Linking ≠ endorsement.
35) In Which Martin Wolf, Eric Rauchway, and Paul Krugman Watch Those Crying "Flood, Flood!" in Surtur's Fire, and Warn of an Even Bigger Fire Next Time: Daily Focus - Washington Center for Equitable Growth
⇧ US Renters Spent $441 Billion on Rent in 2014 | Zillow Blog
The U.S. gained more than 770,000 new renters in 2014, which — along with rising rents across the country — drove the cumulative amount paid in rent to $441 billion. The cumulative total rose 4.9 percent in 2014, from last year's total of $420.4 billion.
"Over the past 14 years, rents have grown at twice the pace of income due to weak income growth, burgeoning rental demand and insufficient growth in the supply of rental housing," said Zillow Chief Economist Stan Humphries. "This has created real opportunities for rental housing owners and investors...."
⇧ Why Greece's New Crisis Isn't Spreading to the Rest of Europe - NYTimes.com
All that has been enough to assure investors that whatever happens with the Greek elections, a renegotiation of a bailout package and even the resurgence of "Grexit" in the newspapers, a firewall has been built that will keep the rest of Europe safe from the damage.
The great risk, of course, is that markets are wrong. The same political forces that appear poised to bring an extreme leftist party to power in Greece are bubbling in other parts of Europe.
The risk is no longer that Greece's problems will infect the rest of Europe. It is that the same dynamics of political economy causing unrest in Greece will soon enough arise in its bigger neighbors.
⇧ Five Reasons for Slow Growth by Michael Spence - Project Syndicate
Reliance on the traditional method has resulted in missed opportunities, particularly given that productive public-sector investment can more than pay for itself. Investments in infrastructure, education, and technology help drive long-term growth. They increase competitiveness, facilitate innovation, and boost private-sector returns, generating growth and employment.
...it remains unclear whether elevated asset prices are supporting aggregate demand or mainly shifting the distribution of wealth. It is equally unclear what will happen to asset prices when monetary assistance is withdrawn.
... In recent years, there has been no shortage of examples of governments abusing their powers to favor the ruling elite, their supporters, and a variety of special interests, with detrimental effects on regulation, public investment, the delivery of services, and growth.
... The stagnation of incomes in the bottom 75% of the distribution presents an especially large challenge, because it depresses consumption, undermines social cohesion (and thus political stability and effectiveness), and decreases intergenerational mobility — especially where public education is poor.
... Public provision of critical basic services like education or health care may never be as efficient as private-sector alternatives; but where efficiency entails exclusion and inequality of opportunity, public provision is not a mistake.
⇧ Black Knight: Mortgage delinquency rate surges to 10-month high | HousingWire
While delinquencies have increased in six of the last seven Novembers, there hasn't been an increase of this magnitude since 2008.
⇧ Miami home prices No. 1 in yearly increase among 20 big cities | The Miami Herald
Home prices in the metro Miami area rose 9.5 percent in October from a year earlier, the biggest gain among 20 big cities tracked by the closely watched S&P Case-Shiller indices.
... "South Florida is outperforming the market due to our desirability internationally. Our international influence has dramatically impacted our markets. That's what's driving it."
Brent crude prices edged towards $57 a barrel on Wednesday as weak Chinese manufacturing data and demand concerns outweighed supply disruptions in Libya.
China is the world's second largest oil consumer and any contraction in its factory sector can have a big impact on demand.
A fire raging for almost a week at Libya's biggest oil port of Es Sider has destroyed up to 1.8 million barrels of crude and damaged seven storage tanks, top oil official al-Mabrook al-Buseif said on Tuesday.
⇧ Firm That Paid Sheldon Silver Is Tied to Landlord With Troubled Past - NYTimes.com
Blair Horner, the legislative director for the New York Public Interest Research Group, said Mr. Silver should explain why Goldberg & Iryami has not been listed on his financial disclosure statements as a source of outside income. He said the discovery by federal authorities that Mr. Silver had been paid by the firm "raises serious questions only the speaker can answer."
