News: Real Estate, Risk, Economics. Nov. 12, 2018

Linking ≠ endorsement. News: Real Estate, Risk, Economics. Nov. 12, 2018

Table of Contents
(Click to sections below.)

1) The myth of monetary sovereignty [sort of]

2) The Myth Of The Myth Of Monetary Sovereignty

3) 5 People Injured in South Carolina Apartment Explosion

4) 35 unlicensed contractors arrested in undercover sting operation in Pinellas County

5) The Scandinavian Style of Capitalism

6) Large hydropower dams 'not sustainable' in the developing world

7) US Supreme Court allows historic kids' climate lawsuit to go forward

8) Wells Fargo reveals software error led to hundreds of faulty foreclosures

9) Green Ballot Initiatives Meet Massive Resistance From Big Oil

10) Six Common Sense Imperatives for Better Home Building

11) Never have corporate profits outgrown employee compensation so clearly and for so long

12) Entire California Town Destroyed; Tens of Thousands Flee in Los Angeles, Ventura Counties

13) Trump calls court block on Keystone oil pipeline 'a disgrace'

14) Fed leaves key US interest rate unchanged, notes slowing investment

15) Yves Behar debuts fully customisable tiny homes [ADUs, not on wheels]

16) Key House Democrat promises hearings on GOP tax package

17) US Apartment Market Sees Strong 2018 Prime Leasing Season

18) The Post-Midterms Tax Policy Outlook: Small Ball and Real Tax Reform Debate

19) One approach to long-term shelter: Tiny grants for tiny homes

20) A Fifth of China's Housing Is Empty. That's 50 Million Homes - Bloomberg

21) Trade players to watch in Congress after Democrats retake House

22) China's central bank says 'grey rhino' financial risks could charge in 2019

23) Climate change: Oceans 'soaking up more heat than estimated'

24) 5 Ways to Offer the Energy-Efficient Features Millennial & Gen Z Renters Seek

25) 7 Ways to Prevent Fraud and Employee Theft in Your Real Estate Business

26) Update on the LA Measure for a City-owned Bank — A Valiant Effort!

27) California voters reject Proposition 10, which would have expanded local authority to enact rent-control laws on residential property

28) When low-income families can meet their basic needs, children are healthier [and so is the economy]

29) The EU is unhealthily biased toward austerity — that's why it's now in a budget standoff with Italy

30) As Renewables Drive Up Energy Prices, Voters In US, Asia & Europe Are Opting For Nuclear Power [Hmmm]

31) Oil producers see oversupply, call for new strategies

32) 'New normal' ferocious winds whip up deadly California fires [heart wrenching]

33) Stunning NASA Photos Show California's Devastating Wildfires From Space

34) California wildfires: Death toll jumps to 25 as Paradise residents return to apocalyptic scenes

35) Unnatural Instincts: The Trump effort to rollback critical climate regulations is bad science and bad business

36) The world is facing a global sand crisis

37) This Drone Sucks Up Trash From The Water Like A Roomba

38) Moorside's atomic dream was an illusion. Renewables are the future

39) Climate Groups Cringe at Virginia Tax Cut for Oft-Flooded Homes

40) Pennsylvania Charges 60 Individuals in Statewide Insurance Fraud Sweep

41) One Month Later, Power Fully Restored to Florida Residents Hit by Michael

  1.    The myth of monetary sovereignty [sort of]

    This article is largely correct. The real takeaway is that there are limits to monetary sovereignty. It is not a one-size-fits-all panacea. None of that is to say that there aren't numerous situations where governmental borrowing was never needed but happened anyway. Regardless, what isn't discussed in the article is the solution to the problem.

    The solution is one global currency managed democratically, not technocratically, at the supranational level.

    As for Argentina, Frances wrote:

    Printing money to fund an external deficit in a foreign currency always ends with the country shut out of markets and facing a painful choice between an IMF programme and debt default, possibly accompanied by hyperinflation. This has just happened to Argentina. Argentina, a country which issues its own currency, has free movement of capital and a floating exchange rate, does not have monetary sovereignty.

    What that misses is that Argentina could default and simply not borrow, ever. Argentina has been a repetitive defaulter because it has been a perpetual, needless borrower. If Argentina were to issue only enough money to maintain or increase productivity and pay for imports (which could be balanced with exports but wouldn't have to be), there would be no problem outlined in the article. At the same time, Argentina could be at the forefront of the movement for a truly global currency, not the US dollar.

