Linking ≠ endorsement.
⇧ INFOGRAPHIC: How the millennial generation will transform the economy — based on research from Goldman Sachs
This is actually a useful infographic.
The Millennial generation is the largest in US history and as they reach their prime working and spending years, their impact on the economy is going to be huge.
Millennials have come of age during a time of technological change, globalization and economic disruption. That’s given them a different set of behaviors and experiences than their parents.
They have been slower to marry and move out on their own, and have shown different attitudes to ownership that have helped spawn what’s being called a “sharing economy.”
They’re also the first generation of digital natives, and their affinity for technology helps shape how they shop. They are used to instant access to price comparisons, product information and peer reviews.
Finally, they are dedicated to wellness, devoting time and money to exercising and eating right. Their active lifestyle influences trends in everything from food and drink to fashion.
These are just some of the trends that will shape the new Millennial economy.
⇧ ‘Unbelievable tragedy’: Hot-plate fire kills 7 children in Brooklyn – CNN.com
This sort of story is always hard to read.
Firefighters found no evidence of smoke detectors in the first and second floors….
We wonder, among other things, how old the hotplate was and about the kitchen-outlet fuse or circuit breaker.
Did they own the home or rent?
California is staring at a massive decline in the hydro-power as the state enters fourth year of drought….
The situation is troublesome in Washington and Oregon as well. Washington and Oregon administration recently declared drought emergencies in many regions as the snowpack is hovering at or near record lows.
Not a word about solar-powered desalinization plants…:
On Thursday Governor Jerry Brown joined a group of Democrats and Republicans to announce legislation aimed at helping local communities cope with the continuing drought.
California needs to finance these projects through a state-owned bank (a public bank).
⇧ Abe-Kuroda honeymoon soured by fiscal friction | Business | Reuters
…the mask began to slip last year when Abe decided to delay a sales tax hike, making Japan’s primary fiscal goal harder to achieve.
“The honeymoon days are over,” said Izuru Kato, chief economist at Totan Research. “Kuroda must be frustrated over a lack of progress in structural reform and fiscal consolidation.”
A former finance ministry bureaucrat, Kuroda feels Japan cannot afford to delay tax hikes and spending cuts given its dire fiscal state, while Abe prefers to focus more on boosting growth to raise tax revenues.
Though their intentions are likely good, neither of them completely knows what he’s doing; but Kuroda knows less than Abe.
With all due respect and as we have stated repeatedly on this blog, we suggest you dump issuing bonds. They aren’t necessary. Also, go back nearly to the way the Japanese economy was run before Japan mistakenly switched to American-style neoliberal financing. Go back to your war-footing industrial economy. Your problems will be over in less than a year.
In addition, hire Richard Werner and do what more he suggests on top of changing the basis of your currency (https://www.iexpats.com/invented-qe-banks-got-wrong-says-economist/). He knows more about what went wrong in Japan than anyone we’ve ever read or heard.
The money that’s created doesn’t have to cause an increase in governmental debt; but do you have the courage to plug your ears when confronted by the laissez-faire types who ruined your economy, cast off your bankers, and then run your economy debt-free and with zero monetary constraints for real growth? If not, do what Werner tells you to do short of all that. It would still be vastly better than what you’re doing now.
⇧ World faces 40% water shortfall in 15 years: U.N. – MarketWatch
The biggest drain on water resources is agriculture, which uses about 70% of the world’s fresh water supplies. Tapping into groundwater supplies to make up for surface-water deficits strains resources. The report said that 50% of the world relies solely on groundwater to meet basic daily needs and that 20% of the world’s aquifers are already over-exploited.
There will be technological advancements on getting, cleaning, recycling, etc., water; but we should not simply do nothing now and depend upon technology later because we could cause a massive problem where we won’t have the rate of advancement be able to get ahead of the problem before the environment is severely devastated and people are dying from thirst and where there is a lack of water to grow food.
