Rent Control, Jobs, Marriage: What Do They Have In Common?Tyler DurdenTue, 05/26/2020 — 15:15
Submitted by Walter E. Block, Chair and Professor of Economics Loyola University New Orleans
Demand curves slope in a downward direction. This means that the higher the price, the less of an item, or good, or service, will be sought. The more road blocks, hurdles, thumb tacks, placed in the way of any given action, the less likely it will occur. Economists do not agree on many things, but on this insight there will be nary a dismal scientist who will not acquiesce.
Yet, there are several public policies in place that are incompatible with this common-sense understanding.
Consider first residential rental units. New York City, San Francisco, Cleveland and another half dozen major cities are now offering free legal advice to tenants threatened by eviction. At present this benefit is afforded mainly to those accused of a crime who cannot afford a lawyer, on the ground that such legal aid is needed to provide equal justice for rich and poor alike. Now, it is being extended to renters.
Some commentators even think that this strengthens the hands of tenants and reduces homelessness. They reckon, however, in the absence of downward sloping demand curves. They think only in terms of immediate, not long term effects. Yes, give them free legal advice and fewer people will be evicted; one point for the tenant.
But look at this from the point of view of the landlord, or, the would-be investor in residential real estate.It now becomes more difficult to evict non-paying, or obstreperous tenants. Will they be more or less likely to build, upgrade, repair, apartment dwellings? To ask this question is to answer it. They will tend to seek greener pastures elsewhere. They will try to convert extant dwellings into condominiums, commercial space, etc. But, with less residential housing available the situation of renters will become more dire, not less. Remember that downward sloping demand curve: with a lowered supply, rents will rise not fall, and a given square footage will accommodate fewer people, not more. More homelessness, here we come.
The same analysis applies to other efforts to “help” tenants. Under economic freedom, landlords may demand as much as several months’ worth of security deposits. This will indemnify them if there are damages. It will also protect them from bankruptcy since it typically takes months to evict non payers. This problem arises especially during the Christmas season; judges are particularly reluctant to toss people out onto the street during these times. Curiously, they do not at all have the same attitude regarding robbers during December. But what are non-paying tenants other than thieves of accommodation?
Next consider the labor market. In France in particular, and other countries as well, the law makes it more and more difficult to fire employees. The authorities want to protect workers, and, also, do not relish increased unemployment statistics. This “remedy” of theirs also fails to take into account downward sloping demand curves; it looks, only, to the immediate run, avoiding long run effects. For when barriers are placed in the way of laying off wage earners, less of it will occur. How do rational profit seeking entrepreneurs react? Why, by not hiring workers in the first place! Instead of offering full time employment, they take on only part timers. Firms resort to contracting out to smaller firms, or to the individuals themselves. The latter take on what are called “gigs” so as to escape these unwarranted legislative enactments.
These laws are also discriminatory. Workers can quit with no by your leave. Unless and until employers can sever relationships with employees as easily, justice, to say nothing of full employment, will not prevail.
Let us attempt to make this point in an unrelated arena of human interaction. Suppose a law were passed and fully enforced mandating that no divorce would be allowed, ever, for any reason whatsoever. The immediate effect of course would be to preserve marriage. Without the possibility of divorce, more marriages would stay intact than otherwise (we abstract from the effect of such a law on the rate of infidelity). But what would be the long run effect of such a law on this institution? Demand curves slope downward even in this milieu. Place more barriers against an act, weddings in this case, and fewer of them will occur.
If society really has the best interests of tenants, of employees, and, also, of spouses, it will not in effect charge higher “prices” for them. The very opposite policies would be pursued.
They Are Outperforming Hedge Funds, And This Is What They Are BuyingTyler DurdenTue, 05/26/2020 — 15:00
After years of trying and failing to sucker in retail investors into the stock market to allow a long-overdue distribution from top shareholders (BofA’s high net worth clients have been patiently selling for 6 consecutive weeksfor a reason) to mom and pop bagholders, as has been the trend heading into every prior recession…
.… the Fed finally succeeded in igniting a retail stock buying frenzy…
… with some help from zero-cost brokerage accounts and billions in “stimulus checks” which as we first reported last week, were promptly “invested” into a stock market trading at 24x forward PE multiples.
