Linking ≠ endorsement.
⇧ 9 Volt Batteries can burn down your House if stored inproperly - YouTube
⇧ Case-Shiller: Housing Made 'Great Strides' in 2014, but Rental Market a Problem ‹ Zillow Real Estate Research
"...even while buying a home is essentially as affordable as it's ever been, renting is less affordable than ever. Widespread and rapid growth in rents, combined with stagnant wages, are keeping many would-be buyers stuck in rental housing, writing ever-larger checks to their landlords instead of saving for a down payment. Today's renters are tomorrow's buyers, and the longer these would-be buyers stay on the sidelines, the longer full recovery will take. Real growth in wages and more rental supply will help ease the crunch, but don't expect either overnight.
"...the longer these would-be buyers stay on the sidelines, the longer full recovery will take." We disagree. Recovery is not a matter of buying versus renting. We're surprised Stan doesn't know that. Recovery is a matter of growth and spreading that around. Growth could come exclusively via rentals, though that's not what will happen. People buying prematurely would actually be counter-productive. That's what bubbles are made of. Perhaps Stan means the longer they are forced to remain in the artificially created financial crunch. Then we'd agree with him fully. That said, we like Stan's body of work. We're just nitpicking. Ha!
⇧ Debt Be Not Proud | Thoughts from the Frontline Investment Newsletter | Mauldin Economics
We completely disagree with John that debt is necessary, but here are a couple of excerpts where John is almost completely correct. John Mauldin:
Following the historic budget compromise between Clinton and Gingrich, the United States began to run actual surpluses in the late 1990s, and indeed we were talking about what would happen if we eliminated government debt altogether, so rapidly were we paying it down. The surpluses were accumulated during a rather remarkable economic time. Then the Republican Congress, aided and abetted by George W. and Karl Rove, came along and squandered that surplus. Dick Cheney famously said that deficits don't matter, in defense of the Bush administration's policies of cutting taxes and increasing spending in order to curry favor with voters.
... Inflation is brought about by not just an expansion of the monetary base but also by a stable, concurrent rise in the velocity of money. It's complicated, I admit. I have devoted more than a few letters to the concept of the velocity of money. The current period of low inflation has been caused by a rather dramatic fall, over the last eight to ten years, in the velocity of money. As I predicted almost five years ago, the Federal Reserve was able to print far more money than anyone could imagine without the threat of inflation rearing its head.
The problem is that the velocity of money is a very slow-moving statistic. It is what we call mean-reverting, in that the velocity of money can't rise to the heavens unless you have a Weimar Germany-type situation, and it can't fall to zero. It oscillates over long periods (think decades) around an average or mean. Right now the velocity of money is falling, which allows the US Fed to have a very loose monetary policy without having to worry about inflation. When the velocity of money begins to rise, the Fed will have to lean against what could quickly turn into soaring inflation with a tighter monetary policy than it otherwise wou ld have, because of its recent, extreme episodes of quantitative easing. Think Paul Volcker in the early '80s, turning the screws on 18% inflation. That was not exactly a fun time.
Of course, economists think that we can avoid any big mistakes. But sadly, there is no such thing as a free monetary lunch. Today's quantitative easing (in a period of reduced velocity of money) will mean tomorrow's much tighter monetary policy — or much higher inflation. Or both.
Not both if the Fed sufficiently tightens. Another factor besides velocity is the Phillips Curve (https://en.wikipedia.org/wiki/Phillips_ curve), which hasn't been working due to globalization. Cheap everything elsewhere outside the US has kept US wages way, way down.
⇧ Oregon records 50 fire-related deaths in 2014, the most in 6 years | OregonLive.com
...recommends smoking outside if you smoke, staying in the kitchen when you cook and keeping combustible items at least three feet from heat sources.
Staying in the kitchen would be the hardest of those. Be sure to have alarms and extinguishers charged up and that you know how to use them. Grease fires (https://www.thekitchn.com/kitchen-safet y-how-to-put-out-138233) are exceptionally pernicious.
⇧ South Fayette commissioner enters ARD program | Observer-Reporter
A South Fayette Township commissioner charged with conspiracy, insurance fraud and related charges over expenses related to a house fire in McDonald was admitted Monday in Washington County Court to the Accelerated Rehabilitative Disposition program for first offenders.
⇧ Olin man pleads guilty to mail fraud, using fire to commit a felony in insurance fraud case - Daily Journal
CEDAR RAPIDS, Iowa — An Eastern Iowa man has pleaded guilty in federal court to mail fraud and using fire to commit a felony.