⇧ Truth Needle: Is $15 wage dooming Seattle restaurants? Owners say no | The Seattle Times
The claim: Recent Seattle restaurant closures may have been linked to the city’s new $15 minimum wage.
What we found: False.
An article suggesting the $15-an-hour minimum wage was a factor in some recent Seattle restaurant closures caught fire with national and conservative media this week. The only problem: When we asked the restaurateurs in question, they said it’s flat wrong.
When it comes to the impact the $15 wage will have on restaurants, University of Washington researchers, University of California, Berkeley, researchers and an owner of seven local Subways agree that restaurants will have to raise their prices about 4 to 5 percent — meaning an additional nickel per dollar on Seattle restaurant checks.
⇧ Great Britain and Laissez Not-so-Faire Economics | The Growth Economics Blog
There is no necessary link between strict laissez-faire policies and growth. The first industrial nation in the world was anything but laissez-faire, and it intervened far more deeply into its economy than China, which functioned in some sense as the idealized “night watchman” state of Adam Smith. There is little to no evidence that government “just getting out of the way” leads to development.
⇧ Trillion Dollar Fraudsters – NYTimes.com
We decided to write our commentary after reading only the first two paragraphs of Paul Krugman’s article just to see where we come down on it relative to how he ends up dealing with it in the balance of his piece. So, read Paul’s first two paragraphs here and then our commentary below those paragraphs before reading the rest of Paul’s post to see how closely our understandings match.
By now it’s a Republican Party tradition: Every year the party produces a budget that allegedly slashes deficits, but which turns out to contain a trillion-dollar “magic asterisk” — a line that promises huge spending cuts and/or revenue increases, but without explaining where the money is supposed to come from.
But the just-released budgets from the House and Senate majorities break new ground. Each contains not one but two trillion-dollar magic asterisks: one on spending, one on revenue. And that’s actually an understatement. If either budget were to become law, it would leave the federal government several trillion dollars deeper in debt than claimed, and that’s just in the first decade.
Of course, and the object is this: cut spending and taxes while claiming it will increase the economy so that the general revenues of the federal government will rise even at the lower tax rates on the rich. Then when the growth in the economy doesn’t happen and the government is in worse shape, blame spending; and go through the whole process again while denying that, that’s what’s going on. It’s a scheme by the rich to rob the poor to pay the rich.
Now, if you read the rest of Krugman’s piece, you’ll see that we have the exact same view about what the rich Republican-backers are generally up to.
Paul says they’re hiding by omission, but they’re actually using the new “dynamic scoring” voodoo without mentioning it. It’s just more of the laughable Laffer Curve, which is being used deliberately to kill Kansas for the sake of the Koch brothers, for one, who live there and whose state income-tax rates have apparently gone down, making them richer while further impoverishing the state.
Does this information getting out embarrass them? No. Has the quality of life for the average Kansan gone up as a result of the libertarian policies having been rolled out in Kansas? No. It’s gone down. So why do such average Kansans go along with it? Paul says, “…the budgets must be sold as courageous efforts to eliminate deficits and pay down debt — which means that they must include trillions in imaginary, unexplained savings.” That’s only partly right.
The average person is constantly bombarded with anti-government rhetoric. Ronald Reagan declared, “Government is the problem,” as if there can never be good government. At the same time, those same average Kansans are not told about the wicked deeds of corporations, not that all corporations are wicked any more than all government is.
There’s an old saying, “He who governs least, governs best”; but that’s saying that anarchy is best. By anarchy, we mean the original Greek sense of the term. We’re not in favor of anarcho-capitalism at all.
The competitive spirit does not bridle itself. Given free rein, disorder and lawlessness result, always. The market does not correct this in time. People grab what they can while the getting is good, so to speak. It is irrational for posterity; and if the trend continues, it will speed up. In the here and now, it will bite those who cause it.
⇧ The Grumpy Economist: Borio, Erdem, Filardo and Hofmann on the Costs of Deflation
This is why we say there is good deflation and bad deflation.
