News: Real Estate, Risk, Economics. Jun. 23, 2018

Linking ≠ endorsement. News: Real Estate, Risk, Economics. Jun. 23, 2018

Table of Contents
(Click to sections below.)

1) Trump sets tariffs on $50 billion in Chinese goods; Beijing strikes back

2) Seattle—and Washington—minimum wage doesn't come close to housing affordability

3) New Research Shows Bitcoin's Meteoric Rise Was a Scam

4) Heat Not the Only Sign That Climate Change is Happening

5) Power Tool Used to Clear Brush Blamed for Sparking LA Hillside Fire

6) Nomi Prins: The central banking heist has put the world at risk

7) 10 Los Angeles renters' rights your landlord doesn't want you to know

8) Why the Fed needs a new monetary policy framework

9) Company neglected properties acquired in foreclosure, city says

10) Germany recycles more than any other country

11) Debunked [hardly]: 5 myths [hardly] about the future of work

12) Plastic waste in Antarctica reveals scale of global pollution - Greenpeace

13) Are you breathing plastic air at home? Here's how microplastics are polluting our lungs

14) If we don't protect the ocean, humanitarian disaster awaits

15) Trump keeps his promises on trade

16) Here's a scorecard for the Trump tariffs

17) Bob Allen's new "poverty machine" and its implications

18) The Charts That Show How Big Business Is Winning

19) Bitcoin Could Break the Internet, Central Bank Overseer Says

20) 12,000-Plus Claims Filed for Hail Damage in Colorado

21) Study Says Groundwater Changes May Have Caused 2014 Napa Quake

22) Chasing Yield during ZIRP & NIRP Evidently Starved Human Brains of Oxygen. Now the Price Is Due

23) The Best Counties for Buying Single Family Rentals

24) How the Koch Brothers Are Killing Public Transit Projects Around the Country

25) How US tax reform rewards companies that shift profit to tax havens

26) There is no trickle-down economics in the US: analysis of SNAP benefits

27) Differences in consumption baskets across households and the distributional consequences of monetary policy

28) US energy industry's methane gas emissions underestimated by EPA: study

29) Dead plankton, stunned fish: the harms of man-made ocean noise

30) The Debate - US Trade Wars

31) Jobs Guarantee or Universal Basic Income? Why Not Both?

32) Heavy Rains Bring Flooding to Harvey-Impacted Areas in Texas

33) Real estate pros say HPD's predatory landlord "watch list" is flawed

34) World trending to hit 50% renewables, 11% coal by 2050

35) Immigration plays a key role in economic growth, Kashkari says

36) Germany makes €2.9billion profit from Greece's crisis since 2010

37) Hurricane-Proof Homes Slow to Gain Popularity [covers much more than hurricanes]

38) Should 100-Year-Old Properties Scare You [give you pause] as an Investor?

39) Social Security benefits buy 34 percent less than in 2000, study shows [whacks elderly tenants]

  1.    Trump sets tariffs on $50 billion in Chinese goods; Beijing strikes back

    Mainstream journalism on this subject seems political and not political-economy oriented. The fact is that President Trump can, and should, continue raising whatever China puts in the pot, as Trump can't lose a trade war with a nation that always runs a large trade surplus with the US. Why the mainstream won't simply say it, is political.

    Why should he do it? China is a one-party, now one-man, totalitarian dictatorship that has gotten extremely rich off laxness in the US, laxness caused by the laissez-faire crowd that doesn't care about the US. That crowd cares about individual wealth, power, and control. They think they can come to dominate China by "liberal" economics, with "liberal" there meaning laissez-faire. Xi will have none of it though. He's not going to "liberalize" that way because doing so would ruin his dictatorship. It's the same reason Xi won't go down the democratic path either.

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  2.    Seattle—and Washington—minimum wage doesn't come close to housing affordability

    Either we build enough affordable housing or we subsidize people enough. Other than that, we simply cause way too much needless stress, which damages everything.

