The Collected Works of Author and Blogger Larry Roberts

Archive for November, 2016

The short-term reaction to Trump's victory was a massive selloff in bonds causing interest rates to soar. Will this be the start of an alarming new trend for mortgage rates? The financial media ascribes gyrations in the financial markets to current news events, mostly with no correlation at all. However, occasionally, developments in world affairs really cause the financial markets to react, and the election of Donald Trump prompted bondholders to sell in a panic, resulting in an interest rate spike. The stage was set for rising interest rates years ago when the Federal Reserve announced the beginning of a cycle of tightening monetary policy. Just the announcement caused mortgage interest rates to rise from 3.5% to 4.5% in about…[READ MORE]

Nobody knows what Donald Trump will do, but it's unlikely he will do anything that hurts real estate. Reporters across America reluctantly trashed their canned reports on how Hillary Clinton's presidency would impact the world. Since Donald Trump's victory was such a surprise, few thought much about how he would impact real estate, the economy, or anything else for that matter. Part of the blame is also on Donald Trump. During the campaign, he was long on rhetoric and short on detail. He didn't need intellectuals to embrace him, so he didn't pander to them with position papers or carefully crafted policies, leaving us all with a huge void of information on what he will actually do as president. Realistically,…[READ MORE]

The Chinese inflated a real estate bubble more than ten times larger than the United States. Bursting this bubble could destabilize the world economy. What would happen if the Chinese housing bubble burst? Obviously, a real estate crash would devastate China, but since the Chinese economy is somewhat isolated and export driven, would a Chinese real estate crash plunge the world into recession? Maybe. Coastal California real estate would suffer from a crash in China. Not only would a Chinese crash remove a hefty component of local demand, it could turn Chinese buyers into desperate sellers. While US lenders can keep distressed properties financed with US debt from the market indefinitely, but they don't control the entire market. If desperate Chinese…[READ MORE]

Nobody thought it would happen, but Donald Trump surprised everyone by winning the election to become our next President. Back in December of 2015, I predicted that Donald Trump would be the next President, but a coin flip could have predicted that too. I did something more: I also detailed why Donald Trump would win. Most of the pundits and pollsters didn't believe Donald Trump had a chance, but I predicted that when people actually voted rather than responding to pollsters that Donald Trump would consistently perform better than his polling. He did. The reasons I believed Donald Trump did better than everyone expected comes down to two main ideas. First, populists always perform better in elections. People vote privately and emotionally,…[READ MORE]

Since California can't properly fund its schools with property tax revenues, school districts must look to other sources. Is there a better way? What is the appropriate way to pay for schools? Most jurisdictions pay for schools with local property tax dollars, and since Proposition 13 was passed, California public schools, which during the 1960s had been ranked nationally as among the best, decreased to 48th in many surveys of student achievement. California's spending per pupil was the same as the national average until about 1985, when it began decreasing. With property taxes greatly reduced as a source of school funding, California schools increasingly depend on money from the general fund. With the many competing ends for general fund tax dollars, schools often…[READ MORE]

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