    The US got where it is as the reserve currency for the world because of a deal with the Saudis to transact the oil trade in USD. Other nations are already attempting to break that stranglehold. If they succeed, the US should want the global currency rather than competing against other national or bloc currencies as one reserve among many.

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  2.    The Myth Of The Myth Of Monetary Sovereignty

    I mean no offense, but I can't follow Brian Romanchuk's writing style. I also find myself wanting to defend Frances against some of Brian's assumptions about what she wrote even though I too took exception to her article.

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  3.    5 People Injured in South Carolina Apartment Explosion

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  4.    35 unlicensed contractors arrested in undercover sting operation in Pinellas County

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  5.    The Scandinavian Style of Capitalism

    I disagree that using precise, strict definitions and laying those out is a waste of time.

    I also believe that calling various setups simply various forms of capitalism is mistaken. I think that what Timothy is actually describing is the varying degrees of mixed economies.

    Public roads are socialist roads because they are government owned and even if they are built by private contractors. That's a mix right there of socialism and capitalism.

    Fortunately for us in the US, the government calls for elections. I know we could do better in that regard, but the point still stands.

    That said, his article is worth reading, especially for those who are unaware of the current Scandinavian model.

    Digging a bit deeper into the history, you'd find an argument that differs from Timothy's as to exactly why the model changed. That's the subject of another post.

    If you want to cite the Scandinavian countries as an economic model for the US, that's of course fine--but then you should also feel some obligation to be aware of what that model actually includes. I've already mentioned parts of that model: strong support for international trade and participation in global markets; much higher taxes on the middle class, and lower taxes on corporations; much higher levels of social services and benefits related to labor market participation. It's a model where the decisions about production, investment, pricing, job choice, and consumption happens in the context of private-sector decision-makers.

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  6.    Large hydropower dams 'not sustainable' in the developing world

    More than 90% of dams built since the 1930s were more expensive than anticipated. They have damaged river ecology, displaced millions of people and have contributed to climate change by releasing greenhouse gases from the decomposition of flooded lands and forests.

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  7.    US Supreme Court allows historic kids' climate lawsuit to go forward

    Andrea Rodgers, co-counsel for the Juliana plaintiffs, says that the Trump administration hasn't challenged the fact that humans are changing the climate. "They haven't presented experts to contest what our scientists are saying about ice melt or sea-level rise or terrestrial impacts or how climate change happens or ocean acidification," she says.

    I think this is an excellent precedent: that the children had the legal standing to sue.

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  8.    Wells Fargo reveals software error led to hundreds of faulty foreclosures

    $12,800 doesn't sound like much as repayment for losing one's home.

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  9.    Green Ballot Initiatives Meet Massive Resistance From Big Oil

    The more carbon that's burned that isn't offset by sequestering in one form or another, the more global warming we'll experience, and the more risk there will be to real-estate investments. Costs will go up for construction and repairs and retrofitting. Insurance premiums will also rise if coverage even remains available.

    Greenpeace's Janet Redman tells Marc Steiner that a carbon tax in Washington, drilling limitations in Colorado, and other initiatives were struck down by fossil fuel industries—but environmentalists did see some wins.

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  10.    Six Common Sense Imperatives for Better Home Building

    Ironically, the difference between the insurance-funded repairs and the cost of disaster-resilient upgrades is often manageable, but no systematic program exists to inform homeowners of resilience upgrade options, provide or identify funding to bridge the gap between claims proceeds and optional upgrades, or support the retrofitting and rebuilding through to conclusion.

    We suggest that mitigation upgrade programs for families residing or rebuilding in disaster zones can be funded with both private donations or public funds, e.g., the FEMA Pre-disaster Mitigation (PDM) program expanded as part of the newly enacted federal Disaster Recovery Reform Act.

    The Insurance Institute for Business and Home Safety Fortified program offers "beyond-code" methods for high wind and other hazards. In fact, Fortified provided the construction recipe used on the surviving homes examined by The Washington Post in the above-referenced story. Bridging the cost gap between insurance proceeds and resilience upgrades like those outlined in Fortified closes the distance between status quo and resilience for recovering families.

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  11.    Never have corporate profits outgrown employee compensation so clearly and for so long News: Real Estate, Risk, Economics. Nov. 12, 2018

    ... the labor share of national income (the light blue line in the chart above) remains below its pre-crash level (and much lower than any earlier year in postwar history), while the share of national income that is distributed to wealthy households in the form of dividends (the light green line) is still much higher than it's been throughout the postwar period.

    Never have corporate profits and dividends outgrown workers' wages so clearly and for so long.

