Linking ≠ endorsement.
⇧ Apartment occupancy at all-time high: Here’s why
“Owners and investors are having a profitable start to the year,” McCleskey said. “One interesting point is that rent growth is increasing in previously challenged markets in the East and Midwest, such as Chicago, St. Louis, Philadelphia, Kansas City, Baltimore and even Detroit,” noted McCleskey.
Apartment demand, which some investors thought would abate as the housing market recovered, is doing just the opposite. It is also coming from both ends of the age scale. Millennials, finally finding jobs and moving out of group or family homes, are pushing rental demand; downsizing baby boomers, many of them soured on homeownership by losses from the housing crash, are doing the same.
⇧ Hong Kong rejects democratic reforms – YouTube
Pro-democracy advocates have triumphed in Hong Kong’s legislature, which rejected the Beijing-supported government reform programme that would have given Hong Kongers the right to vote for their political leaders. The FT’s Ben Bland reports.
“…right to vote for their political leaders”? No.
⇧ Pace of gains in China’s new home prices picks up | South China Morning Post
“The month-on-month price increase in May was mainly driven by tier-one cities, but polarisation among different cities is rising,” senior statistician Liu Jianwei said.
“Such a trend of polarisation will continue in the second half,” said Liu Wenchun, head of research at mainland real estate consultancy Worldunion. “That means some cities will be in heaven, while others will suffer in hell.”
That is almost a consensus among mainland developers as they switch back to first-tier cities. The challenge is soaring land prices there, making developers more vulnerable to losses if they overpay for a location that cannot fetch the high selling price they desire.
⇧ FORECLOSURE: Zombie properties dog Inland region – Press Enterprise
“What we’re seeing is an increased push by banks to clear out homes that were on the books for a long time,” Blomquist said.
⇧ 60 million people fleeing chaotic lands, UN says | Business Standard News
Nearly 60 million people have been driven from their homes by war and persecution, an unprecedented global exodus….
… Half of the displaced are children.
“For an age of unprecedented mass displacement, we need an unprecedented humanitarian response and a renewed global commitment to tolerance and protection for people fleeing conflict and persecution,” António Guterres, the high commissioner for refugees, said in a statement accompanying the annual report.
The nearly 60 million displaced people across the globe are, of course, not the only ones who have left their homes because of hardship. The refugee agency’s numbers include only those who say they have fled conflict and persecution, not poverty or lack of economic opportunity.
Often, refugee experts say, life is more complicated than that. People flee their homes for a host of entangled reasons, including hunger, gang violence, or even the havoc climate change wreaks on local economies.
These things impact, and will continue to impact until solved, the worldwide real-estate industry.
⇧ A programme for Greece: Follow the IMF’s research | VOX, CEPR’s Policy Portal
• Borrow more money (this time mainly from the European authorities) to repay one group of creditors (the IMF, to which substantial repayments are due);
• Stay focused on more austerity, steadily increasing the primary surplus (the budget surplus not including interest payments); and
• Undertake structural reforms—changes in labour and other markets to improve the Greek economy’s longer-term growth potential.
The Greeks could have agreed to this plan and, eventually, not delivered—just like they have not delivered for the past five years. In part, the Greeks have tried that even in this round. The Greek ‘agreement’ on the primary surpluses is a façade of numbers with little reality behind them. For five years, this has not worked.
To see where things have gone wrong, it is helpful to follow three IMF studies:
• Over-indebted countries struggle to grow.
• Austerity in a weak economy is self-defeating (Blanchard and Leigh 2013). As the budget deficit is reduced, the economy slows down, and the ability to repay debt is undermined. Indeed, austerity can be self-defeating (Eyraud and Weber 2013).
• Structural reforms have, at best, an uncertain payoff (IMF 2015). In Box 3.5 of this recent chapter from the IMF’s World Economic Outlook, the updated finding has a long pedigree. Policy measures can possibly create an environment for growth in the long-run, but no immediate payoffs should be expected.
⇧ Greece is not Argentina: don’t expect exports to drive growth if Greece leaves the euro – Bond Vigilantes
Does Greece have the potential to export its way out of depression? Perhaps, although the poor quality of its land (most is unsuitable for agriculture) makes it much more difficult. Food and meat make up just 12% of its exports, compared to more than a third in Argentina. Greece’s biggest export is refined petroleum, which is a pass-through industry, priced in hard currency in any case, so with no devaluation benefits. Also, its biggest export destination is Germany — possibly problematic post a debt default…
So to conclude, those nations that have thrived post devaluations (Argentina, Canada, Sweden) have been fortunate in that their trading neighbours had been growing strongly at the time. Greece does not have that luxury, nor an economy that can respond quickly to increased export competitiveness.
Of course, that’s all true; however, the status quo is completely unsustainable, so Greece exiting must only be compared against that.
We should also remember that whilst Argentina grew strongly post devaluation and debt restructuring, its current real GDP rate is just 0.5% and hard currency government bond yields are around 8%. The ending of the dollar peg and debt restructuring did not prove to be a permanent economic panacea — but it is also hard to argue that the status quo was sustainable or desirable. Greek policymakers will be thinking the same thing.
He said it there. It’s all that matters at this point. Greece has to take the least-worse option. Anything else would be masochistic.
⇧ Why a Grexit should (and would) be vetoed | Re-Define
The uncertain but possible future repayment of the more than € 180 bn that Greece owes its Eurozone partners will turn into a near-certain immediate loss of perhaps more than € 100 bn, assuming the 50%-60% haircut needed if Greece leaves the Eurozone. This will make a big dent in government finance statistics for already vulnerable countries, and cost ruling governments votes, as the losses will be seen to be the result of a gratuitous crisis that should have been averted.
