Linking ≠ endorsement.
⇧ Why is there a huge methane hotspot in the American Southwest?
The Four Corners region of the southwest United States is a magnificent, otherworldly place, marked by red rock vistas, ancient cliff dwellings and sweeping blue sky. The names alone paint a picture of the landscape: The Painted Desert. The Petrified Forest. Monument Valley.
This image shows methane hotspot, highlighted in red, in the Four Corners area. This map shows how much methane emissions varied from average background concentrations from 2003-2009 (dark colors are lower than average; lighter colors are higher. (AP Photo/NASA, JPL-Caltech, University of Michigan)
But billowing above the rust-colored earth is the country’s largest concentration of methane, according to satellite data. That’s because this spot where Utah, Colorado, Arizona and New Mexico meet is also home to one of the nation’s most productive natural gas fields and coalbed methane basins.
⇧ Dahr Jamail | ”Imminent” Collapse of the Antarctic Ice Shelf and a ”New Era” in the Arctic
Recently, two friends and I attempted to climb Washington State’s beautiful, glacier-clad Mount Baker. Roped up while climbing up a glacier, roughly 1,500 feet below the summit, our route reached an impasse.
Given that it was technically early in the climbing season, and that we were on the standard route, we were dismayed to find a snow bridge spanning a 10-foot wide crevasse about to collapse. Finding no other way around the gaping void, we agreed to turn back and return another day.
After breaking down our camp and hiking out, we stopped off for a bite to eat in the nearby small town of Glacier, Washington. Our waitress told us of a friend of hers who worked in the Forest Service there, who told her that the area had, in the past year, “received the least amount of precipitation [that] it had for over 100 years.”
⇧ Dairy grazing management can restore soils, reduce carbon footprint | Dairy Herd Management
Management-intensive grazing, a practice growing in popularity among Southeastern dairy farmers and pasture-based beef cattle farmers, allows producers to efficiently use the nutrition provided in their pastures. In addition to emphasizing pasture quality and quantity for the cattle, these management-intensive grazing practices also feed the biological activity within the soil. This fosters the development of organic matter, thus capturing larger quantities of carbon that would be otherwise released into the atmosphere.
⇧ International Code Council | ICC
The International Code Council is a member-focused association. It is dedicated to developing model codes and standards used in the design, build and compliance process to construct safe, sustainable, affordable and resilient structures. Most U.S. communities and many global markets choose the International Codes.
⇧ US EPA and Army Corps Issue Weak Clean Water Rule
New York, NY and Washington, DC — May 27, 2015 — The U.S. Environmental Protection Agency (EPA) and the U.S. Army Corps of Engineers (Corps) final “Clean Water Rule” issued today reduces the agencies’ jurisdiction to protect waters that have been covered under the Clean Water Act (CWA) since the 1970s. The final rule contains some very serious negative provisions including not protecting streams and rivers that have historically been protected under the CWA, exempting industrial-scale livestock facilities, and allowing streams and rivers to be impounded or filled with toxic coal ash and other waste.
⇧ Reasonable Accommodations and Housing Code Compliance
The ADA and FHA apply to housing that is subsidized by the federal, state, or local government. In private housing, such as market-rate rentals, the FHA and state fair housing laws require reasonable accommodations for disabilities like asthma and, unlike most housing codes, protect the tenant from retaliation by the landlord for making a complaint.
⇧ Trade Deals Undermine Everything Obama Says He Stands For | PopularResistance.Org
After more than six years of Obama-era party discipline and general accord, Democrats are finally suffering a measure of intra-party strife as the president appeals to congress for “fast-track” authority to more or less unilaterally negotiate the still-secret terms of the Trans-Pacific Partnership, one of the largest trade pacts in history.
A bloc of Congressional Democrats have so far stymied the president and balked at his request, and leaders of the liberal wing of the party have engaged in fairly unprecedented public dispute with President Obama. The party’s quarrel has presented Hillary Clinton with her campaign’s first big dilemma, as the former secretary of state does an ugly political dance, trying to reconcile her previously full-throated advocacy of the now-nettlesome trade agreement with the progressive revolt of the party base to whom she’s appealing in the primaries.
I could now list for you the play-by-play of the party’s internecine conflict: Sen. Warren and Obama sparring, with Sen. Sherrod Brown leaping in as Warren’s tag-team partner; Blue Dogs battling their progressive party mates; and Sen. Bernie Sanders’ challenge to Clinton on the matter. But that’d be about as exciting a blow-by-blow as the Mayweather/Pacquiao fight. (Read: not very exciting at all.) No, instead we’ll look the most interesting internal battle of all: Barack Obama versus himself.
Now, President Obama has an out, of sorts. It’s this. His trade deal is what earlier trade deals should have been. His claim is that his deals stand up concerning labor rights, worker safety, the environment, and all the other areas where the earlier trade deals fell short. Okay, but everything that has thus far leaked about his deals don’t show any of what he’s been claiming about them. In fact, the leaks show that his deals are even worse.
It would be lovely were we to be able to simply trust him, or any US President; but, sadly, we can’t do that on something so critical not only to the United States but to the entire planet.
⇧ The Obama Administration’s Self-Sabotaging Coal Leases – The New Yorker
If we shouldn’t burn it here, then we shouldn’t export it to be burned elsewhere on the planet for the simple reason that CO2 emissions don’t respect borders.
