23 April 2014

The Fallacy of Home Ownership

Americans think owning a home is better for them than it is - The Washington Post:



Some people never learn: Polls show that Americans still view their homes as the best and safest place to invest their hard-earned cash.
Gallup asked Americans this month to choose the best “long-term investment.” Real estate was the most common pick, ahead of mutual funds, bonds and other options. Similarly, Fannie Mae’s National Housing Survey asked Americans to assess whether various kinds of assets amounted to a “safe investment with a lot of potential.” As has been the case since before the financial crisis, “buying a home” beat out all the alternatives.
The fact that Americans still financially fetishize homeownership baffles me. Never mind that so many people lost their shirts (among other possessions) in the recent housing bust. Over an even longer horizon, owning a home has not proved to be a terribly lucrative investment either. Don’t take my word for it; ask Robert Shiller, winner of the 2013 Nobel Prize in economics who previously became a household name for identifying the housing bubble.
“People forget that housing deteriorates over time. It goes out of style. There are new innovations that people want, different layouts of rooms,” he told me. “And technological progress keeps bringing the cost of construction down.” Meaning your worn, old-fashioned home is competing with new, relatively inexpensive ones.
Over the past century, housing prices have grown at a compound annual rate of just 0.3 percent once one adjusts for inflation, according to my calculations using Shiller’s historical housing data. Over the same period, the Standard & Poor’s 500-stock index has had comparable annual returns of about 6.5 percent.
Yet Americans still think it’s financially savvy to dump all their savings into a single, large, highly illiquid asset.
Perhaps Americans just want to invest in something tangible. Real estate is, after all, real: bricks, mortar, wood, tile. Other kinds of assets seem more abstract, almost imaginary, by comparison. You just have to trust your financial adviser, bank or never-ending, entire-rainforest-killing Vanguard mailings that your other investments actually exist.
Shiller suspects that selective memory may also play a role.
“People remember home prices from long ago better than they remember other prices,” he says. “Ask anybody, ‘What did you pay for your home?,’ and they’ll remember even if it was 50 years ago. It will be some ridiculous number like $30,000. They then compare it to today’s prices, and it makes a big impression, and they forget there has been so much inflation since then.”
The tax code, alongside other public policy, forcefully nudges Americans toward investing in housing, too. The biggest bogeyman is the home-mortgage interest deduction. But the government effectively subsidizes home-buying in other ways, including through the Federal Housing Administration, Fannie Mae and Freddie Mac, and the fact that we don’t tax imputed rents — the estimated amount homeowners would have to spend to rent an identical property.
There are also large psychic benefits to owning a house, which Americans might conflate with financial ones.
Survey after survey finds that the vast majority of Americans see homeownership as a preferred lifestyle choice, a crucial part of obtaining the “American Dream ” and a requirement for membership in the middle class. Many families view homeownership as the best way to get their children into the right schools or most stable neighborhoods. Our national cultural reverence for homeownership is decades, if not centuries, old; as Pa Bailey declared in “It’s a Wonderful Life,” there is “a fundamental urge,” something “deep in the race for a man to want his own roof, walls and fireplace.”
At least here in the United States, where only a minority of Americans prefers having a landlord and superintendent legally obligated to maintain their buildings and bear the risk if, say, Hurricane Sandy floods the basement. Americans romanticize the idea of owning their own roof, walls and fireplace, and they think they’ll make money off ’em, too.
The problem is that, perhaps because of tax incentives and ignorance about the financial returns from real estate investments, Americans are buying more house than they need or, in some cases, derive pleasure from. That incurs maintenance costs for the homeowner, not to mention other kinds of negative externalities for the rest of society (sprawl, traffic and greater carbon emissions) that likely outweigh the individual “psychic benefits” of buying oversize houses. If nothing else, the recent financial crisis should have taught us that it’s not in the country’s best interest to enable every aspiring homeowner to buy.
As senators mark up legislation next week that would wind down Fannie and Freddie, expect great hue and cry about whether an overhaul of the mortgage system would make homeownership less affordable. But given the many other subsidies that exist, and Americans’ persistent misperceptions about the financial benefits of buying a house, maybe we can afford to make homeownership slightly less affordable.

