The money stock (M-2) has increased from $7,080 billion five years ago to over $9 billion today. With so much new money floating around, you would think that it would be easier to get a loan. So why are businesses finding it so difficult to borrow money?

The answer is that regulations on lending are increasing faster than the money supply. As we explained here, the incentive for banks is to lend more to governments, less to home buyers, and even less to commercial property owners.

The situation was exacerbated by the decision of international regulators over the weekend to hold firm on the required compliance of banks with Basel III regulations. These regulations require banks to increase their tier 1 capital, which are primarily government bonds, from the current 4% of total capital to 4.5% in 2013, 5.5% in 2014, and 6% in 2015. This will tend to crowd out the ability of banks to lend to homeowners and commercial property investors.

The regulations are part of the failure of the ability of regulators to see the trees through the forest. Throughout the world there are enormous opportunities for banks to lend on sound investment properties but, since the regulations aggregate properties into “tiers”, they are prohibited from making these investments.

An example would be hotels in Williamsport, Pa. This is where workers drilling for natural gas in the Marcellus shale deposit stay. Many of the workers are from Texas, Oklahoma, and other traditional natural gas producing states. Very high occupancy rates in these hotels for several years are almost guaranteed. Since national and international occupancy rates are low, however, hotels as an asset class are considered risky by regulators. Consequently, it’s hard for a bank to make a loan to a hotel in Williamsport.

Private equity funds are doing their best to shore up this gap. Sensible Lending Solutions, for example, has several programs that rely on private equity funds. There are dangers, however, that this lending might be curtailed if calls for additional regulations on “hedge funds” are heeded.

For borrowers looking to finance owner-occupied properties, perhaps the best solution is to pursue government funds through one of the agencies that offer them to small businesses. The Small Business Association, Department of Agriculture, and other government agencies have such funds available. These have been marketed through banks but the income that they receive from this lending isn’t as great as what they receive from marketing their own loan products, so they have not been actively marketing them. If you have a business in Pennsylvania and are interested in this type of financing, the best place to start is the South Eastern Economic Development Company of Pennsylvania.

Overall, it looks like we’ll be stuck with difficult lending markets for a while yet. The federal government continues to create massive amounts of new money and then prohibit the private sector from accessing it. If the federal government intended to destroy the U.S. economy, the most effective policies would be almost identical to their current policies. I have to believe that these policies are enacted and maintained out of ignorance instead of intentional malice.

In incorporating a story into my book, I’ve encountered a bit of a dilemma. While many books in the business and investing category incorporate stories, the stories always seem to be of one of two types.

The first of these is the telling of a story in more or less chronological order. The focus is on telling the story, not on explaining why the events occurred. Michael Lewis uses this approach in The Big Short: Inside the Doomsday Machine and I suspect the same approach is used in his Moneyball: The Art of Winning an Unfair Game and in Walter Isaacson’s book on Steve Jobs. This approach is effective in telling what happened historically but is less effective in explaining why it happened.

The second approach is to tell a series of disconnected stories, each one illustrating one of the concepts addressed in the book. This technique is known a concretizing. Abstract concepts are easier to understand if the writer presents a concrete example of the concept in action. This technique is used by Malcom Gladwell and Daniel Kahneman in their popular books.

My dilemma arises from the fact that production of goods and the creation of value run in opposite directions. The creation of value begins with the needs and wants of consumers and ends with decisions made regarding natural resources and the associated labor. The production process and chronological order run in the opposite direction. Consequently, in order to incorporate a single unified story into an explanation of value, I’ll have to tell the story in reverse chronological order.

Several works of fiction have been written in reverse chronological order, typically to demonstrate how the strange situation that occurs at the beginning of the story developed, but I am unaware of any non-fiction that uses this approach. It introduces a complexity that I would like to avoid. It seems that this book is already leading me down paths that I didn’t anticipate.

People often make statements out of ignorance. They say things that are obviously false, usually because they simply don’t know all of the facts. This undermines their credibility but most such people simply need better information in order to change their opinions.

This is not the case when it comes to statements related to economics. Prominent people routinely make public statements that belie their ignorance of economics without having their opinions on the subject immediately and conclusively dismissed. Murray Rothbard addressed this phenomenon in 1970:

“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”
― -Murray N. Rothbard

This statement is just as true today as it was in 1970.

I recently opened a Twitter account on the advice of Rachel Thomson (@RacelintheOC, who seems to be a Twitter addict) and John Locke. As the Twitter illumine know, hash tags play an important part in the medium as a means of categorizing statements. Furthermore, since tweets are very limited in length, hash tags can be used as handy initialisms for broader concepts.

In order to take advantage of this, I created the hash tag #Inctbi, which is short for “It’s no crime to be ignorant”. Rothbard’s quote was wordy even in the standards of its day and is intolerably so today. I’m hoping this new hash tag will be used as a shorthand method of indicating statements that display an ignorance of economics. This way, people on Twitter can mock such statements without using up all of their space. The resulting catalog of statements will be useful in economics education.

I’m often asked why people make such obviously false statements and persist in asserting the truth of them even in the face of overwhelming contrary evidence. I’m convinced that a major reason for this is what psychologists refer to as confirmation bias. Once we have made a decision, we tend to become committed to evidence that confirms the decision and ignore evidence that refutes it. We’re all exposed to an abundance of economic fallacies early and often in our lives. Those who develop a commitment to these fallacies find it almost impossible to understand valid economic concepts.

It’s no crime to be ignorant, but it is irresponsible. If you use Twitter, please do your part by incorporating the #Inctbi into your posts.

I’ve set up pages on LinkedIn, Face book, and Mises.org for anyone who is interested in discussing economic theory as it relates to asset values. Here are the links to those pages:

LinkedIn:

http://www.linkedin.com/groups/Engines-Prosperity-How-Assets-Create-4194303?trk=myg_ugrp_ovr

Face book:

http://www.facebook.com/pages/Engines-of-Prosperity-The-Theory-of-Asset-Valuation/126057727504037

Mises.org:

http://community.mises.org/assetvalue/

An article in today’s Wall Street journal provides an opportunity for us to observe economic theory in action.

Time preference has been extensively studied in economics as a factor in production. The general idea is that as individuals in particular, and economic systems in general, produce enough to satisfy their immediate needs they will begin saving and investing so that they can produce more in the future. In a primitive economy (typically using alternative Robinson Caruso stories in economic literature) this process might manifest itself by saving fish to provide enough food for workers while they are building a net to catch more fish. In an advanced economy, it is more likely to manifest itself in the form of wage workers investing in their retirement funds and similar investments.

