Linking ≠ endorsement.
⇧ China Slowdown Continues With Factory Gauge at Lowest Level Since 2016
I strongly tend to believe the following more than I believe those who claim China won't stimulate.
More government support, including looser monetary policy, more cuts in taxes and fees, and investment to upgrade manufacturing, are expected in 2019, according to the top government planning meeting this month.
Iris Pang, an analyst at ING Bank N.V. in Hong Kong, expects 4 trillion yuan ($582 billion) worth of stimulus in 2019 and another 4 trillion yuan in 2020.
"The key is not just the size, though, it is about the speed," she said.
⇧ Mapping New York City's affordability gap
⇧ LA County's [limited] rent control measure is now in effect
⇧ Martin Wolf: The Future Might Not Belong to China
My sentiments not quite exactly but close ...
⇧ For Third Straight Year, Oklahoma Sees Decrease in Quakes
... Walter says quakes will continue for at least a decade "because earthquakes beget earthquakes."
⇧ T cell photos make data encryption truly random [from the current human perspective anyway]
... researchers are currently using 2,000 T cells per encryption key. The team reports in the journal Advanced Theory and Simulation that even if someone knows the key generation mechanism, including cell type, cell density, key generation rate, and key sampling instance, it is impossible for anyone to breach the system.
⇧ The president of the Dallas Fed says central bank should pause rate hikes amid turmoil in markets
Well, better late than never.
⇧ China entered a world of pain while others doubted it could happen
Apple found out the hard way.
⇧ China's Malign Secrecy by Ricardo Hausmann - Project Syndicate
... China's massive savings, infrastructure know-how, and willingness to lend could be great for developing countries. Alas, Pakistan, Sri Lanka, South Africa, Ecuador, and Venezuela have learned the hard way, Chinese development finance often delivers a corruption-filled sugar high to the economy, followed by a nasty financial (and sometimes political) hangover.
As countries confront rising project costs and try to make sense of what happened and how to get out of the mess, they find that the financial terms of their obligations have been contractually shrouded in secrecy. Moreover, the contracts impose constraints on the ability of borrowers, such as state-owned enterprises, to make the terms known to the government, let alone the public.
I cannot think of a good argument reconciling secrecy in the context of public financial obligations with the public interest. It is something that societies should not tolerate. The fact that the terms of these massive obligations have not leaked to the public reflects how weak civil society and the press are in these countries.
⇧ Key Fed Yield Gauge Points to Rate Cuts for First Time Since 2008
"When market participants expected -- and priced in -- a monetary policy easing over the next 18 months, their fears were validated more often than not," Eric C. Engstrom and Steven A. Sharpe wrote in a research paper dated July 2018.
Again, better late than never.
⇧ As a rising global power, what is India's vision for the world?
Contrast China and India:
... India must sustain and strengthen its own trajectory of rapid economic growth, and show to the world that it is capable of realizing its development goals within the rubric of liberal democracy. No argument for the New Delhi Consensus can be more powerful and alluring than the economic success of India. By IMF estimates, India already accounts for 15% of global growth. Even though nearly 40% of its population live in various shades of poverty and barely a third are connected to the internet, India is still able to proportionately shoulder the world's economic burden. Imagine the possibilities for global growth if India can meet, and even exceed, the Sustainable Development Goals (SDGs).
States in the developing world yearn for replicable templates of growth, yet they find themselves with a binary choice between Western democracy, which is ill suited for deeply plural and socially stratified societies, and autocratic systems that have little room for individual freedom.
⇧ A record-low [ice] start to the new year in Antarctica
With six to eight weeks remaining in the melt season, it remains to be seen whether the present situation will persist and lead to a record-low annual minimum.
⇧ Manhattan real estate closes 2018 as worst year since the financial crisis
I would caution against the thinking that as Manhattan goes, so goes the country.
Nevertheless, the fact that this is happening while San Francisco is also being hit is not a harbinger of boom times.
What's really important is that all the "headwinds" are artificially induced. It means that if we get the right political economy front and center and act accordingly, we can clean up all the ills.
Deregulation certainly would not be the right move. Revisiting regulations to fix any that are truly broken as opposed to underfunded would be a wise move. Regulating things that should be regulated but aren't would be another wise thing to do.