22 April 2014

The Great EPA Water Grab of 2014

Will EPA water grab tip US back into recession? | Fox News:

Quietly last month -- in the midst of Ukraine, the search for flight MH 370, David Letterman’s retirement and the final hours of March Madness -- Washington witnessed a ruling that will affect all of our lives: the redefinition of water under the Clean Water Act.

The redefinition – formally a Proposed Rule issued by the EPA -- is momentous not because water is the essence of life (according to Google, it is), but because of the profound consequences for America’s economic growth, or lack thereof, as a result of the new rule.

As is so often the case with government powers, large matters turn on small shadings of meaning in phrases written decades ago by legislators long since gone. Consider the bureaucratic meaning of the term “waters of the United States,” which is the rubric under which the U.S. federal government establishes jurisdiction under the Clean Water Act. For more than 40 years, the issue of what waters fell under federal scrutiny turned on whether they were “navigable” or near an adjacent wetland.

Enter the EPA, casting its new action as an effort to “clarify” the definition of “waters of the United States,” muddied by recent federal court rulings.

While Websters may only need 85 words to do the job – and even the Clean Water Act’s author, Edmund Muskie, needed only 88 pages for the entire bill – EPA’s definition of water runs 370 pages. And that’s leaving aside appendices, one of which is a hefty 300 pages in its own right.

The new catchphrase is “connectivity:” Forget whether waters are navigable; what matters now for EPA’s would-be rulemakers is that disparate bodies of water are connected ecologically, demonstrating a “significant nexus.” This includes “ephemeral waterways” – translation: ditches and even potholes that sometimes collect rainwater or storm runoff will now fall under EPA authority.

And the new water rule is only the latest in a series of EPA actions unilaterally redefining its authority and extending its regulatory reach.

Take the EPA’s “dredge and fill” authority, under the Clean Water Act’s Section 404. In recent years, EPA has cited its 404 authority to apply to projects after permits have been issued, and even before a mine plan is introduced.

Case in point: The Spuce Mine in West Virginia. After a 10 year-long process, the U.S. Army Corps issued their permit for this coal project in early 2007. Along the way – with EPA oversight – the footprint of the proposed mine was reduced more than 25%, a development that might, in less fraught times, point to the responsiveness of the federal process to expert opinion and community input.

No matter. Two years later, the EPA rescinded Spruce’s permit. Since then, the battle over the Spruce Mine has shifted into the U.S. courts, with split decisions rising last week to the Supreme Court, which returned the case to lower courts for adjudication on the merits. In other words, 17 years after Spruce entered -- and completed -- the federal permitting process, it’s still not clear if the mine can be built.

If EPA’s ex post facto execution of Spruce stands, no mining company can ever be confident that the permits it receives after years of effort and hundreds of millions of expense – will be worth the paper they’re written on.

EPA’s expanding its reach at the front-end of the permitting process as well. Witness Alaska’s Pebble project, a copper and multi-metal deposit. For Pebble, EPA created a special process inviting experts to create a hypothetical mine to assess its potential impacts. Under the EPA’s pressure, the Pebble project lost its major partner, and just this week, a minority investor – both major multi-national mining companies. If EPA finishes Pebble off, a new precedent will be set, whereby projects must navigate an ad hoc “pre-process” in order to earn the right to apply for mining permits.

