News: Real Estate, Risk, Economics. Oct. 15, 2018

Linking ≠ endorsement. News: Real Estate, Risk, Economics. Oct. 15, 2018

Table of Contents
(Click to sections below.)

1) How China's Peer-to-Peer Lending Crash Is Destroying Lives

2) The Next Financial Crisis Is Staring Us in the Face

3) The Dying Continues as Asbestos Cleanup in Montana Town Progresses

4) Austerity is the wrong prescription for the world's wellbeing: It kills

5) Andrew Ross Sorkin Says China May Stop Manipulating Its Currency to Retaliate Against Trump's Tariffs

6) China tries to boost its economy, as long trade fight looms with Trump

7) Illegal Rentals: What Landlords Need to Know

8) Bonds in $916 Billion Wipeout Spark Fear of Worst Run Since 1976

9) Powell Places Risky Bet as He Stokes Too-Good-to-Be-True Economy

10) World Bank launches 'human capital' rankings based on health, education

11) Hurricane Michael slams into Florida with 155 mph winds

12) Smart Technology Will Soon be a Multifamily Necessity [but what's truly smart?]

13) An Increasing Number of New Real Estate Funds Target Opportunity Zones

14) Community and Economic Development Opportunity Zones

15) Can AI Free Humans from 'Routine' Work? [How about all work for income?]

16) Michael Treks Through Southeast After Leaving Florida Beach Towns in Ruins, Kills 2; Flooding Swamps North Carolina Towns

17) 'I should have left' - Hurricane Michael terrified those who stayed

18) Few Admiring Words for "Crypto-Socialist" Singapore

19) With VPN clampdown, China's firewall fills in its cracks

20) Fracking to begin in Britain after court ruling

21) Five Red Flags of a Bad Tenant

22) Best US property market in 2019? All bets are on Dallas-Fort Worth

23) The private equity paradox

24) Thousands line up for zero-down-payment, subprime mortgages

25) The Dollar and its Discontents

26) Trump Puts Supply-Side Economics to Its Final Test

27) How Pass-Through Entities Help Real Estate Investors (& Which is Right for You)

28) As A Landlord, Your Job is to do the Right Thing. Here's Why.

29) Extending democracy into the economy is a no-brainer

30) Bond Traders Eye Fedspeak for Sign of Doubt After Stocks Swings

31) How to Invest in the Hottest Real Estate Markets and Still Cash Flow

32) Contractors Prey on Hurricane, Wildfire Victims After Disasters

33) California Wildfire Victims Voice Complaints During Cleanup

34) Residents Urged To Report Insurance Fraud

35) Toledo woman admits to insurance fraud scheme

  1.    How China's Peer-to-Peer Lending Crash Is Destroying Lives

    More than 400 peer-to-peer lending platforms collapsed from June through August, according to Shanghai-based researcher Yingcan Group. That still leaves about 1,800, a number Chinese investment bank China International Capital Corp. expects to contract to fewer than 200 after more dominoes fall.

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  2.    The Next Financial Crisis Is Staring Us in the Face

    ... Salomon Brothers' Henry Kaufmann (aka Dr. Doom), now 91, made the observation that despite deregulation being a major factor in the crisis, it took less than a decade for many to forget. "A financial market deregulated is like a zoo without bars," he said.

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  3.    The Dying Continues as Asbestos Cleanup in Montana Town Progresses

    ... some of the president's supporters here were startled to discover that, in his opinion, the fuss over asbestos is overblown.
    Trump many years ago expressed the opinion that the entire flap over asbestos was created by the mob, which he said owns asbestos-disposal companies. More recently he has said that it is "100 percent safe when properly applied."

    Those views became relevant this summer when the EPA loosened restrictions on new uses of asbestos.
    ...
    Linda Reinstein is president and co-founder of the Asbestos Disease Awareness Organization. She was horrified at the EPA's action this year.

    "While we gather at grave sites to bury our loved ones, Trump's EPA moves farther away from a ban," said Reinstein Friday. "In 2016, nearly 40,000 Americans died from preventable diseases, yet asbestos remains legal and lethal in the United States of America."

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  4.    Austerity is the wrong prescription for the world's wellbeing: It kills

    The quack doctors rolled into town just as the global economy had come off the critical list. It was 2009 and the message from the austerity medicine show was simple: the only way back to full health was a course of heavy-duty cuts.

    Expert opinion was divided. There were other diagnoses available. There were economists who said austerity was the equivalent of going back to the days of blood-letting — but they lost the argument. The prescription, though it varied a bit from country to country, was pretty much the same across the developed world: get those budget deficits down.

    The upshot was that the global economy had a relapse and has never fully recovered.