⇧ 5 facts about crime in the U.S.
This is interesting reading, but I'm sorry the issue of mass shootings wasn't addressed. I'd be interested in stats concerning what people are thinking of when they think of the crime rate. I'd like the hypothesis tested that many people think of the severity of individual crimes as opposed to the quantity of crimes in general.
⇧ Google shifted $23 billion to tax haven Bermuda in 2017: filing
The tax strategy, known as the "Double Irish, Dutch Sandwich", is legal and allows Google to avoid triggering U.S. income taxes or European withholding taxes on the funds, which represent the bulk of its overseas profits.
However, under pressure from the European Union and the United States, Ireland in 2014 decided to phase out the arrangement, ending Google's tax advantages in 2020.
Well, it's been legal but shouldn't have been.
Bermuda is British territory, but the City of London (the financial enclave) claims it has no authority to clamp down on Bermuda. Think about it. Also, the UK government, and I don't mean just the leadership in Parliament but the entire government, claims it can't clamp down on the City of London. Think about that too.
⇧ U.S. judge limits evidence in trial over Roundup cancer claims
... the U.S. Environmental Protection Agency, have determined glyphosate likely does not cause cancer.
It's my understanding that the EPA used the reports from Monsanto and did not base any decision upon independent-testing results.
This whole issue matters because of the widespread use of the herbicide by the real-estate-investment industry.
⇧ Powell: Fed 'will be patient' as it mulls more rate hikes, boosting stocks
⇧ Los Angeles Releases Earthquake Warning App
⇧ The New Giant in Rental Housing: Single-Family Rentals
⇧ Even With Minimum Wage Increases, There's A Huge Gap In The Cost Of Living
COOPER: Yeah. So when the minimum wage was first established back in the 1930s, it was intended to be a living wage. The problem is that over the years, we've raised the federal minimum wage so infrequently and so inadequately that the gap between where it is today and where it would need to be to be a living wage is enormous.
CORNISH: Is there a sense of what it would need to be to close that gap, in general?
COOPER: We have a tool at the Economic Policy Institute called the Family Budget Calculator. And that will actually tell you what it takes to have what we would consider a modest but adequate standard of living in pretty much any jurisdiction in the country.
And if you look at that tool, what you find is that even someone working full-time full year is probably going to need more than even $15 an hour basically anywhere in the country over the next few years.
⇧ Global Inequality
The top 1 percent in the United States holds 42.5 percent of national wealth, a far greater share than in other OECD countries. In no other industrial nation does the richest 1 percent own more than 28 percent of their country's wealth.
⇧ The Smartest Smart Home: Five Things to Buy Now that Will Help Sell your Home
T3 Sixty research confirms that home security and video "is the fastest growing sector in smart home technology," said Coldwell Banker in its Smart Home Study. "The T3 Sixty survey shows that 36.4 percent of homebuyers ask most often about smart home security. Video feeds allow homeowners to easily check in on their home, pets and family while traveling or at work. It is also the Smart Home feature that consumers respond to most in marketing.
Sounds great, but make sure it is truly secure, as in secure from hacking.
⇧ LA residents spent $40 billion on rent in 2018, says report
According to the report, renters in the LA metropolitan area, which includes Los Angeles and Orange counties, paid $40.4 billion in rent during 2018.
⇧ The Noisy Business of the Law and Insurance Claims
Kahneman and his colleagues gave the same facts to 50 insurance underwriters at the same company and asked them to place a value on the potential claim. The insurance company's management expected that their underwriters' valuations would differ by 10 percent or so. What Kahneman found was that the underwriters' valuations differed by 50 percent. It was closer to 60 percent when the experiment was replicated at another insurance company.
The thing is, we don't know how much information each underwriter was given. Also, why underwriters rather than claims managers?
⇧ Manhattan judge blocks NYC law regulating Airbnb activity
... judge Paul A. Engelmayer, who called the legislation a violation of the guarantee against illegal searches and seizures in the Fourth Amendment.
If it is, then there are an awful lot of laws on the books that are being enforced and that are unconstitutional. Frankly, I think the judge is stretching the 4th beyond recognition. Who searched? What was seized? Nobody and nothing.
