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⇧ EF3 Tornado Touches Down in Wyoming For the First Time in Over 30 Years
⇧ Interviewing a New Tenant? It’s Trickier Than You Think
This can actually save you premium dollars as well if any of the violations are covered risks of loss in any of your policies and claims are made against you for them. You’ll be better equipped to defend your actions and protect your loss history.
⇧ Universal credit changes will bar 2.6 million children from free school meals, warns Labour
… Mrs Rayner will urge the Government to adopt Labour’s plan for free school meals for all primary school children.
No matter how long I live, I still can’t fathom adults who think enriching the few while impoverishing so many is sound policy. I realize there are callous souls; but, honestly, where do they come from?
⇧ “Creating Wealth” through Debt: The West’s Finance-Capitalist Road
Rejection of classical value theory’s focus on economic rent — the excess of market price over intrinsic labor cost — underlies the post-classical concept of GDP. Classical rent theory warned against the FIRE sector siphoning off nominal growth in wealth and income. The economics of Adam Smith, David Ricardo, J.S. Mill and Marx share in common the view that this rentier revenue should be treated as an overhead charge and, as such, subtracted from national income and product because it is not production-related. Being extraneous to the production process, this rentier overhead is responsible for today’s debt deflation and economically extractive privatization that is imposing austerity and shrinking markets from North America to Europe.
The West’s debt crisis is aggravated by privatizing monopolies (on credit) that historically have belonged to the public sector. Instead of recognizing the virtues of a mixed economy, Frederick Hayek and his followers from Ayn Rand to Margaret Thatcher, Ronald Reagan, the Chicago School and libertarian Republicans have claimed that any public ownership or regulation is, ipso facto, a step toward totalitarian politics.
Don’t make the mistake of thinking that Michael is saying that there is no way for the FIRE (Finance, Insurance, and Real Estate) sector to exist without running afoul of sound economics. He’s simply drawing attention to debt overhang being a drag on economic growth in the real, rather than finance, economy. In Michael’s world, finance would be usury free (interest free) and publicly owned. In that world, real estate certainly wouldn’t be an exacerbating drag. RE wouldn’t have debt that would compound and eat up all capital.
Anyway, the most important issue in economics is where the money originally comes from: how it’s created and distributed. The “rentier” class wants to make money without working for it ever. The commercial bankers loan at interest, creating credit that is money in the accounts they open and hold for the borrowers. Governments borrow to create money by issuing bonds that pay interest. They do that for zero good reason. They let the commercial-banking sector control even that function.
Most real estate investors visiting this site are hardworking and do want to retire but are willing to work for it. Michael isn’t putting them down and neither am I.
I offer insurance, which is a shared burden and for which we take a cut in the form of commissions for the work and service provided. It’s not quite on the same level as lending at interest.
As for note buyers and hard-money lenders in real estate, they didn’t invent the system they found themselves born into (our somewhat mixed economy skewed way over to the laissez-faire capitalist rentier side of things). They too often just want to make a decent living and often work hard to not end up bankrupt.
This is absolutely true:
… particularly in a rich country like the United States, the persistence of extreme poverty is a political choice made by those in power,” Alston wrote. “With political will, it could readily be eliminated.”
It could be done without the economy losing a beat. In fact, the economy would benefit immensely.
⇧ The big con: how neoliberals convinced us there wasn’t enough to go around
Different governments in different countries make different decisions at different points in time. While much of neoliberalism’s rhetorical power comes from the assertion that “there is no alternative,” the simple fact is that the world is full of alternatives. …
… For the past 30 years, Australians have been told that we can’t afford high-quality public services, that public ownership of assets is inefficient, and that the pursuit of free markets through deregulation would create wealth and prosperity for all. But none of this is true.
… neoliberal ideas such as deregulation were never aimed at powerful interest groups like the pharmacists or the gambling industry. And savage spending cuts were never aimed at subsidies for the fossil-fuel industry or private health insurers.
The political strategy behind these contradictions is simple: it is difficult to criticise government spending on health and education, or popular regulations like consumer protection and limits on executive pay. So why not just criticise all government spending and all red tape in general? Once you have convinced the public that all government spending is inefficient, you can set about cutting spending on your enemies and retaining it for your friends. And once you convince people that all regulation is bad, you can set about removing consumer protections while retaining the laws that protect the TV industry, the gambling industry, the pharmaceutical industry and all your other friends.
When powerful groups want subsidies, we are told they will create jobs. When powerless groups want better funding for domestic violence shelters or after-school reading groups, they are told of the need to reduce the budget deficit. When powerful groups demand new regulations, we are told it will provide business with certainty, but when powerless groups demand new regulations, they are told it will create sovereign risk.