There is, however, another important role that time preference plays in an economy and this is related to consumption.

The value of a good or service is never intrinsic to the product. Rather, it is determined by the quality and number of renditions of service that the product can provide. For example, a hotel room night might be considered one rendition of service. A monthly rental would then constitute about 30 renditions of the same service and an annual rental would be 365 renditions. If you were to purchase the room as a permanent living space, it might serve you for 30 years, resulting in 10,950 renditions of service.

Time preference theory demonstrates that everyone will always prefer a service delivered immediately to an otherwise equivalent service to be delivered at some time in the future. This evening, we can rest assured that our lodger will be willing to pay more for a room for tonight than for a room on November 25, 2041. The annual difference between the rate that he is willing to pay now and that that he is willing to pay in the future is his natural rate of interest.

The natural rate of interest has been obscured beyond all recognition in production goods and labor and in consumption goods that are typically financed by the Federal Reserve’s manipulations of interest rates. With other consumer durables, however we can still learn a lot from spending patterns.

The Wall Street Journal article indicates that spending on services has increased by only 2.8% since 2009, whereas spending on goods (by which they mean durable goods) has increased by 9.1%. This reflects a decrease in time preference on the part of consumers. What’s interesting is that this decreasing time preference reflects fear of the future instead of increasing prosperity in the present. Any entrepreneur who has an idea for a product or service that can increase the future security or stability of consumers should take note.

One of the key elements that separates a mediocre appraisal from an outstanding one is the depth of verification. Comparable sales and rentals (comps) are much more than an address and a sale price. There is always a story behind any real estate transaction.

Sometimes, unearthing this story is easy. If the transaction has been widely and thoroughly reported in the press, there might be little more to do than to read the articles. More often, however, it requires some private investigation work.

The parties involved in the transaction might be reluctant to talk about it. Consequently, the role of the appraiser investigating comparable sales and rentals is often quite similar to the role of the TV private investigator. These investigations often yield important and surprising results.

While I can’t tell you the details about my investigations for my clients’ purposes, I can tell you about ways in which I was able to help an associate of mine find out about a potential business opportunity for his firm.

Adam is an architect. He saw a sign on a parcel of vacant land indicating that it was owned by Caribou Development. All of his efforts to find Caribou Development with web search engines had yielded no information, so he asked for my help.

Since the parcel was located in Pennsylvania, I decided to start there. Like most states, Pennsylvania has a Bureau of Corporations that is part of the Department of State. They have a search engine for all corporations and partnerships registered in the state. A search for Caribou Development yielded Caribou Development Partnership, LP and Caribou Development Partnership GP, LLC, both with the same registered office address. Caribou Development Partnership GP, LLC is listed as the general partner of Caribou Development Partnership, LP. This indicated to me that both entities were part of the same company and that the address of this company was Three Radnor Corporate Center; 100 Matson Ford Road, Suite 305; Radnor, Pa.

I then did a web search using this address. I managed to find a help wanted add seeking an assisted living resident services manager with a contact address of 100 Matson Ford Road, Suite 300. The company that posted the add was Cambridge Management Companies.

A search for Cambridge Management revealed that they are in the intermediate care facilities business, have between one and five employees, and have between $1 million and $5 million in annual sales.

Had the parcel of land been a comparable sale or lease, I would have visited the offices of Cambridge Management to see how much additional information I could dig up on the transaction. Before doing this, I would have researched all available information on the parcel in the county courthouse and in the township offices. I’ve found that the more background information I have, the easier it is to get additional information when I speak with the parties involved in a transaction.

Cambridge Management won’t see me today, however. Since Adam is the one interested in this information, I’ve assigned him to continue the investigation. I’ll keep you updated on his progress.

One of my all-time favorite short stories is Friends in San Rosario by O. Henry. This story demonstrates the importance of character in making lending decisions. The three C’s of credit used to be character, capacity and collateral. A quick web search indicates that character has been relegated to second or third place, or even eliminated altogether. In those cases where character is still listed first, the original concept has been replaced by credit rating.

It’s simply not possible to evaluate the character of the owner of a retail store in Montana from the offices of a bureaucracy in Washington, D.C. Yet with the enactment of Sarbanes-Oxley, Dodd-Frank and a host of other federal regulations the character of a borrower has become less important than his preferred brand of toilet paper. Bankers tell me that they are now required to call back performing loans simply because of the type of property that serves as collateral.

With conventional financing dissolving, several alternative routes are emerging. Yet these, too are running into regulatory traffic jams. Public and private equity funds both must deal with the vague regulations of the Securities and Exchange Commission (SEC).

One source of funding, often the last to be considered, has always been family and friends. These people already knew your character and, if they had a little money or if you had the proverbial rich uncle, they might be able fund your business. This was the last bastion of unregulated funding.

With the increasing popularity of social media, many people’s circle of friends has expanded exponentially. In response to this, there is a new source of financing. Known as crowdfunding, this strategy involves obtaining investments through a web site. The big question now is: to what extent will this type of funding be regulated by the SEC?

The house passed a bill on November 3 permitting this type of funding for up to $1 million without registering with the SEC but advertising of an opportunity is still prohibited. A Senate bill permitting crowdfunding has stalled.

SEC regulations operate under the premise that someone who can’t understand financial statements should be able to make investments without great risk. They assume that such people will be able to understand opaque legal jargon.

There was a time when people made their own decisions, took their own risks, and lived with the consequences. Now all our decisions are made within the confines of Interstate 495. It’s time we started making our own decisions again.

The guy would literally inhale deeply through his nose and exhale through his mouth just like the stereotypical arts snob. He was my professor for Reviewing the Arts, a 300 level English course that I was taking in order to fulfill the liberal arts requirements as a business major.

He found it amusing that a finance major actually thought that he could pass a class designed for third-year English majors. His attitude invoked in me both a feeling of insecurity and a determination to pass his class.

I had similar feelings last night when I began reading White Space is Not Your Enemy: A beginner’s guide to communicating visually through graphic, web and multimedia design. I’m reading it because I’m in the early stages of writing a book and have started consider the cover design. I’m also interested in designing a logo for CapStruc Advisors. I have absolutely no formal training in design. These were my original reasons for buying the book but I’ve found an unexpected benefit.