Other pending mines are twisting in EPA limbo: The Rosemont copper project in Arizona, where regional EPA regulators are deciding whether a gulch or wash – a sluice through which rainwater passes but is otherwise dry as desert – triggers a clean water review. Then there’s the Eagle Mine in Michigan – the only mine in the country that would extract nickel as its primary product, an ingredient essential to stainless steel, batteries, magnets and ceramics. EPA initially ruled that Eagle would need a wastewater discharge permit, but dropped the requirement after the company revised its mine plan. Eagle got its permit in 2006. Now EPA has flipped the bureaucratic switch – Eagle will need a wastewater discharge permit after all.

Is this what Congress intended? Placing a magic wand in the hands of a single federal agency, with a welter of rules it can interpret to its own taste, leaving citizens and companies no option but expensive litigation?

And the issue isn’t just mining. Couple the expansive new water rule to EPA’s unilateral extension of its “dredge and fill” powers, and there’s no reason that oil and gas projects won’t be next. Ditto major construction, transportation routes, and manufacturing plants.

Even the American farmer is now in EPA’s cross-hairs. Witness the focus on “prairie potholes” – depressions in the land that may occasionally fill with rain or snowmelt -- as part of the system of waters of the United States. It’s not that EPA will classify all prairie potholes as falling under its authority – just that determining which pothole is subject to federal rules will likely require a case-by-case analysis.

According to estimates by the U.S. Army Corps of Engineers, more than $220 billion in economic development runs through Section 404 every year. With the U.S. economy growing around 3 percent annually, that’s more than half the projected GDP increase for 2014. And that’s before the EPA’s expanded definition of water. With more and more of U.S. economic development falling under its purview, EPA’s endless appetite for project delays could push the U.S. economy back intro recession.







In sharp contrast to its legislative mandate, EPA’s understanding of its own authority seems to have overflowed its banks. Members of Congress on both sides of the partisan divide have reacted with alarm at the new water rule. Let’s see whether Congress as a co-equal branch decides to revisit the EPA’s water grab before the puddles around the Capitol Hill fountain are declared wetlands.

17 April 2014

After Nevada ranch stand-off, emboldened militias ask: where next? | Reuters

After Nevada ranch stand-off, emboldened militias ask: where next? | Reuters:



Eric Parker from central Idaho aims his weapon from a bridge as protesters gather by the Bureau of Land Management's base camp, where cattle that were seized from rancher Cliven Bundy are being held, near Bunkerville, Nevada April 12, 2014. REUTERS-Jim Urquhart
2 OF 2. Eric Parker from central Idaho aims his weapon from a bridge as protesters gather by the Bureau of Land Management's base camp, where cattle that were seized from rancher Cliven Bundy are being held, More...
CREDIT: REUTERS/JIM URQUHART

