Linking ≠ endorsement.
⇧ The Renters Next Door: America’s New Generation of Single-Family Residence Renters ‹ Zillow Real Estate Research
Over the past decade, almost all of the growth in America’s households has been driven by renters, especially renters of single-family residences (SFRs).
Owning the stereotypical modest home with a white picket fence was long a hallmark of the suburban society that characterized the second half of the twentieth century (at least in the popular imagination). But the foreclosure crisis triggered by the Great Recession made renters out of millions of former homeowners.
⇧ 1 dead, 1 injured after fire engulfs Woodland Hills condo – LA Times
One person died and another suffered burn injuries after a fire engulfed a condominium unit in Woodland Hills.
Firefighters were called to the 21600 block of Burbank Boulevard around 9:40 p.m. Saturday night where they discovered one unit on the second floor of the complex “well involved” in fire, Los Angeles Fire Department spokesman Brian Humphrey said.
“The Tories have committed to a series of costly promises… At the same time they have also pledged not to raise income tax, national insurance or VAT (value added tax).
“There would therefore appear to be a relatively high chance that they would have to soften their ambitious fiscal targets,” he said.
Or they would cut into spending even more (more austerity), which we say is their real plan, though we’d love to be wrong.
⇧ Washington State Is So Screwed | Mother Jones
Back on April 21, 2015, we posted: “William Shatner wants Seattle’s water to save California” (https://propertypak.com/2015/04/21/news-real-estate-risk-economics-apr-21-2015/#04211518). This is more of why he can’t have it.
California’s been getting all the attention, but it isn’t the only agriculture-centric western state dealing with brutal drought. Washington, a major producer of wheat and wine grapes and the source of nearly 70 percent of US apples grown for fresh consumption, also endured an usually warm and snow-bereft winter.
The state’s Department of Ecology has declared “drought emergencies” in 24 of the state’s 62 watersheds, an area comprising 44 percent of the state.
⇧ The Price Paradox by Robert Skidelsky – Project Syndicate
Avoiding deflation — and thus sustaining economic recovery — would seem to depend on one of two scenarios: either a rapid reversal in the fall of energy prices, or a deliberate policy to raise output and employment by means of public investment (which, as a byproduct, would bring about a rise in prices). But this would mean reversing the priority given to deficit reduction.
No one can tell when the first will happen; and no governments are prepared to do the second. So the most likely outcome is more of the same: continued drift in a state of semi-stagnation.
“…no governments are prepared to do the second.” They should change.
⇧ A Global Marshall Plan by Erik S. Reinert and Jomo Kwame Sundaram – Project Syndicate
The Marshall Plan, as it is better known, entailed a massive infusion of US aid to support national development efforts in Europe, and is still viewed by many Europeans as America’s finest hour.
The Marshall Plan’s impact was felt far beyond Europe’s borders, developing over the following decade into what is probably the most successful economic-development assistance project in human history. …
… Free trade would be possible only after reconstruction, when European countries could compete in international markets.
… Marshall argued that participatory institutions emerge from economic progress, not the other way around — the opposite of today’s conventional wisdom. As he put it, the policy’s “purpose should be the revival of a working economy in the world, so as to permit the emergence of political and social conditions in which free institutions can exist.”
We too have written that what the world needs is a global Marshall Plan.
⇧ Richard’s Real Estate and Urban Economics Blog: Is Free Trade Good for Everyone?
… the workhorse theory of International Trade, the Hecksher-Ohlin Theorem, leads to the Stolper-Samuleson Theorem, which shows that when countries start trading with each other, the relatively abundant factor of production in each country becomes better off, while the relatively scarce factor becomes worse off. In the US context, this implies that opening up trade will leave capital better off relative to labor, and skilled labor better off relative to unskilled labor.
In my ideal world, we would pass the Trans-Pacific Partnership (TPP), a potential [quasi]-trade agreement among the US and 11 other countries of the Pacific Rim, and redistribute its bounty such that everyone would be better off. There is no evidence that our political system would allow this to happen.
Well, until we see what the agreement actually says, we oppose it. If we are allowed to see it and come to the conclusion that it’s bad for the masses, we’ll oppose it.
If the corporate elites can’t come up with agreements that are best for the masses, then there should be no such “trade” deals made at all.
As the graph below on the right shows, the model’s probability distribution for GDP growth in the 2015 calendar year has shifted markedly downwards, with a much increased statistical risk of a sub 6 per cent outcome — one definition of a hard landing in the Chinese context.
That’s what we had predicted and did say would constitute a crash (relatively speaking; given the prior heights and the rapid decline).
Gavyn thinks the Chinese know what to do and will do it. We don’t see strong enough evidence that they know. They think they’re going to hover at around 7% for a decade. That would be an amazing feat.
⇧ Ireland’s Lessons for Greece by Michael Heise – Project Syndicate
Consider Ireland, which was among the countries hardest hit by the global economic crisis. Having become exceptionally bloated during the pre-2008 boom years, Ireland’s banks buckled under huge losses when the property bubble burst. To avert a devastating bank run, the government guaranteed the entire outstanding stock of deposits and liabilities.
