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“Systems of taxation are not framed, nor is it possible to frame them, with perfect distribution of benefit and burden. Their authors must be satisfied with a rough and ready form of justice.”

— U.S. Supreme Court Justice Benjamin Cardozo

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Maps and Measurments of the Expansion of Cities | Sustainable Cities Collective

 

We are living in the midst of the urban century. Though it is common knowledge that the world is urbanizing, it can be striking to visualize this growth on a map. This animation from Unicef maps countries’ urban populations from 1950 to 2050, and shows that urbanization is a global phenomenon set to continue for decades:

 

population-circle-urban-growth-asia-cities1

 

Maps and Measurements of the Expansion of Cities | Sustainable Cities Collective.

Anne Stevenson-Yang: Why Xi Jinping’s Troubles, and China’s, Could Get Worse – Barron’s

Prominent expert on Chinese economy warns of depression and possible crash:

China, for all its talk about economic reform, is in big trouble. The old model of relying on export growth and heavy investment to power the economy isn’t working anymore…

… starting in 2008, China sought to counter global recession with huge amounts of ill-advised investment in redundant industrial capacity and vanity infrastructure projects—you know, airports with no commercial flights, highways to nowhere, and stadiums with no teams…

People are crazy if they believe any government statistics, which, of course, are largely fabricated…actual Chinese GDP is probably a third lower than is officially reported…

Property sales are in decline, steel production is falling, commercial long-and short-haul vehicle sales are continuing to implode, and much of the growth in GDP is coming from huge rises in inventories across the economy. We track the 400 Chinese consumer companies listed on the Shanghai and Shenzhen stock markets, and in the third quarter, their gross revenues fell 4% from a year ago. This is hardly a vibrant economy…

Rampant capital flight could turn into a rout given the ridiculous concentration of wealth in China, cutting the seemingly impregnable foreign reserves dramatically…

China is riding an involuntary credit treadmill where much new money has to be hosed into the economy just to sustain ever-mounting bad-debt totals. Capital efficiency, or the amount of capital it takes to generate a unit of GDP growth, has soared as a result…

The Chinese home real estate market, mostly units in high-rise buildings, is truly bizarre. Many Chinese regard apartments as capital-gains machines rather than sources of shelter. In fact, there are 50 million units in China that are owned but vacant. The owners won’t rent them because used apartments suffer an immediate haircut in value.

It’s as if the government created a new asset class that no one lives in. This fact gives lie to the commonly held myth that the buildout of all these empty towers and ghost cities is a Chinese urbanization play. The only city folk who don’t own housing are the millions of migrant laborers continuously flocking to Chinese cities. Yet, they can’t afford the new housing…

Families have more than half of their wealth in housing, including the less affluent in recent years who have taken to buying fractional shares in luxury apartments and town houses. Local governments, which rely on land sales to developers and real estate transfer taxes for something like 35% of their revenue, would be in a bad way in a housing-price bust…

Interestingly, liquidity seems to be a growing problem in China. Chinese corporations have taken on $1.5 trillion in foreign debt in the past year or so, where previously they had none. A lot of it is short term. If defaults start to cascade through the economy, it will be more difficult for China to hide its debt problems now that foreign investors are involved. It’s here that a credit crisis could start…

December 5, 2014

Anne Stevenson-Yang: Why Xi Jinping’s Troubles, and China’s, Could Get Worse – Barron’s.

John Steinbeck

Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.

 

John Steinbeck

Pentagon Plans for Climate Wars

Now that the Pentagon wants to address climate change, progress may be possible.

After all we only implemented food assistance when the head of the Selective Service in WWII warned Congress that too many draftees were being rejected due to malnutrition, the interstate highway system is actually the  Dwight D. Eisenhower National System of Interstate and Defense Highways, and the internet and numerous other technologies were funded by DARPA (Defense Advanced Research Projects Agency).

No fear, no funds.

Pentagon says we could soon be fighting climate wars | Grist.

Leaving Homeless Person On The Streets: $31,065. Giving Them Housing: $10,051. | ThinkProgress

There is a far cheaper option though: giving homeless people housing and supportive services. The study found that it would cost taxpayers just $10,051 per homeless person to give them a permanent place to live and services like job training and health care. That figure is 68 percent less than the public currently spends by allowing homeless people to remain on the streets. If central Florida took the permanent supportive housing approach, it could save $350 million over the next decade.

via Leaving Homeless Person On The Streets: $31,065. Giving Them Housing: $10,051. | ThinkProgress.

The Great Mortgaging | VoxEu.org

Interesting study that real estate debt has become the center of the financial industry, increasing fragility, and worsening recessions while diverting resources from industry.

In other words, banking today consists primarily of the intermediation of savings to the household sector for the purchase of real estate. The core business model of banks in advanced economies today resembles that of real estate funds: banks are borrowing (short) from the public and capital markets to invest (long) in assets linked to real estate.

By contrast, nonmortgage bank lending to companies for investment purposes and nonsecured lending to households have remained stable over the 20th century in relation to GDP. Nearly all of the increase in the size of the financial sectors in Western economies since 1913 stems from a boom in mortgage lending to households and has little to do with the financing of the business sector.

