"Just pick the good ones" -- Chinese investors are buying up Detroit

From Forbes Digital and MSN:

...Chinese shoppers can't resist a bargain.

Where else can you buy a two-story home in the U.S. for $39? China Central Television, the state broadcaster, in March reported that two houses in Detroit cost the same as a pair of leather shoes.

No wonder a poster on Sina Weibo, the Twitter-like service, pitched, "Seven-hundred thousand people, quiet, clean air, no pollution, democracy -- what are you waiting for?"

Who says the Chinese are waiting? Dongdu International Group of Shanghai bought, sight unseen, two downtown icons, the David Stott building for $4.2 million and the Detroit Free Press building for $9.4 million, both at auction this September.

Moreover, Chinese purchasers are making bulk purchases of inexpensive properties -- those selling for $25,000 or less -- in the rings surrounding the city center.

"They're banking on the downtown resurgence spiraling out into those rings," explains Kelly Sweeney of Coldwell Banker Weir Manuel. Mainland parties often buy at tax and foreclosure sales, hold their property and patiently wait for appreciation.

The Chinese certainly have made an impact on the locals in Detroit.

"I have people calling and saying, "I'm serious -- I wanna buy 100, 200 properties,'" said Caroline Chen, a real estate broker in nearby Troy, Michigan, to Quartz.com.

"They say 'We don't need to see them. Just pick the good ones.'" Chen reports that one of her colleagues sold 30 properties to a Chinese investor.

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Link: http://money.msn.com/investing/post--chinese-investors-are-buying-up-detroit

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Robin Hood policies hurt poor

From Nolan Finley at the Detroit News:

President Barack Obama has some bad news for poor and working class Americans: He’s going to spend the final three years of his presidency attacking the income gap.

“The combined trends of increased inequality and decreasing mobility pose a fundamental threat to the American dream, our way of life, and what we stand for around the globe,” the president said in a recent speech.

No coincidence the pledge to stamp out inequality comes at the same time Obama’s popularity and performance ratings are plunging due to the Obamacare fiasco. He always pivots to populism when he gets in trouble.

But this is no grand shift. Obama has been playing Robin Hood since Day One. All his major initiatives have been built on soaking the rich.

And what’s happened? Those on the bottom rungs of the economic ladder have less disposable income than they did when he took office, and the fat cats are fatter than ever...
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Link: http://www.detroitnews.com/article/20131215/OPINION01/312150003/1008/OPINION01/Robin-Hood-policies-hurt-poor

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Poverty nation: How America created a low-wage work swamp

From Joan Walsh at Salon.com:

2013 is the year many Americans discovered the crisis of the working poor. It turns out it’s also the crisis of the welfare poor.

That’s tough for us: Americans notoriously hate welfare, unless it’s called something else and/or benefits us personally. We think it’s for slackers and moochers and people who won’t pull their weight.

So we’re not sure how to handle the fact that a quarter of people who have jobs today make so little money that they also receive some form of public assistance, or welfare – a proportion that’s much higher in some of the fastest growing sectors of the workforce. Or that 60 percent of able-bodied adult food-stamp recipients are employed.

Fully 52 percent of fast-food workers’ families receive public assistance – most of it coming from Medicaid, food stamps and the Earned Income Tax Credit — to the tune of $7 billion annually, according to new research from the University of California-Berkeley’s Labor Center and the University of Illinois....
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Link: http://www.salon.com/2013/12/15/poverty_nation_how_america_created_a_low_wage_work_swamp/

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Economic Reality and the Minimum Wage

From Steve Chapman at Realclearpolitics.com:

If you offer people something that is too good to be true, you will always find takers.

Ask Bernie Madoff. Or ask Barack Obama. He recently proposed an increase in the minimum wage -- an idea that suits the natural predilections of many people enough to distract them from the unsentimental and unwelcome logic of economics.

One poll found that 63 percent of Americans favor raising the federal floor from the current $7.25 to $10.10, as the president recommends doing over two years.

The reasons are obvious. Wages have stagnated, low-income Americans are getting a smaller share of national income and many working people are stuck in poverty despite their best efforts.

A higher minimum wage is the obvious solution.

Obvious, but wrong.

The proposal rests on the assumption that the government can decree the price of a commodity -- in this case, labor -- in defiance of the dictates of the market, without ill effects. But that view requires a heroic suspension of disbelief.

When stores want to move slow-selling merchandise, they cut prices.

When customers clamor for more of an item than sellers can provide, they raise prices. Lower prices result in higher demand, and higher prices do the opposite.

This is not exotic free-market dogma but elementary economics. Any CEO who proposed to boost sales by jacking up prices would see the company's stock price plummet in response to this lunacy.

But supporters of a higher minimum wage would have us believe that low-wage workers are magically exempt from these phenomena. They claim companies will employ just as many employees at $10.10 an hour as they do at $7.25...
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Link: http://www.realclearpolitics.com/articles/2013/12/15/economic_reality_and_the_minimum_wage_120957.html