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Foreign billionaires in London choosing to rent to avoid stamp duty

Number of lettings costing more than 3,000 a week increased by 28% in the last three months of 2016, research shows

Read more: https://www.theguardian.com/business/2017/feb/12/foreign-billionaires-london-choosing-rent-avoid-stamp-duty


Dreaming of a frugal Christmas? Meet the people whove stopped shopping

There is a growing minimalism movement that puts less emphasis on buying things, and more on people, places and happiness

Geoffrey Szuszkiewicz told his family he didnt want anything for Christmas. But when he opened his stocking to find a roll of duct tape, some cling film and tin foil, he relented. I was ecstatic. I could use everything, he says

The 33-year-old dancer from Canada was in the middle of a buy nothing year when he opened his present, and had managed to cut out spending on anything except a pre-defined list of basic groceries and necessities for 12 months.

Szuszkiewicz is part of an anti-consumerist movement, known as minimalism or mindful consumerism, that has been sweeping across the globe via blogs, self-help books and social media. This move towards buying less often attracts new converts during the festive season when people balk at the scale of Christmas spending.

According to the Nationwide building society, people on average spend roughly half their monthly pay on Christmas. One in three, meanwhile, pay for Christmas using a credit card or overdraft.

Mark Boyle bought a smallholding in the west of Ireland with the proceeds of his book, The Moneyless Man, after spending three years living entirely without money. I generally dont spend anything at all at Christmas now and Im much, much happier, he says.

I didnt buy or spend anything for those years Id grow or forage my food. Now I let people come and stay for free in my home, and run a moneyless pub. At Christmas, everyone from round here brings a bottle and we get together and have a shindig. For me, thats what Christmas is about meeting up and sharing food and drink. I avoid shopping at this time of the year in any way I can.

Moneyless
Moneyless Man Mark Boyle says he needs nothing and now puts a much greater value on time. Photograph: Leigh Pearson

Also among those who have embraced the more frugal lifestyle is financial journalist Michelle McGagh, who has been blogging about her no-spend year, and detailing the challenges and benefits of her new lifestyle. The savings she made helped her to pay off a substantial chunk of her mortgage. Last Christmas she spent just 14.53 on a meal for six people, did a presents amnesty with the adults in her family and made toy cars to give as gifts to her nephews.

Similarly, this Christmas will see Boyle make a few useful gifts for close friends and family out of wood, but he has stopped buying gifts completely and never receives any shop-bought presents. There isnt anything I need, even though I am supposedly living below the poverty line, he says.

Like many minimalists he now values time over money. I think the best gift you can give someone is time, when you are genuinely fully present. Step off the treadmill of rushing around earning money to pay for stuff and you find life goes much slower. I have so much more time now to do the things I love doing and not just at Christmas, but all year-round. I feel liberated, Boyle says.

Szuszkiewicz feels the same way. You experience this huge release and liberation from cultural norms when you stop spending, especially at Christmas. I used to feel obligated to spend money I didnt have on gifts I didnt know whether my family needed or wanted. Now, everyone knows my policy is to not buy any gifts, so I no longer feel that obligation and I enjoy Christmas much more, he said.

He is generous with his time instead, and during his buy nothing year made batches of chocolate, dried fruit and pickled vegetables which he gave to friends and family. Consumables are great because they get eaten and then theyre gone.

Geoffrey
Geoffrey Szuszkiewicz saved 24,000 during his no-spend year. Photograph: Cris Cerdeira

Szuszkiewicz is currently using the 24,000 he saved over his no-spend year to travel around the world, and owns no possessions other than those he carries in his backpack. But he doesnt want anything for Christmas.

Physical things are literally a burden for me and thats not what Christmas means to me anymore. Its about being with the people I love.

He acknowledges that he makes a choice not to spend, rather than being forced into that position by circumstance. But I think theres nothing wrong with living this way, if you do have a choice. Why should you buy stuff that you dont need to buy, just because you have more money to spend than other people?

For people with children, the idea of an abstemious festive season might prove difficult. However, Sarah Koontz, a Christian writer from South Dakota who has two young children, says it teaches willpower. Completing two no-spend Christmases taught me that it is OK to accept a gift from someone knowing that I cannot reciprocate, or that Ive spent far less on them. Everyone is entitled to their own gift-giving strategy, and comparison is a trap I prefer to avoid, she says.

She says that she has been called stingy or even Scrooge from time to time, but her convictions carried her through. Our family is able to enjoy the traditions of Christmas more now that we have eliminated consumerism from the holiday. We still exchange small gifts, many of them homemade, but we have learned that true generosity requires more than a credit card. Spending less money on Christmas forced us to be generous with our time, energy, and talents. Those are the best gifts of all because they are priceless.

Sarah
Sarah and Ryan Koontz, with daughters Anya, left, and Nadia, right. Photograph: Kristi Foreman

She is not alone in feeling this way. Sal Crosland, a 33-year-old holistic therapist from Huddersfield, writes the minimalist blog OneEmptyShelf.com. She has got rid of everything in her home she doesnt need, and now focuses on giving experiences and making memories with her loved ones at Christmas.