⇧ Economics can no longer live with this sort of … completely rubbish approximation to the truth
… we can no longer live with this sort of completely rubbish approximation to the truth.
Commercial banks create money when they extend credit (make loans), period!
⇧ Business economists worry about possible recession in 2020
You all know I’ve been there all along, ever since Trump’s tax cuts. We have a huge debt overhang that’s only getting worse in government and the private sector. Meanwhile, Trump’s moving to slash the poors’ ability to spend to increase demand. Supply is no good if nobody can afford to buy.
… many private analysts are more pessimistic, noting that underlying factors such as the retirement of the baby boomers and weak productivity gains will continue to depress long-term growth prospects. The private forecasters believe the positive effects from the Trump tax cuts will quickly fade after the first two years.
Asked when the next recession might begin, two-thirds of the NABE economists saw one starting by the end of 2020, with 18 percent even more pessimistic, expecting the next downturn to begin by the end of 2019.
⇧ A guide to rent control in Los Angeles
⇧ The secret to stopping the robot apocalypse? Popcorn butter.
Amazon is just afraid to admit the truth that robots are going to replace Amazon workers, all of them.
⇧ The Roots of Argentina’s “Surprise” Crisis
The government undertook a new macroeconomic approach based on two pillars: gradual reduction of the primary fiscal deficit, and an ambitious inflation-targeting regime that was supposed to bring annual price growth down to a single-digit rate in just three years.
Markets cheered. The prevailing view, eagerly promoted by Argentina’s government, was that the country had done what was necessary to achieve sustainably faster economic growth. Presumably, foreign direct investment would flow in. But it did not.
Instead, Argentina suffered stagflation in 2016, followed by a debt-based recovery in 2017. That led to a surge in imports that was not accompanied by a proportional increase in exports, widening the current-account deficit to 4.6% of GDP and sowing doubt about the virtues of the new approach.
Hardly a surprise.
⇧ A Globalisation For People, Not Business
Free trade between countries with very different labour standards creates a trend towards generally lower standards. Cheaper overseas labour will oust more expensive labour at home driven normally by the greater competitiveness of foreign firms. The same applies to environmental standards. Lower standards, by imposing fewer costs on firms, tend to displace higher ones. Both effects reduce the welfare of an economy with at least initially relatively high or simply different labour and environmental standards.
The author thinks that’s news; however, it’s exactly why I opposed NAFTA.
⇧ The Market Police
Read this article to understand where the Austrian School of Economics came from, out of what frame of mind: anti-democratic hierarchy. In other words, it came from the idea of liberty for the rich and servitude for the rest.
In a democratic state, a planning apparatus developed to mobilize in war or cope with economic crises may easily be redirected to serve a broader agenda.
That’s what the libertarians are afraid of.
⇧ How to Leave the Euro
I oppose land taxes (Georgism) because it will pull the land out from under the feet of the poor. If anything, I think we should get rid of all land and property (real estate) taxes so the poor could own without losing it to taxes. Besides, fallow land is good for the land. There are better ways than Georgism.
⇧ Debt justice prevails at the Belgian Constitutional Court: Vulture funds law survives challenge by NML Capital
You’d think this article doesn’t really belong on this blog; however, if we don’t clean our system of such disgusting activities, such as the vulture funds engage in, we’ll all have the bad practices come back to haunt us one way or the other. Leaving such vultures in place sanctions bleeding the poor to death for the sake of those who need help developing a working conscience. Leaving such people alone to do what they want sends the wrong signal that preying on people is just fine and dandy when, in reality, it just makes everything worse and degraded rather than uplifting. It’s a downer.
⇧ Springtime for the Arctic
It’s not getting better but worse.
The linear rate of decline for May sea ice extent is 36,000 square kilometers (14,000 square miles) per year, or 2.6 percent per decade relative to the 1981 to 2010 average. Ice loss during the month was 1.7 million square kilometers (656,000 square miles), which was faster than the 1981 to 2010 average loss of 1.5 million square kilometers (579,000 square miles) for the month.
⇧ Merkel’s Comeuppance is Europe’s — and the World’s — Misfortune
… I warned my interlocutors at a Eurogroup meeting of eurozone finance ministers:
“If you insist on policies that condemn whole populations to a combination of permanent stagnation and humiliation, you will soon have to deal not with Europeanist leftists like us but, instead, with anti-Europeanist xenophobes who see it as their vocation to disintegrate the European Union.”
