Month: April 2017

Authored by Wolf Richter via WolfStreet.com,

Those who lost out on the Fed’s “wealth effect.”

Here’s a mystery: Has this “wealth-effect” economy that the Fed so beautifully engineered since the Financial Crisis gotten a lot riskier, scarier, and uglier in some profound ways for lower-income Americans, those making $30,000 or less a year?

One of the questions that Gallup posed was this:

Next, I’m going to read a list of problems facing the country. For each one, please tell me if you personally worry about this problem a great deal, a fair amount, only a little, or not at all? First, how much do you personally worry about –

Then came 13 issues, including “hunger and homelessness.”

Turns out, among Americans making $30,000 or less a year, 67% worry “a great deal” about hunger and homelessness! Food and shelter, two of the most basic human needs. That’s the highest percentage ever in Gallup’s data series on this question going back to 2001.

It’s up from 52% in 2001/2004; up from 56% in 2007/2008; and up from 51% in 2010/2011.

Median annual household income in February was $58,714, according to Sentier Research. On an inflation-adjusted basis, this was about flat with February 2016 and below February 2000. Median income means 50% make more and 50% make less. Other studies have shown that incomes have risen sharply at the upper end of the spectrum, but have fallen at the lower end, with the gap widening. Thus the median might have stagnated, but for many of those below the median, things haven’t turned out so well. And there are a lot of them!

With the prices of stocks, homes, art, classic cars, commercial real estate, and the like inflated to dizzying heights after eight years of radical monetary policies, why would these folks, making $30,000 or less – worry more than ever about such basic and dreadful conditions?

More on that in a moment. There are other elements in this mystery: Even among people making $30,000 to $75,000, a record 47% worry “a great deal” about hunger and homelessness, up from 40% in 2010-2011. And even among high-income Americans, the percentage, though small, has risen (chart by Gallup):

Rising worries about hunger and homelessness can have a number of causes, including media coverage of those topics, or coverage of rising income and wealth inequality in America. In its survey report, Gallup points out that occasionally, when something terrible happens, such as 9/11, it might be “dominating the national consciousness,” and hunger and homelessness recede as primary concerns.

We get that. But Gallup goes on:

Since 2001, worry has been highest among those residing in lower-income households, likely because those with limited financial resources are more at risk of going hungry or becoming homeless. A consistent majority of lower-income adults worried about the problem before 2012, but that has only increased in the past five years.

Lower-income Americans worry about basic problems, in this order:

1. Hunger/homelessness
2. Crime/violence
3. Healthcare
4. Drug use
5. Terrorism
6. Social Security
7. Economy

At the upper section of the spectrum, at incomes over $75,000, things look different, in that order:

1. Healthcare
2. Budget deficit
3. Economy
4. Social Security
5. Environment
6. Race relations
7. Hunger/homelessness

Lower-income Americans worry more in general than those with higher incomes. Everything is riskier and tougher for them. But nothing compares to the worries about hunger and homelessness. Gallup:

On average, across the 13 issues, the percentage of lower-income adults who worry a great deal is seven percentage points higher than among middle-income Americans, and 17 points higher than among upper-income Americans.

 

But differences in concern about hunger and homelessness far exceed those norms. In fact, the 20-point difference in worry about hunger and homelessness between lower-income and middle-income Americans is higher than for any of the other issues. Similarly, the 30-point difference in worry about hunger and homelessness between lower-income and upper-income Americans ties for the highest, along with concern about crime and violence.

In the dazzling glitter and excitement of soaring asset prices that central banks around the world, and particularly the Fed, have tried so hard to engineer, it’s easy to forget that not everyone has those assets, that a lot of people can’t get “rich” just sitting on inflated assets, that they have to work long hours in measly jobs just to stay one paycheck ahead of hunger and homelessness.

These Americans are paying the price for the Fed’s efforts to “heal” the housing market. The Fed has implemented elaborate strategies since 2008, among them: cutting its policy rate to near zero, embarking on QE, and bailing out banks and their richest investors, including Warren Buffett and his financial and insurance empire. In 2011, the Fed began encouraging and enabling Wall Street’s biggest private equity firms and other investors to buy up hundreds of thousands of homes out of foreclosure to push up home prices.

This has led to soaring housing costs that have by far outpaced wage growth, if any. And it made it that much harder for these Americans to stay that one paycheck ahead of hunger and homelessness. There are a lot of them. They’re consumers too. And this could be why the economy, which has been ruined for them, has since then not been able to grow at a reasonable pace.

And so, America becomes “Landlord Land.” Read…  So Who’s Pumping Up this “New Normal” Housing Market?

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The war in Yemen just marked its second anniversary.  