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  3.    New Research Shows Bitcoin's Meteoric Rise Was a Scam

    ... market surveillance within a proper regulatory framework may be needed for cryptocurrency markets to be legitimate stores of value and a reliable medium for fair financial transactions ....

    It will never happen because it would defeat the entire purpose of the platforms.

    We are moving to transparent transactions so we may eliminate crime, etc., and so we may better regulate the supply of money versus price inflation/deflation.

    Bitcoin is backwards relative to what we need.

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  4.    Heat Not the Only Sign That Climate Change is Happening

    Are you a believer yet?

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  5.    Power Tool Used to Clear Brush Blamed for Sparking LA Hillside Fire

    Don't use metal blades to clear brush in fire-hazard zones.

    How about cutting brush right after a rain when everything is too wet to ignite? Of course, if you're using a contractor, scheduling remains an issue.

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  6.    Nomi Prins: The central banking heist has put the world at risk

    "What we've witnessed, since 2008, is the unbridled ability of the so-called people at the top to implement socialism for the banks," Prins tells me. "If anyone had said we are going to give $21 trillion to the global banking sector, it would never have happened — so we've had a backdoor process instead, under the pretense it would help ordinary people."

    Leaning forward for the first time, Prins ups the ante. "Well, real people don't believe that — and they'll believe it even less as and when we have another crash, a crash off the back of ten years of emergency measures that were supposed to fix the system."

    "The issue isn't whether this money-conjuring game can continue," she says as she prepares to leave. "The issue is that central banks have no plan B in the event of another crisis — and that's going to create an even more massively negative view among ordinary people towards those who see themselves as elites."

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  7.    10 Los Angeles renters' rights your landlord doesn't want you to know

    Tenants are told to know their rights. You should know them too so you won't run afoul and get negative marks.

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


  8.    Why the Fed needs a new monetary policy framework

    ... independence of long run average output levels from monetary policies. ...
    ...
    ... Hysteresis effects may arise from many different sources including reduced levels of investment in physical capital and R&D, lost human capital as those who fall out of work become habituated to being out of work, reductions in the social stigma associated with nonwork, or changes in wage setting practices as firms' attached workforces shrink.

    ... there is no reason to expect that output lost in recessions is subsequently made up.

    ... because of a zero lower bound on nominal wage changes the Phillips curve may not be vertical at low rates of inflation. These arguments make a case that a higher rate of inflation, by relaxing constraints that might otherwise bind, allows more output.
    ...
    ... normal growth is now 2 percent rather than 3.5 percent, and so you have to slip less far to fall into recession. ...

    In the next recession, monetary policy of the standard form will lack room to do what it usually does. ...
    ...
    ... there is the possibility of fiscal policy. I note that growing levels of the debt-to-GDP ratio, coupled with readings of the political process and the way the political process responded to the aftermath of the American Recovery and Reinvestment Act of 2009, suggests little basis for serenity that substantial fiscal policy will be quickly entered into the next time the economy goes into recession. If we really could work counter-cyclical stabilization policy well in our political system, that would attenuate somewhat these arguments, but it's actually a pretty complicated business even if you leave aside the infirmities of our political system. What's the instrument of counter-cyclical stabilization going to be? I have lived this in helping to design the 2009 Recovery Act. It just turns out to be very difficult to turn spending on and off rapidly. It is sometimes suggested that this could be mitigated by requiring units of government to maintain lists of shovel-ready projects available for funding when a countercyclical moment comes. Perhaps. But experience suggests that this may lead to the most promising projects being delayed as the economy turns down in the hope of receiving outside funding when a countercyclical program is introduced.

    How could Larry Summers have left out helicopter money, especially that targeted to the poor, who have a much higher propensity to spend to boost demand and consequently supply and the whole economy? Did you spot that right away? I sure did. It's glaring. Was it an oversight or intentional, as it would undercut the banking system in favor of the People.

    Helicopter money refers to the federal government simply creating money during a recession and giving it directly to individuals to spend.

    The fiscal stimulus at the beginning of the Great Recession helped, but it wasn't enough money. The payroll-tax cuts also helped, but also wasn't enough.

