Linking ≠ endorsement.
⇧ Mr Osborne and the economists’ advice — Prime Economics
Professor Victoria Chick, Ann Pettifor, and Geoff Tily:
…the IMF revised their previous estimates of multipliers to substantially higher figures, which they say better reflects recent evidence. The OECD has also moved towards a more expansionary stance, culminating in their 18 February 2016 interim Economic Outlook. The press release includes this categorical re-assertion the Keynes position, no truer now than it was five or eighty-five years ago:
A commitment to raising public investment collectively would boost demand while remaining on a fiscally sustainable path. Investment spending has a high multiplier, while quality infrastructure projects would help to support future growth, making up for the shortfall in investment following the cuts imposed across advanced countries in recent years. These effects would be enhanced by, indeed need to be undertaken in conjunction with, structural reforms that would allow the private sector to benefit from the additional infrastructure; notably in the Europe Union, cross-border regulatory barriers are a significant obstacle. Collective public investment action combined with structural reforms would lead to a stronger GDP gain, thereby reducing the debt-to-GDP ratio in the near term.
Commentators in the UK press have also recanted, even The Economist. The following comes from the editorial in the issue of 20 February, 2016:
…governments can make use of a less risky tool: fiscal policy. Too many countries with room to borrow more, notably Germany, have held back. Such Swabian frugality is deeply harmful. Borrowing has never been cheaper. Yields on more than $7 trillion of government bonds worldwide are now negative. Bond markets and ratings agencies will look more kindly on the increase in public debt if there are fresh and productive assets on the other side of the balance-sheet. Above all, such assets should involve inf rastructure. The case for locking in long-term funding to finance a multi-year programme to rebuild and improve tatty public roads and buildings has never been more powerful.
… We show that to attempt to lower the debt ratio by cutting spending has always been counterproductive. …
In the wake of the global financial crisis it was surprising that the opinion of economists, however distinguished, could still reach such a degree of consensus. But the call for austerity provoked widespread agreement, and once more society has been disastrously misled. Rogoff and Reinhart advised holding back on the government spending that might have “offset the adverse consequences of the crisis” in order to reduce debt; instead, the adverse consequences have been endured and the public debt has been increased, not reduced.
… the Sunday Times 20 are deploying ‘changed conditions’ to explain any failures. But conditions have changed because of their wrong policy prescription.
…The real miscalculation was overlooking the (negative) multiplier effects of spending cuts ….
There are two arenas, however, where austerity has been successful. Politically, the public (for the moment) remain persuaded of the household analogies that it should be the business of an honest economics profession to dispel. And second, we should not lose sight of the original sleight of hand (evident in Rogoff and Reinhart) that turned a crisis of the financial system and associated vested interests into a failure of the public sector.
In other words, the people are still duped.
The reason so many of the economists who championed austerity are silent isn’t because they are embarrassed. It’s because they don’t want to say anything to support government over the private sector. They are glad the people remained duped.
⇧ What tools does the Fed have left? Part 1: Negative interest rates | Brookings Institution
This is Ben Bernanke’s most educational blog post yet.
“The anxiety about negative interest rates seen recently in the media and in markets seems to me to be overdone.” I totally agree with that.
… The Fed could resume quantitative easing (QE), that is, purchases of assets (typically longer-term assets) for the Fed’s portfolio, financed by the creation of reserves in the banking system. …
Negative interest rates: general considerations
Several central banks, including the Bank of Japan and the European Central Bank, have implemented negative interest rates. In practice this means that, instead of receiving interest on the reserves they hold with the central bank, banks are charged a fee on reserves above a threshold. The expectation is that, to avoid the fee, banks will shift to other short-term assets, which drives down the yields on those assets as well, possibly to negative levels. Ultimately, the efforts of banks and other investors to avoid negative returns on the shortest-term assets should lead to declines in a broad range of longer-term interest rates, such as mortgage rates and the yields on corporate bonds. (Generally, though, we’d expect these longer-term rates to remain positive, because of the extra compensation that investors demand for bearing credit risk and for tying up their money for longer periods.) By putting downward pressure on the interest rates most relevant to borrowing and spending decisions, the introduction of negative interest rates should work through the same channels as more standard monetary policies.