Perhaps the law is overkill, though. Is there some compromise that would still get the basic job done of not allowing people to turn anything and everything into a short-term rental, which ruins the neighborhood for those who want more peace and quiet? They have rights too.
⇧ Wondering what the Green New Deal is all about?
With dire news coming last year from the UN sponsored Intergovernmental Panel on Climate Change (IPCC) and even the American government, it's become clear that the window for action on the climate crisis is rapidly closing. It has in a sense been a story of the failure of successive generations to grapple with the necessary changes that will have to be made to whole societies and to the global economic system that values profit over the life of the planet we all share.
A Green New Deal in the world's most powerful country is a good place to start.
⇧ Looser China drops hints of trade pain ahead — Breakingviews
Trump said on Sunday that weakness in China's economy will push officials to negotiate. He may be right.
May be? He is definitely right about it.
I hope he doesn't forget democracy. He's in the perfect position to hold out for more democracy in China and for Xi backing off concerning the South China Sea and Taiwan.
⇧ The Euro: a mindless idea - Ashoka Mody on the arrogant delusion of the architects of the EU.
Ashoka Mody is a visiting professor in international economic policy and lecturer in public and international affairs at Princeton University:
There is a Euro, which is a single currency in an incomplete monetary union, with a set of fiscal rules that are evidently economically illiterate — and nobody questions the fact that they are economically illiterate, that they lack a necessary fiscal backstop and the necessary fiscal union. ...
... when the yields on government bonds came down, that was still celebrated as financial integration, whereas it was in fact a problem because the countries that were benefiting from these very low interest rates were allowing a debt bubble to form.
George Orwell said of the reporting of the Spanish Civil War that history was being written as it is supposed to be rather than how it was. That is very much how the first decade or so of the Eurozone was reported.
... When an economy is going into a recession, fiscal austerity makes things worse. Government taxes increase as its spending decreases, and therefore the recession becomes deep. ...
... If trauma patients come into surgery, you don't tell them to run round the block a few times as a show of good faith before you treat them. It's as basic as that. Austerity therefore made the Greek problem infinitely worse.
... a country that has low productivity growth needs the crutch of occasional exchange-rate depreciation. No one contests that. No one contests the fact that if you are not productive, you become less competitive, and, if you're less competitive, you need to devalue your exchange rate. But Italy is in a trap. It cannot devalue its exchange rate against the Deutschmark because the two currencies are in parity within the Eurozone, and because the ECB monetary policy remains relatively tight, the Euro has not depreciated against the US dollar in the past 20 years.
... Nearly 70 years ago, Schuman called for a com mon foundation for economic development to create a federation. The idea of a federation has gone, as has the belief in a common foundation for economic development. Therefore, you have to go back to Schuman's other proposition: that Europeans need to hold together in the interests of peace. In the modern sense, that can be extended to the protection and preservation of democracy, and the furtherance of human rights. Europeans need to ask themselves if they still believe in those values — the values of an open society — and are they willing to work towards the creation of an open society in which peace, democracy and human rights are fostered. If that is not the purpose of Europe today, then it is not clear to me what is the purpose of Europe.
I opposed the Euro from the start. I opposed the EU from the start too and for the exact same reason. It was undemocratic. It was (and remains to this day) a technocracy: a very bad idea.
⇧ Exxon Bid to Halt Climate Change Probes Rejected by U.S. Supreme Court
... Exxon's own scientists had determined that fossil fuel combustion must be reduced to mitigate the impact of climate change.
⇧ Updated Columbus, Ohio, Housing Law Gives more Protections to Renters
⇧ BART considers turning old train cars into housing
⇧ Robert J. Shiller on Bubbles, Reflexivity, and Narrative Economics
I view this as a convergence of the social sciences. Economists see themselves as trained in economics and are reluctant to get involved in sociology, psychology, anthropology, or history. In fact, at this point in history, the economics profession is not very interested in learning history. If you're going to be involved with forecasting, you have to use every available perspective to stay in touch with reality.
John Maynard Keynes talked about feedback. When people lose their job, they stop spending. That feeds back into the labor market again because when they stop spending, more jobs are lost. It gets feedback and can amplify itself into a big depression, as Keynes explained.
