News: Real Estate, Risk, Economics. Dec. 22, 2017
Linking ≠ endorsement.
- ⇧ Bernie Sanders And The Resurgence Of Socialist Sentiment In America
Let me preface by saying that my aim here is not crass politics but a clearer understanding of political economy.
Okay, here's an author, Ralph Benko, disparaging Bernie Sanders over Bernie's misdefining democratic socialism when Bernie is apparently referring to a strong welfare state with possible social-democratic nationalization of certain sectors that Bernie views as better handled as natural public-monopolies. However, Ralph falls to exactly what Ralph is complaining about concerning Bernie.
Ralph is misdefining the Soviet Union as, or deliberately confusing the Soviet Union with, democratic socialism.
Let me be completely clear. No democratic socialist nation-state has failed anywhere for the simple reason that democratic socialism has never been the national government of any nation-state.
That said, there are democratic-socialist organizations (worker-owned co-ops and other enterprises and organizations) that have done well and for decade after decade after decade.
Let's also remember that socialist (or those trying to become) nation-states are routinely and nearly automatically sanctioned (anti-free-market style) and targeted by mixed economies where capitalists are the plutocratic force making the final decisions.
I am a democrat (small-d).
- ⇧ Thomas fire rages amid longest red flag warning on record
Red flag warnings were instituted by the weather service in 2004 and are intended to alert fire agencies to hot, dry and windy conditions that foster wildfires.
- ⇧ EPA wants lack of transparency over Flint water fixed now | MLive.com
- ⇧ New York Woman Charged With Laundering Bitcoin For ISIS
"[ICOs are] an area that is minimally regulated, both from a security standpoint and the anti-money laundering/Bank Secrecy Act standpoint," he said. "The question here is whether bitcoin provides any unique capability to obfuscate the beneficiary of the illicit funds."
Bitcoin certainly provides the capability to obfuscate the beneficiary of illicit funds.
- ⇧ US becoming 'world champion of extreme inequality' under Donald Trump, says UN poverty envoy | The Independent
The American dream is rapidly becoming the American illusion, as the United States now has the lowest rate of social mobility of any of the rich countries," said Philip Alston the UN Nations Special Rapporteur on extreme poverty and human rights."
He added: "The dramatic cuts in welfare, foreshadowed by President Trump and Speaker Paul Ryan, and already beginning to be implemented by the administration, will essentially shred crucial dimensions of a safety net that is already full of holes."
Plus, we'll get a recession, probably deep. We'll have a President and Congress that won't put through needed fiscal stimulus. We'll have a Fed Chair not interested in protecting the unemployed but who will stick closer to the laissez-faire noise than he should and who will protect the banker class even though it won't be what's best for the American economy.
I hope that won't come to pass, but for it not to will require not going through with Ryan's plans.
- ⇧ SEC.gov | Statement on Cryptocurrencies and Initial Coin Offerings
So nonchalant ...
- ⇧ Bitcoin Eclipses Tulip Mania as Bubble Talk Grows
I don't want to beat this to death, and I really don't even like discussing Bitcoin; but, this is the best overview I've seen, and risk-management includes the subject for a whole host of reasons.
- ⇧ What John F. Kennedy and Donald Trump have in common [wrong]
These guys never give up. Even the Laffer Curve is based upon the premise that taxes can be too low resulting in a slower, weaker economy.
In addition, the super-rich are not doing the same thing with money that they did in JFK's day or even Reagan's.
Plus, Reagan's tax cuts were offset by his tax increases, and the entire Reagan period did not result in the "boom" the Libertarians like to claim it did.
Lastly, there were all sorts of "externalities." I hate the application of that term in this context. It's a euphemism at best. I'm saying that Reagan's deregulation movement, capitalized upon by Bush-41, Clinton, and Bush-43, directly resulted in environmental damage that would not have occurred had Jimmy Carters precautionary-principle plan been accepted and we also wouldn't have had the Great Recession at all had the deregulators not gotten their way.
