Linking ≠ endorsement.
⇧ Greece should seize Germany's botched offer of a velvet Grexit - Telegraph
Wolfgang Schauble is one of the very few figures who has behaved honourably in this latest chapter.
Standing pat for austerity is dishonorable in our eyes.
⇧ Housing supply shrinking in Phoenix
"The market is moving very fast, especially under $250,000. Homes are lasting one or two days on the market. It slows down quite a bit in the higher price ranges," said Erik Jensen, a real estate agent with the Caniglia Group.
Jensen said investors are still in the Phoenix market but in far fewer numbers.
⇧ How Dodd-Frank changed housing, for good and bad
"It has slowed down lenders from taking chances again. Ultimately that may be good, and maybe that's what the law was supposed to do, but it is slowing down lending and certainly is making the housing recovery a little bit more difficult because lenders are not jumping in with new products," said Hsieh.
It now takes far longer for lenders to process the most basic loans. The average large bank underwriter could process about 165 loans per month in 2005 but can only do about 33 today, according to a study by the Mortgage Bankers Association.
The home loans being made today are arguably the most pristine in history. New default rates are at record lows. All that, however, comes at a cost to lenders, borrowers and the overall health of the housing market itself.
"...comes at a cost to lenders, borrowers and the overall health of the housing market..."? We don't view it that way at all. The true cost is the final cost, and the final cost of lax regulations showed perfectly in the form of the 2008-9 crash. We view the tight regulations as a forced savings. They spare us from the inevitable negative results of recklessness. If there are people who shouldn't borrow and others who shouldn't lend because they don't know the proper limits, then they are protected against themselves and the rest of us are also protected from them. That brings stability and sustainable growth rather than wild booms and severe busts.
⇧ Hotter, Wetter, Stormier: Study Says 2014 Climate Melted Records - Bloomberg Business
Anthropogenic global warming has been, and still is, happening.
Eastern North America was the only major region to record below-average temperature for the year.
Global sea levels swelled to a high, tropical cyclones continued to multiply and the world's thermometer set a record in 2014, according to a new report tracking the earth's climate.
⇧ Southern California Wildfire Caused by Human Activity, Officials Say
Authorities say human activity caused a Southern California wildfire that burned four buildings and 49 square miles of forest land.
However, it's unclear whether the fire was set on purpose or by accident.
⇧ As Nine Storms Rip Through the Pacific, Two Forces Are to Blame - Bloomberg Business
The most storms ever to show up in the Pacific in a two-week period was 11 in 1968, Klotzbach said. The global record for a two-week run is 12, set in 1988 and again in 1992 and 1995, he said. There were El Niños in all of those years, too.
About 60 firefighters responded to a blaze at the Tivoli Apartments across from the University of Central Florida, said Seminole County Fire Department spokeswoman Paula Thompson.
An entire building in the complex was a total loss, Thompson said.
⇧ New Chackbay fire station to help with insurance rates | DailyComet.com
Residents north of Thibodaux [Louisiana] can expect better fire protection and lower insurance premiums with a new, 3,700-square-foot station being built along La. 20, just past the Sugar Ridge neighborhood.
⇧ Forecasters See Strong El Nino Lasting Into Next Year, U.S. Says - Bloomberg Business
The Pacific Ocean's weather-changing El Nino will probably last into 2016 and be stronger than previously forecast, the U.S. Climate Prediction Center says.
The wildfire season globally has lengthened by almost 20 percent in 35 years as the average temperature has risen, a climate change study said Tuesday.
"Fire weather seasons have lengthened across 29.6 million square kilometers (11.4 million square miles) of the Earth's vegetated surface," said a paper in the journal Nature Communications.
This resulted in a 18.7-percent increase in season length overall.
ALBUQUERQUE, N.M. (AP) - People who lived near the site of the first atomic bomb test in the New Mexico desert and later developed cancer and other health problems need to be compensated, a U.S. senator said Thursday.
⇧ Zillow sued over use of real estate photos on Digs website - News - Crain's Chicago Business
Zillow Group Inc., the Seattle-based operator of a real-estate listing website, was sued for copyright infringement by VHT Inc., a provider of professional photographs for the real estate industry.
⇧ Shadow Lenders Are Pushing Into Risky Real Estate Deals - Bloomberg Business
"We clearly need to be very vigilant about monitoring risks that are migrating to that system, and certainly in the Federal Reserve we have hugely ramped up our attention to the shadow banking system," Fed Chair Janet Yellen said Wednesday in testimony to Congress. "We are thinking about regulations that might address — like minimum margin requirements that would apply not only to banking organizations but more broadly that might address some potential risks in the shadow banking system."
