Linking ≠ endorsement.
⇧ The Secret Lives of Central Bankers
This world is beginning to feel like an anachronism, especially after the financial crisis of 2008. When markets fail to respond to monetary policy as the science says that they should, the public loses faith in experts. And it may not be possible for the informal and secretive craft of central banking to continue its traditions in a world that demands greater transparency and accountability. This tradition of the apolitical central banker isn’t even very well established. It goes back only to the late 1980s and early 1990s, when a flurry of academic research suggested that independent central banks were correlated with lower inflation — a priority at the time for the United States.
The US Central Bank should be the US Treasury, which should neither lend nor borrow but simply issue to balance supply and demand.
Central Banks controlled for the benefit of commercial lenders is a scam of the greatest magnitude.
⇧ They Said Seattle’s Higher Base Pay Would Hurt Workers. Why Did They Flip?
When last year’s study came out, Ben Zipperer, an expert on the minimum wage at the liberal Economic Policy Institute, pointed out that it failed to adequately account for the fact that Seattle’s economy was growing rapidly when the minimum wage increases took effect.
In a booming economy, Mr. Zipperer argued, we would expect to see fewer workers employed at low wages — not because employers decide it’s not worth hiring people, but because the competition for workers bids up wages, and many low-paying jobs disappear and are replaced by somewhat higher-paying jobs.
Alternatively, many potential low-wage workers may decide it’s too expensive to live and work in Seattle even with the benefit of a higher minimum wage, leading them to leave the city or not migrate there in the first place.
In either case, it would be the boom, and not a minimum-wage increase, that was reducing the number of hours worked at low wages.
In an interview, Mr. Zipperer said he was unconvinced by the authors’ attempt to square this year’s findings with last year’s. He said that the relatively low number of people making less than $15 an hour in Seattle, the linchpin of the effort to reconcile the results, is consistent with the city’s booming labor market, which the authors still haven’t properly addressed.
“At the end of the day, it really to me points to the hazards of a single case study,” he said. “If something contaminates the case study, like a shock to Seattle, you’re out of luck. There’s no counterbalance you can use.”
⇧ UBS Whistleblower Stephanie Gibaud on Financial Corruption & The Psychological War on Whistleblowers (Video)
UBS Whistleblower Stephanie Gibaud, author of the book ‘La Traque des lanceurs d’alerte’, discusses the corruption within UBS, tax evasion and financial corruption in France and the psychological war on whistleblowers!
Add your comment. Including the article/link number will help.
⇧ How Dismantling an Obscure Tax Created an American Aristocracy (Video)
Tax, borrow, or slash programs, that’s all we ever hear. Why? Where are those calling for issuing money without borrowing? Well, I am.
By the way, the pass-through has an income ceiling that falls below the 1%.
Add your comment. Including the article/link number will help.
⇧ Power Outages Still Plague Florida Panhandle Nearly 2 Weeks After Michael
… thousands of utility poles were blown down or snapped in half like toothpicks. Power lines drooped over roadways or were tossed to the ground like piles of spaghetti.
Many transmission line towers — the enormous metal structures that bring electricity to substations that then route it into specific neighborhoods — were left in twisted piles or knocked to the ground.
Several power substations were damaged, and there were countless disrupted connections to individual homes.
⇧ After Catastrophic Flooding, Austin Issues First Ever City-Wide Boil Water Notice
… boil water for drinking, cooking, brushing their teeth and for making ice.
… vigorous, rolling boil for three minutes ….
Actually, make that six.
⇧ Top 1.0 percent reaches highest wages ever—up 157 percent since 1979
The fast wage growth of the top 1.0 percent in 2017 brought their wages to the highest level ever, $719,000, topping the wage levels reached before the Great Recession of $716,000 in 2007. The wages of the top 0.1 percent reached $2,757,000 in 2017, the second highest level ever, roughly only 4 percent below their wages in 2007.
⇧ 6 Deal-Breakers that Disqualify a Market for Real Estate Investment
Pretty basic …
⇧ Companies Say They’re Ready to Move Supply Chains From China
It’s already happening.
⇧ The Fed Knows What It’s Doing. Relax. [?]
When I look for downside risks, I generally look for periods in which the Fed is unwilling or unable to respond to deteriorating economic conditions due to inflation concerns. That’s when the Fed is most likely to allow a shock to turn into a recession. A series of inflation shocks, such as tariffs and higher energy prices, in a full employment, fiscal stimulus-charged economy could create such conditions. But so far, they haven’t. That tells me the Fed is not likely to risk allowing this expansion to end just yet. Absent an inflationary threat, you should bet that there is a “Powell put” for the economy. We are just nowhere near triggering it yet.