To be clear, I'm not saying that there were no bad regulations. I'm saying that some excellent regulations were rejected and/or reversed.
The Clinton tax cuts were targeted and his boom was a dot-com bubble that burst.
JFK economics was not Brownback's Kansas economics, Stephen Moore, senior fellow at the Heritage Foundation, appears to be completely hiding.
Also, Mr. Moore wants to ignore that we can have our cake and eat it too, all of us. We don't need taxes to fund government. We need the government to create the money to do that and spend it directly to do it (no Federal Reserve, no borrowing). Taxes would be to keep the economy from overheating and would be applied progressively and evenly while maintaining a guaranteed living-income and additional benefits for those who need that additional assistance.
- ⇧ Net Neutrality Rollback Threat to Real Estate Industry |
The last thing small businesses need today is additional costs and competitive disadvantages that put them on the defensive. This isn't just an issue for Silicon Valley or large telecommunications shops; this is a main street concern that affects businesses and consumers across the country.
- ⇧ CONVERSABLE ECONOMIST: Ricardo's Comparative Advantage After Two Centuries
Most of the time, you can tell what's going on by what is not said. Environmental degradation is not addressed. Unfair exploitation is not addressed. The false "invisible hand" requirement with the comparative-advantage theory is not addressed.
What I'm saying is that the "markets" do not take care of these issues on their own. The greedy take the greatest advantage of the "markets" contemplated in the theory.
Finally, plenty of left-wing populists run exactly counter to Timothy's characterization of them. Rather than blaming foreign laborers, they blame the exploiters, who pit the poorest of the poor, the powerless, against those who've just been stripped of any power, even democratic, on account of the exploitation of the foreign workers.
The progressive left typically calls for fairness everywhere and short of attaining that, short of forcing that through, at least calls for fairness at home.
- ⇧ Social Security Will Be Solvent for the Rest of the Century — Mother Jones
... the 2017 Social Security Trustees report, and it turns out that Social Security will be solvent through the rest of the century.
... if we have 2.6 GDP.
I posted this because Austerians want to privatize Social Security so they can make the money while those currently reasonably protected are economically and financially fleeced in the process. At the very least, Social Security should remain the third rail of politics.
- ⇧ Nearly 1,000 More People Died in Puerto Rico After Hurricane María - Latino USA
Currently, linking a death to a disaster depends almost exclusively on a physician making an annotation related to the hurricane in the death certificate and listing the clinical cause of death, but both doctors and hospitals maintain that their responsibility and knowledge are strictly tied to the clinical cause of death. Furthermore, in most cases, the doctor who certifies the death may not be the same doctor who was in charge of the patient. Most death certificates, therefore, do not include additional information about the other circumstances that could lead to the medical decompensation and eventual death or acceleration of that person's death—such as the stress caused by an emergency; lack of power, transportation services or medications; lack of access to health services; changes in diet; and increases in ambient temperatures, among others.
Are you deeply disappointed by how quickly the mainland seemed to stop rendering enough aid?
Anyway, these people appear to have the right idea about creating an audit trail going forward to help them continually improve responses to, preparations for, and preventative measures against, future catastrophic events.
- ⇧ Cost of Solar Power vs Cost of Wind Power, Coal, Nuclear, & Natural Gas
This is from a year ago, but it's still extremely relevant.
The estimates above are supposedly "unsubsidized," but if you include social externalities as societal subsidies (I do), the estimated costs of fossil fuels and nuclear energy are hugely subsidized in those charts.
A study led by the former head of the Harvard Medical School found that coal cost the US $500 billion per year in extra health and environmental costs — approximately 9¢/kWh ($90/MWh) to 27¢/kWh ($270/MWh) more than the price we pay directly.
That's what I meant when I mentioned "externalities" above. As far as I'm concerned, we're wasting time and the planet while we watch people cling to global-warming-causing fuels. We should have completely transitioned decades ago. We'd be paying a great deal less now in so many ways. It's called vision over greed.
