Interesting & Important News & Analysis, July 30, 2019

We all know it’s only a matter of time before we have affordable, readily available clothing that will keep us comfortable even in what we typically think of as extreme outdoor heat and cold. Here’s a preview of one method. It’s not quite affordable enough, but it’s a start. It remains to be seen just how comfortable this method is (product reviews).

Sony’s wearable AC will arrive too late to save you from this year’s heatwave

I totally agree.

MMT’s Kelton Sees Central Banks Quietly Yielding to Governments

“Your policy has constantly been one foot on the brake and one on the gas,” Kelton said, calling for bolder steps. It’s extra fiscal spending, not negative interest rates, that can generate enough consumer demand to get companies to borrow and invest, she said.

Many States Move Toward Higher Taxes on the Rich; Lower Taxes on Poor People

Illinois has been at the forefront in pursuing higher taxes on the rich. The state’s tax system is currently one of the most regressive due, in part, to its flat income tax. In November 2020, voters in that state will decide whether to move to a graduated income tax (meaning the higher one’s income, the higher one’s tax rate) structure. Lawmakers already have enacted a companion bill which would increase tax rates on incomes over $250,000 and assess a top rate of 7.99 percent on millionaires (compared to the current flat rate of 4.95 percent today) if voters approve the measure. A graduated rate tax in Illinois will be far better suited to offer a progressive counterbalance to regressive sales and excise taxes.

Amazing and terrific:

Smith Tower, more than a century old, goes LEED Platinum

Smart move:

Berkeley, CA sets historic law banning natural gas from new buildings

The Berkeley, CA City Council unanimously voted this week to ban natural gas infrastructure in new low-rise residential buildings, beginning Jan 1. 2020. The legislation also requires that all new buildings in Berkeley be “electric-ready,” with proper panels and wiring conduits to support electric infrastructure.

LA’s ban on sleeping in vehicles lapses

The law only applies to residential streets, but more and more non-residential streets have been marked off-limits for those living in their cars and RVs—a group estimated to include more than 16,500 people in the most recent homeless count.

The city’s ordinance replaced a similar but stricter law banning living in vehicles everywhere in LA that was struck down in 2014.

Millennials’ Influence on the Housing Market

Cobb added that the average home size is 2,600-square-feet, which is almost double than the average home in 1973. Young buyers, however, are searching for something different, including energy efficient features, smart technology, and patios.

Homeless advocates challenge constitutionality of sweeps, seizures

“How am I supposed to get back up on my feet when they keep making me go back to square one?” Garcia said in a statement released by the Legal Aid Foundation of Los Angeles, one of three organizations that filed the suit.

Avoiding unemployment is not enough

… persons in employment are not necessarily better off than the unemployed.

In order to understand where the biggest challenges lie, it is necessary to look at the composition of the labour underutilization.

Bronx detention center’s affordable housing conversion will soon break ground

The project, known as The Peninsula, is being developed in partnership with the city to create 740 units of below-market-rate housing, community and open space for locals, light industrial space such as a kitchen for culinary startups, a day care center, workspace for artists, a wellness center, and ground-floor retail.

Rock bottom rates aren’t enough to boost US housing market

“If the Fed thinks rate cuts are going to send housing construction up like a rocket, they better think again.”

The explanation has been the same for months: low inventory for existing properties, and new construction hampered by land shortages, labor shortages, and rising building costs.

Major cities can fight climate change and make billions: researchers

C40 researchers said cities should implement walking, cycling and mass transit policies, introduce stringent emission standards, promote zero-emissions vehicles and establish zero emission areas.

Cities should also adopt strict regulations for new buildings and retrofit older buildings to improving heating, ventilation, air conditioning, water heating and lighting systems, researchers added.

Industry and businesses should use energy efficient technologies.

Antarctica Lost Sea Ice 4x the Size of France in 3 Years

“It went from its 40-year high in 2014, all the way down in 2017 to its 40-year low,” study author and NASA Goddard Space Flight Center climatologist Claire Parkinson told AFP.

That also means that Antarctica rapidly caught up with the fast-melting Arctic. In four years, it lost as much sea ice as the Arctic lost in 34, The Guardian reported.

Credit goes to Jerome Powell for quickly learning on the job! I hope he doesn’t forget what he’s learned.

The Economy Looks Solid, but the Fed Plans to Cut Rates Anyway. Here’s Why.

“I am unaware of another Fed chair in history who has, so quickly and clearly, owned the policy uncertainties that the Fed confronts, including when the Fed has gotten it wrong,” said Peter Conti-Brown, a financial historian at the University of Pennsylvania’s Wharton School. “The strategy was to be the Wizard of Oz to the citizens of the Emerald City, not the man behind the curtain to the visitors from Kansas. Powell has opened the curtain and let us in.”

