A weekend topic starting with the Globe and Mail. "In the early 1960s, only 4 per cent of countries were subject to economic sanctions imposed by either the United States or the United Nations, accounting for less than 4 per cent of global trade. Today, 54 – a quarter of all the countries in the world – are subject to some form of sanctions, affecting almost a third of global GDP. And at the rate that sanctions are now being applied, it will soon be the majority of trade. The most obvious of those consequences is the resurrection of inflation, which had been long buried for more than four decades. Sanctions were the trigger for its dramatic revival. That in turn has forced a crippling rise in interest rates, as central banks such as the Federal Reserve Board and the Bank of Canada were reluctantly forced to respond by raising their target interest rates from near zero to the 5-per-cent range. And those central bank rate hikes in turn led to the largest correction in the supposedly staid but safe government bond market since before the U.S. Civil War (1860 in the case of the benchmark 10-year Treasuries)."

"But perhaps the biggest casualty of sanctions is the global trading order that our governments repeatedly assured us was the basis of our collective prosperity. While no fewer than 11 (and likely more still to come) rounds of sanctions have failed to shred the Russian economy as promised, they have managed to shred that very global trading order that we supposedly all cherished. Instead of fostering the highly specialized division of labour that globalization compels, sanctions encourage economies to look inward to meet the needs of their domestic markets."

"If Apple produced its iPhone in its home state of California, where the minimum wage is US$15.50 an hour, instead of in China, where its principal supplier, Foxconn, pays US$1.50 an hour, you probably couldn’t afford to buy it. And that doesn’t hold true just for Apple. That holds true for virtually everything imported from China. Sanctions are no longer the exception. Instead, they have become part of the new normal. And so have their consequences."

From CBS News. "Kevin Roberts remembers when he could get a bacon cheeseburger, fries and a drink from Five Guys for $10. But that was years ago. When the Virginia high school teacher recently visited the fast-food chain, the food alone without a beverage cost double that amount. Roberts, 38, now only gets fast food 'as a rare treat,' he told CBS MoneyWatch. 'The whole conceit was that you were getting some OK-level of food for a low price and you could get it quick. Now I can't justify the expense. If I'm paying $15 for a burger and fry and drink and it's McDonalds quality, forget about it — I'm going home.'"

"Fast-food prices have shot up over the last decade, according to FinanceBuzz. The personal finance site found that the price of a McDonald's Quarter Pounder with Cheese meal from McDonald's more than doubled in price from $5.39 in 2014 to $11.99 this year. Other restaurant chains also have jacked up their prices, FinanceBuzz said. Between 2014 and 2024, Popeye's, Jimmy John's and Subway hiked their food prices 86%, 62% and 39%, respectively. The price of a two-piece chicken combo at Popeyes jumped from $6.49 to $11.39 over that period, while an eight-inch club tuna from Jimmy Johns rose from $5.75 to $9.10, according to FinanceBuzz."

Go Banking Rates. "Rising grocery prices are making it tougher for middle-class families to pay their bills — and millions are being hit with rent prices they can barely afford. According to TIME, half of all renters in the U.S. were cost burdened in 2022. They were spending more than 30% of their income on housing. Further, over 12 million people in the U.S. were spending at least half their paycheck on rent. U.S. News & World Report said typical rents in the U.S. settled in at $1,957 in December. For comparison, according to a New York Times article from 1973, the median monthly rent for houses and apartments in the U.S. in 1970 was $108."

"According to Consumer Affairs, when adjusted for 2022 inflation, the average annual income in the U.S. for 1970 was $24,600. The national average salary in the fourth quarter of 2023 in the U.S. was $59,384, according to USA Today."

The Union Tribune. "The vast majority of low-income renters in San Diego County are spending more than half of their income on rent, said a new study. The partnership said 81 percent of extremely low-income county residents, earning $31,850 a year for an individual, were paying more than half of their income on rent in fiscal year 2022-2023. The same went for 49 percent of very low-income renters ($53,050 a year) and 12 percent of low-income renters ($84,900 a year). California Housing Partnership reasons a tenant in San Diego County would need to earn $47.67 per hour to afford the average monthly average rent of $2,479. However, that figure defines affordability as someone only paying a third of their monthly income on rent — something increasingly rare across the nation."

"There were similar housing issues throughout the region. The partnership said 494,446 low-income households in Los Angeles County didn't have access to affordable housing. It also said Riverside County had 51,165 households; San Bernardino County, 58,846; Ventura County, 23,937; and Orange County, 129,693."

Palo Alto Online in California. "Palo Alto is now the second-least affordable U.S. city to buy a home, according to a new report, which tracked housing affordability by dividing median home prices by the median annual household income for 380 cities across the nation. According to the report, the median home price in Palo Alto increased by 10.5% over the past five years, and now sits at $3.4 million. Meanwhile, the median income for Palo Alto households is $179,707 — resulting in a price-to-income ratio of 19. This means the average Palo Alto family must invest 19 times their annual household income for the purchase of a home."