“What war” you may ask given the lack of mainstream media coverage?

Here’s Planet America’s Chas Licciardello to explain how the war is causing one Yemeni child to die of malnutrition every 10 minutes, and what America’s role in the conflict is…

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It may be the worst possible news for Julian Assange. Or the best, depending on which exit poll of the Ecuador presidential election is right.

With the results of the Ecuador presidential run-off race set to be announced in hours, two exit polls projected two different winners in a tight election in OPEC’s smallest member nation on Sunday evening, sparking celebrations in the rival camps of a leftist government-backed candidate and a former banker. As Reuters reports, the final results could take days to tabulate, the electoral council has warned, in a race that could extend a decade of leftist rule or usher in more business-friendly policies in the oil-rich Andean country.

According to one exit poll, conservative challenger Guillermo Lasso had 53.02% of votes versus 46.98% for government-backed Lenin Moreno, an exit poll by leading pollster Cedatos showed on Sunday afternoon. With Cedatos considered one of the most trustworthy polls, the Lasso camp broke into cheers, with supporters waving flags and honking horns in wealthier northern Quito.

“Today a new Ecuador is born, the Ecuador of democracy, the Ecuador of freedom,” Lasso told a crowd chanting: “Lasso President!” in his sweltering coastal hometown, Guayaquil.

Meanwhile, a separate exit poll by Perfiles de Opinion showed Moreno with 52.2% of the vote versus 47.8% for Lasso. Moreno was more measured, telling supporters in Quito: “We have a very trustworthy lead.” He urged Ecuadoreans to await final results.

The results will have substantial geopolitical implications, and South America is watching closely to see if Ecuador will follow Argentina, Brazil and Peru in shifting to the right as a commodities boom ends.

But the polarized country is also bracing for potential unrest after a tense campaign. Both candidates have called for their supporters to take to the street and “defend the vote.”

The two contenders could not be more different.

Moreno, 64, a paraplegic former vice-president, just missed the minimum threshold to win the presidency in the first round in February, and polls leading up to Sunday’s runoff showed him leading Lasso. Moreno, who has used a wheelchair since being shot during a robbery in 1998, has promised to boost social benefits to single mothers, pensioners and disabled Ecuadoreans while being more conciliatory than the mercurial Correa.

Lasso, a 61-year-old former head of Banco de Guayaquil who has campaigned on creating one million jobs in four years, argues that Moreno’s generous social promises risk plunging Ecuador’s economy further into debt. He also accuses the ruling Country Alliance party of covering up corruption scandals, stifling media, and stacking institutions with supporters in the vein of Venezuelan President Nicolas Maduro, a Correa ally. As Reuters notes, Venezuela’s political upheaval cast a shadow over Ecuador’s vote, with Lasso supporters fearing their country could turn the way of the crisis-hit nation.

* * *

But the biggest reason why the presidential election is being closely watched by the international community is that its outcome may seal the fate of Julian Assange.

Lasso, who according to the Cedatos poll is the winner, has vowed that if he wins the WikiLeaks founder’s time in the Ecuador embassy in London will be up. Lasso has said he would “cordially ask Señor Assange to leave within 30 days of assuming a mandate”, because his presence in the Knightsbridge embassy was a burden on Ecuadorian taxpayers.

Meanwhile, Lenin Moreno, has said Assange would remain welcome, albeit with conditions. “We will always be alert and ask Mr Assange to show respect in his declarations regarding our brotherly and friendly countries,” Moreno said.

As the Guardian wrote on March 31 ahead of Sunday’s election, the Australian’s legal team are extremely worried.

“We are obviously very concerned that any candidate would threaten to undermine the protection that the Ecuadorian state has granted Julian,” said Jennifer Robinson, a lawyer at Doughty Street Chambers who is a member of Assange’s UK legal team. “No government should play politics with the granting of asylum. It’s a legal protection provided for under international law, Ecuador has granted that protection, they have recognised him as a refugee, and now they have obligations to protect him whatever happens in the elections.”

Assange’s team are reluctant to be drawn on what legal avenues they might be able to pursue, but he is understood to have instructed lawyers in Quito, while others are looking at whether they may have potential options through the Inter-American and European courts of human rights.

Making matters for Assange worse, British authorities are adamant that, should Assange leave the embassy under any circumstances, he will be immediately arrested and sent to Sweden, which has been seeking to extradite him over an allegation of rape dating from 2010, which Assange denies.

In short, Assange’s best hope in the short term, is a Moreno victory. If that does not happen as at least one poll suggests, international human rights groups might rally in his defence, or WikiLeaks might uncover material to put pressure on Lasso. But according to Arturo Moscoso, an Ecuadorian lawyer and academic, Assange should not expect Ecuadorian public opinion to come to the rescue: “For many it’s a headache.”

