Linking ≠ endorsement.
⇧ Oklahoma Recognizes Role of Drilling in Earthquakes – NYTimes.com
No doubt about it:
Abandoning years of official skepticism, Oklahoma’s government on Tuesday embraced a scientific consensus that earthquakes rocking the state are largely caused by the underground disposal of billions of barrels of wastewater from oil and gas wells.
The state’s energy and environment cabinet introduced a website detailing the evidence behind that conclusion Tuesday, including links to expert studies of Oklahoma’s quakes. The site includes an interactive map that plots not only earthquake locations, but also the sites of more than 3,000 active wastewater-injection wells.
Chances are you’ve heard the statistic on numerous occasions, “women earn 77 cents for every dollar a man earns—for exactly the same work.” …
The first thing to notice is that the “77 cents on the dollar” metric isn’t comparing apples to apples. It is a comparison of gross income.
Is that right?
We can attest that one day we’ll see data showing things aren’t rosy; and the next or same day, we’ll see what appear to be puff pieces (https://en.wikipedia.org/wiki/Puffery) trying to psych up buyers.
Back in January, the OC Register reported that OC New Home sales fell 41%, a remarkably bearish and accurate reporting on the poor new home sales performance this year. Unfortunately, it looks like that must have been too bearish because it was shortly followed by a report discussing how the market was on fire, a report I lampooned in Did the OC housing market come alive in February 2015?
How exactly does the market go from very slow to “on fire” in two weeks? It doesn’t, but agents needed some spin, so the newspaper gave them what they wanted.
⇧ US Oil Production Forecast Scenario | Energy Matters
Necessity is the mother of invention, so increased efficiency ramping up to make production cheaper in the US is definitely happening to some degree. The questions are just how quickly and how large the efficiencies.
Readers are keen to know when US oil production will begin to fall. This is not an easy question to answer but in the comments to last week’s rig count update some interesting links were posted. Among them I came across a link to an Energy Information Agency (EIA) report into US drilling efficiency that sought to link future production to drilling activity and this seemed an interesting avenue to explore. The analysis presented here is jam packed with multiple lines of uncertainty, but a simple analysis based on many assumptions suggests that US production may actually increase further by about 1 Mbpd, due to an estimated 18 month time lag between drilling and first production, improved drilling efficiency and a growing backlog of drilled but idle wells. US oil production may not actually begin to fall in earnest until the middle of 2016.
⇧ Digitopoly | The last two digits of a price can signal your desperation to sell
So if you want to sell your house quickly, pick a round number. As it turns out, real estate agents then understand the signal. Alternatively, if you want to sell for a higher price and are willing to wait, your agent will advise you to pick an odd one.
⇧ The Labor Market Recovery’s Missing Ingredient | BlackRock Blog | Global Market Intelligence [cached]
Why are so few Americans participating in the labor market even as jobs become more plentiful? I see three main reasons.
1. An aging population
2. Fewer women working
3. A mismatch between skills employees have and those employers need
⇧ Downtown Rents Aren’t Going to Get Cheaper Anytime Soon – Unaffordable Housing – Curbed LA
The Downtown Center Business Improvement District says that over 9,000 apartments and condos are in the works now, with 13,500 more units currently proposed, but that’s nothing considering LA’s in the midst of a huge housing shortage that’s causing prices throughout LA to shoot up faster than those in any other US city. Many point the finger for outrageous housing prices at LA’s zoning code, which prioritizes single-family homes and limits developers’ opportunities to build.
⇧ Greece Endgame Nears | naked capitalism
It is still astonishing that the European elites have convinced themselves that adhering to the procedures used to implement clearly unsuccessful austerity programs are so important as to justify creating a failed state. Is this what the European project stands for? It’s sadistic and destructive, but there seem to be no cooler heads who can deter the power players, the ECB and the IMF, from this course of action.
Yes, they want the left-wing government to appear to fail to the Greek people and to the world. It is worth it to them to see more Greeks, including children, starving and homeless.
