Linking ≠ endorsement.
⇧ United States Labor Force Participation Rate
Labor Force Participation Rate in the United States decreased for the first time since September last year to 62.8 percent in April from 63 percent in March of 2016.
⇧ Employment Situation Summary
Total nonfarm payroll employment increased by 160,000 in April, and the unemployment rate was unchanged at 5.0 percent.
We just saw that the labor-force-participation rate went down, which is also stated here. So, things got worse, not better. People are retiring, but that doesn't make up the difference. Plus, not everyone retiring really wants that if they don't have enough savings or pension or other income.
⇧ The Book That Will Save Banking From Itself - Bloomberg View
King's starting point is that the 2008 crisis wasn't an anomaly but the natural consequence of bad incentives that are still baked into money and banking — and so quite likely to create another, possibly even greater, crisis. "The strange thing," he writes, "is that after arguably the biggest financial crisis in history nothing much has really changed in terms either of the fundamental structure of banking or the reliance on central banks to restore macroeconomic prosperity." The limited liability of shareholders still incentivizes them to allow the banks in which they invest to take greater risks than they would if they were forced to live with not just the gains from financial risk-taking but also the losses. Small depositors, whose funds are being turned into risky investments, are still covered by deposit insurance, so they could care less what the bankers do. Big depositors and anyone else who extends credit to banks still believe the bigger the bank the better, as the bigger the bank the greater the likelihood that the central bank will bail them out if things go wrong. (JPMorgan Chase today, King notes, has the same market share as the top 10 banks did collectively back in 1960.) That isn't to say that nothing has been done, just that what's been done is disturbingly beside the point.
The financial system, King reveals, is still wired so that a handful of well-connected people capture the benefits from risk-taking while the entire society bears the cost. Complexity was once used to disguise the risk in the financial system. Now it's being used to disguise how little has actually been done to fix that system. Or, as King puts it, "Regulation has become extraordinarily complex, and in ways that do not go to the heart of the problem.?... The objective of detail in regulation is to bring clarity, not to leave regulators and regulated alike uncertain about the current state of the law. Much of the complexity reflects pressure from financial firms. By encouraging a culture in which compliance with detailed regulation is a defense against a charge of wrongdoing, bankers and regulators have colluded in a self-defeating spiral of complexity."
That's all true, but his solution isn't the best way for us to go. His solution doesn't remove the plutocrats from power. Banking should be a utility, not a profit center. The profit should be in the advancement of society as a whole, not a few individuals at the expense of the rest.
⇧ Nonresidential Construction Expands, Industry Unemployment Rate Plunges
"There has been a significant volume of data indicating that residential construction has been slowing, including today's report," said ABC chief economist Anirban Basu. "This may be due in part to growing concerns in various parts of the nation that the multifamily rental market is on its way to being overbuilt."
... overbuilt in the luxury sector in some regions, but the affordable sector is still way under built. There aren't good enough governmental subsidies being offered to make constructing affordable housing profitable for the developers.
If we want to be a really great nation, we need to lift the bottom, the whole bottom. We can do it if we want. It's nothing but a choice. It is not for lack of the ability to create the money. It is not for a real fear of inflation. It is only the greed and egotism of a few standing in the way.
⇧ Donald Trump just threatened to cause an unprecedented global financial crisis - Vox
What's especially troubling about Trump's proposal is that there is genuinely no conceivable circumstance under which this kind of default would be necessary. The debt of the federal government consists entirely of obligations to pay US dollars to various individuals and institutions. US dollars are, conveniently, something the US government can create instantly and in infinite quantities at any time.
Of course, it might be undesirable to finance debts by printing money rather than raising taxes or cutting spending. In particular, that kind of money printing could lead to inflation, and even though inflation is very low right now there's no guarantee that it will always be low.
But a little bit of inflation is always going to be strictly preferable to destroying the whole American economy, especially because a debt default would cause a crash in the value of the dollar and spark inflation anyway.