A Powell put is something Powell should mention is there if needed.
⇧ The China toll deepens
These people lean to the economic left, so Trump trying to do something about China is not viewed by all on the left as strange. Neoclassical globalizers are the ones who primarily have a problem with Trump taking on the Chinese dictatorship. The real issue concerns how democratic Trump wants to push things. So far, his administration has benefited the elitists rather then common working Americans.
The United States has a massive trade deficit with China. The growth of the U.S. trade deficit with China, which has increased by more than $100 billion since the beginning of the Great Recession, almost entirely explains why manufacturing employment has not fully recovered along with the rest of the economy. And the growing trade deficit with China isn’t just a post-recession phenomenon hitting manufacturing: it has cost the U.S. millions of jobs throughout the economy since China entered the World Trade Organization (WTO) in 2001, a finding validated by numerous studies.
This report underscores the ongoing trade and jobs crisis by updating EPI’s research series on the jobs impact of the U.S.—China trade deficit. The most recent of these reports (Scott 2012; Kimball and Scott 2014; Scott 2017a) look at the effect of the U.S. trade deficit with China since China entered the WTO in 2001. Our model examines the job impacts of trade by subtracting the job opportunities lost to imports from those gained through exports. As with our previous analyses, we find that because imports from China have soared while exports to China have increased much less, the United States is both losing jobs in manufacturing (in electronics and high tech, apparel, textiles, and a range of heavier durable goods industries) and missing opportunities to add jobs in manufacturing (in exporting industries such as transportation equipment, agricultural products, computer and electronic parts, chemicals, machinery, and food and beverages).
The growing trade deficit with China since China entered the WTO affects different regions in different ways. Some regions are devastated by layoffs and factory closings while others are surviving but not growing the way they could be if new factories were opening and existing plants were hiring more workers. This slowdown in manufacturing job generation is also contributing to stagnating wages of typical workers and widening inequality.
⇧ Paul Volcker, at 91, Sees ‘a Hell of a Mess in Every Direction’
“The central issue is we’re developing into a plutocracy,” he told me. “We’ve got an enormous number of enormously rich people that have convinced themselves that they’re rich because they’re smart and constructive. And they don’t like government, and they don’t like to pay taxes.”
Washington, when he arrived, “was a city filled with bureaucrats,” he said. “It didn’t make them bad.” At the time, civil servants — like his father, the township manager of Teaneck, N.J. — were respected. “I grew up in a world in which good government was a good term,” he said.
Good government is still a good term in my book!
⇧ Tax Policies Have Increased Inequality, and So Would Entitlement Cuts
… two decisions taken by lawmakers since 2000 account for roughly two-thirds of the increase in the national debt since then: tax cuts and wars in the Middle East. To say that entitlement spending is the sole cause of fiscal problems is disingenuous and demonstrably wrong.
⇧ Thousands of Amazon Delivery Drivers Won’t Be Eligible for the $15 Wage
Wow, if this article hasn’t mischaracterized things, what they described is not good for workers or our economy.
Amazon’s announcement raising its entry-level wage to $15 an hour for all employees has been lauded as an inspiring example of corporate responsibility. In response to sharp criticism and threatened legislation from Sen. Bernie Sanders (I-Vt.) over low pay and horrid conditions at Amazon warehouses, CEO Jeff Bezos said: “We listened to our critics, thought hard about what we wanted to do, and decided we want to lead.”
But thousands of workers delivering your Amazon packages won’t be eligible for that $15 entry-level wage.
⇧ Millionaires Group Says Unfair Tax System Undermines Democracy
Patriotic Millionaires Chairman Morris Pearl says decades of Republican efforts to make the tax system less fair could lead to a dystopian future of concentrated wealth and ineffectual democratic institutions.
Add your comment. Including the article/link number will help.
⇧ [Economically speaking, Mauricio Macri doesn’t know what he’s doing] Argentine police fire rubber bullets at anti-austerity protesters
Macri has committed to balancing the budget at the behest of the International Monetary Fund, which signed a $57 billion standby financing agreement with the government earlier this year. Macri went to the fund for help after market jitters about the country’s increasing debt load caused a slide in the peso.