When I was doing my no-spend year and I thought back to past Christmases, I realised I couldnt remember what I got, but I could remember where I was and who I was with, she says. Now, instead of stressing about buying presents, I place more importance on relaxation and family time and I look forward to Christmas much more.

She always asks her family not to buy her anything for Christmas, and even when other people are given gifts in front of her she says she doesnt feel like she is missing out. I know it is my choice and my decision to opt out and that makes all the difference.

The act of cutting back on giving gifts at Christmas can be catching. Canadian blogger Cait Flanders went on a two-year-long shopping ban to try to pay off a Can$30,000 debt (18,000), and in solidarity her family stopped exchanging gifts on Christmas Day. This year, even though the ban is over and the debt repaid, they have decided not to exchange gifts again. It took so much pressure off everyone, and resulted in a much more meaningful holiday.

Now she says that she would prefer to give someone a random gift on any other day of the year. I hate feeling like I need to give gifts out of obligation.

Regina Wong, founder of the Live Well With Less website, has similar motivations for reducing her spending at Christmas this year. I have become uncomfortable with the highly commercial nature of Christmas and the general pressure and expectations of the season. Im not against consumption Im just against mindless consumption, and consumption one cant afford. Ive realised I already have all I want or need.

MAKING THE CHANGE

Tell people in advance that you wont be buying gifts. When I explained why I wasnt spending at Christmas, the general reaction was relief, Geoffrey Szuszkiewicz says. People respected and understood my decision. If anyone doesnt understand your reasons for cutting back, and still wants you to buy them something, I would recommend re-evaluating that relationship.

Dont underestimate your skills or the value of a homemade gift, says Mark Boyle, especially one that celebrates what you think is wonderful about the person you are giving it to. Every single person alive has got some sort of skill or hobby they can use to give someone a gift or an experience. And I think theres a lot more heart and soul in something you make yourself for another person, especially if it is something unique and distinctive that you think that particular person will like and need.

Remember that your presence can be a present too. A kid might want a computer at Christmas – but is that going to be the deepest longing of that kids heart? Boyle says. At another level, perhaps without even knowing how to articulate it, what that kid may really want is a deeper connection to his or her parents through quality time. Try to understand the person you are giving to, and what they long for, instead of feeding an addiction to consumerism.

Read more: https://www.theguardian.com/money/2016/dec/12/frugal-christmas-people-stopped-shopping-minimalism-movement


Qatar wins approval to turn US embassy in London into hotel

Westminster council accepts plan to build 137-room hotel in Grade II-listed building in Grosvenor Square

The Qatari royal familys property company has won approval to turn the US embassy in London into a luxury hotel.

Westminster council agreed Qatari Diar Real Estates plan for the Grade II-listed building in Grosvenor Square, Mayfair, on Tuesday. The nine floors, three of which are underground, will include up to 137 hotel rooms, shops, restaurants and bars.

The US state department agreed to sell the building to Qatari Diar in 2009 to fund a new embassy in the Nine Elms regeneration project south of the Thames. Estimates put the Grosvenor Square sites value at 500m before it was made a listed building, which would have reduced the value because of restrictions on development.

Qatari Diar, part of the Qatari Investment Authority, has snapped up several high-profile London properties including the former Chelsea barracks, the former Olympic athletes village and most of Canary Wharf. Qatari investment interests also own Harrods and substantial stakes in Heathrow airport, Sainsburys, Barclays Bank and IAG, the parent company of British Airways.

Read more: https://www.theguardian.com/business/2016/nov/16/qatar-wins-approval-to-turn-american-embassy-into-luxury-hotel


Virtual realty: can a computer game turn you into an evil property developer?

Delaying repairs to save money and dehumanising your tenants … Adam Forrest becomes a virtual landlord and learns some interesting and depressing lessons

Building my first high-rise tower wasnt too difficult. I threw up some studio apartments, hooked them up with power and phone lines, arranged for a rubbish collection, and welcomed my first tenants. I packed the people in, stacked the units, and the profits soon began to pile up nicely.

Its fun being a virtual landlord. Ive been playing Project Highrise, a PC and Mac real estate management simulation, since the games release in September. It gives cash-strapped renters like me a chance to indulge the wild fantasy of owning property. It also offers members of Generation Rent some insight into how real-world landlords and larger developers actually do business.

Despite its cutesy appearance, the game is surprisingly detailed and utterly unsentimental. You begin the game by managing the costs of building infrastructure, and trying to avoid taking on too much bank debt before your tenants can provide a steady revenue stream. Before too long, youre hiring consultants to lobby city hall for a metro station and wondering whether prestige artwork in the hallway might attract higher-paying residents.

In becoming a digital Donald Trump, I learned some interesting, if slightly depressing lessons. For one thing, its costly to lose tenants. You dont want a day to go by without any rent; and you dont want to have to reach into your pocket to refurbish an empty flat to make it rentable again. So its best to keep all current tenants happy, if you can. But fixing up occupied flats that have turned grimy is also expensive, so its worth trying to hold out as long as possible without doing repairs.