And not only have retail investors emerged as the most vocal factor in the market, but in a remarkable, twist they are now outperforming hedge fundsas Goldman pointed out, with the basket of retail trading favorites outperforming the hedge fund VIP basket on both a YTD basis and since the start of 2019…
… even as hedge funds refuse to chase the current bear market rally sparked by a tsunami of central bank liquidity.
So in this brave new world where the “dumb money” is up for the year, and where most “smart money” entities are still well in the red, what is one to do? Well, since the Fed is now exclusively catering to WFH millennials, the prudent thing — and we use the term with infinite sarcasm — is to chase the retail herd.
Conveniently, we have access to that information: for those seeking to recreate the Goldman basket of “retail favorites” we have listed the 50 most popular retail stocks below:
What if one want front-row seats to the real retail daytrading frenzy which these days is best captured by Robinhood? We have the answer there to. The table below shows the 30 most widely held stocks by Robinhood investors, starting with Ford at #1 with 855,853 longs, and ending with MRNA with just under 200K.
What if that too is not enough, and instead of the “stock” approach to investing one prefers the “flow” (with good reason: after all if these names already have a ton of retail investors, odds are that any new bagholders buyers will be more difficult to come by) we have the answer there too: below are the 30 stocks in the Robin Hood universethat have enjoyed the biggest absolute jump in popularity in the past day…
… and past week.
Considering there is (or at least was) a cottage industry of financial professionals tracking every single hedge fund move, it now appears more prudent, in this market catering to and driven by millennial bros,to do the same with retail traders. Of course, when doing so, it is also probably prudent to avoid the big glaring ad on the website that tracks robinhood activitywhich, well, may explain everything in this “market.”
California Allows All Retail Stores To Reopen As LA Transforms Dodgers Stadium Into City’s Biggest Testing Center: Live UpdatesTyler DurdenTue, 05/26/2020 — 14:55
LA opens largest testing site at Dodgers stadium
Canada reports another 103 deaths
Macron launches French auto bailout
Italy now reporting 230,555 cases
Florida reports 7 new deaths, 424 new cases
NJ reports 54 deaths, 703 new cases; says sports teams can soon resume practice
NYSE floor trading reopens
Global COVID-19 cases top 5.5 mil
Montenegro now ‘coronavirus-free’
Tory junior minister resigns over Cummings scandal
UK nears 50k deaths
UK plans to reopen car showrooms
US death toll: 99,800
Merck buys Austrian biotech company
Novovax announces start of human trial in Australia
CDC estimates infection mortality rate at less than 0.3%
Millions of Wuhan residents tested over past week
Germany to lift travel warnings on June 15
* * *
Update (1450ET): As total deaths in the state approach 4k, while total cases approach 100k, California health officials announced on Monday that — subject to approval by county public health departments (meaning everywhere but the Bay Area) all retail stores can reopen for in-store shopping, so long as they observe previously issued social distancing guidelines for retailers in parts of the state that have already been allowed to reopen.
The existing guidance for retailers, which had applied just to those counties approved for wider reopening, now applies statewide. Retail can open for in-store shopping throughout California. Note: Retail does not include personal services such as hair salons, nail salons and barbershops, as the LAT reports.
As testing capacity ramps up across the country, the city of LA has opened its largest coronavirus testing site yet at Dodger Stadium. Up to 6,000 people can be tested daily, beginning Tuesday.
“This builds on our work we’ve been doing [over the] past weeks and months,” said Mayor Eric Garcetti during a news conference, shortly after being one of the first people tested at the new site. “We want testing to be easy, accessible and free for everybody here in Los Angeles.”