⇧ Why fracking seen as link to rise in earthquakes in Oklahoma - NY Daily News
Not so many years ago, earthquake science was no more relevant to Oklahoma than marine biology. But these days the state is shaking way more often than California, and giving many people there an unwanted crash course in seismology.
Last year, Oklahoma had 585 earthquakes with a magnitude 3.0 or greater (big enough for people to easily feel) -- almost three times as many as California had and up from an average of just two a year before 2009. Not coincidentally, that's when oil and gas drillers began injecting wastewater from fracking operations into thousands of underground wells.
⇧ US charges Duke with illegal pollution from 5 coal ash dumps - The Washington Post
The investigation into Duke began last February after a pipe collapsed under a coal ash dump at the Eden plant, coating 70 miles of the Dan River in gray sludge. However, prosecutors allege in court filings that Duke's illegal dumping had been going back for years, to at least 2010.
Environmental groups on Friday hailed the charges as vindication for their years of efforts to get regulators to hold Duke accountable for the pollution leaking from coal ash dumps at 14 power plants scattered across the state. The ash, which is the waste left behind when coal is burned to generate electricity, contains such toxic heavy metals as arsenic, selenium, chromium and mercury.
Duke adamantly denied any wrongdoing for years. But in December, the company conceded in regulatory filings that it had identified about 200 leaks and seeps at its 32 coal ash dumps statewide that together ooze out more than 3 million gallons of contaminated wastewater each day.
A new state law passed in August requires Duke to either clean up or permanently cap all of its ash dumps in North Carolina by 2029.
⇧ UPDATE 1-Australia plans to charge fees to foreigners buying real estate | Reuters
Australia plans to charge fees to foreign nationals buying residential property and fine those who break foreign investment laws in an attempt to cool one of the world's hottest property markets, but experts doubt it will make housing more affordable.
⇧ Yellen: Fed will hold off on hiking interest rates | Pittsburgh Post-Gazette
Ms. Yellen, seeking to hold her middle ground, cautioned Republicans that the Fed still saw a need for its stimulus campaign and warned Democrats that the end was approaching.
"We do have an economy that fortunately appears to be recovering and we have to be forward looking in setting monetary policy but I want to assure you that we do want to see that recovery continue," Ms. Yellen said. She added that policy is very accommodative and will remain so even as the Fed starts to raise rates.
Much of the hearing was devoted to proposals that would reduce the Fed's policymaking autonomy, particularly a Republican proposal known as "Audit the Fed" that would subject its policymaking to reviews by the Government Accountability Office.
She handled the interest-rate hike the way we had expected: patience. She's a dove but will raise rates when inflation and unemployment merit it, at least merit it according to mainstream monetarism.
As for the "Audit the Fed" issue, we're for replacing the Fed wholesale, so it's not a real issue with us. We aren't monetarists.
We want a debt-free currency perfectly matched to desired growth.
⇧ PMI: China's factories show signs of fightback
When people discuss China, so many of them never seem concerned with rising debt on wasteful so-called assets.
⇧ Watch an empty New Jersey house disintegrate in massive natural gas explosion
There's an important law-enforcement purpose for police dashboard cameras, but they also capture amazing sights — like on Tuesday, the natural gas explosion that made a house in Stafford Township, New Jersey, disappear in a ball of flame and shooting debris.
⇧ Mysterious Craters in Siberia Caused by Exploding Methane Gas and Climate Change? (PHOTOS) : News : Headlines & Global News
Some experts believe climate change is affecting the permafrost, which traps one million times more more methane hydrates than ordinary gas. The total explosive power of the craters is estimated by one expert to be equivalent to 11 tons of TNT, according to Daily Mail.
As you've probably heard or read, methane is a much more powerful greenhouse gas than is CO2. If global warming is causing releases, it will only speed up global warming.
⇧ The "Plucking Model" of Recessions and Recoveries | Grégory Claeys and Thomas Walsh at Bruegel.org
... the strong recoveries observed in European countries like Latvia and Estonia seem to be directly proportional to the size of their GDP-losses during the crisis. If these quick recoveries are the natural counterpart of the previous recessions, it makes it difficult to infer anything on the success or failure of the policies implemented since the beginning of the crisis, and therefore to use these countries as role model in order to recommend similar policies to other European countries.