Project
Project Highrise Before too long, after filling six or seven floors, I forgot about them as individuals. Photograph: SomaSim

I also learned how easy it is to dehumanise your tenants. At first, each new tower resident was an intriguing little person I cared about. I customised their names so I could remember their characteristics. Phyllis, who didnt seem to go out much, became Phyllis the Quiet One. Mildred, who always complained about the smell of the rubbish bins on her floor, became Smell-sensitive Mildred. Dave was simply Tank Top Dave.

But before too long, after filling six or seven floors, I forgot about them as individuals. They were simply rent payers; inhabitants of my units. And if they werent happy about something, they became a profit-draining pain.

We did a lot of research about how real-world things function, says Matthew Viglione, designer of Project Highrise, which is made by Chicago-based SomaSim. We talked to building developers and owners in Chicago about how much they plan for, how much they react, how needy certain tenants are, and how much you want residential [tenants] versus commercial [tenants]. We did walking tours of various skyscrapers, and said, Yes, we want that element in the game.

Project Highrise runs a series of urban development challenges in which the player is put in charge of buildings in crisis, based loosely on repurposed and rejuvenated downtown Chicago skyscrapers like the Marquette Building.

I tried one challenge called neighbourhood revitalisation, which tests your ability to revive a particularly run-down building and restore it to profit-making glory. Shamefully, I found it cost effective to evict low paying cafes and cheap liquor stores and bring in some higher paying creatives graphic design studios, architectural practices and talent agencies. Perhaps I was only following the gentrification model Ive absorbed from real-life London.

A
A screengrab of game play from Project Highrise. Photograph: SomaSim

Project Highrises programmer, Robert Zubek, says the game was not based on any one model of change and it is possible to adopt a number of different strategies to find reliable, long-term profit.

If you imagine a game where your tower is grimy and run down, you dont actually have to fix it, Zubek explains. You can just lower the rent just enough for people to be less unhappy, so that they dont move out. So you can play this slumlord kind of game. It is still dehumanising, because ultimately youre having to treat your tenants as financial resources.

In this respect, the game reflects life all too well. If continually watching the bottom line seems a little grim, there is at least the consolation of playing with the form of your fantasy tower. Would-be architects can tinker with the shape of construction, although SomaSims designers admit to being strongly influenced by the simple, clean modernism of Chicagos Mies van der Rohe for the games basic structural elements.

Its a style that travels well, explains Viglione. And the interior design, the colour palette and furniture were borrowed from the 1960s. Theres something very simple, international and appealing about it. I think the optimism of that era was fantastic.

Intriguingly, some of SomaSims early ideas were too awkward to incorporate into the finished game. One concept the team considered, before it was finally deemed too complex, was offering virtual tenants the chance to sign up to long-term tenancy contracts.

We did consider introducing leases where residents could agree to be locked into long-term leases, says Zubek. But we had a hard time making that easy for the player to understand it just made it harder to enjoy the game. You want to give the player a lot of power so they have the agency to do things.

After six weeks of playing Project Highrise, squeezing tiny tenants living in my laptop tower, I found myself envisioning a different kind of video game: a fantasy world which flipped everything on its head, and put the tenant in control.

In this alternative game (Project Housing Crisis?) wealthy property magnates would be able to vicariously experience the life of an impoverished renter, attempting to dodge rent hikes and the threat of eviction while saving up for a deposit. You never know, it might even make our cities kinder, more human places.

Follow Guardian Cities on Twitter and Facebook and join the discussion

Read more: https://www.theguardian.com/cities/2016/nov/09/virtual-realty-computer-game-evil-property-developer


My $200,000 college debt is like a growing cancer | Jennifer Billock

I just owe more money every month regardless of what I pay. When will this ever end?

Debt: $200,000+

Source: College, credit card

Estimated years until debt-free: Unknown

Every credit card rejection letter I get looks the same to me: a form letter, written without care or thought, releasing a new sense of failure as the paper unfolds. Its not that my credit is bad far from it, actually. Its just that Im incredibly in debt. Which is also why I cant buy a new house, get approved for a rental or get a new car. I owe more than four times what I make in a year, and I have my education to thank for it.

I knew when I started school that college was expensive, so I applied for scholarships and loans. My first year, I had three scholarships and almost no loans. But then I changed my major, transferred schools, started a new path. I didnt get any more scholarships. I applied for more loans. I expected I would get enough money in federal loans to cover school and I would be set, but the government had other plans.

Good old Uncle Sam denied most of what I needed. Apparently my family made too much money for me to qualify for full federal funding never mind the fact that my mom recently got laid off and my dads business wasnt doing so hot, or that they had two other kids in college at the same time that needed help. The government didnt care. I was forced to apply for what I didnt know then were predatory private loans to make up the difference. And I repeated that process every year, all the way through my masters degree.

That six-month grace period when you get out of school goes fast. Suddenly I owed $2,000 in student loan payments every month. I got three jobs to try and alleviate the cost; I worked at my dads office during the day, a pizza place at night and a fine dining restaurant on the weekends. I didnt want to defer my loans, but once I started missing my stop on the train because I was too tired, I knew I needed a change. I deferred all but one of my loans for six months while I found a corporate job that would pay me the same as the three jobs, but on a regular schedule.

