Central Perk

joi, 1 ianuarie 2015

Posted: 01 Jan 2015 09:41 PM PST

If you are a renter, how much did your rent go up this past year? What's your expectation for 2015?

Let's explore those questions starting with a chart on rent from the MarketWatch article Here's What Americans Spent on Rent this Year.

Cumulative Rent Growth

In isolation, the chart is misleading because it included growth in rent collected which varies by population increases. It does not reflect percentage increases in base rent.

Both MarketWatch and Zillow explain it that way, but one has to read carefully to pick that up.

Zillow says U.S. Renters Paid $441 Billion in Rent in 2014, Up Nearly $21 Billion Since 2013

Americans shelled out $20.6 billion more in rent in 2014 compared to 2013. Cumulatively, U.S. renters paid $441 billion in rent in 2014 compared to $420 billion last year, an increase of nearly five percent (4.9 percent), as both the number of renting households and the average rent rose nationally, according to a Zillow rentals analysisi.

Locally, the Bay Area, consisting of the San Jose and San Francisco metros, saw the largest jump in cumulative rent paid in 2014, up 14.4 and 13.5 percent respectively. Rent per household in the San Jose, Calif. metro rose by $197 per month, while rent in the San Francisco metro rose by $163 per month.

What Percentage Did Rents Really Go Up?

That looks like a shocking stat for San Jose and San Francisco. If one inaccurately places all of the increase on rising rent, the hike would be a whopping $2,364 per year!

However, Zillo explains "Nationally, the total number of renters is estimated to have grown 1.9 percent in 2014ii. Over the same time period, the median rent paid increased 2.9 percent."

Fair enough, but also consider this Zillow statement: "Over the past fourteen years, rents have grown at twice the pace of income due to weak income growth, burgeoning rental demand, and insufficient growth in the supply of rental housing."

Does income growth also factor in the rise in population? If not, it's a very invalid comparison.

Regardless, inquiring minds are probably interested in this question: In percentage terms, how much did rental prices really increase in San Jose, San Francisco, Miami, and Chicago?

Zillow did not even say.

Instead Zillow Chief Economist Stan Humphries explains "Next year, we expect rents to rise even faster than home values, meaning that another increase in total rent paid similar to that seen this year isn't out of the question. In fact, it's probable."

Fred to the Rescue

The St. Louis Fed also keeps tracks of rent, albeit in the form of "Owners' Equivalent Rent".

There are four pages to scroll through. Instead of posting the raw index for each chart, I displayed percent change from a year ago in each of the following charts.

CPI Rent of Primary Residence All Urban Consumers

OER New York, Northern New Jersey, Long Island

OER Miami, FT. Lauderdale

OER Los Angeles, Riverside, Orange County

OER San Francisco, Oakland, San Jose

An increase of 5.1% for San Francisco, Oakland, and San Jose is pretty steep, but nothing like the misleading Zillow-reported 13.5%.

To be fair, Fred added Oakland to the mix, but it's safe to assume rents did not rise anywhere close to 13.5%.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Disgusting Idea of the Day: Another Bush vs. Another Clinton

Posted: 01 Jan 2015 03:12 PM PST

A CNN/ORC Poll shows Bush surges to 2016 GOP frontrunner.

Bush took first place with 23% in a new nationwide poll, putting him 10 points ahead of New Jersey Gov. Chris Christie, who tallied 13%. Physician Ben Carson comes in third, with 7% support, and Sen. Rand Paul and former Arkansas Gov. Mike Huckabee are both tied for fourth with 6%.

Bush Dumps Corporate Commitments

Jeb Bush has not yet formally announced he is running, but actions suggest a 100% likelihood.

Fearing a backlash like Romney had with his ties to Bain Capital, Jeb Bush Resigned from All Boards, an action that will cost him as much as a million dollars a year.

I propose, if those board positions mattered ever, then they still matter now. Would it really have mattered if Romney shed all his ties with Bain Capital? Why would it?

If anything, dumping those corporate ties makes it look like there's some garbage that needs to be hidden. And if there is smelly garbage, it's 100% likely to surface.

But that's not how these guys see it.

Please consider Jeb Bush Sheds Corporate Commitments to Help 2016 Presidential Run.

Technically, Jeb Bush – son of President George Bush Sr and younger brother of President George W Bush – is still only "exploring" whether to seek the Republican nomination. But severing his many business ties means forgoing millions of dollars in consultancy earnings and is likely to prove almost as indicative of his determination to follow in family footsteps as did his announcement of a fundraising committee last month.