We don’t agree with the title of the article, but we agree with its contents with the exception of the “veto” language.
⇧ Economist’s View: Blow Up the Tax Code and Start Over???
The left will argue that the plan is a tax cut for the wealthy. But most of the loopholes in the tax code were designed by the rich and politically connected. Though the rich will pay a lower rate along with everyone else, they won’t have special provisions to avoid paying lower than 14.5%.
Why not just get rid of the special provisions? Why is a flat tax more equitable than taxes based upon ability to pay (i.e. a progressive structure)?
⇧ Thinking About the All Too Thinkable – NYTimes.com
…a devalued currency should eventually produce an export-led recovery — I understand the cynicism one hears, but demand curves do slope downwards even in Greece.
The point is that nobody should be casual or confident here. But the creditors should actually be even more worried than the Greeks about a potential exit that has no upside for the rest of Europe.
⇧ Future Lithium Battery Safety Could Hinge on Additional Chemical Components
This will be a huge deal if it works with large batteries.
…adding both chemicals in just the right amounts stopped lithium dendrite formation; harmless pancake-like deposits grew there instead. The lithium metal acquired a stable coating that helped protect it from further degradation and actually improved the battery’s performance.
⇧ Home Prices Up in 11 of 12 Silicon Valley Communities | Mountain View, CA Patch
Like clock time, home prices march forward. In Silicon Valley, the march is mostly uphill, and some of those hills are quite steep. In looking at the movement of prices on single-family homes in 12 communities, we find that only one community saw home prices drop from May 2014 to May 2015. The other 11 continue their march upward. Let’s look at the differences in May home prices.
⇧ Phoenix running low on short sale properties as market recovers
The number of foreclosures and short sales continues to dwindle in the Phoenix area and across the nation.
…short sales still represent just 3.3 percent of overall real estate sales, down from a peak of 30.4 percent in January 2012 in the midst of the housing crisis.
⇧ Anti-austerity protest: This is just the start of our campaign, say marchers – Home News – UK – The Independent
Frances James, 19, who will begin an engineering degree at Bristol University in September said austerity was a “con”. She called for a higher tax on wealthier people: “And we need our taxes being spent on things that benefit us as citizens, not just the 1 per cent.”
Cutting public spending to continue bailing out bankers, “when they caused the problem in the first place”, was outrageous, said Jenny Shepherd, 65, from Calderdale in West Yorkshire.
⇧ German Incomes Leaving Rest of Eurozone Behind – Real Time Economics – WSJ
…moves in AIC [Actual Individual Consumption] reflect not just the changes in wages as economies slow and accelerate, but also the impact of austerity programs on living standards, since cutbacks in government spending show up as a decline in AIC.
⇧ UK deficit reduction aided by income tax surge | Markit Commentary
What will be interesting is to see if the better than anticipated tax revenues so far this year will mean the government can ease back on some of the austerity measures. The further cuts that have been pencilled in for departmental budget are looking increasingly difficult to achieve, given the scale of the reductions that have already taken place.
“…if the better than anticipated tax revenues so far this year will mean the government can ease back….” Not “can” but “will.”
⇧ Why Greece might now have the upper hand in crunch talks | World news | The Guardian
Meanwhile in Athens, the government said it was preparing for the return of the drachma. “If we are forced to say the big no, the difficulties will last for a few months”, said the social security minister, Dimitris Stratoulis. “But the consequences will be much worse for Europe.”
This is a reasonable point. Throughout the crisis, the IMF, the ECB and the European commission have been negotiating from what they perceive as a position of strength. That’s because traditionally debtors do what creditors tell them. But not this time.
⇧ Yanis Varoufakis: A pressing question for Ireland before Monday’s meeting on Greece
Greece’s drama is often misunderstood in northern climes because past profligacy has overshadowed the exceptional adjustment of the past five years. Since 2009 the Greek state’s deficit has been reduced, in cyclically adjusted terms, by a whopping 20 per cent, turning a large deficit into a large structural primary surplus. Wages contracted by 37 per cent, pensions by up to 48 per cent, state employment by 30 per cent, consumer spending by 33 per cent and even the current account deficit by 16 per cent.
Alas, the adjustment was so drastic that economic activity was choked, total income fell by 27 per cent, unemployment skyrocketed to 27 per cent, undeclared labour scaled 34 per cent, public debt rose to 180 per cent of the nation’s rapidly dwindling GDP, investment and credit evaporated and young Greeks, just as their Irish counterparts, left for distant shores, taking with them huge quantities of human capital that the Greek state had invested in them.
What Greece needs now is not more cutbacks that push an impoverished populace into greater indignity, or higher tax rates and charges that crush what is left of economic activity.
⇧ Greek debt crisis is the Iraq War of finance – Telegraph
The following represents a substantial excerpting of Ambrose Evans-Pritchard because his piece shows exceptional intelligence (even though we aren’t Burkean conservatives).
The guardian of financial stability is consciously and deliberately accelerating a financial crisis in an EMU member state – with possible risks of pan-EMU and broader global contagion — as a negotiating tactic to force Greece to the table.
It did so days after premier Alexis Tsipras accused the creditors of “laying traps” in the negotiations and acting with a political motive. He more or less accused them of trying to destroy an elected government and bring about regime change by financial coercion.
