Linking ≠ endorsement.
⇧ The deflation naysayers | Jérémie Cohen-Setton at Bruegel.org
Eurointelligence writes that this is the kind [of] argument that gives a bad name to empirical research. During the industrial revolution, growth rates were structurally larger than they were today. The world economy also had numerous regime shifts during that period. You should not average a 200 yearlong data series, and then arrive at policy conclusions for today.
…at least not without adding huge qualifiers/weights for different headwinds and tailwinds and the like that fit the full context of the given data points/history.
⇧ Housing is about 75% back to normal: Report
The weakest area of recovery is in employment of 25- to 34-year-olds, the millennial generation. It is just 46 percent back to normal levels, although it did see some gains in the latest monthly report from the Bureau of Labor Statistics (BLS). Employment of these young adults was at 76.4 percent in December, up from 75.5 percent a year ago, and the highest in six years, according to the BLS.
⇧ Mortgage applications spike, biggest gain in six years
“Purchase application volume was at its highest level since September 2013…and notably increased across most loan size categories, particularly for the conforming, middle of the market loan segments that had been weak for much of the past year,” said Michael Fratantoni, chief economist for the MBA.
⇧ Kicking Dodd-Frank in the Teeth – NYTimescom
“If we return to the precrisis business as usual, where it’s routine for people to accommodate Wall Street on these technical changes, they’re just going to unravel the postcrisis regulation piece by piece. Then, we’ll be right back where we started.”
“The truth about Dodd-Frank is it’s pretty moderate and pretty compromised already,” Mr. Stanley of Americans for Financial Reform said. “Any further compromise and it tends to collapse into nothingness.”
Which is exactly what Wall Street seems to be hoping for.
It was lax and no regulation that caused the Great Recession. Returning to lax and little to no regulation is inviting another collapse only worse.
⇧ Storm-chasing home repair contractor sentenced to prison | Norwalk Reflector
Ohio Attorney General Mike DeWine today announced that an Illinois man has been sentenced to prison for operating a traveling home repair scam that cost 35 Ohio victims more than $140,000.
⇧ Montana man gets 25-years for theft, burglary spree
Between 2013 and 2014, Robert Andrew Paliga was involved in a string of thefts and burglaries netting tens of thousands of dollars in stolen tools, hardware and personal items.
⇧ Landlord in fatal fire ordered to clean up another building | Local News – WMTW Home
The owner of a Portland apartment building where six people died in a fire has one week to fix fire safety issues at another building he owns in the same neighborhood.
⇧ Residents reluctantly let go of cherished way of life on Bayou Corne | News | The Advocate — Baton Rouge, Louisiana
The Romeros are among the second wave of families who have accepted property buyouts from Texas Brine Co. and its insurers to settle claims related to the nearby sinkhole.
The now 31-acre swampland hole emerged overnight in early August 2012, the result of a failed salt dome cavern operated by Texas Brine. Since then, the bucolic swampland community known for its fishing and close bonds has been forever changed as residents, under a persistent evacuation order, have left.
⇧ OXFORD, Miss.: Oxford’s new ordinance deflects nature’s damage | State | The Sun Herald
OXFORD, Miss. — The Oxford Board of Aldermen has approved a new ordinance that allows owners of older homes to rebuild after a natural disaster, even if the house doesn’t meet current setback codes and other newer regulations.
Owners should revisit their insurance coverage.
⇧ 9 sent to hospital after carbon monoxide leak in Provo homes
Authorities say nine people were taken to the hospital over the weekend after a carbon monoxide leak in a Provo fourplex.
Provo Deputy Fire Chief Tom Augustus tells the newspaper that two people had such high carbon monoxide levels in their blood that they would probably need to go into a hyperbaric chamber.
⇧ Jackson officials want businesses to help pay for landslide
JACKSON, Wyo. — Jackson town councilors want landowners involved with a huge landslide to help pay to stabilize it. But the landowners are balking, saying it’s a problem for the whole town.
⇧ Report: Propane leak led to 2014 Victoria house explosion | The Star Telegram
VICTORIA, Texas —
A state report says a propane leak led to a home explosion last year in Victoria in which a 26-year-old woman was killed but her infant daughter survived.
⇧ Rep. Chris Van Hollen’s Bold Attack on Inequality | Jared Bernstein | On the Economy
Whether you like CVH’s approach here in attacking inequality through the tax code or favor ideas that target market outcomes, what’s so very notable here is that a senior member of the Democrat’s caucus is trying to do something about the relentless inequality that’s beset the middle class and poor for decades.
He’s demonstrably not saying, “well, now that we’ve got decent growth in the macro-economy, we’re done. Let’s go fundraise!” He’s saying growth is necessary but it’s not sufficient to reach the folks for whom GDP growth is something that shows up in the business press, not in their paychecks.
It’s good to keep the conversation going.
⇧ Elites fight back against mismeasure of poverty | Al Jazeera America
The federal government’s official poverty measure was developed in 1963 by Mollie Orshansky, a Social Security Administration analyst. The standard was based on three times the minimum food budget required for sufficient healthy calorie intake. Before she died in 2006, Orshansky said her poverty measure was seriously outdated.