The idea of negative interest rates strikes many people as odd. Economists are less put off by it, perhaps because they are used to dealing with “real” (or inflation-adjusted) interest rates, which are often negative. Since the real interest rate is the sticker-price (nominal) interest rate minus inflation, it’s negative whenever inflation exceeds the nominal rate. … the real fed funds rate has bee n negative fairly often, including most of the period since 2009. (It reached a low of -3.8 percent in September 2011.) Many of these negative spells occurred during periods of recession; this is no accident, since during recessions the Fed typically lowers interest rates, both real and nominal, in an effort to spur recovery.
… most U.S. bank funding does not come from small depositors, but from wholesale funding markets, large institutional depositors, and foreign depositors, all of whom would presumably accept a marginally negative rate if the alternative were holding currency.
⇧ Bank IPOs expose dark arts of Chinese finance
Peter Thal Larsen:
Financial sorcery rarely ends well.
Whatever your situation, here are three things to know about New York City’s luxury rental market.
1) It’s expensive. 2) It’s expensive. 3) It’s expensive.
Since the “Get Alarmed” program’s inception in 2012, the SFMO has distributed over 100,000 smoke alarms. More 450 Tennessee fire service partners work to install the 10-year battery alarms in homes statewide. Smoke alarms distributed through the program are credited with saving 129 Tennesseans from fire danger so far and helped lower Tennessee’s fire fatality rate to a new all-time low in 2015.
⇧ Economists of the World, Unite! : Democracy Journal
This is a very long but fantastic article by Bernard A. Weisberger and Marshall I. Steinbaum.
I’ve included an extensive excerpt simply because of how good it is. Visit the original (full) post and read the whole thing.
Given the inequality eating at the heart of democracy today, enabled by the prestige and respectability of “free market” orthodoxy, it’s vital to trace this story to its conclusion: Did the eclipse of Ely’s economic views and his beliefs about what constituted proper scholarship—namely, advocacy on behalf of workers—have a lasting impact on the economics profession? And, in a larger sense, does a neutral scholarly pose act to silence challenges to the status quo in higher education—challenges that those who enforce and benefit from that status quo would prefer be left unheard?
Nowhere was the ASSA line more definitively codified than in an undergraduate economics textbook of the time, Political Economy for Beginners by Millicent Garrett Fawcett. It defined economics as “the science which investigates the nature of wealth, and the laws which govern its production, exchange, and distribution.” This was precisely the definition that repelled Ely while studying Fawcett’s book as an undergraduate at Columbia. As he later recalled:
Man is not mentioned in this definition; it was implied that man is simply an instrument by which wealth is created and not the end for which it exists. In this volume, free competition plays the part of the deus ex machina, which, if left well alone, will regulate and bring into harmony all the relations that arise among men in their efforts to make a living. Even charitable relief given to the unemployed is condemned as an obstruction to the operation of natural economic laws.
… the labor market has certain characteristics that make the “free market” a poor model. Foremost among those is simply that the abstraction “labor” d escribes actual people, and people can be exploited. Since workers need jobs to feed their families, they cannot withhold their labor from the market when demand is scarce in order to sustain high wages. That forces them to bear the brunt of recurrent, severe recessions by suffering wage cuts.
Ely recognized wage stickiness as well. In most cases, downward pressure on wages is not shared equally by all workers’ taking a moderate wage cut. For many reasons, overt wage cuts are relatively rare (though they were more common in Ely’s day than now). Instead, recessions create involuntary unemployment: one population desperate to find work and many employed workers who are lucky to have a job, and who can therefore be exploited by their employers. For that reason, workers don’t share in the prosperity of booms until the unemployed find work once again—a powerful tool by which to discipline wage demands.