When Italy’s Silvio Berlusconi balked, the ECB switched off bond purchases, driving 10-year yields to 7.5pc. He was forced from office in a back-room coup d’etat, albeit one legitimised by the ageing ex-Stalinist EU fanatic who then happened to be president of Italy.
Lest we forget, it parachuted in its vice-president — Lucas Papademos — to take over Greece when premier George Papandreou merely suggested that he might submit the EMU bail-out package to a referendum, a wise idea in retrospect. That makes two coups d’etat. Now Syriza fears they are angling for a third.
Personally, I am a Burkean conservative with free market views. Ideologically, Syriza is not my cup tea. Yet we Burkeans do like democracy — and we don’t care for monetary juntas — even if it leads to the election of a radical-Left government.
As it happens, Edmund Burke would have found the plans presented to the Eurogroup last night by finance minister Yanis Varoufakis to be rational, reasonable, fair, and proportionate.
We all know the argument. The EU is worried about political “moral hazard”, about what Podemos might achieve in Spain, or the euroscepti cs in Italy, or the Front National in France, if Syriza is seen to buck the system and get away with it.
Do they think that the EU’s ever-declining hold on the loyalty of Europe’s youth can be reversed by creating a martyr state on the Left? Do they not realize that this is their own Guatemala, the radical experiment of Jacobo Arbenz that was extinguished by the CIA in 1954, only to set off the Cuban revolution and thirty years of guerrilla warfare across Latin America? Don’t these lawyers — and yes they are almost all lawyers – ever look beyond their noses?
The Versailles victors assumed reflexively that they had the full weight of moral authority on their side when they imposed their Carthiginian settlement on a defeated Germany in 1919 and demanded the payment of debts that they themselves invented. History judged otherwise.
⇧ Greece, The Euro and Gunboat Diplomacy — Bull Market — Medium
Psychoanalyzing the Greek situation? Karl Whelan:
Original decision to provide a bail out is the source of the current crisis. Time for Europe to share the blame and financial consequences.
⇧ who holds the us public debt
The rest of the world is, by far, the biggest holder of U.S. government debt. The ownership share of this sector grew steadily from the mid-1990s until 2008, from slightly below one-fifth to almost half. This share has remained relatively stable since. Information provided by the U.S. Treasury reveals that roughly 40 percent of foreign holdings as of the fourth quarter of 2014 were concentrated in Japan and mainland China, with each holding similar amounts.
Does the Fed think it will inflate the US out of trouble?
Why are we paying interest on bonds to China and Japan rather than issuing bond-free currency?
⇧ Sound Off: What are the pros and cons of earthquake insurance? – SFGate
Bolting your home to the foundation and seismic retrofitting will lower your insurance premiums (and may save your life).
⇧ Zombie Foreclosures a Good Buy? – YouTube
Zombie foreclosures, which are foreclosures vacated by the property owner, can be a good buy for real estate investors looking for cheap property.
That’s because zombie foreclosures often sell at a discount compared to owner-occupied foreclosures. Banks have a particularly difficult time recovering their investment in zombie foreclosures because the homes frequently fall into disrepair after their owners vacate the premises. And RealtyTrac’s Zombie Foreclosure Report for the second quarter of 2015 showed that the percentage of properties undergoing the foreclosure process that qualify as zombie foreclosures is rising as the overall number of foreclosures drops. So real estate investors looking for a good buy in the foreclosure market would do well to look for zombie foreclosures in their area.
On this episode of Big Money Real Estate, Ilyce reviews the second quarter zombie foreclosure numbers with Daren Blomquist, Vice President at RealtyTrac. You’ll want to watch their conversation if you’re wondering what the average discount is on zombie foreclosures so that you know if you’re making a good buy.
In addition to mold, people can leave things behind that are, or become, toxic. Properties can become dangerously infested and overgrown too. It can be a serious health risk just to enter some of the properties. If you buy one, you’re buying liability issues. Be extremely careful! You might need certified professionals in hazmat suits, etc., to inspect the property first.
⇧ The Death of ‘Homo Economicus’ – YouTube
…Sam Bowles, a Research Professor at the Santa Fe Institute….
…incentives can also backfire, diminishing the very behavior they’re meant to encourage
So what are the implications for the teaching of economics? How do we construct policies to bring out the good nature that is fundamentally intrinsic to mankind, rather than using traditional incentives which appeal solely to rational self-interest?
Sam’s research findings substantiate much of our many-decades-long ideological position and writings.
As for altruism, we’ve found that people do their first good deed then learn it felt good.
⇧ ECB extends lifeline to Greece – YouTube
The European Central Bank extended a financial lifeline to Greece to keep its banks afloat, ahead of a special summit in Brussels to prevent default and possible exit from the euro. The FT’s Hugh Carnegy brings the latest on the Greek debt crisis.
⇧ Preserving and Recapitalizing Low Income Housing Tax Credit and Affordable Housing – YouTube
Tons of details:
⇧ How Redlining Led to Rioting – Washington Spectator
We don’t think we can lay the violence at this doorstep (pun not intended) to the extent Richard Rothstein has done here, but there’s no doubt a great deal of what is wrong stems from societal and governmental racially motivated segregation policies and practices.
A pattern has emerged—in Oakland, New York, Cleveland, Baltimore, the St. Louis suburb of Ferguson, and beyond. Police claiming to feel threatened kill unarmed black men. Protests follow, sometimes including violence. The Department of Justice finds a pattern and practice of racially-biased policing. The city agrees to train officers not to use excessive force, encourage sensitivity, prohibit racial profiling. These reforms are all necessary and important, but ignore an obvious reality that the protests are not really (or primarily) about policing.
