News: Real Estate, Risk, Economics. Jan. 5, 2018

⇧ Hot off the Press: Real Estate Loopholes and Limitations in the New Tax Bill
Amanda Han has done a very nice "plain-language" overview of the upcoming tax changes. She will definitely be refining her list as we go forward. I'd read over a dozen detailed articles on the changes, and this is by far the clearest. She also mentioned several tips that simply weren't mentioned anywhere else that I saw.
⇧ Thomas fire becomes largest wildfire on record in California - LA Times
⇧ Landmarks in ashes, and of memory, confront fire victims in a traumatized Ventura - LA Times
Most insurers cover two years of rent and give homeowners two years to replace their belongings. Those who are displaced feel the pressure. With all the damage and the work that lies ahead, they anticipate a bottleneck of demolition and construction.
They put together lists: Call the assessor. Stop at the bank. Talk to the insurance adjuster. Tally everything that they have lost.
⇧ 6 Top Trends in Kitchen Countertop Design for 2018
1. Quartz is Here to Stay
⇧ How to Avoid Renovation Mistakes on Your Rental Properties
Analyze and simply fix and repair units for maximum cash flow. Aesthetics can get landlords in trouble.
That depends upon the neighborhood and individual property. That said, it does sound like he over did it, as he related.
⇧ wbir.com | Sheriff: Ky. woman killed after pit bulls attack couple on a walk
The husband shot the dogs that killed his wife. One dog got away.
How long are we going to have to put up with this? The breed is not the same as other breeds but simply poorly trained. Plenty of completely trained pit bulls that have not been abused or taught to attack people have turned on their owners causing major injuries and even deaths. The breed has been documented as killing little children for no apparent reason other than fighting is bred into the dogs' very DNA.
It is not the only breed of dog designated by most insurance companies as too dangerous to underwrite, but statistically, it is the worst of them: most dangerous, unpredictable.
⇧ 7 Things That Could Make Bitcoin Crash to $1,000 or Less — The Motley Fool
It takes 78 minutes to process the average bitcoin transaction, according to Blockchain.com, but this has recently spiked to as long as 1,188 minutes (almost 20 hours) during peak volume times.
...
... People are paying $28 for the average bitcoin transaction right now, and are even paying exorbitant fees on small transactions, like sending $100.
That's not to mention the massively disproportionate energy consumption, the hacking (ransomware, cryptojacking), the increase in CO2 (global warming), the money laundering, the tax evading, etc.
⇧ Mobile Homes Are So Expensive Now, Hurricane Victims Can't Afford Them - Bloomberg
⇧ How Regulation Subsidizes Big Finance
In a nutshell, bank capital-requirements are way too low.
This regulatory model thus concedes at the outset that financial systems are inherently disaster-prone (since it is the extreme leverage of financial institutions that makes them vulnerable to runs and systemic crises) and then tries to prevent such calamities through a combination of prudential regulation and safety nets to protect creditors. As the sorry record of rolling crises and near-crises in this country and around the world attests, this regulatory model fails to deliver the stability it promises.
Rather than just higher capital-requirements, a way to dissuade executives from excessive risk taking on account of moral and morale hazards would be to have claw backs on personal compensation, terminations of executive employment (fire them), and nationalizations, even if temporarily, of insolvent "too big to be allowed to fail" institutions.
⇧ Federal Reserve Bank of Richmond, Working Paper, Understanding the Size of the Government Spending Multiplier: It's in the Sign
So, I looked at the full text so you wouldn't have to. Here's the main idea that matters:
We find no evidence that increases in government spending have larger multipliers during a recession (in fact, the multiplier is consistently below 1) and thus no support for stimulus programs in times of recession. However, we find that decreases in government spending during recessions have the largest multiplier, which suggests that austerity measures during recessions can be especially harmful.
Here's my question. If fiscal spending has always been too low to gain a significant multiplier, how can they conclude what they have without qualifying it? Why do I determine that they're wrong without doing all their math? Their conclusion is illogical. If private investments are done correctly, they lead to more return then put in. There is no difference in the money or the investment if done publicly. It's all in the investment/management, not the source of funds.