- ⇧ Trump, Real Estate Investors Get Late-Added Perk in Tax Bill - Bloomberg
Pass-through with some caps for certain fields ...
It's all really going to come down to a question of robbing Peter to enrich Paul. What will Paul do with it to benefit Peter? Will it be enough? Will we all really be better off, or don't we care if we're out to get rich?
- ⇧ Germany Joins French-led Moves to Regulate Bitcoin at G-20 Level - Bloomberg
This is like watching snails gunfight.
- ⇧ Kashkari cites rising recession risk in his vote against rate hikes - StarTribune.com
Neel Kashkari is the man. I agree with him completely on this issue and for the same reasons.
- ⇧ Canada Adopts a 'Rights-Based' Housing Policy - CityLab
- ⇧ U.S. rental market more unequal, and for many, more unaffordable - Curbed
HUD estimates that 93 units are affordable for every 100 very low-income renters, but of these, only 54 are both available and adequate. The nation's public housing faces a deferred repairs backlog of $26 billion (last estimated in 2010, so it's likely much worse). Part of the reason it's so important to maintain our affordable public housing is that naturally occurring affordable units have been disappearing at an alarming rate. Roughly 60 percent of the 15 million rentals affordable in 1985—8.7 million units—were lost by 2013, according to Hudson Institute research, due to permanent removals and demolitions, conversions, and gentrification.
- ⇧ Coal Is Fueling Bitcoin's Meteoric Rise - Bloomberg
We're all choking on the libertarian capitalism (economic anarchy): Bitcoin.
I will be so glad when it's gone.
- ⇧ Tax Bill Will Lead to More Automation, Executives Boast to Wall Street Investors
This will happen along with stock buybacks and luxury purchases and spending. It is not sustainable under the current economic order/system.
- ⇧ Southern California Wildfires December 2017 | ALERT™ :: Event Summary
Over the weekend, firefighters continued to attack the Thomas Fire, which has now burned more than 270,000 acres, destroyed 1,024 structures, and is currently the third largest fire in California history.
Drier weather and higher variability of weather patterns often seen as effects of climate change have led insurers to turn to new computer models that provide house-by-house predictions of risk, using factors such as local topography and brush cover, a change from past practices that were based on a region's history of blazes.
I've written many times over the last few years that if society doesn't stop tipping the planet more and more into global warming, we'll find ourselves less and less insurable.
- ⇧ Snow Removal Laws For My Rental Property
Hey, this one actually gets the importance of avoiding liability hazards beyond the obvious.
- ⇧ Scrapping $50B threshold will let 30 big banks off the hook | American Banker
Allowing these banks to once again load up on debt, avoid stress testing, not plan for their orderly failure, and not hold enough liquid assets to meet their obligations during a period of stress simply makes the banking sector vulnerable to another shock.
- ⇧ The Thomas fire is now the second largest in modern California history - LA Times
- ⇧ Drone Tracking Plan Moves U.S. Delivery by Air Closer to Reality - Bloomberg
The report recommends protecting the privacy of drone operators. Their identities wouldn't have to be included in any radio identification broadcast, under the recommendations. That information would only be available to law enforcement or FAA officials under the report's proposals.
One wonders about noise, unauthorized flights, illegal spying, etc.
Of course, there are issues of hacking and crashing. Safety is a major, major concern.
However, the drones will be electric, which could help a great deal to lessen global warming.
Lots of pros and cons to think about.
- ⇧ Attorney for landowners against Keystone XL pipeline call decision 'best possible outcome' | Regional Government | journalstar.com
"We're moving toward much more efficient energy usage," he said. "Pipelines are no longer needed. It's a bad idea to continue to invest in fossil fuel infrastructure."
- ⇧ 'Dream Town': China's Charming Villages | The Diplomat
In the last decade, overzealous local officials and developers went on a debt-fueled building spree that created empty cities with enough capacity to house two billion additional residents.
