economics

February inflation rose 7.9 percent year over year. Expect March to be even worse, seeing as how gasoline increased by over 20% in one week.

It’s happening everywhere. Communists in New York pushing to make all evictions for any reason illegal. They try to paint tenants as the victims.

This woman in Winter Haven, Florida had her rent increased by 58 percent, from $1545 to $2450. During the pandemic, the woman wasn’t paying rent, and the landlord collected nearly $6,000 in federal COVID stimulus money to make up for the year or so that she wasn’t paying rent. One of the stipulations on getting the COVID funds is that the landlord has to accept it as full payment for all back rent. So this landlord got screwed out of approximately $12,000 in rent that had to be written off. That six grand was less than a third of what he was owed. So he did what any business would do- he raised prices to make up for it. That apparently makes him the bad guy.

That woman’s case, like others, is being used to paint business owners as the evil, greedy ones for daring that their customers pay for the products and services that they receive. We are talking about a 40 year old woman who is living with her retarded 20 year old daughter and 9 year old son, while also taking care of her daughter’s toddler child. She is trying to raise three kids on nothing but government handouts. I wouldn’t have rented to her broke ass in the first place.

Meanwhile, in San Francisco, the local commies can’t afford rent, so they show up to protest at the landlord’s house, demanding that the landlords sell the apartment building they live in to a local non-profit at a loss. He bought the building for $6.5 million, and the tenants are using this intimidation tactic in an attempt to force him to sell the building for only $3.6 million.

All of this leads us to Tampa. A local communist newspaper called “Creative Loafing” is calling for rent control in the Tampa Bay area. The measure failed in Tampa, but across the bay in Saint Petersburg, the council has actually voted to declare a “housing emergency” and has begun walking down the road of rent control. So what does it take to make that happen under Florida law?

Landlords in Florida can’t raise rent during the term of the lease. My tenants sign a lease for a year, and the rent is laid out in the lease. That is the amount they pay for that year. When the lease is up, we can negotiate for another year, but that deal is separate from the year before.

To restrict the new lease, Florida statute 125.0103 is pretty explicit. There are a number of steps that have to be followed. First, the city has to declare a housing emergency.

Such governing body makes and recites in such measure its findings establishing the existence in fact of a housing emergency so grave as to constitute a serious menace to the general public and that such controls are necessary and proper to eliminate such grave housing emergency.

Saint Petersburg has already done that. Step two is that they have to put it on the ballot and get a majority of voters to approve it:

Such measure is approved by the voters in such municipality, county, or other entity of local government.

After all of that, the rent control is only in effect for one year. Following that, the entire process has to be repeated. Even then, the rent control doesn’t apply to seasonal rentals or to “luxury rentals.” A luxury rental is defined as a rental that would have cost more than $250 in 1977. According to the US inflation calculator, that would today be a rent of $1,159.

The only people who will come out ahead on this will be real estate attorneys.

Communists hate landlords. They want free shit. They are going to destroy the right to private property.

In December, I did a post about rent control. I explained that there are all sorts of steps that property owners can take when the state attempts to control what they can charge in rent. It turns out that landlords in Los Angeles have done exactly that.

During the pandemic, LA passed an ordinance prohibiting landlords from raising rent from one lease period to the next. The definition of increase specifically excluded discounts when calculating base rent. The property owners used that. Let me explain:

The lease says that you can rent my property for $4,000 a month, but I will give you 4 month’s free rent per year, with the free rent being spread across the 1 year term of the lease. So the rent you actually pay is about $2,670 a month. The lease comes to an end, and you want to renew. When you do so, I tell you that I am only going to give you 3 months of free rent this year. That means you will pay me $3,000 a month. Even though you are paying me $330 more a month, I didn’t increase your rent, at least as far as the law is concerned. All I did was reduce your discount.

The tenants say that this is unfair, but I don’t see it as any more unfair than telling a property owner what they can charge for the use of their property. A landlord and a tenant agree to a lease for a one year term. The following year is a completely separate sale. Once the first year’s lease is concluded, that deal is complete. Now we are here to negotiate a completely different agreement.

Imagine if there were a law telling supermarkets that they cannot raise prices. Or a gas station that it can’t raise the price of gas. Or even a car dealership. It’s all been tried before, and price controls always fail in the end.

Two days ago, ADP released their monthly payroll report, saying that the economy lost 301,000 jobs during the month of January. Conservative Treehouse wrote a long article about this.

Reuters reported that U.S. private payrolls fell for the first time in a year in January as soaring COVID-19 infections disrupted business operations, raising the risk of a sharp decline in employment that would deal a temporary setback to the labor market.

Now keep in mind that the ADP report counts all active workers as employed regardless of whether they are paid or not during the survey week. In the government report, people who are out sick or in quarantine and do not get paid during the survey period are counted as unemployed in the survey, even if they still have a job with their companies. This means that if there were a pandemic causing large numbers of otherwise employed workers to be out sick, you would expect that the government job numbers would be significantly lower than the ADP number, but that isn’t what happened.

Two days later, just this morning, the US government claimed that there were 467,000 jobs added to the economy in January, even though the unemployment rate increased from 3.9 to 4.0 percent. The government is claiming that the economy is growing at a rate of 6.9% per year.

So which report is to be believed?

There is quite the discussion in comments over at Peter’s place about the role of gold versus investments. It appears as though at least one user doesn’t understand that precious metals are a store of value, but not an investment.