That is precisely what is happening now. Having vetoed much-needed EU reforms, Merkel’s successive governments guaranteed Europe’s fragmentation. Germany’s establishment media are now referring to the Italian economist whose appointment as finance minister was vetoed by the president as “Italy’s Varoufakis.” That moniker obscures a fundamental difference: I wanted to keep Greece in the eurozone sustainably and was clashing with Germany’s leaders in favor of the debt restructuring that would make this possible. By crushing our Europeanist government in the summer of 2015, Germany sowed the seeds of today’s bitter harvest: a majority in Italy’s parliament that dreams of exiting the euro.
What it comes down to is democracy, integration, and a debt union or failure. Germany will opt for failure until it overturns Merkel and the economic ordoliberals in favor of economic democracy.
⇧ Toxic Drinking Water Becomes Top Campaign Issue for Midterm Candidates Across the U.S.
“If your drinking water is affected by these chemicals, you don’t pause to think about whether you’re a Democrat or a Republican,” ….
We need to get to the place where we care about not just our own drinking water but the drinking water of others and whether we are Republicans, Democrats, members of other political parties, or independents.
⇧ 50 nations ‘curbing plastic pollution’
⇧ Hailstorm Pounds Dallas/Fort Worth Region
… hail as large as baseballs ….
⇧ Washington Orders Microsoft to Stop Using Captive Insurer
Washington’s insurance commissioner issued a cease and desist order against Microsoft Corp. to stop using its Arizona-domiciled captive, Cypress Insurance Co.
Insurance Commissioner Mike Kreidler’s cease and desist order is for without holding a certificate of authority, placing unauthorized insurance with a Washington domiciled insured without holding a Washington State surplus line broker license, and failing to timely remit a 2 percent premium tax to the state of Washington on premiums earned.
⇧ Fed clambers back to positive real rates, now debate is when to stop
With inflation still tame, policymakers are aiming for a “neutral” rate that neither slows nor speeds economic growth. But estimates of neutral are imprecise, and as interest rates top inflation and enter positive “real” territory, analysts feel the Fed is at higher risk of going too far and actually crimping the recovery.
⇧ “The ECB Is Basically Giving The Finger To Italy”: Is Draghi Risking Everything To Teach Rome A Lesson
Are the Eurozone and EU shooting themselves in the foot or the head? It’s looking more and more like the head.
… without the backstop of the ECB’s “whatever it takes” policy to keep the Eurozone together, the Eurozone would almost instantly fall apart (which ironically would be a welcome development for Italy, at least in part, as it would allow it to default on its debt in its own currency).
⇧ The Fed Will Soon Switch Off the Autopilot
Policy makers do not want to choke off the recovery without reason, and that reason cannot be found in inflation.
… The economy is still posting job growth numbers in excess of 200,000 a month despite fears that it will soon run out of workers. That’s telling us the economy has room to run.
⇧ These terrifying ads selling violent services don’t show the true secret of the ‘dark web’ — that criminals behave a lot like regular companies
The article is wrong that the dark web is not accessible via a browser. Also, there’s a huge whole in the article in that it doesn’t mention the methods used to pay for the goods and services offered: cryptocurrencies.
As for behaving like regular companies, they are capitalists.
The article only barely scratches the surface. Global criminal syndicates use the dark web to run anything and everything.
What should really be most troubling is that the entire thing is known about by US intelligence and federal law-enforcement. In other words, it could be shutdown. It’s been allowed to go on for year after year after year.
What does that tell you about risk management at the top? What does it say about internal corruption?
⇧ Italeave: Mother of all financial crises
Failure is baked in by Germany’s shortsightedness.
… the greatest threat to the euro and to European Monetary Union is political (see here and here). As currently designed, with an incomplete banking union and insufficient risk-sharing to combat asymmetric regional shocks, the monetary union remains fragile. Lacking a common framework for deposit insurance and bank resolution, a euro in Rome is not identical to a euro in Frankfurt?and everyone knows it.
… the ECB can scarcely ignore explicit violations of the Maastricht rules, including a none-too-subtle effort to circumvent monetary control and fiscal discipline through the issuance of a parallel currency. Were future Italian leaders to embark on a large fiscal expansion financed by quasi-money, they would again test the ECB’s commitment as well as the patience of voters and politicians in core economies of the monetary union. For the euro area as a whole, Italy is surely too big to fail, but how the latest threat to the euro is resolved likely depends far more on the preferences of Italian voters than on the actions of policymakers elsewhere.
⇧ Slower Productivity and Higher Inequality: Are They Related?
