Site Rating Defence Alliance

I've been longing for good news and it's the Irish that bring it.

2009-10-12T15:48:00.009+11:00

I posted this comment in 'Smart Taxes Network' comment section. I may have rattled on a bit as an article comment, but it is in context. I'm sure you'll agree, this decision by the Fianna Fail and Green Party coalition is great news, for Ireland. What wonderful work the economist Dr Constantin Gurdgiev must have done to persuade those in politics who are normally kicking and screaming and hissy fitting on this issue.

Many in Ireland and elsewhere would know the adage known as Murphy's law

I never had a slice of bread,
Particularly large and wide,
That did not fall upon the floor,
And always on the buttered side.

The law's name supposedly stems from an attempt to use new measurement devices developed by the eponymous Edward Murphy.

A further iteration has evolved to that of "Dora Murphy's Law".

In the Lands tribunal for Northern Ireland Belfast Dec 1988 Dora Murphy did challenge the imposed NAV tax increase.

In evidence the District Valuer assessment tax increase was specified as being attributed to her improvement. "full central heating now valued".

As with windows, chimneys, a second storey, the history the world over is full of examples where behaviour is changed as a consequence of taxes on peoples dwellings and commercial premises.

In Dora's case to validate her claim, of tax gouging, she made comparison with surrounding dwellings on their improvements for the court to further waste its time. It is this self reinforcing process of tax justify's tax. Because the tax is legal any and all forms of inquiry into the behaviour of making improvements is justified by due process of the courts. Now the neighbour's assessment's are brought up to date with supplementary valuations as to the quality of their improvements so the tax collection process is self reinforcing by the 'disclosure in proceedings' of neighborhood improvements.

Herein proves that taxes maybe legal but they are not moral as the change in the behaviour as a consequence of the impost is self evident and to the detriment of the locality as they detract from performing maintenance. Cornered public officials do not dispute this reality. Many in private conversations with me and as a response to providing public revenue modeling services, even going as far as to say: "the imposition of taxes on production and consumption at any level is a political decision not an economic one".

Dora Murphy's Law is I guess, "If I'm been taxed, then so shall you be!"

So we all know what needs to be done. RATE THE SITE RENTAL OF LAND.

Buildings aren't rented they are hired by occupants. And taxed by governments and the people in them and that has to stop if an economy is to be achieved instead of the maintenance in public policy of the monopliconomy.

Ninety-five percent of public revenue systems that are attributed to the land ie Land Tax, are a quasi title-holding tax for some, while the majority of land in district is exempt from contributing to the public purse due to political engineering for perceived rights of some at the expense of the majority who don't enjoy the same privilege.

Now in 2009, the time has arrived where spacial mapping overlay to revenue analysis can measure what is the suppression of economic activity as a consequence of building taxes to the private stock. The genuine economic behaviour of the populous as a consequence of tax policy is measured in the tens of millions of dollars on the dwelling values in the hundreds of millions of dollars at the municipal level.

The profession of this industry is termed economology to show that economics is a taxed based society where economology is a rent as revenue based one.

Watch the indicators in the region where this site value revenue measure is being implemented as history will show over the next 10 years it will outperform neighbouring locales which do not enjoy the same level of economy.

New Reading List

2009-08-05T05:49:00.000+10:00

Municipal Origins History of Private Bill Legislation by F.H Spencer 1911
The Blue Book: Classification and Incidence of Imperial and Local Taxes 1899
Prof Edward Cannan's:History of Local Rates in relation to the Proper Distribution of the burden of taxation. see also of interest, The History of Local Rates in England 1895
The Economic Policy of Colbert by A.J Sargent, M.A., 1897
The English Peasantry and the Enclosure of Common Fields by Gilbert Slater 1906