 “No organisation, no law and no person can prevent the president from revoking the status of political asylum.” Assange’s asylum was granted by a presidential decree and could just as easily be removed by one, he said.

Curiously, while many have implied Russian “interference” in every major recent geopolitical event, from the Brexit vote, to the US presidential election, to the upcoming elections in France and Germany, few have discussed whether or not the Kremlin would be “manipulating” the results of the Ecuador presidential election, especially since the fate of one of the men rumored to have been collaborating with Putin, Julian Assange, is now on the line and could result in a protracted prison sentence.

Then again, it’s just one exit poll, which as recent events have demonstrated, can be painfully wrong. One person – the founder of Wikileaks – will spend the night praying that it is.

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Authored op-ed by Michael Doran via The Hill,

Senator Chuck Schumer and Congressman Adam Schiff have both castigated Devin Nunes, the chairman of the House Intelligence Committee, for his handling of the inquiry into Russia’s interference in the 2016 presidential election.  They should think twice.  The issue that has recently seized Nunes is of vital importance to anyone who cares about fundamental civil liberties.

The trail that Nunes is following will inevitably lead back to a particularly significant leak.  On Jan. 12, Washington Post columnist David Ignatius reported that “according to a senior U.S. government official, (General Mike) Flynn phoned Russian Ambassador Sergey Kislyak several times on Dec. 29.”

From Nunes’s statements, it’s clear that he suspects that this information came from NSA intercepts of Kislyak’s phone.  An Obama official, probably in the White House, “unmasked” Flynn’s name and passed it on to Ignatius.

Regardless of how the government collected on Flynn, the leak was a felony and a violation of his civil rights.  But it was also a severe breach of the public trust. When I worked as an NSC staffer in the White House, 2005-2007, I read dozens of NSA surveillance reports every day. On the basis of my familiarity with this system, I strongly suspect that someone in the Obama White House blew a hole in the thin wall that prevents the government from using information collected from surveillance to destroy the lives of the citizens whose privacy it is pledged to protect.  

The leaking of Flynn’s name was part of what can only be described as a White House campaign to hype the Russian threat and, at the same time, to depict Trump as Vladimir Putin’s Manchurian candidate.  On Dec. 29, Obama announced sanctions against Russia as retribution for its hacking activities.  From that date until Trump’s inauguration, the White House aggressively pumped into the media two streams of information: one about Russian hacking; the other about Trump’s Russia connection. In the hands of sympathetic reporters, the two streams blended into one.  

A report that appeared the day after Obama announced the sanctions shows how.  On Dec. 30, the Washington Post reported on a Russian effort to penetrate the electricity grid by hacking into a Vermont utility, Burlington Electric Department.  After noting the breach, the reporters offered a senior administration official to speculate on the Russians’ motives.  Did they seek to crash the system, or just to probe it?  

This infrastructure hack, the story continued, was part of a broader hacking campaign that included intervention in the election.  The story then moved to Trump: “He…has spoken highly of Russian President Vladimir Putin, despite President Obama’s suggestion that the approval for hacking came from the highest levels of the Kremlin.”

The national media mimicked the Post’s reporting.  But there was a problem: the hack never happened.  It was a false alarm — triggered, it eventually became clear, by Obama’s hype.

On Dec. 29, the DHS and FBI published a report on Russian hacking, which showed the telltale signs of having been rushed to publication.  “At every level this report is a failure,” said cyber security expert Robert M. Lee. “It didn’t do what it set out to do, and it didn’t provide useful data. They’re handing out bad information.”

Especially damaging were the hundreds of Internet addresses, supposedly linked to Russian hacking, that the report contained.  The FBI and DHS urged network administrators to load the addresses into their system defenses.  Some of the addresses, however, belong to platforms that are widely used by the public, including Yahoo servers.  At Burlington Electric, an unsuspecting network administrator dutifully loaded the addresses into the monitoring system of the utility’s network.  When an employee checked his email, it registered on the system as if Russian hackers were trying to break in.

While the White House was hyping the Russia threat, elements of the press showed a sudden interest in the infamous Steele dossier, which claimed that Russian intelligence services had caught Trump in Moscow in highly compromising situations.  The dossier was opposition research paid for by Trump’s political opponents, and it had circulated for months among reporters covering the election.  Because it was based on anonymous sources and entirely unverifiable, however, no reputable news organization had dared to touch it.  

With a little help from the Obama White House, the dossier became fair game for reporters.  A government leak let it be known that the intelligence community had briefed Trump on the dossier.  If the president-elect was discussing it with his intelligence briefers, so the reasoning went, perhaps there was something to it after all.