At times in the last several years, traditional measures of the American economy suggested that it was reaching full health and that interest rate increases might be justified to prevent inflation. But when the Fed’s policies diverge too much from those of its counterparts around the world, it causes the dollar to rise, financial conditions to seize up and overseas economies to slow, in turn endangering the United States economy.

… Mr. Powell is sending an important message: As long as he is running the show, the Fed will aim to react quickly to the world as it is, not as the models say it ought to be.

The Case for a Fiscal Fed

In the United States, the sugar high generated by President Donald Trump’s massive 2017 tax cut has peaked and is now rapidly waning, without triggering the promised investment boom. …

Central bankers have thus begun to call on fiscal policymakers to do more. As US Federal Reserve Chair Jerome Powell recently put it, “It’s not good to have monetary policy be the main game in town, let alone the only game in town.” In practice, a greater role for fiscal policy would mean that tax cuts and spending increases would accompany interest-rate reductions in the event of another downturn.

My “Fiscal Fed” greatly differs from Benjamin J. Cohen’s.

The Monetary-and-Banking-Democratization Platform for The United States of America

How privatisation impacts workers: Evidence from Brazil

Supporters of Bolsonaro’s plans argue that privatisation will raise desperately needed revenue for the government and improve the efficiency of the privatised firms. Opponents of the plan include workers and trade unionists, who have organised multiple protests in the fear that privatisation will lower wages and employment.

There is limited empirical evidence to show how privatisation impacts workers. Most of the academic literature on privatisation focuses on how it impacts firm profits and efficiency (Megginson and Netter 2001, Porta and Silanes 1999). However, the source of these gains is not always clear, and one possibility is that firms increase profits by lowering wages and employment. Therefore, while privatisation may benefit firm owners, it could also lead to declines in worker welfare, as union members fear.

… privatisation leads to persistent earnings losses for all groups, but the losses are greatest for the least economically advantaged group.

Trump Was [Selectively] Right About the Dollar

… the president’s call for lower rates and a weaker dollar have just have found fresh impetus from an unexpected source—the IMF now says the American currency is 6%-12% overvalued.

Incidentally, the Bretton Woods Institution has also found that the euro – the second-most commonly used currency in international trade–is undervalued by 8%-18% relative to the German economy, the region’s largest.

But in a potentially big knock on Trump’s assertions against Beijing, the IMF says the Chinese yuan appears to be fairly valued, though it does concede that there are ‘large uncertainties’ around the currency that could mean it’s undervalued by 11.5 percent or overvalued by up to 8.5 percent.

China: The Covert Credit Superpower

China’s direct loans and trade credits have climbed from almost zero in 1998 to more than 1.6 trillion USD, or close to 2 percent of world GDP in 2018.5 These loans mostly go to low- and middle-income countries. In total, estimates suggest that the Chinese state now accounts for a quarter of total bank lending to emerging markets. This has transformed China into the largest official creditor, easily surpassing the IMF or the World Bank. Beyond that, however, little is known. Among our tasks is to identify these borrowers.

The necessity to change the rules of the current economic system is quite obvious.

From a pragmatic stance, the necessity to change the rules of the current economic system is quite obvious. It is leading to ever rising inequality (a clear violation of most religious and humanist ethics right across moral philosophy) and it is leading to environmental destruction, the 6th mass extinction and very likely human extinction.

Can we save ourselves?

Cap Rates on Apartment Acquisitions Take a Slight Dip in the First Half of 2019

For years, apartment experts predicted that yields on investments in apartment rental properties would rise. Years passed, but cap rates in the sector remain historically low, and are getting lower.

“Investors are looking at,” he notes. “Now we put the schools and their rating on page one of our marketing materials. A property’s WalkScore still matters, but we put it in the back of our marketing materials for suburban properties.”

Project of the Month: Callahan Construction Managers breaks ground on 88-unit affordable housing Squirrelwood Apartments

Passive House construction adheres to five building-science principals: continuous insulation throughout the entire envelope without thermal bridging; an airtight building envelope preventing loss of conditioned air and infiltration of outside air; high-performance windows and doors that manage solar energy for maximized heating and minimized overheating during cooling seasons; energy recovery ventilation; and a minimal space conditioning system.

Elizabeth Warren Declares War on Private Equity ‘Vampires’ in 2020 Plan

A centerpiece of her “economic patriotism” plan is to transform private equity firms, which she said often act like “vampires” when they buy companies by “bleeding the company dry and walking away enriched even as the company succumbs.”