It’s time to default. Trying to continue to pay the debt is just throwing “good” money after bad.
⇧ Laurence Fink | BlackRock | NYC real estate investment
The median sale price for existing condos in Manhattan reached a six-year high of $1.3 million in the first quarter, according to Corcoran Group, while bullion posted its first back-to-back annual drop since 2000 last year and has dropped 38 percent since peaking in 2011….
⇧ European Central Bank Squeezes Greek Banks, Tightening Access to Loans – NYTimes.com
Prolonging the agony or turning the screws tighter to get it over with?
…Mario Draghi, the president of the E.C.B., has made it clear that if Greece does not strike a deal with Europe he will eventually stop backing the Greek banks, which would inevitably lead to capital controls and eventual default.
⇧ Asean economic growth ‘to outdo EU’ – BBC News
…the Asean bloc would not have a single monetary policy or central bank, unlike its European counterpart.
They’ll be even less integrated than Europe is, and it is the lack of integration that’s been the main problem with the EU and eurozone, etc.
⇧ RE No. 5: Wage-led Growth – Social Europe
Wage-led growth is an equitable strategy for recovery that realises that wage growth can support demand via consumption expenditures and it can also induce higher productivity growth. This Research Essay provides an overview of the concept of wage-led growth, both as an analytical concept and as an economic policy strategy. It distinguishes between wage-led and profit-led demand regimes and argues that the available evidence indicates that demand in most economies is domestically wage-led. Changes in functional income distribution also have supply-side effects. Available evidence suggests that higher wage growth induces higher productivity growth. Neoliberalism resulted in an increase in inequality and a decline in the wage share, but growth has nowhere been based on the profit-led growth process. Rather, neoliberalism has given rise to either debt-led or export-led growth regimes, both of which are unstable. This Research Essay concludes by outlining a wage-led growth strategy.
Given the choice between supply-side and wage-led, we’re definitely for wage-led.
⇧ Fact Check: has austerity held back economic growth?
In the last five years, austerity has undermined our public services, lowered the living standards of working people, pushed more children into poverty and held back economic growth.
Nicola Sturgeon, Scottish first minister and Scottish National Party leader at the party’s manifesto launch.
⇧ Could a Carbon Tax Finance Corporate Rate Cuts?
This is further confirmation of what we already knew and have said, but it’s still most welcome evidentiary support.
It turns out that tax cuts for the job creators…don’t create very many jobs. By contrast, tax cuts for low- and moderate-income households can boost economic growth.
Blomquist says home prices aren’t likely to increase much until incomes increase.
⇧ The Good, Bad and Ugly of Real Estate Investments – US News
Turnkey properties can unlock returns. With a turnkey investment, you’re buying a fully vetted, redeveloped property with tenants and a property manager. “It’s a lot like buying a take-and-bake pizza. All the ingredients are there, and all you have to do is buy,” says Scarlett Tassone, a vice president and mortgage banker with PrivatePlus Mortgage in Atlanta. The downside is that compared with other tenant properties, “they are not quite as lucrative and a bit more expensive,” she says.
Caveat rental. Yes, you can make money with rental properties. But if you have little experience in the game, expect a steep learning curve. “Bricks-and-mortar properties require expertise and intensive management, even with investment-grade properties,” Papierski says. “If the owner doesn’t have the expertise, he or she will need to hire someone to handle the leasing and day-to-day management.” And that fee generally runs between 4 and 8 percent of gross rents.
Increase your profit potential with an investment of time. Property development, management and administration often require an army of specialists. But if you’re adept at repairs, accounting or showing a vacancy to prospective renters, you can forego the fees associated with hired help. “Depending on your availability and your skills, these could be trade-offs that are worth making for you,” Reiss says.
⇧ In Battle Between Strong Dollar and Cheap Gas, the Strong Dollar Is Winning – NYTimes.com
There were two big shifts in global markets in the second half of 2014 that looked likely to shape how the American economy would perform in 2015.
