Linking ≠ endorsement.
⇧ mainly macro: To all UK journalists, [the Conservatives are wrong on economics]
Simon Wren-Lewis for Chancellor of the Exchequer? That would be quite a leg up for the UK. Are the Brits wise enough and educated enough (even simply informally)?
Simon Wren-Lewis, economics professor at Oxford University and fellow of Merton College:
To all UK journalists who plan to talk about the economy over the next 100 days. Here is a very simple fact.  GDP per head (a much better guide to average prosperity than GDP itself) grew at an average rate of less than 1% in the four years from 2010 to 2014.  In the previous 13 years (1997 to 2010), growth averaged over 1.5%. So growth in GDP per head was more than 50% higher under Labour than under the Conservatives, even though the biggest recession since the 1930s is included in the Labour period!
George Osborne says: “Britain has had the fastest growing major economy in the world in 2014.” However GDP per head in the UK in 2014 remains below 2007 levels, but it had exceeded those levels in the US and Japan by 2013. …
That GDP per head growth under 1.9% in 2014 can be trumpeted as a great success when it is no more than average growth between 1971 and 2010, and when we should be recovering from a huge recession, and when there are signs that this growth may not be sustainable, shows how diminished our expectations have become.
Growth under Labour, including the Great Recession, was 50% better than under the Coalition. So please, if you want to make your reporting on the economy over the next 100 days objective, use this fact. If the Conservatives win this election because enough people believe that they are more competent than the previous government at handling the economy, it will be a devastating verdict – on the UK media and its journalists.
⇧ Blizzard in the Northeast United States
Some people are upset that the weather forecast was overstated concerning some areas. Others, and sometimes the same people, use that forecast to suggest Anthropogenic Global Warming isn’t happening.
A blizzard in the Northeast United States this week primarily impacted eastern Long Island, southeastern Connecticut, Rhode Island, eastern Massachusetts and Cape Cod and the islands, New Hampshire, and Maine, with record and near-record snowfall, high winds, and monumental drifts.
Exposures at Risk
Ten to 20 inches of snow can lead to loads of roughly 15 to 30 pounds per square foot on flat roofs, but that calculation does not account for snow drift, which can significantly increase loads. The risk of roof collapse is particularly acute for light metal, long-span roofs (such as on warehouses or hangars). Engineered structures must conform to high load tolerances and damage to these structures would be expected to be less. The roofs of marginally-engineered structures (such as small businesses, convenience stores, etc.) can collapse under large accumulations of snow, particularly if their roofs have not been well-maintained.
In the Northeast, design snow loads are on the order of 20 to 50 pounds per square foot. Many old buildings in the Northeast may not meet the current code requirements, however, which could increase the total damage. Also, other building elements—porches, carports, awnings, and gutters—which often do not receive any specific design attention, are vulnerable to heavy snow loading.
Heavy snow and strong wind can result in downed trees, causing damage to structures and automobiles, as well as downed power lines and power outages. Because of the cold temperatures throughout the Northeast, areas with long-duration power outages and lack of heat may experience frozen pipes.
Weather and climate are not synonymous. The trend is still warming. 2014 was the hottest year during modern record keeping. The rate of increase is not due to non-human involvement. Our use of carbon burned as fuel is the prime reason for the rate of increase, though there are other human inputs. Methane releases could become catastrophic if CO is not reduced in time.
Left MPs fighting for Labour to abandon cuts plans won an influential ally…as top economist Ann Pettifor backed their alternative to austerity.
A statement penned by Michael Meacher called for Labour to cut Britain’s £90 billion deficit by “kick-starting the economy” with public investment.
It said that a million jobs could be created “without any increase in public borrowing” by directing publicly owned banks to invest £30bn in key industries.
“Politicians should look after employment, as Keynes once argued, and the budget will look after itself.”
…public investment effectively pays for itself because creating well-paid, skilled jobs will generate income and sales tax revenues from the newly employed with which the borrowing can be repaid.
⇧ Why Russia’s Economy Will Not Collapse by Charles Wyplosz – Project Syndicate
Charles Wyplosz, Professor of International Economics and Director of the International Centre for Money and Banking Studies at the Graduate Institute of International Studies, Geneva:
…in recent years, Russia has enjoyed a sizeable budget surplus, and public debt is below 20% of GDP. It is true that income from oil and gas, which represents the bulk of government revenues, has been halved when measured in dollars. But the Russian currency has fallen by about the same percentage, meaning that the government’s income in rubles remains approximately unchanged.