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  12.    Entire California Town Destroyed; Tens of Thousands Flee in Los Angeles, Ventura Counties News: Real Estate, Risk, Economics. Nov. 12, 2018

    "Pretty much the community of Paradise is destroyed, it's that kind of devastation," said Cal Fire Capt. Scott McLean late Thursday. "The wind that was predicted came and just wiped it out."

    Should fireproof housing be the building code? The complaint will be the expense, but what is the money supply's impact on price inflation when fireproof housing is higher productivity? If done correctly, none.

    What's the lame excuse for building housing that burns when we don't have to? We aren't paying people enough so they can turn around and pay others more to do it? We can't pay people enough?

    We have a form of government and a type of currency where we can subsidize anything.

    Is the excuse that there wouldn't be enough financial gain in it for those at the top of the income pyramid already? What are our priorities as a society? How much dollar value are we placing upon the lives and welfare of our fellow citizens?

    I'm in insurance because it's based upon sharing the expense. It's an unfortunate and unnecessary thing that only some can afford to do that. I'm also not in it to make a "killing." I wouldn't be able to live with myself. I consider that a strength, whereas, plenty of others consider it a weakness. However, if you study the structure and function of the human brain, you'll find that those areas most associated with sympathy, empathy, compassion, and caring about strangers are more recently and more highly evolved.

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  13.    Trump calls court block on Keystone oil pipeline 'a disgrace'

    I say that the court's decision was sound because the reasons behind why the pipeline was canceled were sound. We simply cannot continue spewing CO2 without countermeasures that will actually reduce CO2. Plus, CO2 is not the only very important concern, as the article makes clear.

    This is a huge risk-management issue, and I'm sorry to say that the Donald Trump administration is about as bad as it gets when it comes to environmental risks that directly impact upon everyone and everything on this planet.

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  14.    Fed leaves key US interest rate unchanged, notes slowing investment

    ... markets will dissect a notable change in the FOMC's language, saying "business fixed investment has moderated from its rapid pace earlier in the year."

    That could be viewed as an indication the Fed could move more cautiously, with fewer than the expected three rate hikes next year.

    - Slowing business investment -

    Or the comment might be read as the consequence of President Donald Trump's trade confrontations, which the Fed has repeatedly cited as a factor undermining business confidence and investment plans, as tariffs increase costs.

    Wage pressures have been, and are still being, highly exaggerated. We simply don't know what the tax cuts will finally end up doing other than reducing the economy. If the cuts are sufficiently tweaked, that will alter the entire picture.

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  15.    Yves Behar debuts fully customisable tiny homes [ADUs, not on wheels]

    Add your comment. Including the article/link number will help.


  16.    Key House Democrat promises hearings on GOP tax package

    Speaking of the tax cuts:

    Neal promised the committee would hold hearings on the $1.5 trillion tax cut pushed through by Republicans last year.

    "The tax bill was written in 51 days without one hearing or without one witness offering testimony," Neal said during a wide-ranging news conference in Massachusetts on Wednesday.

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  17.    U.S. Apartment Market Sees Strong 2018 Prime Leasing Season

    What does all this mean? It means we haven't been overbuilding apartments.

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  18.    The Post-Midterms Tax Policy Outlook: Small Ball and Real Tax Reform Debate

    A key question for any of these potential pieces of legislation is whether Congress will close tax loopholes to pay for them or continue the fiscally irresponsible practice of piling on more unpaid for tax cuts on top of trillions in tax cuts since 2001.
    ...
    Some Democrats have also expressed interest in passing larger tax cuts for low- and middle-class taxpayers potentially in the form of expanding the Earned Income Tax Credit (EITC) or Child Tax Credit (CTC).
    ...
    ... The best start for conversations about tax reform are progressive tax change through reforming the taxation of capital gains, the estate tax, the international tax code, and other crucial areas.

    I'm no fan of using tax policy to tweak the economy. I'm a fan of democratic fiscal-policy based upon creating the nation's currency without borrowing. I wouldn't even tax. I'd use an entirely different method if spending were to overshoot productivity and cause unwanted aggregate price-inflation.

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  19.    One approach to long-term shelter: Tiny grants for tiny homes News: Real Estate, Risk, Economics. Nov. 12, 2018

    I've covered this before on this blog, but this article is a slightly deeper dive.