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  9.    Company neglected properties acquired in foreclosure, city says

    ... nuisance properties increase the city's police, fire, health, emergency and abatement costs while at the same time depreciating property values of the surrounding area ....

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  10.    Germany recycles more than any other country

    Why is the US so bad at this?

    ... these countries all have in common government policies that encourage recycling, such as making it easy for households to recycle waste; good funding for recycling; and financial incentives. ...
    ...
    ... Europe recycles 30% of its plastics, compared to just 9% in the United States, but the majority of plastic waste still winds up in landfills and in the oceans.

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  11.    Debunked [hardly]: 5 myths [hardly] about the future of work

    This article is based upon logical fallacies. You can't call something a myth based upon survey results.

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  12.    Plastic waste in Antarctica reveals scale of global pollution - Greenpeace

    Plastics are the new Global Warming, which also hasn't been fixed yet.

    ... less than a 10th of all the plastic ever made has been recycled ....

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  13.    Are you breathing plastic air at home? Here's how microplastics are polluting our lungs

    More than 300 million tons of plastic are produced each year. Half of that plastic becomes trash in less than a year.

    The whole article is like reading a nightmare. Unfortunately, it's no dream.

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  14.    If we don't protect the ocean, humanitarian disaster awaits

    What does this have to do with real estate, risk, and economics? What doesn't it have to do with those things?

    Sure, you can be myopic and focus just on becoming rich via real estate. Know, however, that the planet will continue going to hell right around your ears. Then what will your real estate be truly worth?

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  15.    Trump keeps his promises on trade

    In 2017, the US exported $130.4 billion worth of goods to China, the world's second biggest economy. It imported $505.6 billion worth of Chinese goods, according to Commerce Department statistics.

    I disagree with President Trump on many economic issues, but not this one.

    The stats always require qualifications, but the general point remains.

    505.6 - 130.4 = 375.2 billion US dollars.

    So, some companies lose in the US, but others gain more if done right. The overall economy gains if we choose to source properly and to produce environmentally wisely.

    Why is only one side of the story typically defended or pushed via the mainstream-US media? The global corporatization of global governance is the goal of those who most disagree with Trump on this. Those with that goal are not interested in the welfare of average US citizens, or Chinese for that matter.

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  16.    Here's a scorecard for the Trump tariffs

    There's also major uncertainty about what Trump will do next. He has threatened, for instance, tariffs on an additional $100 billion of Chinese imports, twice what he has targeted so far. And the Commerce Department is studying the feasibility of imposing tariffs of up to 25% on some 8 million imported autos. If Trump did both of those things, new tariffs would affect 17% of all imported goods, equivalent to 2.1% of US GDP. Retaliatory measures would raise the stakes even more. All of that could stoke inflation, suppress demand and hasten a recession.

    Nonsense. Inflation is an aggregate statistic. Some prices go up, others come down. Some people lose job opportunities in one sector, others gain opportunities in another.

    The only thing that really matters first is the total trade-deficit. If there is a trade war that won't quit because China and the others won't cut deals to level things out overall between the US and each and every other player, then the tariffs won't be picking winners, as every sector will have tariffs.

    The real question is sourcing raw materials cost effectively and sourcing labor if it's not replaced quickly enough via automation.

    The stock markets certainly overreacted. This new handwringing is more politically driven than economically driven (as in sound economics).

    Under Trump, this tariff policy appears to be straight out of the American School of Economics versus the Austrian School. The American School has always been vastly superior for the US. I'm not saying I'm for the US taking unfair advantage of anyone. I'm saying that in a global mixed economy, which we're in, it makes total sense to demand fair trade and to have national laws to protect it.

    Ricardian economics must be cherry picked to work. It is not a good blanket rule for all international trade, never was.

    Where the US is better off letting another nation do the work and supply the goods or services, fine. That has to be determined on a sector-by-sector and product-by-product basis. All nations need to do that to protect the health and safety of their people and land, water, and air.

