Linking ≠ endorsement.
⇧ 2 Oklahoma Injection Wells Being Shut Down Following Quakes
Two energy companies are shutting injection wells after three strong earthquakes struck near an Oklahoma town, in response to concerns about the practice of injecting wastewater from oil and gas operations deep underground, state regulators said on July 28.
⇧ R.I. Consumer Alert Looks at Insurance Implications for Home-Sharing Rentals
Rhode Island’s Insurance Division is advising consumers to examine insurance implications when using home-sharing rental websites such as Airbnb.
⇧ Detroit: A tale of two housing markets
“The macro trends are promising. A meaningful high-tech sector is developing in Detroit. Business leaders are investing private capital in Detroit, reversing a decades-long exodus,” Ballard wrote in his report.
That should help housing eventually in the downtown area, but it will likely be a long road to that end.
Note that the Annual Housing Starts are shown inverted, which means that the trend line shown going down actually means housing starts have been trending up. The reason to show starts inverted is to make the correlation between starts and jobless claims more obvious. Increased construction has historically meant new hires. That will continue until robotics replacing human construction-industry labor reaches the tipping point.
⇧ mainly macro: The wheels on the bus
Simon Wren-Lewis fears the non-German bloc won’t offer sane economics and face Germany down. Let’s hope he’s wrong.
⇧ Dentists and Skin in the Game – The New York Times
Have you ever thought about how insurance holds costs down? Well, Paul Krugman puts 2 and 2 together.
Wonkblog has a post inspired by the dentist who paid a lot of money to shoot Cecil the lion, asking why he — and dentists in general — make so much money. Interesting stuff; I’ve never really thought about the economics of dental care.
Paul’s thinking in his piece applies to all sorts of insurance. Insurance is a cost; however, if carriers won’t pay more for losses, there will be a drive to reduce underlying costs. Rational economics doesn’t always come into play though. We always need to keep behavioralism in mind.
⇧ The Greek Coup: Liquidity as a Weapon of Coercion | WEB OF DEBT BLOG
Internationally before 1971, this “settlement asset” was gold. Later, it became electronic “settlement balances” or “reserves” maintained at the central bank. Today, when money travels by check from Bank A to Bank B, the central bank settles the transfer simply by adjusting the banks’ respective reserve balances, subtracting from one and adding to the other.
Checks continue to fly back and forth all day. If a bank’s reserve account comes up short at the end of the day, the central bank treats it as an automatic overdraft in the bank’s reserve account, effectively lending the bank the money in the form of electronic “liquidity” until the overdraft can be cleared. The bank can cure the deficit by attracting new deposits or by borrowing from another bank with excess reserves; and if the whole system is short of reserves, the central bank creates more to maintain the liquidity of the system.
The most dramatic exercise of this liquidity function was seen after the banking crisis of 2008, when credit was frozen and banks had largely stopped lending to each other. The US Federal Reserve then stepped in and advanced over $16 trillion to financial institutions through the TAF (Term Asset Facility), the TALF (Term Asset-backed Securities Loan Facility), and similar facilities, at near-zero interest. Toxic unmarketable assets were converted into “good collateral” so the banks could remain solvent and keep their doors open.
Read that again: “Toxic unmarketable assets were converted into “good collateral” so the banks could remain solvent and keep their doors open.”
They were not otherwise solvent. They were insolvent: bankrupt.
At that point, they should have been nationalized rather than bailed out. Why? Moral hazard. If they are always bailed out, they will continue overly risky speculation and will continue clamoring and lobbying for greater and greater deregulation.
If we allow deregulation and liquidation s rather than regulation and nationalizations, the boom/bust cycle will greatly increase. We will be going backwards to the pre-1929 system.
The current system isn’t good enough, but going backwards won’t make things better but worse.
⇧ Nonresidential Fixed Investment Falls in Second Quarter
“In the first half of 2015, both the broader economy and nonresidential investment lost the momentum they had coming into the year,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Rather than indicating renewed progress in terms of achieving a more robust recovery, today’s GDP release indicates that a variety of factors helped to stall investment in nonresidential structures. There are many viable explanations, including a weaker overall U.S. economy, a stronger U.S. dollar, decreased investment in structures related to the nation’s energy sector, soft public spending, and uncertainty regarding monetary policy and other abstracts of public policy. While the expectation is that the second half of the year will be better, unfortunately not much momentum is being delivered by the year’s initial six months.
⇧ Oregon Woman Sues University after Falling Through Window Asleep
Where to draw the line between owner/management responsibility and tenants/guest personal responsibility:
Macholz says the company should have warned tenants of the fully opening third-story windows and that they neglected to install window bars.
The lawsuit states that on July 27, 2014 Macholz went to sleep on her boyfriend’s bed near the open window.
⇧ Cobra caught inside Houston downtown high-rise
“We’ve heard from other residents that there was another resident who resided at that apartment months ago that did have a cobra in his possession and he was asked to leave,” said Mears.
⇧ Alan Greenberger sees positive real estate future for Philadelphia – Philadelphia Business Journal
Alan Greenberger sees a positive future in development for the city, one that’s been paved by a solid foundation laid in recent years.