By turning the dossier into hard news, that leak weaponized malicious gossip. The same is true of the Flynn-Kislyak leak.  Ignatius used the leak to deepen speculation about collusion between Putin and Trump: “What did Flynn say (to Kislyak),” Ignatius asked, “and did it undercut the U.S. sanctions?” The mere fact that Flynn’s conversations were being monitored deepened his appearance of guilt.  If he was innocent, why was the government monitoring him?

It should not have been.  He had the right to talk to in private — even to a Russian ambassador.  Regardless of what one thinks about him or Trump or Putin, this leak should concern anyone who believes that we must erect a firewall between the national security state and our domestic politics.  The system that allowed it to happen must be reformed.  At stake is a core principle of our democracy: that elected representatives control the government, and not vice versa.

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A United States District Court judge in Kentucky has ruled that Trump was “particularly reckless” at a Louisville rally in March 2016 for shouting “get ’em out of here” in reference to a group of Hillary snowflakes who literally shut down his event with their protests.    Per the Carrier-Journal:  

Citing case law from tumultuous 1960s race riots and student protests, Hale rejected motions to dismiss the pending complaint against Trump and three supporters in the crowd that was filed by three protesters after a March 1, 2016, campaign rally in Louisville. Only a portion of the defendants’ motion was granted, but the decision means that the bulk of the claims will proceed. Hale referred the case to Magistrate Judge H. Brent Brennenstuhl.

 

The protesters, Henry Brousseau, Kashiya Nwanguma and Molly Shah, are seeking unspecified monetary damages. They claim they were assaulted by audience members who were riled up by Trump. Besides Trump, the lawsuit names three defendants in attendance — Matthew Heimbach, a leader with the white supremacist group Traditional Youth Network from Paoli, Indiana; and Alvin Bamberger, a member of the Korean War Veterans Association from Ohio; and an unknown individual.

 

Hale pointed out that, as the protesters had alleged, the violence began as soon as Trump gave a command and an order to get the protesters out of the rally.

And here is video from the event in question:

 

Of course, we can only assume that Judge Hale missed the undercover video series from Project Veritas which revealed that, among other things, the DNC and Clinton campaign conspired to incite violence at Trump rallies all across the country to progress their ‘Trump is a violent racist’ narrative.

“It doesn’t matter what the friggin’ legal and ethics people say, we need to win this motherfucker.”

 

But sure, Trump supporters deserve to be prosecuted because the snowflake below was “basically shoved.”

 

Here is the full opinion from Judge Hale:

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“Jeezuz! No, that’s scary!”

My wife was looking at an app on my phone with a stream of automated alerts.

Actually, it’s way more than an app. It’s the tip of the iceberg for a much broader safety and security iceberg. A multi-channel communication platform with push, SMS, voice calling, email, and real-time alerts – meaning time saved reacting to any emergency. Soon, it’s coming with a network of partners that will actually snag you during an emergency.

I explained all this to my wife.

“But why do you need this,” stuff she wanted to know.

Fair point…

I’ll readily and, might I say, gladly admit that living in a small boutique beachside community in a country many don’t know exists this technology seems awfully like overkill. The fact is bugger all happens in the “terror” bracket down here.

Well, that’s not true actually. Just last week some naughty backpackers went and rented surfboards at the main beach and never returned them. It was all over the local news in hours and residents were on the lookout. I suspect some burly Kiwi farmer has probably found and dealt with the little snots by now and they’ll shortly be found naked tied to a tree with bailing twine and with goats chewing on their soft bits. In any event, this is big news here.

The truth is I don’t always need this stuff for my personal use but I’ve got this sexy swishbang real time data feed on global risk at my fingertips. Just because I’m removed from “hot spots” doesn’t mean I can’t benefit from knowing what’s happening. The SigActs™ engine (part of their platform) creates a place for aggregated open-source intelligence that provides an every-day benefit, not just during an emergency.

If, for example, I wanted to know about the risks of carjackings in an area my sister was looking at a job offering, I’ve got it at my fingertips. Prevention is better than cure.

The other reason is that I seeded the particular company and, as a result, have been eager to be kept up to speed on their progress. They are, after all, in a sector that I’ve said before will EXPLODE.

The real solutions to crime aren’t going to look like Vin Diesel, and the dunderheads at airports around the world aren’t helping anyone by ruining our laptops while having half a dozen labradors rummage through our shoes. That’s useful for keeping pedophiles and people with suspiciously long arms employed, but not much else.

The real bang for your buck will lie in artificial intelligence, machine learning, drones, and the integration of existing data sources.

