Linking ≠ endorsement.
⇧ Elizabeth Warren to Obama Administration: Help Me Tackle Student Debt | Mother Jones
We like Liz’s direction.
Warren thinks that the Department of Education’s habit of pulling out the stops to keep loans on its balance sheet is counterproductive. In the long run, she’s argued, regularly canceling the debts of students tricked by educational institutions would create an incentive for federal regulators to stop deceptive practices before too many students fall for them—because if they didn’t, the government would take a big hit to its bottom line.
However, forget student loans. Make college tuition-free right through grad school. It would turn the US into the best educated people on the planet by far. Other nations would follow. The whole human race would benefit immensely.
If the student can do, and does, the academic work, that should be all that matters.
The student shouldn’t have to pay for a thing while attending school full time and doing a good job of studying and learning.
It could all be paid for via debt-free currency (no bond issues; no interest on, or increase in, the national debt).
⇧ Employment Situation Summary | March 6, 2015 | US Bureau of Labor Statistics
Total nonfarm payroll employment increased by 295,000 in February, and the unemployment rate edged down to 5.5 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in food services and drinking places, professional and business services, construction, health care, and in transportation and warehousing. Employment in mining was down over the month.
Both the unemployment rate (5.5 percent) and the number of unemployed persons (8.7 million) edged down in February. Over the year, the unemployment rate and the number of unemployed persons were down by 1.2 percentage points and 1.7 million, respectively. …
The number of long-term unemployed (those jobless for 27 weeks or more) was little
The civilian labor force participation rate, at 62.8 percent, changed little…
The number of persons employed part time for economic reasons (sometimes referred
to as involuntary part-time workers) was little changed…
In February, 2.2 million persons were marginally attached to the labor force,
little changed from a year earlier. …
Among the marginally attached, there were 732,000 discouraged workers in February, little different from a year earlier.
So, more people got jobs, but the rest didn’t change much at all. What’s it mean?
Inflation is still low, and there are more people who want work than even a rapid increase in jobs is denting. Therefore, it would be foolish for the Fed to raise the overnight rate or to take any steps to slow the recovery.
Wages are still low. Hours worked per week are still low.
Wait until wage pressure actually raises inflation to 3% before dialing things down to avoid overheating.
⇧ Investigating Claims Involving Spontaneous Combustion
According to Timothy Anderson, subrogation manager for Markel Services Inc., the following are examples of materials that can spontaneously ignite:
Charcoal — high
Fish meal — high
Linseed oiled rags — high
Brewing grains — …
⇧ Kentucky City Warns Homeowners Not to Rent to Travelers
It’s like Uber.
Metro Louisville, Ky. officials have sent letters to some homeowners that rent space to travelers through online home-sharing sites telling them to stop the practice immediately or they risk being fined.
⇧ Failure to Remove Snow From Sidewalks Results in Fines
New York City has issued more than 10,000 tickets this winter to property owners for failing to clear snow and ice from sidewalks.
Under city law, businesses, homeowners and other property owners have four hours from the time the snow stops to clear pavements.
We weren’t given the specifics concerning absentee owners not being able to get to a property due to impassable roads not yet plowed or concerning aged or ill owners, etc.
⇧ Arsonist gets 17-year prison sentence in insurance fraud scheme | NOLA.com
Arson and insurance fraud never paid off for Anthony Thomas.
Thomas on Wednesday (March 4) was sentenced to 17 years in prison on charges of conspiracy, arson, fraud and lying to federal investigators in connection with the pair of arsons fires he and three co-defendants set in 2007 and 2009.
⇧ Why the Federal Reserve Bank Needs Defending – The New Yorker
…when it errs, the proper response is to criticize its decisions and force the Fed chair to defend them, not to try to undermine the entire institution and the vital role it plays. Down such a route lies a politicized Fed that is almost as dysfunctional as the rest of Washington. This would be disastrous.
We couldn’t disagree more.