⇧ US Tax Cut and Rate Hikes Threaten China Currency | China economy | The Epoch Times
This is an interesting argument. I tend to agree with it.
I see hot money inflows into US Treasurys as a safe haven. Bond prices go up. Yields come down. The Fed scratches its head. The superrich lavish themselves rather than form capital for real-economy investing. Growth doesn't do nearly as well as the trickle-down pushers claimed it would. Wage pressures remain low. Price inflation is nothing to fear for the foreseeable future. Things could easily tip to deflationary recession again. Voters turn hard left, but fiscal monetarization is still not on the agenda enough, as the left is still co-opted by the banking industry's core (The Federal Reserve System and the commercial banks that feed it).
⇧ One dead after Christmas morning fire near Columbus Circle | New York Post
There should be an alarm system.
Yes.
⇧ Christmas tree causes deadly house fire in Harnett Co.
⇧ Corporations Hoard Their Trump Tax Windfall - YouTube
In the interest of telling the truth regarding economics:
After President Trump signed the GOP tax plan into law, some of the bill's corporate beneficiaries have offered workers minor bonuses. But economist Bill Black says they're keeping most of the money for themselves — and starting a new global race to the bottom for corporate taxes.
⇧ ADPVoice: Small Business HR And Hiring Challenges
What I've been saying:
... four primary areas of criminal activity lend themselves to cryptocurrency: tax evasion, money laundering, contraband transactions, and extortion — not to mention the theft of cryptocurrency itself, which is all too easy with Bitcoin.
The stuff is nasty. I disagree that it should be regulated but allowed. Allowing it adds to its value for crime. Making it illegal singles out those using it, having it, etc. It makes things much clearer. It makes criminals much easier to find, trace, etc. Converting it would be illegal. That way, it wouldn't be any good in the real economy. Those living lavishly without any real-economy activity would be suspected with probable cause on its face.
⇧ At least 12 dead in New York City apartment fire | Fox News
Tragic!
⇧ Trump Rolls Back Offshore Safety Rules Born From BP Oil Spill - Bloomberg
"By tossing aside the lessons from the Deepwater Horizon oil spill, Trump is putting our coasts and wildlife at risk of more deadly oil spills," Miyoko Sakashita, director of the oceans program at the Center for Biological Diversity, said in a statement. "Reversing offshore safety rules isn't just deregulation, it's willful ignorance."
I find anti-environmentalism to be incomprehensibly evil. The whole planet is in a severe downward environmental spiral. The regulations put in place and enforced have helped immensely to slow the rapidness of that spiral, but not stop it. Other new threats appeared that have gone completely unregulated. The powers that be have typically been quite backwards (selfish and greedy) on the subject.
⇧ Property118 | Jeremy Corbyn wants to scrap 'No Fault' evictions in England and Wales - Property118
⇧ China's Shenzhen city electrifies all 16,359 of its public buses
Well, at least they're heading in the right direction on this.
⇧ Toddler Playing With Stove Sparks Apartment Blaze That Kills 12, NYC's Deadliest Residential Fire in Decades - NBC New York
⇧ 6 Ways the New Tax Law Will Impact Individual Real Estate Investors
This article was updated after the tax bill was signed into law.
It's a good overview but way to rosy concerning the notion of trickling through the whole real economy. The Phillips Curve is nearly stuck due to all sorts of downward pressures on working-class wages. Automation really is going to continue taking rather than increasing jobs. Education will not make up the difference. The rich have a vastly reduced propensity to spend in ways that boost the main-street economy. The tax cuts should have been at the bottom to really make a difference. People making below $20 an hour fulltime shouldn't pay any income taxes.
⇧ Incomes Grew After Past Tax Cuts, but Guess Whose - The New York Times
For one in two Americans, though — those in the bottom half of the income pile — income actually shrank on Reagan's watch. In 1980, the year he was elected, they earned $16,371 a year on average, in today's dollars, according to the World Wealth and Income Database. By 1988, Reagan's last year in office, they had to make do with $16,268.