“Well, I’ve been in the city since ’74,” said Greenberger, deputy mayor for economic development and director of commerce. “I have not seen a boom like this in the entire time that I’ve been here.”
⇧ Bankrupt real estate firm auctioning off large piece of portfolio | Richmond BizSense
About 150 properties in and around southern Chesterfield County are being auctioned off as part of a local real estate company’s bankruptcy reorganization.
The most valuable property listed among the assets — and not offered for sale as part of the auction — is the $1.5 million Roadrunner Campground, located in Chester at 13830-13902 Jefferson Davis Highway. Issues surrounding that property — building, health and utility violations — triggered the bankruptcy filing, said David Spiro, a Hirschler Fleischer attorney representing Roadrunner in the case.
⇧ Treason charges: What lurks behind the bizarre allegations | Yanis Varoufakis
Unveiling how previous Greek governments turned crucial government departments, such as the General Secretariat of Public Revenues and the Hellenic Statistical Office, into departments effectively controlled by the troika and reliably pressed into the service of undermining the elected government.
It will sure be interesting to see how this plays out.
For me, I think the Troika will not press the issue. If they do, all they’ll be doing is giving Yanis an even larger megaphone with the whole world listening to his every word backed up by economic data proving him right.
⇧ GDP Report – Tim Duy’s Fed Watch
…2% is the new 4%.
It needn’t be. The obstacle is the lack of sufficient democracy and lack of a debt-free currency. Federal Reserve Notes are the main problem. Treasurys are the main problem. We shouldn’t have either. Banking as a private profit center where credit is created at will by commercial bankers rather than the money created by the people is the main problem. It’s all one big problem that is very, very solvable provided the people cooperate to gain power and control away from the bankers.
⇧ Landlord must allow disabled tenant’s assistance animal – LA Times
Question: I manage an apartment building that doesn’t allow pets. I recently found out that one of the tenants has had a dog in his unit for three weeks.
⇧ More Millennials Living With Family Despite Improved Job Market | Pew Research Center
Recent research using credit report data has indicated that student loan debt and difficulties paying off debt deter independent living among young adults.10 Both the likelihood of borrowing for education and the amounts borrowed tend to increase with the young adult’s education. Young adults with no education beyond high school presumably have minimal student debt burdens. The very similar decline in independent living across education groups suggests that additional factors beyond education debt are impacting the decisions to co-reside with family.
I think young people are being more conservative (cautious). They want a larger cushion before venturing out because they rightly don’t trust the powers that be in terms of whether or not another serious downturn will be avoided (even though it readily could be).
⇧ Greece is to the Eurozone as Puerto Rico is to the U.S. – YouTube
I’m not “politicking” here by posting this but rather because austerity is a basic mistake.
Ameera and Edward discuss the Greek debt crisis panel held on Capitol Hill by Bernie Sanders. The panel, sponsored by the Roosevelt Institute, included Nobel prize economist Joseph Stiglitz as well as economists James Galbraith and Jacob Kirkegaard and highlighted the challenges facing not just Greece but other Eurozone countries with high unemployment like Ireland and Spain.
⇧ 3 Firefighters Hurt in Houston Blaze; Man Charged with Arson
Houston police say a man has been accused of starting an apartment complex blaze on July 28 that left three firefighters slightly hurt.
⇧ 19 Oklahoma Counties Denied Federal Disaster Assistance
Gov. Mary Fallin says the federal government has rejected the state’s request for disaster assistance for 19 Oklahoma counties affected by severe weather, flooding and tornadoes in May and June.
⇧ Research Says Washington, D.C. Is Slowly Sinking Into the Ocean
Chesapeake is rising at twice the global average rate and faster than elsewhere on the East Coast. Geologists have been hypothesizing that land in this area, pushed up by the weight of a pre-historic ice sheet to the north, has been settling back down since the ice melted.
⇧ Happy Valley teacher charged with arson, insurance fraud | Kingsport Times-News
The indictment said Beam “did knowingly damage a structure by means of a fire or explosion with intent to destroy or damage the structure to collect insurance for the damage.”
Tsipras about Varoufakis:
“You can blame him as much as you want for his political plan, his statements, for his taste in shirts, for vacations in Aegina; but you cannot accuse him of stealing the money of Greek people or having a covert plan to take Greece to the precipice.”
⇧ Smallest U.S. Wage Increase on Record Muddies Pay Picture – Bloomberg Business
Signs of a nascent pickup in U.S. worker pay proved fleeting as wages and salaries climbed in the second quarter at the slowest pace on record.
The 0.2 percent advance was the smallest in data going back to 1982 and followed a 0.7 percent increase in the first quarter, the Labor Department said Friday.
The more I read and think about these issues, the more I think the Fed has an underlying ideological problem designed to sound pro-worker but in reality, to keep workers as powerless as possible relative to the banking class and the bankers’ “peers” in corporations those bankers both serve and ultimately control.
Raising the Fed rate will strengthen the dollar, giving American’s more purchasing power for imported goods and services rather than strengthening US employers in the US to hire more Americans and to pay them better. A weaker dollar would allow the US to export more.
