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Democracy Now! - October 29, 2013 at 9:00am

Democracy Now! (9 am), for October 29, 2013 - 9:00am

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Democracy Now!

Former Irish President, Climate Justice Advocate Mary Robinson Urges Divestment of Fossil Fuel Firms; 1 Year Later, Superstorm Sandy Strengthens Resolve for Community Solutions in Recovery, Rebuilding; Stranded By Sandy: A Year After Hurricane, 22,000 Households Remain Displaced in New York Region.

October 29, 2013

    U.S. Drone Strike Kills 2 in Somalia
    Obama Admin May Halt NSA Spying on Foreign Leaders
    Senate Intel Chair Opposes Spying on U.S. Allies
    European Lawmakers Press U.S. on Surveillance
    NSA Director Faces Congress Amid Surveillance Row
    U.N.: Syria on Pace to Chemical Deadline
    Child Polio Outbreak Confirmed in Northern Syria
    U.S. Blames Shutdown for Failure to Answer on Guantánamo, NSA
    Brazilian Judge Halts Construction of Belo Monte Dam
    Federal Judge Strikes Down Key Part of Anti-Abortion Law
    Ohio To Use Untested Drug Combination in Execution
    Comey Orders FBI Employees to Visit MLK Memorial
    Penn State to Pay Nearly $60 Million to Sandusky Victims


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Perhaps Grim or

Perhaps Grim or Chichagofinance could take a look at the following paper, which argeus against the housing bubble, based on cash flows from rent.[edit]My initial impressions:Given the lax lending in the mortgage market, the required rate of return is likely to be higher than 6% used in the paper. A mere 3% increase in home prices is going to cause many borrowers to be upside down, given the leverage used. I just don't see how a soft landing can work, even given this data.1:10 AM”You don't need to dive into the details of the paper to question its findings. Its conclusions are so fundamentally flawed, I think most interested parties can merely dismiss the paper as irrelevant.That said, I reviewed the paper and believe your comment about its core model undercharging for risk is valid.Among other items, they have conveniently sidestepped the issue of the expenses associated with owning. In a sense, their model is a Frankenstein [i.e. bastardization of finance], that uses data and cash streams from the renter's market, prices from a purchaser's market, and pulling risk from a financial instruments market.On page 17, they put forward the assumption that the buyer never sells, and that I would point out that is a convenient way to avoid noting that relative to their cost of capital, future home prices are by definition NPV negative. Read: even at their unrealistically low 6% after-tax rate hurdle rate, long-term real estate appreciation is lower than 6%, so the cost of carry is negative.I am also uncomfortable with the fact that they seem to have spent more time peer reviewing this paper with financial types rather than real estate types. Even then, the financial types are CFP’s, not CFA’s, Economist, Phd’s etc. As someone who has dealt with economists, finance professionals, the academic community as well as the financial planning profession, I would characterize CFP’s on the whole more applied than theoretical, and certainly less analytically rigorous, so I wouldn’t be parading the review of 27 CFP’s as some gold standard. However, do not confuse this comment with the fact that in my profession, a CFP is a valuable and important credential. It is just that in this theoretical discussion, the author’s are miscasting the utility of experts in applied thinking.My last comment is that GIGO [garbage-in garbage-out] comes to mind. What is the source of their market data? The idea that they remotely make various assessments about different regional markets is laughable at best, or downright reckless at worst. Performing data analysis while needing to put forward assumptions about the functioning of “Yahoo! Maps” ugh…..Put this one in the circular file, but market sure to shred it first, so no one is tempted to pull it out.chicago

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