Here’s a useful little set of stats for you.

• 300% YoY increase in use of cellphone-based accountability.
• 400% increase in fatalities from terrorist attacks, globally from 2005 to 2015 (Global Terrorism Database).
• $31.9bn – projected size of  critical communications market in 2020, up from $15.6bn today (Frost and Sullivan, Market and Markets 2016).

I reached out to the CEO Greg Adams of Stabilitas (the company referenced above) to see if he’d be ok with sharing their recent update with you:

No working model exists

 

Crowdsourcing security data offers enormous promise: real-time, ground-truth intel for everyone in the network. But any crowdsourcing effort comes with significant challenges. With more than 7 billion potential intel sources, crowdsourced reporting needs some controls for reliability. Current models for security information are consumer-centric and do not have mechanisms to protect proprietary or sensitive company data. More importantly, these models leave organizations without the structure they need to safeguard large numbers of people effectively.

…so we’re building one.

 

Leveraging professionals, vested stakeholders, and Artificial Intelligence (AI) , we’re tackling each of these problems. The concept is simple, develop a broad, trusted network for intelligence-sharing and validation of open-source data to keep one another safe.

 

Here’s how it works. A user-generated report gets passed to the security manager (or similar role), who confirms the report and shares it to her organization and passes it up to Stabilitas. Our software does a final analysis, then anonymizes and shares the report across our ecosystem while still keeping your company’s data secure and partitioned. There’s trust-based human verification at each level, supported by pattern recognition, sentiment analysis, and other machine learning (more AI) processes the whole way through.

 

We believe this will provide unparalleled speed, accuracy, and granularity in risk information. Security leaders at Fortune 500 companies have told us how excited they are about this project, particularly when combined with our intelligence and communication platform.

 

We’re testing the service with a limited group. To be among the first members of the Security Crowd™, click here.

This sort of business will be the future of security and crime control – I’m sure of it.

If you want to know more about what they’re doing feel free to reach out directly to the gents here.

Disclosure: I am an investor in Stabilitas and this is NOT a solicitation to do anything. I’m not paid by them or anyone under this blue sky to say or do anything. I mention the company because, unsurprisingly, I know a little about what they’re up to, and I believe, rightly or wrongly, that this is the space to be in – obviously otherwise I wouldn’t have sent them some of my hard earned moolah. That may turn out to be a terrible idea… or not. I am banking on the latter.

– Chris

“Technology is anything that wasn’t around when you were born.” — Alan Kay

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I can’t avoid linking that to earlier periods of American poverty (see the photos below), says The Automatic Earth's Raul Ilargi Meijer, times in which ‘leaders’ thought it appropriate to let large swaths of the population live in misery, so everyone else would think twice about raising their voices. A tried and true strategy.

But of course there are large differences as well today between the likes of Greece and Connecticut. In Athens, there’s a poverty problem. In Fairfield County, there’s a (fake) ‘wealth problem’. Ever fewer people can afford to buy a home, so the rental market is ‘booming’ so much many can’t even afford to rent.

 

We can summarize this as ‘The Ravages Of The Fed’, and its interest rate policies. Or as ‘The Afterburn of QE’. That way it’s more obvious that this doesn’t happen only in the US. Every country and city in the world in which central banks and governments have deliberately blown real estate bubbles, face the same issue. Toronto, Sydney, Hong Kong, Stockholm, you know the list by now.

 

Helen’s real-life observations offer a ‘wonderful’ picture of how the process unfolds. The demise of America comes in small steps. But it’s unstoppable. The same is true for every other housing bubble. When no-one can afford to buy a home anymore but a bunch of Russians and Chinese, rental prices surge. And then shortly after that the whole thing goes up in smoke.

Here’s Helen Loughrey (via The Automatic Earth):

I am getting a reminder about class systems and downward social drift while searching for a rental in Fairfield County, Connecticut.

First of all, I realize I am extremely lucky to be able to afford a home at all. More and more Americans increasingly cannot. I am very aware that my current socioeconomic status could be gone in an instant. And so I am more inclined to notice class issues. There, but for the grace of GDP, go I.

And as one who studies the economy, I know we are all destined to go ‘there’ in the not-so-distant future. Owners are downsizing to become tenants, occupancy rates may rise to depression era levels, and homelessness will continue to rise up through the social fabric like water wicking up a paper towel.  

This week, I rejected an unoccupied split level rental for the dilapidated condition of the heavily scuff-marked and dingy old wall paint and dirty carpets and peeling deck paint. The house screamed “I do not care about my tenants’ quality of life.” I told my real estate agent that it indicated the landlord would not be responsive to tenant needs. He replied, “Well, after all, it’s a *rental*.”

