Linking ≠ endorsement.
20) Seismic denial
⇧ They may save us yet: Scientists found a way to turn our carbon emissions into rock – The Washington Post
In their results reported Friday in the journal Environmental Science & Technology Letters, they go beyond the Carbfix project in several key ways, McGrail said. First, they injected carbon dioxide in its fluid, supercritical form, which is most likely to be how it is received and transported from industrial projects. And second, after two years had passed, they took core samples of the rocks, using a battery of tests to prove definitively that the CO2 had indeed turned into a carbonate rock called ankerite, comprised of calcium, carbon, oxygen, iron, magnesium, and manganese.
⇧ Fault activation by hydraulic fracturing in western Canada | Science
Just in case you mistakenly thought concerning fracking that only injecting waste fluids causes earthquakes:
Intermittent sequences of induced earthquakes began in December 2013 within a region of previous seismic quiescence west of Fox Creek, Alberta (Fig. 1). These earthquake sequences exhibit clear spatial and temporal correlation with hydraulic fracturing of the upper Devonian Duvernay Formation (9) ….
⇧ Oakland Just Voted to Explore Public Banking – Public Banking Institute
Go Public Banking!
⇧ Denver Voters Approve Pot in Bars, Restaurants
Keep in mind:
… landlords exercise their right to ban pot use.
⇧ Portugal’s PM: Failing to regulate globalisation a “great failure” of the EU
Isabelle Kumar: “So Germany, often considered the leader of the European Union, is not always the example to follow.”
Antonio Costa: “I think it’s a paradox, because it’s the only one who can be the leader, but unfortunately it does not want to be the leader, because the leader must have the ability to bring people together: the poor, the rich, the small, the big, the countries of the east, the countries of the west, the countries of the south.
‘And Germany does not know how to do it. Germany has never been a unifier and has never learned how to be one. It is very difficult for Germany to have this leadership position and unfortunately there are no other countries that have succeeded in exercising this function of Germany.
Well, I disagreed with Antonio Costa on a number of issues, but he nailed that. It’s been exactly the problem. Merkel has been too weak and wrongheaded, and in general, the German people have been myopic.
At the very least, the EU should be a democratic welfare state. Unfortunately, it was formed to be a technocracy rather than real democracy.
⇧ Musk Says Tesla’s Solar Shingles Will Cost Less Than a Dumb Roof – Bloomberg
The new tempered-glass roof tiles, engineered in Tesla’s new automotive and solar glass division, weigh as little as a fifth of current products and are considerably easier to ship, Musk said.
That’s fine, but the cost of insuring a roof that cost 20x more … ?
Naturally, we’ll be learning about how it’ll stand up to extreme-weather events too.
Anyway, more power to solar roofs! (Yes, the pun is intentional.)
⇧ Crackdown on city properties nets county a big tax payoff – The Buffalo News
The county budget crisis in 2004 gutted the county’s tax enforcement personnel. While the county eventually restarted foreclosures on suburban properties, county officials ignored city properties for more than 10 years.
As a result, many city property owners realized they could avoid paying their county tax bill year after year without consequences. City officials, in contrast, threaten foreclosure within two years of unpaid taxes, trash fees and sewer bills.
⇧ State stalks ‘zombie’ properties – The Blade
Banks are as aware as anyone how long a foreclosure process can take. And with a big stock of vacant properties on their books, they may not be keen to take on additional properties that they then become responsible for maintaining and marketing, especially some of the lowest value homes, experts say.
“I believe the goal would be to give those banks a reason to go ahead and foreclose even on some of those lower-value properties with the prospect of a more efficient and less costly foreclosure process,” Mr. Blomquist said.
⇧ Times Leader | Luzerne County purchasing software to ID missed properties for taxation
Swetz said the assessor’s office has six evaluators who must stay on top of all new construction, and building permits are not always obtained or reported to the county.
The new program will ensure no new construction was missed, including garages, additions and in-ground swimming pools, Swetz said. The software is expected to pay for itself through the addition of previously undetected property added to the tax rolls, he said ….