⇧ FRB: Testimony--Yellen, Semiannual Monetary Policy Report to the Congress--February 24, 2015
...the Committee judges that a high degree of policy accommodation remains appropriate to foster further improvement in labor market conditions and to promote a return of inflation toward 2 percent over the medium term. Accordingly, the FOMC has continued to maintain the target range for the federal funds rate at 0 to 1/4 percent and to keep the Federal Reserve's holdings of longer-term securities at their current elevated level to help maintain accommodative financial conditions. The FOMC is also providing forward guidance that offers information about our policy outlook and expectations for the future path of the federal funds rate. In that regard, the Committee judged, in December and January, that it can be patient in beginning to raise the federal funds rate. This judgment reflects the fact that inflation continues to run well below the Committee's 2 percent objective, and that room for sustainable improvements in labor market conditions still remains.
The FOMC's assessment that it can be patient in beginning to normalize policy means that the Committee considers it unlikely that economic conditions will warrant an increase in the target range for the federal funds rate for at least the next couple of FOMC meetings. If economic conditions continue to improve, as the Committee anticipates, the Committee will at some point begin considering an increase in the target range for the federal funds rate on a meeting-by-meeting basis. Before then, the Committee will change its forward guidance. However, it is important to emphasize that a modification of the forward guidance should not be read as indicating that the Committee will necessarily increase the target range in a couple of meetings. Instead the modification should be understood as reflecting the Committee's judgment that conditions have improved to the point where it will soon be the case that a change in the target range could be warranted at any meeting. Provided that labor mar ket conditions continue to improve and further improvement is expected, the Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when, on the basis of incoming data, the Committee is reasonably confident that inflation will move back over the medium term toward our 2 percent objective.
She'll let us know when we might begin to expect that the rate will rise at a subsequent meeting.
⇧ mainly macro: Greece and primary surpluses
...it is as clear as it can be that the current dire position of the Greek economy is the result of a huge mistake by the Troika. The size of the collapse in the Greek economy is similar to the fall in Irish output during the Great Irish Famine of 1845-53, and while the suffering in the latter is obviously of a different order, the attitude of some in the Eurozone is as misconceived as most English politicians during the famine. Of that event they say 'God sent the blight but the English made the famine'. In the future the Greeks may justly say 'our politicians caused the deficit but the Troika made the depression'.
⇧ Grexit would shock eurozone, says Trichet - YouTube
An exit by Greece would be just as dramatic now as during the eurozone crisis, says former ECB president Jean-Claude Trichet. He tells capital markets editor Ralph Atkins the historical political underpinning to the euro project has to be understood.
⇧ BBC News - Syriza dumps Marx for Blair
The price of staying?
...in appeasing the European economic establishment, seen only days ago as the enemy, Mr Varoufakis risks alienating his friends, the members and supporters of his very young party.
The danger for him is that he buys economic and financial stability at the price of political instability.
The real issue is whether Syriza believes it is buying time to get set up to exit.
If it stays under the current outline, Syriza will have quickly moved from being democratic socialist to social democratic to, yes, Blairite. We can't imagine that the party would be able to hold together a large enough coalition in Greece by doing that. The Greek people did not vote Syriza into office to have a Tory government that simply manages to collect taxes from the rich.
How will Syriza turn around and attempt to play hardball with Germany in the face of the current situation? Is Syriza counting on being able to show Germany that Greece will have no choice but to default and leave because there isn't enough political support in Greece for the outline Syriza just submitted to get more money, more debt?
Frankly, we think nothing has changed. We think Germany is mismanaging its leadership role in Europe and that Greece should probably just bite the bullet and exit.
Spain may well follow, or Germany might come to its senses if it sees Greece really getting ready to leave (no bluff).
⇧ N.J. Bill Seeks to Prohibit Home Insurers From Raising Rates After Single Claim
"For the purpose of determining adverse claims experience and any related increase in premium, an insurer shall not consider or categorize as a claim the first claim filed under a policy of homeowners insurance during each coverage period," the proposed bill states.
How would you handle premium rates as an insurance company in the face of any such law? You'd raise everyone's minimum premium to cover the difference.
Should all insureds share the first covered loss of everyone else? Perhaps. People should know what they are voting for or against though.
To keep one's premium lower, some poorer homeowners might request lower limits and/or higher deductibles than they would have otherwise.
Also, maybe a sliding scale would be useful. There's a huge difference in the size of loss claims. Shouldn't the larger the claim still impact premiums to some degree? What about the insured's loss history? Should someone whose first-ever claim came 40 years into homeownership be treated the same as someone with numerous claims but who took out a new homeowners policy and has a first claim under that new policy?
Then there's the issue of a regional catastrophe. How many first-ever claims under a given policy might occur? Many insurers might simply opt out of offering any coverage where they might have otherwise.