Another six months went too fast, and soon I was paying for the original loan amount plus all the interest that racked up while I tried to better my situation. By this point, I was $100,000 in debt. That was 10 years ago.

Some things have changed in my life since then. I no longer have that corporate job (I have my own business now), I am married and we own a home. My loan debt has changed, too its gone up to almost twice what it was, thanks to interest rates and another couple of deferrals while I was laid off.

My husband has no student debt, thankfully, but it tortures me that hes now saddled with mine, with me. Then add in credit card debt from some plastic I got just out of college that was my fallback during unemployment, and my debt is more than $200,000.

Were lucky we got this house. The debt-to-income ratio was way higher than what the mortgage company would accept, but I was able to cash out an old 401K and use that to offset the mortgage cost. The home was abandoned for three years before we got it, so it came in at dirt-cheap.

Were paying for that now: we cant use the water from the tap because we need a new well that we cant afford. We cant fix the plumbing because its too expensive. Our basement floods when it rains because we cant afford waterproofing. And its not just the house.

I need a new car, but I cant get approved for a loan nor would I be able to afford payments because of my debt. Forget putting anything we need on credit cards, either. Theyre all maxed out from emergencies and I havent been able to get a new one in years. We can barely make the payments we have because I owe so much to my loans every month. I was at least able to get the payments down with income-based repayment, but still.

Its not like it matters, anyway. I truly dont know why I continue paying. With the interest rates (already refinanced to the lowest percentage) and the total I owe, I just owe more money every month regardless of what I pay. I thought about filing for bankruptcy, but student loans dont apply.

Weve wanted to move for two years. But we cant. Instead, I can only sit here, watching my mass of debt grow like a cancer, applying for credit cards Ill never get. All for an education.

Read more: https://www.theguardian.com/commentisfree/2016/oct/10/college-student-debt-growing-us-economics


Why a surging stock market isn’t making ordinary investors happy

For the first time since 1999, the three major US stock market indices have scored records simultaneously but big personal gains depend on big risks

You dont have to look as far afield as Rio to find all-time records being smashed to bits in the last two weeks.

The US stock market has been celebrating Team USAs string of gold medals by posting a string of new highs, having staged a decisive recovery from its Brexit swoon, after Britain voted to leave the EU in late June. The three major indices Standard & Poors 500-stock index, the Dow Jones Industrial Average and the Nasdaq Composite even scored new records simultaneously for the first time since 1999, the height of the dotcom boom.

So why, amid all this market ebullience, do most ordinary investors feel downright glum?

The problem is that though stock markets bounced back to life rapidly following the 2008 financial crisis, the typical investor waited until 2013 to return, missing out on the earliest and biggest parts of the post-crisis rally.

Most people remain deeply wary of stocks not surprising, after they saw the equity portion of their retirement shrink by 40% or more within a single year. A professional investor isnt worrying about needing to retire in four or five years with a much, much smaller 401k plan. He can afford a long-term view.

The average woman in the street, however, is in a much different position. Not only are her savings smaller, but the collapse in interest rates part of the Federal Reserves repeated attempts to jump-start the economy has left her fixed income investments yielding almost nothing.

Her house, which represents a larger share of her net worth than that of a more affluent investor, may have lost value. Or at least she probably cant count on its value at the same rates as before 2008, when the housing market cratered and left only San Francisco and New York City as real estate exceptions.

Her job may be less secure, as companies cut costs. Her salary, which also is more important to her financial wellbeing than her investment income, is almost certainly flat, and she pays a higher proportion of the cost of the benefits she receives.

To profit from the markets record highs, she would have to be willing to take on more risk in her investment portfolio if she has one at all and load up on stocks. And for many Americans, that feels like its asking too much. They probably arent wrong.

The last bull market in stocks ended brutally when the dotcom bubble burst in the spring of 2000, but it wasnt followed by a chasm opening in wealth inequality, as in the crisis of 2008. If that late-1990s boom gave birth to equity culture the idea that stock investing can go mainstream then the 2008 crisis may have handicapped the idea.

Too few Americans have profited too little from the stock market rally, while a handful of the countrys wealthiest have taken the lions share of the profits, simply because they have the spare capital to invest.

Rises in the stock market have persistently accompanied increases in income inequality from 1979 to 2011, according to a report by the St Louis Federal Reserve. Even middle-income families are less likely to expose their savings to the higher risks of the equity markets, the report concluded.

And the reason those stocks have climbed? Well, its as much due to interest rates as corporate profits. As long as bond yields are at their current basement levels, even anemic profits look attractive to investors,relative to bonds. Its growth! And bonds arent going to be delivering that any time soon. So what else is an investor to do? As the old saying goes, in the kingdom of the blind, the one-eyed man is king. And that one-eyed man, right now, would be US stocks.

The truth is that the stock markets records may be fragile. Corporate earnings have declined for the fifth straight quarter, and those companies that have managed to post higher profits have done so by cutting costs rather than generating higher sales. That should be bad news for stock prices, which typically trade as a multiple of a companys earnings.

The only thing thats keeping the party going for now is super-cheap money, AKA low interest rates. As long as thats happening, well, the only place to park your spare cash if youre an investor is in stocks.