⇧ Car crashes through apartment, kills Kent man
… a small four-door import that was more than halfway inside of a ground floor apartment, according to the Kent Police Department.
⇧ Slovenia adds water to constitution as fundamental right for all | Environment | The Guardian
⇧ The Rebel Economist Who Blew Up Macroeconomics – Bloomberg
⇧ Robert Samuelson: Trump’s mission impossible? | National Columnists | daily-journal.com
“The policy uncertainty is going to drive financial markets crazy,” said economist Mark Zandi, of Moody’s Analytics.
Stock prices, interest rates and exchange rates all might be especially volatile.
It’s also an open question as to whether Trump’s economic strategy will work as expected. Zandi, for one, is skeptical. Supply and demand are at odds, he said. Trump is stimulating demand with his massive tax cuts but limiting supply by discouraging imports and expelling illegal immigrants. Strong demand ultimately will collide with constricted supply. Inflation and interest rates will rise; a slump might follow.
Residents of a town hit by Oklahoma’s strongest earthquake have filed a class-action lawsuit against dozens of energy companies, accusing them of triggering destructive temblors by injecting wastewater from oil and natural gas production underground.
⇧ How Smart Building is Changing Construction [and rehabs: fix and flips, etc.]
OLYMPIA, Wash. — Insurance Commissioner Mike Kreidler’s Special Investigations Unit (SIU) has earned accreditation from the Washington Association of Sheriffs and Police Chiefs ….
⇧ Trump, ideology and the economics profession — Prime Economics
Oh, this is really, really good.
⇧ 7 Injured in Fire that Damaged 3 Homes in New Jersey
⇧ Man arrested for insurance fraud following house fire – KAUZ-TV: Newschannel 6 Now | Wichita Falls, TX
⇧ Seismic denial
The commission, while calling for “sound science,” has disregarded, downplayed and at times disparaged the scientists’ work. …
After heated disagreements with his bosses, Rister retired as the commission’s director. One of his big disappointments, he says, is that the episode that began in Azle ended without “anybody looking like we cared about the public.”
In her speech “Macroeconomic Research After the Crisis”, Janet Yellen said that if we assume that hysteresis is in fact present, it may imply there are possibilities that policymakers can temporarily run a “high-pressure economy” to reserve the adverse supply-side effects caused by hysteresis. For example, Yellen postulated that running a “high-pressure economy” may result in a tight labor market and draw in potential workers who would otherwise sit on the sidelines to the labor force, and lead to a more efficient job market.
Of course that’s right, and I’ve been pushing the idea since before I can remember anyone else breathing a word of it. I think it’s just intuitively understood by many currently heterodox types.
⇧ Why Free Trade Doesn’t Work for the Workers
Steve Keen nails it, again. Read the whole thing. Here’s a snippet for you.
… you have 3-D printing turning up, which has become mainstream. So it means you can produce onshore without cheap labor. But it also means you can produce without labor at all.
In a well-functioning human society, that wouldn’t be a problem. The problem in a neoclassical capitalist system is that the workers lose out because their only source of income is wages. If there is no need for wages anymore, you don’t have an income anymore.
So we have to think about a post-capitalist income system. Trump is a right winger but not an ideologue of small government.
The conventional economic theory makes you think that way, reduce government as much as possible. Trump doesn’t seem to think that. He seems to be much more pragmatic in his attitudes.
By the way, Steve deserves, but doesn’t get, a great deal of credit for forcing the DSGE types to start realizing the importance of finance. Steve is still light years ahead of them though because he knows there is no equilibrium.
⇧ Calgary landlords facing ‘grim’ times as almost 40% of rental properties sit empty | Financial Post
Close to 40 per cent of Calgary’s available rental listings are unoccupied, according to a local property management company which says the weak market has become a major source of financial stress for small, private landlords.
⇧ China banks’ “shadow credit” carries “Lehman” risk from WMPs – Business Insider
⇧ Trumpism Has Dealt a Mortal Blow to Orthodox Economics and ‘Social Science’
… Trumpism has generated confusion among economic actors, even as his victory produced an early bout of stock-market euphoria. It does not rebuke neoliberalism so much as replace it with its own heretical version, bastard neoliberalism, an orientation without a theory, whose tale has yet to be written.