    They didn't lose the argument. They weren't heard. They were drowned out by those who wanted to shrink government so they could further privatize. It hasn't worked out very well except for those at the very top. Even they will have it all come back to haunt them.

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  5.    Andrew Ross Sorkin Says China May Stop Manipulating Its Currency to Retaliate Against Trump's Tariffs

    The story is that in a desperate move, since it doesn't have more imports to tax, China could dump $1 trillion in U.S. treasuries to screw the United States. No part of this makes any sense.

    Correct.

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  6.    China tries to boost its economy, as long trade fight looms with Trump

    I think this article is completely missing the point. Trump is hitting China as China is struggling with debt issues. Plus, there's plenty of ammunition left in Trump's canon. He could ramp tariffs up to 50% on all, that's ALL, products from China and not even stop there. It's a game of chicken and who can stand the most pain for the long-run gain/position. Trump is also enlisting others in the game via back channels and through trade deals, such as USMCA, in which the US can block Canada and Mexico from deals with China simply by labeling China a non-market economy, even though China is hardly a socialist, non-market economy. China isn't even a market-socialist country. It's a mixed economy. What the Trump administration should have put in the USMCA is anti-democratic economy.

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  7.    Illegal Rentals: What Landlords Need to Know

    There will be insurance complications too. Insurance doesn't cover illegal activities, and you could lose what coverage you have and have that fact follow you via your insurance history.

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  8.    Bonds in $916 Billion Wipeout Spark Fear of Worst Run Since 1976

    Is the Fed premature? I still think so.

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  9.    Powell Places Risky Bet as He Stokes Too-Good-to-Be-True Economy

    ... there are signs that businesses have gained pricing power as economic growth has accelerated, especially if they can justify their price increases by pointing to higher tariffs on U.S. imports.

    If the Fed tightens in the face of that, it will be clamping down on the ability of domestic manufacturers right at the wrong time and for the wrong reason. It will reduce supply when prices are rising, which will only help raise prices more.

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  10.    World Bank launches 'human capital' rankings based on health, education

    A low-tax, low regulation economy doesn't do better on education and healthcare for its general public. How long will it take for the general public to be allowed to connect the dots and vote accordingly? The plutocracy is in the way. How do the People remove the plutocracy when the People don't know to do it because that very plutocracy is blocking the People from getting the needed info?

    In addition, there are educational systems that are too stressful for the students. Many are burned out and suicidal. That's not healthy. There must be a proper balance that puts health first. A mentally healthy youth will learn better in less time and be more well-rounded. The whole of society will be vastly better off.

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  11.    Hurricane Michael slams into Florida with 155 mph winds

    Scientists say global warming is responsible for more intense and more frequent extreme weather, such as storms, droughts, floods and fires. But without extensive study, they cannot directly link a single weather event to the changing climate.

    That is the single most ridiculous concept concerning Anthropogenic Global Warming (carbon-fuel-burning driven climate change). Absolutely zero weather events are not linked to global warming. There is no such thing as an isolated weather event out in the general atmosphere. Any climate "scientist" who doesn't know it needs remedial help.

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  12.    Smart Technology Will Soon be a Multifamily Necessity [but what's truly smart?]

    Well, may I say security, security, security. A smart home or apartment is secure, and that means that its tech is secure against hackers. A keyless lock that's not secure is just like an old key-lock that can be picked in seconds.

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  13.    An Increasing Number of New Real Estate Funds Target Opportunity Zones

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  14.    Community and Economic Development Opportunity Zones

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  15.    Can AI Free Humans from 'Routine' Work? [How about all work for income?]

    Artificial intelligence (AI) is poised to replace routine jobs, says Dr. Kai-Fu Lee. But done right, that process could allow us to "pursue dreams, spend time with our loved ones and find out why we exist as humans" Dr. Lee talks with Rob Johnson about his new book, AI Superpowers: China, Silicon Valley, and the New World Order (Houghton Mifflin Harcourt, 2018). He draws on his personal experience with the growth of artificial intelligence (AI) in the U.S. and China to analyze its social, political, and economic implications.

    The idea is that AI will plateau at below the level of what we now term the highly skilled and highly creative. I think that's a ridiculous notion and not even advantageous. To me, it sounds like an elitist fear of becoming replaced as the controllers of others. My concern is how soon will AI be able to independently undo the mess of garbage in, garbage out. In other words, when will it become autonomously smarter than the people who fear it?

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  16.    Michael Treks Through Southeast After Leaving Florida Beach Towns in Ruins, Kills 2; Flooding Swamps North Carolina Towns

    The images are of horrific damage, pain, and suffering. Warming waters due to increased global warming due to carbon-fuel burning is the prime cause. The connection is irrefutable. No weather events in the general atmosphere are unlinked to such industrially increased warming.