I’ve been writing narrative appraisal reports for over two decades and have consistently strived to improved my writing but only occasionally considered the graphic design elements that are inevitably a component of any written communication. While I’ve been doing some things right, I now realize that I’ll have to include margins within the borders of some of my tables and eliminate the boarders from others. I’m sure that I’ll find additional opportunities to improve my work as I begin to look at it with a designer’s eye.

This is just another example of what I have long held to be a great strategy for creating something valuable: combine the knowledge gained from two or more disparate disciplines. In 1999, I combined my existing knowledge of appraisal with my then newly-acquired knowledge of warehouse management to write an Appraisal Journal article that won the award for the most outstanding article of the year. With my upcoming book, I’m hoping for the same success by combining practical asset valuation knowledge with Austrian economic theory.

I haven’t kept track of the flesh and blood professor who serves as the model of arrogance in my mind but I have to figure that he is still around somewhere. A little over 20 years ago, I managed to get a B+ in his class.

An age-old question in accounting is what  should be considered a capital investment and what should be considered an expense. The general criterion is that expenditures that contribute to profitability in one operating period should be classified as expenses, whereas expenditures that benefit multiple periods should be expensed.

The difficulty with this criterion is that it’s often not obvious whether an expenditure contributes to profitability in one period, in multiple periods, in some combination of the two, or if it does not contribute to profitability at all. Enron famously converted many of their expenses into capitalized assets, thus baffling  many investors as to their true financial condition. James Chanos actually read to footnotes of the Enron financial statements and was able to profit by short-selling their stock.

The Financial Accounting Standards Board (FASB) doesn’t think that investors should need to read the footnotes in order to understand the financial statements of a company. Since the Enron incident, they have put forth their best efforts to eliminate the off-balance sheet entities that contributed to Enron’s demise.

Despite these efforts, one type of asset that most accounting professionals regard as a capital investment continues to be accounted for as an expense. This is the multi-year commercial lease. This type of lease is common for commercial real estate and aircraft. Multi-year leases have been around since the earliest days of the agricultural economy, and there is a good argument to be made that these leases should have been capitalized, but the payments have traditionally been regarded as expenses.

FASB does not have a fiddler on its roof, and any argument about tradition holds little sway in Norwalk. We don’t yet know what the full effects of the proposed accounting changes will be but rest assured that they will be dramatic.

I've been called to testify as an expert witness in a deficiency judgment case in Carbon County, Pennsylvania on Monday. A deficiency judgment is an unsecured money judgment against a borrower whose mortgage foreclosure sale did not produce sufficient funds to pay the underlying promissory note, or loan, in full.

Oddly enough, while I’ve testified several times in several cases, each time that I’ve been called on to testify in a bankruptcy or foreclosure case, I’ve never actually been called to the stand. One client (or more specifically, his attorney) asked me to remain on call to testify in a bankruptcy proceeding against American Appliance in Delaware County. The case was literally settled on the courthouse steps and I never had to leave my office. Another client flew me down to Richmond, Virginia at great expense to them in order to testify. As I was sitting in the courtroom, the parties decided that they didn’t need my testimony after all.

Although I am paid the same whether or not I testify, being called to the courthouse without being called to the stand leaves me unsatisfied. I’m hoping that the powers that be in the Carbon County medieval castle will give me a chance to have my say.

Tax appeal season in Pennsylvania is over for another eight months and, with the holiday season; there will be little opportunity for property owners to sign new tenants between now and January. Now is a great time to start planning strategies for reducing energy expenses.

The first step in this process is to find the lowest cost energy supplier for your needs. While it seems as if everyone these days is hawking energy, few of these representatives know how to tailor the energy contract to your specific needs. CapStruc Advisors has developed a seminar, entitled Buying Electricity: Strategies for Choosing a Supplier and Negotiating Contracts, to guide you through this process. If you are interested in this seminar, please let us know. In the mean time, you can check out the CapStruc Advisors energy markets web site.

Once you have a contract in place that ensures that you will be paying the lowest available price per kilowatt hour over the course of the contract, you are ready to start reducing the total number of Kilowatt hours that you use. In order to do this effectively and efficiently, you will need an energy audit.

There are three levels of energy audits. A visual audit will reveal the most obvious opportunities to reduce energy use. A standard audit will include an analysis of your utility bills for the past year and benchmark the energy use of your facility against similar facilities. A diagnostic audit includes the use of diagnostic equipment, such as energy meters and thermal imaging cameras, to discover less-obvious opportunities for savings. It usually makes sense to begin with a visual audit and consider proceeding to more detailed audits based on the initial findings. The costs of visual and standard audits are usually based on a percentage of the savings identified by the audit. CapStruc Advisors now offers visual and standard audits.

Once the opportunities for cost savings have been identified, it is time to implement the projects that are required in order to recognize these savings. The projects with the highest return on investment should be implemented first, while other projects should be postponed until various building components approach the end of their economic life and must be replaced.

By making these preparations now, you can ensure that your energy costs for 2012 are the lowest that they can possibly be.

In a presentation on developing brownfields last Friday, I explained that the value of any productive asset depends on how it fits into peoples’ production plans. If the production plan to which the asset is committed is abandoned, the asset will have to be re-purposed for some other use that fits into a different production plan.

An article on the front page of today’s Wall Street Journal illustrates how this economic principle works in practice. It explains how much of the raw land that was once destined for residential development is now being purchased for agriculture. Because the contribution of the site to the value of a new home has fallen and commodity prices have increased, the highest and best use has changed.

The efforts of federal, state, and local governments to impede these changes have contributed more to the extended economic downturn than any other single factor. The TARP programs, support of Fannie Mae and Freddie Mac, and government subsidies to manufacturers prevent the market adjustments that would return the country to prosperity if these and similar programs were not implemented.

The shift in highest and best use from residential to agricultural use is likely even greater in Pennsylvania than in many other areas of the country. The development of natural gas in the Marcellus shale region has created a new market for much of the land that was previously used for agricultural purposes. This results in a reduced supply of agricultural land which will drive prices up. Conversely, the oversupply of housing is not a severe as in other parts of the country, so this factor will not drive down the prices of residential land to the same extent.

This illustrates the importance of examining the break-point between different uses for any property.