The official federal poverty level for a family of four in 2012 was $23,050. The ALICE threshold, by contrast, was $64,689 in Connecticut, $61,200 in New Jersey and $46,495 in Indiana, the least expensive of the six states.
Inadequate wages and high housing costs are the two most significant factors in financial instability, ALICE research shows.
What’s important about this new research is that the wealthy elite in six states and one midsize city are now engaged in addressing the financial hardships afflicting far too many Americans. When the elites want change, they can make it happen.
We should encourage our local business leaders and prosperous families everywhere to get to know ALICE not just because it’s morally right but also because all Americans will benefit when we rid ourselves of poverty, especially poverty among children.
⇧ EconoSpeak: Spend&Spend and Borrow&Borrow
I bring this up today in light of the fact that Mitt Romney is once again running for President. The last time he did so, he advocated large tax cuts without any serious consideration of how to pay for them. I’m sure Romney will have plenty of supply-side enablers once again.
The idea is always to cut taxes, watch the deficit rise, and then call for spending cuts to hurt the poor and further enrich the rich: a very shortsighted, immoral plan.
⇧ Correcting estimates of sea level rise | EurekAlert! Science News
The acceleration in global sea level from the 20th century to the last two decades has been significantly larger than scientists previously thought, according to a new Harvard study.
The study, co-authored by Carling Hay, a post-doctoral fellow in the Department of Earth and Planetary Sciences (EPS), and Eric Morrow, a recent PhD graduate of EPS, shows that previous estimates of global sea-level rise from 1900-1990 had been over-estimated by as much as 30 percent. The report, however, confirms previous estimates of sea-level change since 1990, suggesting that the rate of sea-level change is increasing more quickly than previously believed. The new work is described in a January 14 paper published in Nature.
⇧ A New Ceiling for Oil Prices by Anatole Kaletsky – Project Syndicate
“Anatole Kaletsky is Chief Economist and Co-Chairman of Gavekal Dragonomics and Chairman of the Institute for New Economic Thinking”:
The Middle East’s oil potentates are now determined to reverse this loss of status, as their recent behavior in OPEC makes clear. But the only way for OPEC to restore, or even preserve, its market share is by pushing prices down to the point that US producers drastically reduce their output to balance global supply and demand. In short, the Saudis must stop being a “swing producer” and instead force US frackers into this role.
Any economics textbook would recommend exactly this outcome. Shale oil is expensive to extract and should therefore remain in the ground until all of the world’s low-cost conventional oilfields are pumping at maximum output. Moreover, shale production can be cheaply turned on and off.
Competitive market conditions would therefore dictate that Saudi Arabia and other low-cost producers always operate at full capacity, while US frackers would experience the boom-bust cycles typical of commodity markets, shutting down when global demand is weak or new low-cost supplies come onstream from Iraq, Libya, Iran, or Russia, and ramping up production only during global booms when oil demand is at a peak.
Under this competitive logic, the marginal cost of US shale oil would become a ceiling for global oil prices, whereas the costs of relatively remote and marginal conventional oilfields in OPEC and Russia would set a floor. As it happens, estimates of shale-oil production costs are mostly around $50, while marginal conventional oilfields generally break even at around $20. Thus, the trading range in the brave new world of competitive oil should be roughly $20 to $50.
Now that’s what we call filtering out the noise.
⇧ FRB: Beige Book – January 14, 2015
Real Estate and Construction
Single-family residential real estate sales and construction were largely flat on balance across the Districts. Sales declined somewhat on a year-over-year basis in the Boston, Cleveland, Atlanta, Chicago, Minneapolis, Kansas City, and Dallas Districts. In the Philadelphia District, year-over-year existing home sales finished lower in November, but pending December sales in some areas were up notably over December 2013. However, builders of new homes in the Philadelphia District reported weak traffic for prospective buyers and fewer contract signings. San Francisco reported that overall home sales picked up in December. Richmond reported a modest increase in housing market activity. Home prices increased modestly, on balance, in the Boston, Philadelphia, Cleveland, Atlanta, Chicago, and Dallas Districts. The Cleveland, Atlanta, Chicago, Minneapolis, and Kansas City Districts all reported slightly slower single-family residential construction activity. However, the pace of single-family home construction increased in some areas of the San Francisco District.
Commercial real estate activity expanded in most Districts. The Philadelphia District reported a modest pace of growth for commercial real estate leasing activity, and Boston reported improving conditions in commercial real estate markets overall. Commercial real estate activity in the Chicago and Kansas City Districts expanded at a moderate pace. The Dallas District noted that office leasing activity remained strong, but one contact noted a slight pullback in demand from oil and gas firms. Demand for apartments in the Dallas District also remained strong. New York City’s co-op and condo market showed continued strength in the final quarter of 2014; apartment sales volume was down from the exceptionally high levels of the prior year but still fairly brisk, while selling prices were up moderately. Commercial construction activity increased in most Districts. Ac tivity grew modestly in the Philadelphia District and a bit faster in the Atlanta and Chicago Districts. Atlanta cited the multifamily residential segment as a source of growth, while Chicago credited demand for industrial and office buildings. Commercial builders in the Cleveland District reported a moderate to robust increase for projects in the pipeline. Dallas reported that overall commercial construction was strong. San Francisco reported that multifamily residential construction was strong in many areas of that District and that retail, office, industrial, or infrastructure projects were widespread across that District.