⇧ mainly macro: Where Labour went wrong
This post is all about the best way of regaining economic credibility, which means taking a strategic view rather than looking at what sounds good to today’s focus group. Put simply, if around half the electorate already think austerity should not continue, why on earth are Labour giving in to deficit fetishism? In electoral terms, the fact that attacking austerity is also good macroeconomics is just a bonus.
“…strategic view rather than looking at what sounds good to today’s focus group….” Really smart politics (the politics that will eventually completely win) is to educate the masses with the whole truth.
⇧ Avoiding Apocalypse – NYTimes.com
Paul Krugman about Greece leaving the euro:
I know that many people are telling stories about immediate collapse due to inability to buy raw materials, complete failure of exports to respond, and so on. They could be right. But I actually can’t think of any historical examples that fit this story — in particular, all the hyperinflations I know about involved governments too weak to collect taxes, and believe it or not, that’s not true of Greece despite all you’ve heard.
“…governments too weak to collect taxes….” Taxes can be used to drain excess currency from the system (as higher interest rates have also been used).
We don’t think hyperinflation in Greece is the worry but rather concerns about how long it would take for Greece to get up and running with whatever currency they would use.
Hopefully they’ve been planning well ahead all this time and do not plan to issue bonds to issue that replacement or additional currency!
⇧ How To Find & Manage a Top-Notch Contractor
If the contractor isn’t licensed and insured, walk away.
⇧ Rumors versus Facts About Texas Flood Disaster Assistance | FEMA.gov
…low-interest disaster assistance loans for noncitizen-owned businesses of all sizes (including landlords), homeowners and renters may be available from the U.S. Small Business Administration (SBA).
RUMOR: Renters can’t get FEMA aid.
FACT: Renters in designated counties whose homes were made unlivable by a disaster may be eligible for FEMA disaster grants to help pay for rent and other serious disaster-related needs.
U.S. Small Business Administration (SBA)
RUMOR: Only businesses can get low-interest disaster loans from SBA.
FACT: SBA low-interest disaster loans are available to homeowners and renters, as well as businesses of all sizes (including landlords) and private nonprofit organizations, for disaster damages not fully covered by insurance or other compensation.
⇧ Denton, Texas Officials Repeal Voter-Approved Fracking Ban
…Texas university town that was the first in the state to ban hydraulic fracturing repealed the voter-approved measure early on June 17…capitulation to the state’s powerful oil and gas interests after a seven-month battle.
Fracking…triggered concerns that the process could damage the environment and cause earthquakes.
⇧ 7 things to watch for if Greece leaves the euro – Agenda – The World Economic Forum
Oxford Economics calculates that two-thirds of countries saw their economies expand in their year of exit from a currency union — the median growth rate is 2.7% — and one of the key drivers is the boost to competitiveness from sharp devaluation. While the Greek economy is likely to shrink at first, a vigorous recovery is expected. Analysts at Munich thinktank IFO even believe the Greek textile industry could re-emerge.
⇧ US productivity — the dog that isn’t barking at the Fed | Gavyn Davies
The risk…is that neither the Fed dots, nor the markets, are making sufficient allowance for the looming threat to the path for short rates stemming from low productivity growth. The markets are increasingly aware that this threat exists.
⇧ “Sentence First, Verdict Afterwards”: The Alice in Wonderland World of Fast-tracked Secret Trade Agreements | WEB OF DEBT BLOG
National security dictates that President Obama classify the contents of the trade laws even after they are passed?
We aren’t sorry to say that, that appears to be illegal on its face.
The secrecy is against whom? Is it against the Russians, the Chinese, any and all potential global competitors against US and other agreeing corporations?
Why in the world would the American people rollover and play dead for the sake of such corporations, corporations that offshored American jobs by the tens of millions and corporations that rewarded their CEO’s and others while American wages haven’t even kept up with price inflation?
Why are the American people simply to take the President’s word for it that labor rights, safety standards, and environmental protections are vastly better under these new deals than they were under NAFTA?
Why are we having to rely upon WikiLeaks for the details?
Read Ellen Brown’s article on the subject.
⇧ Meet TISA – YouTube
Do we want a global corporatocracy? https://en.wikipedia.org/wiki/Corporatoc racy
Richard Eskow, Campaign for America’s Future/The Zero Hour (radio)….
In addition to the questions raised in the video, what would these “trade” deals also mean for small businesses? For instance, would the global corporations allow small-business startups to be fostered against those global corporations?
⇧ How Obama’s ‘Trade’ Deals Are Designed to End Democracy
Eric Zuesse makes the case that the TISA, TPP, and TTIP are a grab for global fascism.
Much of what he says is shared by both Progressives and Libertarians but for different reasons and with different ends in mind. Progressives will be more democratically mixed-economy oriented while typical Libertarians will be more decentralized capitalist-market oriented. (Note: there are also left-wing “libertarians.”)
If you aren’t accustomed to reading “alternative” media, some of the language may shock you. As an example, Eric pulls no punches concerning his very low opinion of President Obama’s ultimate motives.