Today’s Wall Street Journal reports that Goldman Sachs and Morgan Stanley are considering a change from mark-to-market to historical cost accounting. This despite the fact that Goldman chairman and CEO Lloyd Blankfein contends that mark-to-market accounting helped Goldman and similar firms to recognize exposures promptly and curtail the worst effects of the financial crisis.

The rationale behind the proposed change is that mark-to-market accounting is making it more difficult for these firms to make loan commitments. Nonetheless, as we’ve explained before, mark-to-market accounting is more accurate.

The fact that many companies are still using historical cost accounting offers tremendous opportunities for savvy investors at all levels. By revising the balance sheets of these companies to reflect market values, instead of historical costs, they can get a more accurate picture of the actual condition of the company. If the revised balance sheet looks worse than the original, this is probably a company to avoid or maybe even sell short. If it looks better, it might be a great investment opportunity.

CapStruc Valuation is now CapStruc Advisors, LLC. We've changed our name to reflect our expanded services.

When I was studying economics in college, I became intimately familiar with the term "aggregation." This is the lumping of information into categories. While this might be a natural impulse, it can lead to all kinds of problems.

Racism is one of the central problems caused by aggregation but is certainly not the only one. I'm currently working on appraisals of two apartment buildings and it is becoming increasingly apparent that decisions are made by individuals under particular circumstances, not by any aggregates. Each sale or rental is a story with many nuances. Any attempt to aggregate these transactions creates a loss if important details.

The Article that I was interviewed for is here: http://www.inc.com/guides/201105/10-things-about-commercial-real-estate-appraisal.html.

I just completed another Uniform Standards of Professional Practice (USPAP) update class. Appraisers are obligated to take this class every two years, and this is the eleventh time that I've taken it. I was once again reminded that, while clients are almost always interested in prompt delivery, USPAP does not include any requirements for timely delivery. Because of this, the incentive for appraisers is to take all the time that they want to ensure that appraisals conform to USPAP in order to avoid possible disciplinary action. While compliance is important, most clients are also interested in prompt delivery. This is yet another instance where government regulation interferes with the needs of clients.

I was interviewed for by an Inc. magazine reporter earlier this week regarding things that businesspeople should know about commercial real estate appraisal. The article will appear next week on the Inc. magazine web site. I'll give you a direct link when it becomes available.

Being writer of sorts, I consider it very important to quote people accurately. Unfortunately, others aren't as conscientious. Here, I offer  my opinion on two of the four crimes of quotations.

The worst crime, in my opinion, is to mis-quote someone. I was the victim of this when I returned from fighting wildland fires in 2000. A newspaper reporter asked if she could interview me about my experiences and I agreed. When the article came out, it quoted me as saying that I felt humbled and small in the vast Wyoming wilderness. In fact, not only did I not say this but I never would have. I felt an enormous sense of power with all the resources that we were able to command from our remote location.

I have a similar difficulty with the alleged quote by Winston Churchill in which he supposedly said "never give up." What he is actually documented as saying is "never give in." It is entirely possible that he said the former at some point, but not in the context of any famous speech. The two phrases have very different meanings.

The second major crime is failure to site any source at all and instead saying "it is said that." This is a major problem with a book that I recently read, Climate of Corruption: Politics and Power Behind The Global Warming Hoax. While it is a good book, at several points it fails to site the sources of its information. I could say anything to myself and accurately state that "it is said." We need sources and credentials in order to evaluate the information contained in any such quotations.

And what about the other two crimes? Stay tuned.

At the risk (or reward) of tooting my own horn, here is a history of the Armstrong/Khan Award:

http://www.entrepreneur.com/tradejournals/article/163680952.html

I attended the Globacon trade show and the associated greater Philadelphia chapter of the Association of Electrical Engineers luncheon last week. The trade show included several exhibitors for building system controls companies. These companies wire heating ventilation, air conditioning, electrical and other building systems to a central computerized control center, so that all of these systems can be centrally monitored and controlled. The newest trend in this business is to connect these systems to the internet so that they can be remotely monitored and controlled. If this becomes prevalent, companies that own or manage multiple buildings will require fewer facility or property management personnel. All of the buildings will be managed from a central location.

Lighting technology has also advanced from increasing energy-efficient lamps to energy efficient ballasts. These ballasts can be connected to the building system control center to maximize efficiency. The ballasts take advantage of the utilities' demand response programs.

In the realm of heating and cooling systems, Fulton Heating Solutions was demonstrating a commercial boiler system that uses less electricity than a coffee maker. The system relies on back-flow gaskets and the suction created by the combustion process to allow the boiler to continue to operate without electricity after it starts.

The next generation of window technology will include windows (and window films) that respond to the environment in order to  save on energy. Photochromatic windows  will become darker as light levels outside a building increase, while thermochromatic windows will adjust based on outdoor air temperatures. These technologies are still in development but we can expect them in the coming years.

Some of the more exotic products were also on display. Garden roofs are still extremely impractical for any building that has to make a profit Nonetheless, I did learn that these are not considered impervious surfaces for zoning purposes, so eventually buildings in very high building density areas might find a use for them. Most solar systems still require government assistance in order to be practical.

On the topic of government assistance the luncheon speaker, Pennsylvania State Representative Chris Ross, tells us not to expect a lot from Pennsylvania in the coming years. Apparently, Governor Rendell exhausted most of the money set aside for these purposes before he left office and the new governor, Tom Corbett, has higher priorities. As a result, we probably won't see nearly as many of these marginally financially feasible systems installed in Pennsylvania soon.

The article for Medical Office Today is here:

http://www.medicalofficetoday.com/content.asp?article=5228

I was interviewed yesterday for an upcoming article in Medical Office Today. The article is one in a series by Daniel Casciato called Dissecting Your Lease. This particular article will be on renewal options. The article is scheduled to appear tomorrow. Mr. Casciato expressed interest in interviewing me for another article in this series on proposed Financial Accounting Standards Board changes to lease accounting.

I visited the Greater Philadelphia Spring Home & Landscape show this weekend at the Valley Forge Convention Center. I went there primarily to learn about new ways to save energy so that I can present them to my Values of Green class.

One particularly interesting new device is the GreenRevolution^TM Energy Saver^TM. This device is a surge protector with a twist. Instead of just dissipating electrical surges, it stores them in a capacitor and releases the extra energy into your home electrical system over a period of 20 seconds. The distributor claims that this can result in savings of up to 25% on your home energy bills.