If Argentina hadn’t borrowed in the first place, this wouldn’t be happening. Argentina’s peso is it’s own currency. Why did Argentina just borrow another $57 billion rather than simply creating $57 billion in pesos without issuing any bonds? If Argentina created pesos that Argentina were to sink into enterprises public or private that returned more than the created pesos, the result would be a profit, not increased debt and not increased price inflation provided the supply chain were properly planned and managed, which is part of the productivity equation if viewed properly (holistically).
⇧ EU parliament approves ban on single-use plastics
Well, it’s better than nothing but not good enough in my view. Hopefully, they’ll get something into law and then come back to it to strengthen it over and over.
The entire world needs a totally circular economy ASAP! We could have had one long ago but for the greedy who put themselves over everybody and everything else.
⇧ Willa dissipates, but evacuations continue, towns cut off
⇧ The West Needs to Come to Terms With the Disaster of China’s Entry Into the WTO: Expert
To undo some of the dire consequences, Paterson believes the first thing to be done is to “have proper understanding of how naive we were in the first place ….
I opposed China’s entry into the WTO at the time. I had huge reservations about allowing China to have Chinese one-party-dictatorial market-socialism that would supposedly lead to the democratization of China. I proved right in my belief that it would not. Yet, here we still have the major story about what was wrong with letting China have the freedom to sell all over the place with no strings attached being that China didn’t “reform” into market capitalism, not democracy.
Look, democracy is the issue, not market access in either direction. If China were to fully democratize, their economy would not be a problem for other nations.
⇧ FICO’s new credit scoring model could boost your score [but at what cost?]
“The possible unintended consequence of including bank account balances would be an increased focus on income and assets,” Rossman says. “Historically, your FICO score has been affected by how well you manage your money, not how much money you have.”
⇧ Lewis Lapham: Can America Survive the Rule of a “Stupified Plutocracy”?
Donald Trump ran as a populist. So far, he’s mostly benefited the upper class, which isn’t populism. Will he change that?
When author and journalist Lewis Lapham, founder of Lapham’s Quarterly and former editor of Harper’s, turned his shrewd gaze on the go-go ’80s in “Money and Class in America,” he never imagined the era’s avatar of greed would one day become President Donald Trump. Three decades later, Lapham shares his views on the decades-long deterioration of democracy in an interview with INET’s Lynn Parramore. An expanded and revised edition of his book is now available with a new foreward by Thomas Frank from OR Books.
Add your comment. Including the article/link number will help.
I was opposed to the World Trade Organization (WTO) from the outset. It was, and remains, woefully antidemocratic. It has benefited the wealthiest at the direct, negative expense of everyone and everything else. The argument is that wages have lifted people out of poverty, but at what cost? Environmental damage around the world has been overwhelming. Also, nothing that the WTO did in terms of causing wages to rise couldn’t have been done better and without the environmental and other damage.
We all know that Donald Trump has money for the US and his own empire in mind first, but the US really should put world real-democracy first. Everyone would be better off as a result, including the richest of the rich and their offspring.
So, if Donald Trump pulls the US out of the WTO, I won’t be upset with him for doing that so long as the US can then focus on democratizing the planet with or without him.
I really want him to become a democrat (lowercase d), though.
⇧ Shaking up TCJA: How a Proposed New Credit Could Shift Federal Tax Cuts from the Wealthy and Corporations to Working People
So, maybe you’re an aspiring landlord because you want to get rich or you’re already a well-to-do landlord or are rich by other means. You might think tax cuts for the poor are a bad idea if cuts for the wealthy go down to pay for the change. You’d be making a fundamental mistake.
The Livable Incomes for Families Today (LIFT) the Middle Class Act would actually make everyone richer. That’s because most of the huge costs to society and the economy that come with low incomes at the bottom and for the middle class would disappear. The total quality of life would go up, not down. The rich would be generally safer and more secure in every respect. How much is that worth?
Everything worthwhile is not measured as “net worth” in dollars and cents.
⇧ Trump Administration Slams Socialism in New Report
Oh my, this is the same old fear-mongering, false-propaganda at its worst.
The US trails all other leading economies in longevity and has the least socialistic-healthcare system of all of them by far. The Japanese far outlive typical Americans and have much more socialized healthcare.
Also, government money spent on Medicare is money Medicare recipients don’t have to spend directly on health insurance. Medicare provides more care for the buck than any private health insurance plan, that’s any.
The reason other nations have backed away from the social-democratic model isn’t because the model wasn’t working but because of other factors having nothing to do with the models. One such factor was the competition for ideology.