Similarly, Russia’s current-account balance has been mostly in surplus in recent years. Gross public and private external debt is below 40% of GDP, and much of it is denominated in rubles. The sharp fall in export income is rapidly changing the situation, but Russia is starting from a comfortable position. To panic would be premature.
Those are very good points within a rather narrow context. We laid out our much broader views in our last post: “Russia mulls “bad bank” to fight economic woes — fastFT: Market-moving news and views, 24 hours a day — FT.com.” (https://propertypak.com/2015/01/29/news-real-estate-risk-economics-jan-29-2015/#01291517)
⇧ Calculated Risk: EIA: Record Oil Inventories, Imports at 7.4 million barrels per day
Bill McBride quoting “the EIA: Weekly Petroleum Status Report”:
U.S. crude oil imports averaged over 7.4 million barrels per day last week, up by 204,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.2 million barrels per day, 4.8% below the same four-week period last year. …
⇧ The Risk Retention Rules: A Victory for Securitizations Involving Residential Mortgage-Backed Securities? | Pepper Hamilton LLP – JDSupra
Because the risk retention requirements will require banks to list the retained interests on their balance sheets, banks will have to meet higher regulatory capital requirements. We expect this development to spur the migration of certain financial products away from banks to non-bank financial institutions, such as hedge funds.
Depending upon size, a given hedge fund may or may not be systemically risky for the economy as a whole. Will any hedge fund still be treated as Too Big To Fail? The Fed would have us believe not, but when push comes to shove and a large hedge fund has been under-regulated and fails, will the Fed sit by and let liquidation occur?
Martin Meant, Senior Researcher and Head of Unit European Economic, Employment and Social Policy at the European Trade Union Institute (ETUI), Brussels:
It will lead to some more investment, but it suffers from serious shortcomings, meaning that the investment will be limited in volume and biased towards the countries that need EU help the least.
The continuing emphasis on ‘structural reforms’, when this is partly a euphemism for reducing employment protection and pay levels and for limiting the scope for collective bargaining, should also be judged counter-productive. Cutting wages has contributed in a number of countries to lower demand, without obvious positive effects in raising exports. Cutting wages can also nullify the positive effects of investment in areas which need to attract and retain qualified employees.
… To achieve more would require dropping the strict insistence on the core elements of austerity and developing a more substantial and better-funded investment plan. The current proposal ignores the great potential strength of a plan run from the EU level. A EU fund, or institution such as the EIB, if adequately capitalised, could raise substantial finance at very low rates of interest and use it to finance investment across the EU, above all in countries in the greatest difficulty.
⇧ Deal requires firms to justify fracking trade-secret claim – Washington Times
Many of the ingredients in fracking chemical products are linked to health problems ranging from respiratory distress to organ damage and cancer, according to Earthjustice.
Companies and commission staff will need time to re-process the litigated trade-secret requests and more recent ones regulators set aside pending the outcome of the lawsuit, but the work isn’t insurmountable, said Tom Kropatsch, a program supervisor for the commission. “We think we can meet the requirements of what the agreement says,” Kropatsch said.
Three accidents since 2010, in California, Florida and West Virginia, illustrate many of the systemic problems, the board said. In the California accident, nine people were killed and 70 homes destroyed. In the West Virginia incident, the stretch of pipeline that ruptured ignited a fire that destroyed three homes and damaged several others.
⇧ Big banks must face currency rigging lawsuit | Business Insurance
A federal judge on Wednesday said U.S. investors may pursue a nationwide antitrust lawsuit accusing 12 major banks of rigging prices in the $5.3 trillion-a-day foreign exchange market.
In some lines of work, they’d lose their institutional and personal licenses and serve time in prison. Why has there been such never-ending special treatment? When they are fined, it is never enough to even put their institutions at a financial lost for the given year.
⇧ Cook County land bank may add 700 properties – Chicago Tribune
To date, the land bank, created by the Cook County Board in early 2013, has acquired or earmarked for acquisition more than 60 homes or lots zoned for residential use. The first abandoned homes that have been sold to developers are scheduled to be rehabbed and put on the market for sale in spring.