⇧ [“We all know what to do, we just don’t know how to get reelected after we’ve done it.”] Athanasios Orphanides | The Political Roots of the Financial Crisis
Scathing nailing of Germany’s Merkel by Athanasios Orphanides:
Two episodes, largely absent from Wolf’s narrative, clarify the extent of the loss-shifting game. The first occurred in early 2010, when Greece, buckling under years of unsustainable debt accumulation and overconsumption, turned to the International Monetary Fund for help. According to leaked IMF documents, however, a decision to write off Greece’s debt, which the country badly needed, was delayed due to resistance from countries whose banks held Greek bonds. As Karl Otto Pöhl, former president of the Bundesbank, Germany’s central bank, said in an interview in Der Spiegel, the resultant IMF program “was about protecting German banks, but especially the French banks, from debt write-offs.” According to an internal IMF account of the May 2010 meeting of the IMF’s Executive Board, to gain support for a plan that would delay a debt restructuring and thus shield their banks from losses, the Dutch, French, and German chairs “conveyed to the Board the commitments of their commercial banks to support Greece and broadly maintain their exposures.”
Merkel did eventually force losses on selected holders of Greek sovereign bonds, but only after allowing German banks the opportunity to sell their holdings—a violation of the 2010 promise. The loser in all of this was Greece. According to the IMF, Greece’s debt-to-GDP ratio skyrocketed, from 126 percent in 2009 to 177 percent in 2014. Real GDP per person sharply declined, falling by 25 percent between 2007 and 2014.
If a poorly constructed eurozone explains why the continent was vulnerable to the crisis in the first place, policy blunders after the crash explain why it had trouble recovering.
The second episode took place in October 2010. At a summit in the French commune of Deauville, Merkel and Sarkozy decided to use their countries’ veto power in the euro area to block temporary assistance programs to eurozone member states—unless France and Germany could first impose losses on the private creditors of those states. This policy, known as private-sector involvement, was a serious misstep. The realization that the French and the Germans could force losses on private lenders alarmed those who held sovereign debt, which led to the deepening of the crisis throughout the eurozone, beginning with the collapse of the Irish economy. Germany, of course, came out on top. By making euro-denominated sovereign debt of peripheral states less attractive, Merkel masterfully created an implicit subsidy for Germany from the euro area periphery.
Throughout the crisis, Merkel has faced the same choice again and again: act to diffuse the crisis and avert catastrophe in the eurozone at the risk of losing support at home or enact policies that are sure to be popular in Germany but that will spread misery elsewhere. Put this way, Merkel’s decisions seem understandable—even inevitable. As Jean-Claude Juncker, the president of the European Commission, has said about the euro crisis, “We all know what to do, we just don’t know how to get reelected after we’ve done it.”
“We all know what to do, we just don’t know how to get reelected after we’ve done it.” Why not? The issue is solely one of educating the electorate.
⇧ Greek Creditors Turn Down Latest Offer From Tsipras – Bloomberg Business
Greek Prime Minister Alexis Tsipras has informed his government that creditors have rejected the nation’s latest aid proposals. Tsipras is headed back to Brussels for emergency talks in search of a solution to the crisis. Bloomberg’s Hans Nichols and Guy Johnson report on “Bloomberg Surveillance.”
Tsipras is rightly putting himself in the right place to take it directly to the Greek people that Germany in particular is making a deal all but impossible, that Germany is demanding that Greece remain insolvent and in a dire humanitarian crisis (deep, deep depression).
By the way, comparisons of Ireland to Greece are apples to oranges in many ways and not conducive to humanitarian assistance to Greece. That’s not to say that Ireland’s deal was the right one. We think it was not.
⇧ When Too Big To Fail Fails: The Scheme To Seize Depositors’ Money | Occupy.com
Here’s another from the “alternative” media.
We’ve covered this “bail-in” topic before and will state again that we believe the FDIC will be backed by the “full faith and credit” of the US, meaning the FDIC will be backstopped by the US Treasury.
That, however (if we’re even correct, which isn’t guaranteed), won’t help those with deposits that exceed FDIC limits.
Late last year, the heads of state of the G20, the developed nations, met in Brisbane, Australia. One piece of business was the advancement of new banking rules that will allow what were called the Too Big to Fail Banks, and are now called Global Systemically Important Banks (G-SIBs) to seize depositors’ money to save themselves in the next crash.
⇧ Study Finds That Mega Injections of Wastewater Triggers More Quakes
The more oil and gas companies pump their saltwater waste into the ground, and the faster they do it, the more they have triggered earthquakes in the central United States, a massive new study found.
So, they can slow it down and reduce quakes? We’ll see. What it won’t do is alter the toxic aspects of what they’re pumping, though they claim it’s being pumped way too deep to harm drinking water. Even if depth is the secret, is getting it down there without leaking foolproof?
⇧ Insurers, Bankers Can’t Be Scared Into Doing Right Thing: PwC Survey
A get-tough approach to poor employee performance, in terms of behavior and reaching targets, risks creating a climate of fear and breeding more unethical conduct in financial services — the opposite of what regulators, businesses and the public want, according to a joint PwC and London Business School report….
We’d like to see the data analyzed with “targets” separated into its own category. That said, we’re all for reinforcing positive behavior rather than emphasizing punishments.
⇧ Texas Tops in Lightning Damage Claim Amounts
“I’d rather have an ugly lightning rod than watch my roof burn off.”
⇧ Atlanta Police Seek Fraud Suspect | Midtown, GA Patch
Atlanta police are looking for a woman who they say ripped off an insurance company serving low-income Georgians by submitting a bogus invoice for a roof job that never happened.
…Georgia Underwriting Association’s clients, who are high-risk and low-income, may see their premiums increase to cover the cost of the fraud.
That’s how fraud costs us all.