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(Reuters) - Flat on his belly in a sniper position, wearing a baseball cap and a flak jacket, a protester aimed his semi-automatic rifle from the edge of an overpass and waited as a crowd below stood its ground against U.S. federal agents in the Nevada desert.
He was part of a 1,000-strong coalition of armed militia-men, cowboys on horseback, gun rights activists and others who rallied to Cliven Bundy's Bunkerville ranch, about 80 miles northeast of Las Vegas, in a stand-off with about a dozen agents from the federal Bureau of Land Management.
The rangers had rounded up hundreds of Bundy's cattle, which had been grazing illegally on federal lands for two decades. Bundy had refused to pay grazing fees, saying he did not recognize the government's authority over the land, a view that attracted vocal support from some right-wing groups.
Citing public safety, the BLM retreated, suspending its operation and even handing back cattle it had already seized.
No shots were fired during the stand-off, which Bundy's triumphant supporters swiftly dubbed the "Battle of Bunkerville," but the government's decision to withdraw in the face of armed resistance has alarmed some who worry that it has set a dangerous precedent and emboldened militia groups.
"Do laws no longer apply when the radical right no longer agrees?" said Ryan Lenz, a writer for the Southern Poverty Law Center, which monitors militia group activity.
Armed Americans using the threat of a gunfight to force federal officers to back down is virtually unparalleled in the modern era, militia experts said. But the BLM, which says it is now pursuing legal and administrative options to resolve the dispute, has won praise for stepping back and avoiding violence.
Energized by their success, Bundy's supporters are already talking about where else they can exercise armed defiance. They include groups deeply suspicious of what they see as a bloated, over-reaching government they fear wants to restrict their constitutional right to bear arms.
Alex Jones, a radio host and anti-government conspiracy theorist whose popular right-wing website, Infowars, helped popularize Bundy's dispute, called it a watershed moment.
"Americans showed up with guns and said, 'No, you're not," before confronting the armed BLM agents, Jones said in a telephone interview. "And they said, 'Shoot us.' And they did not. That's epic. And it's going to happen more."
Militia experts interviewed by Reuters said they could not think of another example in recent decades where different militia groups had banded together to offer armed resistance to thwart a law enforcement operation.
In the days since the showdown, right-wing websites have begun searching for other Bundys. Several conservative and survivalist blogs have seized on the case of Tommy Henderson, a rancher on the Texas-Oklahoma border who they say is fighting BLM attempts to seize some of his land.
MILITARY FATIGUES, RIFLES
Few people had heard of Bundy and his ranch until a few days before the stand-off. Right-wing websites and advocacy groups such as Americans for Prosperity, founded by one of the billionaire industrialist Koch brothers, cast his tale in a folksy David and Goliath light and helped spread it online.
Someone who has known Bundy since his early 1990s fall-out with the BLM is Richard Mack, a former Arizona sheriff who founded the militia group Constitutional Sheriffs and Peace Officers Association.
Mack is also a prominent member of Oath Keepers, a similar group of serving or former soldiers, police and firefighters who view themselves as defenders of the U.S. Constitution. More than 100 Oath Keepers headed to the desert, Mack said.
Mack, who proposed putting women on the front line of the stand-off with the agents, said armed resistance was a justified response to a "totally unnecessary" show of force by the BLM.
"It was so obvious it looked like it was going to be another Waco or Ruby Ridge," Mack said, referring to two bloody sieges in the 1990s involving federal agents and armed civilians that fueled the militia movement.
"We weren't going to let that happen again," he said.
A number of Bundy supporters wore military fatigues and carried rifles and pistols and had traveled from California, Idaho, Arizona, Montana and beyond. Most kept their handguns holstered.
Mack, who wore his gun on his hip, and other Bundy supporters interviewed by Reuters said they would not shoot first but would retaliate if fired upon.
"We did not want anything to get out of hand," Mack said.
GAME-CHANGER?
The weekend showdown marked the latest resurgence of violent, anti-government sentiments that have existed in rural America for centuries, said Catherine Stock, a history professor at Connecticut College who specializes in rural militias.
"The question is whether we're going to see sustained flame-up now. We could see more of that if they actually think that the federal government is going to stand down," she said.
"It's not the groups, it's not their concerns, it's not their anger, all of that is old, but the federal government backing down? I was like, wow! Seriously?"
Stock said the rise of right-wing media outlets and websites and the election of Republican politicians who have shifted the party further to the right have given a new legitimacy to groups that were once dismissed as being on the fringe.
At least half a dozen state legislators from Nevada, Washington, Utah and Arizona attended protest rallies in Bunkerville at the weekend.
Michele Fiore, a Republican Nevada assemblywoman from Las Vegas who said she joined the protesters daily after getting a torrent of supportive emails about Bundy from constituents, called the resistance "justified."
"This is historic," she said. "This is the first time we went arm to arm with the federal government."
GOVERNMENT MISSTEPS?
The Bundy dispute has been simmering since 1993, when the BLM took over the management of the land on which his cattle grazed. The agency ordered him to reduce the number of grazing cattle to protect the habitat of the desert tortoise, which had been listed as "threatened."
Bundy refused and has not paid grazing fees since then. The BLM says he now owes more than $1 million.
Critics of the BLM, which administers 245 million acres of public land in the 12 Western states, say it mishandled the situation and was unprepared for the armed resistance, despite fears in past years that the seizure of the illegally grazing cattle could spark violence.
BLM spokesman Craig Leff said the "safety of employees and the public was key throughout the course of the operation." The BLM, National Park Service and the U.S. Park police "had the minimal personnel needed to maintain the safety of the operation," he added.
Two sets of images were frequently cited by those who saw the roundup of Bundy's cattle as a call to arms.
The first showed BLM agents using a stun gun to subdue one of Bundy's sons at a small protest on April 9, bloodying his shirt over his heart, and a female relative of Bundy being knocked to the ground in a tussle with agents.
"Looking at that made it extremely clear that these federal agents are willing to hurt people and didn't think they would be accountable," said militia leader Mack.
Photographs of a so-called "First Amendment Zone", a taped-off patch of desert where agents would allow protests to be held, also prompted outrage.