- ⇧ EU Braces for Brexit by Tightening Rules for Investment Firms - Bloomberg
- ⇧ Tech Companies Coming To Portland For Relatively Low [Office] Rents - Technology
- ⇧ Tax Bill's Cost Could Hit $2.2 Trillion Over Next Decade | Center on Budget and Policy Priorities
... every credible analysis shows that the bill won't come close to paying for itself.
The Republicans know it. They have always used this process to then slash government spending on the poorest of the poor and to drive through privatization. They don't even hide it anymore. Even if they were to try, it wouldn't work. We all know the pattern (those of us who've seen it over and over especially).
Slashing help to the poor will finally undercut the economy and cost vastly more in the longer run. Those who want their "reward" now don't care. They plan on being rich and then dying. Their consciences don't bother them because they don't have working consciences. It's rather sociopathic and sad. I know, that's rough talk. It still must be said.
- ⇧ The Republican tax bill got worse: now the top 1% gets 83% of the gains - Vox
... these tables leave out the effect of millions of people losing health insurance, typically subsidized insurance through Medicaid or the health insurance exchanges, due to the repeal of the individual mandate. That can change the bill from a small net benefit in 2018 for poor families to an overall net cost.
That's just the beginning of making it more expensive for the poor. The plan is to cut the welfare state down without providing any guarantees that the economy will improve enough to make up for the difference and then some.
The deficit hawks will be screaming, including the ones who voted for the cuts that will have caused massive deficit-increases. Rather than rolling back the cuts on the rich, they'll say we can't afford the welfare state.
It's a scam.
- ⇧ Three looming worries for bankers in final tax reform plan | American Banker
This one discusses bank lending for real estate.
The whole tax-cut package is really designed for landlord-investors and those who develop for them. It will cause more renters. That sounds good to the landlords, but it will benefit the larger landlords disproportionately. It will also end up crimping tenants, which will increase headaches for managers.
- ⇧ As Tampa Bay home prices and rents climb, townhomes are becoming all the rage
Townhomes differ from condos in that they are individual houses, typically two stories high, built side by side with one or two shared walls. Unlike condo dwellers, townhome owners hold title to the land beneath their houses; like condo dwellers, they pay a fee for maintenance of common areas such as community pools.
Insurance is different too. Condo coverage might be limited to interior partition-walls "studs-out." The Condo fee would help pay for the Master Policy covering the superstructure (or shell) less the interior partitions. Reading the policies (plural) is a good idea and often required to get the right coverage, which would be to not leave gaps in coverage that could come back to haunt you.
- ⇧ mainly macro: The advantage of a central bank not being 'ahead of the curve'
What I've been driving at for years now:
In 2012 the Riksbank admitted their mistake, and started lowering rates to the new lower bound of -0.5%, where they have been since the beginning of 2016. Having made the error of prematurely raising rates once, they are in no hurry to risk doing so again.
- ⇧ Let it go: The Arctic will never be frozen again | Grist
I remember writing well over a decade ago that human-caused (CO2) global warming will occur and that the scientists' climate models would not be able to keep up with it, get ahead of it, or get a handle on it. AI and machine learning won't do it either. We are entering uncharted territory of our own making. We won't get a handle on things until we stop burning carbon and start sequestering what we already pumped into the atmosphere. There are some interesting and promising other possibilities, but we need to start doing what we know will work now, not wait, not gamble recklessly so deniers (some of them fake) can make billions.
- ⇧ Indiana Board Blocking Residential Carbon Monoxide Detector Rules
The Indiana Apartment Association ... argued ... "it is best to have statewide codes ....
- ⇧ mainly macro: Voting Labour isn't going to turn the UK into Venezuela
Ann Pettifor has an article about why business would do well under Labour, which invokes some of the points made in an earlier Financial Times piece. Once you discount the scare stories, I agree with Ann that the economy and therefore businesses will do much better under Labour than under the Conservatives. But her article contains an interesting remark which I think tells us something about the current leadership. Ann's says
Here I must acknowledge a disagreement with Professor Simon Wren-Lewis, of Oxford University, who advised Labour to adopt a fiscal rule that once again prioritises monetary policy ...