"Newport Beach, which has a median home price of $3.2 million and a median household income of $127,353, topped the list with a price-to-income ratio of 25.4. Of the 20 U.S. cities with the highest home-price-to-income ratios, all are in California – including Sunnyvale, with a ratio of 11.8 ($2 million vs. $169,781) and San Jose with a 10.5 ratio ($1.4 million vs. $133,835). For the Midpeninsula region specifically, Palo Alto is the only city included in the study. Statewide, California has an 8.4 ratio, just below Hawaii, which is the least-affordable state at 9.1. By comparison, the national price-to-income ratio sits at 4.7."

"According to the report, the rate of growth of median income has trailed behind that of home prices for at least the last two decades. From 2000 to 2022, the median annual household income in the U.S. increased by 77.6%, from $41,990 to $74,580, while the median home price nearly tripled — a 170% increase — from $123,086 to $332,826, according to data from the U.S. Census Bureau and Zillow. On an inflation-adjusted basis, household incomes increased by just 4.5% since 2000, while home prices increased by 59.1%, the report reveals."

From Scripps News on California. "As the 66th annual Grammy awards opened in February, millions of viewers were greeted with a striking sign of an expensive problem challenging cities coast to coast: two in-the-works high rises turned mega-canvas, towering over downtown Los Angeles; each tower covered in floor upon floor of graffiti. The Oceanwide Plaza developmen broke ground in 2015 but building halted four years later when funds apparently dried up. Then, the buildings sat empty for years with little attention paid. That is, until graffiti artists broke in."

"Carolina Miranda, design columnist for the Los Angeles Times, said she'd been keeping her eye on the Oceanwide Plaza development ever since construction stalled in 2019. 'What I always check is, are there any affordable units in the mix? In this case there were not,' Miranda said. 'What's concerning about that is housing for normal people not being a priority to the members of government who approve these sorts of projects.'"

"So, how did LA find itself in this situation to begin with? The development was approved when former Los Angeles City Councilman Jose Huizar was in charge of new development approvals in Downtown LA. He was sentenced earlier this year to 13 years in prison for accepting hundreds of thousands of dollars in bribes related to those approvals. Oceanwide Plaza wasn't mentioned in the indictment, and prosecutors say the development didn't come up in related criminal cases, but Huizar pleaded guilty to taking bribes from several developers, including some based in China."

News & Observer in North Carolina. "For decades, real estate agents gave potential homebuyers a general guideline for how much house they could afford — about two and half times their annual income. But across the nation and especially in the Triangle, that guidance is no longer close to matching reality. Still-rising house prices (and home insurance premiums) are crushing many would-be homeowners’ dreams. In Raleigh, the median home price now sits at $434,407 — up 55.8% over the past five years — as increasing demand and rising land and material costs drive up prices. Meanwhile, the median income is $75,424. That’s a home price-to-income ratio of 5.8, according to a new study by Construction Coverage — more than double what people used to think of as affordable."

"In Durham, the ratio is at 5.2. The median home price stands at $340,336, while the median income is $65,534. In Cary, where median income is much higher than the rest of the region, it’s significantly lower at 4.7 and on par with the country as a whole. The median home price is $498,838, but the median income is $106,304. Statewide, the median home price is $322,527. The median income is $67,481; the home price-to-income ratio is 4.8. Asheville has the highest ratio (7.2). The median home price is $462,515; and the median income is $64,548."

Bozeman Daily Chronicle. "Mark Egge, in his enthusiastic advocacy of developer profits, mistakenly links all housing supply with reduced housing prices. He seems to be working from a playbook that promotes unchecked growth to solve the housing shortage, with a bulldozer-on-every-street-corner promotion. Increased housing supply, so far has not reduced the cost of housing to affordable levels, but has flooded the market with higher end, newer, 'better' units, perhaps standing vacant, while destroying lower cost housing in the process. Even long-time former residents, discouraged with the build, build, build cacophony, have retreated to alternative Montana destinations in self-defense."

"Wreaking havoc on neighborhoods and executing on a 'build, build, build' strategy doesn’t sound like a win-win. If you materially change the beautiful place that you live to make way for a newer, 'better,' more expensive housing, and hoping that developers voluntarily settle for a lower profit margin, then doubtful the housing crisis will ever be resolved. What you end up with is urban sprawl of non-affordable housing with a queue of citizens still waiting for their turn to live here affordably."

From Barron's. "Massachusetts could join the growing number of cities and states with a mansion tax on high-value properties, as it considers a proposal to levy an additional transfer fee on commercial and residential sales above $1 million. The measure, first proposed as part of Gov. Maura Healey’s larger $4.1 billion plan to address affordable housing in the state. The measure follows similar proposals in places like Chicago, Los Angeles and Santa Fe, New Mexico. Boston is now one of the nation’s hottest real estate markets, with housing prices up 43% since 2020. Rents have increased over 20% in two years, according to data from Boston Pads, even as rents level out on a national level."