"The public has a right to know if an elected official has outside business interests that may conflict with their role as a public official," Mr. Horner said. "That's why the laws are on the books, and anything that undermines that disclosure fuels suspicion."
⇧ Lizard Squad launches DDoS tool that lets anyone take down online services, starting at $6 per month | VentureBeat | Security | by Emil Protalinski
Untraceable-currency transactions equals the following and worse:
The service only accepts the cryptocurrency bitcoin, though the group says PayPal support is "coming soon." The payment system doesn't work with VPNs, so those making purchases will have to find other ways to hide their identity and location if they want to remain anonymous.
⇧ Seattle confronts prospect of its own long-delayed Big Dig - The Washington Post
...problems last month when, in the course of removing groundwater, some buildings in the surrounding Pioneer Square neighborhood, the oldest in Seattle, sank about an inch, opening cracks in walls and frightening building owners and tenants. In an update last Monday, the Department of Transportation said it had surveyed 50 buildings in the historic district in the last two weeks. The same day, teams of surveyors were seen on neighboring blocks, measuring for any further potential settling.
We opposed the plan from the beginning. The area is too earthquake prone, and the ground under there is too soft.
Hopefully, they'll be able to work things out without too much additional expense. We won't be holding our breath.
Ever wonder what SYRIZA would try getting done if it were to come to power in Greece?
⇧ mainly macro: On the Stupidity of Demand Deficient Stagnation
Simon Wren-Lewis has definitely become one of the best voices for saner economics. He comes very close to nailing it here.
He's a good sport for taking the time to clarify his terminology this way.
Arrogant types consider themselves above such things: clarifying for the non-academic economists.
If we were allowed to assemble a batch of current economists and set them the task of cleaning up the global economic mess, Simon Wren-Lewis would definitely be on our short list.
In my last post I wrote about "why recessions caused by demand deficiency when inflation is below target are such a scandalous waste. It is a problem that can be easily solved, with lots of winners and no losers. The only reason that this is not obvious to more people is that we have created an institutional divorce between monetary and fiscal policy that obscures that truth." I suspect I often write stuff that is meaningful to me as I write it but appears obtuse to readers. So this post spells out what I meant.
"Money financed fiscal stimulus" as opposed to debt-financed fiscal stimulus: As our regular readers know, we are completely for money-financed fiscal stimulus and totally opposed to debt financing.
We need transparent democracy. To have a better functioning economy than ever, we should do away with usury (interest).
⇧ Is China in for a hard landing? - YouTube
John Authers on the pressures for China. Growth is slowing, and its competitiveness is declining. What will it do to avert a 'hard landing'?
⇧ OOPS! Should Have Covered That in the Lease - YouTube
There's a great deal of practical experience showing through here (unintended pun).
A firm grasp of leases will benefit anyone who runs a company or has any interest in commercial real estate. Commercial leases are the single most important part of commercial real estate. They control the use and value of the property for both the tenant and the landlord.
Michael Bull's guest is Peter Hartman, a partner in the law firm of Hartman Simons: https://www.hartmansimons.com/
⇧ Dozens die as Tropical Storm Jangmi sweeps across south east Asia - YouTube
Dozens have been killed in heavy rains and flash floods across parts of the Philippines, Malaysia and southern Thailand.
Officials say Tropical Storm Jangmi has left at least 31 dead in the Philippines. Seven people are reportedly missing.
Sweeping from east to west, winds of up to 65 km/h and gusts of 80 km/h have ravaged the region.
Officials in the Philippines say areas affected by the heavy rains include those "still recovering from last year's Typhoon Haiyan."
⇧ Collateral Damage: US renewables, shale fall victims to slumping oil - YouTube
Naturally, Russia Today (RT) is interested in the oil sector because so much of Russia's economy is dependent upon it.
Conventional oil producers are not the only ones affected by falling oil prices. The energy crisis has also hit shale production and green energy in the US, Marin Katusa, chief energy investment strategist from Casey Research told RT.
Well, we've been talking about it a great deal and will continue to do so.
We see the Saudis as a major obstacle to, a veritable enemy of, green-energy development.