    My view is that it is only a matter of time before the entire insurance industry is directly at odds with the entire carbon-fuel-burning industry.

    I'll be with the insurance industry prevailing in that fight for survival. What about you?

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  17.    'I should have left' - Hurricane Michael terrified those who stayed

    I don't think they'll do that again: stay.

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  18.    Few Admiring Words for "Crypto-Socialist" Singapore

    From the very beginning, Singapore relied on the so-called 'mixed economy' — on a strong, powerful, incorruptible socially driven state/government, and paralleled by a thriving private sector, which, however, was forced to put the interests of the country well above its profits.

    This is the direction the US should be heading in. We could do better than Singapore because we're big enough not to be pushed around or have to be fearful of offending jealous others. What we could do is be the best example for the entire world.

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  19.    With VPN clampdown, China's firewall fills in its cracks

    "China's censorship system has become the model for many authoritarian regimes: evidence exists that others are trying to emulate it," political scientist Margaret Roberts writes in "Censored: Distraction and Diversion inside China's Great Firewall." In the era of digital media, China's manipulation of public information also raises issues relevant for democracies ....
    ...
    ... Chinese with the time, money, and motivation have still been able to obtain VPNs to jump the firewall. Only a small percentage do, and they tend to be younger, wealthier, and better educated, and to live in cities along China's coast ....

    So, what's more important to the US economy in the longer run 1) trading with an anti-democratic China or 2) freedom in China and then trading with China? I say it is emphatically number 2. How about you?

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  20.    Fracking to begin in Britain after court ruling

    ... fracking damages tourism, contaminates water supplies, hurts wildlife, causes earthquakes and contributes to global climate change.

    How many of those points will be proven right there in Lancashire? I'm betting all of them.

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  21.    Five Red Flags of a Bad Tenant

    Irregular Employment History

    Keep in mind that job hopping is the norm now at least for a fairly sizable part of the population. Focus on gaps and how long they last in conjunction with the credit report. If the credit report and other factors show steadiness, then job hopping and gaps are not nearly as important because you're dealing with someone with a proven history of knowing how to handle finances vis-a-vis unemployment. Of course, there's always the first time for a slip-up.

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  22.    Best U.S. property market in 2019? All bets are on Dallas-Fort Worth

    ... D-FW is the top home and apartment building center in the country and a leader in demand for all kinds of commercial real estate. In just the first half of 2018, more than $11 billion in construction projects were started in North Texas. Only New York City had more total building.
    ...
    The top concerns for 2019 include:
    ...
    *Higher property insurance costs, because of climate change and expensive storms and fires, which are raising policy premiums.

    "... because of climate change ..." because of carbon-fuel burning.

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  23.    The private equity paradox

    Rethinking risk

    The biggest chunk of private equity money in real estate has long targeted opportunistic, high-risk investments with big payoffs — often for fix-and-flip properties.

    In July, opportunity funds held about $108 billion in capital — or 40 percent of all the private equity money earmarked for real estate. That was the largest percent of the dry-powder pie.

    But investors are starting to show signs that they have less of a stomach for those kinds of deals.

    That's partly because those opportunistic investments tend to do better during the earlier, high-growth times of the real estate cycle, experts said.

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  24.    Thousands line up for zero-down-payment, subprime mortgages

    The NACA loans are all fixed rate with full documentation.

    That doesn't mean the people will be able to keep up the payments.

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  25.    The Dollar and its Discontents

    It is worth recalling how the dollar gained international prominence in the first place. Before 1914, it played essentially no international role. But a geopolitical shock, together with an institutional change, transformed the dollar's status.

    The geopolitical shock was World War I, which made it hard for neutral countries to transact with British banks and settle their accounts using sterling. The institutional change was the Federal Reserve Act, which created an entity that enhanced the liquidity of markets in dollar-denominated credits and allowed US banks to operate abroad for the first time. By the early 1920s the dollar had matched and, on some dimensions, surpassed sterling as the principal vehicle for international transactions.

    This precedent suggests that 5-10 years is a plausible time frame over which the US could lose what Valéry Giscard d'Estaing, then France's finance minister, famously called the "exorbitant privilege" afforded it by issuing the world's main international currency.

    There is also what's termed the Petrodollar because the US and Saudi Arabia agreed that international oil-trade would be conducted in US dollars. Going off the gold standard and closing the gold window also ramped up the US's ability to create all the dollars necessary to be the world's reserve currency.

    The times they are a changing.