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  20.    A Fifth of China's Housing Is Empty. That's 50 Million Homes - Bloomberg

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  21.    Trade players to watch in Congress after Democrats retake House

    Trade impacts the economy, which impacts real-estate investing and investments. Therefore, I've included this link. Here's the most salient aspect in the linked article in my view:

    Richard Neal of Massachusetts is expected to become chairman of the House Ways and Means Committee, one of the most powerful trade posts in Congress. A 30-year House veteran with 25 years on the panel, Neal opposed the original NAFTA. He has said that the "bar for supporting a new NAFTA will be high," and that he will insist on stronger enforcement of labor and environmental provisions.

    I opposed NAFTA for the very reason that it did not protect the environment or labor.

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  22.    China's central bank says 'grey rhino' financial risks could charge in 2019

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  23.    Climate change: Oceans 'soaking up more heat than estimated'

    The key element is the fact that as waters get warmer they release more carbon dioxide and oxygen into the air.

    "When the ocean warms, the amount of these gases that the ocean is able to hold goes down," said Dr Resplandy.

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  24.    5 Ways to Offer the Energy-Efficient Features Millennial & Gen Z Renters Seek

    Add your comment. Including the article/link number will help.


  25.    7 Ways to Prevent Fraud and Employee Theft in Your Real Estate Business

    Add your comment. Including the article/link number will help.


  26.    Update on the L.A. Measure for a City-owned Bank — A Valiant Effort!

    The Los Angeles charter amendment to approve a city-owned bank did not pass, but it did get 42 percent of the vote, a remarkable feat considering that the dynamic young Public Bank LA advocacy group effectively only had a month to educate 4 million voters on what a public bank is and why passing the measure was a good idea. If they had had another month, the bill could well have passed.

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  27.    California voters reject Proposition 10, which would have expanded local authority to enact rent-control laws on residential property

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  28.    When low-income families can meet their basic needs, children are healthier [and so is the economy]

    Leaving people behind weakens the entire economy. We'd actually pay less in the longer run if we'd take care of children's needs regardless of the parents' ability to pay.

    A series of reports from five cities across the US found that young children and their parents are healthier when they are able to afford basic needs. New research published by Children's HealthWatch, headquartered at Boston Medical Center, highlights the need for policymakers to improve access to and effectiveness of programs that enable all families with low incomes to afford basic needs such as food, shelter, utilities, medical care, prescription medicines and childcare.

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  29.    The EU is unhealthily biased toward austerity — that's why it's now in a budget standoff with Italy

    If the EU's officials — and the governments pushing them — are not scared, they should be. Europe's people have had enough of austerity. They recognised many years ago that we were not "all in this together", that austerity is not a programme for recovery, but for forcing the poorest to pick up the tab for the crimes of the financial sector.
    ...
    After five years of 10 per cent unemployment and low or negative growth, Italy's government says you have to spend and invest to repair a damaged economy. They compare their programme to that of the New Deal measures of President Roosevelt. This shouldn't be controversial. But the Eurozone's rules go in precisely the opposite direction — forcing austerity on stagnant and depressed countries in exactly the way the International Monetary Fund pushed austerity of dozens of developing countries in the 1980s and 90s. This result has been catastrophic in terms of human welfare.

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  30.    As Renewables Drive Up Energy Prices, Voters In U.S., Asia & Europe Are Opting For Nuclear Power [Hmmm]

    I'm not sure about the stats in the article; but, even if they are correct, I still oppose increasing nuclear and I'm still in favor of phasing out existing plants. That's because of the cradle-to-grave costs and so-called externalities (environmental hazards, which are huge).

    If the stats are correct that more people are favoring nuclear because of global warming and the costs of non-nuclear alternatives, then that's highly likely to be due to generational differences in the knowledge about the drawbacks of the complete nuclear cycle.

    Techniques have improved all areas, but they are still far more dangerous than anything associated with non-nuclear alternatives.

    Anyway, I'm pretty sure battery breakthroughs will continue and that those will spell the demise of nuclear generally.

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  31.    Oil producers see oversupply, call for new strategies

    Where is the libertarian-capitalist screaming against these agreements in restraint of "free trade"? OPEC is an international price-fixing cartel; however, we see no outcry in mainstream-media reporting. Is that because the US's oil sector has a strong lobbying effort? Is it also because the Saudis have usually been presented to the American public as US allies because the Saudis agreed to trade oil in US dollars?

    What's going to happen that will impact US real-estate investing? How will it impact property and casualty insurance premiums?

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  32.    'New normal' ferocious winds whip up deadly California fires [heart wrenching]

    To be absolutely clear, I am not writing the following as a crass, political ploy.