If the Administration is serious about cutting U.S. emissions, it certainly can’t expect domestic coal use to increase. (Coal production in the U.S. has, in fact, been dropping, owing to tighter domestic regulation and low global coal prices.) So where’s the coal from the new Powder River Basin leases supposed to go? If the industry has its way, it will go to other countries. Since 2011, six new terminals have been proposed for the Pacific Northwest, all aimed at boosting coal shipments from the Western U.S. to Asia. There’s been strong local opposition to all of these proposals and it’s unclear if any of the terminals will actually get built, but obviously cutting coal use in the U.S. only to ship more coal abroad is no way to save a climate. An analysis by Greenpeace suggests that if all the coal that could be mined from the proposed new Powder River Basin leases is burned, in the U.S. or overseas, the resulting carbon emissions will exceed the carbon cuts expected from the new power-plant rules by a factor of three.
⇧ When It’s a Crime to Withdraw Money From Your Bank – NYTimes.com
Did you know?
…a person who engages in structuring because of “a simple aversion to being monitored,” despite having no intention of using the money for an illegal purpose, is committing a crime.
Here’s the deal. We’ve heard that if you’re not engaged in anything illegal, don’t worry about it. If you have to move more than $10,000 for a completely legal reason, just do it. You have the backup (the documentation) as to your legal purpose. If you’re asked about your purpose, you can hold out for a warrant or simply answer and even provide the backup. Here’s what we say. When in doubt, consult your attorney.
⇧ The May Jobs Report in 12 Charts – Real Time Economics – WSJ
The U.S. economy added 280,000 jobs in May, but the unemployment rate ticked up to 5.5% as more Americans entered the workforce.
⇧ The Real Reason Your Property Management Company Sucks
There are two ways to remedy the situation of your property manager sucking because he can’t handle all the business that has been sent his way.
Fire him and hire a new property manager. Take it from me — don’t wait too long or listen to too many promises before deciding to cut the rope. Promises do nothing if they don’t remedy the problem almost immediately, and the longer you wait, the more money (and sanity) you are likely to lose.
Hire an already-big property management company. I’m not suggesting all big property management companies are bad (although I would argue towards the majority). Feel free to interview bigger companies, but if you do, really ask them how they handle the masses. What can you expect for communication, can you see a sample monthly statement, are the inspections guaranteed, etc. Just know going into it how they operate, and decide then if you are down with it. It’s really when you start with someone small who grows big, often quickly and unexpectedly, where the problems with size really matter.
What’s your experience with this?
⇧ mainly macro: The academic consensus on the impact of austerity
The models used by pretty well all central banks would therefore imply that temporary cuts in government spending were contractionary, absent any monetary policy offset. The governors of the central banks of the UK and US say this publicly. European central bank governors do not tend to say this, and instead continue to advocate austerity despite deflation. The reason why they might do this despite what their models tell them will be the subject of a later post, but I suspect it has little to do with conventional macroeconomics (but see also the point about German academic views above, and Sen’s article). If temporary cuts in government spending are contractionary in a liquidity trap, it follows that it is much better to delay this form of austerity.
⇧ mainly macro: The latest IMF paper on debt
…high debt does impose a burden, because the taxes required to pay the interest on that debt are ‘distortionary’ – for example income taxes prevent people from working as much as they should. But cutting debt also imposes a burden – taxes have to be raised to get debt down. Analogies between households and governments are misleading: while we as individuals do not live forever and therefore need to pay back debt eventually, the state can act as if it will go on forever. We therefore face a trade-off: is it worth paying higher taxes now in order to reduce government debt so we can pay lower taxes in the future? …
The answer to that question depends on two key variables: the real rate of interest and the discount rate….
⇧ Views Differ on Shape of Macroeconomics – NYTimes.com
Since Simon Wren-Lewis mentioned Robert Peston mentioning also Paul Krugman, here’s Paul on the subject:
…at this point research economists overwhelmingly believe that austerity is contractionary (and that stimulus is expansionary). Surveys show overwhelming support among US economists for the proposition that the ARRA was a job creator, a huge majority of British academics denying that the Cameron austerity program was positive for growth. The Federal Reserve, the IMF, the OECD, the OBR, and more believe that austerity is contractionary. Nothing in economics is ever settled for good, but for now at least expansionary austerity has virtually collapsed as a doctrine taken seriously by researchers.
⇧ Why Am I A Keynesian? – NYTimes.com
…the case for viewing most recessions — and the Great Recession in particular — as failures of aggregate demand is overwhelming.
Now, this could be a case for using monetary rather than fiscal policy — and that actually is the policy I advocate in response to garden-variety slumps. But when the slump pushes rates down to zero, and that’s still not enough, any simple model I can think of says that fiscal expansion can be a useful supplement, while fiscal austerity makes a bad situation worse.
And while it’s true that there was limited direct evidence on the effects of fiscal policy 6 or 7 years ago, there’s now a lot, and it’s very supportive of a Keynesian view.
If one is speaking strictly a mixed economy under bond-financed fiscal spending, then Krugman is correct. However, there is no reasonable justification for dispensing with what Simon Wren-Lewis calls money-financed fiscal spending (what most non-academics called debt-free money), in which case, the zero lower bound becomes moot.
“Monetary-and-Banking-Reform Platform for The United States”: https://propertypak.com/introduction-hom e/articles/monetary-and-banking-reform-p latform-for-the-united-states/
⇧ The Employment Situation in May — Better Than You Think | Eye On Housing
The labor market and the broader economy would benefit more from a rebound in the labor force participation rate, which has hovered below 63% for most of the period since leveling off in late 2013, than further declines in the unemployment rate. At 5.5% the unemployment rate is at or near what some economists consider a normal level, consistent with a dynamic labor force and job switching, rather than sustained unemployment. Luring back some of the nearly 2 million workers who have dropped out of the labor force but are ready and willing to work would be a sign of a healthier labor market.