Well, Stephen Kevin Bannon does have a theory: throw it on the wall and see if it sticks. Someone called him fiercely intelligent. Hmmm. It won’t stick. Okay? Why throw it? Well, it’s disingenuous. The object is that when it doesn’t stick, as they know it won’t, they’ll do what their libertarian streak has always done: blame government, blame entitlements. Let’s hope this time will be different in that Trump won’t continue going along because to do so will mark him in history as a deceiving economic-royalist rather than a President truly for all the People. We wait.
⇧ Judge’s properties in St. Cloud, including 1 with meth lab, called a blight – StarTribune.com
“Clearly these properties, in our estimation, are being operated like rentals,” Kleis said. “There really needs to be a way for a city and a neighborhood to have some better accountability when it comes to contract for deed, particularly when you have residents who truly are causing a tremendous amount of challenges and issues.”
⇧ mainly macro: Whatever happened to the government debt doom spiral
Believe it or not, Donald Trump knows this. Unfortunately, he’s still pushing supply-side, trickledown, massive tax cuts for the wealthy, as the remedy for the economy.
⇧ Great Green Landscaping Practices to Promote Sustainability | Sustainable Cities Collective
Rentals can incorporate these ideas.
⇧ China’s property frenzy and surging debt raises red flag for economy | Business | The Guardian
… Collier said that credit-fuelled spending was a “risky game”, because when capital flows slow, property prices are likely to collapse, particularly in China’s smaller cities.
That could lead to defaults among property developers, small banks, and even some townships.
“That will be the beginning of a crisis,” he said. “How big this becomes is unclear but it’s going to be a difficult time for China.”
⇧ The giant vacuum cleaner that can suck pollution out of the sky | World Economic Forum
Infrastructure-spending target, anyone?
⇧ Inferno in the Smoky Mountains: Photos From Gatlinburg and Pigeon Forge
More than 100 homes were reportedly destroyed by the fires.
⇧ This Startup Is Changing The Way People Invest In Single Family Homes
Nationwide, prices have now surpassed their bubble peak in 2006, not adjusted for inflation….
⇧ 3 more bodies found in Tennessee wildfire ruins; toll at 7 | U.S. News | US News
Three more bodies were found in the ruins of wildfires that torched hundreds of homes and businesses in the Great Smoky Mountains area, raising the death toll to seven ….
⇧ 5 Dead, Dozens Hurt After Tornadoes, Storms Slam Alabama and Tennessee – NBC News
⇧ Fannie Mae, Freddie Mac should be privatized, treasury secretary nominee says – The Washington Post
No surprise here that Steven Mnuchin wants to privatize Fannie and Freddie. There’s only one reason to do it: higher profits for elite lenders. It certainly isn’t about making housing more affordable.
⇧ 2017 Housing Market Hinges On Consumer Sentiment
The Architectural Billings Index (ABI) for Residential construction is an 8-month leading indicator of residential construction. This measures the billings from the American Institute of Architects for residential construction projects. It follows then, that if architects aren’t designing as fast, we aren’t likely to see construction continue as fast and that step-through process is about 8 months. After we see a slowdown in the ABI, 8 months later we begin to see a slowdown in construction spending The ABI has been slowing year-over-year (YoY) since July 2016, suggesting deceleration in the industry through at least the first quarter of 2017.
Also, the S&P CoreLogic Case-Shiller 20-City Composite Home Price NSA Index, which seeks to measure the value of residential real estate in 20 major U.S. metropolitan areas, is not suggesting widespread acceleration across the nation either. When we look at the first three quarters of 2016, the YoY gains in home prices has been decelerating.
⇧ Online real estate service OpenDoor raises $210M Series D despite risky financing model | TechCrunch
If you buy a house from OpenDoor, you also receive a 180-point inspection, warranty and 30-day money-back guarantee.
Backed by whom and what? Show me the bond.
⇧ A Better Choice | Seeking Alpha
Want to eliminate or simplify Dodd-Frank? What are you proposing?