⇧ U.S. real estate hot again as homes sell at fastest pace since 2007 | Financial Post
Home sales are on pace for their best year since 2007. First-time buyers are streaming back into the market. Prices are skyrocketing, aided by a stronger job market and tantalizingly low mortgage rates that are creating pressure for buyers to act fast.
“The housing market is unique in that the sellers are also the majority of the buyers,” said Mark Fleming, chief economist at First American, a title insurance and real estate services firm.
Many economists caution that the sales gains of recent months could be short-lived if prices increase so sharply buyers are priced out of the market. The recent rise in mortgage rates could also curtail sales, similar to the higher mortgage rates slashing into sales in the middle of 2013.
The latest gains also appear to be driven by people searching for value, unlike the previous debt-fuelled increase in housing prices that ultimately led the economy to crash.
⇧ 4 tax-free strategies for investing in real estate | Inman
Tax-free loans, like-kind exchanges, depreciation and tax elimination are all valuable options that can save…millions over a lifetime.
⇧ Baltimore and Detroit Get Aggressive With Nuisance Properties — Next City
With a staggering 90,000 vacant properties — nearly a quarter of all properties in the city — Detroit is dealing with blight on a scale unknown anywhere else in the country. Baltimore, a much more compact city, has somewhere between 16,000 and 40,000 vacant properties, which are largely concentrated in the neighborhoods of its east and west sides. Nuisance properties pose significant challenges to neighborhoods and communities: They’re fire and flooding hazards. They attract illegal scrapping, squatters and rodents. To battle blight, both cities are using everything from legal action to giant posters and talking with neighbors.
…Detroit and the Detroit Land Bank Authority…attacking blight more aggressively than anywhere else in the country.
⇧ All of the Cool Companies Want to Live in All of the Cool Cities — Next City
After conducting a survey of 500 companies and interviewing executives at 45 of those businesses, they concluded that talent attraction and retention is the most common reason that businesses have ultimately made their decision to move to a downtown.
The report’s researchers measured how walkability, access to public transit and biking shifted when these companies moved. …average scores for walkability increased from 52 to 88, transit scores went up from 52 to 79 and bike scores rose from 66 to 78.
⇧ Cruel summer: 425 [600+] dead and counting – The Express Tribune
The death toll from the intense heat wave sweeping across Karachi and other parts of southern Pakistan has climbed to 425 over the course of 72 hours, snowballing into a major health crisis in the country.
Muzammil Hussain, a meteorologist for the Pakistan Meteorological Department, said the pre-monsoon season had already started in various parts of the country on June 21. Karachi received light showers in some parts of the port city on Monday, bringing the mercury level down from 43°C [109.4°F, humid, and for most, without air-conditioning] to 35-38°C.
⇧ ‘A Great Day for Corporate America’: US Senate Passes Fast Track | Common Dreams | Breaking News & Views for the Progressive Community
In keeping with our more Progressive position concerning the various “trade” deals being pushed by President Obama, here’s another piece in the face of the US Senate having passed the very onerous “Fast Track” measure.
“…putting the interests of transnational corporations ahead of the public.”
In our view, it’s another sad day for democracy in the face of the very increasing global corporatism drive of the budding global plutocracy against democracy. We aren’t exaggerating here. This legislation is not good for business in general. It is, in very fact, anti-competitive. It is designed to increase global consolidation of wealth, power, and control (monopolistic tendencies).
If you are a small-or-medium-sized business owner (as the majority of residential real-estate investors actually are) or work for the same, you are losing ground via this dreadful legislation.
⇧ New York Legislators in Tentative Deal on Rent Regulation and Other Issues – The New York Times
Though Mr. Cuomo, a Democrat, said he wanted to strengthen rent regulations, he offered little by way of detail about his goals. Tenant activists and some Democrats faulted him for not standing up on their behalf, accusing him of siding with landlords and their allies in the Senate.
The rent laws had originally expired on June 15, though lawmakers later agreed to a temporary extension as negotiations continued.
The Assembly, controlled by Democrats, had been pushing to strengthen rent regulations so that fewer apartments become market-rate in the future. The Republican-led Senate had resisted those efforts.
We aren’t convinced rent control, per se, is the right way to keep housing affordable; however, we are definitely not for allowing all but the extremely rich to be priced out of the market.
It seems that if we are to keep our mixed economy, there needs to be more and wiser development of market-rate housing.
⇧ Fannie and Freddie Reward Affordable Housing Properties | Multifamily content from National Real Estate Investor
Fannie Mae and Freddie Mac don’t have to count loans made to apartments with affordable rents toward the $30 billion limit on their lending to multifamily properties. The Federal Housing Finance Agency (FHFA) counts apartment[s] that rent at rates affordable to households earning 60 percent of the area median income as “affordable.” If a property is a mix of affordable and market rate apartments, a portion of the loan amount based on the percentage of affordable apartments is still excluded.
In markets with high housing costs, middle income residents also struggle to pay for housing. In these areas, rents are considered “affordable” if households earning 80 percent of the area median income (AMI) can pay them without paying more than 30 percent of their income. That rises to 100 percent in very high cost markets.
Loans to small apartment properties, with 50 units or less, and loans to manufactured housing properties also don’t count towards the FHFA limits.
⇧ Change in total nonfarm employment by state, over-the-month and over-the-year, seasonally adjusted
West Virginia was hit the hardest over the year. Utah did the best.
⇧ Australian housing market facing ‘bloodbath’ collapse: economists
“Contrary to the analyses of the vested interests, the data clearly establishes Australia is in the midst of the largest housing bubble on record. Policymakers are caught between a rock and a hard place, as implementing needed reforms will likely burst the bubble,” Mr David and Mr Soos state in a submission on behalf of real estate and financial services research house LF Economics.