⇧ As real estate market booms, demand for lawyers rises, too
After a lengthy drought, real estate lawyers are a hot commodity again.
⇧ Wayne Co. properties with years of tax debt to be sold
The Wayne County Treasurer this fall will auction off a record number of tax delinquent properties, nearly half that were eligible for foreclosure years ago.
Of the approximately 30,000 properties headed to auction in September, about 14,500 have owners that owe five years or more in back taxes, according to county data reviewed by The Detroit News.
⇧ Fiscal Headwinds are Abating | Brookings Institution
Fiscal policy is no longer a source of contraction for the economy, but neither is it a source of strength.
⇧ Unemployment projected to drop to 5.2% in July and reach 4.5% by December | Brookings Institution
The Fed really doesn’t want to see 4.5% unemployment even if inflation remains below 2%. Why is that? As stated above, I think they don’t want labor to gain power. By labor, I don’t mean unions, per se, but workers regardless of whether they’re organized or not.
They don’t want the US returning to more 1950’s-like tax rates and radically reduced income-and-wealth inequality.
The model predicts a jobless rate of 5.2 percent for July, reaching 4.5 percent by the end of the year.
Do you think I’m on to something?
It’s the cynic coming out after Tsipras caved in to no avail.
⇧ Exurbia Returning to Prominence as Single-Family Housing Regains Traction | Auction.com
…the most recent drop in oil prices has helped commuters who don’t have access to public transportation and must drive. This, along with advancements in hybrid vehicles, will certainly lessen the burden of commuting costs. Continually evolving improvements in technology have also created a shift in working lifestyles, with many electing the benefits of telecommuting.
Finally, the National Association of Realtor’s First-Time Homebuyer Affordability Index reached a post-recessionary low in October 2014; many new prospective homeowners will likely be priced out of inflated urban rentals and elect for the more affordable exurban or suburban alternatives.
… A recent NAHB survey showed that among first-time homebuyers, 75% are interested in single-family dwellings, with a mere 4% looking to purchase a multifamily unit. Moreover, 90% of respondents prefer to reside in the suburbs or rural areas, while only 10% favor the central city.
Let’s keep in mind that the market is skewed right now to larger homes for the wealthier.
If they don’t build affordable housing in the urban core but do develop affordable exurb housing, then people will drive the exurbs. Those with strong village-cores, will do well. Apartment developers and owners in those areas will do well too. However, sprawl can be detrimental in a number of ways too numerous to go into: https://en.wikipedia.org/wiki/Urban_sprawl
⇧ Has Productivity Outstripped Wage Growth? – YouTube
Robert Z. Lawrence argues that, contrary to a widespread perception of lagging wage growth, constant dollar labor compensation for all US workers has kept pace with output when appropriately measured from 1970 to 2000, and perhaps to as late as 2008.
Critiquing the current American-economic system based upon the gap between wages and productivity by inputting subjective increases in the “values” of goods and services while not comparing wages and productivity against the income and wealth gap seems to fall quite short of the mark of usefulness or helpfulness. The question is Robert Z. Lawrence’s reason.
The notion that the rich haven’t been keeping a larger share and that they haven’t sent higher-paying jobs overseas to be able to pay lower wages while keeping greater profits seems to be denialism.
⇧ 4 All-Too-Common Real Estate Scams Making Headlines
In most cases, these scams would not have worked if proper due diligence had been performed.
Why doesn’t that read simply: “These scams would not have worked if proper due diligence had been performed”?
⇧ Tech industry’s persistent claim of worker shortage may be phony – LA Times
The American elitists’ race to push workers to the bottom for the short-term, short-sighted sake of said elitists’ bottom lines:
They’re not recruiting elite STEM graduates with unique skills, but contract workers to replace American technical employees — who often are required to train their foreign-born replacement as a condition of receiving their severance.
They’ll say it’s necessary for global competitiveness. If US international trade agreements had insisted upon US standards rather than dropping them for competing nations, we wouldn’t be having this debate but other nations would have been incentivized to start with high standards, which would have been better for everyone.
⇧ The U.S. Economy Is on Track to Finish a Decade Without Significant Growth – Bloomberg Business
Although productivity made a comeback in the midst of the recession, most economists agree that was the result of big layoffs that made companies look a lot more efficient, not any real improvement.
It’s interesting that it’s the definition that matters there. Productivity gains aren’t a real improvement? Well, yes and no, depending upon what is meant by “real.”
I take the authors point.
⇧ Apartment Association of New Mexico and the Southwest Affordable Housing Group apartment conference geared towards needs of urban and rural communities – Albuquerque Business First
Speaking of urban sprawl:
“For rural communities, we’re going to give them the tools they need to sell their communities to outside investors. For urban communities, they will learn how to support smart development so they can increase the value of their downtowns and avoid problems like urban sprawl,” Curry said.
⇧ CoreLogic Chief Economist Perspective- July 2015
The last time I posted Frank Nothaft directly was when he was still Chief Economist for Freddie Mac. He was extremely optimistic regarding the housing market then. I don’t know how much of that was politically driven and whether consciously or not. I often disagreed with his outlooks. This one seems more in line with my general understanding.