⇧ Palm Springs City Council votes for stricter regulations for vacation rental properties – KESQ
The new ordinance includes capping the amount of times a property can be rented in a year to 32 contract bookings, with no limit for how long that booking can be. Family members would be excluded from this restriction.
There could also be a hike in rental permit fees from $234 a year to $900 to cover the cost of heightened levels of enforcement.
There are steeper penalties for people caught not following the rules.
Also a homeowner or a business can only have one permitted vacation rental property in the city. People and couples that have two properties can be grandfathered in, but only for two properties.
⇧ Single-Family Built-for-Rent Construction | Eye On Housing
This class of single-family construction excludes homes that are sold to another party for rental purposes. It only includes homes built and held for rental purposes.
⇧ China: A Housing Market Without Re-sales? — Miller Samuel Real Estate Appraisers & Consultants
Home sales seem to be a one-way transaction. Investors that buy a home feel wealthier as their investment rises in value. Theoretically that gets them to go out and consume, i.e. the wealth effect. However the market share of consumer spending in China is roughly half the 60% market share seen in the U.S. so they have a long way to go. While the Chinese investor may enjoy rental income when an active rental market exists, domestic housing purchases seem to be driven by a long term equity play.
I have found no anecdotal evidence of the widespread selling of existing properties that were recently developed. There doesn’t seemed to be a tangible moment when the recent investor expects to cash out the equity realized on their purchase of several years ago.
⇧ OECD pushes for global Keynesian fiscal stimulus to spring low-growth trap | The Independent
The OECD, which six years ago was instrumental in encouraging a global “pivot” to austerity through its warnings about rising government debt levels, has now become a full-throated supporter of Keynesian fiscal stimulus.
⇧ These fund managers target the real driver of real estate success | Financial Post
“The number one factor impacting real estate is not the old adage: location, location, location. It’s not interest rates. It’s supply and demand,” Olin said. ” And the number one factor impacting the demand side for real estate is jobs. If you have a job, you can buy a house, rent an apartment, and you may work in an office or industrial building, and have money to buy things in a retail centre.”
That’s a bit sweeping, but we take his point.
⇧ Real Estate Contract Contingencies
When purchasing or selling a property, most individuals always think that the biggest hurdle is settling on the sales price, which occasionally, becomes a negotiation between the two parties, particularly when the home buyer is not willing to meet the asking price.
However, in the purchase contract, both the buyer and the seller can put in certain conditions, known as contingencies, which if not met, may allow them to opt out of the purchase of the property with or without penalties, depending on the situation.
Investor contingencies are well worth exploring for a buyer’s market where all-cash, quick purchases become rarer as a percentage of total turnovers.
⇧ Trump, the Dragon, and the Minotaur, by Yanis Varoufakis
Yanis Varoufakis shows why Donald Trump won’t be able to deliver unless Donald changes course.
Trump’s plan for helping those left behind since the 1970s, to the extent that one is discernible, seems to turn on two axes: a domestic stimulus and bilateral deal-making under the threat of tariffs and quotas. But if he plays hardball with China, pushing the Chinese to revalue the renminbi and employing threats of tariffs and the like, he may well end up pricking the bubble of China’s private debt — unleashing a deluge of nasty consequences that would overwhelm any domestic stimulus he introduces.
In that case, Trump’s infrastructure spending would morph into more corporate welfare, implying a negligible multiplier effect. That, in turn, would set the stage for future austerity, as panic over further US interest rate rises and federal budget blow-ups put the squeeze on the government’s existing unfunded commitments (for example, Social Security).
If Trump’s medium-term economic strategy is to have any chance of success, he must grasp that it is not US public debt, but Chinese private debt, that needs to be restructured. Otherwise, US Treasury yields could go through the roof, severely weakening US debt sustainability.
Likewise, Trump must realize that he cannot make America great again by emulating Ronald Reagan’s unfunded stimulus. That trick worked when the Minotaur was chained and fed; it won’t work when the Dragon has run out of fire. Instead, if Trump truly wants to rebalance the US economy so that growth benefits the abandoned people to whom he has promised so much, he should emulate Franklin D. Roosevelt and pursue a Keynesian makeover of Bretton Woods.