They believe the current bubble is worse than those in the 1880s, 1920s, mid-1970s and late 1980s.
If there’s an oversupply while prices are high and climbing without real absorption (people living in the properties) in sight, there’s a bubble by definition.
⇧ Scott Walker’s Tax Policy — Supply-Side Orthodoxy Isn’t the Answer | National Review Online
Okay, we’ve been pumping up the progressive side of things and even more so, the Populist (with a capital P).
Even still, we found this “less worse” (Scott Walker versus Sam Brownback approach) article very interesting.
⇧ Downbeat Chinese manufacturers cut jobs at fastest rate for over six years | Markit Commentary
…China’s factories cutting employment at the fastest rate since February 2009. The increased rate of job losses reflected a lack of optimism with regard to future order books, causing increasing numbers of firms to cut costs and boost productivity.
⇧ Greek government confident despite backlash over debt deal | Reuters
Tsipras has had no choice but to find the exact place where the Greek people won’t take anymore, that they will rather leave the EU/euro than to undergo increased austerity.
Opinion polls suggest most Greeks want to stay in the euro. Tsipras, whose coalition has a 162-seat majority in the 300-seat parliament, may also find support from opposition lawmakers, who want to secure Greece’s place in the euro, even though the government says it cannot continue unless its own lawmakers back any deal it brings to parliament.
That’s the political reality. Tsipras must see the polls decidedly swing the other way before he can withdraw from the EU/euro (not that he doesn’t want the EU powers that be to cut a sustainable and humane deal with Greece).
⇧ Advanced e-Closing: supporting CFPB final rule and more | HousingWire
Although the mortgage industry is awaiting the CFPB’s e-closing pilot findings, it is anticipated that the results will substantiate the benefits detailed in the agency’s previous e-closing observations, and even highlight additional benefits. The findings are also likely to offer some insight into how the industry might fully embrace e-closing technology and when it could be adopted.
⇧ The eurozone’s ‘five presidents’ report’: An assessment | CER
The presidents of the European Commission, the European Central Bank (ECB), the European Council, the European Parliament and the Eurogroup have now presented their widely anticipated report — the ‘five presidents’ report’ — on how to complete the monetary union. It contains some important proposals, such as a strong emphasis on completing the banking and capital markets unions. But two key aspects are missing: a more activist ECB in order to prevent future shortfalls in demand, and strongly counter-cyclical fiscal policies at the national level.
They still don’t “get it” or don’t want to. We think it’s the latter. If they admit getting it, they’ll be undermining the plutocracy they serve versus modern democracy (government by the people).
⇧ Top CEO Compensation Soars, and Why We Do Not Look at “Average CEOs” | Economic Policy Institute
Our analysis, which shows that CEO pay grew far faster than pay of the top 0.1 percent of wage earners (those earning more than 99.9 percent of wage earners), indicates that CEO compensation growth does not simply reflect the increased value of highly paid professionals in a competitive race for skills (the so-called “market for talent”).
…we know that highly paid managers are the largest group in the top 1 percent and the top 0.1 percent, measured in terms of either wages or household income, and so there are plenty of good reasons to be interested in the pay of executives of large firms. Moreover, the pay of CEOs in the largest firms has grown multiples faster than the wages of other very high earners and hundreds of times faster than the wages these CEOs provide to their workers.
⇧ Dogs Assist Investigators in Sniffing out Georgia Arson Cases
Fire marshal Ricky Shores said human investigators can find accelerants used in a fire 30-40 percent of the time. Accelerant detection canines can find the materials used by arsonists in more than 90 percent of cases in just a few minutes.
⇧ Abandoned properties: Do they need to be maintained? | KHON2
“They have to maintain it to a certain level, but you don’t have to paint it or fix the roof,” said real estate analyst Stephany Sofos. She also said squatting is a growing problem.
Sofos says the best way for property owners dealing with these issues is to make sure they have no trespassing signs, locked gates and proper fencing.
⇧ Sacramento real estate boom for some, bust for others
“The homes are still affordable, it is not like 110 miles west of us,” Northpoint Asset Management Regional Manager Scott Swindell said. “Here you can still get a nice house, put 20 percent down for an investor and have a positive cash flow.”
Sacramento has been named the 18th best market in the country for rental real estate investors in All Property Management’s quarterly report. You can read the complete report here.
⇧ What are the top 10 issues affecting real estate in the coming year? | cleveland.com
7. The gap between rich and poor: Widening income inequality presents some opportunities for real estate at the upper and lower ends. For example, discount stores and luxury retailers are thriving. Developers are chasing high-end housing and affordable apartments. But there are fewer opportunities in the middle. And the wealth gap is making it harder for young people to buy houses or start businesses.
⇧ Philly finally figures out how to sell properties
Where in the City Charter does any councilman have the right to select city-owned properties for sale or determine how they are to be sold or to whom? Is there any ordinance that vests this authority in the hands of an individual councilman?
We all know there is no such authority.
Wow, if Matt Wolfe is right about there being no law to allow it, ….
⇧ Toms River to restrict real-estate soliciting
There are 7,750 homes listed in the registry, which bans salespeople from soliciting at homes that display a “no-knock” sticker.
⇧ TR to regulate real estate soliciting
Also prohibited: attempting to convince someone to sell or lease their property by … [discussing with them] a decline in the quality of schools serving the area, or an increase in crime in the area.