⇧ 21 Signs That 2014 Was the Year of LA's Rental Apocalypse - Curbed Awards 2014 - Curbed LA
Aside from the immature gratuitous profanity, the article is a trove of statistics on the LA-rental market.
...in 2014, practically all we saw—over and over and depressingly over—was that Los Angeles was in a rental crisis and it's bad and there's no real fix in sight. It's not just that the rents are too high, it's also that the wages are too low, and the new construction is all for the rich.
⇧ San Franciscans Spent a Bonkers $14.6 Billion on Rent in 2014 - The Numbers - Curbed SF
Renters in the San Francisco metropolitan area spent a massive $14.6 billion on rent in 2014, a figure that was up by $1.7 billion, or 13.5 percent, over 2013, according to new research from real estate website Zillow. That jump was the second highest in the nation, after only neighboring San Jose, where the amount spent on rent went up by 14.4 percent. The increase in the San Francisco metropolitan area—which includes the East Bay, North Bay, and San Mateo—was due both to an estimated 14,000 new renters in the region and to an increase in the amount spent on rent. The average renter household in the San Francisco area spent $163 more per month on rent in 2014 than in 2013.
⇧ Court Filing Illuminates Morgan Stanley Role in Lending - NYTimes.com
Since the financial crisis, Wall Street firms have argued that they were victims, just like everybody else, of the bad mortgages that were churned out by subprime lenders like Countrywide and New Century.
Now, though, a trove of emails and confidential documents, filed in court, reveal the extent to which one of Wall Street's leading banks, Morgan Stanley, actively influenced New Century's push into riskier and more onerous mortgages, and brushed aside questions about the ability of homeowners to make the payments.
Morgan Stanley is denying all of it; but they were either culpable, stupid, or both. You decide. I think you know what we think. Obviously, some people at Morgan Stanley at the time tried to do the right thing.
⇧ Wealthy Russians aren't buying U.S. homes anymore
The big drop off occurred right after the Russian government tightened its currency restrictions, making it difficult for Russian nationals to move large sums of money out of the country. It's now even getting to be a challenge for some to transfer the small amounts of cash they need to pay real estate taxes and maintenance costs, Hertzberg said.
It's difficult to know just how much of an impact the pullout of Russian buyers will have on markets like New York, said Warshawer.
⇧ Dramatic rise in delinquency rate validates analysis of downturn | HousingWire
Definitely pessimistic but not without reasons:
...the rise in delinquencies points to a likely future increase in foreclosure activity. Anyone who disagrees with that fact probably believed we would not have a housing crash in 2007.
⇧ Lenders violate the Sherman Antitrust Act to drive up house prices - OC Housing News
Of the four options available to them, ordinarily banking regulators would have forced them to recognize their bad loan losses, foreclose on delinquent borrowers, and recover what they could of their original capital. If regulators had forced that course of action in 2008, the entire banking industry of the United States would have been exposed as insolvent, and the government would have been forced to nationalize the banking system, and management would have been thrown to the wolves. That's what should have happened. However, instead of nationalizing the banks, we designated them too big to fail and bailed them out with a blank check and gave the managers obscene bonuses.
The idea that bankrupting our banking system would trigger a depression is bullsh[_]t. We could have wiped out the stockholders, forced the bond holders to take a haircut, and recapitalized the banks with fresh money from the government. The government could have sold it's holdings for a profit once the banks became profitable. That's what happened with Bears Sterns, Lehman Brothers, and Citibank, and the world didn't come to an end.
What we have today in banking is a cartel (or perhaps an oligopoly) made of of eight too-big-to-fail banks, Bank of America, Bank of New York Mellon, Citi, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street, and Wells Fargo. Through their lobbying efforts and the federal reserve, they control any key decisions in Washington concerning banking policy and regulation. They have unlimited government backing, and they can speculate wildly without fear of substantive reprisal. The taxpayer will absorb any losses.