Oil prices plummeted last year, leading to cheaper gasoline — good news for American consumers and companies like airlines and shipping firms that are heavy fuel users. Meanwhile, the dollar soared on global currency markets, making life more difficult for exporters who faced higher costs relative to global competitors.
The giant question for the economy in 2015 was which of these forces would prove more powerful. The bad news is that so far, the strong dollar is winning.
Cheaper gasoline may yet create a consumer spending boom, but there’s no real evidence of it in the data so far. And while the winners from the cheaper fuel aren’t acting like winners yet, the losers most certainly are.
Companies involved in the drilling of oil and other fuels are pulling back on investment, as you might expect after oil prices fell by half in seven months. And orders for nondefense capital spending excluding aircraft have fallen for six straight months through February (the March numbers are due out Friday morning, and analysts expect a slight gain).
Also, much of the growth in GDP over the last few years has been attributed to fracking. Frackers are making do with smaller workforces and improving technology, but that doesn’t help wages.
We said it would take several months of lower oil-prices to get a sense of how things will be. Well [no pun intended], it looks like the Fed’s Vice Chair, Stanley Fischer, overestimated the positive impact lower oil-prices would have at least in the near term.
⇧ No, the TPP Won’t Be Good for the Middle-Class | Economic Policy Institute
…the net national gains from lowering trade costs tend to be wildly overestimated. In short, even “free trade” tends to redistribute a lot more (about 5 or 6 times as much) income as it generates. Given that complementary policies to re-re-distribute the income redistributed away from typical American workers are a necessary condition to make the middle-class better off from “free trade”, one is compelled to ask just what are the subsequent policy maneuvers that the current Congress will likely undertake to compensate those on the losing end? Yes, there has been some talk about beefing up Trade Adjustment Assistance (TAA), but this is compensation that is too small by an order of magnitude….
⇧ Why You Can’t Put Faith in Reports of First-Quarter Economic Slumps – NYTimes.com
The “first-quarter effect” is rather large. In a recent research note to clients, Alec Phillips of Goldman Sachs highlighted the differential, noting that since 2010, “growth in Q1 has averaged 0.6%, while growth in the rest of the year has averaged 2.9%.” CNBC’s Steve Liesman has analyzed the data, finding that since 1985 “first-quarter growth has been by far the weakest of the four, averaging just 1.87 percent while the economy has grown 2.7 percent.”
I have checked the math, and they’ve each gotten their sums right. Moreover, these differences are large enough that they are unlikely to simply reflect the effects of chance. And while Mr. Liesman is right that the phenomenon is apparent over the past few decades, there’s no evidence of it in the 1970s and 1980s.
Almost no one is moving to San Francisco to save money.
They might come for the tech jobs, the comfortable weather or even the artisanal espressos. But average home rent has jumped nearly 15 percent in the past year — to $3,129 last month — according to real estate data firm Zillow.
Across the country, rising home prices have been shifting many Americans into rentals, a trend that has driven up rents.
…Rents have fallen over the past year in six of the United States’ 100 largest metro areas, including Chicago, Minneapolis, New Orleans and Rochester, New York.
⇧ Mosler: US economy weakness will continue – YouTube
Warren Mosler sees it pretty much the same as we’re seeing things.
Edward sits down with Warren Mosler — president of Valance Co., Inc. Warren gives us his take on the Atlanta Fed’s downbeat forecast for first quarter GDP growth and if the Fed raising rates would have a greater impact on interest income or credit activity.
⇧ Calbuco volcano’s surprise eruption alarms Chileans – YouTube
A huge cloud of ash spewed from Chile’s Calbuco volcano on Wednesday (April 22) as it erupted for the first time in 40 years.
Emergency services declared a red alert and thousands of people evacuated the immediate area as a precaution.
Calbuco is near the cities of Puerto Varas and Puerto Montt .. around one thousand kilometers south of Chile’s capital Santiago.