Rush Limbaugh Abandons Fiscal Conservatism

… Rush says stuff like this:

How many years have people tried to scare everybody about [the deficit]? How many years, how many decades have politicians tried to scare us about the deficit, the national debt, (Sen. Jim Sasser pronunciation) “the dafycit,” any number of things? Yet here we’re still here, and the great jaws of the deficit have not bitten off our heads and chewed them up and spit them out.

He’s simply stating the obvious.

SF’s $1,200-per-month bunk bed ‘pods’ sold out

While the company calls its sleeping units “pods,” spaces in a Podshare building are essentially just enclosed beds with a couple of amenities, including a television, toilet paper, and ramen noodles.

The arrangement is little different from a hostel, although SF hostels sometimes charge more than $100 per night. The company brands itself “co-living” and makes explicit reference to the lack of privacy involved—renters are afforded no guests and no romantic exploits on the premises.

‘Eco-shaming’ is on the rise, but does it work?

Flight shaming

In Sweden, travellers are becoming more and more conscious of their carbon footprint. And they’ve invented a word to discourage people taking to the skies: “Flygskam” – which means flight shame.

Tokyo Announces Plan To Install Solar Roads In Time For 2020 Olympics

The road is made of solar panels that are installed in the ground, then covered in a special resin that makes them durable under the weight of traffic.

If this technology were more widely used, it would greatly reduce the cost of installation, as the components could be more affordably mass produced. So implementing any usage is increasing the likelihood of solar roads everywhere.

What economists have gotten wrong for decades

The natural rate of unemployment that AOC questioned is one such idea (more on that below). There are three others worth singling out:

that globalization is a win-win proposition for all, an idea that has deservedly taken a battering in recent years;
that federal budget deficits “crowd out” private investments; and
that the minimum wage will only have negative effects on jobs and workers.

Economists and policymakers have gotten these ideas wrong for decades, at great cost to the public. …

In every case, the costs fall on the vulnerable: people who depend on full employment to get ahead; blue-collar production workers and communities built around factories; families who suffer from austerity-induced weak recoveries and under-funded safety nets, and who depend on a living wage to make ends meet. These groups are the casualties of faulty economics.

In contrast, the benefits in every case accrue to the wealthy: highly educated workers largely insulated from slack labor markets, executives of outsourcing corporations, the beneficiaries of revenue-losing tax cuts that allegedly require austere budgets, and employers of low-wage workers.

In this regard, there is a clear connection between each one of these mistakes and the rise of economic inequality.

How Clients Can Max Out on the Section 199A Deduction

… the TCJA failed to provide a bright-line test as to whether real estate activities constitute a trade or business, despite the large number of such enterprises operating around the country.

To address this situation, the final regulations created a new safe harbor rule. Here’s how it works:

A rental activity (including multiple activities combined into a single enterprise) is treated as trade or business if the following requirements are met…

Elizabeth Warren Means Business: A Letter in Support of the ‘Stop Wall Street Looting Act of 2019’

… the bill:

holds those who have ultimate decision-making authority responsible for damages and debts, including employee back pay and benefits;
limits or prohibits the looting of assets through fees and capital distributions;
reduces the incentive for risk-taking by prohibiting interest on excessive debt obligations from being tax-deductible;
limits enhancement of executive compensation, and prioritizes unpaid wages, severance pay, contributions to employee benefit plans, and damages from violations of labor and employment laws, during bankruptcy proceedings;
directs bankruptcy courts to give substantial weight to the effect on employees in directing the sale of company properties;
puts consumers with unredeemed gift cards or undelivered services just behind employees in bankruptcy proceedings, along with people who purchased, leased, or rented property from the company;
closes the carried interest loophole that gives preferential tax treatment to private equity partners’ income;
protects outside investors by requiring detailed disclosure of fees and returns, as well as the performance of past funds, including the outcomes for target firms;
clarifies that fund managers have a fiduciary duty to pension plans whose assets they manage;
prohibits giving favorable treatment to certain limited partners;
requires managers of collateralized debt obligations to retain a share of the risk according to the credit risk retention requirements in the Dodd-Frank Act; and
provides effective enforcement mechanisms to ensure compliance with these provisions.


No, Sen. Warren, Germany Is Not a Model for the U.S.

The IMF found an almost perfect correlation between the change in Germany’s trade balance and the change in the share of German national income going to the rich and the companies they control.

At first blush, criticizing Germany’s economic management seems absurd. The country has one of the world’s lowest unemployment rates, high wages, a generous social safety net, and a large, technologically advanced manufacturing sector. Look beneath the surface and focus on how things have changed in the three decades since reunification, however, and a distinctly different picture emerges.