But its interesting to look at just where those investors are choosing to put their money. By far the strongest performers of the S&P 500s 10 sectors are the telecommunications and the utilities sectors, both crammed full of stocks that pay out big dividends to their investors every quarter. In other words, investors are flocking to the safest companies out there, and the ones that will behave the most like bonds, paying them dividends instead of interest . There just arent very many cheap stocks left another reason to feel gloomy as the market has hit highs.

Perhaps it wouldnt matter as much if more of us had managed to capture more of the gains. But we havent. But when this geriatric bull market eventually gives up the ghost, all of us who have any kind of investment portfolio, however small, will share the pain. The smaller our portfolios, the more significant those losses will be.

Ultimately, the only thing average Americans seem able to count on is financial insecurity. Their increased productivity has gone to higher profits for corporations, and companies have paid those profits to shareholders in the form of higher stock prices, rather than to employees in the form of higher compensation. Only if that is reversed will we all be able to truly celebrate a bull market that profits everyone.

Read more: https://www.theguardian.com/business/us-money-blog/2016/aug/21/stock-market-records-ordinary-investors


All hail the CFPB: banking watchdog hangs in balance as election nears

The Consumer Financial Protection Bureau, a brainchild of Elizabeth Warren, celebrates its fifth birthday as it faces a Republican threat

Almost, but not quite, lost in all of the noise surrounding the back-to-back presidential nominating conventions in Cleveland and Philadelphia in July was the fact that the Consumer Financial Protection Bureau (CFPB) celebrated its fifth birthday.

What does this have to do with election day? Well, depending on who wins, it might not get a sixth.

The CFPB, the watchdog agency charged with ensuring that the financial markets work for ordinary consumers and to police financial institutions, was the brainchild of Elizabeth Warren, then a law professor at Harvard.

Her advocacy of the financial interests of ordinary, middle-class Americans, and her understanding of the situation in which they found themselves even before the financial crisis wreaked further havoc on their personal balance sheets, catapulted her to political stardom, even as it won her a host of enemies among bankers.

Today, a sizable group of Democrats still quietly mourn the fact that Warren, now a Massachusetts senator, wont be their standard bearer in Novembers election, and wasnt chosen as Clintons vice-presidential candidate. Regardless of her official status, she may wield as much influence as the Vermont senator Bernie Sanders.

But while most Democrats celebrate Warren and her accomplishments, the Republicans deplore both the senator and the CFPB. Warren seems to have gotten under the skin of the Republican presidential nominee, Donald Trump. The two have traded barbs on Twitter.

Donald J. Trump (@realDonaldTrump) June 11, 2016

Goofy Elizabeth Warren, sometimes referred to as Pocahontas, pretended to be a Native American in order to advance her career. Very racist!

Elizabeth Warren (@elizabethforma) May 7, 2016

.@realDonaldTrump spews insults and lies because he cant have an honest conversation about his dangerous vision for America.

And as for the CFPB, well, Republican language turns downright Trumpian. Ted Cruz dubbed it a runaway agency that doesnt do much to protect consumers; the Republican partys platform described it as a rogue agency that should be abolished or overhauled if those consumers are really going to be protected.

I interviewed Warren in July 2009, when the CFPB was still merely a proposal, and I doubt that any of these reactions or overreactions would come as much of a surprise to her today.

The big banks want things to go back to the way they were, she said then, in the immediate aftermath of the financial crisis, and only a few months after the stock market had begun to struggle back to life. They made billions of dollars from consumers who didnt fully understand the products these banks were selling. That whole process brought this economy to the brink of collapse and must be changed. We all have an interest in a safer consumer credit market.

And while hardball Washington politics meant that when it came time for Barack Obama to nominate the first head of the CFPB, he tapped Richard Cordray, the former attorney general of Ohio, rather than Warren, who stood beside the president and Cordray at the Rose Garden ceremony. It had been made very clear that, if Obama had nominated her, the Senate would never have confirmed her in the role.

That didnt stop the CFPB from becoming what Jennifer Lee, a partner in the banking and financial services practice of Dorsey and Whitney (and herself a former CFPB enforcement attorney) describes as one of the most powerful and aggressive agencies in the country. Its accomplishments, she argues, are voluminous for a baby agency.

Lee says one of the reasons the CFPB has been successful is the way it has responded to its track record. With each successive new development, the agency gets emboldened to do more, she explains. The current appetite for increased enforcement is not going to change.

Thats clearly true. Even as the Republicans were rattling their freshly sharpened sabers, the agency announced a new line of attack. This time, it plans to crack down on abusive debt collection practices, tightening the rules that govern the industry. The goal is to ensure that debt collectors are pursuing those who actually owe the debt, that they arent harassing debtors, and that they abide by statutes of limitations barring them from trying to collect on older debt. That would make a significant difference to the estimated one in three Americans who have an a debt that has reached the stage where its in the hands of a collection agency.