⇧ Trump and Asia Pivot: Post-TPP Outlook | The Diplomat
With the U.S. presidential transition underway, identify three indicators of what a Trump trade policy approach might look like.
President-elect Trump has said repeatedly that he will put “America First.” It appears he is concerned about American jobs and also wages. Of course, there are a lot of reasons as to why median wages have been stagnant in the U.S. for decades, which include trade as one cause. Trade always entails “winners and losers” and those who have been left behind in this era of globalization are calling for reforms. When America trades with a poorer nation, there is more of a negative impact on wages in the traded sector. Manufacturing jobs come to mind, for instance. There are ways to address the distributional impact of trade, but those thus far have not been entirely satisfactory. So Trump’s trade policy may focus on pushing trade with comparably wealthy nations, where there is less of a wage differential. For instance, during the campaign, Canada was less of an issue than Mexico in NAFTA [North American Free Trade Agreement].
Secondly, Trump is likely to use trade negotiations to address these distributional concerns, which is arguably better done through domestic fiscal policy.
Third, Trump has more authority as president to withdraw or re-negotiate trade deals and impose tariffs than enter into new ones, which requires Congressional approval. And he seems more focused on withdrawing than entering into new ones, so that may well be the priority in his trade policy.
I disagree with all of that.
“… Trump’s trade policy may focus on pushing trade with comparably wealthy nations, where there is less of a wage differential. For instance, during the campaign, Canada was less of an issue than Mexico in NAFTA.” Mexico was a larger issue precisely because of the lower wages paid in Mexico. Trump’s focus will remain there and China and all other rising lower-wage markets.
“… Trump is likely to use trade negotiations to address these distributional concerns, which is arguably better done through domestic fiscal policy.” That latter bit would be true only if the US were to turn from borrowing to money financing (that is issuing the money for fiscal spending without first borrowing the money, without first issuing bonds regardless of who buys them and where the “profits” are returned: which is to say, regardless of whether the Fed buys them and returns the interest to the federal government).
“Third, Trump has more authority as president to withdraw or re-negotiate trade deals and impose tariffs than enter into new ones, which requires Congressional approval. And he seems more focused on withdrawing than entering into new ones, so that may well be the priority in his trade policy.” That’s to misunderstand Trump’s interest in “deals.” He wants to visit renegotiating everything.
⇧ Trump’s tax holiday to make American financial engineering great again: James Saft | Reuters
Trump’s pre-election economic plans included a special one-off tax holiday allowing U.S. firms to repatriate funds held overseas with only a 10 percent payment, versus the current 35 percent rate.
While that could set up substantial repatriation of corporations’ $2.6 trillion held overseas, both history and logic indicate that the lion’s share will be used to flatter per-share earnings by buying back shares rather than to grow top-line revenues.
For one thing, the dollar has risen already and should rise further as expansionary Trump policy stokes inflation and both allows and forces the Federal Reserve to boost interest rates.
“Corporate profits on overseas operations will be reduced, but with demand weak and current profits under downward pressure, the repatriated earnings are likely to go into financial rather than physical investment,” Van Hoisington and Lacy Hunt of Hoisington Investment Management wrote in a note to investors.
⇧ Trump’s Showdown With Manufacturer Exposes Obama’s Weakness on Outsourcing
The Intercept is very left-wing. This article shows a clear willingness to view Trump in the light of real reality rather than political spin.
Don’t misunderstand the article. David Dayen is not endorsing Donald Trump. He’s simply stating the truth that more could have been, and should have been, done all along for America’s working class.
My readers know I think Donald Trump’s current approaches will not work. I have not said that Donald Trump won’t change and for the better. I don’t know for sure that he will, but I sure want him to. I want him to be ready, willing, and able to turn on a dime toward Post-Keynesianism when the libertarianism that is in his current plan causes it to fall flat on its face.
⇧ City Council settles on a route for the Downtown Streetcar – Curbed LA
… not scheduled to break ground until 2053.
It will be obsolete by then.