John H. Cochrane:
Deflation remains the looming zombie apocalypse of international monetary commentary. Before we argue too much about cause and effect, it’s nice to get the correlations straight. And the correlation between deflation and poor growth is much weaker than most people think:
That’s true provided one is dealing with one who isn’t referring to bad deflation when referring to the threat of poor or no growth or even a quickly shrinking national pie.
We have consistently said that lower oil prices may have an overall positive-growth impact (not that we want increased carbon burning; we don’t). So, it would be good deflation in one sense while being a negative cost in another (a so-called externality).
⇧ China at cruising not ‘break-your-neck’ speed: OECD
The world’s second-biggest economy has set a 2015 growth target of 7 percent; a goal with which the OECD concurs and one that would mark China’s weakest expansion in 25 years.
“It’s no longer break-neck speed, but when you are at break-neck speed sometimes you break your neck, so it’s preferable to have a cruising speed that is more sustainable and we think that is the case,” he added.
The economy expanded 7.4 percent last year, down from 7.7 percent in 2013 and a peak of just over 14 percent in 2007.
We don’t think they’ll hit it even using fudged numbers.
⇧ Asia’s Almighty Middle Class by Lee Jong-Wha – Project Syndicate
This was the promise, but it was supposed to have happened a long time ago.
Most important, the rise of the middle class is likely to be accompanied by growing demands for political freedom and civil liberties, thereby fostering democratization. Indeed, an examination of a large sample of countries, from the nineteenth to the twenty-first centuries, reveals that a larger population of affluent, educated citizens — especially women — brings about more political participation and greater support for democracy, particularly in less-developed countries.
In the West, capitalism and democracy progressed in tandem, as the development of markets reduced the power of landlords and increased that of the working and middle classes. By participating actively in politics, basing their electoral choices on rational self-interest, and developing the sense of moderation needed to resist dictatorship, the middle class promotes democratic progress. At the same time, the growth of private organizations associated with the rise of the middle class prevents state institutions from monopolizing political resources.
In Asia, South Korea experienced a similar progression, with rapid economic growth spurring the rise of a large middle class, which in turn drove democratization in the 1980s. That history may repeat in China before long.
The only way it will happen is if the Chinese people throw off the one-party dictatorship of the Chinese Communist Party. They won’t go quietly.
⇧ CPI Has Declined, and So Has Your Rent | Insights | Colliers International’s Blog
The Bureau of Labor Statistics recently posted the January 2015 Consumer Price Index (CPI) figures and the results show that the measure declined 0.1% from a year ago*. This would be of little consequence to most non-economists, but federal landlords must take note because the decline in CPI — for most GSA-leased properties — means a decline in rental income.
⇧ Don’t Let the Unemployment Rate Fool You, Labor Market Slack Remains – US News
The Bureau of Labor Statistics’ most comprehensive alternative measure of unemployment and underemployment (which it calls U6) includes the unemployed, the marginally attached and those involuntarily working part-time. It stood at 11 percent in February, 2.2 percentage points higher than at the start of the recession. By that measure, about 17.5 million people are unemployed or underemployed, or twice the 8.7 million people in the official unemployment measure.
⇧ An affordable housing crisis with no end in sight – The Washington Post
Six. That’s the number of years that the District has been running a program that requires developers building fancy condominiums with custom floating Leicht vanities and subway tile backsplashes to set aside a certain percentage of units as affordable housing for lower-income folks.
And six. That’s the number of condos sold under that initiative, the District’s highly touted Inclusionary Zoning program, according to figures the city shared with advocates.
And that about sums up the fight to make the nation’s capital a city for all.
It’s not like those condos are housing any of the 700 homeless families that represent the face of the city’s affordable-housing crisis. …
So move, you say? Not everyone gets to live in Paris or Manhattan; the District is becoming a rich-people’s paradise. The problem is that moving isn’t always an answer. Housing is pricey everywhere, and adding on the cost of commuting and child care and the other expenses that come with two extra hours of travel — not to mention the regional gridlock that comes with importing a workforce — makes a move equally unfeasible.