⇧ Tiny Devices Set to Change How Florida Monitors Hurricanes, Rising Sea Levels
Small wireless computing devices, ranging from the size of a matchbox to the size of a dime are going to change the way Florida monitors its water quality, sea level rise, hurricanes, agriculture, aquaculture, and even its aging senior population. The types of sensing devices developed by computer scientist Jason...
⇧ Earthquake Authority to Study Quake's Impact on Napa Homes
Napa has many historic houses that are particularly vulnerable to seismic activity, so understanding how they fared may provide important insight into the effectiveness of various retrofit techniques, Pomeroy said.
⇧ Be Calm, Robots Aren't About to Take Your Job, MIT Economist Says - Real Time Economics - WSJ
One woman, who at the end came forward to ask if there would be "life-sustaining" work in the future, wasn't convinced. "I just don't get why you're an optimist," she said. "It seems we can't avoid having excess people."
Mr. Autor replied he may be wrong, but then quickly added, "If we automate all the jobs, we'll be rich—which means we'll have a distribution problem, not an income problem."
That's not a problem. It's an issue, and it will happen.
⇧ One Sign Americans Won't See Big Raises Anytime Soon - Bloomberg Business
An expanded pool of able and willing workers keeps the unemployment rate from falling as fast as it otherwise would. The increased supply keeps companies from confronting a staffing shortage, which would force them to raise wages to attract talent.
What's more, workers who are willing to rejoin the workforce from outside the labor pool tend to accept salaries that are about 25 percent lower compared to job seekers who have been actively searching for employment, past research has shown.
"Individuals persistently out of work may have atrophied skills or dwindled savings, suggesting a lower bar to accept work," Enenajor wrote. Having a big pool of potential hires who are willing to accept lower pay "points to a further softening in the relationship between the jobless rate and wages."
That's true; but if the trend continues, wages will eventually rise, though not as much as they would have had the various international free-trade treaties been written with high labor and environmental standards in mind.
⇧ The Economic Consequences of Greece by Alberto Bagnai et al. - Project Syndicate
This article nails it! Alberto Bagnai, Brigitte Granville, Peter Oppenheimer, and Antoni Soy:
Initially, the IMF took the official position that Greek debt was sustainable. But IMF staff knew otherwise. In 2013, the Fund admitted that its analysts knew that Greece's debt was not sustainable, but decided to go ahead with the program "because of the fear that spillovers from Greece would threaten the euro area and the global economy."
In addition, from November 2010 to April 2013, the IMF revised downward its forecast for 2014 Greek nominal GDP by 27%. This cast doubt on the transparency and accountability of the Fund's debt-sustainability projections. The implication is shocking: the IMF was unable to provide a credible framework for the adjustment that Greece would have to make.
This background provides crucial context for the ongoing negotiations, for it reveals that the aim of the Greek bailout was not to restore prosperity to the country's people, but to save the eurozone. Given this, the new Greek government is entirely justified in questioning the terms that the country was given.
They've come to the same conclusion we did above. Germany ought to cave in, or Greece should exit.
⇧ Yellen Hearing Raises Question: 'Who Is Scott Alvarez?' - Real Time Economics - WSJ
Ms. Warren was asking about Mr. Alvarez's comments at a conference of banking lawyers in November. The Fed lawyer suggested that lawmakers should revisit a provision of Dodd-Frank that has come to be known as the swaps push-out rule, saying it was drafted "at 2:30 in the morning." The provision required banks to spin off certain derivatives-trading activities into units that don't enjoy access to the government safety net.
Banking-industry lobbyists repeatedly cited Mr. Alvarez's comments while urging Congress to repeal the provision. Some Democratic staffers on Capitol Hill called the Fed at the time to complain about his remarks, according to a Democratic aide, who said that the general counsel was disparaging Congress.
Congress did repeal the swaps provision in December as part of a must-pass spending bill. Ms. Warren opposed the repeal.
We're with Liz on it.
⇧ Can cooperatives deliver more jobs and greater social inclusion in a changing world of work? | Work In Progress
During the recent and persisting economic crisis, the cooperative model proved its value time and again as a resilient business model. For workers of conventional businesses which were failing, cooperatives offered a socially, as well as economically viable alternative. Empresas recuperadas (reconverted enterprises) in Argentina are just one example of firms where workers were able to save their jobs by taking ownership of the companies they worked for.
Employee ownership is a good thing.