⇧ mainly macro: Austerity as a Knowledge Transmission Mechanism failure
This is the third one from Simon Wren-Lewis in this batch of articles/links. Here, he speculates as to why central banks don’t say more what they know, which is that fiscal stimulus was the way to go. We’ll add that even though in the US we had stimulus, it was, among other things, way, way, way too small.
We think Simon hits on the right notes but that he’s not conspiratorial enough about it.
Look, those who want steep tax cuts for the superrich claim to the masses that such cuts will trickle down (lead to more and better-paying jobs). When that doesn’t happen, the rich say that rather than raise taxes back up again to take care of the deficit fiscal spending on the safety net, etc., that, that very safety net just has to be slashed.
Of course, the rich pay corporate mouthpieces in media owned by that same elite and pay lobbyists who spread the word to willing politicians who share in the ill-gotten gains via campaign financing, the revolving door, and other favors.
Did the rich plan it that way? We say that of course they did.
Where do the central bankers fit in? They are beholden to that same elite. The central bankers are walking a tightrope. They must answer the masses but do so in a way that supports the central-banking system set up by the said elite.
Are the rich a monolith? No. There are those among them who understand fully that it is wiser to share more of the gains to keep the workers happy and better able to pay for the goods and services those workers produce. In other words, there are more intelligent rich people who know that it is better to increase the whole pie and to make the whole pie better for everyone so that the slices of those intelligent ones will actually be larger and of better pie than is the case under the current austerity route imposed upon the masses. Unfortunately, those intelligent ones are a tiny minority.
As for central bankers who end up speaking the truth, they are driven out of the system and must appeal to the masses to retain a voice.
Also see #70 below, which is a video of Simon delivering this information in a lecture to a German group in Germany, who needs to hear it more than anyone else in the world right now because of Greece.
⇧ Wall Street outlook on housing market – Business Insider
Here’s Morgan Stanley again:
“Demand for shelter does not necessarily equate to demand for ownership shelter. In fact, as household formations have increased over the past two quarters, the homeownership rate has fallen 70bps to 63.7% (Exhibit 10). To put this number into historical context, we have not seen the homeownership rate lower than this since 1986.”
⇧ Real estate has a language of its own- Register on Real Estate Blog: Orange County Register
…languages we agents speak are extremely specific to our industry, difficult to master, and highly technical. Jam packed with acronyms, abbreviations and special definitions.
⇧ Problems With Obamacare That Could Prove Difficult to Fix — The Motley Fool
1. No universal Medicaid expansion
2. Individual mandate penalty may not be high enough to encourage enrollment
3. Personalized medicine could drive up inflationary pressures
⇧ Austerity isn’t ‘good housekeeping’: it’s dogmatic, risky and unjust | Business | The Guardian
…the cuts are larger than Osborne and his colleagues let on; they may threaten the quality of cherished public services, place an unfair burden on those who can least bear it, exacerbating inequality — and jeopardise the very economic growth which is ultimately the best way of tackling the deficit.
Labour’s proto-leaders are right to try to learn the lessons of the campaign and seize back the language of “aspiration”. But they must not abandon the central insight that austerity is not a necessity, but a political choice.
“…austerity is not a necessity….” That’s absolutely correct. It never is.
⇧ The Real ‘How To’ For Real Estate Investing — The DIY Retirement
What If . . .
You used a couple of your homes to create a tax free income, using a completely different vehicle?
You took advantage of the 1-4 times during the 30 years of investing to trade up — conservatively — to more property?
You incorporated multiple strategies to create capital gains that would remain untaxed.
You were told of various tax code regulations that allow you to enhance your future income/net worth — without taxation?
The list goes on, but you get the point.
Trouble is, the article doesn’t tell you how to do all of that.
⇧ Your Guide to the Tax Treatment of Closing Costs: The HUD-1
Closing costs can amount to a significant outlay of capital, so it’s important to understand when you can recover that capital. Closing costs may fall into one of the following three categories:
1. Deductible as a current expense
2. Added to the cost basis of the property and depreciated
3. Amortized over the life of the loan
I’m going to walk you through a HUD-1 settlement statement and place each line item into one of the three tax categories above. This knowledge will help you when reviewing your tax practioner’s work. Here we go!
It’s a handy article to set up or check your accounting codes.
See: “How to Track Real Estate Investments using Quickbooks”: https://www.youtube.com/watch?v=WzUh-7S8 Kdo
That’s 7 years old but gives you the idea. Don’t blast through it if you’ve not done it before. Check things so you’re setting them up to do your taxes with the least amount of effort come tax time. We’re speaking about software in general here. You may or may not be using QuickBooks.
⇧ China’s Pursuit of a New Economic Order by Zhang Jun – Project Syndicate
Can China sustain rapid GDP growth within the confines of the current global order, including its trade rules, or must the current US-dominated order change drastically to accommodate China’s continued economic rise? …
…China has faced major challenges within the existing global system as it tries to carve out a role befitting its economic might. That may explain why, with its “one belt, one road” initiative and its establishment of the Asian Infrastructure Investment Bank (AIIB), China’s government is increasingly attempting to recast the world order — in particular, the monetary and trading systems — on its own terms.
Whether or not the renminbi is added to the SDR basket this October, a gradual transformation of the global system to accommodate China seems all but inevitable.