    I want to add that when the recession comes, it will be Fed- and corporate-tax-cut caused, not tariff-caused. Don't let them throw you off the scent. The Fed is the biggest problem. It should be abolished and replaced by the US Treasury as the US banking system.

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  17.    Bob Allen's new "poverty machine" and its implications

    ... it falsified the World Bank standard approach where $PPP 1.90 poverty line was supposed to really reflect the same consumption opportunities (bundles) across the world. Mostly because of the differences in housing and clothing costs, but also in relative food prices, Allen shows that this line is broadly correct for African countries but that in Asia and in middle-income countries to achieve the same level of calorific intake, clothing, shelter you need between $PPP 2.50 and $PPP 3.50, and that in rich countries, you need about $PPP 4.50. This means that the monetary amount of the global poverty line ought to vary between the countries.

    I thought that was common knowledge. Who doesn't know about the cost of living varying by location?

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  18.    The Charts That Show How Big Business Is Winning

    Left unchecked, laissez-faire inherently leads to monopoly.

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  19.    Bitcoin Could Break the Internet, Central Bank Overseer Says

    None of this is any surprise here, as my longtime readers will attest. I was opposed to Bitcoin the second it came out.

    I have always felt sorry for the average folks who bought into it. Some were lucky enough to get in low and to sell high. Others are going to hold on against hope and lose it all.

    Anyway, Bitcoin won't break the Internet because Bitcoin is, thankfully, going the way of all dinosaur scams.

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  20.    12,000-Plus Claims Filed for Hail Damage in Colorado

    ... city's worst hail storm in 20 years.

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  21.    Study Says Groundwater Changes May Have Caused 2014 Napa Quake

    ... seasonally receding groundwater under the Napa and Sonoma valleys.

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  22.    Chasing Yield during ZIRP & NIRP Evidently Starved Human Brains of Oxygen. Now the Price Is Due

    The thing is, Argentina hasn't even defaulted on it yet, though 11 months after selling the bonds, it has already gone begging to the IMF for a bailout. And the IMF, in another bout of debt-benightedness, has agreed to lend it $50 billion. But those $50 billion won't be used to pay off the century bond. They'll be plowed into government spending and will disappear, leaving Argentina with an additional $50 billion in dollar-debt.

    It's not crazy for Argentina to have undertaken this piece of 100-year gaucho showmanship — in fact, you have to admire it for being able to pull it off. But it's crazy for investors to have fallen for it.

    But now investors, including the hot money, are once again getting burned in the emerging markets, and the emerging markets are once again getting burned by their exodus. You'd think someone might have remembered that from the last few times it happened. But no. These old sins are repeated endlessly.

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  23.    The Best Counties for Buying Single Family Rentals

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  24.    How the Koch Brothers Are Killing Public Transit Projects Around the Country

    If public transit is so bad, why do property values go up near public transit? Okay, so the Koch brothers are against gentrification? They care about the poor in an area? Well, the poor can't afford Uber and Lift to get them around. They can usually afford the public bus.

    I'm all for clean-alternative-energy autos, but they simply aren't affordable for the poor. The Kochs say subsidize the poor for their transportation needs? That sure doesn't sound like something the libertarians would put forth. Are we sure they didn't say subsidize the poor just to get the public transit defeated? Did they actually propose subsidies? No.

    Do you think your residential-rental-property investments are harmed by mass transit or helped by it being close by? If they are helped, then the Kochs are making things worse for you and your working-class tenants who use public transit.

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  25.    How U.S. tax reform rewards companies that shift profit to tax havens

    Loopholes that need to be closed:

    Under the new Global Intangible Low Tax Income (GILTI) provision, if a company generates untaxed profits in a tax haven, it will be liable to have that profit taxed as though it arose in the United States.

    However, the effective tax rate that will apply is half the U.S. tax rate of 21 percent, or 10.5 percent. And if a company reports a loss in the United States, this can be set against the GILTI provision, or deemed U.S. income. This can reduce the tax liability further.