⇧ The Confiscation of Bank Deposits and The Derivative Debt: James Corbett interviews Ellen Brown on GRTV | WEB OF DEBT BLOG
Ellen Brown again making the supposedly complicated simple:
Last month's G20 Summit in Australia came and went without the protests and riots we've come to expect at the summit in recent years. But as author and researcher Ellen Brown notes, the real fireworks happened behind closed doors, where the group rubber stamped new regulations that will make Cyprus style bank bail-ins a worldwide reality.
This is the GRTV Feature Interview with Ellen Brown and your host, James Corbett.
We fully support Ellen's efforts and suggest that you should as well.
We must say that were the worst-case scenario to play out, meaning the government were to allow the banks to confiscate everyone's cash and savings in bank deposits, there would likely be a violent revolution. We don't think the government intends that or would sit by doing nothing about the banks. There would be emergency backing of depositors, including business deposits such as for payroll.
Of course, as we've said before, Ellen is completely correct that a banking solution should be set up now rather than waiting for an otherwise completely preventable crisis to occur.
Given the current state of regulatory affairs, we don't fault Ellen at all for being cynical about the political will to do what's right and to do it now.
We're very glad Ellen has been leading the campaign for the public-banking alternative. She has done more than anyone else in the world to bring this extremely important issue to the fore.
⇧ Chemicals' phaseout a 'success story' for S.F. Bay wildlife - SFGate
...exposure to the chemicals can disrupt the endocrine system, leading to developmental problems.
Researchers more recently and consistently have found that higher PBDE levels in pregnant women were associated with lowered IQs, attention-deficit disorder and hyperactivity in their children.
The flame retardants enter the environment when the products that contain them degrade, and people pick them up by ingesting the dust.
⇧ Dover home damaged on Christmas morning to be demolished
A woman's Dover home will be demolished after a SUV plowed through the front of the house Christmas morning.
...Dorothy's family and neighbors helped her move out whatever was salvageable, but with no homeowner's insurance and no savings to fall back on, she doesn't know what she and her son will do.
CASTLE HILLS, Texas (AP) — Five people died Sunday [December 28, 2014] after a fire broke out at a senior-living apartment building in the San Antonio suburb of Castle Hills, authorities said.
⇧ Roger Farmer's Economic Window: Secular stagnation: a neo-paleo-Keynesian perspective
It is a premise of the monetarist position, that the real economy is self-stabilizing and that a rule based monetary policy is the most effective way to ensure both low inflation and maximum sustainable employment.
Keynes claimed, in contrast, that the real economy can get stuck in a position of high unemployment and that permanent high involuntary unemployment can persist as an equilibrium phenomenon. See my earlier post on the neo-paleo-keynesian perspective. If Keynes is correct, and I believe he is, a single instrument, monetary policy, is not enough to hit two targets. Fiscal policy in one form or another, is an important second string to the policy maker's bow.
We too believe Keynes is correct.
⇧ Princes of the Yen: Central Banks and the Transformation of the Economy - YouTube
We rate this video as excellent. Professor Richard Werner (https://en.wikipedia.org/wiki/Richard_Werner) clearly understood Modern Money Theory even decades ago.
He is absolutely correct that the major economic crises discussed in the video were all easily preventable via the proper and timely application of easing, credit creation, central bank asset purchases, and we assume fiscal spending, all of which only happened and only somewhat in the US.
China, Japan, and the EU are all now attempting variations on these measures and to varying degrees.
In the aftermath of the 2007-8 crash, both China and the US have had the most success with some of the measures.
Japan got into it later and mistakenly also increased its sales tax.
Europe has barely gotten started. Germany still stands opposed. It is still insisting on counter-productive austerity measures.
"Princes of the Yen" reveals how Japanese society was transformed to suit the agenda and desire of powerful interest groups, and how citizens were kept entirely in the dark about this.
Based on a book by Professor Richard Werner, a visiting researcher at the Bank of Japan during the 90s crash, during which the stock market dropped by 80% and house prices by up to 84%. The film uncovers the real cause of this extraordinary period in recent Japanese history.
Making extensive use of archival footage and TV appearances of Richard Werner from the time, the viewer is guided to a new understanding of what makes the world tick. And discovers that what happened in Japan almost 25 years ago is again repeating itself in Europe. To understand how, why and by whom, watch this film.