... Mayra Rodriguez Valladares, managing principal at MRV Associates in New York, a consultant to both regulators and banks, said she's concerned that lending has been "moving to the shadows" in the U.S., Europe and China, and that regulators lack authority or have largely ignored the growing threat that might pose.
"Regulators need to write rules to regulate the shadows," she said. "The focus has been too much on banks. Bear Stearns and AIG were not banks."
In our minds, Mayra Rodriguez Valladares is absolutely correct about this.
⇧ Asians Investing in U.S. Real Estate Surging — and That's Good News - TheStreet
While some draw parallels between Japanese investments in U.S. commercial real estate in the '80s, this wave is different with many more signs of long-term investment. According to Deloitte research, Chinese investors are more conservative, buy in at reasonable prices and express interest in partnering to learn how to develop and maintain real estate in the U.S.
The main question in our minds has been, and remains, will Chinese investors be able and willing to hold onto their investments in the US while the Chinese market continues crashing such that debts in China will have to be paid off perhaps by selling assets outside China?
⇧ Boom in North Texas' commercial real estate market may last a while | Dallas Morning News
Even the slowdown in the energy sector has so far had negligible impact on the D-FW property markets, the latest statistics show.
The real surprise has been on how well Huston has done given the impact on fracking from the Saudis' attempts to kill the fracking industry in the US, which, so far, hasn't worked because of rapid technological advances in that industry.
Texas has diversified, and the severe drought let up.
⇧ FRB: Testimony--Yellen, Semiannual Monetary Policy Report to the Congress--July 15, 2015
Well, this sure sounds like Janet Yellen expects to raise the federal funds rate this year.
She's seems to be planning a tiny increase to start, followed by a series of similarly small increases.
The only thing that will alter this is a downturn that the Federal Open Market Committee (FOMC) doesn't consider "transitory."
She doesn't want to wait to actually see employment and PCE inflation hit the targets because she's afraid of having to do larger rate increases. Hers is not the approach we'd take.
We had thought she'd be more pro-full employment at higher wages. She seems to have greatly reduced commenting on slack. Considering Tsipras, we're less surprised than we would have been. Our level of cynicism has gone back up.
⇧ Making sense of the productivity puzzle
...economics textbooks never tire of telling you, a worker with a backhoe can dig more mud than a worker with a shovel. The backhoe of course costs much more than a shovel, which is to say that if you want productivity you need to make capital investments. And capital investment is exactly what has been lacking in the US economy since 2007....
⇧ The Case For September - Tim Duy's Fed Watch
This is the best analysis/post we've seen from Tim Duy in a long, long time.
...it seems that Yellen abandoned her enchantment with optimal control models. A recent version from the IMF indicates it would be still preferable to delay rate hikes in favor of a more aggressive normalization path later:
Under the optimal control approach, the Fed would accept the cost of temporarily higher inflation (still within a 25b range of target) in return for a faster return to potential output. Yellen now appears will[ing] to tolerate a return to the inflation target from below, rather than above, in order to avoid the possibility of a sharper rise in rates later.
Why the change of heart?
We actually think she's likely succumbed to the influences of Stanley Fischer, the Vice Chair of the Federal Reserve, who never appeared to be as concerned with the unemployed as Janet once appeared to be.
⇧ Greece's debt: so just what joint advice did the IMF and European Commission give? — Prime Economics
It's high time for total transparency on this crucial issue for the European Union and the future of its economic and monetary union. The debt sustainability assessment must now be published. Depending on its contents, the decisions reached by the Euro Summit (I leave aside its lack of legal power to make binding decisions!) may well be judged to be fatally flawed and vitiated - whether due to neglect, or to non-receipt, of the IMF's advice, or because the sustainability assessment from all three institutions was too thin - in the time available - to form the basis of rational decision-making.
Well, in keeping with our previous level of cynicism and our now reinforced and increased level of cynicism, we must say that they don't care about any of this with the exception of some level of keeping up appearances in front of the generally disinterested-and-duped broader public. What they care about is their ideology of keeping the elites just that: super rich relative to the huddled masses and on the backs of the huddled masses in very fact.