So long as the increase in money is matched to the increase in real productivity (not speculative gambling) with an eye to planned avoidance of resource constraints, there's no inflation. Trump's not the only one who doesn't get it, Matthew.
⇧ 13 charts on China's debt issue! | Jeroen Blokland Financial Markets Blog
The 'funny' thing is that the previous seven charts are likely to underestimate China's real debt levels. China has a lively shadow banking sector that has also grown exponentially in recent years. If you take a closer look at all the exotic and resourceful financing schemes it becomes obvious there should be even more debt out there.
⇧ Barack Obama's economic delusions continue unabated | Communities Digital News
This article, by Michael Busler, is completely wrong.
If this article were correct, then there would be no multiplier (fiscal spending returning more than that spent). However, there is a multiplier, and all good economists know it.
Furthermore, all the governmental spending during the New Deal right on through to the end of WWII would have crushed the economy and employment. The exact opposite happened!
The fiscal stimulus that happened under Obama was way, way, way too small. That's why the economy is slow. The only argument typically used against more spending is the fear of inflation, not more debt, which is low right now compared to what it took to get out of the Great Depression (along with interest rates on that debt).
This laissez-faire talk is a nonstarter. Unbridled capitalism commits suicide. Who doesn't know it? Saving capitalism from itself is common knowledge.
⇧ When It Comes to Taxes, Donald Trump and Hillary Clinton Have 1 Thing in Common | The Nation
Nomi Prins rips Hillary and The Donald.:
While the two leading candidates for the presidency, Donald Trump and Hillary Clinton, have indeed suggested cosmetic fixes for a situation that only grows more extreme with the passage of time, they have themselves taken advantage of numerous tax "efficiency" strategies that make money evaporate. Of course, you shouldn't doubt for a second that they'll change their ways once in the Oval Office. [tongue hurts cheek]
⇧ Is Your Property In A Flood Zone? Find Out In 2 Minutes Or Less! - REtipster.com
This is just scratching the surface; but for a layperson, it's the right attitude to get the ball rolling.
⇧ U.S. job market at a crossroads?
My readers aren't the least bit surprised.
Given how the unemployment rate has halved in the last six years without any accompanying surge in wage growth, it has become difficult for the Fed and forecasters to judge at what level of employment pay — and with it, inflation — will start to pick up again.
We need fiscal stimulus. The right way to do it is via debt-free currency issuance.
⇧ Trump's Tax Statements Don't Match His Plan | Center on Budget and Policy Priorities
Is he trying to sell the trickledown theory? What else could explain it?
⇧ Dear Time Magazine Readers, the United States Is Not Insolvent - Multiplier Effect
The idea that the US government or the nation as a whole is "insolvent" has an undying appeal. The fear of (or yearning for) some manner of budget crisis has waned somewhat over the last couple of years (one hopes this is due to the fact that most people alive today have never lived through a period in which the deficit has shrunk so rapidly), but stories like this will never go away.
The 25th Minsky conference wrapped up recently (video of all the speakers is posted here), and in one of the sessions Stephanie Kelton delivered a presentation in which she argued that, in contrast to almost any other area of policy, there is one issue on which Democrats and Republicans agree: a public debt crisis is looming. In addition to some disagreement over when the crisis will strike (hawks: yesterday; doves: in a decade or so), they differ merely on the question of how to solve this perceived problem: by cutting spending or raising revenue. This broader moment of bipartisan consensus, Kelton argued, is tarnished only by being wrong.
⇧ Are Your Rentals in a Landlord-Friendly State? Here's Why That Makes a BIG Difference.
This article very briefly covers differing state and local governmental/legal issues of the eviction process, litigation, and rental and (presumably) rent control.
⇧ When Rhetoric Distorts Statistics - The New Yorker
We live in a fluid world, and it is almost inevitable that the pace of change will exceed our ability to capture that statistically in real time. More people are working in the gig economy—driving for Uber and the like—as well as living in a world of cell-phone numbers that undermines the reliability of the traditional land-line surveys, which form the raw material for most of these official statistics. If you cannot easily survey twentysomethings on their smartphones, you are missing a vital piece of the puzzle.