Disentangling the extensive business interests that Bush has built up since standing down as governor in 2007 has not been a simple exercise. His first major resignation – as an adviser to Barclays following its purchase of Lehman Brothers – was confirmed by the British bank three weeks ago, after questions were raised about whether it and other controversial relationships could prove his achilles heel.

He is also still reviewing what to do about some directly owned business interests such as the consulting firm Jeb Bush & Associates, according to the Washington Post, which first reported the latest news.

Various private equity investments in energy and aviation, made through a company called Britton Hill that is named after the highest point in Florida, were only disclosed last June. At the time, such investments were widely interpreted as a sign that Jeb might have decided to heed his mother Barbara's advice that there had already been enough Bushes in the White House.

But the Republican establishment is anxious for a well-known candidate to challenge more radical rivals such as senators Ted Cruz and Rand Paul, and the Bush name is seen as the most reliable rallying point for wealthy donors and the business community after the New Jersey governor, Chris Christie, was tarnished by a political scandal in 2014.

Who Isn't Running?

"The more the merrier," said the Kentucky senator Rand Paul when Bush first announced he was "exploring" a run in December, one of many indications that Paul's participation in the contest is in as little doubt as that of his equally ambitious conservative colleague Ted Cruz.

The Florida senator Marco Rubio also announced in a New Year's Day radio interview that he was "spending the holidays thinking about his future".

The unusually early launch of team Bush was thought to be aimed partly at deterring other establishment competitors such as Rubio and the New Jersey governor, Chris Christie, but their public prominence since and Mitt Romney's strong performance in polling suggests it may have only spurred them on.

And with governors from Indiana's Mike Pence to Rick Perry of Texas and Scott Walker of Wisconsin dropping similar hints in recent days, the easier question among top Republicans is who isn't running?

Republican Establishment Losers

And so the Republican establishment is already rallying around another loser just as they rallied around Mitt Romney.

When does the stupidity end? The next election, like the last, is highly likely to depend on independents, libertarians, and those who want change.

Neither Jeb Bush nor Hillary Clinton offers any change. That pairing would be one of the most disgusting ever.

I support Rand Paul as the only candidate possible to make a difference.

Admittedly it's too early to make any predictions, but Real Clear Politics shows Clinton beating Bush, Cruz, Paul, Huckabee, Christie, and Ryan, all by substantial margins.

One think Clinton has going for here is name recognition. There are a lot of people who do not know who some of the Republican candidates are. And there are many feminists who will vote for Hillary just to have a woman in the Whitehouse.

Name recognition will change with the passage of time and with the primaries. What may not change is the willingness of independents to rally behind Bush. I sure won't, but I won't vote for Hillary either.

Regardless, if Republicans nominate another Neanderthal instead of someone who represents change, expect to see "no change" another way, with Hillary Clinton as president.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Happy New Year!

Posted: 01 Jan 2015 01:37 PM PST

Happy New Year to you and all your loved ones. May 2015 be your best year ever. For those of you seeking a job or a better job, better health, or simply peace of mind, may you find it in 2015. Mish

Seth's Blog : Used to be

Used to be

This hotel used to be a bank.

That conference organizer used to be a travel agent.

This company used to make playing cards.

Perhaps you used to be hooked on keeping score, or used to be totally focused on avoiding the feeling of risk, or used to be the kind of person who needed to be picked...

"Used to be," is not necessarily a mark of failure or even obsolescence. It's more often a sign of bravery and progress.

If you were brave enough to leap, who would you choose to 'used to be'?

• Email to a friend •

miercuri, 31 decembrie 2014

Mish's Global Economic Trend Analysis

Bluff of the Day: Germany Warns "Greece is No Longer of Systemic Importance For the Euro"

Posted: 31 Dec 2014 03:34 PM PST

In the obvious bluff of the day, Euro zone No Longer Obliged to Rescue Greece, Merkel Ally Says.

Actually, the eurozone was never obliged to rescue Greece, and in fact did not rescue Greece. Rather the EU and Troika rescued European banks holding Greek bonds.

Here's the actual bluff.

In an interview with Rheinische Post newspaper published on Wednesday, Michael Fuchs also said Greek politicians could not now "blackmail" their partners in the currency bloc.