⇧ Lose-Lose: Greece Leaving Euro Seen Costlier Than Write-Off - Bloomberg Business
"Greece "does not have the required currency reserves to support a return to the drachma," he [Alexis Tsipras] said....
Who told him Greece needs currency reserves to return to the drachma? It most assuredly does not!
More to the point of the article, however, the elitists running the eurozone are quite willing to take a very large hit in order to dissuade member states from thinking they can be bailed out the way states in the US are backed up by all the other states.
Finance Minister Theo Waigel, personally at odds with Pohl, agreed with him on the economics. The two had opposed the conversion of one East German Ostmark for one West German D-Mark. Waigel also insisted on a slower pace of European monetary integration at least till the Maastricht Treaty in December 1991. But then he fell in with Kohl's agenda. The compromise that Waigel shepherded was European fiscal austerity to protect Germans from picking up the tab for others. Once again, contemporary critics warned that this — along with a single monetary policy for disparate countries — would make macroeconomic management harder, especially in economic downturns. But disregarding those warnings, an incomplete monetary union, without the safeguards of labour mobility and a fiscal union, was forged.
Thus, at that bend in history — when politics defied economics — the European macroeconomics of austerity was born, protected by groupthink and necessarily cast in institutional straightjackets. Even as the Europeans narrowed their macroeconomic options, the rest of the world moved steadily to macroeconomic flexibility — in exchange rate, monetary, and fiscal arrangements.
However, those who understood political economy also agreed that there was insufficient political union planned, which included no fiscal union as well.
Please note the URL for this is not a permalink.
Economic growth and evolving demographics continue to bring strong demand levels to the U.S. multifamily rental segment. However, new supply is building and by 2016-2017 the demand for units will begin to fall short of supply.
We'll be pleasantly surprised if that happens.
⇧ mainly macro: Labour and the deficit: a Tristram Hunt follow-up
This cracked us up, though he's serious.
Where is this nonsense economics coming from? ... Are they simply parroting stuff that comes from the Conservative Party, which is repeated in much of the press? Does it come from some City economist? If anyone knows, please tell me (confidentially by email if necessary).
So, where do you think it's coming from?
Ultimately, it's coming from people who know better but definitely do not want the general public to learn and to comprehend because it would spell the end of the economic-class structure (even though all boats would rise higher than the highest boat is now).
⇧ Housing market recovery - Business Insider
On Friday morning, Census Bureau data showed that housing starts surged 9.8% to an annualized pace of 1.174 million, a level not seen since July 2007.
Building permits, which indicate the pace of future construction, climbed 7.4% to an annualized pace of 1.343 million, also the highest level in about eight years.
⇧ Detroit moving on 50 properties at Alter Road border with Grosse Pointe Park | MLive.com
DETROIT - The City of Detroit has "initiated activity" on 50 properties along Alter Road on the city's east side border with Grosse Pointe Park.
As part an agreement signed last year, Grosse Pointe Park was to take down what many called a blockade of farmer's market sheds in exchange for the City of Detroit cleaning up their side of of the border.
⇧ Professor Delivers A Crash Course In Real Estate Investing To Detroiters : NPR
More from Michigan:
You can snap up a home for just a few thousand dollars in Detroit these days. But just because a property is cheap, that doesn't necessarily make it a good investment.
Peter Allen with the University of Michigan is equipping local residents with housing investment know-how with the hope that they can go on to revitalize their neighborhoods.
⇧ Greece debt crisis news: Yanis Varoufakis says 'disastrous' bailout reforms 'will fail' as Tsipras reshuffles cabinet - Europe - World - The Independent
The package — including VAT rises and pensions cuts — would "go down in history as the greatest disaster of macroeconomic management ever", Mr Varoufakis said.
⇧ The crucifixion of Greece is killing the European project | Seumas Milne | Comment is free | The Guardian
This is an excellent summation by Seumas Milne.
⇧ Accounting for Buy & Holders: Best Practices You Should Know
This is a clear and well-organized article by Brandon Hall, CPA.
⇧ The Climate Deception Dossiers: Internal Fossil Fuel Industry Memos Reveal Decades of Corporate Disinformation | Union of Concerned Scientists
Real estate and whole economies are on the line due to the growing risks of anthropogenic global warming.
For nearly three decades, many of the world's largest fossil fuel companies have knowingly worked to deceive the public about the realities and risks of climate change.
... Communities around the world are already facing and paying for damages from rising seas, extreme heat, more frequent droughts, and other climate-related impacts.