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  26.    There is no trickle-down economics in the US: analysis of SNAP benefits News: Real Estate, Risk, Economics. Jun. 23, 2018

    The title of the post is, "Alongside rising top incomes, the level of living of America's poorest has fallen."

    When the poorest gain, the lower bound, or 'floor', of the distribution of living standards rises. Using microdata spanning the last 30 years, this column argues that the floor in the US has been sinking, alongside rising top incomes. The floor would have fallen further without public spending on food stamps, which helped protect the poorest in the wake of the 2008 financial crisis.

    I'm very glad these men conducted this analysis.

    Consolidation of wealth at the very top is an extremely bad idea even for those at the top. The entire economy will suffer, and they'll end up suffering right along with it whether they realize it or not.

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  27.    Differences in consumption baskets across households and the distributional consequences of monetary policy

    ... households that consume more sticky-priced goods will experience smaller CPI changes following a monetary policy shock than households consuming flexibly-priced goods.
    New facts

    We establish that the prices of the goods consumed by high-income households are more sticky and less volatile than those of the goods consumed by middle-income households.

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  28.    U.S. energy industry's methane gas emissions underestimated by EPA: study

    Methane, the main component of natural gas, is colorless and odorless. It is a major force in short-term global warming because it has more than 80 times the heat trapping potential of carbon dioxide in the first 20 years after it escapes into the atmosphere, scientists say. In high concentrations it can also lead to formations of smog, which is linked to heart and lung damage.

    The amount of methane leaked from U.S. oil and gas wells and related infrastructure in 2015 equaled about 2.3 percent of the country's overall natural gas output, a study led by the Environmental Defense Fund advocacy group said. That was much more than the 1.4 percent the Environmental Protection Agency estimated for 2015 in a report last year.

    Why it matters to you is because, for one, global warming increases weather- and climate-related risks to your investments.

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  29.    Dead plankton, stunned fish: the harms of man-made ocean noise

    This is just one reason among many that the sooner the better we phase out the carbon-fuel industries.

    "It is highly misleading to claim that there is no measurable or documented scientific evidence on seismic activities impacting fish or other marine animal populations," she said in an email to AFP.

    "To date, about 130 species have been documented to be impacted by underwater noise, much of it from seismic surveys."

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  30.    The Debate - US Trade Wars

    I don't often watch anything on PressTV (Iran) but will click through if a particular video is recommended, as was this one.

    I agree that tariffs, per se, are not the problem. What wasn't mentioned was the national security/defense aspect of certain choices of products for tariffs, though I do think some of even that is politically driven (just my feeling).

    As for the US Bretton Woods and Petrodollar status, I agree with Steve Keen that it's highly overblown and actually counter-productive. I'd not go to a global replacement currency, a la Keynes, right off the bat but would use the US dollar to finance the US economy rather than using bond issues as we do now.

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  31.    Jobs Guarantee or Universal Basic Income? Why Not Both?

    I'm for a guaranteed living income, not a UBI, per se. The B in UBI is for basic, which is at the poverty line. I'm for a guaranteed public-job though for anyone who wants one and can't find a private job paying more and with as decent a package of benefits and workplace environment.

    What I oppose is paying for any of it via governmental borrowing or from taxes.

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  32.    Heavy Rains Bring Flooding to Harvey-Impacted Areas in Texas

    Chris Jenkins' home in Orange County was flooded with about 6 inches (15 centimeters) of water. He and his family had moved back into the home in March after it flooded during Harvey.

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  33.    Real estate pros say HPD's predatory landlord "watch list" is flawed

    ... the list may unfairly vilify property owners since there are many reasons to buy properties at a low cap rate, said Shaun Riney, of Marcus and Millichap. Institutional investors, for instance, often buy properties with the expectation that that the investment will pay off in the long term. The purchase could also be the result of a 1031 exchange, in which cases the motivation is often to park money quickly in order to reap tax benefits. He added that the list doesn't take into consideration that landlords are often pumping capital into buildings and improving the housing stock.