Ann follows the heterodox MMTschool that favours using fiscal rather than monetary policy to stabilise output and inflation. Of course both Ann and I were on Labour's Economic Advisory Council, and so it is obvious that there was a similar discussion in this group.
The fact that McDonnell chose a more conventional but still innovative approach (which happened to be the one I put forward), and has also stressed the importance of central bank independence, shows us two things: he has a distinctly conservative streak, and he wants Labour not only to win but to be successful in economic terms.
If Simon does say so himself. Ha! Actually, the thing is, Ann's right. The fiscal approach is vastly superior to monetarism. It's a banking-elite issue. Ann is more against them than is Simon.
Simon is a technocrat. He's for technocracy over grassroots democracy. He doesn't believe most people have the time or inclination or aptitude, etc., to become "expert" in economics, even though the "experts" routinely make a mess of it for banking-elite reasons and we've never, as a society, attempted to create a fully informed electorate. In other words, we've never voted to have ourselves informed.
Of course, we've never had a chance to do so. The elite have always been in power or fairly quickly regained power everywhere once any elitists ever held power.
- ⇧ Bitcoin Intensifies Pain for Some as Ransom Demands Skyrocket - Bloomberg
Utterly disgusting, energy-hogging, CO2-polluting, money-laundering, anarcho-capitalist (criminal) cyber"currency" (also causing hackers to use other people's computers to "mine" the junk), never should have been invented and should have been shutdown by all governments the moment it showed its ugly, greedy head.
- ⇧ Nuclear regulator downplays safety warnings
Employees from U.S. nuclear power plants filed nearly 700 complaints with the United States Nuclear Regulatory Commission in recent years, claiming retaliation for raising safety concerns, records show. The agency found no wrongdoing.
Is there regulatory capture by the industry?
Regardless, the system is aging and we see leaks reported in various places. Besides the plants, there are mining issues, transportation issues, and waste issues. Frankly, it makes zero sense for the US not to completely replace all nuclear-power plants with clean, safe, alternative energy and do so on a crash course fully subsidized.
- ⇧ Will the Tax Bill Prove Too Much of a Good Thing for the CRE Industry? | National Real Estate Investor
Industry analysts predict the new tax code will strengthen demand in the multifamily sector and spur corporations to put more money into real estate assets and new development.
That's what I wrote above before seeing this article.
I like this from Jim Costello:
The reduction in the depreciation period is a point of concern for Jim Costello, senior vice president with research firm Real Capital Analytics (RCA). He notes that a similar measure enacted as part of the 1981 tax reform package led to over-building and an eventual real estate bust. "In this world of low yields and high prices, investors may take on more risks to generate their needed returns, so does development come on strong again?" Costello asks.
When it comes to the bill's impact on the larger economy and the hope that it will spur greater economic growth and the creation of new jobs, the reasoning "does not hold water," according [to] Costello. "The only way to generate stronger growth is through productivity improvements and that comes from investment in infrastructure, plant and equipment. Corporations already are swimming in cash and are not investing," he says.
This article on "The Enlightened Economist" blog has a point but misses points on the other side. The real issue has been neoclassical ideology supported by overreaching and/or myopic statistical analysis versus political economy and actual history of what has happened in economies and why. By missing that, it's on the defensive attacking a strawman rather than simply acknowledging that the field in general was severely misguided but is starting to snap out of it somewhat. Plus, the issue is between technocracy versus fully informed democracy. The facts about how money is created and why such money is mostly debt is something the field has hidden from the public not because the public is too stupid but because there are better monetary systems than what we have that should be democratically decided under full transparency rather than protecting the usurious elite.