Capital Value Rating tax to Come under Public Scrutiny

2009-08-05T04:52:00.000+10:00

Re-editted: Capital Value Rating tax to Come under Public Scrutiny
By Far North District Council
2 October 2008, 7:29PM
NORTHLAND
A major initiative is about to be launched to engage the community in a comprehensive review of the Far North District Council's land value rating policies.
 This will be the first detailed analysis of the council's predominant funding base since the government's rationalization of territorial authorities in the Far North in 1989.
 The review will look at the advantages and disadvantages of both the current system based on land values and the new preference of the vested interest signaled earlier this year for a change to ~~capital value rating~~ building taxes.
 The council's has no intention is to establish a fair and equitable rate collection system which recognizes the economic and social diversity of the Far North and the community's ability to pay by the choice of location preference.
 Step one of the process will be to set the scene for a ~~new rating~~ taxed environment and stimulate widespread community ~~discussion~~ confusion on the range of ~~options~~ taxes available, including options for the use of targeted ~~rates~~ taxes and differentials carte blanche.
 Step two will be to refine a firm proposal for inclusion in the democratic ~~public consultation~~ ignoring process which forms part of the Long Term ~~Council Community Plan review~~ global public administration the world over.
 Community ~~discussion~~ indoctrination papers outlining the ~~options~~ mechanics of boffins are being prepared, including a website link through which people can look at the deminishing rating scenario on their own properties under both Land Value and Capital Value options, where historically every council prepared analysis corrupts the figures to secure diversified revenue source, whereas the community has only one limited recourse & is ineffectual in the long term.
 The comprehensive ~~consultation~~ avoidance, evasion,misrepresentation, subterfuge programme will be openly control to community feedback throughout November.
 Revenue & Policy Manager Chris Ellington says the intention is to settle on Capital tax base ~~a sustainable rating~~ policy which complies with legislation and which satisfies the majority of landbanking, Real Estate speculators,pen pushing accounting, lawyers, finance engineers of ratepayers.
 "The main ~~feature~~ game will be an imposition ~~consideration~~ of a change in the general rate base from land value to capital value tax. ~~But~~ we will ~~also be looking at activities which might better be~~ funded by targeted taxes ~~rates~~, how the ~~Uniform Annual General~~ Charge ~~(UAGC)~~ component ~~might be changed and how general rate~~ differentials ~~might~~ will be applied," he said.
 "We want to finish with a robust, transparent, practical, fairy and equitable rating system that will carry the council into the future.Trust me, no really trust me because I care.
 "Whatever system is finally adopted must relate to the district as a whole, acknowledging that there will be slum induced impacts on some properties which cannot be universally addressed. The test will be to keep anomalies hidden to the minimum favoured few through the use of targeted taxes~~rates~~ and A. Hitler like differentials, while ~~without~~ creating a formula so complex it will be impractical to administer," he says.
 There has been a progressive shift in recent years on how land price through the absence of rates are impacting on ~~different sections of~~ the economic community, driven by increasing property ~~valuations~~ prices and a~~n expansion of residential subdivision in both urban and rural areas~~ locking away prime home sites. The particular pump primed problem to emerge has been the huge variation in these land ~~valuation~~ price increases.
 "This was brought strongly to attention in the 2007 revaluations which produced rate increases for many properties in the west and north of the district, while eastern areas enjoyed some rating relief. Less than a cent in the dollar, while income tax and payroll and gst stole the property of wages 680 fold greater times in quantum.
 "The reality is that a general rate system based on land value is always going to be subject to big swings in the level of ~~rates~~ prices on indifferentce to the evidence ~~properties~~ . The impact of revaluations is much less marked with a capital value base," he says because it corrupts the process,you can't value that which is annually being taxed. As window, chimney, attached, C of O, 2nd storey yet planned 3rd story dwelling demmonstrate the world over, taxes on the activity of people is the power to destroy.
 "At issue is whether a capital value ~~rates~~ tax base is a better option, more closely reflects the principle of user pays and better recognizes the ability to pay, or whether a land value base can be satisfactorily modified with the tools available under existing legislation to better reflect what the majority of the community expects of a rating system. To loaded to amend speaks for itself, just read the history of polls. NZ is special in this regard.
 "The arguments (but not access to uncorrupted data for modeling) for and against will be discussed in the consultation programme which will go out to the community next month (November)," he says. Expensive Waffled disinformation.
 Among other issues which the review will address are:- to confuse matters further.
 How some costs might be funded by those who benefit the most i.e. how extensively should the 'user pays' principle be applied and to what activities and services?  Why do we have to pay for services we don't use?  How should cost be shared between different sectors –i.e. the potential for differentials between commercial/residential/farming/tourism land uses?  Is a UAGC necessary?  Should there be a targeted rate for roading?  Should there be targeted rates for waste management/stormwater/sewerage/water?  Should ward rates be included in the general rate? Following this argument the train traveller is the beneficiary not the store holder out front of the station. See the above link for the original ability-to-pay in taxation theory was espoused before neo conservatives got a hold of the phrase. Like many others, common ground, middle ground, safe as houses, draw a line in the sand. etc
- No jobs for youths, say bosses
- Elderly 'silent victims' of recession