⇧ News from The Associated Press
Balconies on Berkeley, California, apartment buildings will be inspected every three years under new regulations adopted by the city in the wake of a balcony collapse that left six people dead.
The City Council also voted Tuesday to require that new balconies be made of corrosion-resistant material and be ventilated....
"Five years ago, if you had called us, we were building homes for people who liked and wanted modular homes. Now we're very good at this, it's kind of becoming a niche for us, because people and insurance companies like how fast we can rebuild. It's become about 60 percent of our business."
These are not "mobile" homes.
⇧ Calculated Risk: Comments on June Housing Starts
The rolling 12 month total for starts (blue line) increased steadily over the last few years, and completions (red line) have lagged behind - but completions have been catching up (more deliveries), and will continue to follow starts up (completions lag starts by about 12 months).
⇧ Variable geometry bites back: Schäuble's motives | VOX, CEPR's Policy Portal
The Greek crisis risks shattering the Eurozone as we know it. Germany's Finance Minister Wolfgang Schäuble has been leading a coalition of hawks who appear determined to make Grexit an unavoidable outcome. If not immediately then at least once it becomes clear (or clearer) that it is impossible for Greece to satisfy the conditions it is being asked to meet.
As one ponders Mr. Schäuble's possible motives for insisting on such demanding (many would say infeasible) targets, it is instructive to recall his political and intellectual history in the run-up to the euro.
Mr. Schäuble's commitment to European integration is unquestioned, and no better description can be found than the remarks by IMF Managing Director Christine Lagarde when Mr. Schäuble was awarded the Charlemagne Prize in 2012 (Lagarde 2012). But Mr Schäuble's history shows that his commitment to 'variable geometry' is just as strong — to the point that his most recent statements on support for Grexit within the German government are creating a rift with Chancellor Angela Merkel.
This reestablishes much of what we had thought, but it does not excuse Alexis Tsipras at all.
Mr. Tsipras completely blew it with his "stay in at any cost" approach.
Yanis Varoufakis is correct that the current plan/deal will not work, and we know that Mr. Schauble agrees.
Mrs. Merkel and Mr. Tsipras have been had and out maneuvered all for the worse.
"At the beginning of any recovery, wage growth is low," Occhino adds. "With so many unemployed people, businesses don't need to raise wages. Then, as a recovery progresses and the labor market tightens, you should expect more competition and a bit of higher wage growth. But, we don't see that. We see low wage growth."
Average productivity growth—that is, growth of the output of employees, or the goods and services produced relative to the labor hours spent—was 3.5 percent between 1997 and 2004. After 2004, however, it has averaged 1.5 percent.
"When the productivity of workers rises, through competition, employers pay more for their workers," Occhino says. "So one reason why wage growth has been low is productivity growth is low." Productivity is influenced by various factors, mainly a worker's skillset and education. Also driving productivity is the capital, such as equipment, afforded to each worker.
Occhino's recent research also shows this: Labor income has declined as a share of total income earned in the United States. In other words, labor income, which includes wages, salaries, and other work-related compensation, has declined relative to capital income, which includes rent, interest, dividends, and capital gains.
Though both labor income and capital income have increased over time, capital income has increased at a faster rate.
⇧ Why is Germany so tough on Greece? Look back 25 years | Dirk Laabs | Comment is free | The Guardian
Schäuble comes across as a tough and sober accountant. In fact he is just an ordinary politician repeating old mistakes.
⇧ Quick Update on Greece, Germany, and the IMF | naked capitalism
Yves Smith was pretty much right all along about Alexis Tsipras. She took a great deal of flack because of it.
Here she is reminding not only all of us but herself of the importance not to buy into narratives prematurely.
We'd posted earlier this week that odds favored a Grexit. With the Greek bridge loan deal having passed the key hurdle of securing passage in the German Parliament, and Lagarde making it clear that the IMF will support an eventual bailout deal with "restructured" loans (ie, no haircuts), the odds have shifted. It is now more probable that this pillage-of-Greece program stays on track near term, meaning the so-called "third bailout" gets completed.
The events of this week should also serve as a reminder of the need to consume news reports with care, and we were initially thrown off by the leak of the IMF sustainability report.
⇧ Here's What Membership in the Euro Did for Greece - Bloomberg Business
Membership in the single currency was initially great for the Greeks. The size of their economy (on a per person basis) rose by 25 percent, and came very close to reaching the European Union average. Then Greeks watched in horror as the global recession and later their own debt crisis erased all those gains in just a few short years. By 2012, Greeks' per capita share of real GDP was the same as in 2001 and had fallen to 74 percent of the EU average.