In many ways, the U.S. and Germany have been following the same economic model for decades. Both countries have experienced rising income concentration and falling corporate investment—and those trends have been reinforced by a variety of government policies. In Germany, the result has been depressed spending on imports and a big trade surplus. Americans have had debt bubbles and trade deficits. Neither is desirable. Sen. Warren should find another country to emulate.

Germany is more the problem than the solution.

Chrome 76 prevents NYT and other news sites from detecting Incognito Mode

When using Incognito Mode, “Chrome won’t save your browsing history, cookies and site data, or information entered in forms,” a Google support page notes. This is useful for keeping browsing activity private from other users of the same device or Google account but not for hiding your location or identity from websites and network operators.

In Incognito Mode, “Your activity isn’t hidden from websites you visit, your employer or school, or your Internet service provider,” the same Google support page says. For more comprehensive privacy protection, there are systems like Tor and VPNs—but finding a VPN that is both private and secure requires a bit of research.

Michael Hudson: U.S. Economic Warfare and Likely Foreign Defenses

The United States has dissipated its supply of spare manufacturing capacity and local suppliers of parts and materials, while much of its industrial engineering and skilled manufacturing labor has retired. An immense shortfall must be filled by new capital investment, education and public infrastructure, whose charges are far above those of other economics.

The Fall of the Economists’ Empire

The big challenge – to use that overworked word – is to develop what the philosopher Thomas Nagel called a “view from nowhere” that transcends both cultural fetishism and scientism, and does not force us to choose between them. This is a task for philosophy, not economics.

Jonathan Portes, professor of economics and public policy at King’s College London, on why ideology, short-termism and a relentless focus on Brexit is resulting in economic hardship continuing in the UK.

Not just the UK, but almost every other developed country, has seen high deficits and very large increases in public debt at the same time as long-term interest rates have remained at the lowest levels in recorded economic history – going back to the Babylonian Empire. Arguments, whether from the left or the right, that financial markets will somehow punish governments which run persistently large deficits are political rather than economic in origin. Austerity was a political choice, not an economic necessity.

… As the impact of austerity has become more and more obvious, public opinion has moved decisively in favour of higher spending on public services and a more generous approach to welfare benefits. Unfortunately, however, while austerity is intellectually dead, it is far from over at the sharp end. The Government has applied a sticking plaster to the NHS, but the squeeze on other services continues.

In an alternative political universe, we’d be having a serious debate about what the priorities are for repairing the damage, who’s going to pay and over what timescale, what the balance should be between investing for the long-term and helping the neediest in the short-term, and so on.

Instead, the entire British political debate is focused on Brexit.

How re-engineering an old technology could give us EVs with 700 miles of range

If they’re right, it could also revolutionize solar and wind storage.

To help the homeless, close a shelter

“We used to think that people somehow needed to get sober in order to be able to live in a flat,” said Helsinki Mayor Jan Vapaavuori. “But then we turned that around: You need an apartment in order to get sober.”

The program is based on the comically simple idea that to end homelessness, give people homes.

Infamous landlord Steve Croman illegally de-stabilized Harlem apartments: lawsuit

“It’s unconscionable for a landlord to unlawfully force a family from its home simply to improve his own bottom-line,” James said in a statement. “Unscrupulous landlords like Steve Croman are not above the law, and we remain committed to holding bad-acting landlords accountable for taking advantage of New Yorkers.”

The suit against Croman comes a week after a group of landlords filed a lawsuit challenging the tenant-friendly rent reforms that were recently passed in Albany, alleging that owners are deprived of their rights to “use, possess, dispose of, and exclude others from their property.”

Mayors declare heat emergencies as cities face power outages, health risks

The mayors of Boston, New York, Philadelphia, Baltimore and Washington, DC declared heat emergencies as temperatures across the Northeast soared to 100-plus degrees over the weekend. The mayors shared information on public spaces to be used as “relief centers,” and enhanced outreach efforts for the homeless and other vulnerable populations.

Heat waves across the U.S. were responsible for six deaths over the weekend, according to CBS News. Four people died in Maryland, one died in Arkansas and one died in Arizona.

World’s Largest Tropical Reforestation to Plant 73 Million Trees in Brazilian Amazon

… this precious land has been threatened by decades of commercial exploitation of natural resources, minerals and agribusiness, as Conservation International editorial director Bruno Vander Velde writes, “leading to about 20 percent of original forest cover to be replaced by pastures and agricultural crops, without securing the well-being of the local population.”

To solve climate change and biodiversity loss, we need a Global Deal for Nature

We chart a course for immediately protecting at least 30% of Earth’s surface to put the brakes on rapid biodiversity loss, and then add another 20% comprising ecosystems that can suck disproportionately large amounts of carbon out of the atmosphere. In our view, biodiversity loss and climate change must be addressed as one interconnected problem with linked solutions.