I also learned a little more about geothermal heating and cooling systems. These systems are essentially heat pumps but the heat is drawn from the ground on cold days and dissipated into the ground on hot days. Since the temperature six feet under ground remains around 55 degrees in any kind of weather, these systems are more efficient than heat pumps. I have spoken to the vice president of operations at the Penbroke North Condominium in Wayne, which has one of these systems, and he says that it saves a tremendous amount of heating and cooling costs.

Geothermal heat pumps were already a part of the Values of Green class but I was not aware that there are open loop, as well as closed loop, systems. The closed systems involve running a refrigerant underground and then back to the heat pump. The open loop systems draw water from an underground or clean surface source, exchange the heat with the refrigerant, and then return the water to the source. I had not been aware that there were open loop systems.

Solar heat and energy are still not practical for most applications. I asked several of the exhibitors about solar roof tiles and all of them told me that they are prohibitively expensive. I couldn't find any exhibitors who were offering them. The solar panel systems that are less expensive still rely on government incentives to make the investment worthwhile. The only product in this category that might make sense are solar powered attic fans.

One of the issues that a student brought up in the first Values of Green class was whether programmable thermostats were appropriate for buildings with heat pumps. I asked an exhibitor from Service Mark about this and he told me that the thermostats are still worthwhile, although the programmed temperature variation should be limited to 5 degrees, as opposed to 7 degrees with fossil fuel systems. In other words, if the base temperature is 70 degrees, the low temperature should be programmed to 65 degrees if you have a heat pump instead of 63 degrees if you don't. There is also a feature called intelligent response which ensures that the heat pump is used instead of the back up system to raise the temperature from the low setting.

If you missed to show, there will be another opportunity to browse resource saving products at the grand opening of the Penn Solar Store in Phoenixville on April 2.

Although I attended the Greater Philadelphia Home & Landscape show in order to better teach my class, I'm still more interested in commercial and industrial properties than in single-family residences. I've submitted my application to attend the BOMA Every Building Show on June 27 in the D.C. area for free. I'm not sure if appraisers qualify, but I'm hoping.

A central tenet of economics is that markets tend toward equilibrium, which is similar to what is known as an evenly rotating economy in the Austrian school. A perfectly evenly rotating economy is one in which all demands are perfectly anticipated by suppliers and there are no new products or services.

Of course, in the ordinary course of events, some sort of disruption always causes new variations from the evenly rotating economy before the economy reaches this state. We also know that changes in the money supply by a central bank and increasing regulations can drive an economy out of equilibrium for extended periods of time but there seem to be market forces that can act in a similar way.

How is it that Google became the most used search engine? How did Facebook become more popular than MySpace? There seem to be some phenomena that drive markets out of equilibrium that aren't accounted for in current economics literature.

This is the first of many topics that I am investigating for my book.

We have recently expanded our services. We are now offering energy advisory services. For those in deregulated electricity markets, we can assist you in finding the lowest cost provider for your particular electricity needs. For larger users, we can actually get live quotes directly from traders on the PJM.

Here is the site for more information on commercial, industrial, multi-family and institutional electricity:

http://dwmcknight.emexpower.com/

If you are interested in finding the best energy provider, please contact us.

I've finally started reading The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb. In this 2007 book, Taleb explains how extremely unusual events can have a disproportionate influence on wealth and fame.

I was somewhat surprised to find a reference to the Austrian school of economics in this book. Taleb explains how both Austrian and Neo-Keynesian economists criticize mainstream, or Neo-Classical mathematical, economists for their failure to consider events that lie beyond one or two standard deviations from the standard normal distribution. He goes on to say that the two schools address this failure in different ways: the Neo-Keynesians believe that a government must address these issues whereas the Austrians believe that only a free market can address them. Unfortunately, he leaves the discussion at this without further comment.

The vital distinction is that the Neo-Keynesian approach relies on a government that is omniscient. The government can enact a law or regulation that addresses the problem but, assuming that the law is universally  enforced, everyone within the government's jurisdiction is forced to address the issue in exactly the same way. The Austrian approach permits a multitude of responses from many different market participants depending on their particular circumstances. Many of these will fail, but those that succeed will be copied by others and proliferate.

Take the example of talking on a cell phone while driving. There are undoubtedly times when this can be very dangerous. The TV show Mythbusters had an episode in which they drove through an obstacle course while answering arithmetic questions over a cell phone and the performance was poor. Contrast this, however, to the real life conditions. In heavy traffic, driving conditions can resemble an obstacle course but driving on a deserted, limited access highway requires far less attention. Similarly, many, if not most, cell phone conversations require less mental concentration than solving equations.

The Neo-Keynesian approach to this dilemma is to pass a law prohibiting cell phone use while driving. This, they believe, will reduce the risks. The problem with this is that it doesn't permit a variety of responses adapted to particular circumstances.

If someone is driving a relative who has suffered a heart attack to the hospital and needs to notify someone of the situation, the immediate care of their loved one might be worth the risk of being on the cell phone while driving. For someone driving long distances in light traffic, talking on the cell phone might actually help to keep them alert. Law enforcement has no hope of being equipped to address the competency of every driver in every traffic condition and the importance of every business or personal cell phone conversation.

The Austrian approach is to allow each driver to evaluate his own situation. Under these conditions, there may well be some accidents on the part of drivers who don't manage to successfully manage both tasks but these drivers will likely learn from these mistakes. The important point is that each driver will have the opportunity to evaluate each situation and that each driver is far more qualified to do so than any legislator.

An interesting aspect of the Neo-Keynesian approach is that most people who take it seem to want to exempt themselves from their own regulations. No one has proposed that police officers refrain from talking on their mobile radios while driving. Some time ago, a guy told me that guns should be banned but that he should be able to own one. It seems that this mindset trusts itself but has a deep mistrust of all other people who aren't part of the supposedly omniscient government.

The Neo-Keynesians are right to criticize the rigidity of the Neo-Classical economics but fail to account for the complexity of human action. Because of this, Taleb should recognize that the two schools of thought have very little in common. 

Since 1990, I've had a fascination with the application of the principles of the Austrian school of economics to the valuation of assets. I have finally started writing a book on the subject. I anticipate that it will take some time to complete the book and I welcome any ideas that you might have.