The drive-through facility will have big screens showing videos demonstrating how to administer a self-test to help prepare those waiting in line. The city is partnering with the Los Angeles Fire Department and the Community Organized Relief Effort, a nonprofit co-founded by Sean Penn, which will oversee operations and have 60 staffers helping.
About two months ago, Dodgers Chief Executive Stan Kasten said 40,000 people had been tested at a site already operating at the stadium. With this new undertaking, Kasten said, more people can be tested in one week than in the 10 previous weeks combined.
“This is how we come back,“he said.
* * *
Update (1220ET):Canada has just released its latest figures for Tuesday. It counted 103 new deaths across the country, and just 895 new cases. That brought its death toll to 6,556 and its case total to 85,998.
Italy just reported its numbers, including just 397 new cases and 78 deaths, the third straight session where deaths were below 100.
In total, Italy is now counting 230,555 cases and 32,955 deaths.
Before we go, an interesting pattern:
Coronavirus success stories:
– South Korea – Germany – Norway – Iceland – Denmark – Finland – New Zealand
In other news, French President Emmanuel Macron on Tuesday unveiled an €8 billion plan to revive France’s car industry, which has been crippled by the pandemic and the lockdowns. Per the FT, the plan includes increased subsidies for buyers of electric or hybrid cars and support for research into hydrogen power. It’s aimed at ensuring that the country’s automotive assemblers and suppliers survive the crisis so the government can help them “relocalize” manufacturing and “make France the leading country in Europe for the production of clean vehicles”, with an output target of 1 million a year by 2025.
* * *
Update (1140ET): The NYT has been harping non-stop on the fact that nearly a dozen states have reported an uptick in cases since they started rolling back restrictions, only rarely mentioning that a commensurate rise in testing capacity was often enough to explain these increases, and that public health officials in these states expected cases to rise in the near term as people started interacting in public again.
In Florida on Tuesday, the Florida Department of Health reported 424 new cases over the last 24 hours, bringing the states total confirmed cases to 52,170. Meanwhile, the number of reported deaths increased by just 7 to 2,259.
The total statewide number of patients hospitalized with the virus is just 9,482, though the Department of Health noted that this figure does not reflect the number of COVID-19 patients currently in hospitals, according to the News-Press of Southwest Florida.
New Jersey, which has reopened much more slowly than Florida, just reported a 1,500-patient drop in hospitalizations over the past 2 weeks.
LOOK: Our hospitals currently have 2,723 patients being treated for #COVID19 – a decrease of nearly 1,500 over the past two weeks.
As Gov Murphy said during his press briefing, the state has made huge progress and has unquestionably flattened the curve. Additionally, the governor said schools can reopen for graduation sendoffs, and also said professional sports teams in the state could soon begin practicing again.
* * *
Update (0820ET): A few weeks ago, Slovenia became the first European nation to announce zero new coronavirus cases. Now, nearby Montenegro has declared the country “coronavirus-free”.
An editor at Insider tweeted that the suspiciously low number of deaths reported yesterday might have been the result of “underreporting” related to holiday weekends in the US, UK and Brazil. A bounceback this week wouldn’t be a surprise.
Big picture: Just 1,179 deaths reported worldwide yesterday. That’s incredibly low, see the chart. It’s especially promising because the number of detected cases is still going up. pic.twitter.com/PLQOEW6QeU
US equity futures pointed to a sharp jump at the open on Tuesday, with the Nasdaq eying a return to the old highs, as traders celebrated the return of floor traders to the New York Stock Exchange as a symbol of the resilience of the capitalist system — or maybe it was the latest suspiciously preliminary vaccine news.
Two days after the NYT published the names of American coronavirus dead on the front page of its Memorial Day Weekend edition in solemn remembrance of the 100k milestone, the US still hasn’t actually crossed the threshold. Virginia became the latest state to report a one-day record jump in new cases over the weekend after the US saw a jump in cases and a slight uptick in hospitalizations last week.