I was impressed by a Pulitzer Prize winning author Arthur Krock, who traveled the country in 1932, talking to people, listening, and trying to understand what was driving them. Where did all this extreme pessimism come from? It was related to the presidential campaign between [Herbert] Hoover and [Franklin Delano] Roosevelt. Krock found that trying to talk to people about the candidates' proposals fell on deaf ears. The talk was more emotional. It was more personal. It was about the neighbors next door: The husband lost a job and they have three kids and they're in real trouble. Talks like that.
Even though I've been studying narratives and changes in human thinking, it's still relatively new. I believe that economics and finance research will need to be more real world oriented and more willing to use information — digitized texts, for example — about how people are thinking and how their thinking changes. We're not all there yet.
... I wish I could be more scientific about these things. That's a mission for us, to make this into more of a science.
⇧ Chinese buyers expand their reach in the US housing market as the middle class gets in on the act
... more middle-class Chinese buyers are searching for lower-priced homes and they are using mortgages much more often.
That's because China's economy is coming down to earth.
If Trump and Xi don't come to an agreement, Xi will clamp down even more on Chinese citizens spending in the US.
⇧ [Global Warming] California Wildfires, Hurricane Michael Top List of 2018's Costliest Natural Disasters: Munich Re
A report from Munich Re on last year's natural disasters pointed to "clear indications" that man-made climate change is a factor in California's wildfires.
⇧ From Dams to Coastal Barriers: How the U.S. Is Fighting Flooding in 2019 - Scientific American
⇧ One of the largest homebuilders said it can't give a forecast because the market is so 'uncertain'
⇧ U.S. Carbon Emissions Surged in 2018 Even as Coal Plants Closed
... even as power generation has gotten cleaner, those overlooked industrial plants and factories have become a larger source of climate pollution. The Rhodium Group estimates that the industrial sector is on track to become the second-biggest source of emissions in California by 2020, behind only transportation, and the biggest source in Texas by 2022.
⇧ China's Stability Is at Risk
... the most troubling development are the growing signs that the CCP and paramount leader Xi Jinping feel compelled to take more and more authoritarian measures to retain political control. Credulous western observers talk about the "long term" perspective of the CCP, but in fact this gang of "running dogs," to borrow the Marxist terminology, is no different than western politicians. ...
The rise of Xi Jinping to sole power in China is nothing if not a display of massive insecurity and power, starting with the elimination of all rivals and ending with the dissolution of collective leadership.
⇧ Texas Insurance Department Recommends Flood Disclosure on Property Policies
"At least six states (Florida, Louisiana, Minnesota, New Hampshire, New York, and Washington) have adopted laws requiring that property insurance policies include a disclosure that the policy does not cover flood damage," TDI reported.
⇧ Government Shutdown Stalls Final Guidelines for Opportunity Zone Investing
Billions of dollars of new commercial real estate spending is being sidelined after the Internal Revenue Service canceled a highly anticipated public hearing set for Thursday.
⇧ The Fed Finally Admits It, China Is A Problem
As the younger generation rises, looking the other way concerning anti-democratic dictators for the sake of the plutocrats making more money at the general expense of the US economy is dying.
Therefore, I disagree with Kenneth Rapoza that Xi can take his time.
There are those in China who won't put up with it indefinitely either. Xi has to take care that the Chinese People don't rise up and throw him out and his Party right along with him, which they should have done a long time ago.
⇧ Multifamily: The Energizer Bunny Sector
Click through to listen to the podcast.
⇧ The inequity of pay-by-distance transit in the Bay Area
According to Gina, BART's pay-by-distance fare policy disproportionately affects low-income commuters:
"Most people who are from [low-income] neighborhoods have to travel for work," says Gina ....
"This idea that there is something called a commuter rail where you're charging people by distance ... is in and of itself part of the problem," he says. "The very clear assumption there is that if you're traveling more, that means that you're living in some far-off suburb and you're rich."
⇧ Forecasts are highly uncertain, and that argues for quicker, more aggressive policy intervention
V. V. Chari of the University of Minnesota sure is a vastly better economist than was Milton Friedman.
Free markets are, in the language of economists, Pareto optimal: That is, no one can be made better off without making others worse off.