⇧ Build it back; Inside Baltimore’s quest to rehab blocks of vacant housing – Curbed
I’ve covered this story before, but this is an update and quite detailed (perhaps too long).
“The problem with most vacant houses in Baltimore, even if you pay nothing for the house itself, is that the cost of renovating them and bringing them back up to code exceeds their value in the place that they are,” says Henry.
Vacants to Value has spent six years trying to sell Baltimore’s vacant properties to owners who will rehab them. Is the effort working?
⇧ Declaring A Housing Recovery Using A Threshold Based on Fraud — Miller Samuel Real Estate Appraisers & Consultants
S&P CoreLogic used it’s National Non-Seasonally Adjusted Housing Price Index to declare that the housing market has recovered. Even the ironies of this public relations effort have ironies. I’ll explain.
⇧ Wall Street Wins Again as Trump Picks Bankers, Billionaires – Bloomberg
“Some say that those who elected him [Trump] may be disappointed in some way,” said Scott Bok, who heads boutique investment bank Greenhill & Co. “But I think all those people want is a stronger economy. If tax cuts and infrastructure spending get them that, I think they’ll be happy.”
So, they won’t be happy unless Trump changes.
We haven’t heard from any flies on walls of meetings between Trump and his various financial picks. Have those picks agreed to change on a dime when needed? Have they agreed to go directly against their Wall Street roots when push comes to shove? If not, Donald will be doing quite a bit of reshuffling and find the going tough with the GOP legislature.
⇧ Bernie Sanders: Carrier just showed corporations how to beat Donald Trump – The Washington Post
Why Bernie Sanders should have been the … ?
Trump has endangered the jobs of workers who were previously safe in the United States. Why? Because he has signaled to every corporation in America that they can threaten to offshore jobs in exchange for business-friendly tax benefits and incentives. Even corporations that weren’t thinking of offshoring jobs will most probably be reevaluating their stance this morning. And who would pay for the high cost for tax cuts that go to the richest businessmen in America? The working class of America.
… many of whom, if you’re a typical residential landlord, are your tenants (being squeezed making it riskier for you too).
Some pundits claimed that Sanders was being thoughtless about the poor in other countries who’ve benefited by new jobs there. Bernie wants things better globally.
I was opposed to NAFTA not because I was against Mexicans getting good jobs in Mexico but because I knew they’d be exploited with lower standards while American workers would also lose.
⇧ THE EMPLOYMENT SITUATION — NOVEMBER 2016
The unemployment rate declined to 4.6 percent in November, and total nonfarm payroll employment increased by 178,000. Employment gains occurred in professional and business services and in health care.
Unfortunately, the Labor Force Participation Rate decreased to 62.70%.
⇧ Airbnb Has Settled Its Lawsuit Against The City: Gothamist
… it provides the City with an additional tool to use against those seeking to turn permanent homes into illegal, short-term stay hotels. The city will enforce this and other existing laws against bad actors, and appreciates the additional enforcement powers this new tool provides to protect New Yorkers and visitors from unsafe conditions.”
⇧ Realtor.com: Phoenix will be No. 1 housing market in 2017
… not the biggest projected price increase on its list of top 10 markets in 2017, but it’s the biggest sales increase.
⇧ Construction Job Growth Accelerates Amid Optimistic Post-Election Outlook in November
“Next year is shaping up to be a good one for both residential and nonresidential construction segments,” said Basu. “Of the two branches of the industry, nonresidential likely offers the larger upside. An infrastructure-led stimulus package would largely be oriented around nonresidential activities. Moreover, in certain markets, there is evidence that the apartment market is approaching saturation. Expected increases in interest rates next year would also tend to hit certain residential activities (i.e., single-family construction) more forcefully.”
⇧ Behind the Numbers: PCE Inflation Update, October 2016 – Dallas Fed
Gasoline Gives Major Boost to Headline Inflation
All the major energy components of PCE registered increases in October. Taken as a whole, prices for energy goods and services rose 3.8 percent in October, led by a 6.9 percent increase in the price index for gasoline and other motor fuels. The gasoline index alone contributed about 1.6 annualized percentage points to October’s headline inflation rate; an index of all items other than gasoline would have increased at a 1.4 percent annualized rate for the month.