⇧ Real Estate Tip: 1031 Delaware Statutory Trusts
⇧ UK's poorest to fare worst in age of automation, thinktank warns | Technology | The Guardian
The mainstream is always too rosy about this. It's time to face the fact that a guaranteed living-income is inevitable as simply the first step to a moneyless society.
⇧ Federal Reserve Bank of St. Louis admits federal "debt" is not a real problem -#Monetary Sovereignty - Mitchell #Monetary Sovereignty — Mitchell
Almost 100% true but we don't need a debt regardless. It only benefits "lenders."
⇧ Seattle extends its run as the nation's hottest housing market — but we may be starting to cool | The Seattle Times
Read the article and ask yourself why things are slowing now when they used to crash before. What's the answer?
Construction. Before, it was build, build, build to keep up with the subprime bubble and the rest. This time, prices went up but construction wasn't feeding liar's loans pushed by fraudulent lenders using robo-signers, etc.
⇧ China puts US$15,000 annual personal cap on overseas bank card withdrawals | South China Morning Post
New limits on the amount of money people can withdraw from their Chinese bank accounts while overseas will come into effect on Monday, in the latest move by Beijing to tighten its capital account controls and curb money outflows.
Under the new rules individuals will be allowed to withdraw a maximum of 100,000 yuan (US$15,000) a year, regardless of how many separate bank accounts or ATM cards they have ....
⇧ Beware the dangerous orthodoxy of neoclassical economics | Letters | Education | The Guardian
Quite so.
⇧ r* and the range of irrelevance - Philosophy of Money
This is an extremely non-arrogant article. It asks tons of questions (and there're more). There is nothing similar to the simplicity of E=mc² concerning the "real" interest rate. There is no real interest rate. There is no equilibrium without perfectly reading the future and then some.
⇧ US apartment vacancy rate rises in fourth quarter
⇧ $180bn investment in plastic factories feeds global packaging binge | Environment | The Guardian
Many people invest with an eye to early retirement and getting what they want in terms of life style; however, many also think about creating an environment for their children and even grandchildren. Well, what good is it to amass a fortune in dollars only to leave behind a cesspool for offspring to live in, surrounded by it, killing them?
This plastics situation is completely out of hand. It's as if some people are trying to kill us off. What kind of mentality is it that, at best, doesn't care or can't see the evil in it?
⇧ Scotland united in curiosity as councils trial universal basic income | UK news | The Guardian
When it works, and it will if they don't shortchange it, there will be all sorts of complaints that it's working. The complainers will strive to undercut it. Now, tell me why.
⇧ 2017 was a great year to be rich - Dec. 26, 2017
The rich generally can't, and don't try to, spend it all. They simply amass more and more on purpose. That's why trickledown doesn't even start.
⇧ J. D. Alt: The New Poverty | naked capitalism
Why is everyone for guaranteed income stuck in this subsistence, basic, poverty-line thinking? What do they think would happen if the income were twice that, the world would end, the economy would blow up? How many of them are afraid of not being rich enough relative to the masses? How many of them are simply hung up on their egos? I'm not saying this author, J. D. Alt, is, but there are just way too many people hammering on basic to the exclusion of twice or three times that as perfectly viable options (better options).
⇧ Student Debt Slavery: Bankrolling Financiers on the Backs of the Young | WEB OF DEBT BLOG
The only reason we don't have free college through graduate school is we lack sufficient democracy and transparency. With sufficient democracy and transparency, the people would give themselves free educations through as far as they could do the school work. They would do it by just doing it, no questions about who would be paying for it, as they would know that they could simply create the money to fund all of it. They'd also know that the boost in money would be matched by the boost in productivity via vastly better-educated people and the automation they'd create to do all of the mandatory tasks, including cleaning up every last bit of the pollution humanity has caused since the beginning of time.
We lack sufficient democracy and transparency because selfish, and frankly, stupid people are in control.