The great mortgaging | vox.

How Asset Building Tax Subsidies Miss Their Targets

How Asset Building Tax Subsidies Miss Their Targets

Nearly one-third of all federal tax expenditures–$384 billion in 2013 alone– is aimed at various forms of asset building, such as retirement savings, higher education, and home ownership. Yet, according to research by several of my Tax Policy Center and Urban Institute colleagues, these tax breaks do little to help low- and middle-income households build wealth.

Incentives for homeownership represent a bit more than half of these subsidies, special tax treatment for retirement savings nearly 40 percent, and higher education subsidies about 8 percent. Together, they are so big that they’ll inevitably be part of any broad-based tax reform effort. Because they are such a high percentage of tax expenditures, it is effectively impossible to achieve significant tax rate reduction without scaling them back. That’s why they were such an important element in House Ways & Means Committee Chairman Dave Camp’s tax reform plan.

In both a long paper and in a newly issued fact sheet, Gene Steuerle, Ben Harris, Signe-Mary McKernan, Caleb Quackenbush, and Caroline Ratcliffe conclude that these asset building subsidies are ripe for reform, whether through a broad tax code rewrite or on their own.

Because high income households receive the lion’s share of the benefits of these subsidies, they raise important distributional issues. But, more importantly, they fail to achieve a key goal: To help households boost their assets. They simply don’t work very well.

– See more at: http://taxvox.taxpolicycenter.org/2014/10/07/asset-building-tax-subsidies-miss-targets/#sthash.MFAItClc.dpuf

How Asset Building Tax Subsidies Miss Their Targets

Nearly one-third of all federal tax expenditures–$384 billion in 2013 alone– is aimed at various forms of asset building, such as retirement savings, higher education, and home ownership. Yet, according to research by several of my Tax Policy Center and Urban Institute colleagues, these tax breaks do little to help low- and middle-income households build wealth.

Incentives for homeownership represent a bit more than half of these subsidies, special tax treatment for retirement savings nearly 40 percent, and higher education subsidies about 8 percent. Together, they are so big that they’ll inevitably be part of any broad-based tax reform effort. Because they are such a high percentage of tax expenditures, it is effectively impossible to achieve significant tax rate reduction without scaling them back. That’s why they were such an important element in House Ways & Means Committee Chairman Dave Camp’s tax reform plan.

In both a long paper and in a newly issued fact sheet, Gene Steuerle, Ben Harris, Signe-Mary McKernan, Caleb Quackenbush, and Caroline Ratcliffe conclude that these asset building subsidies are ripe for reform, whether through a broad tax code rewrite or on their own.

Because high income households receive the lion’s share of the benefits of these subsidies, they raise important distributional issues. But, more importantly, they fail to achieve a key goal: To help households boost their assets. They simply don’t work very well.

– See more at: http://taxvox.taxpolicycenter.org/2014/10/07/asset-building-tax-subsidies-miss-targets/#sthash.MFAItClc.dpuf

| Posted on October 7, 2014, 4:40 pm

Nearly one-third of all federal tax expenditures–$384 billion in 2013 alone– is aimed at various forms of asset building, such as retirement savings, higher education, and home ownership. Yet, according to research by several of my Tax Policy Center and Urban Institute colleagues, these tax breaks do little to help low- and middle-income households build wealth.

Incentives for homeownership represent a bit more than half of these subsidies, special tax treatment for retirement savings nearly 40 percent, and higher education subsidies about 8 percent. Together, they are so big that they’ll inevitably be part of any broad-based tax reform effort. Because they are such a high percentage of tax expenditures, it is effectively impossible to achieve significant tax rate reduction without scaling them back. That’s why they were such an important element in House Ways & Means Committee Chairman Dave Camp’s tax reform plan.

In both a long paper and in a newly issued fact sheet, Gene Steuerle, Ben Harris, Signe-Mary McKernan, Caleb Quackenbush, and Caroline Ratcliffe conclude that these asset building subsidies are ripe for reform, whether through a broad tax code rewrite or on their own.

Because high income households receive the lion’s share of the benefits of these subsidies, they raise important distributional issues. But, more importantly, they fail to achieve a key goal: To help households boost their assets. They simply don’t work very well.

See more at TaxVox.TaxPolicy.org : Tax subsides for asset building fall short.

James McCarthy has 30+ years in finance and private equity, corporate structuring and work-outs, and raising debt and equity as an investor, lender, investment manager, portfolio manager, financial advisor, corporate consultant, work-out consultant, and city planner. Clients have included domestic and offshore institutional investors, investment funds, hedge funds, high net worth investors, and private companies. I hold an MBA from Columbia University and a Master of City & Regional Planning from Rutgers University.

Special interests include green and sustainable design, resilience, passive energy design, waterfront, walkability, transit-oriented design, affordable housing, high-quality and innovative architecture and construction technology, mixed-use development, and the inclusion of public spaces and landscape architecture.

JMc & Jameson Capital