Productivity growth has been uneven across the economy, with top firms earning increasingly skewed returns. At the same time, the between-firm disparities have been important in explaining the increase in labor income inequality. Both these findings are consistent with the observed reductions in competition, as evidenced by increasing concentration and economic rents, and business dynamism.
⇧ Data Privacy May Be Landlords’ Next Big Challenge
Real estate companies are still grappling with how to use data to make their businesses and buildings more efficient, smarter and cheaper. But as they push forward into the technological age, the ethical and privacy challenges around gathering data will follow.
⇧ Progressive groups are launching a movement to create a public bank in New York City
I understand moves like this, but it’s not the way I advocate going. I think the Federal Reserve should be abolished and that the US Central Bank should be the US Treasury that holds all transaction and savings accounts for the entire economy all as money created without the government borrowing a dime: no bonds, no national debt.
⇧ Contiguous U.S. had its warmest May on record
The average May temperature across the contiguous U.S. was 65.4 degrees F, 5.2 degrees above average, making it the warmest May in the 124-year record ….
⇧ Post Crisis Rates Feed `Wealth Gains’ for the Rich, Nordea Says
“Probably you could prop up the economies a bit more and probably you could keep the markets at a high, but what’s the price for that?” Bernard said. “You will have a lot of credit extensions to weaker households while you will have a lot of wealth gains for the rich, and at some stage that discussion starts to bite.”
⇧ There are more jobs than people out of work
The jobs market has reached what should be some kind of inflection point: There are now more openings than there are workers.
⇧ Japan’s recovery is the greatest economic success story never told
… printing a lot of money to give the economy a chance to grow as much as possible, and then helping women enter the workforce to make sure it does.
First, printing all that money did not result in hyper-inflation. Second, having women enter the labor force kept wages and inflation down as the economy made up lost ground.
I was entirely for both, as documented on this blog and despite all the false-prophets saying Japan would cause hyper-inflation and then crash.
Things would have been even better had Abe not raised the sales tax.
⇧ Teaching Economics the Adam Smith Way [the real Adam Smith, not the laissez-faire one who never existed]
In many ways, Adam Smith had a better economics education than today’s students.
Add your comment. Including the article/link number will help.
⇧ Rivers of lava destroy 600 homes on Hawaii’s Big Island: mayor
⇧ U.S. house prices to rise at twice the speed of inflation and pay
… supply has not been able to keep up with rising demand, making homeownership less affordable.
Annual average earnings growth has remained below 3 percent even as house price rises have averaged more than 5 percent over the last few years.
⇧ Mediterranean “sea of plastic”
… boost recycling, ban single-use plastics such as bags and bottles, and phase out the use of micro plastics in detergents or cosmetics ….
The plastics industry itself should develop recyclable and compostable products made out of renewable raw materials, not chemicals derived from oil.
⇧ All UK mussels contain plastic and other contaminants, study finds
Seafood is not the only way plastic could turn up in people’s diets, as microplastics have been found in other food sources and drinking water, and can even be inhaled, according to Professor Jeanette Rotchell of the University of Hull.
⇧ The Chemical Industry Scores a Big Win at the E.P.A.
…as it moves forward reviewing the first batch of 10 chemicals, the E.P.A. has in most cases decided to exclude from its calculations any potential exposure caused by the substances’ presence in the air, the ground or water, according to more than 1,500 pages of documents released last week by the agency.
Instead, the agency will focus on possible harm caused by direct contact with a chemical in the workplace or elsewhere. The approach means that the improper disposal of chemicals — leading to the contamination of drinking water, for instance — will often not be a factor in deciding whether to restrict or ban them.
You know, it was a Republican President who ushered in the Environmental Protection Agency. Under the current regime, “Environmental Protection” is not the agenda. The agenda is cronyism, and the cronies are those who will not have to stop polluting the air, ground, and water. “Direct contact”? We make direct contact when we drink, breathe, and eat pollution released into the environment, not just through our use of the pollutants at work and in our households.
⇧ Productivity and Pay: Is the Link Broken?
They’re missing something: the greed factor.
Those at the top are holding more for themselves, much, much, much more.
⇧ Piece by piece, a factory-made answer for a housing squeeze
On a recent afternoon, Mr. Pace laid out the factory’s process. At the first station, just past the door, four workers toiled above and below a raised platform to build what would eventually become the floor. The two men up top laid down flooring while a man and woman stood below simultaneously installing pipes.