I will be giving several presentations on environmental issues related to real estate at the Suburban West REALTORS® Association. The first of these will be Environmental Concepts in Commercial Real Estate: An Overview of Current Issues. I will be presenting this before the Commercial/Investment Marketing Exchange on Friday, April 8 from 8:00 to 10:00 am and there is no charge.

Here is their web page address:
http://www.suburbanwestrealtors.com/sem_exchange.htm.

In the next two presentations, I will be teaching the Values of Green Class. This class addresses valuation issues related to residential real estate. It qualifies for credit for real estate appraiser, broker and salesperson continuing education and for continuing legal education (CLE). The classes will be on Friday, May 6 and Monday, June 13 from 9:00 am until 5:00 pm. I'm not yet sure what the cost of the course is.

Here is the contact information for the Suburban West REALTORS® Association:

Suburban West REALTORS® Association

Malvern Executive Center 100 Deerfield Lane, Suite 240 Malvern, PA 19355

Phone: 610-560-4800 Toll Free: 1-866-495-SWRA Fax: 610-560-4801

Email: info@suburbanwestrealtors.com

We have finally posted a working version of our property tax appeal calculator on the Articles page of this web site. Please try it out and let us know what you think of it. We will continue to work on improving it.

It turns out that the technical difficulties of creating our tax appeal calculator are greater than we anticipated. Since time is running out to file tax appeals in some Pennsylvania counties, we've decided to post the average sales prices per square foot for the state of Pennsylvania for various property types. If you divide the assessment of a property by the current level ratio for the county in which the property is located and then divide this by the number of square feet of building area (or land area for land) and the result is substantially higher than the mean sale price per square foot listed below, you should contact us to discuss a property tax appeal.

Office: $96.02
Flex/R&D: $62.48
Industrial: $35.49
Retail: $93.21
Shopping Center: $92.40
Multi-family: $48.05
Hospitality: $39.02
Land: $1.06
Health care: $42.35
Sports & Entertainment: $181.12

The Marcellus Shale region on Pennsylvania, which includes Tioga and surrounding counties, is shaping up to be a prime opportunity for investors in Pennsylvania real estate subsurface rights. This is a major source of natural gas and is the closest to the northeastern U.S. We have one of the hottest summers on record and, while natural gas is not used directly for cooling, it is the cleanest viable source for electric power, which is used to power air conditioners.

We'll be elaborating on this in future posts.

From CFO Magazine:

As a means of improving the performance of banks and making them more resilient, the BIS clearly favors stronger capital requirements and less leverage. Proposals by the Basel Committee on Banking Supervision include tighter rules for core tier 1 capital, an increased capital requirement for trading books, and a borrowing ratio that caps bank assets relative to tier 1 capital.

As indicated in our article "A Tale of Two Markets", many banks are already facing challenges maintaining tier 1 capital. This would exacerbate the situation.

Adams	23.7
Allegheny	86.2
Armstrong	36.1
Beaver	29.9
Bedford	23.7
Berks	70.1
Blair	8.9
Bradford	34.0
Bucks	10.9
Butler	13.7
Cambria	35.5
Cameron	32.5
Carbon	36.8
Centre	28.9
Chester	55.4
Clarion	26.3
Clearfield	18.9
Clinton	96.9
Columbia	27.1
Crawford	36.0
Cumberland	80.1
Dauphin	70.6
Delaware	64.2
Elk	39.7
Erie	81.8
Fayette	81.4
Forest	23.5
Franklin	12.3
Fulton	29.1
Greene	84.6
Huntington	13.2
Indiana	17.6
Jefferson	53.2
Juniata	17.0
Lackawanna	17.0
Lancaster	75.2
Lawrence	84.8
Lebanon	14.2
Lehigh	32.2
Luzerne	99.7
Lycoming	82.7
McKean	84.6
Mercer	34.2
Mifflin	47.2
Monroe	15.8
Montgomery	56.1
Montour	81.4
Northampton	31.9
Perry	69.5
Philadelphia	32.0
Pike	20.4
Potter	39.2
Schuylkill	41.6
Snyder	19.9
Somerset	35.2
Sullivan	67.8
Susquehanna	34.3
Tioga	73.7
Union	77.4
Venango	93.5
Warren	34.0
Washington	17.5
Wayne	72.2
Westmoreland	23.1
Wyoming	21.9
York	79.9

The filing deadline for Pennsylvania property tax appeals is September 1. Before filing, most taxpayers consult the current level ratio. This is the ratio between the sales of real estate in each county and the assessments of those same properties (actually, assessed values divided by sales price). The assessed value of a taxpayer's property is divided by this ratio in order to derive the assessor's opinion of the property value and provide a benchmark for the taxpayer to use in considering whether or not to appeal their assessment.

By law, the Pennsylvania State Equalization Board is required to publish the current level ratios for the year by July 1. They usually publish these in the Pennsylvania Bulletin but the last issue before the July 1 deadline was published on June 26, and the ratios are not in it. CapStruc Valuation has emailed the Equalization Board, asking why the ratios were not published in the Bulletin and when and where they will be available. We'll keep you posted as we find out more.

Once this issue is resolved, we will be posting an assessment appeals benchmarking calculator to assist taxpayers with commercial and industrial properties in deciding whether they should pursue an appeal.

For months now, lenders have been very lenient with borrowers who fall behind on payments. They have been extending and restructuring loan terms in a practice that has become known as extend and pretend in order to avoid foreclosing on properties.

Meanwhile, many private equity funds have been created to capitalize on distressed properties that they anticipated would find their way into the market.

Now, many of the private equity funds have given up on finding distresses properties and are returning their funds to investors. As a result, when these assets finally do have to be sold, there will be fewer buyers available.

Buried underneath the news of 10 minutes of extreme stock market volatility that most people didn't even know about until it was over was the Federal Reserve's success in sidestepping a vote on a watered-down senate amendment to audit the Fed. The amendment was co-sponsored by 23 senators, almost a quarter of the entire senate. It was supported by a diverse spectrum of organizations, from the AFL-CIO to the Citizens Against Government Waste. Nonetheless, the Fed managed to avoid even a vote on the bill.

The Fed's argument is that any increases in the breath of its audits would undermine its independence. They say that it would be more difficult for them to raise interest rates in order to head off inflation. The argument rings hollow when the Fed has maintained a Fed funds rate of effectively 0% for several months.

"Pay no attention to that man behind the curtain." "Do not arouse the wrath of the great and powerful Oz."