As a result, government debt soared from 25% of GDP in 2007 to more than 120% in 2013. Add private debt, and the Irish sit on a debt mountain worth nearly 400% of GDP. In Greece, where private debt is much lower, total debt amounts to around 300% of GDP.
Nonetheless, Ireland regained access to capital markets in early 2013, and investors have few qualms about the country’s prospects.
That’s sounds great until you look into the negative impacts on the common people, all of which negatives were truly unnecessary.
The only reason Ireland did what it did and is held out as having made the best choice is because the leadership of Ireland held up the system of monetary usury rather than abandoning it for what would have been vastly superior and would have meant zero austerity, zero privatizations, etc.
Greece should follow Iceland more than Ireland. In fact, Greece should lead the way by immediately issuing sovereign money (no bonds, no debt, no interest payments to anyone ever again).
⇧ Telematics and Usage-Based Insurance: Benefits, Challenges, and the Future | Carlton Fields Jorden Burt – JDSupra
This is a very good overview of the many issues surrounding telematics.
Telematics allow for the measurement of actual driving habits, through remote access to a vehicle’s real-time driving data. Thus, a driver’s actual experience can be studied in data transmitted from, for example, the vehicle’s navigation system, speedometer, odometer and tachometer, braking and acceleration systems, suspension system, engagement of anti-lock brakes, late-night driving habits and more.
⇧ Greeks Add Pressure on Tsipras to Compromise as Talks Resume – Bloomberg Business
Support for the government’s confrontational stance fell to 46 percent in a University of Macedonia poll for Skai TV published on Tuesday, compared with 56 percent a month earlier. Two polls published over the weekend showed most Greeks want the government to strike a compromise with creditors.
According to a Kappa Research survey published in To Vima weekly, 71.9 percent of those surveyed said a deal with creditors would be best for the country, while 23.2 percent said they prefer a clash. The Alco survey showed that 50 percent of respondents want a compromise even if creditors reject Greek government demands, while 36 percent said the government should opt for a “rupture.”
It appears the Greek government hasn’t done a good enough job showing the math to the Greek public.
A deal the Greek’s can’t afford is a deal the Greeks should not want. How many Greek’s must suffer and just how deep should that suffering be before the Greeks as a whole should opt for a new currency?
Well, as we wrote above, they should be choosing a debt-free currency rather than staying with the euro with its built-in debt.
Why doesn’t Greek Prime Minister Alexis Tsipras offer that to the Greek people? He knows it’s available, right?
⇧ The coming defaults of Greece | VOX, CEPR’s Policy Portal
• The way to avoid the first step, default, is to announce an agreement in principle to reduce the public debt of the Greek government.
• The way to avoid the last step, Grexit, is to announce that resources to thwart a bank run are available.
These announcements must be unconditional — independent of an agreement on the assistance programme — because it seems that such an agreement is beyond reach.
In 2014, investors deposited US$30 billion in overseas markets, an all-time high, and while the US has long been the largest cross-border investor in the world, outbound capital soared by 75 per cent in 2014 as the dollar climbed against other currencies.
For those holding US funds, real estate in almost every market in the world has become cheaper.
This is exactly what we’ve been saying in brief. The Germans have been being anti-democratic.
In reality, the issue here is not coolly calculated economic regulations but basic political understanding or view of humanity. The conservative lawyer Wolfgang Schäuble wants control, he mistrusts both people and politicians and not only Greeks.
It’s a meagre, scrimping life that the European visitor tries to make tasty for his audience. Political progress is accordingly only possible if the actors are under constant pressure. It’s great if one succeeds in sticking to a scarcely incalculable number of rules. And crises are good as they enforce change.
That’s the start of a report by Claus Hulverscheidt in the Süddeutsche Zeitung on an event at the Brookings Institute in Washington where finance minister Varoufakis followed Schäuble. The former spoke, on the contrary,
about the marvelous power of democracy,… of freedom and self-determination. Friendly murmurs in the audience.
The older the distinguished politician Schäuble became, the closer he got to the classical German tradition of authoritarianism: anthropological pessimism, distrust, control, judicial enforcement instead of politics. In post-WW2 political culture, this traditional authoritarianism was supposed to give way to a democratic view of humanity in schools because democracy can’t exist without a basic trust in civic liberty and sense of responsibility.
So it’s quite logical that the outcome of democratic elections in Greece should be treated by a conservative German government as an accident that should be reversed as quickly as possible so that the country can be brought back under domestic or European control. Syriza is not viewed as a final opportunity to get out of the crisis without social unrest and with a government that retains (at least so far!) society’s support. Rather, it should fail — setting an example for Podemos in Spain’s elections this autumn — and be replaced.
The whole article is worth reading.
⇧ The great unraveling of globalization – The Washington Post
This is a rather lengthy but informative discussion about globalization or reshoring and localization.
Yet despite all this activity and enthusiasm, hardly any of the promised returns from globalization have materialized, and what was until recently a taboo topic inside multinationals — to wit, should we reconsider, even rein in, our global growth strategy? — has become an urgent, if still hushed, discussion.
If the article is basically correct, and we think it is, China’s slowdown will continue. What’s also interesting is that the process has continued even while the US dollar has strengthened and fuel prices have dropped. If the dollar weakens and oil prices rise, the process of localization will only increase.