The rest of the article shows that membership hasn't been particularly good.
The savings rate and amount is up, but how long will the people be able to hold onto that money? In addition, it's part of the paradox of thrift. It's not being invested to become productive but actually taken money out of circulation, which slows the economy.
⇧ mainly macro: Ireland and Greece
A learning moment:
...Ireland does give us a clear example of how austerity is supposed to impact an open monetary union member, according to standard theory. A permanent reduction in government spending or higher taxes will increase unemployment, which will reduce wages and prices. This will improve competitiveness, leading to higher external demand for Ireland's products (and less imports) which will eventually replace the lost demand due to austerity. However, because wages and prices are 'sticky', this adjustment will not happen quickly.
To sum up, the main reason Greece has suffered so much more than Ireland is that the amount of austerity imposed on Greece has been much greater. Any recession is also likely to be greater because Greece is a less open economy, so a larger internal devaluation is required to offset the impact of austerity. One final factor is that large cuts in wages have not been translated into improvements in competitiveness, in part because of the way austerity was implemented.
⇧ Macro and Other Market Musings: Who Predicted the Eurozone Crisis?
For our purposes the most interesting thing about this article is not its incredibly wrong Euro triumphalism, but its documentation of the many American economists who were skeptical of the Euro. The article looks at American economists in the 1990s both at the Federal Reserve and in academia.
...add these folks to the list of people who saw the Eurozone crisis coming.
If we were to include all the politicians, pundits, academics (in other fields, such as political science for just one), and others, the list would be huge. We'd be on that list too.
⇧ BBC News - Goldman defends Greece debt swaps
So, what Goldman Sachs did via-a-vis Greece back in 2001 wasn't illegal at the time, they're saying.
Seattle as boomtown:
... Sea-Tac as the fastest-growing airport among the top 20 in the U.S.
Residential projects continue to dominate the construction landscape with 28 projects now under way, representing 6,428 units (5,552 apartments and 876 condos). This is nearly twice as many residential units under construction than in 2007 — the height of the previous development cycle.
The downtown apartment market is on track to see 3,487 units delivered in 2015, more than any year since tracking began in 2005, according to the report.
⇧ Real estate industry creates 1-in-4 new Orange County jobs - The Orange County Register
Work in various real estate trades has accounted for 1-in-4 of the jobs created in Orange County in the past five years.
⇧ First-of-its-kind tornado panels installed in Alabama home - YouTube
With the 2011 Alabama tornado catastrophe still lingering in the minds of many, University of Alabama at Birmingham research has led to the creation of new technology designed to help save lives in a natural disaster.
Properly attached to a solid foundation in a basement with a separate exit tunnel, this looks like a promising material.
⇧ Quakes Spur more Study of Wells by Oklahoma Corp. Commission
The Oklahoma Corporation Commission said it is placing more than 200 oil and natural gas wastewater disposal wells under scrutiny as the regulatory agency investigates whether the wells are triggering earthquakes in the state.
⇧ President Tusk: opposition to austerity is an ideological, anti-European illusion — Prime Economics
Jeremy Smith quoting Donald Tusk, President of the European Council:
The debate, and the main actors [anti-austerias] in this debate, everything they say today is very attractive and spectacular and intellectually brilliant. Unfortunately, it has nothing to do with the political reality.
That statement is a plea for the masses to stay sound asleep.
The truth. the real political reality: There Is No Alternative to anti-austerity, and the people are waking up to that inescapable fact.
David Gow sheds more light on Schauble's past, running a bit contrary to some earlier links we posted.
The fact that it is Schäuble who is plotting and calculating how best to eject Greece from the Eurozone is especially puzzling and annoying for those of us who have followed his political career for many years. This is the same man who, with Kurt Lamers, wrote the 1994 paper arguing for not only a two-speed Europe but an increasingly federalist EU, with political as well as monetary union and, implicitly, a cross-border version of Germany's Länderfinanzausgleich transferring monies from richer to poorer federal states. ...
... Germany has gone backwards post-2008.... Stupidly, its political class, including unforgivably Social Democrat leaders, is undoing seven decades of foreign policy — and, what's worse, of rebuilding the country's image in the world.