What the Federal government has done (and is doing) with our fortune is a disgrace, but governments have done that since, well, ever. Nothing new. Inflation isn’t an increase in prices. Inflation is a currency becoming worth less. Sometimes a currency is tied to a physical asset like gold, silver, or salt. Sometimes it isn’t. To say that gold is money and dollars are currency makes you sound like an idiot.

If currency is not tied to a physical asset, then its worth is not set in stone, pun intended. Because it does not in and of itself have value, currency will inevitably and eventually become worth less. That is called inflation.

To protect yourself from inflation, you are better off holding something that has intrinsic value. That can be food, oil, livestock, or precious metals. Over the long term, precious metals are a great way to own an asset with intrinsic value. This is because food spoils, livestock dies (and needs to be fed), oil is bulky and difficult to store. Even non-precious metals are difficult to store. An quantity of gold takes up far less room than an amount of lead of similar value.

Because they have intrinsic value, assets like precious metals don’t increase OR decrease in value. They just are. In 1920, an ounce of gold could buy a nice Colt handgun. The same holds true today. The problem is that your asset (the gold) won’t appreciate in value. It is therefore a nonperforming asset, and not an investment.

An investment is an asset that will not just hold its value, it will increase in value. Things like real estate, stocks, bonds, and the like will change in value. Sometimes for the better, sometimes not. If I had bought a new Ford Mustang in 1964, I would be doing far better than if I had bought a 1964 Ford Anglia. Picking winners and losers is how fortunes are made and lost.

Even though it can seem like it, the stock market is not the same as a casino. As both an investor and a gambler, I will tell you that they are fundamentally different. Where the ball lands on the Roulette wheel is a random event, that is, the ball is just as likely to land on the ‘4’ as it is on the ’30’.

Not so in the stock market. Companies are managed by people. Management teams. Some are good at what they do, some are not. Companies that are well run tend to do well. Companies that are poorly run tend to not do well. But how to tell the difference? The same way that you judge people. Look at how they have performed in the past.

The problem here is that random events can ruin even the best companies. A big fire in a key factory. An executive gets caught embezzling. A government contract is awarded to a competitor. The best defense to this is to diversify. Own shares in many companies across many segments of the economy. That way, if one company fails, the rest can carry you through.

That is why I am a huge fan of index funds. I buy shares in managed funds that are filled with large companies. The S&P500 is the 500 largest companies in the nation. They are large because they are successful. Even though there are bad days and good days, the good days outnumber the bad. That is why the S&P500 tends to increase.

You don’t have to know about business or stocks or get involved in the day to day workings of the market. Buy into an index fund and let the money compound. There are many to choose from. You can get a fund that buys shares of S&P500 companies. You can get a fund that buys companies that pay dividends.

Once you are comfortable with index funds and want to pick a couple of individual stocks to experiment with, do it. Just be careful. Don’t put all of your eggs in one basket. Just a small purchase at first. Leave most of your invested money in those index funds, and just buy a few shares of the individual stock you want to play with.

In March of 2020, I saw the price of cruise line stock nosedive. I figured that it was an opportunity. I started by buying $5K worth of Royal Caribbean in March. By May, we wound up buying about $50K worth of Royal Caribbean at an average price of $30 a share. I began selling it off in December of 2020, at an average of $90 a share. I tripled my money in less than 6 months. During the same time period, gold went from $1500 to $1800 an ounce- a 20% increase.

That doesn’t mean that you avoid gold. Remember, diversify. Gold should be PART of your savings, not ALL of your savings. Entire books are written on this. If gold were the answer, then billionaires would all have a vault filled with coins that they swim in like Scrooge McDuck. They don’t. You shouldn’t, either.

The bottom fell out of Facebook’s stock price this morning, down 24% for the day, and 38% from its 52 week high. In fact, its current price of 241.33 is the lowest it has been since July 2020. Wow Mark, that’s gotta sting.

Meta missed on earnings, saw Facebook’s daily active users dip for the first time ever as a public company (DAUs down by 1 million) and cited headwinds from inflation, foreign exchange, and an app tracking transparency feature Apple.

Remember when Facebook knocked MySpace out as the new Social Media hotness? Now TikTok is doing the same to Facebook. Social media is driven by teenagers and their fads. They come and go. TikTok has a shelf life, too.

Zuckerberg made the mistake of thinking his money train would last forever. I hope this is the beginning of the end for that asshole and his political money machine.

Local governments are offering to pay for legal representation for any tenant being evicted. This will greatly increase the costs for eviction of a tenant, especially since you are fighting the bottomless pockets of government.

So how do you avoid that? Well, if you pay attention, you will see that the program is income restricted to $25k a year for singles, and $51.5k for a family of four.

So make sure that your rental is not in the hood. Using a 3 bedroom rental as an example, make sure it is nice enough to charge a rent of $1450 a month, then require that household income be at least three times the rent in order to be eligible. Make it a criteria with no exceptions.

Then they won’t meet the income level for a free lawyer, and will also be unlikely to stiff you on the rent.

That is the secret to being a successful landlord: don’t rent to people in the lower quartile of income. It just isn’t worth the financial risk.

A married couple with ordinary jobs like teachers or electricians should make enough to have a combined income of $80k to $100k, which is enough for $2200 a month in rent. If you own a rental in that price range, you are unlikely to have to worry about eviction.

A single mom working as a bartender is not going to make enough money for that kind of rent, and won’t be stable. So owning a rental that rents for $900 a month is asking for an eviction.