And that statement in its conventional wisdom summed up class assumptions: buyers deserve better than renters. Yet landlords expect renters to deposit $8,000 to $10,000 of their savings, to maintain excellent credit ratings, to pay more than they would for a monthly mortgage, and to increase payments over time by $100/month every year without commensurate capital improvements to maintain the quality of the premises.

I replied, “Well, renters are people too.” I was facing the fact that despite having been a conscientious homeowner and model tenant, I had lost significant socioeconomic status by becoming a renter.

Another anecdote: Our current rental is likewise being shown to potential tenants. This week an until-recently wealthy, brand new divorcée with a pre-teen visited while I was here. She needs to switch her daughter from private school to the public schools and to quickly obtain a separate town residence in order to register her daughter. 

I spiffed up the place for my landlord, put fresh flowers on every table, and told the prospect how marvelous it was to raise our daughter in this school district with the backyard pool available to her new friends, how the third bedroom was a cozy office/family room. She listened politely but she visibly recoiled at the drop in living standards that comes with renting after a divorce. Welcome to the Greenwich renters club, my dear.

Arthur Rothstein Low-cost housing. Saint Louis, Mo. 1936

I remember despairing in our 2013 rental search that we would not find a decent home by the time we had to register our daughter in the Greenwich school system. We had compromised on this residence. Granted, the New York regional prices are stratospheric compared to our southern Maryland experience. You must DOUBLE your housing costs and even then you get much less square footage for the money.

Second, even though Greenwich is notoriously about rich and famous estates in “back country”, nevertheless like any city there are a lot more resident middle class people in average homes and even less well-off poor living in lower quality public housing apartment complexes.

The options in our price range were deplorable when we arrived here. So we paid a lot more than we thought we could afford only to share a portion of a 1950’s era non-updated house with the resident owner living in the in-law apartment.

I tried not to compare it to the larger modern house we had owned in Maryland but on my depressed days, I let my mind wander through our old home for old times’ sake. (But even there during the real estate boom years, I remember thinking we could not afford to buy again in our own neighborhood.)

In 2013 we had offered less than the listed price for our current Greenwich rental but past the top of our affordability. We rationalized that there was a swimming pool bonus for our daughter to invite new friends over. Our offer was accepted. We incorrectly assumed that over the years, the monthly rent would not rise much.

The list price should have been a clue to us that the landlord would attempt to increase the price back to their higher monthly income expectations. Plus the landlord retired from his job and took out a home equity loan a year later. 

G. G. Bain Eviction in an East Side neighborhood of New York 1908

Four years later, the time has come for us to balk at any further increases. This 3 bedroom 2 bath “tear-down” house apartment now is listed at $5500 and in three years the landlord likely expects rent creep to provide the $6000 they want in monthly income. Well, good luck to the next tenant. So we are house-hunting again. We no longer require the public school system,  but since we are paying cash now for college, our options are still limited. (I could write another essay about skyrocketing college costs.)

We recently concluded that we are now priced-out of the Greenwich rental market for what we are seeking: my husband needs a home office. I want to get moving finally on a productive food garden and starting a Permaculture Design school home business.

Convincing a potential landlord to allow me to convert costly wasteful lawn space into productive perennial food garden space; and to accept all my pets, a well behaved 6 pound lapdog plus 24,000 to 140,000 honeybees …. does not endear me to the real estate agents here. (I could write another essay on entitled and controlling listing agents.)

Other factors also place upward pressure on rental pricing: The sales market is in a longterm slump. Fewer potential buyers qualify to enter the market because they have recently lost their life savings in the housing slump themselves or they are too young to have acquired any.

Bank lenders expect larger down payments than in the recent past, amounts which I expect will be forfeited to the banks anyway when the economy tanks and more “homeowners” are thrown out of work. (Tanked economy, thanks in part to those same banks betting their depositors money in declining real estate.)

Renters risk losing their deposits to unscrupulous thieving landlords but nothing beats a thieving bankster. That down payment you saved? Kiss it goodbye, you are very likely never getting it back. And banksters know this. It is why they demand high down payments.

They’re counting on the eventuality that a good portion of current mortgagees will have to forfeit in a depressed economy. But you would not know there is a sales market slump, let alone another looming crash, by reading glowing real estate -sponsored newspaper articles. It is no wonder many  sales are for cash not lien, to wealthy foreign buyers.

Carl Mydans Kitchen of Ozarks cabin purchased for Lake of the Ozarks project, Missouri 1936

Anyone buying housing today should expect an asset value loss to occur when the real estate market adjusts downward again. (Which is another reason we are not buying in this market.) However sellers, listening to advice from hopeful real estate agents and pollyannish economists, are holding out for *higher* prices to return.