⇧ Are you paying for parking you’re not using? How parking minimums make urban housing less affordable | Broken Sidewalk
This article really makes the case for changing the requirement in big, congested cities, such as Chicago. Yonah Freemark:
For most people, zoning requirements have little to no effect on everyday life. Indeed, zoning—which is defined by municipal governments and which regulates building features such as building size and allowed uses for new projects—is typically an issue that affects few others than developers and land use planners.
But sometimes zoning regulations get in the way for regular people, years after a building was built. That’s especially true in the case of parking requirements attached to new building permits.
⇧ Dr. Joan Clos: Putting housing at the center of urban strategy – YouTube
Housing should be a big part of the urban planning and design conversation.
⇧ Thousands join anti-austerity march in Madrid – YouTube
Thousands of demonstrators have taken to the streets of Madrid, as the pain of austerity continues to strike.
Those here are calling for more jobs and affordable housing, with EU-imposed cost-cutting fueling poverty among Spain’s worst off.
The so-called “Dignity Marches” have brought together more than two dozen groups from across the country.
“We have to think about the youth. So many people are going abroad because they cannot live here. This is a shame,” said one man.
“This is unaccept…
⇧ OC for-sale home inventory up 45%, sales down 3.6% – OC Housing News
We think Larry Roberts is right.
Rumors of a surging real estate market are greatly exaggerated.
⇧ [Insurance] Fed still learning on insurance industry oversight -Lockhart | Reuters
The Federal Reserve is still coming to grips with how large insurance companies should be regulated to protect the financial system, Atlanta Fed President Dennis Lockhart said on Friday.
The issue is being closely watched by the insurance industry….
⇧ [Insurance] A.I.G. to Pay Nearly $1 Billion to Settle Class-Action Suit Brought by Shareholders – NYTimes.com
Shareholders of the insurance giant American International Group have won approval of a $970.5 million settlement resolving claims that they were misled about its subprime mortgage exposure, leading to a liquidity crisis and $182.3 billion in federal bailouts.
Investors, led by the State of Michigan Retirement Systems, which oversees several state pension plans, accused A.I.G. of failing to disclose the risks it took on through its portfolio of credit default swaps and a securities lending program.
No comment. See the disclaimer section below this post for why.
⇧ Cyclone Pam lifts chance of El Nino this year in Australia, forecasters says
Cyclone Pam’s impact may not be restricted to devastating the island nation of Vanuatu — it may also have boosted the likelihood of an El Nino event for later this year….
… With 2014 already declared the hottest year on record, another year of near-El Nino or stronger conditions could see 2015 turn out to be even warmer, climate scientists say.
The first two months of this year have continued the trend of 2014, with the 12 months to February the hottest such period in about 130 years of records, according to US data.
“It’s absolutely essential we discharge our duty to protect policy holders in the insurance industry,” Mark Carney told a session of the House of Lords economic committee on Tuesday.”In the re-insurance business one of the top risks is climate change — that is the assessed risk of those institutions with money on the line.”
We couldn’t agree more.
⇧ Exchange Rates and Balance Sheet Effects – NYTimes.com
…if you paid attention to Asia in 1997-98 you were pre-inoculated against the temptation to fiscalize crisis narratives — the urge to see everything that goes wrong as the result of budget deficits. …
…I sometimes hear people declaring that until the 2008 crisis struck, economists paid no attention to private debt as a source of economic problems. But everyone who worked on Asia 1998 was very well aware of the problems debt and leverage could create. If we didn’t realize how vulnerable the rise in household debt made America, that was a failure of observation, not a deep conceptual problem.
⇧ Karl Aiginger: Europe and the Challenge of Re-Starting Growth – YouTube
We’ve never heard the connection put over with more emphasis and clarity between higher wages for the working class and GDP.