The outlook for the rental market remains robust since we expect household formation among millennials to strengthen, and their first home will likely be a rental and often an apartment. The large number of millennials also means that rental housing demand is likely to remain strong for the next few years, and as millennials begin to form their own families, demand for single-family rental homes may remain strong as well.
⇧ Why Liberals Have to Be Radicals
…the reforms needed to restore that degree of shared prosperity are somewhere to the left of Bernie Sanders.
It’s true, and Robert’s article helps substantiate my commentary above on “Has Productivity Outstripped Wage Growth? – YouTube.”
Many people are glad Bernie Sanders is in the race just because they think he’ll force Hillary Clinton to the left. (Just to be clear here, Robert Kuttner is talking about economic left, not anarchism.) However, if the US is to thrive for all its people, it needs to move more radically to the left in terms of monetary and banking reform than anything Bernie Sanders has been pushing. Bernie Sanders is like a right-wing social democrat. What we need at the very least is left-wing social democracy.
Of course, my readers know that I’ve been advocating for a debt-free currency and banking as a utility. You may read a quick overview here: “Monetary-and-Banking-Reform Platform for The United States”: Here
After the 2007-8 crash in the US, I was amazed to discover how little I understood just how different Canada’s system is from ours.
The arguments for why Canada wasn’t dragged down, and won’t be, always seem more credible than arguments for the Australian real-estate sector, not that I think Canada is impervious.
It’s strange to think, but I believe I understand the Chinese economy quite a bit more than the one right next door. Therefore, I’m always glad to read more about Canada, though it still leaves the place opaque to me.
More Fuel is Added
The pressure on the housing market in both Vancouver and Toronto contradicts Canada’s oil-driven economic slowdown over the past six months and has complicated the Bank of Canada’s recent monetary policy decisions . The central bank has cut rates twice this year. In its latest move, the BoC stated:
“Of particular note are the vulnerabilities associated with household debt and rising housing prices. And we must acknowledge that today’s action could exacerbate these vulnerabilities.”
The Bank recognized that, although its policy moves were necessary to stimulate overall growth, it runs the risk of further inflating Vancouver and Toronto housing markets.
Is There is a Correction Coming?
The rise in house prices has prompted many analysts to say that a correction is inevitable. Simply put, they argue that growth in market demand is unsustainable and thus a major correction must follow. Before arriving at that conclusion, it is important to bear in mind that both cities feature:
- Diversity in employment and industrial makeup, so that they can weather a downturn in oil and other commodities , as they did in the oil crash of mid-1980s;
- Population growth will continue at the current rates and there is no sign of change in government policy regarding immigration flows;
- Interest rates not only remain low, but show no sign of increasing given the current economic environment, eg 5 year mortgage rates are 2.50%;
- And, both cities face land scarcity, especially in the core areas.
However, read “It Gets Ugly in Canada | Wolf Street” (below).
Speaking of Australia:
Sydney house prices grew at their fastest annual pace in nearly 13 years in July, highlighting the huge task ahead for Australia’s bank regulator to rein in the boom that threatens to destabilize the country’s already-fragile economy if it turns to bust.
The jump in the Sydney market comes as the Australian Prudential Regulation Authority has ramped up efforts to curb speculation on Sydney housing, with major banks responding by asking for bigger deposits on loans.
Australia seems to mirror China way too much: the right hand not knowing what either hand is up to.
⇧ Columbia offers 50% tax break to lure non-student rental properties to downtown | The State
The same tax-credit incentives that Columbia [South Carolina] began offering in 2014 to private student housing properties now apply to market-rate rental properties — but not for long.
Columbia City Council recently approved a resolution to extend the 10-year, 50 percent property tax reduction available to some student housing developments, and now to some market-rate rental housing developments, too, if they meet certain criteria. Market rate apartments are not targeted to students.
However, the window to qualify for the tax credits, both for student and market-rate developments, will close at the end of this year, council decided.
Columbia faces a unique challenge in that a large proportion of its properties are tax-exempt, Benjamin said, which creates a need for creative ways to source revenue to support city functions. The tax credits have helped attract taxable development on properties that otherwise might have drawn less revenue for the city, Benjamin said.
Many observers are very sceptical about the accuracy of Chinese data, especially during downturns, but an alternative explanation is that Chinese growth has recently been more concentrated in service sectors, which have lower commodity useage than manufacturing and real estate sectors. In the absence of any obviously superior sources of data, official or unofficial, our activity models are driven by the latter view.
The thing about that is, China had claimed that its manufacturing sector had picked up to where it was even while commodity usage had stayed down.
I find it interesting that Gavyn Davies isn’t worried enough about the Chinese leadership forcing the equity markets to remain high to have even mentioned it.
I always like reading Davies because he supplies plenty of data in digestible bites; however, I think I’m detecting more ideology peeking out from his reporting. I more than suspect that he wants China to bite the laissez-faire bullet while I’d rather they calm down and plan a mixed economy leaning heavily to the public side and without gambling and superstitious relish.