⇧ Amartya Sen: The economic consequences of austerity
Keynes ushered in the basic understanding that demand is important as a determinant of economic activity, and that expanding rather than cutting public expenditure may do a much better job of expanding employment and activity in an economy with unused capacity and idle labour. Austerity could do little, since a reduction of public expenditure adds to the inadequacy of private incomes and market demands, thereby tending to put even more people out of work. …
… The ratio of deficit to GDP has fallen in the US thanks to economic growth, which — rather than austerity — is of course the well-tried way of achieving the desired result.
… Democracy should be about preventing mistakes through participatory deliberations, rather than about making heads roll after mistakes have been made. This is one of the reasons why John Stuart Mill saw democracy as “government by discussion” (a phrase coined, along Millian lines, by Walter Bagehot), and this demands discussion preceding public decisions, rather than following them.
…the public has not always been scared stiff by the size of the public debt. The public debt-to-GDP ratio was very considerably larger in Britain in every year for two decades, from the mid-1940s to the mid-1960s, than it has been at any time since the crisis of 2008. And yet there was no panic then (when Britain was confidently establishing the welfare state), in contrast to the confused anxiety, not to mention the orchestrated fear, that seems to run down the spine of the terrorised British today, making austerity look like a fitting response.
When Britain went for pioneering the welfare state and established the National Health Service, among other ways of expanding the public services, with Aneurin Bevan inaugurating the Park Hospital in Manchester on 5 July 1948, the ratio of debt to GDP was larger than 200 per cent, much more than twice what it has been at any point in recent years. Had the British public been as successfully frightened about the debt ratio in those days, the NHS would never have been born, and the great experiment of having a welfare state in Europe (from which the whole world from China, Korea and Singapore to Brazil and Mexico would learn) would not have found a foothold. A decade later, when Harold Macmillan, as a buoyant new prime minister, told the British people in July 1957 that they had “never had it so good”, the size of government debt was more than 120 per cent of GDP — immensely higher than the ratio of roughly 70 per cent in 2010 when Gordon Brown was accused of mortgaging Britain’s future by profligacy.
The scare was not there from the late 1940s through the 1960s, with Labour as well as Conservative governments in office, perhaps because the scarers were more scarce then. And armed with good public services and a flourishing market economy, Britain steadily reduced its debt-to-GDP ratio through economic growth, while establishing the welfare state and a huge array of new public services.
Amartya Sen is professor of economics and philosophy at Harvard….
⇧ HSBC must face US lawsuits over $34 bln mortgage debt losses | Reuters
NEW YORK, June 1 (Reuters) – HSBC Holdings Plc was on Monday ordered to face three U.S. lawsuits accusing it of breaching its duties as a trustee overseeing residential mortgage-backed securities that suffered more than $34 billion of losses in the global financial crisis.
⇧ Fukushima leak ‘could cause hydrogen explosion’ at nuclear plant – Telegraph
Leaking containers at Japan’s embattled Fukushima nuclear power plant are at risk of possible hydrogen explosions, experts have claimed.
Almost 10 per cent of recently inspected containers holding contaminated water at the nuclear plant in northeast Japan were found to be leaking radioactive water.
The leakages, discovered during inspections by Tokyo Electric Power Co (Tepco), the operators of the plant, were thought to be caused by a build-up of hydrogen and other gases due to radiation contamination.
Let’s hope Tepco is right that they have a handle on it all.
Our biggest concern is another tsunami.
⇧ Insurance Council of Australia says severe storms leave $1.55b damage bill
The series of severe storms that wreaked havoc along Australia’s east coast in April and May have left a $1.55 billion damage bill.
⇧ Hawaii Told to Expect El Nino to Continue All Year
El Nino occurs sporadically and can last anywhere from six months to four years. Hurricanes Iwa in 1982 and Iniki in 1992 both occurred during El Nino, and the western Pacific is already seeing a tropical cyclone system with more than three times the normal activity.
⇧ Better Building Construction Limits Risk as Florida Coasts Continue to Grow
Since eight hurricanes whipped through Florida during back-to-back seasons a decade ago…the state’s coastal communities have added an additional…almost a half-million new houses….
…risk of catastrophic destruction hasn’t grown along with the new development because Florida builders are doing a better job of making structures hurricane-resistant.
⇧ Power Outages May Become Worse Absent Upgrades To National, State Reliability Rules
It sounds like a solid study.
National and state electricity regulations that industries, businesses, and consumers depend on to prevent power outages are deficient in a number of significant ways that could result in worse future outages unless the rules are strengthened, especially as hurricanes and other weather events are predicted to become more severe under climate change, according to a new study.
⇧ HSB Study: 69% of Businesses Reported Being Hacked in the Last Year
This is becoming a huge, huge deal.
Almost 70 percent of businesses experienced at least one hacking incident in the last year, according to…The Hartford Steam Boiler Inspection and Insurance Company (HSB)…. Yet,…(55 percent) don’t believe their company is dedicating enough money or trained and experienced personnel to combat the latest hacking techniques.
⇧ South Carolina Woman Accused of Arson for Insurance Money
A Union, S.C., woman is accused of setting fire to her mobile home with her two cats still inside.
…Union County Sheriff’s Office announced the arrest of 28-year-old April Lynn Hudson…. …Hudson admitted to setting fire to her home May 19, saying she had renter’s insurance and was struggling financially.