⇧ Beware Of Politicians Bearing Household Analogies – Forbes
…two fallacies in the political fetish for running government surpluses. The first is to believe that what happens to the private sector is the same as what happens to the government: if the government runs a surplus, then so will the private sector. In fact, one is the mirror-image of the other—as MMT writers like Stephanie Kelton have been pointing out for over a decade now. The second is to make an analogy between households and the government, when the correct analogy is between banks and the government. Both are sources of money. Both may direct this money unwisely—which again I’ll cover in future posts—but both have to provide it, otherwise economic contraction and instability will result.
⇧ What if the Public Understood How Money Works? – New Economic Perspectives
William K. Black
Even in response to the Great Recession, when increasing the deficit through increased net government spending would greatly aid the recovery of the economy and reduce future deficits, even when the programs that would be funded would be effective and would reduce suffering, and even when there are no real resource constraints Monetary Myth Theory teaches that we should adopt austerity by slashing helpful government spending and actively makes things worse. That is a nightmare result and Europe shows it isn’t hypothetical. Monetary Myth Theory is now law in the Eurozone in the form of the oxymoronic “Stability and Growth Pact,” which produces recurrent crises and cripples growth. The European priestly caste chants the “TINA” (there is no alternative to austerity) mantra. Unless Monetary Myth Theory is successfully countered it must corrupt the democratic governance process by not spreading a myth that prevents the alternative of what Worstall concedes is the ready alternative of the economic reality of how money actually functions from even being heard. Worstall wants to produce the same result in the U.S. — excluding reality in favor of myths that he knows cause, gratuitously, epic levels of harm.
⇧ Hollywood Real Estate Agent Chris Cortazzo Sued Over Missing Square Footage – ABC News
A real estate agent to the stars who has worked with the likes of Ellen DeGeneres and Richard Gere, and appeared on the reality show “Million Dollar Listing,” is now facing a lawsuit over accusations he overstated the square footage of a multimillion-dollar mansion.
Hong Kong multimillionaire Hiroshi Horiike says when he purchased a $12 million Malibu, California, mansion in 2007, real estate agent Chris Cortazzo told him it was the largest home in Malibu, at 15,000 square feet.
“…it’s always buyer beware.”
It’s always what the highest court says it is if it can get it enforced; and in CA, they have so far. We’ll just have to wait.
⇧ Britain’s economy is ‘leading the way’, head of IMF says – Telegraph
Miss Lagarde was last year forced to apologise after the made dire predictions about the fate of Britain’s economy under George Osborne, the Chancellor.
Oliver Blanchard, the IMF’s chief economist, in 2013 warned Mr Osborne was “playing with fire” with austerity and downgraded Britain’s growth forecast to just 0.7 per cent for 2013. Instead, it grew by 1.7 per cent, and is expected to hit 2.7 per cent this year.
As the philosopher said, it ain’t over til it’s over; and it ain’t over. We’re speaking here about the longer-term results of the austerity package.
⇧ Eurozone deflation – a good thing? – YouTube
The eurozone has fallen into deflation, raising fears the bloc could be set for prolonged stagnation. FT economics correspondent Ferdinando Giugliano speaks to business editor Sarah Gordon, who says deflation could be a good thing for Europe.
The key term in the video is “core.” There is good deflation and bad deflation. Lower gas prices are generally good for oil/gas importing nations.
⇧  Commodities melt down and bonds rally; where is the US headed? – YouTube
…Mark Thoma, professor of economics at University Oregon, columnist at “The Fiscal Times,” and author of the blog “Economist’s View.” Mark tells us if the US economy is headed in the right direction. He also gives us a read on what lower long-term yields are signaling.
⇧ Rania Antonopoulos – Responding to the Unemployment Crisis in Greece – YouTube
Rania Antonopoulos, Senior Scholar at the Levy Economics Institute, describes her proposal for an “Employer of Last Resort” program in Greece. Part of the MMx seminar “The Disparate Impact of Unemployment: Macroeconomic Policy as a Tool for Race, Gender, and Age Discrimination” hosted by the Modern Money Network.
The thing in the video with which we’ll take exception is that Greece can’t create currency. It can through its banks issuing loans. Those loans would create euros in bank checking accounts. They could be at rates vastly lower than Greece is paying now. The issue would be with getting Greek banks to do it for the Greek government and for the sake of the people. They’d have to watch their backs.
Even though it would be completely legal, we think the banking powers that be would do whatever it would take to thwart it.
⇧ Where are Multifamily Building Permits Rising and Falling Most? – YouTube
Nationally, apartment construction remains at the highest levels since the late 1980s. But at the metro level, the latest multifamily permit numbers tell us which markets could soon see more construction … and which could see development start to wane.