"Boston’s pricy housing market makes the $1 million threshold unreasonable, said Craig Brody, a broker with Douglas Elliman. 'A million dollars is not a mansion,' he said. 'It’s unfair to call it that.' In downtown Boston, for instance, the median price of a condo was slightly more than $1 million in the first quarter of this year, according to Douglas Elliman data."

The Financial Post. "We find it rather incredible that the Bank of Canada is so nonchalant when it comes to the state of the Canadian economy. The degree of excess capacity is expanding by the month, inflation has swung to disinflation and the economy (in real output per-capita terms) is contracting at a two per cent annual rate. Yet the folks in Ottawa fiddle as the macro landscape burns. Business insolvencies have soared 87 per cent over the past year to the highest level since the peak of anxiety in 2008 when the global financial crisis was raging. The number of people entering the labour market without landing a job has practically doubled those who found one over the past year. That has resulted in more than a 20 per cent year-over-year surge in the ranks of the unemployed and it seems amazing to think that Bank of Canada officials are unaware of that statistic."

"Any concerns over a resurrection of the housing bubble should be put to rest by now, with home sales in the once-hot Greater Toronto Area chilling 3.4 per cent month over month in April, losing ground in each of the past three months and down five per cent from year-ago levels. At the same time, new listings have ballooned 47 per cent year over year, and this new demand-supply backdrop has created the conditions for a flattening out in residential real estate prices."

"How is it that the Liberals are so adept at divvying up the national income pie instead of thinking creatively to expand it. It’s as if the term 'productivity' to the politicians , bureaucrats and mandarins in Canada is a dirty 12-letter word. Better to pursue supply-side growth through an unprecedented immigration policy stance (never mind that there has been no economic payback, judging by the continuous contraction in real output and income in per-capita terms) than embark on measures to bolster productivity growth, which is the mother’s milk for future prosperity."

The Telegraph. "Record-high levels of immigration have failed to boost the economy while making the housing crisis worse, a leading think tank has warned. In a report co-authored by former immigration minister Robert Jenrick, the Centre for Policy Studies (CPS) urged the Government to introduce caps on legal immigration to stop a drain on British infrastructure and public services that is not offset by economic growth. In particular, high levels of immigration are 'significantly exacerbating the housing crisis,' it said. It came after data published showed British consumers are suffering the longest drop in living standards in the G7 as the economy fails to keep up."

"Karl Williams, of the CPS, said: 'Traditionally, the Treasury and much of the rest of Government have modelled immigration as an unqualified benefit to the public purse. But this is not the case.'"

The Wall Street Journal. "Beijing’s newfound focus on a housing glut marks a sea change in how senior officials view China’s festering property crisis, setting the stage for rescue efforts that could range from unprecedented easing for home buyers to billions in state spending to buy up unsold projects. Chinese policymakers’ passing mention last week of plans to consider 'policy to digest existing housing inventory' has been a much-parsed phrase in recent days, with analysts stressing it marks the first time in a long-running real-estate downturn that top officials have publicly broached the subject of excess apartment supply. They said another part of the study—to 'optimize policies on new housing supply'”—suggests the government wants more public-housing options."

"'It’s the first time the Politburo signaled that reducing housing inventory and improving policies for new supply are a key focus,' said Bruce Pang, JLL chief economist for Greater China. 'The good old days of China’s housing market with spectacular growth is over,' he said. 'That’s why policymakers believe that unlocking growth potential by blending ‘something old, something new’ could hold the most promise.'"

"HSBC economists said in a research note that Beijing could set up a national platform to absorb housing oversupply, then sell or rent properties in a controlled manner over time to resolve the housing crisis. 'Given the depth and length of the correction and the weak finances of many local governments, we think a top-down approach by Beijing policymakers may be needed,' they wrote. ANZ analyst Zhaopeng Xing called that possibility unlikely, saying that precedent and a wide geographical variation in property policy make stimulus the responsibility of local governments. If buying happens, 'it’s going to be big spending for local governments,' Xing said."

Yicai Global. "China's real estate bubble burst was similar as Japan's 34 years ago, but it has a huge advantage as many people know about the balance sheet recession, Richard Koo, chief economist of Nomura Research Institute, told Yicai. The balance sheet recession concept Koo coined, which is considered the best explanation for Japan's 'lost three decades' of economic stagnation, has been very popular in China in recent years. Koo starts his new book 'Pursued Economy: Understanding and Overcoming the Challenging New Realities for Advanced Economies' with the balance sheet recession and global competition for capital. He explains why the Great Recession lasted so long and why policies that worked so well in the past are no longer suitable."

"Yicai: What is the right way to cure Chinese economic woes? Koo: When going through schools, we were taught how effective monetary policy is. When I moved to Japan and saw what happened after 1990, what we were taught in schools, how effective monetary policy could be, was incomplete at best because the professors never told us that for monetary policy to work, there have to be plenty of borrowers out there. If there are no borrowers, the monetary policy is completely irrelevant. We found that in Japan first, and we also found that after 2008 in Europe and the US, borrowers all disappeared because they were all repairing balance sheets after the housing bubble collapsed."