Experts expected a jump in cases and hospitalizations as states adjusted to the first few weeks of ‘Phase 1′ reopening. Most hope that a ‘seasonal effect’ will help offset the increase in social interaction
An uptick in new cases was expected, due to the inevitable increase in interactions as restrictions are lifted. States have also expanded testing access as they’ve loosened restrictions.
With Brazil and Russia still accounting for ~1/5th of all new cases reported on Monday, the global total number of confirmed cases has broken above 5.5 million, though many experts believe the roughly 330k confirmed cases in Brazil represents just a quarter of the total infections in the country.
I haven’t commented publicly on the situation with Dominic Cummings as I have waited to hear the full details. I welcome the statement to clarify matters, but there remains aspects of the explanation which I have trouble with. As a result I have resigned as a government Minister. pic.twitter.com/6yXLyMzItJ
as we noted earlier, over the weekend, the CDC released its first official estimate of the overall infection fatality rate (IFR). The number? Just 0.26% — a full 3.2 percentage points below the WHO’s official estimate of 3.4%. The CDC also estimated the rate of “asymptomatic” infection (patients who showed few or no symptoms) at 35%.
I NYC alone, 0.3% of all city residents have died from the virus (more than 30k have died in the US alone). “According to some surveillance studies using antibody tests, roughly a quarter of NYC residents have been infected. This would suggest the mortality rate might be closer, or just above, 1%, but still well below the WHO number that unleashed a wave of panicked lockdowns across the world.
To be sure, roughly 50% of deaths across the US have occurred in nursing homes. This alarmingly high rate is due in part to certain Democratic governors instituting obviously dangerous policies allowing COVID-19-positive patients to be returned to the managed-care facilities where they lived. Some have suggested that better protecting the most vulnerable patients might greatly mitigate the mortality rate. But we digress…
As the WHO warns that the world remains mired in the ‘first wave’ of the outbreak, the AP reported Tuesday that states are scrambling to spend billions of dollars on PPE and medical supplies to replenish depleted stockpiles. But more than 2 months into the supply scramble, few states are sharing information about what they’re buying and how much they’re paying (remember, reports about states and cities being swindled have proliferated during the crisis). While many states have obscured their spending, Illinois has released a detailed database that can be accessed by the public.
With the US inching ever-closer to the 100k fatality mark, the UK’s Department of Health and Social Care said the country had surpassed 47,000 deaths on Tuesday, coming ever-closer to the 50k mark which Boris Johnson’s government had once said would be a ‘worst-case’ scenario for the outbreak. Meanwhile, Tory Junior minister Douglas Ross resigned on Tuesday, saying Dominic Cummings’ interpretation of the lockdown guidelines weren’t shared by the majority of Britons.
As the UK plods through an extremely gradual reopening, Johnson revealed on Tuesday that HMG plans to allow car showrooms and outdoor markets to reopen on June 1, while allowing all non-essential retail to open from June 15.
The ONS said 42,173 people had died in England and Wales with suspected COVID-19 as of May 15, bringing the UK total to 47,343 — which includes earlier data from Scotland, Northern Ireland, plus recent hospital deaths in England, Reuters reports. Chatter about Johnson being “replaced” — not unlike his predecessor, Theresa May — as Tories begin to see him as a liability has intensified.
On Tuesday, as images of packed Ozark beaches lingered in the minds of Americans, the WHO warned of the risks of an “immediate second peak” as Europe, the US and others ease up on lockdown conditions, while urging countries to step up surveillance, testing and tracking.
After a flurry of overhyped reports about various vaccine trials, Pharmaceutical giant Merck — which has “largely kept to the sidelines” of the vaccine race according to Reuters — has unveiled plans to buy privately-held Austrian vaccine maker Themis Bioscience. Merck also said it plans to collaborate with research nonprofit IAVI to develop two separate vaccines.
Merck also announced a partnership with privately-held Ridgeback Biotherapeutics to develop “an experimental oral antiviral drug” to help patients infected with the virus.