So far, the CFPBs pursuit of financial institutions, from banks to payday lenders, that have relied on a lack of financial sophistication or understanding on the part of consumers to take advantage of them has resulted in the payment of about $11.7bn to more than 27 million of those consumers directly. Another $500m or so has been generated in penalties. The largest of those settlements was with Ocwen, the countrys biggest nonbank mortgage loan servicer, under the terms of which the company refunded $2bn to 185,000 borrowers whose mortgages were underwater. Ocwen took advantage of borrowers at every stage of the (mortgage) process, Cordray said at the time.

This is pretty much what Warren hoped the agency would accomplish when she drew up the blueprint for it following the financial crisis.

Any market in which a credit card agreement is more than 30 pages long and mortgage documentation runs into the hundreds of pages none of which is designed to be easily read and understood by the consumer is a broken market, she said. Not all banks suffer from this: smaller banks, for instance, that offer more straightforward products get drowned out by multimillion dollar advertising campaigns for credit cards and mortgages by bigger institutions that may not offer consumers such favorable terms. She saw part of her mission as levelling the playing field. Its not a surprise that the biggest banks with the most powerful lobbyists seem ready to declare all-out war on a readable contract and other minimal consumer protections.

Unsurprisingly, the same groups are still at war today with the CFPB, which carries on Warrens mission.

Even before the November election, warning lights were flashing. Jeb Hensarling, the Republican member of Congress who chairs the House financial services committee, has declared he wont rest until he tosses post-financial crisis reforms like the Dodd-Frank Act on to the trash heap of history. Hensarling is also a fierce opponent of the CFPB, which has calls a dangerously out-of-control agency.

Hensarlings plan to repeal Dodd-Frank and replace it with a patchwork quilt of lightweight, bank-friendly rules, unveiled in June, would gut the CFPB. It would deprive the agency of the right to scrutinize some kinds of lending altogether (such as auto loans), and it would politicize the entire process. Right now, the CFPB is about as independent as any Wall Street agency can be: its head is appointed by the president and left to get on with his job, with independent funding received from the Federal Reserve.

If Hensarling gets his way, the CFPB would become completely accountable to Congress, having five commissioners appointed by party leaders, and having to fight for an annual budget. In other words, the same politicians who receive lobbying funds from Wall Street would be deciding who runs the agency that protects consumers from Wall Street and how much money that agency should get. That hasnt always worked out terribly well for the SEC, which has battled for its budget, and which is still waiting for the Senate to confirm two nominees to its five-member commission.

So lets celebrate the CFPBs fifth birthday, and its success in fighting for the interests of the ordinary borrowers and debtors against the big financial institutions that seem to have the decks stacked in their favor.

Lets also hope that the Republicans remember that there is tremendous bipartisan support for financial regulation, and for the agency in particular. Turning it into a scapegoat to make the banks happy could prove to be a very costly error for all concerned.

Read more: https://www.theguardian.com/business/us-money-blog/2016/jul/31/consumer-financial-protection-bureau-election-2016


Meet Donald Trump’s biggest donor (he also loves to build walls)

Property developer Geoffrey Palmer has made his fortune building luxury fortresses in LA microcosms of Trumps vision for a sealed, affluent America

Even on balmy days in downtown Los Angeles, Americas second-biggest metropolis, the sidewalks around the Da Vinci luxury apartment complex are deserted.

You can tramp around the entire perimeter of the 75,000 sq ft, seven-storey complex, which promises a unique lifestyle in the heart of Americas most dynamic city and encounter not a soul.

The medieval brick buttresses which ring the complex, combined with the absence of shade or anywhere to sit, plus the forbidding black-tinted glass doors, all locked, suggest the absence of people of outside people is a design feature.

By his own admission, the builder, a tycoon named Geoffrey Palmer, is in the fortress business. He has erected half-a-dozen similar faux-Italianate citadels across LA, all facing inward, acting as bulwarks against outsiders.

Da
Da Vinci apartment complex in Los Angeles. Photograph: Rory Carroll for the Guardian

The complexes have made Palmer the citys biggest developer and may help explain why he has just become Donald Trumps biggest donor, giving $2m to a pro-Trump group known as Rebuilding America Now, according to Federal Election Commission data. Palmer, estimated to be worth $3bn, is not well known in donor circles and has not previously made donations of that size, according to Bloomberg, which first reported the donation.

Why now, and why to Trump?

Palmer declined an interview request for this article, saying in a brief email: We dont do interviews.

Having made his fortune walling off chunks of LA to insulate his tenants from undesirable locals, perhaps it is logical to fund a Republican presidential candidate who wants to deport 11 million undocumented people and wall off the USs southern border to insulate Americans from supposed disease-carrying thieves and rapists.

Like Trump, Palmer enjoys his wealth. The headline on an Architectural Digest profile of his Beverly Hills estate, a $16m pile which boasts Louis XIV Boulle commodes, was Affinity for opulence.

Like Trump, he rewrites history: he claims Italians settled LA before the Spanish.

Also like Trump, Palmer has a reputation as a bulldozer who smashes through obstacles and does things his way. His company owns about 10,000 apartments in Los Angeles County, a third of them downtown. Admirers call Palmer a visionary who led downtowns revival.

Critics call him an ersatz monster who destroys heritage and displaces the poor. Such is the loathing some cheered when an arsonist burned down Da Vinci, then half-built, in 2014, causing $100m in damage.