⇧ New Jersey Division of Consumer Affairs Obtains $6.34 Million Default Judgment Against Bergen County-Based Home Improvement Contractor | New Jersey RealEstateRama
The Office of the Attorney General and the New Jersey Division of Consumer Affairs have obtained a $6.34 million default judgment against Anthony Angelo Pizza of Rutherford and two home improvement companies he operated, A. Pizza Contracting, LLC and AP Building & Construction, LLC, a/k/a “AP Builders & Construction, LLC,” after a judge found that they committed 571 violations of the State’s consumer protection laws and regulations.
⇧ Cyber Attack | Ready.gov
You can increase your chances of avoiding cyber risks by setting up the proper controls. The following are things you can do to protect yourself, your family, and your property before a cyber incident occurs.
It also has “During” and “After” lists plus “More Information.”
⇧ Solar Shines as Sellers Sometimes Pay Buyers to Use Power – Bloomberg Business
Move over, shale. The sun is now the fastest-growing source of U.S. electricity.
“Solar is the new shale,” Michael Blaha, principal analyst of North American power at Wood Mackenzie Ltd. in Houston, said April 8. “Shale has lowered cost and enabled lower natural gas prices. Solar will lower costs for electricity.”
Even with the rapid growth, solar still accounts for less than 1 percent of total U.S. power production, behind coal, natural gas, oil, nuclear and hydroelectric, according to the government’s Energy Information Administration. Because output suffers on cloudy or hazy days, grid operators have to keep conventional plants on standby.
Batteries will change that we think.
⇧ More North Carolina Wells Near Duke Coal Ash Pits Show Water Contamination
North Carolina officials are warning even more residents living near Duke Energy’s coal ash pits that it’s not safe to drink or cook with their well water.
…191 drinking wells failed to meet…standards. …test results show high levels of such toxic heavy metals as lead, vanadium and hexavalent chromium.
⇧ El Nino Data Mimic Record 1997-98 Event as IMF Warns on Food – Bloomberg Business
All five NINO indexes, averaged over the past four weeks, exceeded plus 1 degree Celsius, the bureau said in its fortnightly update on Tuesday [May 26, 2015]. That’s the first time this has occurred since the 1997-1998 El Nino, the bureau said.
Australia this month joined the U.S. and Japan in declaring that the first El Nino since 2010 had begun. The 1997-1998 event was the strongest on record, according to the National Oceanic and Atmospheric Administration. The weather patterns can bake parts of Asia, hurting crops from rice to palm oil, while crimping the hurricane season in the Atlantic and bringing more rain across the southern U.S.
⇧ Oklahoma is latest state to prevent local fracking bans – Salon.com
Oklahoma joins Texas:
Oklahoma cities and counties would no longer be able to ban hydraulic fracturing — a process commonly called fracking — or other oil and gas operations within their boundaries under a bill signed into law on Friday by Gov. Mary Fallin.
In our view, such state laws will drive up insurance costs or make coverage unattainable.
⇧ Warming Pause Cited by Climate Skeptics Countered in New Report – Bloomberg Business
The pace of global warming hasn’t slowed since 1998, a finding that contradicts a major United Nations study and challenges a key argument of skeptics of manmade climate change.
Temperatures since 2000 have risen at a pace that is “virtually indistinguishable” from the rate of the five preceding decades, researchers led by Thomas Karl at the U.S. National Oceanic and Atmospheric Administration said Thursday in the journal Science.
That challenges the biggest-ever UN study on warming published in September 2013, which found that the rate of temperature gains had fallen by more than half since 1998.
⇧ Bond turmoil – YouTube
We watch bonds because they lead mortgage rates. If the trend holds, mortgage rates will shoot up, which will slow the housing recovery and construction of homes for sale. It will, however, boost multifamily rents and construction after a lag.
Frankly, because more people joined the labor market keeping the unemployment rate the same, we still think it is premature to raise the Fed rate.
Wages are seeing some rise due to employee political-pressure and not too much due to greater difficulty finding help (however, see #62 below). Plus, another cause (major) is skilled workers getting raises, not common laborers.
The foregoing is far from the full set of implications though.
Volatility has returned to global bond markets with yields sharply higher. John Authers reviews the week, and suggests that the strong US labour report will put more upward pressure on yields.
⇧ This chart shows where the world’s most crowded cities will be in 2025
…population growth estimates over a thirty year period between 1995 – 2025. The data shows that as the world’s population continues to grown exponentially, our cities are going to feel correspondingly claustrophobic, as this chart from Statista demonstrates.
⇧ Worcester reworks ordinance on maintenance of vacant properties – News – telegram.com – Worcester, MA
In the wake of recent court rulings that stopped the city from enforcing an ordinance relative to maintaining vacant and foreclosed properties, officials have reworked the language to bring it into compliance with those rulings.
The owners of those properties would be required to maintain the property, making sure the structures are in a structurally sound condition; the property is free of overgrowth, trash and debris, and pools of stagnant water.
The properties also have to be maintained in accordance with all other relevant state codes and local regulations concerning the maintenance of property.
The owner of a vacant foreclosed property, or one that is in the foreclosure process, has to obtain from the city a certificate of building closure. Those who fail to do so shall be liable to the city for expenses incurred by the city in inspecting, securing or maintaining the property.
⇧ Two Arrested, Accused Of Taking Part In Real Estate Scheme – CBS Miami
A 43-year-old Homestead woman who says she’s been a real estate broker for more than 20 years is charged with stealing rental deposits and mortgage payments and cheating nine victims out of thousands of dollars.
Salguero told police that she was addicted to cocaine and needed the money to support her habit.
⇧ A study has found that new homes don’t lower house prices. But things aren’t quite that simple | CityMetric
…housebuilding doesn’t drive down house prices. But that is, quite literally, deliberate. If Britain was building enough homes in the first place, things might look very different.