Petrol stations in the region were swamped with motorists waiting in line to fill up their tanks.
Well, we’re also wondering about how much it will dampen global warming.
⇧ The Trans-Pacific Partnership and the Death of the Republic | WEB OF DEBT BLOG
Ellen Brown has been doing some extensive reading about the Investor-State Dispute Settlement (ISDS) issue.
In her usual manner, she’s synthesized it.
Ellen leans very much over to the precautionary side and doesn’t put her faith in people who have shown a pattern of being disingenuous. She almost never fails to consider fairly plausible worst-case scenarios.
This article is well worth reading.
Something else besides attracting investment money and encouraging foreign trade seems to be going on. The TPP would destroy our republican form of government under the rule of law, by elevating the rights of investors — also called the rights of “capital” — above the rights of the citizens.
That means that TPP is blatantly unconstitutional. But as Joe Firestone observes, neo-liberalism and corporate contributions seem to have blinded the deal’s proponents so much that they cannot see they are selling out the sovereignty of the United States to foreign and multinational corporations.
⇧ Those on lowest incomes ‘suffered most’ in the recession
The poorest section of Irish society suffered the largest contraction in income as a result of the recession, according to one of the most comprehensive studies of income distribution in Ireland during the crash.
“In assessing the impact of recession and austerity on income inequality, Ireland provides a case study of particular interest, in light of the extent and nature of the crisis faced — not only deep recession but the inter-related banking crisis of unprecedented proportions and bursting of a housing bubble — and the scale of the fiscal adjustment then undertaken,” the report’s authors, Michael Savage, Tim Callan, Brian Nolan and Brian Colgan, said.
⇧ Billions of Dollars of Real Estate at Risk to Wildfire, Experts Say – NBC News.com
To reduce risk, experts recommend clearing flammable vegetation such as pine trees, shrubs and wood piles in at least a 30-foot perimeter around the home, using non-combustible construction materials such as ceramic shingles and composite decking instead of wood, and installing wire mesh over vents to prevent windblown embers from flying in.
The key, Jeffery said, is for whole neighborhoods to take these steps so that “you are actually creating a large defensible space … and enable the fire responders, the firefighters, to do their jobs more effectively” when — not if — the wildfire occurs.
⇧ Habitat buyer rehabbing properties
The purchaser of 56 Pensacola Habitat for Humanity homes plans to sell some of them.
⇧ SE Valley: Home prices recover, show growth
For decades, the mantra for many people buying homes in the southeast Valley was: Drive until you could afford a new house. Now, although homebuilding in newer areas is growing again, interest in core areas in those cities also is surging.
For almost 50 years, regional growth spread from Tempe across Mesa, Chandler, Gilbert, Apache Junction and Queen Creek into Pinal County as families drove farther out to former farmland to buy bigger houses for lower prices.
Now subdivisions built in Tempe, Mesa and Chandler during the 1970s and 1980s have evolved into established neighborhoods with large homes surrounded by mature landscaping, top-rated schools, freeways and growing job corridors.
⇧ Americans Again Say Real Estate Is Best Long-Term Investment
For the second straight year, more Americans name real estate than stocks, gold, savings accounts/CDs or bonds as the best long-term investment. Real estate leads with 31% of Americans choosing it, followed by stocks/mutual funds, at 25%. Meanwhile, gold dropped to third this year, a significant change from 2011 and 2012, when it was the runaway leader.
One wonders how much differentiation there is in real estate as an income investment versus those buying their personal residence for potential appreciation and as a hoped-for long-term hedge against deflation. Also, how many have made the renting-versus-buying decision and have had the money to make that transition.
⇧ Bay City residents have chance to clean up dozens of foreclosed properties on Saturday | MLive.com
With a weekend of spring cleaning on tap, Bay City Commissioner Chad Sibley is looking to spruce up some foreclosed properties that have been off limits to the public.