Neoliberal economics is what is described in the video for what the international system did to Japan to drive Japan into decades of stagnation. Neoliberal economics is bad. Private and unregulated central banking is part of that bad system.
⇧ Helping the ECB Cross the Rubicon by Jean Pisani-Ferry - Project Syndicate
"Jean Pisani-Ferry is a professor at the Hertie School of Governance in Berlin, and currently serves as the French government's Commissioner-General for Policy Planning":
...financial markets consider QE so likely that the largest part of its bond-rate and exchange-rate consequences have already been priced in. Should the ECB disappoint expectations, bond and foreign-exchange markets would confront an abrupt and damaging unwinding of positions: long-term interest rates would rise, stock markets would sink, and the exchange rate would appreciate.
Orthodoxy rules out providing ECB support to a particular country, because this would violate the separation between monetary and fiscal policy: The authority to commit public resources to the benefit of a particular country belongs exclusively to parliaments, not the central bank. But a wholesale purchase of government bonds does not raise similar concerns.
⇧ Ambac sues Bank of America over Countrywide mortgage bonds | Reuters
Ambac Assurance Corp sued Bank of America Corp to recoup hundreds of millions of dollars of losses from insuring roughly $1.68 billion of securities backed at least in part by risky mortgages from the bank's Countrywide Home Loans unit.
⇧ Will the Labor Force See a Resurgence? The Question Divides Economists - Real Time Economics - WSJ
...some economists believe a significant resurgence of workers could occur in coming years as the economy strengthens. The quintile of economists with the highest estimates for labor force participation, that is, those with guesses above the 80th percentile, believe the labor force participation rate will rebound strongly to 64% by the end of 2016. That would be enough to offset all the decline since late 2011.
The longer we wait to do proper fiscal stimulus, the fewer Boomers will get back in. It's fundamental.
Credit Suisse Group AG has signaled that it intends to fight a U.S. lawsuit that accuses the Swiss bank of deceiving investors in mortgage-backed securities it had issued.
A New York State Supreme Court justice last week rejected the Zurich-based bank's request to dismiss the case, in which New York Attorney General Eric Schneiderman accuses the bank of misrepresenting the quality of loans underlying residential mortgage-backed securities sponsored and underwritten by Credit Suisse in 2006 and 2007.
Investors suffered $11.2 billion in losses on the securities, according to Schneiderman's lawsuit....
⇧ All NEW Niche Loan for Your Residential Income Properties!
Are you an investor who has run into the "no more than 10 financed properties" problem when applying for traditional financing on your investment property? Or are you an investor who has been turned down for "excessive debt to income ratio" because too many of your cash flowing rental properties are leveraged? If so, there is at least one lender that is now offering a new loan product for this exact situation. It's called the Investor Edge by United Wholesale Mortgage.
⇧ Service-sector productivity and international competitiveness | McKinsey & Company
October 1992: Bill Lewis, Andreas Siemen, Michael Balay, and Koji Sakate:
Wedded to outdated ideas about the importance of manufacturing, economists of all stripes have usually given short shrift to the service sector. When they did pay it attention, it was often to conjure up derisive images of unskilled, low-wage armies of "burger flippers" and supermarket clerks. This was always wrong. It is now dangerous. The conventional wisdom about services is seriously in error.
Manufacturing is, and of course, will remain, genuinely important to the economic health of industrial nations. Today, however, in terms of employment, income, international trade, and even production costs, services have become yet more important. This is the inescapable conclusion of a recent study by the McKinsey Global Institute of service-sector productivity in the United States, the United Kingdom, Japan, France, and the former West Germany.
It's a good article; however, we want to point out that when the US "off-shored" manufacturing via free-trade zones, it did so in partial error. It agreed to export jobs without requiring matching labor, safety, and environmental regulations in its trade partners. In other words, it exported environmental damage, much of which has had a global impact regardless.
We could say more about labor and safety, but we'll leave off at this point (for now).
Analyzing DC's benchmarking data to better understand the energy performance characteristics of LEED certified buildings.