We have that same competition here. That’s why Kansas enacted all of the libertarian tax-cuts only to have to roll all of those cuts back to save the state from utter economic disaster.
Lastly, comparing central-planning Bolshevism to Medicare for All is highly disingenuous. The Bolsheviks were not remotely social democrats. Social democrats are for a mixed economy. Bolshevism was a one-party dictatorship with a very few making the decisions. That’s why they got so many things wrong, although not all things.
⇧ European Parliament Bans Single-Use Plastics in Historic Vote (Video)
Watch the video. There’re millions of tons of reasons to recycle or ban as much plastic as possible.
Dr. Jonathan Latham says 95% of table salt contains plastic due to plastics pollution in the oceans.
Add your comment. Including the article/link number will help.
⇧ The day Theresa May lied in parliament about something I wrote
… the Prime Minister quoted me saying about Labour’s 2017 manifesto “the numbers did not add up” In fact I said “Let us suppose the IFS was correct” and examined consequences. I have never taken a view on whether they did/didn’t add up. If that is what she said, she lied.
… If you do not have the media to call out lies, they will pass as the truth and democracy dies.
⇧ As Hurricane Florence Stalled, Uninsured Losses Surged
… approximately 85% of residential losses were uninsured.
⇧ The Neutral Rate of Interest
… it is our expectation at the Dallas Fed that the impact of recent fiscal stimulus, which has substantially contributed to 2018 economic growth, is likely to wane somewhat in 2019 and further in 2020. At the same time that the recent stimulus begins to wane, our Dallas Fed economists believe that the rate of workforce growth, a key driver of longer-term GDP growth, is likely to slow due to aging-population demographics.
A key question is whether this slowing in workforce growth will be offset by improvements in the rate of productivity growth in the U.S.
What’s he calling fiscal stimulus: corporate tax-cuts, Pentagon spending, both?
Have you seen what the rate increases and Fed bond-holdings reduction has been doing to the economy? Doesn’t it look like overshooting already?
Hot money is flowing to the US, but is that enough?
⇧ America’s Homelessness Crisis Is Deepening
… the number of homeless people in the US actually rose in 2017 — the first increase since 2010 ….
⇧ The Republican tax cut is a big, fat failure
Well, it’s a failure if you ever believed the people who passed it actually thought it would do what they were telling the average American citizenry it would do. I didn’t believe they meant one word of it. In fact, before it passed, I was saying (many others were too) that exactly what Mitch McConnell is blaming now was the plan all along. He wants to destroy government except for the ultra-rich. It wouldn’t even be hidden anymore that we have a government of the ultra-rich, by the ultra-rich, and for the ultra-rich. It’s called plutocracy, and that’s what we’ve been under forever.
⇧ Airbnb can’t go on unregulated — it does too much damage to cities
During their early rapid growth, sharing economy companies started operations around the world without regard to local laws on the basis that existing regulations had not envisaged the radical and disruptive new ideas they embodied. But the tide slowly turned as the whizzy tech rhetoric wore off and it became clear that Uber was in fact a taxi company and Airbnb was in effect a hotel business.
You can share a taxi, but that usually means splitting the cab fare. What you don’t do is share a taxi (unless you’re the owner), as in share your home with your nonpaying guests. That’s why the sharing economy still really means what it meant before Uber and Airbnb came along and tried to twist the word into meaninglessness. The giving-and-sharing economy is giving and sharing for free. It was so understood, so embedded, that the “for free” was purely redundant: still is.
⇧ Turning Thatcher on her head: There is no alternative to anti-austerity
Child poverty has increased, with three in 10 children now living in households in poverty …
Thatcher rolled in on libertarian-capitalist ideology and commenced to trash the economy. She said there was no alternative. She was dead wrong. Neoclassical economics is mindless nonsense. It is solely for the benefit of plutocrats.
⇧ Gilded Age II: “World’s billionaires became 20% richer in 2017, report reveals”
The Gilded Age has historically been correctly viewed as extremely obscene wealth accumulation in the face of poverty. We are again in such an era.
“The past 30 years have seen far greater wealth creation than the Gilded Age” the UBS Billionaires 2018 report said. “That period bred generations of families in the US and Europe who went on to influence business, banking, politics, philanthropy and the arts for more than 100 years. With wealth set to pass from entrepreneurs to their heirs in the coming years, the 21st century multi-generational families are being created.”
⇧ Are Condos Profitable as Investment Properties? Let’s Look at the Numbers.