Investigators say the alleged arsonist, Abdulwali, wanted revenge for police shootings of African Americans. Little is known about Abdulwali, who is due to go on trial later this year, but that did not stop Pamela Geller, a far-right blogger, branding the arson fire jihad committed by a Muslim convert.

The first phase of the complex, which has 526 apartments, opened in 2015. The second phase opened in April and is already mostly occupied.

Street
Street view of the Da Vinci apartments and skybridge. Photograph: Rory Carroll for the Guardian

Palmer discovered profit in safety, or perceived safety, in the wake of the 1992 LA riots, putting him ahead of a political curve which made make America safe again a slogan at this weeks Republican convention in Cleveland.

Step inside any of the Renaissance Collection complexes Da Vinci, Medici, Lorenzo, Visconti, Piero, Orsini and a blanket of security and comfort enfolds you, keeping the city outside at bay. They are arguably microcosms of Trumps would-be America: sealed, affluent strongholds.

Weve had no major incidents. Its very secure, said a Da Vinci leasing office agent as she showed a prospective tenant around this week. We have convenience cameras all over. And convenience guards who patrol on the hour.

A lobby of white tiles, cream walls and piped classical music led to courtyards with fountains and rooms with recessed lighting, Italian marble vanities and double-paned windows.

A skybridge over Temple street connects two wings of the complex, allowing residents to remain in the Da Vinci bubble and walk over any pedestrians, including homeless ones, who may appear on the sidewalks below.

Street
Street view from the Da Vinci complex skybridge. Photograph: Rory Carroll for the Guardian

The website and brochure, illustrated with a castle logo, underline security by highlighting the complexs electronic door entry, closed-circuit camera system and 24-hour doorman.

Those who can afford to live here a single bedroom unit starts from around $2,240 a month enjoy bountiful amenities, including a business centre, an ATM, a cinema, a basketball court, swimming pools, gyms and jacuzzis.

With so many security layers Palmers buildings can be difficult to get into but once youre in its very welcoming. You understand why theyre filled up, said David Abel, publisher of the Planning Report, an urban planning trade publication.

The property magnate pioneered his citadel model in the wake of the Rodney King riots, which left 55 people dead and $1bn in property damage, and continued with the same design even as the riots faded into history and downtown became a gentrified hub for business, arts and entertainment.

Twenty years on, the whole experience in downtown LA is the difference between night and day, said Abel. Yet he continues to build the same fortress-type complexes. Every one of [his] projects outwardly has no connection to the street. Its a unique model. The residents are focused internally.

Palmer himself has reportedly referred to his complexes as fortress-like, but he also says they possess timeless beauty and award-winning classical designs.

Impact on street life can be dramatic. While the rest of LA hummed during afternoon rush hour this week there were only fleeting signs of human presence on sidewalks near Da Vinci, which fills an entire block.

Rappers
Rappers use empty streets to shoot video in front of Da Vinci. Photograph: Rory Carroll for the Guardian

On Fremont avenue some youths used the empty cityscape to shoot a rap video. On Dewap road, Albert, 55, a homeless man who declined to give a last name, complained of an urban desert. Theres no life here, no way to tell what season it is. You dont see people, just cars going in and out.

The blog LA Curbed has branded Palmer the citys worst developer. His squat, nearly-identical fortresses, with embarrassing names … arent just ugly (although they are very ugly), theyre vacuums designed to suck the life out of a neighborhood that has worked so hard to become lively in the past decade.

Housing advocates bristle that Palmer has twice overturned city rules about including low income units in his complexes. We think that Palmers developments are exactly the kind that add to, not alleviate, the citys displacement and housing crisis, said Walt Senterfitt of the LA Tenants Union.

Strategic Actions for a Just Economy, a non-profit, is fighting to change Palmers Lorenzo complex, said Joe Donlin, the groups director of equitable development. Architecture has an impact on the community in terms of how people feel. They see a building and can think, Im not welcome here.

Albert,
Albert, a homeless man, dislikes the empty streets around the Da Vinci complex. Photograph: Rory Carroll for the Guardian

Palmer started his career developing land tracts in the San Fernando and Santa Clarita valleys in the 1970s.

Notoriety followed. Employees of his company, GH Palmer Associates, unlawfully contributed funds to a political action committee and to an LA city council member, prompting a $30,000 fine, according to LA Magazine.

While clearing land for the Orsini complex downtown Palmers workers demolished an 1880s Queen Anne cottage, the last original building on Bunker Hill. It was supposed to be moved but workers said they had to destroy it after a bulldozer accidentally backed into it. Palmer paid $200,000 to settle the suit.

That pales beside a $20m lawsuit the city filed earlier this year for not having an adequate fire protection plan for the Da Vinci. The blaze was so intense it melted signs on the 110 freeway.

Abel, publisher of The Planning Report, said Palmers generosity towards Trump reflected a willingness to gamble and follow instinct.

Hes an iconoclast and libertarian in his approach. He bet on downtown when no one else was betting on downtown. The tycoon had a pragmatic relationship with LAs Democratic-dominated city authorities, said Abel, but in backing Trump he possibly had some scores to settle. He doesnt like being muscled by liberals and activists who have ideas about what he should do.