They are in control because they have historically been more violent and coercive, undeservedly granting themselves authority to lord it over their betters.
That turns things right-side up for a change, doesn't it.
We need radical change to avoid driving ourselves into extinction (and much sooner than later).
It's risk management at the existential level.
Read Ellen Brown's article. She's an excellent researcher who pulls the pieces together to paint the big picture.
⇧ Why 3-15 Unit Buildings Offer the Best Returns for Investors
Does a 15-plex merit a live-in manager/custodian? If so, what would be the compensation? Would it be free rent and a fixed utility-allowance but no money? That arrangement might not work for someone who doesn't already have a paying pension or the like. It might work well for a couple where one of them works outside the complex for someone else. Screening the manager/couple during the hiring process would be extremely important.
⇧ Hundreds of Superfund Sites Face Flood Risks
In Houston, more than a dozen Superfund sites were flooded by Hurricane Harvey, with breaches reported at two. In the Southeast and Puerto Rico, Superfund sites were battered by driving rains and winds from Irma and Maria.
These Superfund sites are ridiculous that they been allowed to exist without being cleaned up and properly handled. It's decade after decade after decade that we've just procrastinated (if even that). It's more like we've (the powers that be) never had any real intention of actually cleaning them up. To me, it's sociopathic.
⇧ Christmas Eve Apartment Fire in South Carolina Leaves 54 Homeless
... investigators say was intentionally set.
If that's true, someone needs to be institutionalized in a secure facility and treated for severe mental illness.
⇧ South Korea Sets Date for Anonymous Crypto Trading Ban: Report - CoinDesk
Smart move.
⇧ Employee ownership gives power to the people, not corporations - Baltimore Sun
I have been for this since the first time I even heard of them many decades ago.
Broad-based employee-ownership is a proven strategy to build assets for workers, retain jobs in our neighborhoods and provide a meaningful and financially rewarding exit for retiring business owners. Employee-owned enterprises perform better in terms of productivity and sales growth, and they also tend to be greener and more socially just than traditional businesses. ... they maintain employment during downturns.
⇧ 23 injured in seven-alarm blaze in the Bronx | New York Post
This fire comes just days after 12 people were killed at 2363 Prospect Ave. in The Bronx — the city's deadliest fire in more than a quarter-century.
⇧ The Hidden Cost of Bitcoin? Our Environment.
So, my consistent readers know that I have literally hated Bitcoin from the first and for a whole host of reasons, one of which is it's AGW aspect. Well, this article addresses that fairly well. I know I need to understand more about the whole crypto-money idea and possible employment, as many nations are tackling the issue concerning regulation, taxes, money-laundering, energy consumption, speculative bubbles, etc.
Proof of stake, per se, appears a vastly superior way to go versus the Bitcoin "mining" method. That doesn't address every issue though, but perhaps national currencies or a single global-currency (my choice) can employ the technology or build upon newer concepts that will arise.
⇧ Non-mineable cryptocurrencies & their plans for the future
This one gave me a deeper dive into Proof of Stake in the cryptocurrency sphere.
I can see why banks are looking at Ripple's underlying technology or being willing to test via the Ripple platform.
"Know Your Customer" in banking and transaction clearing is critical if we are going to combat global crime. That has to be built in before I get on board.
⇧ NYC's arctic chill prompts nearly 6,000 heat complaints - Curbed NY
New York City:
Property owners are required to provide tenants with heat between the hours of 6 a.m. and 10 p.m; if outside temperatures drop below 55 degrees, inside temperatures must be no lower than 68 degrees Fahrenheit. Between 10 p.m. and 6 a.m., inside temperatures must be kept no lower than 62 degrees.
⇧ Brits Pay Five Times As Much On Rail Fares Than Europeans, Research Finds
Privatization often stinks. This article offers a prime example.
... ultimately the government need to take our railways back into public hands. That will stop hundreds of millions being siphoned off by private rail firms, and allow us to put passengers first."