⇧ JPMorgan reaches $388 mln settlement in mortgage securities case | Reuters
JPMorgan Chase & Co agreed to pay $388 million to settle a suit by investors claiming that the largest U.S. bank had misled them about the safety of $10 billion worth of residential mortgage-backed securities it sold before the financial crisis.
⇧ The confessions of Yanis Varoufakis: The pseudo-left as a social type - World Socialist Web Site
What this Trotskyist article, by Chris Marsden, seems to fail to appreciate is just how stark and naked Yanis Varoufakis has helped make things for the world.
I'm not completely unsympathetic, but the real issue is that most Greeks still want to stay in the EU and eurozone and are still keeping Alexis Tsipras' popularity there rather high, considering. That's democracy whether Communist violent revolutionaries like it or not and even though the greferendum confused the issue. The people have spoken via polls well after the greferendum. So, it was a real coup only if one ignores the recent polls.
We must be willing to learn as we go and to admit where we didn't have the clearest understanding.
Also just to be very clear, I'm saying that violent revolution is unnecessary and even counter-productive.
The only thing that's going to change Greek minds is the failure of the deal to work, which is exactly what Yanis Varoufakis is predicting (that it will fail). It is either that or the whole thing goes down the global memory-hole (is allowed to be forgotten by the left). That's much less likely with the Internet, provided we can keep it free and open.
UNDER Alexis Tsipras, Greece slid back into recession, sank deeper into debt and found itself pushed to the brink of bankruptcy. Then after rejecting one painful bailout deal, the radical left leader agreed to a new one with possibly just as harsh terms.
IT wouldn't be surprising to find Greeks calling for his head by now. But the telegenic prime minister is more popular than ever - testament to how his defiance of Europe has struck a chord with a nation fed up with sacrifices imposed from outside.
The 40-year-old has an approval rating of nearly 60 per cent, more than 10 points clear of his closest rival - leading to speculation about a possible snap election in the northern autumn. A weekend opinion poll suggested his hard-left Syriza party would win a landslide victory if elections were held today.
See what I mean? It's not just the leadership, it's the electorate. They are all still extremely undereducated about monetary- financial- and banking-reform possibilities. Even Yanis Varoufakis doesn't seem to know nearly enough about it.
⇧ The 7 Tips Entrepreneurs Need to Know Before Investing in Real Estate
Why should entrepreneurs invest in the first place? The answer is: to have enough money to live on when we no longer can or wish to work. To put that money aside, however, we have to accumulate enough to offset inflation and the taxes that erode our savings. And for that purpose, real estate is an excellent solution.
⇧ Hintadupfing: Thermopylae or Versailles? Greece deal threatens to destroy the European project
...brutal humiliation of the Greek government and people heralds the end of the dream that the EU could be softly nudged towards a benevolent economic and political union.
⇧ This is what economists don't understand about the euro crisis — or the U.S. dollar - The Washington Post
The U.S. case is instructive. America used to have a chaotic multitude of state currencies and privately issued bank notes, with complex exchange rates between them. This only changed thanks to the Civil War. The American greenback was created in 1863 when Abraham Lincoln's Republican Party muscled through legislation giving the federal government exclusive currency rights. It was only able to do this because Southern legislators, who opposed more centralization of power, had seceded from the American union. The Union side wanted a common currency to help the war effort by rationalizing revenue raising and wartime payments. But it was also a potent symbol of the power of the federal state in the face of the challenges of a disintegrating union.
European leaders, the IMF and the European Commission have done a terrible job at handling the Greek debt crisis. However, criticizing the euro because it doesn't meet the ideal economic conditions for a single currency is missing the point. The same is true of every project to create a common political system. History does not unfold as a series of neat and sterile decisions made by people rationally trying to create economically optimal policies. It emerges through political struggle and hard bargaining, in which people fight to try to reshape politics, recognizing that even their greatest victories are likely to be messy and inefficient, but hoping that their successors will be able to improve on them.
The Greenback was created so the Union wouldn't have to pay interest on any loans.
Also, saying the politics is/are messy is not conducive to defeating harmful ideologies. The political reality will always remain messy if enough people insist upon it. What we need to do is convince enough people to say, "Enough with this mess and avoiding doing the right things. Let's see what the data actually say." I think that's what Paul Krugman was thinking back when he was saying that the planned European Union is going to be too weak and too austere. It's what I was thinking, and he and I seem to be on the same page about the EU and euro right now too.