"But," writes Chari, "economists widely agree that this prescription is woefully inadequate when it comes to externalities such as those induced by pollution and global warming." An externality, a cost imposed by one party on another without the latter's consent, is a problem for unregulated markets because prices don't reflect true costs. ... greenhouse gas creators like power plants and automobiles don't pay a price for the consequences of global warming those gases create.
... Markets can address commodities like shoes or houses, where alternatives are available, Chari notes. But "no good substitutes are available for the quality of any resident's air" since all must breathe, and that plays a central role in market failure for greenhouse gases.
If you're interested: https://en.wikipedia.org/wiki/Milton_Friedman
⇧ Thousands march against Macri's austerity measures in Argentina
... electricity and gas rates up more [than] 2,000 percent since the start of his term ....
⇧ Chevron, Occidental invest in CO2 removal technology
The costs of such technologies are high, however, and a huge number of plants would be needed to make a dent in manmade CO2 emissions.
⇧ Wildfire Investments, 911 Fee Proposed by California Governor
He'll outline the specifics of the $305 million investment in his budget due this week, but the bulk will go toward forest management and fuel reduction already approved by lawmakers.
⇧ Wondering what the Sunrise Movement is?
Rolling Stone spoke to Varshini Prakash, a co-founder of the Sunrise Movement, the grassroots outfit that is partnering with a new generation of Democratic leaders to push the ambitious agenda to the fore. The Green New Deal has three pillars, according to Sunrise: 100 percent clean energy by 2030; investment in communities "on the frontlines of poverty & pollution"; and the guarantee of a quality job for "anyone ready to make this happen."
⇧ Organic farming is on the rise in the U.S.
Certified organic food, according to the Agriculture Department's definition, must be produced without the use of conventional pesticides, petroleum- or sewage-based fertilizers, herbicides, genetic engineering, antibiotics, growth hormones or irradiation. Certified organic farms must also adhere to certain animal health and welfare standards, not treat land with any prohibited substances for at least three years prior to harvest, and reach a certain threshold for gross annual organic sales.
Is this good for the economy and environment? We think it is.
⇧ China Won't Be Taking Over
China is in a mess that the mainstream is trying to pretend isn't there.
I said long ago before I saw it anywhere else that Xi doesn't know what he's doing. I still hold to that view of him.
He's a tyrant who needs to go. The sooner the Chinese People remove him and his Party, the better.
What China needs and has always needed is for the People to truly decide things based upon complete transparency.
It's like the much heralded Belt and Road project, or Silk Road 2.0, isn't it, where the first batch of participating nations have started sounding the alarm over loan conditions. Yes, it sounds great, I admit, but I have long said that in reality Belt&Road is China's ingenious scheme to export its industrial overcapacity and force other countries to pay for it. It's like the model Rome had, and the US still do, just all in one single project. And this one has a name, and it can be expanded to Africa.
But no, I don't see it. I think China's debt, combined with the vast distance it still has from owning a global reserve currency, will call the shots, not Xi Jinping.
China won't be taking over. At least, not anytime soon.
⇧ Germany, the 4th-largest economy, probably just went into a recession
A recession in Germany could easily drag down France and Italy — the latter is already likely in a recession of its own.
Greece is still struggling to recover from its debt crisis and neighbouring Turkey also dropped into a steep recession, triggered by the devaluation of its currency.
⇧ Colorado could save $2.5B through 2040 by replacing coal with clean energy: report
Don't generate electricity by burning coal. Save money. Who knew? Who didn't?
⇧ Hundreds of environmental groups pressure Congress by backing Green New Deal
The Green New Deal is a Big New Deal.
... end to all new fossil fuel leasing on federal land; transitioning the power sector completely to renewable energy; phasing out fossil fuel-powered cars; and helping workers transition out of the fossil fuel sector.
⇧ Modern Monetary Theory Doesn't Make Single-Payer Health Care Any Easier [wrong]
... while a conventional economic thinker might say you establish a new government program and levy taxes (now or in the future) to pay for it, an MMT thinker would say you establish a new government program and the government prints the money to pay for it. But that does not mean the MMT thinker thinks the new program is free! The government is not constrained by its ability to obtain dollars, but the economy is constrained by real limits on productive capacity. If the government prints and spends money when the economy is at or near full employment, MMT counsels (correctly) that this will lead to inflation, and prescribes deficit-reducing tax increases to reduce aggregate demand and thereby control inflation.