Building into a growing bubble is one thing. Building affordable housing (proper square footage, not McMansions) in a non-bubble, tight, seller’s market is quite another.
⇧ Titan Development’s drones deployed to big Albuquerque properties (Video) – Albuquerque Business First
Tapia said that while real estate companies can use drones for commercial purposes, laws may soon change as the Federal Aviation Administration plans to implement new rules on the industry and others come 2017.
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⇧ Home Depot housing market outlook in European investor meeting – Business Insider
Home Depot is bullish on the housing market.
We recently highlighted that many economists on Wall Street consider the housing market the bright spot of the economic recovery.
And America’s largest home-improvement retailer also expects the sector to improve.
⇧ West Main Street properties near Louisville Slugger Museum, Frazier History Museum slated for redevelopment – Louisville – Louisville Business First
A section of vacant properties on West Main Street near the Louisville Slugger Museum and Frazier History Museum are the target of a major redevelopment that could top $20 million.
Louisville-based C&P Real Estate LLC plans to turn the structures at 811-813 and 815-817 W. Main St. into a mixed-use development housing office and retail space and a 7,000-square-foot rooftop bar and restaurant.
Tyler Smith, principal and managing director of Louisville-based firm PRG Investments, said the firm plans to completely refurbish the buildings with new mechanical systems, flooring, paint, and other modernizing features.
It’s nice to see old, vacant buildings restored.
⇧ The Seattle housing market may be hot, but millennials aren’t buying – Puget Sound Business Journal
Some analysts, including Seattle real estate company Zillow (Nasdaq: Z), have said that will change as the economy heats up. The company’s economists have postulated that the fast increase in rents across the region will drive up the number of millennials interested in buying homes.
Rising rents will do that, but the arguments for why millennials aren’t buying, or aren’t able to, are, and will remain, valid for a long time.
⇧ Changes in real estate closing process take effect Aug. 1 – Post and Courier
Selling and buying real estate after Aug. 1 will entail changes during the closing process.
Because of new disclosures and regulations required by the Consumer Financial Protection Bureau for the new Real Estate Settlement Procedures Act and Truth in Lending Act changes, the mortgage process should be improved for consumers. The changes are designed to help buyers understand the mortgage process, aid in comparison shopping and help to prevent surprises at the closing table.
⇧ CEOs lukewarm on economy, says survey
A very neoliberal-economic ideology is reflected in this article. We do not subscribe to neoliberalism. We see it as counter-productive.
American CEOs plan to hire and invest at a slower pace in the next six months, with future economic growth hinging on trade agreements and tax reform, according to a quarterly survey released Monday.
… The main driver of the cautious responses was uncertainty around passage of tax reform and the Trade Promotion Authority (TPA) in Congress, after a slow rebound from bad weather, labor disputes, a strong dollar and low oil prices in the first quarter of this year.
Business Roundtable is a professional association whose member companies are used as a barometer of corporate America because they comprise more than a quarter of the total value of the U.S. stock market, including representatives from companies like Viacom (VIA) and Pfizer (PFE), according to its website. The results are summarized in an index called the Business Roundtable CEO Economic Outlook Index, which ranges from -50 to 150, where readings at 50 or above indicate an economic expansion, and readings below 50 indicate an economic contraction.
The overall index declined from 90.8 in the first quarter of 2015 to 81.3 in the second quarter of 2015. That result was tempered, but above the long-term average of 80.5.
⇧ G7 climate vision requires gargantuan economic shift – Houston Chronicle
…many scientists and economists say demands by some environmental activists for a complete phase-out of fossil fuels are unrealistic. Instead, they say the fight against climate change will have to include efforts to capture CO2 emissions from fossil fuels and bury them deep underground where they don’t affect the climate.
Still, the message from the leaders of the world’s most powerful developed countries is important because it’s the first time they acknowledge what needs to happen to keep global temperatures from reaching dangerous levels, said Jeffrey Sachs, a Columbia University economist and U.N. special adviser.
“It does mean in practice an enormous shift from a fossil fuel-based energy system to near-zero carbon energy sources. It’s a big deal,” he said. “Not unlike the Apollo mission.”
Well, we believe “the Apollo mission” is apt language. We did land on the Moon. We can switch from mainly carbon to nearly none. However, sequestration is also very doable right now. We don’t have to bury the carbon deep underground. All we need to do is improve our soils to absorb and store it. That won’t happen with current farming practices that, among other things, rely on cheap fertilizers produced by the very carbon-based industry causing Global Warming and which fertilizers aren’t even good for producing highly nutritional crops in the first place.
⇧ GDP of BRICS could surpass G7 in 2-3 years – senior Duma MP — RT Business
The GDP of the BRICS countries may surpass that of the G7 within two or three years, as it has already hit $32.5 trillion and rising, claims State Duma Foreign Relations chief Aleksey Pushkov.
⇧ Real Estate Giant CBRE Group: Coming Soon To Run A Building Near You CBG JLL JCI – Investors.com
CBRE Group didn’t get to be the world’s biggest commercial real estate services and investment firm by being good at only one thing. It got there by offering a wide range of products and services across many geographies, industries and customer types.
⇧ Should Hillary Clinton Call for Debt-Free College for All Americans? – NBC News
Proposals that simply make a college debt free in essence give colleges a free pass to continue to increase expenditures because they can escape pricing pressure and taxpayers foot that bill,” said Michael Horn, an education policy expert who co-wrote a book called “Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns.”