⇧ Housing Starts Fell in September, Hurricane Recovery Won’t Help
“Efforts to repair damage from hurricanes Florence and Michael will likely slow housing starts in coming months, as resources are redirected toward repairs and rebuilding efforts,” explains Mark Fleming, chief economist for First American.
Fleming adds that “housing permit and construction activity typically slows down in the impacted area, and the labor needed to help repair the hurricane damage further disrupts new housing construction.”
“Using data from DataTree by First American and the National Hurricane Center, we estimate that Hurricane Michael will impact $125 billion of residential real estate in Florida,” Fleming says.
Another negative impact from the storms is that the recovery will drive up demand for building materials, which, in turn, will drive up the cost of those materials. It will also drive up the cost of labor.
“The competition between reconstruction and new construction after hurricanes depends on the extent of the damage, but the cost of labor is likely to increase significantly, creating additional headwinds to housing starts,” Fleming says. “Past research found that average construction labor costs increased 10 percent following Hurricane Katrina in the three metro areas surrounding New Orleans 1.5 years after the storm.”
⇧ Trump rollbacks causing premature deaths should not be celebrated
This article does a solid job of making the same point I’ve made numerous times on this blog. If deregulation costs society, the economy, and the environment more, then the deregulation should be rejected.
Even a 5-year-old asked to make the choice would be able to figure it out and give the right answer. Therefore, there’s no way Donald Trump doesn’t know he’s making bad decisions for the short-term gain of a few super-wealthy people, who are then beholden to him, not to mention that Trump may be heavily invested in polluting industries himself.
This is not a partisan issue. It’s a moral issue.
Think of the damage and potential damage being done to your real-estate investments.
If a rule targeted for repeal costs $1 million to implement but delivers $5 million in tangible benefits to the American public, OIRA’s mandate is to avoid the problematic policy change that will make Americans $4 million worse off, not to implement the change and celebrate $1 million in avoided compliance costs.
⇧ Southern California house sales fall 18%, biggest drop in 8 years
CAR President Steve White also attributed sales drops to federal tax cuts adopted late last year, which make homeownership less advantageous by capping property tax deductions and reducing the amount of mortgage interest that can be deducted from federal income taxes.
The point of the tax change is ultimately to drive more people into multifamily rentals, thereby, benefiting developers and landlords. Multifamily construction is slowing for a host of reasons. It can’t last.
⇧ Slump in capital spending hints that corporate tax cut is fizzling
Conservatives insist that companies have been held back by high taxes and regulations, which is why they had high hopes for the tax cut and the lighter hand on regulations.
Liberals, on the other hand, suggest that companies invest only when it will pay off; as long as they can meet demand with their current capacity, they won’t invest much. The historical evidence shows that changes or levels of taxes don’t have much impact on investment.
⇧ MMT and fiscal rules (part I) — a prologue
Good start …
⇧ Driven by Trump Policy Changes, Fracking Booms on Public Lands
… regulators follow detailed industry scripts for rollbacks in protections for wildlife, air quality and groundwater supplies, documents show.
… perhaps the most visible shift — and real-world consequence — involves the watering down, completed in August, of an Obama-era rule intended to curb the flaring or venting of methane, an earth-warming gas that is roughly 30 times more potent than carbon dioxide.
The efforts started during the Obama administration, when the oil and gas industry groups like the Western Energy Alliance and the Independent Petroleum Association of America sued the Interior Department in attempts to reverse a slowdown of oil and gas lease sales. At the same time, the groups were moving to block new rules such as a mandate that the companies disclose the fracking chemicals they use.
… Drilling on these plots would push up air pollution and ozone levels in a state that has suffered from bad air quality during the last natural gas boom, the groups argued.
It also might deplete critical groundwater supplies needed for area ranchers, they said. One oil and gas project in Converse County alone is expected to consume as much as 55 million barrels of water a year — or 124,100 barrels of water for each oil and gas well drilled.
There was no mention of earthquakes. There was also no mention of injection wells contaminating groundwater.
⇧ The UK isn’t winning the war against dirty money because government refuses to do anything about it
Much of the hot money finds its way into the property market. Estates agents are required to report suspicious activity to regulators, but are very economical. An undercover investigation found that despite being made aware of the use of hot money, the estate agents agreed to continue with the property purchase and in several instances recommend law firms to help a buyer hide his identity.
Dirty money can’t easily be laundered without the involvement of banks. Banks are required to comply with the “Know Your Customer” (KYC) guidelines and perform checks on the opening and operating of bank accounts.
⇧ Track every major NYC construction project with this new map