Sibley, who represents the city’s 8th Ward, is hoping, on Saturday, April 25, to clean up dozens of properties heading toward tax foreclosure. He received permission from Bay County officials to clean up nearly 40 properties in Bay City — some of which are in pretty rough shape.
⇧ The American Dream is a myth, says Nobel-prize winner Joseph Stiglitz
Stiglitz argued that income inequality in America is not just the result of market forces, but also politics and policies put in place by lawmakers and companies, particularly after Ronald Reagan’s election in 1980.
He noted that the post-World War II era was prosperous for both the American economy and its workers. But since then wages have stagnated, with median income falling to where it was 40 years ago. Meanwhile, CEO pay has risen to 300 times the average worker’s income, up from 30 times. He also said that minimum wage jobs are increasingly held by a family’s primary breadwinner, instead of a teen looking for part-time work.
According to Stiglitz, there’s no magic bullet to solving income inequality.
He’s right except for that last bit. There is a bullet, but it’s not magical, just censored.
“Monetary-and-Banking-Reform Platform for The United States”: Here
⇧ Disciplined Approach: Calida Climbs Top Developers List | Multifamily Executive Magazine
For Eric Cohen and Douglas Eisner, creating The Calida Group in 2007 just as the market was crashing, was never about making a pretty penny off of other companies’ shortcomings; it was always about investing for the long haul.
⇧ Greek finance minister tells magazine: Grexit no bluff if more austerity imposed | Reuters
The risk that Greece would have to leave the euro if it has to accept more austerity is no bluff, Greek Finance Minister Yanis Varoufakis told a French magazine, saying that no one could predict what the consequences of such an exit would be.
“We cannot bluff anymore. When I say that we’ll end up leaving the euro, if we have to accept more unsustainable austerity, this is no bluff,” Varoufakis is quoted as saying.
“Anyone who pretends they know what would happen the day we’ll be pushed over the cliff is talking nonsense and is working against Europe,” he said.
Yanis isn’t bluffing. He can’t be. Greece can’t afford to pay. It’s that simple. He’s also right about those who claim that a Greek exit would be as nothing. It would be the Greeks paving the way if it were to work for the Greeks, and it would work.
If the Germans want Europe to stay together, the Germans must pay now to reap later. It’s also that simple.
⇧ A New Deal for Greece by Yanis Varoufakis – Project Syndicate
Our task is to convince our partners that our undertakings are strategic, rather than tactical, and that our logic is sound. Their task is to let go of an approach that has failed.
It has failed, but they insist upon having their fingers in their ears because they do not want a left-wing government succeeding even when that government is right.
The powers that be in Europe are still plutocrats at heart. That’s the obstacle.
⇧ Chinese Real Estate New York | Kaisa Default
What happened is what many didn’t think would, or even could, happen.
Many in New York associate Chinese real estate companies with limitless funds and a never-ending ability to invest here. But what if they are wrong?
On Monday, Shenzhen-based megadeveloper Kaisa defaulted, sending shockwaves through the worlds of real estate and finance. As the Chinese property market continues to soften, observers are starting to wonder who will be next.
We think there’s still a great deal of unrealistic psych-up language going on. China is in worse shape, and has been, than the mainstream has been claiming. They are too erratic.
⇧ A primer on Greece’s primary surplus – YouTube
Greece is now running a primary surplus. As discussions between Greece and its creditors roll on, Martin Sandbu, Lead writer, Martin Sandbu’s Free Lunch, explains what the primary surplus is and its significance to Greece’s negotiating position.
⇧ What To Do When HELOCs Reset & Break Your Budget – YouTube
Pretty optimistic at the systemic level:
Previously on Big Money Real Estate, Ilyce looked at the impending financial strain for homeowners who took out a home equity line of credit during the height of the real estate bubble. Those loans are about to reset with much higher payments, which could lead to defaults for anyone who hasn’t been able to budget ahead. Greg McBride, Chief Financial Analyst for Bankrate, talks with Ilyce about what to do if resetting HELOC payments are about to break your budget.