⇧ Is the $60 camera drone worth it? – YouTube
FT San Francisco correspondent Tim Bradshaw tries out the cheapest camera drones on the market, the Hubsan X4 H107C and the Syma X5C, to see how these remote-controlled quadcopters with video cameras compare with more expensive models.
Don’t break the law with these!
⇧ SYRIZA Victory in Greece In Spite of the NYT and WSJ Coverage – YouTube
Professor William Black says the people of Greece won in spite of mainstream medias’ efforts to bury their plight and force them into a Great Depression.
He also pointed out the contagion of a different type: democracy overcoming neoliberalism and austerity.
⇧ ‘Spaniards desperate, will revolt if Brussels fails to listen’ – MEP for Podemos party – YouTube
This is a good follow-up to Bill Black’s comments concerning democracy spreading to Spain and other nations.
It’s not only Greece which is challenging the EU – Spain’s echoing Athens’ example and witnessing the rapid rise of a left-wing party. It’s called ‘Podemos’, which means ‘We can’.
RT spoke to Lola Sanchez, a Euro MP for Spain’s Podemos Party, which is keen to follow Greece’s example. She says that Brussels has no choice but to listen to Athens.
⇧ The Case for Renting: Homeownership Isn’t for Everyone | Zillow Blog
This is a very good overview by Melissa Allison.
Shirleen Holt’s relief at returning to renting is typical of many former homeowners.
No more fixing leaky faucets; no more time-consuming projects.
A marketing consultant who recently moved to Ashland, OR, Holt expects to own again, but for now she is thoroughly enjoying the renter’s life.
“When something goes wrong, I just call the landlord,” she says. “That right there is worth an extra $100 a month.”
It’s a practical reflection of the added bother and expenses that accompany owning a home.
Although owning is now twice as affordable as renting when it comes to monthly payments, those figures don’t tell the whole story. Some people say they’ve made more money — and even become millionaires — because they switched from owning to renting. They invested down payments and other money that went toward mortgages, taxes, insurance and maintenance, and they came out ahead.
⇧ Woolworth mansion in Glen Cove blaze, firefighters respond – Newsday
Part of a wing of Glen Cove’s historic Woolworth mansion was burned and “priceless” woodwork and decor forever gone when flames erupted Wednesday in a first-floor bedroom, authorities said.
Smoke was noticed just before 11 a.m. by an off-duty Glen Cove firefighter plowing the snow at the 1916 estate, city and fire officials said.
Brick construction saved a great deal of the house if not all of it.
⇧ New England coastline risk assessed – Eagle-Tribune: News
The U.S. Army Corps of Engineers on Wednesday issued a report saying that managing the flooding risk along the North Atlantic coast from events like Superstorm Sandy is something that has to be done collaboratively by all levels of government and the private sector.
The Corps issued a framework to help that collaboration as part of a two-year study covering 31,000 miles of coastline along the northeastern United States.
The study said there are a range of options that communities can look at, such as how floodplains are used and how evacuation plans are put together. They also must consider how much risk is acceptable.
⇧ Warren Asks Wall Street for Answers on Dodd-Frank Rollback – Washington Wire – WSJ
Elizabeth Warren and her allies are keeping up the pressure on the contentious Dodd-Frank rollback that made its way into a must-pass $1.1 trillion spending bill at the end of last year.
Ms. Warren (D., Mass.) and Rep. Elijah Cummings (D., Maryland) sent letters to four top Wall Street banks Thursday asking for details about how the firms will alter their derivatives trading operations in the wake of the change. Mr. Cummings is the top Democrat on the House Committee on Oversight and Government reform and Ms. Warren a member of the Senate Banking Committee.
The letters are a clear indication that liberal Democrats plan to continue hammering big banks over the change — which all but eliminated a provision forcing banks to “push-out” risky swaps activities into affiliates that aren’t eligible for federal backstops.
We totally oppose the particular rollback of Dodd-Frank and find completely specious the argument that creating a wall so derivatives will not be backstopped increases overall risk.
⇧ Audit the Fed? Not so fast. – The Washington Post
Not this again.
Calls to “Audit the Fed” are back. And just as before, they are extraordinarily dangerous to the health of the U.S. economy.
We aren’t going to question the sincerity with which Catherine Rampell holds her stated convictions. We are, however, more than a bit put off by the use of the loaded term “conspiracy.”
As our readers know, we are not libertarian capitalists. That said, we certainly do not believe that auditing the Fed is dangerous. Here’s why.