There's a vast difference, however, between such healthy questioning and a flat-out assertion that the numbers are lies or fake or phony.
The U-6 is fairly accurate. If it's low, it's not by much (highly unlikely that it would be more than 2%). Trump may be referring to discouraged workers being greatly under estimated. I think they are underestimated too but not nearly to the degree suggested by Donald Trump's "20%".
⇧ The Economy Is Rigged, and Other Presidential Campaign Myths - The New York Times
N. Gregory Mankiw:
Bad trade deals are what ails the economy.
That's a myth? Well, it's worded wrong. Bad trade-deals are bad relative to good trade-deals. Bad trade-deals didn't and don't emphasize the environment, worker rights, worker safety and health, or local democracy. Bad trade-deals further enrich the rich while eliminating high-paying jobs in one area and replacing them with slave wages elsewhere. Good deals promote fair trade, not so-called free trade.
The economy is rigged.
That too is a myth? See my response immediately above. Read about the powerful lobbying firms working for the superrich. Read about the Panama Papers. Read about elections fraud. How in the world can anyone conclude that the system isn't rigged? Look at what the Democratic Party is doing against the Bernie Sanders campaign concerning the Democratic national convention's main committees. The Sanders people are being systematically marginalized. If you don't think that has to do with rigging the economy, you're not thinking.
I could go on but why bother?
⇧ Yes, the Economy Is Rigged, Contrary to What Some Economists Try to Tell You | The Center for Economic and Policy Research
Here's a whole bunch more on what I was just saying above. So, what's in it for Mankiw?
⇧ The case for free trade | VOX, CEPR's Policy Portal
"Protectionism" is a pejorative. Fair trade is the proper terminology when discussing trade from a progressive perspective.
⇧ The Top 1% Are Sitting on Their Cash: Here's Why | Investopedia
... the top wealth managers' rich clients are sitting on their hands.
UBS, which suffered the most precipitous decline, addressed the cause of its troubles with the greatest candor: "Negative market performance, substantial market volatility, as well as underlying macroeconomic and geopolitical uncertainty led to more pronounced client risk aversion and abnormally low transaction volumes in the first quarter."
... hedge fund managers ... piling into cash at the highest rate since November 2001. ...
... But when everyone else is running scared, Buffett reminds us, it might be a good time to buy.
Buffett was extremely slow on seeing the Great Recession coming and equally overly quick to call its bottom and in predicting its recovery.
The "smart" money is in cash because cash, among other things, is what one uses to buy everything up when the economy hits rock bottom.
Are we headed for a global depression? Well, that depends on whether the deficit hawks are still in charge when there's a slowdown/recession.
⇧ Law seeks to stop razing of New Castle County historic properties
"A developer might buy a piece of property with a historic building on it and they want to redevelop the whole property and don't pay any attention to the historic building there," Kilpatrick said.
⇧ Why You Can't Afford All the Cool, New Rental Properties | Credit.com
Early 2016 data shows no slowdown in luxury apartment development, with 79% of all apartment buildings finalized in the first quarter of 2016 being categorized as luxury.
... The highest percentages of high-end rentals were registered in the Southwest and the Mid-Atlantic (88% of the total number of large rental developments), and in the South and Southeast (78%), the study showed. The lowest numbers were registered in the Pacific Northwest (61%), in California (65%) and in the Northeast (65%), where the leading metro markets are more mature.
What I've been saying ...
Nice job, Norman Mogil:
Some point to the experience of the US stimulus bill of 2008 had very little impact. However, that program was dominated by tax cuts which have the smallest impact of any stimulus measure. Also, the size of the program, roughly $750 billion was less than 1 percent of the economy and would not likely have produced the desired impact. The program was designed to kick start only, rather than to provide for sustained increase in economic activity.