⇧ In conversation with El Pais (Claudi Pérez), the complete (long) transcript | Yanis Varoufakis
I think that the people of Spain need to look at the economic and social situation in Spain and base the judgment on what their society needs, independently of what is happening in Greece, France… The danger of becoming Greece is always there and will materialize if you keep repeating the same mistakes that were imposed on Greece. Punishing one proud nation in order to put fear in another is not what Europe should be about. It is not the Europe we signed up for, not the Europe that González had signed for or Papandreou, or Giscard d’Estaing, or Helmut Schmidt etc. We need to recover the sense of being Europeans and finding ways of recreating the dream of shared prosperity with democracy. The idea that fear and loathing are going to be the creators of the new Europe is an idea that is going to lead us headlong to a postmodern 1930s. I believe that the people of Spain and of Greece know exactly what the 1930s did to them.
You said once that the legacy of Thatcher was financialization, malls and Tony Blair. And I ask you, what is the legacy of Merkel, of her leadership?
Europe is in the process of turning from a realm of shared prosperity, which is how we imagined it, into an iron cage for our peoples. I hope that Mrs Merkel decides that this is not a legacy she wants to leave behind.
I don’t think she’ll have a choice if she can’t turn the German people away from Schäublism. So far, she hasn’t shown the leadership skills to do that. I’m not even sure she’d want to if she could.
I still agree with Yanis that it has been good that the debate has been put out there before the whole world. I’m just sorry that Tsipras wasn’t smart enough to realize that Yanis was and remains completely correct about TINA and that it would have been better had Tsipras pushed the button to create a new Greek currency (not that Yanis has said he would have pushed it himself — that I know of anyway).
⇧ The guy who won the 2002 Nobel Prize for economics thinks Sydney property prices are in ‘a pretty good bubble’ | Business Insider
More about Australia:
Vernon Smith is an experimental economist who shared the 2002 Nobel Prize in economics with behavioural psychologist, and father of behavioural economics, Daniel Kahneman.
Highlighting how quickly and unrelentingly property prices have accelerated in Sydney, Smith said: “It is amazing how people get carried away in the bubble.”
But he also added: “Then all of a sudden it’s over and they are petrified.”
That’s the point Australian markets, Sydney and Melbourne in particular, may be at now. Or at least close to, given the efforts of Australia’s banking regulator, APRA, to rein in investment lending.
But Christopher added: “The problem is, property investors can be a fickle bunch. A number of them are momentum driven — buy when the market is moving higher and sell when the market is heading lower.”
That’s a risk to the market and at some point, if Vernon Smith is right, all these marginal buyers might suddenly become “petrified”. That’s when we might see Sydney and Melbourne property prices start to reverse.
⇧ Q2: Hot Markets See Runaway Rents Amid Dropping For-Sale Inventory ‹ Zillow Real Estate Research
- U.S. home values nationwide were up 3.3 percent year-over-year in 2015 Q2 and are expected to rise another 2.4 percent in the next 12 months.
- For-sale inventory of homes declined 6.5 percent from 2014 Q2.
- Rents are still outpacing growth in home values, up 4.3 percent annually, growing one percentage point faster than home values over the last year.
Rajoy’s conservative Popular Party says that if new far-left party Podemos — a close ally of Greece’s ruling Syriza — forces a change of course on the economy after the election, Spain could plunge back into crisis.
Asked about the Spanish government’s statements, Varoufakis said Greece “has become a sort of football for right-wing politicians, who insist on using Greece to frighten their population.”
Spain has been needlessly suffering due to senseless austerity. Mariano Rajoy represents a continuation of failure for the sake of the elitists running Europe.
⇧ Nonresidential Construction Spending Retains Momentum
“Today’s release represents the largest year-over-year growth during a calendar year’s first six months since the Census Bureau began tracking construction spending in 2002 and serves as further proof of the recovery for nonresidential construction,” said Associated Builders and Contractors Chief Economist Anirban Basu.
⇧ China’s real estate sector is in even worse shape than people think – Business Insider
- Supply is massively outstripping demand. China’s housing inventory problem is worse now than in 2012 and 2014. The big 10 cities have around 14 months of spare inventory at the moment.
- The share of residential real estate investment in GDP (10.4%) is higher in China than any other economy before a major real estate collapse, apart from Spain in 2006 (12.5%). The US was at 6.5% before the subprime collapse.
- Around 40-45% of China’s total debt is tied up in real estate — that’s as much as $9.5 trillion (£6.1 trillion), according to the note.
⇧ Two Reasons to Rethink Real Estate Investing
As economic activity increases, vacancies can fall, rents can increase and real estate prices can climb. If rates keep rising, of course, economic activity can stall and demand for real estate can wilt. But at that point, rates could likely fall once again to spur economic activity and real estate values would likely change again. The cycle repeats.
Netherlands crane collapse : Two cranes employed to restore a bridge in the central Dutch town of Alphen aan den Rijn have collapsed onto buildings, with rescuers searching for victims.
Amateur video showed the cranes, on a pontoon on the River Rhine, trying to hoist a section of the Juliana Bridge and toppling over under the weight.
It is still not known how many people, if any, are trapped in the rubble, the town’s vice-mayor said.
Images on Dutch media showed a row of crushed buildings.