From there the unit would move steadily down the line, and, over 21 additional stations, would acquire toilets, indoor walls, outdoor walls, a roof, electric outlets, windows, sinks, countertops and tiling. It takes about a week to finish a unit, Mr. Pace said. The goal is to churn out about 2,000 apartments a year, which would be turned into four- and five-story buildings with 80 to 150 units each.
For workers, factory building seems to mean lower wages but steadier work. Factory OS pays about $30 an hour with medical insurance and two weeks of vacation. That’s about half what workers can make on a construction site, but the work is more regular and, for many, requires less commuting.
Plus, the workers get to work indoors out of the elements. The factory can more closely monitor health and safety too.
Quality construction-standards can be more closely monitored and mistakes caught more quickly and fixed more easily.
Factory printing of parts may become a large element of the process going forward.
Assembly will be an interesting thing to watch develop. I wouldn’t be surprised to see robot elevators lifting and sliding units in place where air dropping/delivery might be too noisy and windy.
Of course, air delivery and printing-in-place will be constantly improving too.
⇧ NOAA Expects Sea Level Rise to Produce Record Coastal Flooding This Year
Sweet noted that the sea level is rising globally up to 3 mm or more per year, or roughly 1 inch every eight years, one-third of which he attributes to thermal expansion of the ocean while two-thirds is from land-based ice melt.
Both of which are accelerating.
⇧ Rising Seas Raising Concern in Low-Lying Massachusetts Coastal District
This is no joke.
⇧ Bernanke Says U.S. Economy Faces a ‘Wile E. Coyote’ Moment in 2020
The degree of slowdown as stimulus fades is a matter of debate among economists, with some predicting the effects could last beyond two years if the U.S. boosts its capital stock and upgrades its workforce during this period of strong growth. Congress could also write new spending laws to smooth out the program, Bernanke noted.
It’s starting to become the consensus view among the sharper economists, who do economics rather than crasser politics (not to be confused with legit political economy) and factless ideology.
⇧ Trump Says the U.S. Economy Is the ‘Greatest’ Ever. It’s Not
… the economy has made major progress since the Great Recession ended in 2009, and that improvement has continued — and even strengthened by some metrics — during Trump’s 16 months in office. Jobless rates among minorities are at or near record lows, openings are at an all-time high and there are more positions available than there are unemployed.
Yet wage growth is moderate, productivity remains tepid and expansion has averaged 2.4 percent on a year-over-year basis since Trump took office, well below the 4.4 percent of the 1950s and 1960s.
Sounds great and then bad; however, it’s not even great to start with. That’s because there’s still tons of labor slack, meaning people who can work and would work if their situations would really benefit enough to draw them back in. They became really discouraged, and rightly so. They don’t see promotions as a possibility but rather just another layoff when the coming recession kicks in. They’re rusty at working. Their health isn’t as good as it would be were they to have had solid medical care, such as via single-payer enhanced Medicare. They don’t have the money to move to where the jobs are either. Plus, way too many employers still insist on hiring those who haven’t been out of work long or at all.
⇧ Yield curve points to recession in about 22 months
⇧ Update on the Fed’s QE Unwind
Just as the Fed created money to buy Treasuries and MBS during QE, it now destroys money when Treasuries and MBS “roll off” the balance sheet. The money just disappears to where it had come from — nothingness. Just like QE added liquidity to the markets, the QE unwind is draining liquidity. QE was associated with enormous media hoopla for maximum “wealth effect” in terms of asset price inflation; but the QE unwind happens quietly, on autopilot, and the media is silencing it to death.
That’s because they don’t understand how it could impact things, especially in the face of Trump’s corporate tax cuts and the rest of his “plan.”
⇧ Swiss sovereign money referendum
Going to a gold standard is a really bad idea. That system would be hugely inflexible and result in many more recessions and of a much wilder nature: spiking up (if there could even be enough gold) and then suddenly spiking down. There’d be no smooth ride.
⇧ Swiss to vote on ‘suicidal’ [nonsense] overhaul of banks
Now this is what I call a one-sided report.
Of course the commercial bankers are going to be screaming against the idea. However, their claims about it are just like Chicken Little running around saying “the sky is falling, the sky is falling.”
What the article fails to mention is that the money creation would still happen only democratically rather than by unelected bankers. The government would simply spend the money into the economy, and the people and firms would take that new money and still deposit it in banks, which banks could still make loans against those deposits.
What the banks wouldn’t be able to do is leverage up into another Great Recession. They also wouldn’t have so much money to create the shadow economy and to launder money, etc.
It doesn’t sound so scary when the other side gets to tell its side of the story, does it.
⇧ Seismic thrift: welcome to the shopping centre for recycled goods
Read the whole article.