Mish's Global Economic Trend Analysis

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Paris to Tax Empty Offices at 20-40% of Rental Value; Price Crash On the Way Posted: 08 Jul 2014 10:43 PM PDT The ideas from France get nuttier and nuttier as time goes by. Via translation from Les Echos, please consider Paris Will Tax Empty Offices. The Paris City Council approved Tuesday a tax on commercial vacant properties. The main objective according to city planners is to encourage the conversion of empty offices into housing, not to "create a new tax". The city plans to tax owners of vacant commercial premises at 20% of the rental value of the first year, 30% the second, 40% the third year, from 1 January 2015. Paris has 18 million square meters of office space, of which  6-7% is vacant, according to the deputy in charge of Housing Ian Brossat. The mayor of Paris, Anne Hidalgo, pledged during his campaign to get at least 200,000 square meters transformation of offices into housing during his term. Price Crash On the Way With this ruling, a price crash in office space lease terms as well as property values is a given. And if a mad dash for the exits ensues (as is highly likely), expect downward price pressures on rental values and condo prices as well. Look on the bright side. Deflation is a good thing (but try telling any bureaucrats anywhere on the planet that story). Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Immigration Reform Madness Posted: 08 Jul 2014 10:52 AM PDT Underage Immigrants Flood US From Central America Over 52,000 illegal immigrant kids and 39,000 families have been apprehended this year alone, flooding into the US primarily from Central American countries of Guatemala, El Salvador and Honduras. Obama Requests $3.7 Billion to Strengthen Borders On Tuesday, president Obama asked Congress for $3.7 billion to deal with the issue. Will Congress oblige? And by the way, whatever happened to the immigration reform bill that both parties seemed to want earlier this year? Here's the answer (possibly to both questions): Republicans declared immigration reform dead following the surprise defeat of house majority leader Eric Cantor to Tea Party candidate David Brat in the Republican primary (See Goldman Sachs President Inadvertently Explains Why Cantor Lost; Reflections on the Bush Years). The Washington Post made the claim Make No Mistake: Immigration Reform Hurt Eric Cantor. Following defeat of Cantor, Republicans decided it is better to sit back and criticize anything and everything the President does (or doesn't do), rather than propose anything themselves. What Do Democrats Want? Besides more money, what do Democrats want? That's a good question and it depends on whether you ask the president or activists. It also depends on when you ask the president. Back in March, and under pressure from human rights activists, Obama asked for an Immigration-Enforcement Review purportedly to slow the deportation of immigrants. "Advocates who met with the president said Obama told them he would build off a 2012 decision to defer the deportations of young people brought to the country illegally as children. Democrats and activists have called on him to dramatically expand that program, and Obama has ordered aides to review his legal options." In March, Obama wanted to slow deportations. Yesterday, Obama stated Most Children Illegally Crossing the Border Alone Will Be Deported. The White House signaled Monday that it expects to deport most of the unaccompanied minors entering the country illegally across the southern border, employing the strongest rhetoric to date to indicate that an influx of thousands of Central American migrants will not be tolerated. The tougher tone came a day before Obama administration officials were expected to ask Congress to authorize new measures, including more than $2 billion in emergency funds, that would expedite the legal processing of the more than 52,000 children and 39,000 families apprehended this year. Officials said the request is separate from statutory changes that the administration is also seeking to make it easier to deport children back to Guatemala, El Salvador and Honduras, where most of the influx has originated. Super-Aggressive Stance Today, the president upped the ante asking for $3.7 Billion in Emergency Border Control Funds. Funds would be allocated to send more immigration judges to the southern border, build additional detention facilities and add border patrol agents. The move is aimed at more quickly deporting the tens of thousands of women and children who have entered the country illegally across the border, most of them in the Rio Grande Valley in Texas. The administration's comprehensive strategy represents a "super-aggressive deterrence and enforcement strategy," a senior administration official told reporters, speaking on a conference call on condition of anonymity to provide more details. What About the Republicans? One might think that Republicans would generally be in favor of faster deportations, but the Washington Post notes ... Under anti-human-trafficking laws signed by President George W. Bush in 2008, unaccompanied minors from non-contiguous countries are afforded greater legal protections than those who arrive illegally from Mexico or Canada. They are usually placed in the care of relatives, but many do not show up for their court hearings, which are routinely delayed for more than a year because of backlogs, officials said. And the Democrat Activists? Democrats have balked at rolling back those protections. Late last week, 225 organizations led by the American Civil Liberties Union sent a letter to Obama warning that eliminating those safeguards could ultimately jeopardize the children's lives. Does Anyone Want Reform? Curiously, Obama now wants tougher deportation measures than: Republicans who don't seem to know what they want, except of course whatever the President doesn't want, no matter what the issue. Democrats who don't want reform under guise of human rights issues In general, Republicans prefer a campaign issue to solving a problem. But if a Republican were president, it would be equally safe to say Democrats would prefer a campaign issue to solving a problem. All things considered, it is the best interest of the majority, with Republicans curiously siding with Democrat activists (but for completely different reasons), to do little or nothing. Don't expect much progress with this setup. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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