⇧ Signs of Overheating in the Single-Family Rental Market - Real Time Economics - WSJ
The single-family rental market has grown dramatically after around seven million families lost their homes during the foreclosure crisis and its aftermath. But there are signs that rents in some markets may be unsustainable, a new report finds.
Single-family rentals now account for 13% of the overall housing stock, up from 9% in 2005, according to a report by Moody's Analytics.
Demand for renting homes grew dramatically after millions lost their homes to foreclosure, short-sale or other distressed events. Many didn't want to live in apartment buildings, so investors scooped up foreclosed homes in bulk and rented them back to families.
But there are signs the market is starting to overheat. Rents in San Jose, California — one of the hottest real-estate markets in the country — appear to be 19% overvalued when compared to home prices, according to Moody's.
Buying as an alternative runs into headwinds for potential buyers. More people have larger student debts. They have to save first for a down payment. Many have a desire, and often need, to remain mobile. Others have seen stats showing that renting and investing can return more than owning the property they live in.
Market forces are constantly changing. It's difficult to say exactly what will happen and when.
⇧ Britain's left turns on Europe | FT Comment - YouTube
Yes, this is what's happening. With Spain and others yet to weigh in fully via elections, we think it's too early to be even guessing Britain will vote to stay in.
Factors driving leftwing euroscepticism
With a referendum on the UK's EU membership looming and austerity dominating the continent, FT political commentator Janan Ganesh says the British left has fallen out of love with Europe. Editor Lionel Barber asks him about the revival of leftwing euroscepticism.
House price inflation and rising mortgage rates will make housing so unaffordable that half of all under-40s will be tenants within the next ten years, according to a report published this morning by PricewaterhouseCoopers."
During July, prices in the most expensive London borough, Kensington and Chelsea, fell 7.2 per cent. City AM notes significant falls in other high-value areas of the capital, such as Camden and Richmond-Upon-Thames, with the five worst-performing boroughs in the report all boasting average prices of above £618,000.
Cheaper boroughs meanwhile closed the gap a little, with house prices in Greenwich and Lambeth up by 7.9 per cent and 7.8 per cent respectively for the month.
⇧ Sydney house prices jump 22% in one year to reach $1m median, report says | Australia news | The Guardian
Sydney median house prices have hit $1m for the first time, according to the latest Domain Group House Price report.
The report revealed median house prices in Sydney are $1,000,616, rising 22.9% in just 12 months.
The report touted it as Sydney delivering the "unthinkable" and having "emerged as a significant player in the international property market" but there are concerns about a worsening housing affordability crisis.
⇧ Lies And Real Estate: Operation Wax House Comes To A Close - Forbes
Mortgage fraud was rampant throughout the United States before the 2008 financial crisis. It was a time when bankers, mortgage brokers, title company representatives, rating agency analysts and home buyers were caught up in the euphoria of easy money. Although many shared in the blame after the collapse, there were not enough handcuffs to lock up all of those involved in the massive fraud ... particularly the many executives within the banking industry who fueled it. Some were not so lucky. In hot beds for mortgage fraud in Florida, Arizona and California, where home values and speculation were rampant, plenty of bit players were prosecuted and found themselves with long prison terms. Far from these areas, the unlikely town of Waxhaw, NC, outside of the banking center of Charlotte, would be home to one of the largest mortgage fraud busts in the country—Operation Wax House.
⇧ Looking back: Real estate crash of 1997 remind us prices can fall by 50%
Good article by Vivek Kaul:
In response to a column I wrote yesterday many people wrote in saying that real estate prices never fall. Some others said that real estate prices cannot fall in India because India has a huge population, there is scarcity of land, and there is inflation and a lot of black money.
Another logic that was offered was that real estate prices will not fall because they have only gone up in the past. Alan S Blinder explains this logic in his book After the Music Stopped: "A survey of San Francisco homebuyers[sometime in the mid 2000s]... found that the average price increase expected over the next decade was 14 percent per annum...The Economist reported a survey of Los Angeles homebuyers who expected gains of 22 percent per annum over the same time span." At an average price increase of 14% per year, a home that cost $500,000 in 2005 would have cost $1.85 million by 2015. At 22% it would have cost $3.65 million.
Now replace San Francisco with Mumbai or Delhi or Bangalore, and you get the drift of how people who believe that real estate prices can never fall, tend to think. This, if anything is a classic sign of a bubble.