"If Alexis Tsipras of the Greek left party Syriza thinks he can cut back the reform efforts and austerity measures, then the troika will have to cut back the credits for Greece," he said.

"The times where we had to rescue Greece are over. There is no potential for political blackmail anymore. Greece is no longer of systemic importance for the euro."

Blackmail Potential

Curiously, there was little potential for blackmail years past when Greece ran a primary account deficit (Greece needed money from Europe to stay afloat), but now Greece has a tiny current account surplus (not counting interest payments).

Countries with current account surpluses are not dependent on foreigners to finance debt. This makes it all the more likely Greece can tell the Troika "go to hell".

Of course, Tsipras has made all kinds of pledges that would kill the surplus if carried out, but since when do politicians keep promises?

More than likely a default would wreck the Greece economy, but so does interest on €245 billion in "bailouts" for years if not decades to come. Tsipras may easily decide he has nothing to lose.

Ironically, if his economic proposals were better, Greece would indeed have everything to gain and nothing to lose by cramming this straight down the EU's throat.

Eurozone Financial Stability Contribution Weights

Country	Guarantee Commitments (EUR) Millions	Percentage
Austria	€ 21,639.19	2.78%
Belgium	€ 27,031.99	3.47%
Cyprus	€ 1,525.68	0.20%
Estonia	€ 1,994.86	0.26%
Finland	€ 13,974.03	1.79%
France	€ 158,487.53	20.32%
Germany	€ 211,045.90	27.06%
Greece	€ 21,897.74	2.81%
Ireland	€ 12,378.15	1.59%
Italy	€ 139,267.81	17.86%
Luxembourg	€ 1,946.94	0.25%
Malta	€ 704.33	0.09%
Netherlands	€ 44,446.32	5.70%
Portugal	€ 19,507.26	2.50%
Slovakia	€ 7,727.57	0.99%
Slovenia	€ 3,664.30	0.47%
Spain	€ 92,543.56	11.87%
Eurozone 17	€ 779,783.14	100%

The above table from European Financial Stability Facility

I posted the above table on Monday in Snap Elections in Greece; 3-Year Bond Yield Tops 12%; Potential Cascade! Who Has the Upper Hand?.

Here's a second table I created today to put a potential €245 billion default into proper perspective based on percentage liabilities.

Responsibility in Euros

Country	Percentage	Greek Debt Responsibility
Austria	2.78%	6.79875
Belgium	3.47%	8.49317
Cyprus	0.20%	0.479465
Estonia	0.26%	0.62671
Finland	1.79%	4.3904
France	20.32%	49.79527
Germany	27.06%	66.308515
Greece	2.81%	6.88009
Ireland	1.59%	3.88913
Italy	17.86%	43.75651
Luxembourg	0.25%	0.611765
Malta	0.09%	0.221235
Netherlands	5.70%	13.96451
Portugal	2.50%	6.12892
Slovakia	0.99%	2.42795
Slovenia	0.47%	1.151255
Spain	11.87%	29.076355
Eurozone 17	100%	245

The idea that Greece is responsible to cover its own default is of course ridiculous, so mentally spread Greece's €6.88 billion liability to the other countries.

Italy's responsibility would rise by a little over €1 billion while Spain's liability would rise by a little under €1 billion. Germany would need to pick up about €2 billion, and France about €1.5 billion etc.

Where is Spain going to come up with €30 billion? Italy €45 billion? France €51 billion?

The simple answer is they aren't. So, does the ECB print the money in violation of rules and pass it out?

If not, who's bluffing whom regarding "systemic importance" of Greece?

The irony of the day is that Greece was no systemic threat to the eurozone until the Troika foolishly threw €245 billion at Greece hoping to prevent a default.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Damn Cool Pics

Seven Generations Of Family

Posted: 31 Dec 2014 04:51 PM PST

This woman traced her family tree back seven generations that spanned two centuries. This is what she found.

via reddit

Female Bullfighter Gored Twice by Bull

Posted: 31 Dec 2014 11:46 AM PST

Single mother and bullfighter Karla de los Angeles was injured in Mexico City, Sunday after twice taking blows from a bull's horns. The 495 kg (1,090lb) bull named Gamusino first gored her just as she was going in for the kill. Despite the initial blow, de los Angeles managed to resume the battle after medical attention only to be gored again. She could not resume the fight for a third time. She suffered two cuts of 12cm (4.7 in) and 10cm (3.9in) in length to her thigh and buttock.