Since workers have to be located somewhere, Ely further noted, and frequently have reason to remain where they are rather than migrate to the best possible job opportunities, whole regions can face prolonged underemployment. And since workers cannot agree collectively to lower their birthrate or exert much political control over a seemingly endless supply of immigrants, they cannot create a scarcity of their services in the absence of collective bargaining. By contrast, a recession reduces demand for labor by definition, which contributes to the power imbalance favoring employers inherent to the labor market. All of these observations are as true today as they were in the 1880s.
Ely excoriated three further strategies of exploitation: the company store, company town, and company-provided credit that could keep workers in perpetual debt; the blacklisting of union members and other “trouble-makers”; and the iron-clad oath against union membership as a part of labor contracts. All are formally illegal now, ….
… Ely is at pains to demonstrate that trade unionism is not socialism, and that it in fact represents the surest antidote to nascent American radicalism by allowing workers to share in the fruits of an industrialized economy, short of overthrowing the owners of capital.
… The old guard began to face up to the basic critique offered by the AEA’s generation: that economics derived from “universal laws of wealth” could not claim to be an empirical science. Ely and his AEA confederates had pushed empiricism by introducing a publication for new research, simply called Publications of the American Economic Association (the precursor to the American Economic Review, still the leading journal in the field), and making peer review the requirement for being taken seriously. …
What was lost in the eclipse of radicalism? For one thing, as Ely was publishing The Labor Movement in America, his erstwhile colleagues, in particular John Bates Clark, were working out the theory that became the so-called “Marginal Revolution,” based on the work of European economists like Leon Walras, Alfred Marshall, and William S. Jevons. Eventually, that theory was ensconced at the center of academic economics in the form of “competitive equilibrium”—essentially mathematizing the classical doctrines of Fawcett’s textbook, in which the economy naturally adjusts to any change, to universal benefit, provided no outside force like the state is unwise enough to interfere. Ely’s insights about how the labor market departs from that theory would have to wait until the 1990s—and especially following the Great Recession and its long, inadequate recovery—to gain a hearing once again.
… The more general intellectual trend in the field is toward empirics, with convincing causal inference the sine qua non of good original research. This so-called data revolution (or, as two of its best-known adherents, Joshua D. Angrist and Jörn-Steffen Pischke, refer to it, “credibility revolution”) is facilitated by sophisticated computation and data availability. But it is also motivated by increasing distrust in the old way of doing things: starting from competitive equilibrium and searching reality to find just-so stories to serve as evidence of that theory’s benign operation. Instead, economics researchers search out natural experiments as tests of one theory against another, or conduct their own.
… since the 2008 financial crisis, the AEA has increasingly insisted that economists who publish in its journals issue a disclosure statement about their sources of funding and make data available for replication, subject to a generous confidentiality loophole—reforms that have been received with some hostility in a field where the ethos is that the final research output should be judged solely on its merit and not by the motives of its authors. What the early history of the AEA tells us, however, is that when the subject at hand is inherently controversial and political, as is the case with inequality, formal devotion to impartiality may serve to impair rather than promote insight, by ruling out any explanation that carries with it a threat to the sources of academic funding and prestige.
The marginalization of Ely’s radicalism came at the hands of his peers, and it is only by economists themselves that such a marginalization of views that challenge incumbent wealth might be reversed. In contrast with other social sciences, which could be said to lean left, economists have a reputation for ideological diversity if not conservatism, which is exactly how it comes to be that their research is lavishly funded in prestigious business schools and marquee departments. Economists should come to see their influence for what it is: contingent on staying within certain boundaries first tested by Ely. It’s hard to escape the conclusion that in exiling radicalism from the AEA and from mainstream economics, its practitioners attained enormous intellectual prestige precisely by sacrificing the disinterested search for answers to the most controversial questions in economics to the professional imperative of gaining the approval of the el ite.
⇧ Micro Prefab Housing Startup KASITA is Revolutionizing Attainable Urban Living – The Registry
The future is now.
KASITA’s futuristic metal and glass housing units measure approximately 300 square feet, catering to the increasing numbers of one and two person households in today’s cities. Units are packed with amenities, smart home tech and custom furnishings that take advantage of every cubic inch of space. Because they are mass-produced, construction costs are kept low and quality high. KASITA units are quickly attached to a patent pending plug-and-play rack, which can be set up in days and quickly hooked up to utility lines. The racks slide into underutilized or unused urban lots that are too small for conventional housing development.