⇧ 6 Ways for House Flippers to Save Big on Remodeling Supplies [cached]
⇧ Antonio Fatas on the Global Economy: The OECD procyclical revision of fiscal policy multipliers
Thanks to Mark Thoma for the link.
The OECD just published its November 2016 Global Economic Outlook. Their projections suggest an acceleration of global growth rates in particular in countries with plans for a fiscal expansion. In the case of the US, and based on the “plans” of the Trump administration, the OECD projects an acceleration of GDP growth to 3% in 2018. …
But I am puzzled that they … are upgrading their estimates of fiscal policy multipliers (in particular for tax cuts) at the wrong time in the business cycle, when the economy must be closer to full employment.
Here is the history: back in 2011 many advanced economies switched to contractionary fiscal policy at a time where their growth rates were low and unemployment rates remained very high. During those years the OECD seemed be ok with fiscal consolidation given the high government debt levels (consolidation was necessary). They understood that there were some negative effects on demand but as they assumed multipliers or about 0.5 (in the middle of a crisis with very high unemployment rates!) the cost did not seem that high.
Today, in an economy with unemployment rate below 5%, and wages and inflation slowly returning to normal values and a central bank ready to raise interest rate, the OECD turns around and decides to change the fiscal policy multipliers to something close to 1 even if the announced fiscal measures consists mostly of tax cuts to the wealthier households with low propensity to consume.
This is what I would call a procyclical revision of fiscal policy multipliers. Encourage consolidations in the middle of a crisis and expansion in good times. Not quite what optimal fiscal policy should look like.
⇧ Infrastructure, jobs and wages: It’s not so simple – CBS News
… when the economy is operating at full capacity, expanding activity in one area requires cutting back somewhere else, so that little if any new spending is created. But when the economy is in recession, idle labor and other resources can be brought into use without cutting back anywhere else.
Thus, in a recession, a given increase in government spending creates much more new income and GDP than the same amount at full employment.
The U.S. is presently approaching full employment, ….
… the state of America’s infrastructure is undoubtedly poor. So the low financing costs that are now available (due to low long-term interest rates) and the uncertainty about how many people can be induced to return to the labor force make infrastructure spending still worth doing.
But how that spending is done will also matter. If it involves privatization of public infrastructure, a plan rife with opportunities for cronyism, corruption and incentives to overlook some of the nation’s most urgent needs (projects most attractive to private investors due to their profit potential are not necessarily the projects the country needs most), it may not be worth doing after all.
⇧ Weighing the stronger dollar’s pros and cons – CBS News
A stronger dollar will make imports cheaper for American consumers, but it will also make the country’s exports more expensive for foreigners. The net effect of increased imports and reduced exports would be less domestic demand for goods and services produced in the U.S. because of the drop in prices of imported goods.
Thus, while consumers in general are better off from getting cheaper imported goods, the decline in demand abroad for our more expensive exports will put downward pressure on employment. If you’re working in an export-oriented industry and lose your job because demand for American goods falls, those cheaper prices on imports won’t compensate for lost job.
There’s a caveat, however. The employment effects would be much larger and more damaging when the economy is in a deep recession compared to when it’s operating at or near full employment, as it is now.
⇧ How Windows 10’s data collection trades your privacy for Microsoft’s security | PCWorld
Microsoft says it tries to avoid collecting personal information, but it can happen. For example, crash dumps can contain the contents of a document that was in memory at the time of the crash.
Just that alone could expose you to Cyber policy or Technology Errors and Omissions policy claims issues. Exposing customer or potential customer Personally Identifiable Information would constitute a reportable security breach. It doesn’t necessarily matter that it was exposed to Microsoft.
Do you have a disclaimer acknowledgment concerning everyone who submits sensitive data that covers every possible breach scenario? Who’d agree to it? Would it stand up in court?