We’re assuming Marshall Auerback wrote this lede/video description:
The Eurozone is arguably the greatest economic casualty of the 2008 financial crisis. Whilst both the US and China have managed to exceed 2008 GDP levels, Europe continues to languish and in many cases (notably, Greece, Spain and Portugal) is worse relative to the impact of the Great Depression. If Europe in its current form is to survive, notes the economist Karl Aiginger, Director of the Austrian Institute for Economic Research (WIFO) [https://www.wifo.ac.at/jart/prj3/wifo/main.jart?rel=en], then restarting growth is both necessary and (more importantly), feasible.
But the new growth should not be more of the same, which is to say, attempted via a series of “beggar thy neighbor” internal devaluations (the economics of which are highly questionable). Rather Europe’s policy makers must embrace a new growth path that is more dynamic, socially inclusive and ecologically sustainable. More importantly, it needs to go beyond metrics such as GDP growth, embracing a model which aims to lower carbon dioxide emissions, and also reduce unemployment and income differences. In effect, Ainginger is calling for a new kind of social contract that measures “economic success” via different outcomes of a country’s socio-economic system (poverty risk, inequality, youth unemployment), as well as advocating an ecological pillar that evaluates environmental outcomes. Gone is the “low road model” of fiscal prudence and low inflation to all other countries and wage cuts to sustain an unsustainable economic mercantilism. Rather, Professor Ainginger urges Europe to embrace a more dynamic, more inclusive, more sustainable, and more stable European Union, one which serves the needs the real economy, rather than the narrow interest of the continents rentiers.
It’s an important interview.
⇧ Why Are U-3 And U-6 Important? – YouTube
Short but sweet explanation:
Atlanta Fed vice president and senior economist John Robertson explains the difference between the U-3 and the U-6 unemployment rates, and why researchers think the difference is important.
The issue beyond this concerns retirement numbers.
⇧ A different vision, but the same goal: Merkel and Tsipras agree to cooperate – YouTube
“…Greece’s economic problems were not the fault of any one country or institution.” Of course they aren’t, but Germany’s decision is key. If Germany lets up on austerity, that will be that for the whole of Europe. It will be a very wise move on many, many levels.
In his first official visit to the German capital, Greek Prime Minister Alexis Tsipras pledged to honour his country’s commitments following almost five years of austerity measures.
⇧ Germany: Tsipras calls for an end to stereotypes of Germans and Greeks – YouTube
The video is in Greek, but the following is the English transcript:
Alexis Tsipras, Greek Prime Minister (Greek): “I believe the two governments should set as their priority to break the stereotypes generated in the past five years. Greeks are not lazy and Germans are not to blame for Greece’s suffering. We must work hard to break these stereotypes in both countries.
Secondly, we must work together to fight corruption which keeps Greece stuck. We would like Germany’s help in this and a first step in this direction would be for the German authorities to provide judicial assistance in order for justice to be brought with regards to the actions of Siemens in Greece over the past decades.
Thirdly, we should resolve differences from the past which overshadow our bilateral relations. The issue of the occupation loan and war reparations is not a material claim but rather a moral issue which both countries should work to resolve for the sake of their own people who paid dearly in blood to fight the Nazi totalitarianism in a period that threatens to leave unhealed wounds.”
He’s right that Greeks are not lazy; however, Germany could, and should, lift the austerity measures and rather treat Greece as a 100% humanitarian crisis right now. Obviously, corruption must be cleaned up. Obviously, Tsipras knows it and wants that to happen. Help him. Help the Greeks.
⇧ Paying for Climate Change: A Reinsurance Industry View – YouTube
The reinsurance industry insures insurance companies to help reduce risk associated with underwritten policies. Insurance rates have risen in areas with extreme weather events.
Frank Nutter, President of Reinsurance Association of America, says climate change is a big factor for reinsurance and insurance companies.
“The consequences of climate change are quite real to our industry and it will have a significant impact on the economy going forward,” he says.