"If the government prints and spends money when the economy is at or near full employment, MMT counsels (correctly) that this will lead to inflation ...." MMT doesn't actually say that. MMT actually advocates for full employment and also only focuses correctly on productivity. If productivity can keep up with demand caused by additional money in circulation, then price inflation is not an issue. Only the elite thinkers in MMT know this (finally). Automation is the key.
⇧ "It's Crucial to Break Up Facebook"
The article is historically quite correct about the issue of antitrust law and enforcement.
Ultimately, antitrust is a kind of constitutional check on private power. You can't understand antitrust law without understanding its relationship with power. This is the centerpiece of the book and the original soul of antitrust law. It wasn't so concerned with the details with price. It just had a sense that there needed to be some kind of outer limit on private power, much like there's a limit on public power set by the constitution.
What would you think of, say, three corporations controlling 100% of the residential-income-property sector? Would you be one of the three or driven out of the business because you'd be too small to survive the biggest fish swallowing up all the rest? Would it be a good thing for the nation and economy, etc.? If there were only one or two insurance carriers at most, do you think premiums would be higher or lower?
⇧ Oceans warming faster than expected, set heat record in 2018, scientists say
... "observational records of ocean heat content show that ocean warming is accelerating," the authors in China and the United States wrote in the journal Science of ocean waters down to 2,000 metres (6,600 ft).
Man-made greenhouse gas emissions are warming the atmosphere, according to the overwhelming majority of climate scientists, and a large part of the heat gets absorbed by the oceans.
⇧ Should we worry about temporarily raising government debt? - Blanchard's AEA Address
However, it's not an excuse for debt that's not needed. It's not needed. Governments should not borrow to create money, period.
⇧ The Landlord's Guide to Screening Vendors
⇧ Wow! Single-stream recycling is a major, major problem
Contamination runs wider than I had thought. I was typically thinking that people weren't rinsing bottles and jars enough, but it's broken glass that's really bad too, and more.
We can't not recycle. That would be total insanity. We have a problem with laziness. Therefore, we're going to have to clampdown in the form of enforcement, surveillance, fines, and fees, etc. What a shame it is that people are so lazy about saving their own planet.
⇧ 3 Pre-Inspection Red Flags That Make Me Run From a Deal
Now, there is nothing wrong with any piece of real estate as long as the price is right. So if the property does need a new roof but the foundation is great, the electrical and plumbing are good, and the interior is not too bad, then you have to get a discount on that price based on what the roof will cost. Ultimately, you're buying a problem and you're selling a solution. That is the name of the game. However, you don't want to buy too big of a problem.
"... there is nothing wrong with any piece of real estate as long as the price is right." I disagree. Somethings, so far, money won't fix, even if they give the real estate away for free or even pay you to take it. The bigger the problem the more cushion you should require over and above straight costs to repair or replace.
Needing a new roof could be a great thing, though, at the right price. Just make sure the season is right for replacing it in time before interior damage, etc.
⇧ Why the Fed Backed Off on Interest Rates
Steven Ricchiuto, U.S. chief economist at Mizuho Securities, writes in a client note that the reduction of the Fed's balance sheet, to just over $4 trillion from a peak of $4.4 trillion in October 2017, has shrunk excess reserves in the banking system far more, by $1 trillion.
That has forced foreign banks, the main holders of these excess reserves, to find alternative funding sources and push up money-market rates, which boosts borrowing costs for businesses and consumers. Ricchiuto says this rise supports his contention that the Fed should slow its balance-sheet contraction by March, at the latest.
The Fed backed off on interest rates because the corporate-tax cuts would otherwise have come back to haunt the economy even more than they will anyway and the Fed finally figured that out (in public). I will say that I thought they'd even take longer to get it. So, I'm glad they were a bit faster than usual.
⇧ As the oceans go, so goes real estate. Let's protect the oceans.
One good reason to feel less blue about the future of our ocean ...