Mack, and other militia members, say they have yet to pick their next battle. "We're only reacting to what the government does," he said. "We hope that they'll keep it a little calm from now on and not overreact."

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08 April 2014

NASA photo captures strange bright light coming out of Mars - SFGate

NASA photo captures strange bright light coming out of Mars - SFGate:



Updated 12:52 pm, Tuesday, April 8, 2014
  • A NASA camera on Mars has captured what appears to be artificial light emanating outward from the planet's surface. Photo: NASA.gov Photos
    A NASA camera on Mars has captured what appears to be artificial light emanating outward from the planet's surface. Photo: NASA.gov Photos


A NASA camera on Mars has captured what appears to be artificial light emanating outward from the planet's surface.
The photo, beamed millions of miles from Mars to the Jet Propulsion Laboratory in Pasadena, Calif., was taken last week, apparently by one of two NASA rovers on the red planet.
Although the space agency hasn't issued any official statement yet about the phenomenon, bloggers and NASA enthusiasts have started chiming in.  
Scott C. Waring, who maintains the website UFO Sightings Daily, posted the photo April 6.
Waring noted that the light shines upward, as if from the ground, and is very flat across the bottom.
"This could indicate there there is intelligent life below the ground and uses light as we do," Waring wrote on his website. "This is not a glare from the sun, nor is it an artifact of the photo process."
On Tuesday, Slate.com's Bad Astronomy blog suggested that a UFO conspiracy site might not be the best source of information for exploring serious planetary phenomena. A more serious source of this light, said blogger Phil Plait, is that "a subatomic particle smacked into the camera, leaving behind its trail of energy."
Earlier this month, NASA announced that on April 2, the Curiosity rover drove the last 98 feet needed to arrive at "the Kimberley," a spot where it can study rock clues about ancient environments that might have been favorable for life, according to a news release.
The Kimberley, where four different types of rock intersect, is named for a region of western Australia. The rover's stay there has been planned since early last year, the release said.
"This is the spot on the map we've been headed for, on a little rise that gives us a great view for context imaging of the outcrops at the Kimberley," Melissa Rice of the California Institute of Technology in Pasadena said in the release.
Rice is the scientist in charge of planning several weeks of observations, sample-drilling and on-site laboratory analysis of the area's rocks.
Arrival at this location means Curiosity has driven 3.8 miles since August 2012, when it landed inside Mars' Gale Crater.
The Kimberley investigations are to be the most extensive since Curiosity spent the first half of 2013 in an area called Yellowknife Bay, the release said.
At Yellowknife Bay, the one-ton rover examined the first samples ever drilled from rocks on Mars. These samples showed signs of an ancient lakebed environment that provided the chemical ingredients and energy necessary for life, the release said.
At the Kimberley and, later, at outcrops on the slope of Mount Sharp inside Gale Crater, researchers plan to use Curiosity's science instruments to learn more about habitable past conditions and environmental changes
.