John Cassidy writes from the perspective that the only option to the status quo Fed is Congress haggling over monetary policy or whatever. There are other options. For one, we could have a computer program and network that matches the supply of debt-free currency exactly to real-economy needs all handled through one and only one bank, the US Treasury, where all accounts would be held so that the supply could be increased or decreased uniformly across all accounts. No one would be helped or hurt by either inflation or deflation because there would be none. There would only be growth and additional spending on maintenance and catastrophe recovery, all tax and interest free: democracy.
⇧ Is China changing its exchange rate policy? | Gavyn Davies
The bottom line is that China is finding it increasingly difficult to remain tied to the dollar bloc (and thus absorbing some of the deflationary pressure in the global economy) at a time when the US Federal Reserve is tightening monetary policy and the dollar is rising. Some exchange rate flexibility is needed. Other countries may complain about “currency wars”, but a gradual renminbi adjustment would be far safer for the world economy than a failed attempt to maintain a fixed rate that has outlived its usefulness.
⇧ Austerity and recovery: East Asian lessons for Europe | VOX, CEPR’s Policy Portal
Anusha Chari and Peter Blair Henry:
Europe’s pivot away from stimulus toward a starkly different policy stance in the midst of a crisis with very similar causes to the one in Asia enables us to view the trajectory of output in Asia as a proxy for what might have happened in the peripheral countries of Greece, Ireland, Italy, Portugal, and Spain (GIIPS) had Europe stayed the course with stimulus.
… A striking feature of the data is the speed with which growth recovered in East Asia. Within a year of the crisis, GDP growth turned positive. …
The event-time profile of GDP growth in the GIIPS stands in sharp contrast to the East Asian profile. While output falls on impact and the recession deepens in the first year after the crisis hits, the pace of contraction slows in the second year as GDP growth becomes slightly less negative. But rather than growth continuing to recover as it did in East Asia, the GIIPS economies experience a ‘double dip’, contracting even more sharply in Year 3 and falling to about -2.5% by Year 4. The correspondence between the components of this three-quarter ‘W’ and the evolution of fiscal policy depicted in Figure 1 provides strong prima facie evidence that the so-called double dip was triggered by the large and rapid pivot from stimulus to austerity after Year 2.
… Across the board, t-tests of differences in differences confirm the simple visual story of Figures 1 and 2. T-tests of differences in differences on unemployment are also consistent with the growth results, and all of our results are robust to alternative time frames for the pre- and post-pivot windows. Panel regression estimates that control for country-fixed effects, changes in exchange rates, and differences in debt-to-GDP ratios confirm that the change in fiscal stance from stimulus to austerity had a negative an d statistically significant impact on real GDP growth in Europe.
See the next post below.
⇧ Repeating Our Mistakes: The “Roosevelt Recession” and the Danger of Austerity | Roosevelt Institute
Why is the US failing to remember?
In 1937, after five years of sustained economic growth and a steadily declining unemployment rate, the Roosevelt Administration began to worry more about possible inflation and the size of the federal deficit than the ability of the economy to sustain the recovery. As a consequence, in the fall of 1937, FDR supported those in his administration who advocated a reduction in federal expenditures (i.e. stimulus spending) and a balanced budget. The results — which included a massive reduction in the number of people employed by such programs as the WPA — were catastrophic. From the fall of 1937 to the summer of 1938, industrial production declined by 33 percent; wages by 35 percent; national income by 13 percent; and not surprisingly, the unemployment rate rose by roughly 5 percentage points, with an estimated 4 million workers losing their jobs.
The economic downturn caused by the decline in federal spending was commonly referred to as the “Roosevelt recession,” and to counter it, FDR asked Congress in April of 1938 to support a substantial increase in federal spending and lending. Unlike the current situation, Congress backed FDR’s request, and as a result, the recovery was soon underway again.
Even when this and other examples are stated, libertarian-leaning capitalists stubbornly refuse to do the right thing.