Reading List 13/07/09

2009-07-13T05:59:00.000+10:00

Tax Research UK » Tax injustice in the UK
By Richard Murphy
Council tax is blatantly regressive. So is VAT, as overall are indirect
taxes as a whole. Is it any surprise that the Big 4 firms, the Institute
for Fiscal Studies and other big business lobbying groups are so keen on
them? ...
<http://www.taxresearch.org.uk/Blog/2009/07/30/tax-injustice-in-the-uk/>
Tax Research UK
<http://www.taxresearch.org.uk/Blog/>

Tory Jacob Rees-Mogg embarrasses Conservative Council (again)
By Hadleigh Roberts
Hinchcliffe was at the time the politically-restricted Tory group
researcher on B&NES (as the Private Eye article explains) – this means
banana skin-prone JRM has benefited from a Council officer, paid by the
council tax payer to ...
<http://hadleigh.eu/2009/07/tory-jacob-rees-mogg-embarrasses-conservative-council-again/>
Hadleigh Roberts

Council tax rises to rescue local government pension schemes?
FT.com Blogs
by Jim Pickard The man who runs the Local Government Pension SCheme has
warned that public sector pensions need radical reform to meet critics who
believe ...
<http://blogs.ft.com/westminster/2009/07/council-tax-rises-to-rescue-local-government-pension-schemes/>
See all stories on this topic:
<http://news.google.com/news/story?ncl=http://blogs.ft.com/westminster/2009/07/council-tax-rises-to-rescue-local-government-pension-schemes/&hl=en>

Tackle pensioner poverty, urge MPs
Public Finance
Local authorities could also take action to increase the take-up of housing
and council tax benefit, the report said. The committee said it was ...
<http://www.publicfinance.co.uk/news/2009/07/tackle-pensioner-poverty-urge-mps/>
See all stories on this topic:
<http://news.google.com/news/story?ncl=http://www.publicfinance.co.uk/news/2009/07/tackle-pensioner-poverty-urge-mps/&hl=en>

Mayor Peyton Vetoes City Council Tax Vote
First Coast News
JACKSONVILLE, FL -- Mayor John Peyton has fired back in the battle to
balance the city budget. The Mayor vetoed City Council's amendment to keep
the millage ...
<http://www.firstcoastnews.com/news/topstories/news-article.aspx?storyid=142486&catid=3>
See all stories on this topic:
<http://news.google.com/news/story?ncl=http://www.firstcoastnews.com/news/topstories/news-article.aspx%3Fstoryid%3D142486%26catid%3D3&hl=en>

Time to scrap such an unaffordable tax
Express & Echo
This was the second such meeting and it became clear that the one cost that
most members found abhorrent and least affordable was council tax. ...
<http://www.thisisexeter.co.uk/features/Time-scrap-unaffordable-tax/article-1204099-detail/article.html>
See all stories on this topic:
<http://news.google.com/news/story?ncl=http://www.thisisexeter.co.uk/features/Time-scrap-unaffordable-tax/article-1204099-detail/article.html&hl=en>