⇧ Officer shares home security tips to keep burglars away | abc13 com
Johnson makes house calls. He’ll walk you through your own house, pointing out flaws and showing you what you can correct to improve security. We discovered a lot of police departments have similar programs, you just have to call and ask.
⇧ Budget 2016: Richest 10 per cent of households easily the biggest beneficiaries, analysis finds | UK Politics | News | The Independent
“This will lead to lower wages and living standards, not just lower tax revenues for the Treasury.”
The impact of the Budget reinforces a regressive trend from this Government since last May’s election.
Taking all of Mr Osborne’s post-election tax and benefit measures together, the IFSon 17 March estimated that the incomes of the poorest 10 per cent of the population are set to fall by 7 per cent by the end of the parliament and the second poorest decile by 9 per cent. That equates to an annual loss of £1,300 and £1,600 respectively.
The incomes of the richest 10 per cent, however, will remain unchanged.
Here’s the deal. George Osborne knows exactly what he’s doing. He shrinking government for privatizations’ sake regardless of the negative impacts on the poor and middle class. He’s conducting class warfare on behalf of the upper class. It’s as plain as day.
⇧ Real estate students raise the bar at national competition
The new site would include a maritime museum, hotel, residential apartments, workforce housing for port employees, office and meeting space, and retail outlets. Among the other features: a 150-foot setback to allow for rising sea levels plus alternative power sources including solar, wind and LEED platinum certification.
What do you think?
⇧ TRID slashes independent mortgage banks’ profits by 60% | HousingWire
The net gain on each loan originated by independent mortgage banks and mortgage bank subsidiaries plummeted 60% in the fourth quarter of 2015 due to the implementation of the Consumer Financial Protection Bureau’s TILA-RESPA Integrated Disclosures rule in October.
Net gains only reached $493 on each loan they originated in the fourth quarter, down from a whopping $1,238 per loan in the third quarter of 2015, the Mortgage Bankers Association reported in its Quarterly Mortgage Bankers Performance Report.
“Production profits dropped by over 60% in the fourth quarter of 2015 compared to the third quarter,” said Marina Walsh, MBA’s vice president of industry analysis.
The question is whether it’s worth it. It will take decades to be able to measure the fuller results. I’m confident it’s better to have the additional transparency, organization, and clarity than cheaper service.
⇧ Do First Floor Retail Spaces Pencil Out for Multifamily Developers?
More than a third—34.9 percent—of the apartment properties that developers plan to open between 2016 and 2021 will mix apartments with another real estate asset class, like retail. That figure is up compared to 28.8 percent of apartment properties that opened between 2010 and 2014, according to data from research firm Axiometrics.
That’s quite a bit higher than I would have guessed.
⇧ Forms and sources of inequality in the United States | VOX, CEPR’s Policy Portal
Although a global issue, income inequality is particularly important in the US in terms of both its level and in recent changes. Large advanced economies have seen a persistent trend of rising inequality for decades, as the very highest earners capture a larger share of aggregate income. Until the 1980s, the US experience was similar to other countries, as recently as 1975, the top 1% garnered a similar share of the income in the US as in other G7 countries, as shown in Figure 1. But since 1987 the share of income going to the top 1% in the US has exceeded every other G7 country in each year that data are available. Moreover, the US has continued to diverge further from other advanced economies, with the top 1% income share rising 0.2 percentage points a year on average in the US from 1990 to 2010, well above the 0.1 percentage point average increase in the UK, for example. While comparable international data are scarce after 2010, the gains of the top 1% have continued in the US. In 2014, the top 1% captured 18% of income, up from 8% in 1975 (World Wealth and Income Database 2015).