⇧ ECB and IMF to Greece: No Escaping the Austerity Hairshirt | naked capitalism
One interlocutor suggested that things were not as dire for Greece as they appear, since the ECB is a bit trapped by not wanting to pull the plug on its support for Greek banks, since that would lead to a disorderly Grexit and a recognition of losses by the central bank. Since the Germans do not believe in allowing central banks to operate with negative capital (ie, "print" or monetize the losses), the Bundesbank would almost certainly insist on a taxpayer level to shore up the ECB's capital, which would set off a political firestorm across the Eurozone. So the argument is that Greece holds stronger cards than it seems. But the ECB and the IMF have no incentive to release funds to the government. They can play the game of starving the Greek bureaucracy, and making it defer payments and fail to deliver on existing programs, which will gnaw away at Syriza's credibility and support.
And do not forget that the German paper FAZ reported that the ECB board believes that Greece really wants a Grexit but does not want to look as if it is the precipitating party. If the ECB and the IMF believe that Varoufakis' letter is more of the same, withholding funds might force the Greeks to take initial steps toward a Grexit, such as introducing quasi currencies like tax anticipation notes.
Syriza has had a Greek people who mostly have wanted to remain in the EU/Eurozone system in full. If the Germans appear more and more as the obstacle to Greece's recovery, Syriza will be able to turn to the Greek people to say that it hasn't been Syriza's fault at all that a humanitarian deal hasn't been cut.
We think the Germans are being extremely shortsighted and that Greece shouldn't prolong Greece's agony any longer than necessary: shouldn't overly wait for the German handwriting on the wall saying go ahead and leave.
⇧ Opening Remarks: One Bank Research Agenda Launch Conference - YouTube
We very much like Bank of England Governor Mark Carney's broadly cross-disciplinary approach.
⇧ War on corruption: Ukraine struggles to emerge from the shadow of the oligarchs - YouTube
Amid war and economic collapse Ukraine's economy minister has a portfolio not many politicians would envy. Lithuanian Aivaras Abromavicius was appointed to bring international expertise to the government.
Implementing reforms required by an IMF bailout is among his toughest challenges. He spoke to Euronews' Ukraine bureau chief, Sergio Cantone.
So, you hear and see there that the IMF is requiring massive privatization, as if publicly owned enterprises are inherently evil or something, which they are not, often far from it in fact.
Of course, Abromavicius define many of the public enterprises as effectively for the benefit of private entities in the form of the "oligarchs.
At the same time, you hear the plan for a welfare state where the rich pay a larger share. So, it's a mixed bag. We'll just have to wait to see how it turns out and whether not letting the poor fall through the cracks is a serious plan.
⇧ Spain: Podemos criticises Rajoy's 'useless' government in alternative state-of-the-nation address - YouTube
Contrary to Prime Minister Mariano Rajoy's assurances, 'the nightmare is not over' for Spain, according to Podemos leader Pablo Iglesias.
Translating as 'We Can', the new leftist Podemos movement gave an alternative 'state-of-the-nation' speech on Wednesday (February 25), led by Pablo Iglesias.
'Yes, we can' chanted the crowds in Madrid as the head of the anti-austerity party took to the stage.
⇧ Appraiser mistakes contributing to soaring house prices
In August 2013, Austin realtor Jonathan Stilley went to the Texas Appraiser Licensing and Certification Board (TALCB) with a complaint, asking them to investigate whether an appraiser overvalued a home in his North Austin neighborhood, Mesa Park. Real estate records show the home sold in April 2013 for $325,000, which is $50,000 more than the second-highest-priced home in the area.
In November 2014, the board confirmed Stilley's suspicion, but it took the board 20 months to determine a mistake was made.
"The market is already turned. I mean, we've had houses sold in 30 to 45 days. It's too late," Stilley said.
⇧ Gaia Real Estate adds five properties to Houston apartment portfolio - Prime Property
New York-based Gaia Real Estate has made another shift in its Houston portfolio with the addition of five apartment properties containing 1,376 units.
With oil prices what they are, do you think that's a good investment? Maybe renting will stay strong while people lose their houses; but will they stay in the area or move where the jobs are? It will be a mix.
⇧ Morgan Stanley to pay $2.6 bln to settle mortgage-bond claims | Reuters
Morgan Stanley said it will pay $2.6 billion to the U.S. government to resolve potential claims stemming from the sale of mortgage bonds before the financial crisis, reducing its 2014 profit by more than half.
JPMorgan Chase & Co agreed to a $13 billion deal in November 2013; Citigroup Inc signed a $7 billion settlement in July 2014; and Bank of America Corp reached a $16.65 billion agreement in August.
Last week, U.S. Attorney General Eric Holder said he has given federal prosecutors a 90-day deadline to decide whether they can bring cases against individuals for their roles in the 2008 financial crisis.
Is that a change of heart for Barack Obama now that he can't run again and may want to help the Party's chances in the next election? What about the statute of limitations running out?