That’s not a valid argument. Taxpayer’s don’t create money for government to spend. The government decides how much money to create. The issue is government bonds. The government should stop issuing them. College education is productivity. Pumping newly created, debt-free money at it rather than bigger mansions for the superrich is not inflationary and will reap vastly more benefits for society as a whole than larger slices for the already rich of a smaller pie caused by fiscal reductions.
The last thing any progressive should be afraid of is being called a big-government spender. In fact, that’s exactly the debate progressives need because progressives can win it hands down with actual data where the other side only has unsupportable ideology most of which has already been thoroughly debunked.
NBC is usually called “liberal.” Being liberal isn’t being progressive, and it especially isn’t being populist.
Populist democracy is what the elitists fear the most, though they shouldn’t fear it but rather embrace it, as their own lives and the lives of their offspring would vastly improve right along with everyone else’s.
⇧ Housing Apartheid, American Style – NYTimes.com
Good job: By THE EDITORIAL BOARD:
The riots that erupted in Baltimore last month were reminiscent of those that consumed cities all over the country during the 1960s. This rage and unrest was thoroughly explained five decades ago by President Lyndon Johnson’s National Advisory Commission on Civil Disorders, also known as the Kerner Commission. The commission’s report was released in 1968 — the year that the assassination of the Rev. Dr. Martin Luther King Jr. touched off riots in 125 cities — and contains the most candid indictment of racism and segregation seen in such a document, before or since.
…a Harvard study released earlier this month found that young children whose families had been given housing vouchers that allowed them to move to better neighborhoods were more likely to attend college — and to attend better colleges — than those whose families had not received the vouchers. The voucher group also had significantly higher incomes as adults.
Ronald Reagan was openly hostile to fair housing goals, as the sociologists Douglas Massey and Nancy Denton have shown in their book, “American Apartheid: Segregation and the Making of the Underclass.” The Justice Department under President Reagan challenged the ability of civil rights activists to sue for fair housing violations. The administration also conspired with the National Association of Realtors to undermine HUD’s already feeble enforcement authority.
The Obama administration has proposed new fair housing enforcement rules, which should be finalized soon, that make states, cities and housing agencies more accountable for furthering fair housing.
But for these rules to be meaningful, the federal government will have to restructure its own programs so that more affordable housing is built in low-poverty, high opportunity neighborhoods.
⇧ Statistical Methods Can Demonstrate Racial Disparity – NYTimes.com
Credible statistical methods exist to identify policies that disproportionately burden minorities and are unrelated to a seller’s costs of doing business. Multivariate regressions that often control for dozens of potentially business-justified variables allow courts to test statistically whether corporate policies tend to hurt minorities more than similarly situated whites.
⇧ Texas Department of Housing and Community Affairs v. The Inclusive Communities Project: A Test of Disparate Impact | Urban Institute
We come down on this with Solomon Greene.
Laurie Goodman raises important issues, but those issues would, in our view, be taken care of by the lender simply issuing to anyone rejected for a loan application a plain-language statement as to why the loan was rejected and why no illegal discrimination was involved in the decision.
Of course, even in the face of solid statements issued by rejecting lenders, rejected parties could still bring frivolous claims of illegal discrimination. To us, that would simply be an acceptable cost of doing business in a society doing its best to eliminate illegal discrimination.
⇧ Demographic Changes in and near US Downtowns
What is driving these changes in neighborhood choices? Why are neighborhoods close to downtowns becoming whiter, more educated, and higher income in cities across the country? These changes may be driven by increases in the sizes of higher SES demographic groups, like the college educated, or by increases in demand for these neighborhoods by certain high-SES demographic groups. Such increases in demand may have been driven by improvements in the amenities of such neighborhoods or by increases in labor demand by certain types of industries in downtown areas. We attempt to provide some possible answers in a forthcoming working paper.
*Baum-Snow, Nathaniel and Daniel Hartley, forthcoming. “The Causes and Consequences of Gentrification and Neighborhood Change in US Cities, 1980-2010,” Federal Reserve Bank of Cleveland working paper.
⇧ Europe’s Pointless Deficit Targets? by Benedicta Marzinotto – Project Syndicate
In a fully integrated market, the annual financing of government deficits should not be an issue, provided the stock of debt is sustainable. That is why the EU should strive to create a fiscal framework that has the sole objective of ensuring that its members’ debts are sustainable. By definition, this target would be country-specific. It would not require a headline deficit of below 3% of GDP in each and every year, in each and every country. But it would require a more sophisticated analytical framework than the current one, which merely distinguishes between countries on the basis of whether they meet the EU’s 60%-of-GDP ceiling on public debt.
⇧ How I’ve Built Wealth Through Apartment Investing
If he could start all over again, though?
“I’d become an apartment broker and get a resident manager gig with a free apartment to live in while I built up my brokerage business. By the time your business is rolling, you’d know the sector and your local market inside and out and could start getting a piece of deals as well as doing your own.”
⇧ Upbeat Small-Business Owners Say Sales Are Picking Up – Real Time Economics – WSJ
Hmmm, looks like more on-the-job training is in order.
Small firms continue to face a tough time finding qualified applicants. In May, 29% of companies had job openings they could not fill right now, the highest reading since April 2006.
⇧ Cerberus Said to Buy 4,200 Rental Homes in Top U.S. Deal – Bloomberg Business
Cerberus Capital Management is buying about 4,200 U.S. houses, expanding its foray into home rentals in the industry’s largest bulk purchase.