The American public is mis-educated. Keynesians fail to stand up enough, to debate libertarians head on with data in hand proving the libertarians wrong. They fail to drumbeat it to the politician such that those politicians can’t escape but have to concede defeat and change policies and practices immediately for the sake of the economy and the people.
⇧ Publicly Funded Inequality by Kemal Dervis – Project Syndicate
It does not take huge rates of returns to mobilize a lot of talent; something like a 50% profit margin for a few years would be an acceptable reward for particularly good entrepreneurship. Multiples of that amount, however, simply end up as gifts by the public to a few individuals. A combination of measures and international agreements must be found that would allow taxpayers to obtain decent returns on their investments, without removing the incentives for savvy entrepreneurs to commercialize innovative products.
The seriousness of this problem should not be understated. The amounts involved contribute to the creation of a new aristocracy that can pass on its wealth through inheritance. If huge sums can be spent to protect privilege by financing election campaigns (as is now the case in the US), the implications of this problem, for both democracy and long-term economic efficiency, could become systemic. The possible solutions are far from simple, but they are well worth seeking.
Not only that, but the total expended on pure R&D in the US is way, way, way too low and has been for many decades.
⇧ Stronger Construction Standards Can Reduce Tornado Destruction: IBHS
“…damage caused to manufactured homes by EF0, EF1 and most EF2 tornado winds can be greatly reduced if buyers select manufactured homes built to U.S. Department of Housing & Urban Development (HUD) Code Zone III Exposure D (open water exposure wind design) standards and have them installed on permanent foundations.”
⇧ Better Late Than Never: El Nino Finally Arrives
A long anticipated El Nino has finally arrived. But for drought-struck California, it’s too little, too late, meteorologists say.
⇧ [Risk-Management Issue] Can the ‘connected’ car save carriers? – YouTube
This is about cars, but it may as well include your home if fully connected. Watch it through to the end. It’s a risk-management decision.
At this year’s Mobile World Congress wireless carriers have joined forces with manufacturers to showcase their take on the ‘connected’ car, the FT’s David Crow reports.
⇧ Le Pen, French farmers and the euro – YouTube
It would be a huge hit to the EU and eurozone were Marine Le Pen to be elected President of France.
Even though we want the EU and euro to survive, we have mixed emotions about her. We’re not nationalists in any sense of the term, but her concerns in many areas are not without some justification.
That’s no endorsement of François Hollande’s government either.
Paris bureau chief Anne-Sylvaine Chassany assesses the prospects for far-right National Front leader Marine Le Pen in upcoming French elections, as Le Pen reaches out to new voters and campaigns against the euro.
⇧ Bank of England investigated for fraud – YouTube
This is the third in a row now from FT:
The Bank of England is the focus of a criminal investigation by the UK’s Serious Fraud Office. Caroline Binham, financial regulation correspondent, and UK news editor Michael Stott discuss the allegations and what they could mean for the BoE and London.
We really do think Mark Carney has been doing a great job, considering that we oppose the Bank of England in principle in the first place.
⇧  Beckworth on Jobs, the Taylor Rule and Fed Policy – YouTube
At the 12:50 mark:
…Boom Bust Producer Bianca Facchinei takes a look at how the consistent rise in rent has affected city planning and the real estate market.
She deals with micro-apartments.
⇧ Household Formations Have Returned to Pre-Recession Levels – YouTube
This is recommended viewing. Nice job, Ilyce Glink (quick wit and a good sense of humor too).
Household formation is back to its pre-recession level of around one-million new households a year, according to research from the USC Lusk Center for Real Estate. Gary Painter, PhD, co-author of the study and a Professor at Lusk, explains how future unemployment spikes will affect the housing market on this episode of Big Money Real Estate with Ilyce Glink.
This video is a strong argument for developers building, and landlords buying, rental units to keep rent rates from driving people into buying.
The issue has been land prices and skilled construction labor. Fuel prices have been good as have construction materials.