'All talk no trousers'
The TSSA trade union's General Secretary, Manuel Cortes, said: "Every year UK passengers are forced to pay more to Holland, Germany, France and Italy all of whom currently own our train operating companies.
"Yet, it's all talk and no trousers when it comes to taking back control from the foreign companies who own large swathes of our infrastructure including our railways. Money made out of passengers here is invested in fare subsidies there."
⇧ The tax bill should've been called The Inequality Exacerbation Act | TheHill
This article really boils it down.
⇧ Commercial real estate comes out on top in tax law overhaul | Real Estate | Dallas News
Multifamily looks to be a winner — at the expense of single-family residential — especially in states and municipalities with high state and local taxes.
⇧ 18 states will increase their minimum wages on January 1, benefiting 4.5 million workers | Economic Policy Institute
If it had kept up with productivity since the late 1960s, the federal minimum wage would be worth about $19 an hour in 2018.
⇧ Critical flaws revealed to affect most Intel chips since 1995 | ZDNet
Heads up.
⇧ TAWC Shares Tips on Preventing Water Pipes from Freezing and Breaking - East Ridge News Online
⇧ How Polanyi best explains Trump, Brexit and the over-reach of economic liberalism — Prime Economics
So, Polanyi asked, can America avoid the anti-democratic, fascist turn? The answer comes down to making the democratic state the master, not servant, of the financial markets....
Actually, no, it doesn't come down to that. It comes down to democracy versus capitalism and capitalistic markets. With real democracy, we all can have our cake and eat it too.
⇧ Leader of arson scheme to collect insurance money sentenced to 40 years | WTVR.com
⇧ North America Pounded by Disasters in 2017
It was a relatively calmer year globally but not here in the US.
⇧ Disasters Affected 8% of U.S. Population in 2017, FEMA Notes in Review of Historic Year
⇧ Why Our Oceans Are Starting to Suffocate | At the Smithsonian | Smithsonian
⇧ Girl, 13, dies from CO exposure in Perth Amboy | NJ.com
⇧ global battle of tax codes: the US and China just upped the arms race
... the two largest economies in the world are not alone in a battle of tax codes — commonly deemed a race to the bottom.
⇧ Modern economics — an intellectual game without practical relevance | LARS P. SYLL
Stupid models are of no help in understanding the real world.
That's true, except for understanding why mainstream-neoclassical economists typically get things so terribly wrong.
That said, there are macroeconomists and others working on tweaking models to bring them into the 21st century. Let's pray they get them properly tweaked before the 22nd.
Frankly, tweaking really isn't going to cut it. Fortunately, there are great economists really driving that point home.
Political economy and the philosophy of economics are foundational. If one doesn't see the history of economic events in their full context, one isn't going to be able to predict anything better than via picking daisy petals.
⇧ L.A. races to fix vulnerable buildings before next major earthquake
The deadly nature of brittle concrete buildings became clear in Los Angeles nearly half a century ago, when 52 people died in the collapse of several concrete structures, including hospital buildings, in the 1971 Sylmar earthquake. Concrete buildings fell again in 1994 during the Northridge quake. Efforts in the 1990s to fix the buildings died amid concerns from property owners about the costs.
Brick and wooden structures must meet standards too.
⇧ New Year's Fireworks Cause $1.2M in Damage in Texas' Harris County
⇧ Epic Winter Storm Brings Car Wrecks, Broken Water Mains, Power Outages to Southeast
A storm is a bomb — or bombogensis happens — when it drops 24 millibars of pressure in 24 hours.
⇧ Employment Situation Summary
Total nonfarm payroll employment increased by 148,000 in December, and the unemployment rate was unchanged at 4.1 percent. Employment gains occurred in health care, construction, and manufacturing.
...
In December, average hourly earnings for all employees on private nonfarm payrolls rose by 9 cents to $26.63. Over the year, average hourly earnings have risen by 65 cents, or 2.5 percent. Average hourly earnings of private-sector production and nonsupervisory employees increased by 7 cents to $22.30 in December.
That was the good news, barely.