⇧ Mnuchin’s Silence on Dollar Policy Signals Rubin Mantra Lives On – Bloomberg
Then-Treasury Secretary Robert Rubin in 1995 began promoting the dogma that a strong dollar was in the nation’s interest. Underpinning the policy is the view that a robust currency reflects a healthy economy and bolsters foreign demand for U.S. debt by reducing the prospect of currency losses. While a climbing greenback helps American consumers by lowering the cost of imports, it also compounds manufacturers’ struggles by making exports less competitive.
Trump has also promised to revive manufacturing, even negotiating directly with Carrier to preserve an Indianapolis plant that had been set to move jobs to Mexico. A stronger dollar could complicate prospects for the sector.
“They have to tread very carefully now, because if the dollar were to appreciate a lot it could be a distinct disadvantage to manufacturing,” said Kathy Jones, chief fixed-income strategist at Charles Schwab & Co., which has $2.7 trillion in client assets. “It’s a very tricky situation. If I were in Mnuchin’s shoes, I wouldn’t say too much one way or another.”
No smoke detectors were found in an Ohio house where a fire killed two adults and two young girls in Akron….
⇧ Seattle Minimum Wage Experiment is Over – The Big Picture
The unemployment rate in the city of Seattle — the tip of the spear when it comes to minimum wage experiments — has now hit a new cycle low of 3.4%, as the city continues to thrive. I’m not sure what else there is to say at this point. The doomsayers were wrong. The sky has not fallen. The restaurant business, by all accounts, is booming (in fact, probably reaching a saturation point when one looks at eateries per capita). I think it’s safe to say we’ve got enough data — over almost two years now — to declare that Seattle has not suffered adverse consequences from its increases in the minimum wage, and has certainly not experienced the dire effects foretold by the anti-min wage crowd [primarily libertarians].
⇧ This Country is Mopping Up Trickle-Down Economics – Bloomberg
“The model we have here is effectively ‘trickle-down economics,’ with benefits to the rich expected to reach everyone else as the economy keeps growing,” said Karsten Staehr, Professor of International and Public Finance at the Tallinn University of Technology. “Now we don’t have high growth any more, this is losing appeal.”
Advocates of flat tax rates, such as the late Nobel Prize-winning economist Milton Friedman, say they boost government revenue by closing loopholes and increase employment by adding incentives to earn and invest more. Opponents complain they actually lower revenue, rewarding the rich at the expense of the poor and curbing funds available for public services.
Former Estonian Prime Minister Mart Laar, who introduced the flat tax, says he only did so after reading a textbook by Friedman and assuming its ideas had been implemented in the West, where nations have by now largely shunned such thinking.
⇧ Keen, Hudson Unpick Historical Path to Global Recovery | Michael Hudson
This is a great interview. I can’t begin to express how much I learned, but that’s been my entire experience concerning Michael Hudson (and Steve Keen).
Unfortunately, the reader might stop reading where the text seems to be repeating. The “Highlights” section doesn’t say where it ends. Well, it ends right before this line:
Steve Keen: Often you’ll see somebody who’s a public speaker
So, do a text search on the text of that line and you’ll be there.
… all reformers — the classical economists were reformers. They wanted to free industrial capitalism from feudalism. They wanted to get rid of the landlords who’d conquered the land. They wanted to get rid of the monopolists.
And all of the reformers, including you and me, look at the — we have a picture of the overall economy, because we’re showing how something whether it’s bad or good will affect the overall economy. The anti-reformers have something in common — a methodology.
And the methodology is very narrow minded. Only look at the market as the whole economy. Only look at individuals. So an individual will borrow from another individual.
Not looking at banks. Not looking at how the flow of interest and financial gains and capital gains do not appear in the national income. And yet that’s what the name of the game is capital gains, making asset price inflation. We look at the whole economy. But the Austrian School, the Chicago School, the Neoclassical School, the neoliberals carve things up only as how individuals make their money. And that’s really the difference.
Once you can get students to adopt this narrow, tunnel-visioned methodology, they’re not going to see what you and I are talking about, which is the whole society. And that’s what all of the classical economists were talking about. Pro and con. From Smith, Malthus, and Ricardo — they had a great debate between Malthus and Ricardo. It was something that took me a long time to get through. John S tuart Mill. And it all led to Marx. And that traumatized.