⇧ Weaker China factories argue for more policy support as stocks swoon | Reuters
Note the following when considering “Firm global growth amid doubts about Chinese data | Gavyn Davies” above:
While growth in the services sector picked up slightly, offsetting some of the drag from persistent factory weakness, services companies rang alarm bells, too, reporting that new orders were cooling and they were cutting jobs at a faster pace.
On July 29, So Others Might Eat (SOME) broke ground on The Conway Center, a $90 million project that will deliver the first building in the District to combine housing, health care and job training under one roof.
That mix sounds like a good one.
⇧ Bad credit score can double insurance premiums in Texas | Dallas Morning News
Depending upon the state you live in or may move to, pay attention to your credit score to keep it as solid as possible so your premiums won’t be negatively impacted.
In almost every legislative session, bills are filed to ban or sharply restrict the use of credit scores by insurance companies, but industry opposition has kept the measures from passing. Only a handful of states, California among them, prohibit insurers from using credit scores in setting rates.
⇧ Chris Leslie: Jeremy Corbyn’s anti-austerity agenda will harm the poor, says Labour shadow Chancellor – News – Art – The Independent
Chris Leslie, the shadow Chancellor, has launched a scathing attack on “Corbynomics”, the anti-austerity agenda of the Labour leadership candidate Jeremy Corbyn, warning it would hurt poor people the most.
The shadow Chancellor rounded on Mr Corbyn’s proposal for “quantitative easing for people instead of banks.” He said: “Printing money and ending Bank of England independence would push up inflation, lending rates, squeeze out money for schools and hospitals and mean spending more on debt servicing. …
… “If the state cannot live within its means, and has to be cut back more and more, then taxpayers will lose faith in the public realm, will become more sceptical and cynical, and be more likely to exit and go to private health and private education. Without realising it, you end up eroding the collective case for public services.”
Mr Corbyn said last month he stood for the leadership “because Labour shouldn’t be swallowing the story that austerity is the anything other than a new façade for the same Tory plans.” He said if the deficit has been cleared by 2020, Labour should not run a deficit on day-to-day spending but should “borrow to invest in our future prosperity.”
“Printing money and ending Bank of England independence would push up inflation, lending rates, squeeze out money for schools and hospitals and mean spending more on debt servicing.”
Printing money, per se, wouldn’t do any of that provided the money weren’t borrowed and more money weren’t circulating than real productivity could fully absorb.
“If the state cannot live within its means….”
The state, the British treasury, doesn’t have limited means.
Chris Leslie doesn’t appear to understand basic economics. Of course, Mr. Corbyn is equally mistaken when he says that the state should run a deficit: borrow (provided he means the state would have no alternative but to borrow to spend more than it obtains in taxes).
⇧ It Gets Ugly in Canada | Wolf Street
In the city of Calgary, Alberta, the epicenter of the oil bust, home sales plunged 14% in July year-over-year, according to the Calgary Real Estate Board (CREB). Year-to-date, homes sales are down 25%.
Despite months of assurances that the oil bust and the broader commodities rout won’t spread into the rest of the Canadian economy, they’re now beautifully spreading into it.
⇧ Rocky Fire – Wikipedia, the free encyclopedia
The Rocky Fire is a wildland fire that started on July 29, 2015 near Morgan Valley Road and Rocky Creek Road, east of Lower Lake, California. On Saturday August 1 the fire dramatically progressed burning 47,000 acres (19,020 ha) and threatening 7,000 structures. As of Monday morning, the fire grew to 60,000 acres (24,281 ha), causing the evacuation of over 12,000 residents and the deployment of 2,900 firefighters. By late Tuesday, it had burned 67,000 acres and destroyed 24 homes and 26 other buildings.
(WBIR – KNOXVILLE) A Vonore same-sex couple played at least a role in a 2010 arson of their home that they said was a hate crime, a federal jury found Monday.
⇧ Corbyn and the Cringe Caucus – The New York Times
Chris Leslie needs to answer to Paul Krugman. See “Chris Leslie: Jeremy Corbyn’s anti-austerity agenda will harm the poor, says Labour shadow Chancellor – News – Art – The Independent” above.
First, it’s really important to understand that the austerity policies of the current government are not, as much of the British press portrays them, the only responsible answer to a fiscal crisis. There is no fiscal crisis, except in the imagination of Britain’s Very Serious People; the policies had large costs; the economic upturn when the UK fiscal tightening was put on hold does not justify the previous costs. More than that, the whole austerian ideology is based on fantasy economics, while it’s actually the anti-austerians who are basing their views on the best evidence from modern macroeconomic theory and evidence.
⇧ Day of reckoning postponed as global recovery builds – Telegraph
Talk about optimistic:
The commodity crash may feel as if Armageddon has arrived but it is, in reality, the tail-end of China’s hard landing, compounded by Saudi Arabia’s political decision to flood the global crude market and strike a blow against Russia, Iran and the US shale industry.
…commodity crashes are double-edged. They act as a stimulus for the world economy. The consuming nations are enjoying a $500bn “tax cut” from the OPEC cartel.
The slide may soon touch bottom in any case, if it has not already done so. The Baltic Dry Index measuring freight rates for dry commodities has almost doubled since the start of June. The shipping firm Clarksons said it is being driven by a revival of Chinese steel demand.