That part sounds like a clear case of unconstitutional restriction on free commercial and political speech. What are your thoughts on it?
⇧ First-time buyers grab a bigger share of the real estate market – The Washington Post
According to a June 19 Campbell/Inside Mortgage Finance tracking survey, which polls 2,000 real estate agents nationwide, first-time buyers accounted for nearly 39 percent of home purchases in May; that’s the highest level since August 2010. The National Association of Realtors reported Monday that first-time purchases in May rose to 32 percent of all buying activity — the largest share since September 2012.
What might be going on? Tom Popik, research director for Campbell Surveys, told me that one key change he sees in the data has been in financing. The Federal Housing Administration cut its annual mortgage insurance premium rate drastically in late January. That has made 3.5 percent down payment loans affordable to first-time buyers with FICO scores and debt-to-income ratios that would trigger rejections elsewhere in the market.
From a mixed-economy perspective, please, do not lower standards so much that you re-inflate the housing bubble. Keep a lid on the system. Increase sensible regulations and enforcement where the system is weak in terms of actual and potential corruption from all directions.
⇧ Australia is closing on the world record for economic expansion, but one bank says the good times are about to end | Business Insider
Special one-off factors have also been a key underpinning of Australia’s current record expansion. A long run-up in household indebtedness, a strong rise in house prices, a commodity super cycle & an associated China infrastructure boom have all combined to extend Australia’s economic expansion beyond the length of a normal cycle.
That sounds ominous.
⇧ Explaining the Capitalist Crisis – Anglejournal.com
This is one of the best, if not the best, arguments we’ve ever read for a strong state-side mixed economy.
Hicks, Schumpeter, and Polanyi versus selective aspects of Say, Hume, Ricardo, and Lewis:
Teddy (E.A.) Brett, Professor of International Development at the LSE (London School of Economics):
Following a period of relative prosperity, the survival of liberal democratic capitalism is threatened by the prolonged economic slump that set in after the 2008 banking crisis. While neo-liberals attribute the crisis to state interventions that distort markets and undermine their inherent tendency to generate equilibrium solutions, structuralists attribute it to the inequalities, exclusion and deflationary spirals created by market competition itself. It turns out that the case for a free market system is undermined by commonly observed scale economies affecting its equilibrium assumptions; producing uneven development and inequality. In this case, it is clear that redistributive policies are a necessary technical requirement for the survival of an economic system that will otherwise be subject to deflationary pressures and intensifying social and political crises.
…new technologies like steam power or automation enable dominant producers to increase output, reduce costs and jobs, destroy or marginalise existing producers, as well as their skills and organisational systems, and existing distributions of wealth and power. This undermines the equilibrium assumptions of the Say/Hume/Ricardo/Lewis theory because lower cost firms and surplus countries can invest their profits in improved technologies and higher local production, rather than increasing imports or exporting capital. These processes of ‘creative destruction’ explain the major increases in wealth and changes in the location of industry that began with the indu strial revolution, but also its disruptive and unequalising effects.
This gentleman was born in 1936. We hope we have as many of our buttons when we reach his age as he seems to have retained of his own.
⇧ Global Risk: the Wildfire in the Commons – Anglejournal.com
We do not need global coordination for geo-engineering. Scientists estimate that initial sulfate programmes would cost a few billion dollars.5 That is expensive, but affordable for many countries. Hundreds of people are rich enough to afford single-handedly a major programme. If a single actor went ahead with such geo-engineering, the effects would be almost instantly global. Other, riskier, forms of geo-engineering can be even cheaper.
… Biotech firms let people without specialised facilities order custom DNA. It is possible to buy custom sections of smallpox DNA, although firms are better at spotting this than they once were.7 In the future, a small team of PhD level workers might be able to assemble those bits without access to a big lab.
Risks grow as the underlying technologies become more widely distributed and powerful. Individuals will be more able to cause global calamities in the same way that someone with a gun can kill more people than a someone with a knife. As a result, we need to work out how to manage global risk before the stakes get too high.
The situation that geo-engineering and emerging biotechnologies create, however, is much harder to manage. It only takes one ‘defector’ to start a wildfire – only one person needs to drop a match. Similarly, only one country needs to decide that the benefits of stratospheric sulphate outweigh the costs. Its choice will affect everyone. This situation is harder to manage, from an international perspective, because the only acceptable number of defectors is zero.
Although existing international systems are able to make some progress towards resolving collective action problems like climate change, we have a lot to learn about situations where a single group can have a significant global effect. As technology develops, humanity will encounter more such ‘wildfire’ technologies. The international community will need to do more work to prepare for these scenarios before technologies become mature, so that we are not left with a hasty and poorly considered response to emerging technologies.
⇧ Wealthier baby boomers shun homeownership
The U.S. home ownership rate is at the lowest level in 25 years and is widely expected to go even lower. That’s not just the result of younger Americans struggling to make ends meet to save for a down payment on a home. It is increasingly the result of middle-aged, higher income Americans choosing to rent.
Renter growth is now at the highest level in 30 years, and families or married couples ages 45—64 accounted for about twice the share of renter growth as households under age 35, according to a new study by the Joint Center for Housing Studies at Harvard University. …
Apartment construction is booming, but much of it is in urban centers, catering to wealthier renters.
Rents are surging in the double digits for apartments and single-family rental homes. New apartment construction, now at the highest level since 1989, should ease the burden in coming years, adding supply to the demand, but it is not enough.
Build affordable housing. Even at market rates, it would take a ton of new construction (vastly more than the current rate) for profits to not materialize.