There is ongoing curiosity as to whether LEED buildings perform in line with market expectations on energy efficiency measures, or similarly, if LEED buildings perform better on energy efficiency metrics than non-LEED rated counterparts. Until recently it has been difficult to analyze the performance of LEED buildings across a large and comparable set of buildings within a single geographic location. The emergence of local energy benchmark ordinances in many US cities requiring the disclosure of energy performance data has led to the emergence of robust data sets from which to analyze building performance.
"The findings from DC's 2012 Private Building Benchmarking Disclosure data are encouraging and reinforce the market value of LEED certification."
Using Pepco's average commercial electricity rates [here] and the District of Columbia's water rates [here], these efficiency differentials equate to a financial advantage of $0.22/SF for LEED certified office buildings. With an average size of 359,000 SF, LEED buildings hold a sizable financial advantage compared to market totaling over $80,000 per year in projected operating cost reductions. Assuming a very conservative 5.5% cap rate, this $80,000+ annual financial advantage equates to $1.5 million in increased asset value for LEED certified buildings (see CBRE 2Q14 cap rate survey).
Since World War II, however, there has been no material hard-money caucus: all of the rich have broadly diversified portfolios. And everyone has the franchise. Since World War II, the stakes in the zero-sum hard-money soft-money debate are now very low. Since World War II, we all have a common interest in full employment and shared prosperity—we are all the 100%.
So whence come the many policy disasters since 2007? How are we to explain what has happened? We have managed to throw away between 5%-10% of the potential wealth of the North Atlantic, and we appear to have thrown it away permanently. How? Why? And why can't we fix it?
And, of course, why haven't we drawn the obvious and transparent lessons from the past seven years of what we need to do in order to keep this from happening again?
Because some people stand to make even more relative to everyone else if those same people who stand to "gain" trash the system regardless of which direction it ends up going thereafter as long as those same people remain in power, which they have managed to do because most politicians are sellouts.
⇧ Something That Changed My Perspective: Karl Polanyi's The Great Transformation | naked capitalism
Our thesis is that the idea of a self-regulating market implied a stark utopia. Such an institution could not exist for any length of time without annihilating the human and natural substance of society. It would have physically destroyed man and transformed his surroundings into a wilderness. Inevitably, society took measures to protect itself, but whatever measures it took impaired the self-regulation of the market, disorganized industrial life, and thus endangered society in yet another way. It was this dilemma which forced the development of the market system into a definite groove and finally disrupted the social organization based upon it.
But the secular tenets of social organization embracing the whole civilized world are not dislodged by the events of a decade. Both in Great Britain and the United States millions of independent business units derived their existence from the principles of laissez-faire. Its spectacular failure in one field did not destroy its authority in all. Indeed, its partial eclipse may have even strengthened its hold since it enabled its defenders to argue that its incomplete application of its principles was its real reason for any and every difficulty laid to its charge.
[Yves Smith:] ...as Polanyi demonstrates, the market economy isn't a beautiful self-correcting machine, as neoclassical economists would have you believe. It instead voraciously consumes the society and natural environment in which it sits unless it is curbed. But this process isn't orderly; the trajectory is more like a barely controlled fall in which the market system grinds onward until it becomes so destructive in terms of stability as to rally opposition. The Great Depression and World War II were sobering enough experiences for social democracies to remain intact for about 30 years.
The combination of perceived failure due to large fiscal deficits when the economy was at full employment in the 1960s generating the stagflationary hangover of the 1970s gave considerable impetus the efforts of well-funded, radical conservatives* to roll back New Deal and New Society social welfare programs. That counterrevolutionary project is now well advanced.
And in contrast to the implosion that began in 1914, not only is the social order at risk, but so to is the environment on which we depend. The first time around, the struggle between market forces and social opposition was relatively novel, and some of the pushback came from businesses themselves. Now, we seem to have the veneer of democracy while in fact moving strongly in the direction of an authoritarian business-state combine, an improved version of Mussolini-style corporatism. Even though it seems unlikely that this system will unravel, the dissolution of a much more successful-looking world order was simply minconceivable in the summer of 1914. Highly-integrated cross-border market systems are more fragile than they seem, and we are stressing this one in far more ways than was the case a century ago.