Public policy is therefore critical to ensuring that the competitive channel works well, by promoting equality of opportunity writ large. That includes investments in the education, health, and well-being of lower-income children and reforming our criminal justice system, but also providing a safety net for those who face barriers to success in the evolving competitive market — such as providing job retraining, unemployment insurance, robust social security, access to health care, and other policies
… Analysis of the various forms and sources of inequality in the US can help to elucidate the mechanisms by which certain pro-growth policies can reduce inequality through either the competitive channel or the rents channel. Policies that promote inclusive growth can be grouped in four categories — those that strengthen aggregate demand in general; those t hat make the competitive channel work better by promoting equality of opportunity; those that reduce unproductive inequality by reducing inefficient rents and rent-seeking behaviour; and those that help better protect workers and their families from the consequences of inequality — while also serving as a springboard for upward mobility.
⇧ The GOP Must Answer for What It Did to Kansas — NYMag
In 2010, the tea-party wave put Sam Brownback into the Sunflower State’s governor’s mansion and Republican majorities in both houses of its legislature. Together, they implemented the conservative movement’s blueprint for Utopia: They passed massive tax breaks for the wealthy and repealed all income taxes on more than 100,000 businesses. They tightened welfare requirements, privatized the delivery of Medicaid, cut $200 million from the education budget, eliminated four state agencies and 2,000 government employees. In 2012, Brownback helped replace the few remaining moderate Republicans in the legislature with conservative true believers. The following January, after signing the largest tax cut in Kansas history, Brownback told the Wall Street Journal, “My focus is to create a red-state model that allows the Republican ticket to say, ‘See, we’ve got a different way, and it works.’ “
As you’ve probably guessed, that model collapsed. Like the budget plans of every Republican presidential candidate, Brownback’s “real live experiment” proceeded from the hypothesis that tax cuts for the wealthy are such a boon to economic growth, they actually end up paying for themselves (so long as you kick the undeserving poor out of their welfare hammocks). The Koch-backed Kansas Policy Institute predicted that Brownback’s 2013 tax plan would generate $323 million in new revenue. During its first full year in operation, the plan produced a $688 million loss. Meanwhile, Kansas’s job growth actually trailed that of its neighboring states. With that nearly $700 million deficit, the state had bought itself a 1.1 percent increase in jobs, just below Missouri’s 1.5 percent and Colorado’s 3.3.
Louisiana has replicated these results. When Bobby Jindal moved into the governor’s mansion in 2008, he inherited a $1 billion surplus. When he moved out last year, Louisiana faced a $1.6 billion projected deficit. Part of that budgetary collapse can be put on the past year’s plummeting oil prices. The rest should be placed on Jindal passing the largest tax cut in the state’s history and then refusing to reverse course when the state’s biggest industry started tanking. Jindal’s giveaway to the wealthiest citizens in the country’s second-poorest state cost Louisiana roughly $800 million every year. To make up that gap, Jindal slashed social services, raided the state’s rainy-day funds, and papered over the rest with reckless borrowing. Today, the state is scrambling to resolve a $940 million budget gap for this fiscal year, with a $2 billion shortfall projected for 2017. … Louisiana can no longer afford to provide public defenders for all its criminal defendants. Its Department of Children and Family Services may soon be unable to investigate every reported instance of child abuse. Education funding is down 44 percent since Jindal took office. The state’s hospitals are likely to see at least $64 million in funding cuts this year.
What has happened to these states should be a national story; because we are one election away from it being our national story. …
… supply-side voodoo ….
Vote for that on the national level? Why commit economic suicide? Even the plutocrats are hurt by such bad economic policies and practices.
⇧ Trade Treaty Propaganda Goes Into High Gear | Beat the Press | Blogs | Publications | The Center for Economic and Policy Research
… the stronger and longer patent and copyright protection will necessarily mean job loss in manufacturing and other areas. This must be the case, since the stronger protections will mean that the Pfizer, Microsoft, and Disney will be getting more money from the TPP countries. If the total balance does not change, then everyone else will be getting less on net.
In other words, the TPP is about redistributing money from the rest of us to the pharmaceutical industry, the software industry, and the entertainment industry. Needless to say, this will increase the market for economists and policy types doing analyses to determine what can be done about income inequality.