    "The buyer is coming in and investing a lot of capital, getting violations down and fixing the boiler, fixing the roof," he said. "Where's the angels' list?"

    Good points.

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  34.    World trending to hit 50% renewables, 11% coal by 2050 News: Real Estate, Risk, Economics. Jun. 23, 2018

    I think we need to beat that 2050 date by quite a bit.

    ... falling photovoltaic (PV), wind, and battery costs will cause the dramatic shift in investment, Bloomberg New Energy Finance (BNEF) notes. "PV and wind are already cheaper than building new large-scale coal or gas plants," ....

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  35.    Immigration plays a key role in economic growth, Kashkari says

    I'm not going to say that Neel Kashkari has no basis from which to argue his point about needing immigrants, and I'm certainly not opposed to people migrating to the US. What I will say, however, is that the US could, and should, do vastly better at educating and training people in real time for open jobs and could, and should, do better in paying workers a living wage. That would bring labor slack way down to where the arguments against allowing in immigrants would lose any economic basis.

    Secondly, growth for growth sake is a terrible idea. The environment should always, and I mean always, come first. By the environment, I mean more than simply what is typically meant. I mean the total quality of life.

    There's no room for racism or ethnic bigotry in my book, so race and ethnicity don't work with me when someone complains that letting people of a certain race or ethnicity in will lower our quality of life.

    Besides, we could do more internationally to aid all nations in improving the quality of life right in those other nation-states. Then fewer people would seek to move.

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  36.    Germany makes €2.9billion profit from Greece's crisis since 2010 News: Real Estate, Risk, Economics. Jun. 23, 2018

    "Contrary to all right-wing myths, Germany has benefited massively from the crisis in Greece," said Greens household expert Sven Christian Kindler said and demanded a debt relief for Greece.

    Really, it's rather obscene that Germany profited off Greece's misery while Greece suffered 25% unemployment and a depression worse than the Great Depression for them. Greece's former government caused the problem, and the terrible design of the EU and Eurozone caused it too.

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  37.    Hurricane-Proof Homes Slow to Gain Popularity [covers much more than hurricanes]

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  38.    Should 100-Year-Old Properties Scare You [give you pause] as an Investor?

    Should 100-year-old properties scare you as an investor? Kevin Perk says they should not. However, Kevin Perk has experience dealing with them. I would say that unless you too are experienced or have a contractor who has the experience needed, you should not start out with one and you should start with a small one when you do decide to dip your toe.

    When I saw the title of the article, the first thing I thought of is knob and tube wiring, which Kevin placed as his number 1. He doesn't know why insurance carriers don't like it. Well, it's more fire prone. It's old and subject to degradation, as is anything. So, it's automatically closer to falling apart while still being hot or live.

    Here's an excellent article on it: "Knob-and-Tube Wiring," by Nick Gromicko and Kenton Shepard:
    https://www.nachi.org/knob-and-tube.htm

    As for asbestos, there are liability issues, even though asbestosis takes a long time to develop. Insurance often excludes it from coverage in both property and casualty (liability) senses. The same goes for lead paint and pipes.

    "Buy to the coverage™" is an axiom/slogan I just now came up with. I often think about it as I develop underwriting and other forms. I would recommend clients use our PropertyPak quotation forms to determine eligibility. The eligibility portion of the forms comes up front (first section of the process) and requires no client/customer-to-insurance broker direct interaction. It's all automated.

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  39.    Social Security benefits buy 34 percent less than in 2000, study shows [whacks elderly tenants]

    Are you finding that your elderly tenants are having a harder time making rent? If so, you should stand behind them by advocating a change to how their Social Security benefits are calculated.

    While COLA increases since 2000 cumulatively have equaled 46 percent — matching inflation over those years — typical retiree expenses grew by 96.3 percent, the study shows. Of the 39 costs analyzed in the report, 26 grew faster than the percentage increase in COLAs from 2000 to 2018.
    ...
    ... Johnson's group is among those that advocate for a different index — the Consumer Price Index for the Elderly — to be used to determine Social Security COLAs.

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