"Even though it seems unlikely that this system will unravel..."? Oh, we think it will, but we think it will be a controlled unraveling, unraveling on purpose and controlled to result in further consolidation of wealth, power, and control at the top of the pyramid. What we also believe is that the pyramid will only appear to fall but finally will fall and never to be resurrected. In other words, the plutocrats will finally lose; and we think they know it.
⇧ China Developer Kaisa's Bonds Plunge After Loan Default - Bloomberg
If Kaisa can't either make the payment or negotiate a waiver with its bankers, then cross defaults may be triggered, tipping other bonds and loans into default, according to CreditSights Inc.
"The trouble is I don't even know who will be negotiating with the banks since the CFO and the chairman have resigned," Cheong said. She said that while Kaisa's case may be a unique one, the "recent negative headlines on Chinese developers might cause some investors to pare down their positions. This could in turn cause some corrections in China property bonds."
Stock of China Overseas Land & Investment Ltd. rose 8.5 percent today while China Resources Land Ltd. gained 7.1 percent. The Hong Kong Hang Seng Properties Index increased 2.1 percent.
Real-estate companies are benefiting from China's decision to ease monetary policy several month ago, according to Francis Lun, the chief executive officer of Geo Securities Ltd.
China has been operating in unreality for many, many months now. We think most mainstream news and economic analysis about China is a Potemkin village.
We don't see the Chinese leadership doing enough (though they have done things and surprisingly so) to correct the major economic problems. We think they have mostly been masking over the issue, buying time, kicking the can, and that many people have been fooled, just as they were fooled in the US in the lead up to the 2007-8 collapse.
They should not have built so much of their economy on vacant real-estate construction. How can they maintain property values when the properties remain vacant?
What are they waiting for? What do they think is going to happen? Do they think enough people will move and move up to fill all those vacancies?
To make that work would require vastly more radical measures than China appears to be preparing. In fact, they seem to be headed in the wrong direction towards greater laissez-faire (at the insistence of Western forces).
Socialism with Chinese characteristics was too unbridled as it is.
China will go the way of Japan's last couple of lost decades if they don't watch out and if they're lucky to avoid worse, much worse.
⇧ Where Will All the Workers Go? by Nouriel Roubini - Project Syndicate
"Nouriel Roubini, a professor at NYU's Stern School of Business and Chairman of Roubini Global Economics":
The risk is that robotics and automation will displace workers in blue-collar manufacturing jobs before the dust of the Third Industrial Revolution settles.
Obviously, this is not the first time the world has faced such problems, and the past can help to serve as a model for resolving them. Late nineteenth- and early twentieth-century leaders sought to minimize the worst features of industrialization. Child labor was abolished throughout the developed world, working hours and conditions became more humane, and a social safety net was put in place to protect vulnerable workers and stabilize the (often fragile) macroeconomy.
As we begin to seek enlightened solutions to the challenges that the Third Industrial Revolution presents, one overall theme looms large: The gains from technology must be channeled to a broader base of the population than has benefited so far. That requires a major educational component. In order to create broad-based prosperity, workers need the skills to participate in the brave new world implied by a digital economy.
Even that may not be sufficient, in which case it will become necessary to provide permanent income support to those whose jobs are displaced by software and machines. Here, too, we should attend carefully to the lessons of the past.
The dust isn't going to settle. We've been writing for some time now that technology is going to eliminate the need for human beings to work for compensation to pay for anything. It's time we start setting that up. The sooner the better.
⇧ 92,700 Renters Try for Hunters Point South Affordable Units - Affordable Housing Wire - Curbed NY
Looking at the number of applicants for new affordable housing developments makes one thing very clear: a lot of New Yorkers need affordable housing. The lottery for 924 units at Hunters Point South closed on December 15, and the city received a whopping 92,700 applications, meaning that more than 100 people are competing for each unit.
