9 November 2018 FT — Articles to Read

9 November 2018


Question: According to MSN: Money, what are 20 reasons you do not want to live in a tiny house?


Fed readies rate rise next month as it remains bullish on economy – Pg. 1

–        The FOMC kept its target range at 2-2.25% yesterday, and gave a bullish verdict on the US economy, noting that unemployment had dropped further as growth in economic activity and household spending remained strong.  Investment growth has decelerated compared with earlier this year

–        Wage growth has accelerated to its quickest pace in almost a decade, job gains are averaging more than 200,000 a month, unemployment is hovering at multi-decade lows, and the economy has recorded two straight quarters of annualized growth well in excess of 3%

–        The Fed has boosted rates eight times in the current cycle, with a further move predicted at the December 18-19 meeting


Voters give strong economy and tax cuts a tepid response – Pg. 3

–        The party’s $1.5tn tax-cutting package, in particular, failed to galvanize many voters, in part because the Democrats successfully branded it as a handout to the rich, …

–        …while Mr Trump’s trade tariffs do not appear to have had an adverse effect on Republican support, they did not trigger a surge in support


Investors start to fret about ballooning US public debt – Pg. 9

–        …US government currently pays $1.43bn/day to service its public debt – 10 times more than any other G7 country (Italy is a distant second in this grim league)

–        …$1bn bill has materialized when interest rates are still fairly low by historical standards

–        …America’s debt pile swelled above $15tn

–        …assuming that interest rates rise towards their long-term average of 3.7% and 2.8% for 10-year bonds and three-month bills repsecitvely (or slightly above the current levels of 3.2% and 2.34%)

–        …interest payments will soon become the third largest item on the budget, eclipsing even military spending

–        …US Treasury quietly revealed that the deficit is poised to top $1tn for the first time in history

–        To plug this gap, Steve Mnuchin, the US Treasury secretary plans to sell $83bn of bonds, which is also a record, eclipsing even the level of bond sales after the global financial crisis.  Strikingly, Mr Mnuchin predicts that almost half of this tally – some $37bn – will have a maturity of just three years.  This short maturity makes the debt more prone to rollover risks


Breaking up the Big Four is not the answer to audit problems – Pg. 9

–        We propose banning all non-audit services to FTSE 350 and large public interest entity audit clients.  As part of this, we need a clear definition of what an audit service is

–        We support a UK equivalent of American’s Sarbanes-Oxley Act of 2002, which sought to improve the accuracy and reliability of corporate disclosures in the wake of the Enron scandal

–        …Big Four accounting firms (Deloitte, PwC, KPMG and EY)…


Answer: (1) The initial home price can be deceptive; (2) Cost per sf can be significantly higher; (3) Space will be extremely limited and might cramp your lifestyle; (4) Storage costs can quickly add up (Prof Note: Love the Sea Containers…I have four); (5) Land costs can get expensive, even if you move around; (6) Laws might not work in your favour; (7) Utilities could end up costing you just as much; (8) Appliances for tiny homes are often more expensive; (9) Moving a tiny home is not cheap; (10) The logistics for moving a tiny home are complicated; (11) It could take years to see any savings…if you ever do; (12) Insuring a tiny home is difficult and potentially expensive; (13) Mortgages are difficult to get with a tiny home and costly; (14) Shopping can be challenging with limited space; (15) Garbage storage and disposal can get complicated; (16) Having mail delivered can get tricky; (17) Cleaning a tiny home is not easy and has to be done more often; (18) Living in confined space can test your patience; (19) Neighbours can be hostile towards tiny-home owners; (20) The resale value can drop dramatically