We don’t think there should be a Fed as we know it but rather a computer program that increases or decreases the money supply (bond-free) across the board (all accounts) depending solely upon what the people want funded as expressed by fully informed votes, whether for representatives or directly on whatever measures the level of detail of which those deem in their interest to vote directly. If the money were put to the real economy and not finance capitalism (private speculation), there would be increases in real growth to match the increases the money supply and hence no inflation. The supply would be pegged to real productivity.
That would wrest democracy back from those who currently control it via nothing else than their wealth and the wealth of the corporations they own and control, which wealth was typically created on an uneven playing field made uneven in the first place by what money and often unethical means brought forth.
⇧ How Fast Will China Grow? by Justin Yifu Lin – Project Syndicate
Justin Yifu Lin, Professor and Honorary Dean of the National School of Development, Peking University, founding director of the China Center for Economic Research:
In 2008, China’s per capita income was just over one-fifth that of the United States. This gap is roughly equal to the gap between the US and Japan in 1951, after which Japan grew at an average annual rate of 9.2% for the next 20 years, or between the US and South Korea in 1977, after which South Korea grew at 7.6% per year for two decades. Singapore in 1967 and Taiwan in 1975 had similar gaps — followed by similar growth rates. By extension, in the 20 years after 2008, China should have a potential growth rate of roughly 8%.
But potential growth is just one part of the story. Whether it can be achieved depends on domestic conditions and the international environment. In order to exploit its latecomer advantage, China must deepen its reforms and eliminate its economy’s residual distortions.
… China’s investment resources are abundant. Combined central- and local-government debt amounts to less than 50% of GDP — low by international standards. Meanwhile, private savings in China amount to nearly 50% of GDP, and the country’s foreign-exchange reserves have reached $4 trillion. Even under comparatively unfavorable external conditions, China can rely on investment to create jobs in the short term; as the number of jobs grows, so will consumption.
There’s not one word about real estate in the entire article. The real-estate bubble issue still exists whether it’s talked about or not.
⇧ EUROPP — After Syriza’s victory, Podemos now poses a major threat to the Spanish political establishment
Following Syriza’s victory in the Greek elections on 25 January, a number of commentators have turned their attention toward Spain, where the left-wing Podemos, which originally emerged from the Indignados protest movement, has been receiving strong polling numbers since the end of 2014. Vicente Navarro writes on the growth of Podemos and his role in shaping the party’s economic programme. He argues that the anti-austerity and pro-democracy narrative put forward by Podemos has deeply resonated with the Spanish electorate, and that the party now poses a major threat to the Spanish political establishment.
We support Podemos’ anti-austerity and pro-democracy efforts.
⇧ Sluggish Wage Growth Continues Throughout 2014 | Economic Policy Institute
Our position exactly:
We need to see consistent wage growth above this range before there is a hint of upward pressure on prices stemming from too-tight labor markets. Thus, the Fed should not even consider raising interest rates to forestall inflation until wage growth is consistently above this target. Elise Gould:
⇧ 421a Tax Abatement | Vicki Been HPD | Tenant Advocates NYC
It remains unclear what the future holds for the 421a tax abatement program. The program, which provides a tax break for developers but sometimes requires the addition of affordable units in their buildings, is set to expire in June.
⇧ Galle — Asia’s property hotspot? – YouTube
Foreign investment into Sri Lanka’s picturesque southern coast has grown since the end of the country’s 26-year civil war. The FT’s Avantika Chilkoti reports from the former Dutch settlement of Galle on the opportunities available for foreign investors.
⇧ Has Greece Done Enough? – YouTube
Moderate to strong pro-austerity positions voiced here.
Paolo Mauro and Anders Aslund debate whether the austerity undertaken by Greece has been sufficient to merit more help from Europe.
We, on the contrary, find austerity measures to be extremely anti-democratic. They are designed to further enrich entrenched usurers.
⇧ Yanis Varoufakis on the future of Greece – YouTube
This past Sunday, Greece’s Syriza party came into the power and frequent Boom Bust guest Yanis Varoufakis was elected as finance minister. Take a look at some of Yanis’ interview highlights from the show over starting from January 2014.
He’s not a far-left radical at all. He’s quite the mixed-economy realist and understands macroeconomics.
⇧ How to Figure Cash Flow on Rental Properties – YouTube
Cash flow is not monthly rent minus your mortgage. There are many more expenses you must account for.