WASHINGTON (AP) -- The Federal Reserve adopted a plan on Friday allowing banks to set up the equivalent of certificates of deposit at the central bank. The move will help the Fed mop up money pumped out during the financial crisis and prevent inflation from taking off.

Under the plan, the Fed will offer so-called "term deposits" that will pay interest. Doing so will provide banks with another incentive to park their money at the Fed, rather than having it flow back into the economy.

Once the economy is on firm footing, the term deposits program will be one of the Fed's tools for tightening credit.

The Fed said the announcement has "no implication for the near-term conduct of monetary policy."

The plan doesn't come as a surprise. The Fed has been working on it for months.

Now that the economy is recovering from a deep recession, the Fed is getting its tools ready to soak up the unprecedented amount of money it injected into the economy during the crisis. The Fed's balance sheet has ballooned to $2.3 trillion as the result of its efforts to nurse the economy back to health.

The Fed said details about the program would be provided later.

The Fed has proposed that the interest rates paid on the term deposits be set through an auction mechanism. Banks wanting to hold a term deposit would bid in regularly scheduled, competitive auctions, where the lowest rate would prevail. The Fed said it anticipates that the maturities of the term deposits will be six months or less.

In coming months, the Fed hopes to conduct "small-value offerings" of term deposits to make sure operations go smoothly and to give banks an opportunity to get familiar with the program.

As the article indicates, this new Fed tool has been in development for several months. The Fed thinks that it can use these and other recently developed tools to can clamp down on the inevitable rapid inflation that results from rapid expansion of the money supply. The problem is, none of these new tools have been tested. It's like flying a pilot model test aircraft with a full load of passengers, only the passengers comprise everyone in the world.

Back in 2007, Palm, LP converted an old industrial property in Phoenixville, Pennsylvania into the Franklin Commons multi-tenant educational, corporate, and recreational facility. This was the first time that a private developer has transformed a brownfield site into an educational mall. Now, 80% of the finished space is leased to educational tenants such as the Renaissance Academy charter school, Rock & Roll After School, and the Facetime Performing Arts Studio.

A portion of a property in South Coatesville, Pennsylvania owned by ArcelorMittal Steel has been leased to the Graystone Academy charter school for several years.

Now, Mountain State University has purchased the failing Martinsburg Mall in West Virginia and plans to convert at least 13,000 square feet of the shopping center's vacant space into classrooms and conference areas.

Educational institutions might be an overlooked but potentially lucrative opportunity for those trying to lease vacant space.

Are you wondering why it's still so hard to get a mortgage on commercial real estate? We explain it all in A Tale of Two Markets.

If you took our advice in February, 2005 and invested in multi-family properties, you've made out pretty well. The latest Marcus & Millichap survey (free registration required) indicates that the  vacancy rate in the greater Philadelphia area is still just 6.6%.

New empirical research into household formation, and how it relates to multi-family markets, comes from the Mortgage Bankers Association. Many of the results are not surprising. New households are formed when children move out of their parents home, when couples separate, and when individuals begin to live seperately after sharing a household. More highly educated people are more likely to form new households. People who were moving were more likely to rent in 2008 than in 2005. Unemployment depresses the formation of both owner-occupied and rental households.

There are, however, some surprises. The first is that unemployment depresses both owner-occupied and rental household formation by the same amount. The second is that, while children living with parents with greater wealth are more likely to form new households, children living with parents having higher incomes are less likely to do so. Also, the rate of household formation falls less among immigrants than among the native born population during recessions.

This report should prove useful for residential market analyses for years to come.

It's no secret that commercial real estate investments have been performing poorly lately. Office vacancy rates continue to increase and retail space continues to drain occupancy. One often overlooked sector, however, is showing definite signs of recovery.

The Institute for Supply Management reports that economic activity in the manufacturing sector expanded in March for the eighth consecutive month. Accelerating growth in new orders, production, supplier deliveries and pricing can only be positive for industrial real estate.

The indications are that, almost 2 1/2 years into our economic troubles, everyone is finally being forced to replace goods that have simply worn out. The fastest growth is in the apparel related industries, followed by electrical components and appliances & components. With flagging business conditions, many have been reluctant to replace these old goods. That is no longer an option.

Industrial real estate also tends to be more responsive to changes in the economy than other types. The lead time required to construct an industrial building is much shorter than for hospitals or hotels. The result is that, when economic conditions decline, industrial construction stops quickly, while other types of projects are so far along that they have to be completed. This leads higher vacancy rates for other types of property.

In looking for industrial investment opportunities, it is important to take into consideration how properties fit into the supply chain of various manufacturers. Warehouses located near major ports have become increasingly popular in recent years as the volume of imports have increased. The layout and design of the building is also very important. A layout that permits a smooth flow of goods through a manufacturing process or through the receiving, warehousing and shipping functions of a warehouse can result in cost savings that mean the difference between a profitable or non-profitable operation.

Conditions always vary from one market to the next, but alert investors should keep an eye out for opportunities in industrial real estate.

The latest jobs numbers came out this morning and all the CNBC commentators were mystified that far fewer census workers had been hired than in previous censuses. There's a simple explanation.

The largest group of census workers are enumerators. These are the folks who knock on your door and personally ask you the questions if you haven't previously mailed in your census form. For the 2000 census, those who wished to be enumerators were required to attend a couple hours of training. They were then given a tote bag containing a list of addresses that had not been counted in the blocks and lots that they were responsible for and bundles of short and long forms to fill out. This was all that was required to be an enumerator in 2000.

This year, prospective enumerators have to take a test containing 28 questions before they can even be considered. There is no simple pass or fail on this test. Instead, the test grade is used as one criteria (along with minority, woman or veteran status and several other factors) in determining who will be given a phone interview. Those that are selected after the phone interview are then required to take four days of training before they are ready to hit the streets.

The 2010 hiring process obviously takes much longer than the 2000 process did. Nonetheless, because of increased resistance to filling out the form, it is likely that fewer people sent theirs back. So eventually, more enumerators will be needed than in prior years. This will tend to lower the unemployment rate in the coming months. However, since the enumerator job is part-time, temporary, and performed by people who are more effective at other jobs, the underemployed number will remain about where it is. The unemployed number will jump back up when the census is completed.

So, we've scooped CNBC on this one and now you know what to expect in the next year or so regarding the employment numbers.

Blog here.