⇧ Iain Duncan Smith’s resignation letter in full – ITV News
This is the sentence that Simon Wren-Lewis says is the most important:
I am unable to watch passively whilst certain policies are enacted in order to meet the fiscal self-imposed restraints that I believe are more and more perceived as distinctly political rather than in the national economic interest.
What the letter really makes me wonder is whether he actually believes that the Tories have done anything economically sound. He is, of course, correct that the latest round of planned cuts is an abomination and designed to garner support from the richest of the rich, who want as little government as possible and personal estates as large as they can manage to dupe the world into letting them have even if it means they are surrounded by a hellish society foolishly of their own making that they then pay to try to wall off without success.
Better to lift the bottom!
⇧ United States Youth Unemployment Rate | 1955-2016 | Data | Chart | Calendar
Youth Unemployment Rate in the United States increased to 10.50 percent in February from 10.30 percent in January of 2016.
⇧ Foreign governments dump U.S. debt at record rate
In a bid to raise cash, foreign central banks and government institutions sold $57.2 billion of U.S. Treasury debt and other notes in January, according to figures released on Tuesday. That is up from $48 billion in December and the highest monthly tally on record going back to 1978.
It doesn’t mean the US is in trouble relative to other nations though.
⇧ Microsoft HoloLens Lets You Design Your Dream Kitchen At Some Lowe’s Home Improvement Stores : PERSONAL TECH : Tech Times
Microsoft and Lowe teamed up in a pilot project that will deliver augmented reality simulations to some of Lowe’s home improvement stores.
Lowe will use the augmented reality visor from Microsoft to give its customers a clear image of various design options for their appliances and kitchens, without the hassle of actually assembling them.
⇧ ‘Our 17 properties will lose £16,000 per year’
What’s Chancellor George Osborne up to with this? He’s creating the circumstances for greater consolidation at the top. What else?
Offered no respite in the Budget, landlords are facing a bleak future and a conundrum over how to manage their properties.
Existing landlords are caught between an income tax bill which is set to begin rising next year, or the stamp duty hit involved in incorporating their properties now.
⇧ AG’s office assists communities to rehab abandoned properties – Sentinel & Enterprise
The program expanded across the state and now covers more than 90 cities and towns in Massachusetts, she said, with 357 active abandoned properties in the program.
⇧ Central banks are already doing the unthinkable – you just don’t know it
It’s about time!
… without tax breaks and greater state investment, the world is at risk of another “economic derailment”, the IMF has warned.
Realistically, there are little signs that politicians are ready to jettison their fixations on low debt and balanced budgets to support global growth.
Faced with political intransigence, central bankers are openly talking about the previously unthinkable: “helicopter money”.
A catch-all term, helicopter drops describe the process by which central banks can create money to transfer to the public or private sector to stimulate economic activity and spending.
The Bank of Japan’s move to impose a three tiered deposit rate on banks is a covert attempt to inject funds directly to the private sector, argues Eric Lonergan, economist and hedge fund manager.
He notes that the BoJ’s decision to exempt some reserves from the negative rate represents a transfer of cash to commercial lenders at rate of 0.1pc.
The system “separates out the interest rate on reserves from that which affects market rates”, says Lonergan.
“It is taking the first step along the journey towards helicopter money and opens up a whole new avenue of stimulus”.
In the same vein, the ECB has also signaled its intention to move towards targeted attempts to boost private sector credit demand.
From June, eurozone banks will be paid as much as 0.4pc to borrow from the ECB for four years – a scheme dubbed ‘Targeted Long-Term Refinancing Operations’ (TLTRO’s). Lenders who do the most to pass on cheap loans to customers will be rewarded with the most favourable rates.
Erwan Mahe, chief macro strategist at HPC, calls the ECB’s moves a “veritable revolution” in monetary policy which marks the end of an erstwhile central bank taboo.
“For the first time in the hi story of central banking, private-sector agents will be able to borrow money from the ECB and give back less than the capital borrowed,” says Mahe.