The bank’s “heat map” for China shows that 53pc of the components are flashing “hot”, including electricity output, chemical fibres, non-ferrous metals, chemical fertilizers, real estate investment, car production and M2 money. The “hot” ratio is up from 44pc in May, and 31pc last October.
… A mini-blitz of a fresh infrastructure spending has begun to plug the fiscal gap.
If need be, it can cut the reserve requirement ratio for banks from 18.5pc to zero, injecting $3 trillion into the system. Only once Beijing has played that final card, should we start to worry. China’s day of reckoning is still far away.
It’s a wait-to-see.
⇧ Can Everyone’s Wage Be Above Average? Krugman And Clinton Are Wrong – Forbes
I don’t know who devised the article’s title, but Paul Krugman isn’t suggesting it. He’s suggesting that those at the top be compelled by the state via various means to share more.
This article, by John C. Goodman, completely ignores the share taken by executives (primarily) and stockholders.
Should the government address income and wealth inequality through public policy? Of course.
As for there being “no free lunch,” that’s only because we haven’t chosen that there be one. We certainly could have free lunches for everyone. In fact, we should. One day, we’ll have to. The sooner, the better.
⇧ The Syriza Dilemma | Jacobin
The latest poll, conducted by the reputable Palmos Analysis from July 15 to 17, shows that even taking into account the harsh new memorandum, 74 percent continue to support staying with the euro — and this includes 66 percent of Syriza supporters. At least 42 percent of those polled after the signing of the new memorandum indicated they would vote for Syriza today, a substantial increase over the 36 percent in the last election. This gives Syriza more than a 20 percent lead over New Democracy, which is in second place, and would yield a clear majority of the parliament’s 165 seats.
Given his massive popularity, Tsipras might, with an enthusiastic campaign, have tried to increase support for exiting the euro, but even getting that to a bare majority would require more than doubling current support for returning to the drachma, which stands at only 24 percent. Tsipras has always made it very clear that he — and this applies to the majority of the party’s leadership at every level — would only go as far as the Europeans would let him. He was elected on this basis and conducted the referendum on the same basis.
The poll is a bit old, and I haven’t seen anything newer (though I haven’t looked either).
Tsipras ran on that austerity is over, period. Now, a case can be made, and Sam Gindin & Leo Panitch have made it here, that Tsipras continually qualified his statements and made painfully clear that he was hell bent on staying in the EU and eurozone, etc. Tsipras didn’t really ready Greece for a possible exit, and he never attempted to educate the Greek masses on how and why an exit should and could be accomplished.
“Those who now traduce him for not doing an about-face are now effectively admitting that they should have backed the Greek Communist Party (KKE) or the Antarysa positions all along, rather th an enthusiastically backing Syriza’s election.” It would not really have been an about-face had he prepared and had he educated (been educated too) and had he had the greferendum worded to be clear that an exit would be on the table if the greferendum were to pass and were the ordoliberals to remain as harsh or become harsher, as they did, leaving Greece insolvent and in a humanitarian crisis.
No doubt, there were those who voted Syriza in the first place because they wanted some element of the left to win rather than the alternative right. They opted for the center-left Syriza, likely hoping that when the Germans continued to be “ugly” (which is how many have described the German’s ordoliberal insistencies), the Greek people would wake up to the reality that Greece is insolvent without sufficient loan-principal reductions. Stretching out the loan terms just won’t really cut it, unless one doesn’t care about lost generations of Greeks.
Just how stupid do we have to think the Greek people are to assign to them that it was impossible to convince them of that fact and to take the plunge into a new and debt-free currency?
⇧ 119 properties in Grady County up for auction | Oklahoma City – OKC – KOCO.com
“These properties haven’t had title work done. We’re selling them as is. It’s buyers beware.” Burton said. “People need to make sure and check the records, because the leans go with the property.”
⇧ Barclays: Forget the Wild Stock Market Swings, China’s Real Estate Sector Is What’s Most Worrisome – Bloomberg Business
Analysts led by Ajay Rajadhyaksha say that Chinese real estate is the sector to focus on….
The outlook for the real estate sector remains the most important and the medium term path seems clear — a continued, multi-year slowdown of very significant proportions but not an imminent collapse. The Chinese economy remains on a glide path to slower but more sustainable growth over the next several years, though if we are right, the slope down might be a little steeper than many investors expect.
⇧ California wildfires: Thousands evacuated as flames spread – CNN.com
This homeowner’s dilemma is being shared by more than 13,000 northern Californians who’ve been told to evacuate as the Rocky Fire rampages across almost 105 square miles in Lake, Yolo and Colusa Counties.
As of late Tuesday, the Rocky Fire destroyed 24 homes and 26 outbuildings as it continued to burn for the sixth day, charring 67,000 acres with only 20% containment.
In all, 22 wildfires raged throughout California, where four years of historic drought have made it easy for flames to spread….
The nearly two dozen California wildfires have torched more than 134,000 acres as of Tuesday morning, but the Rocky Fire accounts for almost half of that….
More than 2,900 firefighters, 285 engines, four air tankers and 19 helicopters are battling the Rocky Fire, Cal Fire says. Berlant says that particular blaze is unique because of its burn rate, devouring 20,000 acres in about five hours, he said.
