpayer rescue banks when things go wrong; the creditors of banks, the big institutions that hold the banks’ debt, – not the depositors – will become the new shareholders of banks if banks make mistakes.”
The capital set aside should be worth 15-20% of the bank’s assets, the FSB said.
How long will that last before the laissez-faire crowd convinces too many that they don’t need such a cushion because they’ve figured out how to avoid meltdowns?
We heard it before. We are hearing more and more for relaxing standards that have barely been in place.
⇧ 2 men hurt in shooting; SAPD seeks up to 5 black-clad gunmen – San Antonio Express-News
SAN ANTONIO — Two men are recovering from gunshot wounds as police are investigating a shooting at an apartment complex Sunday night on the West Side.
⇧ Boy, 10, killed in North Side apartment fire, 11 injured, 27 displaced | abc7chicago.com
CHICAGO (WLS) —
A fire on the city’s Northwest Side claimed the life of a 10-year-old boy and injured several of his family members.
Several people had to jump to safety and dozens of people are without a home Sunday night.
⇧ Buy Real Estate with Your IRA, Yes it’s True – YouTube
Jason Craig, President of The Entrust Group, joins host Michael Bull at NAR’s Annual Conference in New Orleans to discuss how you can buy real estate with your self directed IRA.
⇧ Was the $9 billion Chase settlement paid to conceal fraud? – OC Housing News
…he [Eric Holder] allowed widespread fraud to go unprosecuted, and the terms of the settlement allowed the bank to avoid any real consequences, but he probably got the most out of the bank he could without resorting to lengthy and costly prosecutions that might have failed. This is not a capitulation and whitewash by the DOJ as the article contends, but rather a recognition of the practical limitations on getting anything more out of Chase or its minions.
I agree with the popular sentiment that the banks should pay a heavy price, but I also recognize they are too big and powerful to take down. Perhaps it’s a defeatist attitude, but let’s face it: the banks won. They got bailed out, they avoided prosecution for their crimes, and they managed to reflate the housing bubble to avoid any meaningful losses.
We disagree. A determined Attorney General turning to the history lesson of the myriad Savings and Loan prosecutions (https://billmoyers.com/2013/09/17/hundreds-of-wall-street-execs-went-to-prison-during-the-last-fraud-fueled-bank-crisis/) could easily have succeeded.
⇧ Pressure will mount to lower FHA insurance fees to revive home sales – OC Housing News
Here’s a second in a row by Larry Roberts because even though we disagree with him here and there, he raises excellent questions while giving great background info.
Should we revive housing sales by lowering borrowing costs for today’s first-time homebuyers using FHA financing by direct taxpayer bailout of the FHA, or should we endure the consequences of a weak housing market due to ongoing low first-time homebuyer participation rates?
The issue is again moral hazard. However, we should add a bit more background info. FHA was not a leader in the accounting-control fraud that swept Wall Street. It was much more the victim. A terrible ideology of laissez-faire/deregulation is the direct and first cause of the crisis (if one assumes people currently and generally have a weakness for falling to temptation, which we do assume).
The point is that if proper regulations could be brought to bear while bailing out FHA, then the taxpayers doing the bailing out would reap more by way of an improved overall economy than they sowed in taxes.
That said, we see nothing at all wrong with renting provided inventory keeps up with demand. Those who want ever-increasing rent rates above price inflation might not like to hear that, but it’s the societal price they need to help pay for a more fair and, therefore, more stable economy.
⇧ Full housing recovery may not happen until 2018: Survey
Household formation has been running historically low since the recession, and all of it has been in rental households. While rents are still rising, new construction is now adding thousands of new units, which could slow the gains and help more cash-strapped renters. That, however, will take time.
Hong Kong’s main attraction for foreign firms is that it is a gateway to mainland China, the world’s second-largest economy with a population of 1.3bn and a rising middle class keen to buy Western products.
Others with a distinctive product or design say being closer to China means they are less likely to be exposed to copycats, and can keep a stronger grip on their IP.
Hong Kong is one of the most business-friendly economies in the world according to the World Bank’s annual “Doing Business” report published last month. It was ranked third and was praised for laws protecting minority investors, the ease of trading across borders, dealing with construction permits and starting a business. A company can be created and registered within 24 hours. It also has a low and simple tax regime.
Bartlett Regional Hospital has estimated that an arsonist caused at least $100,000 worth of damage with a Sunday fire in a second-story bathroom.
⇧ Byproduct of drought: Water thieves – ContraCostaTimes.com
Some water rustlers sneak in at night to wrench open fire hydrants, and then truck it away.
⇧ Students collect oral histories to document fading south Louisiana coastal communities | News | The Advocate — Baton Rouge, Louisiana
Louisiana has lost almost 1,900 square miles of land since the 1930s through a combination of levees along the Mississippi River hemming in sediment that used to feed the wetlands, canal dredging, natural sinking of land and sea level rise.
There are estimates the state could lose another 1,750 square miles in the coming decades if nothing is done to help slow down or even stop land loss.
A house that was destroyed in Maine’s deadliest fire in 40 years had a history of complaints, including a concern about a possible illegal unit on the third floor, according to documents released Friday.
The documents released following a Freedom of Access request by The Associated Press detail 16 complaints going back about 11 years. The complaints cited excessive trash and debris, rodent problems and items like computers and office chairs left outside the two-apartment house.
A 2012 complaint says owner Greg Nesbit added a new dwelling unit on the third floor, where state police said three bodies were found in a bedroom after the Nov. 1 blaze. The building was permitted for two units, records state.
… Long also said the house had only two units, and the third floor of the unit he lived in was a master suite with its own bathroom but not a separate unit.
A new online mapping tool from the National Hurricane Center shows the risks of storm surge from Texas to Maine.
⇧ Court reaffirms BP is liable in Gulf oil spill
NEW ORLEANS — A federal appeals court panel has reaffirmed its ruling that BP is liable for federal Clean Water Act damages stemming from the 2010 Gulf of Mexico oil spill, the latest loss for the oil giant as it fights court decisions that could ultimately bring $18 billion in penalties.
AUSTIN, Texas (AP) — A state agency that regulates oil and gas will continue issuing permits to companies seeking to drill in Denton, despite residents passing a ban to prevent further hydraulic fracturing in the north Texas city.
DETROIT (AP) — About a half-dozen homes in southwestern Detroit have been damaged or destroyed by fires that started after an explosion in a vacant house.
⇧ Chinese Spying at the Waldorf? Let’s Start With the Spooks Closer to Home – Bloomberg
Security reviews of Chinese investments in U.S. companies typically have centered on transactions involving telecommunications and assets near military facilities.
The Committee on Foreign Investment in the U.S. may want to review the sale because of the Waldorf’s high-profile guests, according to Nova Daly, a senior public policy adviser at Wiley Rein LLP and a former Treasury Department official who managed CFIUS reviews.
⇧ Springsteen Girls Priced Out as Rich Buy N.J. Shore Homes – Bloomberg
When Hurricane Sandy roared through New Jersey two years ago, it not only tore up the shoreline. It also pushed out much of the middle class.