- ⇧ Instead of Boosting Working-Family Tax Credit, GOP Tax Bill Erodes It Over Time | Center on Budget and Policy Priorities
... a married couple making $40,000 with two children would see their EITC shrink by $322 in 2027 (from $4,974 to $4,652).
Does that fit the income profile of any of your tenants? If so, won't that make it more difficult for your business investment to manage?
- ⇧ Why it's impossible to predict the effect of the tax bill on investment and growth - MarketWatch
Roman Frydman and Edmund S. Phelps:
... jettisoning the pretense that our macroeconomic models can generate reliable quantitative predictions spanning decades does not make economic knowledge irrelevant for understanding outcomes or the impact of this or that policy change. But it does mean acknowledging that the most that our mathematical models can deliver are qualitative predictions regarding the direction of change.
- ⇧ How tax overhaul would change business taxes - Journal of Accountancy
Gauging from this linked overview, software that renders "what-ifs" (financial/tax planning and estimating) will need extensive updating.
- ⇧ What the tax reform bill means for individuals - Journal of Accountancy
Behavioral economics is going to have a hay day. What will people do with any reduction in taxes? Will they save it or spend it on consumer or other goods or services? Will they pay down debts? Will rent increases or other inflation eat it? Will inflation even go up that much?
- ⇧ Complete guide to buying rental property | Mortgage Rates, Mortgage News and Strategy : The Mortgage Reports
What holes do you spot in this beginner's guide.
- ⇧ Efforts throughout county target blighted properties - News - Citizens' Voice
- ⇧ The Latest in Apartment Technology: Fridge Cams and Robotic Valets - The New York Times
It's getting to the point where things will be obsolete before they're rolled out. There's no discussion of the security ramifications of the features mentioned. Are they protected? If so, for how long? How upgradeable are they?
- ⇧ California Commissioner Asks Insurers to Forego Detailed Home Inventories in Wake of Wildfires
In the longer run, this could increase premiums; but, it sounds like the right thing to do right now regardless.
- ⇧ 18 states will increase their minimum wages on January 1, benefiting 4.5 million workers | Economic Policy Institute
... the current federal minimum wage of $7.25 is simply too low. If it had kept up with productivity since the late 1960s, the federal minimum wage would be worth about $19 an hour in 2018.
- ⇧ Keynes' intellectual revolution | Real-World Economics Review Blog
The "loanable-funds theory" is something that may not stick with you. It's not intuitive. In a nutshell, the idea is that banks are intermediaries only and only lend out deposits.
There are several problems with the terminology. Another thing called a theory is "fractional-reserve banking." In that theory, banks may create credit/loans/money as the principal part of a loan at a ratio of about 10 to 1. That's ten times more credit created than reserves (deposits). That ratio is actually the Federal Reserves published ratio, but Modern Monetary Theory says that it's not as it seems. MMT says that the credit can come before the deposits and that the central bank (the Fed) will create the reserves at will. In addition, banks borrow from each other to meet the required reserves. They borrow other banks' excess reserves, of which there is plenty.
Therefore, don't feel stupid or ignorant if some of this arcane argumentation throws you later even though you've heard it all before. Just drill into your head that commercial banks create money and that the Fed is not transparent concerning enforcement of its stated ratio and can also create money at will. The Fed's QE is not the federal governments' national debt.
It would still all be hush-hush except for the Internet and net neutrality.
- ⇧ The Dangerous Myth of 'Taxpayer Money'
... in one fell swoop.
That's the first time I think I've ever seen anyone else say that that's the way we could fund eliminating poverty and do everything else we want. I've been pushing it for many, many years now via that exact expression: one fell swoop.
That said, taxes do not destroy money. It can. Mostly, it recycles money that was created as stated in the article. The government could tax all the money, wipe the books, and create all new money to replace it and more. In some accounting sense (limited household superimposed on our fed government) it looks as if taxes destroy the money. That's only to mask the process of money creation in the first instance. Don't get hung up on it. It's irrelevant.