⇧ Wage growth and the health of the U.S. labor market – Washington Center for Equitable Growth
… the unemployment rate is currently not as useful at measuring the health of the labor market as it usually is, due to a variety of factors leading to the decline of the labor force participation rate. There are other ways to measure the health of the labor market, such as the prime-age employment-to-population ratio, which is the share of workers ages 25 to 54 with a job. As of June 2015, it was 77.2 percent, is still below its pre-Great Recession level of 79.7 percent. So how will we know when the labor market is starting to reach a better place? When wage growth picks up.
… wage growth looks flat no matter the measure, even when we look at just the wage and salary component of compensation in the Employment Cost Index.
… The absence of persistent, strong wage growth implies that estimates of the unemployment rate compatible with full employment should be moved downward from current 5-percent levels.
I’ve been advocating that for years. Don’t raise the Fed rate until inflation is up directly due to wages being up.
⇧ A New Deal for Debt Overhangs? by Kenneth Rogoff – Project Syndicate
This anti-austerity camp believes that even when private markets totally lost confidence in Europe’s periphery, northern Europe could easily have solved the problem by co-signing periphery debt, perhaps under the umbrella of Eurobonds backed ultimately by all (especially German) eurozone taxpayers. The periphery countries should then have been permitted not only to roll over their debt, but also to engage in full-on countercyclical fiscal policy for as long as their national governments deemed necessary.
In other words, for “anti-austerians,” the eurozone suffered a crisis of competence, not a crisis of confidence. Never mind that the eurozone has no centralized fiscal authority and only an incomplete banking union. Never mind moral-hazard problems or insolvency. And never mind growth-enhancing structural reforms. All of the debtors will be good for the money in the future, even if they have not always been reliable in the past. In any case, faster GDP growth will pay for everything, thanks to high fiscal multipliers. Europe passed up a free lunch.
This is a fully coherent viewpoint, but naive in its unqualified confidence (for example, in the polemical writings of the Nobel laureate economist Paul Krugman).
That’s as if Paul Krugman thinks and writes in a vacuum, completely unaware of political dynamics and absent any call for political and legal changes to facilitate his economic findings and suggestions, which simply isn’t the case.
Anti-Austerians, myself included, push for all the changes necessary to fix the situation. We oppose those making excuses to drag their feet.
The entire US was plunged into the Great Depression. The New Deal applied to the entire country regardless of which parts were more responsible for the disaster. The same may be said of the Great Recession than can be said about it in Europe.
How long would it have taken to pass the necessary emergency legal changes to have done the types of things advocated by the anti-Austerians had Europe begun immediately upon realizing that Europe had been hit full on by the Great Recession, which is a full depression in Greece for sure?
Who dragged his feet and why? That’s what matters so it may be changed and avoided in future.
⇧ Has Greece crisis created a two-speed Europe? | FT Comment – YouTube
The Greek debt crisis has laid bare the fissures between Greece and its creditors but it has also revealed the fractures between EU members, notably France and Germany. Can their differences over fiscal policy be reconciled? Quentin Peel finds out.
⇧ Economist Predicts Vancouver Toronto Price Correction of 30%
Although the Canadian economy has slowed due to the fall in oil prices, meaning some markets are beginning to experience price corrections, the pace of price gains has accelerated in both Vancouver and Toronto. Madani views these property markets as being some of the most overvalued in the world, where real estate prices do not reflect household incomes and rents. When this happens there is a risk of growing greed among investors. He doesn’t see how this trend can continue much longer in Vancouver and Toronto due to jobs being lost over falling oil prices and as affordability declines. This is even while mortgage rates are below 2%. Apparently even a median priced property with mortgage rates based on the latest five year fixed-rate terms would account for 40% of household income in Toronto and 64% of household income in Vancouver.
⇧ How Climate Change Affects CRE Due Diligence Process | Finance & Investment content from National Real Estate Investor
Droughts in the West, floods in Texas, tornadoes in the Midwest and increasing severity of storms along the East Coast and in the South are all evidence that climate change—whatever the cause—is real, and will have lasting effects on owners, investors and lenders of commercial real estate throughout the U.S.
For example, we have seen the Federal Emergency Management Agency (FEMA) rezone parts of Lower Manhattan and the surrounding New York City boroughs in the wake of storm surge effects during Hurricane Sandy, largely driven by insurance claims and concerns over rising sea levels in the Northeast. …
Commercial real estate professionals and their due diligence providers need to stay abreast of these new local municipal environmental requirements to stay ahead of the competition as the market continues to recognize the importance of the impacts from climate change. Buyers should look for investments that have contingency plans to mitigate disruptions from climate change and address the need to conform to stricter environmental regulation in the future.
⇧ Who Is Public Housing Really For?
Last week came the puzzling news that some millionaires were living in tax payer—funded public housing.
The solutions are as rare (and complex) as the phenomenon is common (and complex), but here’s one: Build more (affordable) housing to erase the fierce competition for space. That last one, at least, has been getting a wee bit of a boost. New home construction has been slowly but steadily on the rise.