⇧ Annoying Euro Apologetics - The New York Times
Paul Krugman confirms what we thought about his thinking on the formation and history of the euro.
⇧ Capital exodus from China reaches $800bn as crisis deepens - Telegraph
China is engineering yet another mini-boom. Credit is picking up again. The Communist Party has helpfully outlawed falling equity prices.
Economic growth will almost certainly accelerate over the next few months, giving global commodity markets a brief reprieve.
Yet the underlying picture in China is going from bad to worse. Robin Brooks at Goldman Sachs estimates that capital outflows topped $224bn in the second quarter, a level "beyond anything seen historically".
The Chinese central bank (PBOC) is being forced to run down the country's foreign reserves to defend the yuan. This intervention is becoming chronic. The volume is rising. Mr Brooks calculates that the authorities sold $48bn of bonds between March and June.
Charles Dumas at Lombard Street Research says capital outflows - when will we start calling it capital flight? - have reached $800bn over the past year. These are frighteningly large sums of money.
⇧ Wife of Fort Carson soldier sentenced for insurance fraud
The wife of a Fort Carson soldier accused of setting their Colorado Springs house on fire for insurance money was sentenced Tuesday to two years of probation, court records show.
⇧ Couple charged with arson, insurance fraud after Davidson County house fire | Local News - WXII Home
DAVIDSON COUNTY, N.C. —A couple faces multiple charges including second-degree arson and insurance fraud following a fire at a vacant house last fall.
⇧ Ashland man accused of setting mother's Talent house ablaze - News - DailyTidings.com - Ashland, OR
Oregon State Police detectives Saturday arrested a 53-year-old Ashland man for allegedly setting fire to his mother's Talent home last winter in what court documents described as an insurance fraud scheme.
According to an affidavit filed in Jackson County Circuit Court by an OSP arson investigator, Jeffrey Lynn Kenton told a friend he had tried to make it look like his mother had started the fire by leaving her curling iron on in her downstairs bathroom.
⇧ Schäuble: Europe's Last Man Standing - The Globalist
André Reichel, Professor of Critical Management & Sustainable Development at Karlshochschule International University, is missing the point. Neoliberalism and ordoliberalism aren't either/or nationalism. There are plenty of neoliberals in the United States who aren't advocating for the breakup of the US but rather the expansion of US economic imperial-power. They are about rules, yes; but, which rules? Ordoliberalism was supposed to be more welfare state than neoliberalism, but it has been difficult to see any welfare-state mentality peeking out from Schauble's rhetoric lately, if ever.
⇧ Dean Baker | Wolfgang Schäuble, the Hero of the Greek Austerity Crisis?
Like many people following the negotiations between Greece and its creditors, I was inclined to see Wolfgang Schäuble, Germany's finance minister, as the villain of the story. After all, Mr. Schäuble insisted on severely punitive measures for Greece as a condition for continuing support from the European Central Bank (ECB). He appeared to be the bad cop relative to others in the negotiations, such as German Chancellor Angela Merkel, who was willing to make at least some concessions to keep Greece in the eurozone. But a more careful analysis arguably leads to the opposite conclusion.
Schäuble did not argue for throwing Greece out of the eurozone simply as a punitive measure, although he quite obviously disapproved of the way Greece had run its budget and its economy. He argued, quite possibly sincerely, that at least a temporary departure from the euro zone would be the best path forward for Greece.
Schäuble argued that a departure from the euro zone would have facilitated a restructuring of Greek debt. He also pointed out that a decline in the value of the new Greek currency would allow its economy to regain competitiveness. In particular, its tourism industry would suddenly be hypercompetitive as prices would possibly be 30-40 percent lower relative to other tourist spots in the region.
Schäuble proposed an orderly disengagement from the euro that would allow Greece to reestablish its own currency with as little disruption as possible. He also proposed humanitarian assistance to ensure that supplies of food, medicine and other essential items were available through the transition process.
This divorce process was clearly not the first best solution. That would have involved restructuring Greek debt while keeping Greece in the euro, but none of the major actors among the creditors seriously considered such proposals. The Schäuble option looks quite good in comparison with the route Greece eventually took: a bailout with harsh terms that kept the country within the euro.
Dean Baker is failing to appreciate that Schauble wants Greece to change rather than the EU and eurozone to change. Sure, he's suggested Greece leave for awhile and to help them somewhat while their out, but his main goal is the perpetuation of neo/ordoliberalism, which is a failed, heartless, elitist ideology, bad for everyone.