⇧ Michael Hudson: The War on Pensions — The US Budget Anti-Pension Law | naked capitalism
"Michael Hudson [one of our favorite economists], a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College":
It looks like Greece may be the test case for where the American economy is heading.
⇧ 1921 and All That - NYTimes.com
April 1, 2011: Paul Krugman:
...do we have anything to learn from the macroeconomics of Warren Harding? No.
See: "5)  Jim Grant on the Forgotten Depression of 1921: The crash that cured itself — YouTube": https://propertypak.com/2014/12/27/news-real-estate-risk-economics-dec-27-2014/#1227145
⇧ Europe's bond yields fall to lowest since the Black Death - Telegraph
Nothing like this has been seen in European history since the 14th century, after the depletion of silver mines set off a slow monetary contraction, followed by Edward III's default on debts to Italian banks and the Black Death soon after, compounding a deflationary collapse.
"What we are seeing is the 'Japanification' trade," said Andrew Roberts, credit chief at RBS. "The eurozone is sinking into corrosive deflation and it is too late to stop. We think the inflation rate in December may already have been negative. The ECB are in trouble, and they know it."
The Germans are shooting Europe in the economic head and then planning to commit suicide.
Well, the whole European Union project was very poorly designed.
The idea of a monetary union without a fiscal and political union truly dooms any such monetary union to fail.
A slowdown in orders growth indicates companies are beginning to scale back capital spending plans as overseas markets slow and lower oil prices hit American oil producers. At the same time, factory floors will probably stay busy early this year as employment gains and cheap gasoline boost consumer spending.
At the same time, cooling overseas markets may hurt some U.S. producers. European Central Bank officials meet on Jan. 22 to consider steps to drive down borrowing costs and revive Europe's economy. China is on course for the slowest year of growth since 1990, according to a Bloomberg survey. Russia, the world's biggest energy exporter, this year is facing its first recession since 2009 amid plunging oil prices.
The stronger US dollar and gas deflation are supposed to hold up the entire global economy?
We can think of better ways.
California's drought declaration has triggered only local limits such as restrictions on washing cars or watering lawns, but one Pacific Coast tourist town has seized it as an opportunity to build a long-desired desalination plant.
The project, which uses a novel mix of fresh water, estuary water and highly treated sewage wastewater, will be capable of providing about a third of the town's water demand. It makes Cambria one of the first communities in the state to recycle sewage wastewater as an eventual drinking-water source.
We believe desalinization is a good idea but didn't have this mix in mind or a brine pond. We think the "salt" should go right back into the ocean.
We also believe that desalinization is a stopgap measure and that we urgently need to curtail Global Warming.
The Saudis keeping oil production up and gas prices down aren't helping at all but simply making matters worse.
The desalinization needs to be run via solar and other clean energy systems.
⇧ NORTH TOPSAIL BEACH: Eroding North Topsail Beach turns to sandbags to save 20 homes | State Politics | NewsObserver.com
"Building bigger and bigger hardened structures to save 21 houses that should have been condemned or removed a long time ago is just crazy," Riggs said. "We're spending more money than those structures are worth."
⇧ A Republican Ruse to Make Tax Cuts Look Good - NYTimes.com
"Edward D. Kleinbard, a law professor at the University of Southern California":
...the models are not a step toward more neutral revenue estimates, because they assume that, while individuals make productive investments, government does not. In reality, government spending contributes significantly to economic output. Truly dynamic modeling would weigh the forgone economic returns of government investments against the economic gains from lower taxes.
The Republicans' interest in dynamic scoring is not the result of a million-economist march on Washington; it comes from political factions convinced that tax cuts are the panacea for all economic ills. They will use dynamic scoring to justify a tax cut that, under conventional scorekeeping, loses revenue.
When revenues do in fact decline and deficits rise, those same proponents will push for steep cuts in government insurance or investment programs, because they will claim that the models demand it. That is what lies inside the Trojan horse of dynamic scoring.
"...political factions convinced that tax cuts are the panacea for all economic ills." We aren't convinced that they are convinced rather than simply wanting as much privatization as they can ram through because they want to earn the fees rather than having the general population be better served by any publicly owned entity.