    As a property/casualty insurance broker, I'm obligated to tell the truth about risks and managing them.

    The problem is global warming caused by burning coal, gas, and oil.

    President Donald Trump is going to be caught out being disingenuous shortly if he keeps repeating gross scientific errors on the subject. He'll be accused of shilling for the coal, gas, and oil industries. He'll be directly blamed for 1) people being burned alive, drown, made homeless, turned into global-warming refugees, etc., and 2) taking only the exactly worst action possible in the face of all of it: increasing coal, gas, and oil burning, increasing global warming wreaking havoc.

    Is that the legacy he wants? It's the one he's going to leave if he doesn't do a 180 on CO2 emissions.

    "We are entering a new normal. The rate of spread is exponentially more than it used to be," said Ventura County Fire Chief Mark Lorenzen, noting at a press conference that California's fires in 2018 grow far more quickly ....
    ...
    The Republican president has previously blamed California officials for fires and threatened to withhold funding, saying the state should do more to remove rotten trees and other debris that fuel blazes.

    State officials have blamed climate change and said many of the burn areas have been in federally managed lands.

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  33.    Stunning NASA Photos Show California's Devastating Wildfires From Space News: Real Estate, Risk, Economics. Nov. 12, 2018

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  34.    California wildfires: Death toll jumps to 25 as Paradise residents return to apocalyptic scenes

    The "Camp Fire" burned down more than 6,700 homes and businesses in Paradise, more structures than any other California wildfire on record.

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  35.    Unnatural Instincts: The Trump effort to rollback critical climate regulations is bad science and bad business

    The scale of these rollbacks — measured in GHG emissions, in economic costs to be paid and benefits to be lost, and in human lives — is breathtaking. These rollbacks not only reveal a bad "instinct" for science, they also show a bad sense for business.
    ...
    Underpinning the justifications for many of these rollbacks are new ways of calculating costs and benefits of regulations that seek to minimize benefits and make the regulations seem more costly. However, these rollbacks will be a disaster for public health and the environment, and will ultimately be a drag on the U.S. economy. A new study finds that the U.S. economy has more to lose from the effects of climate change than all other countries in the world except India, while another report shows that the Trump administration's reckless deregulatory rollbacks would deprive workers, consumers and the economy of more than $2.1 trillion in benefits over the next two decades. The potential losses from the 13 rules examined in the report would amount to nearly $17,000 per household, far exceeding any savings for businesses.

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  36.    The world is facing a global sand crisis

    In 2010, nations mined about 11 billion tonnes of sand just for construction. Extraction rates were highest in the Asia-Pacific region, followed by Europe and North America. In the United States alone, production and use of construction sand and gravel was valued at US$8.9 billion in 2016, and production has increased by 24 percent in the past five years.
    Moreover, we have found that these numbers grossly underestimate global sand extraction and use.
    ...
    ... It is time to treat sand like a resource, on a par with clean air, biodiversity and other natural endowments that nations seek to manage for the future.

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  37.    This Drone Sucks Up Trash From The Water Like A Roomba

    Terrific idea!

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  38.    Moorside's atomic dream was an illusion. Renewables are the future

    Even the government's own advisers, the National Infrastructure Commission, are urging a rethink. Renewables, they point out, are simply less risky.
    ...
    The momentum is with renewables. The technology is becoming cheaper, investors view it as an increasingly safe bet and the need for subsidies is diminishing. Next year we will find out how much cheaper offshore wind, which has already halved in cost, can become in a new round of government auctions.
    Ditching new nuclear would require a huge increase in the amount of wind and solar power already expected in coming years. It would need dramatic progress on energy storage, smarter grids and even more efficient use of energy. All those things will be difficult. But pursuing an impossible atomic dream, as Moorside demonstrates, looks even harder.

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  39.    Climate Groups Cringe at Virginia Tax Cut for Oft-Flooded Homes

    "It will be an incentive to stay in a risky area," said Chad Berginnis, executive director of the Association of State Floodplain Managers ....

    I don't think "buying time" this way is a good idea. As for who would pay to relocate those who can't afford the expense, the whole People should. Why not? Of course, those who continue not even trying to curtail global warming but rather pump more CO2 into the atmosphere should pitch in the lion's share I should think.

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  40.    Pennsylvania Charges 60 Individuals in Statewide Insurance Fraud Sweep

    I've been trying to stick to posting convictions as opposed to when people are charged, but this is not the typical article. It gives a sense of what investigators are up against.

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  41.    One Month Later, Power Fully Restored to Florida Residents Hit by Michael

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