They eventually remove their properties from the sales market in order to rent them after they still cannot find a buyer even though dropping the price continuously for two years. And because fewer people can afford buying than renting, the price of rentals is rising now while the price of real estate is dropping.

Landlords who are strapped with high mortgages from the boom years, and other landlords who may have owned their older houses outright but then took out home equity loans to finance eventual roofing or HVAC expenses, and even to afford replacement cars or family vacations, are placing expectations on their tenants to provide the income to pay for those bank loans.

Meanwhile town zoning laws still prevent the tenant cost savings of subletting; and prevent owners from contracting with simultaneous multiple tenants. Yet the pool from which to draw tenants who can afford a whole house or 3/4 of one is still shrinking.

Renters like us may eventually opt (and perhaps should be opting now) for smaller square footage multiple family apartment complexes. (But no food gardening amenities? Rental managers take note.) Whole houses, with high mortgages to cover, will remain vacant and become foreclosed.

And I get it, owning a mortgaged property is also costly. But while renters are seeing standards of living drop now, so too will landlords when their properties sit vacant due to aggregate inability of renters’ incomes to afford to support the mortgaged landlords in the manner to which they had once become accustomed.

There will be a resurgence in foreclosures. And then, if they are lucky to still have a job income, we’ll also welcome them to the renters club.

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We bring readers this follow-up note to our earlier quote from the latest Weekend Notes by Eric Peters, CIO of One River Asset Management, as it provides a glimpse into the process of cognitive disappointment many other market participants may soon encounter, once the following key question is asked, and answered: “What happens if Trump can’t cut corporate taxes? What happens if we’ve recalibrated earnings to a future that was just an illusion?”

Swamped

“How’s he going to cut taxes and make it revenue neutral?” asked the CIO. “How’s he going to do massive infrastructure when we’re so deep in debt?” he continued.

“And why is the yield curve flattening? Why is loan demand declining? Why is consumer confidence at historic highs while retailer stocks are getting demolished?” He paused to catch his breath.

And still panting asked, “What happens if he can’t cut corporate taxes? What happens if we’ve recalibrated earnings to a future that was just an illusion?”

* * *

“Tax reform without tax cuts never works,” said the politico. “Because reform makes 50% of taxpayers winners and 50% losers.” To bribe the losers, you need to slash their taxes. The bigger the reforms, the bigger the required bribes. And Republicans want a massive reform package. “But Trump has no money to bribe the losers unless he generates it through Obamacare repeal and BAT (border adjustment tax).” Obamacare repeal was supposed to create $300bln of bribe money, and BAT would’ve generated another $1trln. But BAT also creates winners and lowers.

“Trump desperately needs the $300bln from Obamacare repeal to pay off the BAT losers, or that policy is dead on arrival,” continued the same politico. “And that is why Ryan told Trump that healthcare reform had to come first.” The Donald, Pence and Bannon all agreed. “But by the time they finished negotiating Obamacare repeal, they only ended up with $100bln. And even that couldn’t pass.” And $100bln isn’t even enough to pay off the BAT losers. So that’s now dead too. “So major tax reform is dead, so is major infrastructure.”

“Most people simply think that Trump can take the deficit higher and solve all of these problems,” said the politico. “But the Byrd Rule prevents any of the kind of plans Trump wants if it increases the deficit over 10yrs, unless he gets 60 Senate votes, which he can’t possibly.”

So slogging through the swamp, shunned by his own party, Trump first turned to the Democrats to do a deal. But for a democrat to deal with Trump is political suicide. So he quickly pivoted and went on the attack.

“His only chance is to beat the Freedom Caucus into submission.”

“But the Freedom Caucus gerrymandered themselves into electoral fortresses,” said the politico.

“They know Trump has a strong Twitter following, but he has limited ability to raise money from big Republican donors. And without money he can’t harm their re-elections.” Deep-pocketed Republicans are supporting the Freedom Caucus and their opposition to Obamacare in its entirety. “The most influential donors are vehemently opposed to the BAT, and they believe that if Trump can’t deliver healthcare reform, he won’t get a BAT deal either.”

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Adam Schiff, the top Democrat on the House Intelligence Committee, accused the White House and Devin Nunes, his Republican counterpart and the Chair of the House Intel Committee, of conspiring to divert attention from Moscow’s actions.  Schiff said Nunes had colluded with Trump as part of a White House ploy, in an “attempt to distract” the public from links between Trump and Russian meddling.

Schiff said on CNN’s State of the Union that Nunes and the White House had made an “effort to point the Congress in other directions, to basically say, ‘Don’t look at me, don’t look at Russia, there’s nothing to see here’.”