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  26.    Trump Puts Supply-Side Economics to Its Final Test

    So what's going on? Why isn't the tax cut raising wages? Perhaps the impact of tax cuts will be felt only over a period of years rather than months. After all, it's important not to read too much into short-term economic data.

    But it also might be the case that the supply-siders are simply wrong. Perhaps those who believed that a substantial amount of the corporate tax cut would go to workers were doing their empirical studies incorrectly, or plugging the wrong numbers into their models. Or maybe U.S. corporations were simply so successful at avoiding taxes before the tax cut that the new lower rate hasn't really done anything other than to allow them to save money on accountants and lawyers. Either way, if Trump's corporate tax cuts end up having no observable effect on workers' pay, it will be the final blow to the supply-side worldview.

    I don't think Noah is thinking correctly about it. The corporatists spoke openly about how they'd be doing stock buybacks rather than sinking much into research and development and higher wages.

    The Phillips curve still exists, but its pulse is very weak since the People don't have the power. They have to take it back more than ever. I want it to be done peacefully, democratically. Will the powers that be allow such a transition without resorting to bloodshed? It's a legitimate risk-management concern to say the least.

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  27.    How Pass-Through Entities Help Real Estate Investors (& Which is Right for You)

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  28.    As A Landlord, Your Job is to do the Right Thing. Here's Why.

    This is very direct, hands-on helping. I also think advocating for subsidies for low-income people is the right thing to do. Nobody in America should have to live on the streets or in a car. If you're asking where the money will come from, I'll tell you we can create all the money we need to house everyone decently and without causing inflation. That's because the system to take care of everyone is productivity that matches the increase in money in circulation. When there's a match, there isn't inflation. It's that simple.

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  29.    Extending democracy into the economy is a no-brainer

    Going back to the story of Western Sugar Cooperative and other agricultural co-ops that Schneider sees scattered throughout his native Colorado, "these are people who are as conservative as you can get, generally," he says. "And yet they're using the same business model that these radical, anarcho-leaning activists of Occupy were interested in." At the moment when the politics of this country feel extremely polarized, "it gives me hope to work with this tradition that seems to cross some of these lines," Schneider says. "There's something about how this tradition fits into a society that claims to be democratic . . . Whether you're conservative or liberal, the idea that you would extend democracy into the economy just seems like a no-brainer."

    It is a no-brainer.

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  30.    Bond Traders Eye Fedspeak for Sign of Doubt After Stocks Swings

    "I've heard and seen more focus on housing than I have in a long time, as it has been years since we had a 30-year fixed-rate mortgage at 5 percent," said O'Donnell, a managing director. While that's low historically, "the first sign of economic stress from higher U.S. rates will likely emerge in housing."

    You bet.

    On the larger issue of how the Fed will react, it can't afford to be willy-nilly on signals. It should have been talking up the fact that the Fed can and should turn on a dime. That would be a form of forward guidance saying that the economy shouldn't worry that the Fed will be so stupid as to continue raising rates and selling off assets in the face the certainty of causing a recession. Of course, the real issue is whether the Fed is sufficiently sensitive and perceptive enough to do that: avoid causing a recession. So far, I haven't been favorably impressed. I hope they learn and quickly.

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  31.    How to Invest in the Hottest Real Estate Markets and Still Cash Flow

    Positive cash-flow in an appreciating market ...

    Naturally, but the caution is avoiding looming downturns and going underwater. Leaning toward or weighting for positive cash-flow is simply the more conservative approach. If you are less risk-averse, go for more market speculation.

    The value-add play certainly makes sense in almost any case. Just don't overshoot the area unless it's definitely gentrifying or your intention is to cause such gentrification.

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  32.    Contractors Prey on Hurricane, Wildfire Victims After Disasters

    According to the International Code Council (ICC), following Hurricane Katrina in 2005, more than 1,300 people were prosecuted for contractor fraud, according to U.S. Department of Justice information.

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  33.    California Wildfire Victims Voice Complaints During Cleanup

    The Army was in charge of awarding $1.3 billion in cleanup contracts to three contractors, which hired dozens of smaller companies to haul away the debris and dispose of it in landfills. The hauling companies were paid by the ton. The more they hauled, the more they earned.

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  34.    Residents Urged To Report Insurance Fraud News: Real Estate, Risk, Economics. Oct. 15, 2018

    Insurance fraud isn't a victimless crime. Honest taxpayers are paying the price through higher insurance premiums and increased costs for goods and services ....

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  35.    Toledo woman admits to insurance fraud scheme

    Farooki poured gasoline on the home, lit it on fire, and later called the insurance company seeking a claim of $160,000 ....

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