The purchase will make Cerberus one of the top 10 owners of U.S. houses as the institutional rental industry built from the housing crisis consolidates. Large landlords are seeking economies of scale by acquiring bulk portfolios, while smaller companies are taking advantage of gains in real estate values to sell as it gets harder to compete.
⇧ These Are the 13 Cities Where Millennials Can’t Afford a Home – Bloomberg Business
…millennials living in unaffordable markets will be forced to shell out money for ever-increasing rents….
⇧ Settlement Awards Free Rent for Tenants Living in Construction – NYTimes.com
In a rare and major victory for tenants that could sound alarm bells for developers, state prosecutors have ordered that rents be waived for 11 residents of a building on the Upper West Side, after their landlord improperly tried to convert their building into a condominium.
⇧ States Confront Wide Budget Gaps Even After Years of Recovery – NYTimes.com
Longtime bipartisan neglect of pension obligations has caught up with lawmakers in Illinois, New Jersey and Pennsylvania, and deep tax cuts in Republican-dominated states like Kansas, Louisiana and Wisconsin have contributed to budget shortfalls as economic growth has fallen short of projections.
“A lot of governors have cut their taxes with the hopes that that would bring increased economic activity and they could postpone painful decisions about spending reductions,” said Tracy Gordon, a senior fellow at the Urban-Brookings Tax Policy Center in Washington. “But those increases in economic activity haven’t come to pass.”
In Wisconsin, Mr. Walker signed into law last year a $541 million tax cut that benefited both families and businesses. But expectations of a surplus dissipated amid slow job growth, and now the state faces a budget shortfall of more than $280 million.
Mr. Walker has proposed closing the gap by decreasing funding to public schools, the state’s university system, public workers’ health benefits and state parks. Despite resistance from some legislators, particularly Democrats, the Republican-controlled State Legislature is expected to approve his plan by the end of the month.
“A lot of governors have cut their taxes with the hopes that that would bring increased economic activity and they could postpone painful decisions about spending reductions.” That is definitely not what Republican governors were, or are, up to.
The entire plan with tax cuts during a deep recession was, and remains, to deliberately cause fiscal problems and then call for cutting government spending especially that benefits the lower class.
⇧ Yes, Higher Wages Benefit Workers | Center for Labor Research and Education
A recent LA Times story profiled a fast-food worker who, according to reporter Don Lee, would lose eligibility for Medicaid if his wages were raised to $15. His wage gains could be “wiped out” by the higher health care costs he’d end up paying. Lee’s portrayal was inaccurate and misleading.
⇧ The prudential regulation of insurers under Solvency II – Quarterly Bulletin 2015 Q2 pre-release article | Bank of England
Solvency II is a new regime for the prudential regulation of European insurance companies that will come into force on 1 January 2016. Learn how it will modernise the existing regulatory framework, with features that will improve a form’s understanding and management of its risks.
⇧ The FOMC, the Board of Governors, and Fed interest rate policy | Brookings Institution
…because of the Fed’s large balance sheet, traditional methods of controlling the federal funds rate (the Fed’s policy rate) will not work today. Instead, to raise the federal funds rate when the time comes, the Fed will have to rely on novel tools, including changes in the rate of interest it chooses to pay on reserves held at the Fed by commercial banks. The 2008 law that gave the Fed the power to pay interest on bank reserves vested the authority to set that rate in the Board, not the FOMC. Mr. Steil concludes that the Board rather than the FOMC actually controls monetary policy.
Mr. Steil is correct that the interest rate paid on reserves will be one important tool for influencing short-term interest rates—a point that Fed policymakers have been quite open about—and that, by law, the Board sets that rate. He might note that other important tools for influencing short-term interest rates, such as the so-called reverse repo facility, are under the control of the FOMC.
⇧ Jahre IMK – Simon Wren Lewis – YouTube
We’ve linked to Simon’s blog posts quite often. It’s nice to be able to put up a video of him discussing something to which we’ve actually linked before: Knowledge Transmission Mechanism:
⇧ The Least Worst Crisis – NYTimes.com
…a funny thing was happening in Iceland: the nation that was supposed to be Ground Zero for financial disaster was actually having a milder crisis than many others, thanks to heterodox policies — debt repudiation, capital controls, and massive devaluation.
⇧ Fracking Does Cause ‘Widespread, Systemic’ Contamination of American’s Drinking Water
Josh Fox and Lee Ziesche:
In a draft report five years in the making, the U.S. Environmental Protection Agency (EPA) has confirmed that fracking does indeed contaminate drinking water, a fact the oil and gas industry has vehemently denied.
But instead of dismantling the industry’s “not one single case of groundwater contamination caused by fracking” refrain, the EPA decided to go with the misleading headline “there is no evidence fracking has led to widespread, systemic impacts on drinking water resources.”
It’s a puzzling conclusion since their study was conspicuously narrow (they did no new case studies, dropped three marquee cases that proved water contamination and dropped all air quality studies from the report).
⇧ From Occupying Banks to City Hall: Meet Barcelona’s New Mayor Ada Colau (Video) – Havana Times.org
From the left in Spain:
A longtime anti-eviction activist has just been elected mayor of Barcelona, becoming the city’s first female mayor. Ada Colau co-founded the anti-eviction group Platform for People Affected by Mortgages and was an active member of the Indignados, or 15-M Movement.
Colau has vowed to fine banks with empty homes on their books, stop evictions, expand public housing, set a minimum monthly wage of $670, force utility companies to lower prices, and slash the mayoral salary. She enjoyed support from the Podemos party, which grew out of the indignados movement that began occupying squares in Spain four years ago. Ada Colau joins us to discuss her victory.