From the underwriters’ perspective, encouraging people to build on coastal areas, barrier islands and other high risk areas inevitably raises the risk level and the exposure not only by property values –including high value homes — but by the cost of repair and recovery of property and public infrastructure.
“The cost of climate change has to be factored in both in public and private insurance,” Nutter says. Also of concern – wildfires exacerbated by climate change that expose more and more homes and businesses to losses covered by insurance of federal disaster assistance.
Nutter calls for a long-term investment in mitigating losses, better land use planning, better building codes, the greater use of green infrastructure to protect properties and a change in philosophy in government.
⇧ Thomas Piketty: Student Loan Debt Is the Enemy of Meritocracy in the US | Big Think
Higher and more equitable growth in the United States requires more public support for higher education, argues economist and best-selling author Thomas Piketty. Changes are necessary for the stark reality of higher education to match the purported American values of meritocracy, hard work, and equal opportunity/mobility. If we really want to promote these things, says Piketty, we need to do something about student debt.
⇧ Congressional Budget Plans Get Two-Thirds of Cuts From Programs for People With Low or Moderate Incomes — Center on Budget and Policy Priorities
If your tenants are low-middle- or low-income and if these planned cuts go through, many of your tenants won’t be able to afford to remain in your properties. You’ll have to cut maintenance expenses. Your properties will deteriorate. Your positive cash-flow will shrink while the value of your holdings will go down.
The US economy will be greatly harmed for a variety of reasons.
Richard Kogan and Isaac Shapiro:
The budgets adopted on March 19 by the House Budget Committee and the Senate Budget Committee each cut more than $3 trillion over ten years (2016-2025) from programs that serve people of limited means. These deep reductions amount to 69 percent of the cuts to non-defense spending in both the House and Senate plans.
Each budget plan derives more than two-thirds of its non-defense budget cuts from programs for people with low or modest incomes even though these programs constitute less than one-quarter of federal program costs. Moreover, spending on these programs is already scheduled to decline as a share of the economy between now and 2025.
The bipartisan deficit reduction plan that Alan Simpson and Erskine Bowles (co-chairs of the National Commission on Federal Policy) issued in 2010 adhered to the basic principle that deficit reduction should not increase poverty or widen inequality. The new Congressional plans chart a radically different course, imposing their most severe cuts on people on the lower rungs of the economic ladder.
None of the planned cuts are necessary at all, not even close. There are only two reasons for such cuts, ignorance or malignancy (whether intended or due to a lack of compassion, sympathy, or empathy).
Every cut could be easily avoided by the US converting from Federal Reserve Notes to United States Notes (which do not increase the National Debt one penny).
Switching to USN, would allow the US to pay off the National Debt via those notes.
The increase in GDP would more than make up for any one-off inflationary pressures.
In this first episode of Social Europe Talk (SET) economists James K. Galbraith and David Lizoain as well as Maria Joao Rodrigues, the Vice-President of the S&D Group in the European Parliament, join Social Europe Editor-in-Chief Henning Meyer to discuss ‘Where now for Greece and the Eurozone?’
The U.S. has overtaken China to become the world’s largest real estate investment market, according to research published by Cushman & Wakefield.
⇧ The Basics of Co-op Housing
What if you could live in a place with 50,000 other residents, but instead of owning your unit, you owned shares in the whole complex?
It’s not something from a teen novel’s dystopia. It’s called cooperative living and for some homebuyers, particularly in New York and parts of the Midwest, it’s a way of life.
What is a co-op?
A “housing cooperative” (or “co-op”) is the legal term for a housing unit that is owned and controlled jointly by a group of individuals who have equal shares, membership, and/or occupancy rights to the housing.
A co-op is essentially a nonprofit corporation, complete with a board of directors, and each resident is a shareholder. This means the co-op owner does not actually own his or her unit, but instead owns shares of the co-op relative to the size and desirability of the unit.