Read more: https://www.theguardian.com/us-news/2016/jul/22/donald-trump-donor-geoffrey-palmer-los-angeles-property


Zimbabwes trillion-dollar note: from worthless paper to hot investment

The central bank of Zimbabwe issued $100,000,000,000,000 notes during the last days of hyperinflation in 2009, and they barely paid for a loaf of bread. But their value has shot up

Whats been one of the best-performing investments of the past seven years? Shares in Facebook? London property? Bitcoin? Up there with the best, believe it or not, are Zimbabwean 100 trillion dollar notes.

A trillion, by the way, is a million million. There are 12 zeros in a trillion. Add another two to reach the total on the Zimbabwean 100 trillion dollar bill, the note with the most zeroes of any legal tender in all recorded history. The bills circulated for a few months in 2009 at the zenith or, more precisely, the nadir of one of the most terrible instances of hyperinflation in history, before Harare finally abandoned the Zimbabwean dollar in favour of the South African rand, the US dollar and several other foreign currencies.

At one stage a hundred trillion dollar note would not even cover a bus fare. You needed a bale of notes just to buy a few household essentials. However, its thought that only a few million of them were ever printed.

I remember buying one on eBay. It is on the wall in my office. John Wolstencroft, a private investor, bought a batch of them to give away. I always found they were a good conversation starter, he says.

In 2010-11, Wolstencroft was living in New Zealand where he joined an investment club, made up mostly of locals and US expats. At the time, the great central banking experiment of quantitative easing and a 0% interest rate policy was making a lot of people nervous. He brought a handful of the Zimbabwean notes along to his first meeting to give out as a way of saying thank you for letting him join the club, but there were more people there than he was expecting.

I didnt have enough notes to go round, he says. People started offering me money for them. I tried to explain they were just a gift, but they just upped their offer. I realised then these notes were going to become a collectors item.

John
John (left) and Vishal Wolstencroft sell trillion dollar notes from the defunct Zimbabwean currency to collectors

Wolstencroft went away and bought several hundred more notes. The price had already risen since his first purchase; they were 1.50 each. He gave some out to members of the club, as promised, and kept the rest. When he returned to Britain he gave some to a financial company he works with. One of the independent financial advisers used to give the notes out to prospective clients to show why they should invest away from cash in a diverse range of assets, such as real estate, gold, stocks and shares, he says. Over the long term, cash loses its value.

Wolstencroft wasnt alone in seeing the potential of trillion dollar notes. The Wall Street Journal reported in 2011 that David Laties, owner of the Educational Coin Company in New York, had speculated about $150,000 (104,000) importing the notes from Zimbabwe, sensing they would become the best notes ever. Frank Templeton, a retired Wall Street equities trader, bought quintillions of Zimbabwe dollars (thats thousands of trillions) for between $1 and $2 each, via a broker from the Zimbabwe central bank. He would then sell them on for several times the price.

Vishal Wolstencroft, Johns 12-year-old son, noticed late last year that these same 100 trillion dollar notes were now changing hands on eBay for as much as 40 each. He talked his father into a joint venture. Vishal is responsible for the listing, photographs, posting, packing and advertising, while father John supplies the goods. Their profits are shared 50:50. Business is good. According to Vishal, its quite a step up from his previous venture selling old toys at a local market stall. Most 100 trillion dollar notes fetch close to 20-25 on eBay, but set against the 1.50 paid by Wolstencroft in 2011 it is a striking return. In percentage terms, it is close to 1,500%, compared with the miserable 5% rise in the FTSE 100 over the same period.

In an extraordinary irony, the 100trillion dollar note a symbol of financial mismanagement on a colossal scale has turned into one of the best-performing asset classes of recent years.

The disappearing currency

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A Zimbabwean lady with a basketful of cash Photograph: Tsvangirayi Mukwazhi/AP

When the Zimbabwean dollar first came into existence in 1980 it had a similar value to the US dollar, writes Patrick Collinson. But by 2009, $1 was worth Z$2,621,984,228, 675,650,147,435,579,309,984,228. TheBank of England worries if inflation in the UK goes over 2% a year; in Zimbabwe it hit 79.6 billion per cent.

The countrys central bank could not even afford the paper on which to print its worthless trillion-dollar notes. President Mugabe issued edicts to ban price rises, of comedic value were it not for the devastation that hyperinflation wrought upon the people. The miserably low savings and incomes of the impoverished population were wiped out; shopkeepers would frequently double prices between the morning and afternoon, leaving workers pay almost valueless by the end of the day.

In 2009 the government scrapped the currency, leaving US dollars and South African rand as the main notes and coins in circulation. To this day, Zimbabwe still has no currency of its own, although the government last year offered to swap old deposit accounts into US dollars, giving savers $5 for each 175 quadrillion (175,000,000,000,000,000) Zimbabwean dollars.

In an extraordinary irony, Zimbabwe now suffers among the worlds worst deflation, currently at -2.3%.

Read more: https://www.theguardian.com/money/2016/may/14/zimbabwe-trillion-dollar-note-hyerinflation-investment


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