Lord Adair Turner, a former chairman of the Financial Services Authority, and one of the earliest advocates of helicopter money, calls for more transparency in a bid to finally smash the taboos around injecting money straight into the hands of consumers or governments.
“I think it is more dangerous for central banks to forever deny what they are doing,” says Lord Turner.
He calls Japan’s move to issue government debt at a rate of 40 trillion yen, while the central bank expands its balance sheet at a rate of 80 trillion yen a year, “a de facto debt monetisation”.
“You are effectively replacing government debt with central bank money,” says Lord Turner. “It would be better for authorities to publish a statement, laying out the rules and assuring the world it is not too much.”
⇧ Why China’s Property Rally Has ‘Reached A Tipping Point’ – Forbes
Leverage up, risk up, fraud up, crackdown rolling out but how quickly, committedly, and authoritarianly rather than properly, democratically?
Previous upswings were not driven by leverage, McCord explains. The norm was that people did not finance the maximum allowable level. They financed, on average, half of the cost — even if 70% or 80% was allowed. Therefore, mortgages did not play a role in driving up demand or prices.
“Now, we believe there are more buyers using the maximum available leverage,” he says.
⇧ Up to 13 Million Americans Are at Risk of Being Washed Away – Bloomberg Business
Tyrrell County leads the country only by percentage of its population at risk. The largest absolute numbers of people at risk are in Miami-Dade and Broward counties in Florida. These two areas would make up 25 percent of all people impacted nationally—or more than 3.5 million—if waters rise by 6 feet, which is the most extreme scenario the study’s authors anticipated. That threat has made the southern Florida climate story the center of much attention in recent years. More than 100,000 people could be displaced in each of 31 counties in the 6-foot rise scenario.
⇧ Britain’s House Price Crash – 2016 Predictions Mount – TruePublica
And not forgetting those poor fearful middle class reluctant landlords about to lose their shirts. From Industry expert Letting Agent Today — “Osborne has slashed rental sector confidence ‘to below crisis levels’. Landlords’ confidence in the buy to let sector has collapsed to an all-time low and is now “worse than levels witnessed during the financial crash” according to a trade body. Richard Lambert, chief executive of the National Landlords Association, says confidence in landlords’ business expectations has tumbled by more than a third over the past year — down from 67 per cent to an all-time low of 43 per cent. The current level of confidence in the BTL sector is now five per cent lower than levels witnessed after the financial crash in 2007″.
… “All-time low interest rates have fuelled a borrowing spree that has seen Britons rack up a mind-boggling debt of £40billion. The latest figures show family that household debt rose by 42 per cent in the last six months alone, according to research from Aviva. The average family now owes £13,520 on credit cards, personal loans and overdrafts, up from £9,520 last summer. Throw in a 20 per cent increase in average mortgage debt over five years and households are more vulnerable than ever. Worse, family incomes are falling and many have lost the savings habit as their finances are stretched.”
Finally, some comforting words from the 12th largest bank in the world. As the Telegraph reports — “RBS has advised clients to brace for a “cataclysmic year” and a global deflationary crisis, warning that major stock markets could fall by a fifth and oil may plummet to $16 a barrel. The bank’s credit team said markets are flashing stress alerts akin to the turbulent months before the Lehman crisis in 2008. “Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small,” it said in a client note”. To be fair, RBS should know, they have a lot of experience of completely screwing up investments having lost £46billion in a tax payer bail-out and £45billion of their own since then.
⇧ New York Times Hypes Financial Industry Scare Story on Public Pensions | Beat the Press | Blogs | Publications | The Center for Economic and Policy Research
The NYT has committed itself to putting numbers in context, where is the context here? Virtually none of the NYT’s readers has any clue how large a burden $78 trillion is for the OECD countries over the rest of the century. The article did not inform readers with this comment, it tried to scare them. That is not journalism.
For those who are keeping score, GDP in these countries for the next 80 years will be around $2,000 trillion (very rough approximation, not a careful calculation) so we’re talking about a big expense, roughly 4 percent of GDP, but hardly one that should be bankrupting.