Maryland-based biotech firm Novovax announced early Tuesday that it had begun injecting its experimental coronavirus vaccine candidate into test subjects in Australia on Tuesday, CNBC reports.
The company hopes to release a vaccine by the end of the year if its early studies find success. Novavax will inject 131 volunteers in the first phase of the trial testing the safety of the vaccine and looking for signs of its effectiveness, the company’s research chief Dr. Gregory Glenn said. At this point, roughly a dozen experimental vaccines are in early stages of testing, or are poised to start in the near future; most of these are based in China, the US and Europe.
“We are in parallel making doses, making vaccine in anticipation that we’ll be able to show it’s working and be able to start deploying it by the end of this year,” Glenn told a virtual news conference in Melbourne from Novavax’ headquarters in Maryland.
After releasing its first testing update on Friday, Wuhan, the epicenter of China’s coronavirus outbreak, affirmed on Tuesday that it has tested nearly seven million people in 12 days,concluding a campaign to test the entire population after several infections prompted fears of a second wave. And as Beijing scrambles to test millions in Wuhan and China’s northeastern Jilin Province, Taiwan on Tuesday announced plans to lift its coronavirus-related restrictions on mass gatherings and the sale of masks next month as China’s ‘wayward province’ has nearly stamped out the virus.
As more European nations lift, or plan to lift, limitations on inter-EU travel, Germany said Tuesday it plans to lift travel warnings for 31 European countries per June 15, DPA reports, citing a government draft.
On seemingly every cable news channel, pundits are bemoaning the ‘politicization’ of the coronavirus pandemic. While their conclusion is typically to blame the president, we suspect there might be another reason why it sometimes seems like red states and blue states are experiencing different versions of the same reality.
From The way Back Machine: Wednesday, 12 December 2007
A. Nicholas was born in Parara, Turkey in 270CE and later became Bishop of Myra. He died in 345CE on December 6th. He was only named a saint in the 19th century.
b. Nicholas was among the most senior bishops who convened the Council of Nicaea in 325CE and created the New Testament. The text they produced portrayed Jews as “the children of the devil” who sentenced Jesus to death.
c. In 1087, a group of sailors who idolized Nicholas moved his bones from Turkey to a sanctuary in Bari, Italy. There Nicholas supplanted a female boon-giving deity called The Grandmother, or Pasqua Epiphania, who used to fill the children’s stockings with her gifts. The Grandmother was ousted from her shrine at Bari, which became the center of the Nicholas cult. Members of this group gave each other gifts during a pageant they conducted annually on the anniversary of Nicholas’ death, December 6.
d. The Nicholas cult spread north until it was adopted by German and Celtic pagans. These groups worshipped a pantheon led by Woden –their chief god and the father of Thor, Balder, and Tiw. Woden had a long, white beard and rode a horse through the heavens one evening each Autumn. When Nicholas merged with Woden, he shed his Mediterranean appearance, grew a beard, mounted a flying horse, rescheduled his flight for December, and donned heavy winter clothing.
e. In a bid for pagan adherents in Northern Europe, the Catholic Church adopted the Nicholas cult and taught that he did (and they should) distribute gifts on December 25th instead of December 6th.
f. In 1809, the novelist Washington Irving (most famous his The Legend of Sleepy Hollow and Rip Van Winkle) wrote a satire of Dutch culture entitled Knickerbocker History. The satire refers several times to the white bearded, flying-horse riding Saint Nicholas using his Dutch name, Santa Claus.
g. Dr. Clement Moore, a professor at Union Seminary, read Knickerbocker History, and in 1822 he published a poem based on the character Santa Claus: “Twas the night before Christmas, when all through the house, not a creature was stirring, not even a mouse. The stockings were hung by the chimney with care, in the hope that Saint Nicholas soon would be there…” Moore innovated by portraying a Santa with eight reindeer who descended through chimneys.