A lender recently asked me what I'm sure has become a common question:

"How do I deal with multi-tenant properties that have high vacancy? If I capitalize their current income, it doesn't account for the potential of the vacant space to lease in the future and the result is a value that is too low. If I capitalize the potential income of the property as if it was fully leased, it doesn't account for the vacancy and the value is too high."

The answer is that this problem can be solved but, unfortunately, it requires more than a simple direct capitalization. Direct capitalization rates can be modified to take into consideration changes in income, in either a straight line or constant ratio pattern, but these changes have to occur in perpetuity.What we are looking at here is an increase in income that only continues until the property is fully leased (or reaches a market vacancy rate). This requires a four-step procedure.

The first part of this process is a demand analysis. The analyst must forecast how much space of this particular type will be needed in the coming months and years. For a retail property, this would involve forecasting total retail sales and then dividing it by the required sales per square foot. For an office property, it would involve forecasting office worker employment and dividing this by square feet per employee.  

The next step is to analyze current and future supply. This includes both the space available now and the space that is under construction.

Pairing the forecast supply and demand for each period gives an accurate picture of future space needs. It is then just a matter of figuring out how much of these needs the property in question will capture in order to create a lease-up schedule for the property.

Multiplying the square feet of leased-up property by the market lease rate for each period and discounting the resulting net operating income to present value at a market discount rate will give us the market value of the property. The NOI for the first year can then be divided by the market value in order to arrive at a direct capitalization rate, if desired.

This process is obviously much more complex than simply dividing the latest year's NOI by a market cap rate, which is why this lender also expressed frustration in not knowing what the appraised value would be before receiving the appraisal. Nonetheless, it's the only way to properly analyze these properties.

 

I've been involved in an interesting discussion on the Mises.org web site. The thread is at http://mises.org/Community/forums/t/13141.aspx. Here is the original post from Fephisto:

I was doing as I usually do when I get depressed, and was checking out emerging technologies on Wikipedia.

I then came upon this:  http://en.wikipedia.org/wiki/In_vitro_meat

I believe the idea is described well as "Growing Sheets of Meat".  It would dramatically decrease the price of meat.  And so, I got to thinking, say this technique started working well with our bovine friends.  For the purposes of argument, all bovine meat can be cultured in giant vats, with the same taste/health-quality as regular meat; and for a significant fraction of current meat prices.

But, for the purposes of argument, say the same situation had not occurred for the other products we get from cows.  Such as leather, jelly, etc..

What would happen to the price of leather?

I would think the price of leather would rise.  If we assume that the price to take care of a cow is the same, then after some market clearing the other products one gets from a cow that can not be mimiced [sic] by this culturing technology would have to have higher prices to offset the lower amount of revenue from the meat of the cow.

But, this strikes me as very odd, since in general, technology is supposed to decrease the price of goods, isn't it?

My reply:

Interesting question. If you think this through, I think that you'll agree that in a free market the price of leather almost certainly has to fall.

Under current conditions, and in-line with your assumptions, the discounted marginal value product of beef cattle is beef. This means that cattle are produced for the beef that they provide, not for the skins that serve as the raw material for leather. The excess skins that are not purchased by the leather industry are discarded or sold for even more submarginal uses.

With in-vitro meat, the demand for cattle is reduced. Depending on the specifics, it might even be reduced so far that skins replace beef as the marginal product. This will free up resources (land, labor, cattle feed, etc.) that were previously used for cattle production. These resources will be employed by their next marginal uses. These next marginal uses must be less in demand than production of beef was, otherwise these resources would already have been deployed in these other uses. The price of these newly freed resources will thus be less than what it was under previous conditions. The leather industry will thus be completing for less expensive resources and their costs will fall. The reduced costs will eventually result in increased production and lower marginal utility for the consumer.

Revenue per unit of beef will go down but the in-vitro producers won't care because they care about total profits. Costs will decline faster than revenue for these companies, resulting in higher profits during the readjustment process to an evenly rotating economy. (see Man, Economy, and State, Chapters 7 and 9)

With the decrease in the price of beef, the prices of substitutes or near-substitutes will go down. Everyone will have more money but we have no way of knowing exactly how they will change their purchasing decisions as a result. They might replace some chicken with beef or buy higher quality beef. Then again, they might decide for health reasons to replace grease burgers with tofu.

Finally, this all requires more than just technology. It also requires the capital to build in-vitro production facilities.

Here is the reply from Fephisto

Alright, I think I have a better way of explaining how I'm thinking about this.  Our conclusions are exactly opposite, but I don't exactly see where either goes wrong.

 

Here:

1)  Supply and Demand of cattle remain initially at equilibrium.

2)  In-vitro meat technology is introduced, the demand for beef-cattle decreases as people eat in-vitro meat instead of cow meat.

3)  Assuming that the ranchers are at levels of competitive pricing, the price/MR decreases below ATC.  Which in response, causes ranching firms to go out of business, and bringing the supply of cattle down.

4)  However, the introduction of in-vitro meat has not affected the demand for cow-skins (I'm assuming for the purposes of argument that in-vitro leather hasn't been invented), and yet the supply of cattle and thus cow-skins has decreased, causing an increase in leather prices

And my reply:

I think you're going all neoclassical on me.

I'm not sure what you mean by ATC, but I'm going to guess that this is average total cost (or something similar). If this is correct, then you're buying into two neoclassical fallacies. First of all, the fact that this is the average cost means that some ranchers have lower costs and others have higher costs. With lower prices, those with above-average costs will be going out of business, bringing the average cost down.

Secondly, and this is a critical point, costs don't determine price. It's the other way around. The ultimate determinate of value is the marginal utility of consumers. At this point, however, we're in the middle of the production process, so we have to look at how cattle producers can best serve their customers.

The only remaining cattle producers are those that can produce cattle for less then the cost of the cow's leather. All of the employees of the sub-marginal producers want to work for the remaining producers, so labor costs are down. The land owned by the sub-marginal producers is available for sale at lower prices, so land costs are down. The costs of electric fencing, cattle feed, large animal veterinary services, and other capital costs are also down. In order to compete with the other super-marginal producers, each super-marginal producer has to lower its prices.

So, the revenues of the most efficient providers has declined but their costs have declined even more, leaving them with larger net profits. The price of leather has gone down.

 

We'll be posting comments on current events related to capital structure, economics and finance here several times a week. Please check back regularly for the latest reflections.