“It certainly is an attempt to distract and to hide the origin of the materials, to hide the White House’s hand. The question is, of course, why? And I think the answer to the question is this effort to point the Congress in other directions, basically say, ‘Don’t look at me, don’t look at Russia, there is nothing to see here,’” Schiff said.

Schiff also slammed Nunes for the way in which he reviewed the source’s intelligence reports. “It doesn’t need to be done, you know, by night through stealth at the White House. The only reason to do that, again, is if you want to hide where these materials are really coming from and who is behind it,” the Democratic lawmaker said, adding that both the Senate and House intelligence committees should be able to review the documents.

Schiff on Friday viewed the documents, telling Tapper on Sunday some red flags were raised.  “First, the deputy assistant to the White House informed me when I went to see them that these are exactly the same materials that were shown to the chairman. Now, this is a very interesting point. How does the White House know that these are the same materials that were shown to the chairman, if the White House wasn’t aware what the chairman was being shown?” Schiff asked. 

“And the second point was also made to me. And this is — I think was also underscored by Sean Spicer — and that is, it was told to me by the deputy assistant that these materials were produced in the ordinary course of business,” Schiff added.

That said, Schiff largely ignored to discuss the essence of the docs, and whether they confirmed what Nunes said, namely that Trump had indeed been the subject of surveillance; instead reverting back to the narrative that the events detracted from his priority: investigating Russia’s interference in the election.

“I think part of the reason why that was done is this effort to deflect attention from the Russia investigation, to raise other issues, to effectively create a cloud through which the public cannot see what is at stake here. And what is at stake here is a foreign intervention in our election, a very serious issue about whether U.S. persons were involved, an investigation that is being conducted by the FBI into possible coordination with the Trump campaign,” Schiff said.

* * *

Meanwhile, Trump over the weekend continued to seize on Nunes’s original allegation that the identities of Americans caught up in the surveillance had been improperly “unmasked” by US officials, for internal use during the Obama presidency. “If this is true, does not get much bigger,” Trump said on Twitter. “Would be sad for US” On Sunday he added: “The real story turns out to be SURVEILLANCE and LEAKING! Find the leakers.”

The real story turns out to be SURVEILLANCE and LEAKING! Find the leakers.

— Donald J. Trump (@realDonaldTrump) April 2, 2017

Schiff in turn responded by saying that “alarm bells” should go off whenever President Trump calls something “fake”: “I would tell people, whenever they see the president use the word ‘fake,’ it ought to set off alarm bells,” Schiff told CNN’s Jake Tapper.

Schiff added that the the White House is trying to mislead the country into believing there is no connection between Russian officials and Trump campaign associates, which – again – is an odd thing to say for the House Intel Committee member who complains that he is unable to conclude his probe due to distractions by Trump, unless of course he has decided what the conclusion of the “investigation” will be ahead of time.

And so, despite the FBI admitting on several occasions that there does not appear to be any evidence of collusion between Trump and Russia, the media circuit continues to be wrapped tighly around this narrative which serves as the true public distraction, and as a strawman foil to accuse anyone who is, or voted against Hillary Clinton/the establishment – now including supporters of Bernie Sanders – of being “influenced” by Putin, in what has become the biggest US witch hunt since Joe McCarthy.

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While the "Silent Hunter" laser-gun is a more 'offensive' weapon, China has stepped up it's 'defense' too. As PopSci reports, Chinese authorities have developed and rolled out anti-drone "jamming" guns domestically…

The $19,000 gun drone-jamming gun, one of several owned by the Wuhan police, can shut off drones up to a kilometer away.

At a March 11 soccer game in Wuhan, China, police faced a new kind of threat: drones trespassing near the stadium. Their response was to use a new kind of weapon: an anti-drone gun that jammed the control signals, forcing the trespassing drones to land automatically.

Given China's role as a global leader in consumer drone and military unmanned aircraft systems (UAS) exports, it only makes sense that China is also developing a range of anti-drone capabilities to stop unauthorized or hostile flying robots from coming over sensitive or vulnerable sites. In the case of Wuhan, the jammer "guns"—known as such not just because they "shoot" but also because they look like an assault rifle—cost approximately $19,000, and can reportedly jam control signals up to a kilometer away (though that figure assumes that the user has exceptional aim). Impressed with its capabilities, Wuhan police intend to buy more.

The weapon is only one example of anti-drone tech. Comparable American jamming rifles, like the Battelle Drone Defender, are already used by Coalition forces in Iraq looking to shut down ISIL quadcopters used for surveillance and grenade attacks.

Meanwhile, some European forces have gone for more novel solutions, like training eagles to attack errant small drones.

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