Peyton vetoes Council's tax rate cap
Bizjournals.com
Mayor John Peyton has vetoed the bill passed by City Council Tuesday night
that would have put a ceiling on the tax rate of 8.48 mills. ...
<http://www.bizjournals.com/jacksonville/stories/2009/07/27/daily30.html>
See all stories on this topic:
<http://news.google.com/news/story?ncl=http://www.bizjournals.com/jacksonville/stories/2009/07/27/daily30.html&hl=en>

Middle class homeowners to be hit by council tax hikes
Easier (press release)
Government plans revealed this week to overhaul the council tax system
after the election will send a chill down the spines of middle class
homeowners, ...
<http://www.easier.com/view/UK_Property_News/General/article-262394.html>
See all stories on this topic:
<http://news.google.com/news/story?ncl=http://www.easier.com/view/UK_Property_News/General/article-262394.html&hl=en>

Mayor Vetoes Council's Tax Bill
News4Jax.com
JACKSONVILLE, Fla. -- The morning after City Council voted down a proposal
to increase the property tax rate by passing a resolution keeping the
current ...
<http://www.news4jax.com/news/20213291/detail.html>
See all stories on this topic:
<http://news.google.com/news/story?ncl=http://www.news4jax.com/news/20213291/detail.html&hl=en>

Cuts or rises: toxic claim 'will hit council tax payers'
Independent
He said: "If we were to settle in one go then it would cost us about a 150
per cent rise in council tax, which is unacceptable, cuts of the level
which is ...
<http://www.independent.co.uk/news/uk/home-news/cuts-or-rises-toxic-claim-will-hit-council-tax-payers-1764382.html>
See all stories on this topic:
<http://news.google.com/news/story?ncl=http://www.independent.co.uk/news/uk/home-news/cuts-or-rises-toxic-claim-will-hit-council-tax-payers-1764382.html&hl=en>
Council tax rises to rescue local government pension schemes?
FT.com Blogs
by Jim Pickard The man who runs the Local Government Pension SCheme has
warned that public sector pensions need radical reform to meet critics who
believe ...
<http://blogs.ft.com/westminster/2009/07/council-tax-rises-to-rescue-local-government-pension-schemes/>
See all stories on this topic:
<http://news.google.com/news/story?ncl=http://blogs.ft.com/westminster/2009/07/council-tax-rises-to-rescue-local-government-pension-schemes/&hl=en>

Tackle pensioner poverty, urge MPs
Public Finance
Local authorities could also take action to increase the take-up of housing
and council tax benefit, the report said. The committee said it was ...
<http://www.publicfinance.co.uk/news/2009/07/tackle-pensioner-poverty-urge-mps/>
See all stories on this topic:
<http://news.google.com/news/story?ncl=http://www.publicfinance.co.uk/news/2009/07/tackle-pensioner-poverty-urge-mps/&hl=en>

Mayor Peyton Vetoes City Council Tax Vote
First Coast News
JACKSONVILLE, FL -- Mayor John Peyton has fired back in the battle to
balance the city budget. The Mayor vetoed City Council's amendment to keep
the millage ...
<http://www.firstcoastnews.com/news/topstories/news-article.aspx?storyid=142486&catid=3>
See all stories on this topic:
<http://news.google.com/news/story?ncl=http://www.firstcoastnews.com/news/topstories/news-article.aspx%3Fstoryid%3D142486%26catid%3D3&hl=en>

Time to scrap such an unaffordable tax
Express & Echo
This was the second such meeting and it became clear that the one cost that
most members found abhorrent and least affordable was council tax. ...
<http://www.thisisexeter.co.uk/features/Time-scrap-unaffordable-tax/article-1204099-detail/article.html>
See all stories on this topic:
<http://news.google.com/news/story?ncl=http://www.thisisexeter.co.uk/features/Time-scrap-unaffordable-tax/article-1204099-detail/article.html&hl=en>

Peyton vetoes Council's tax rate cap
Bizjournals.com
Mayor John Peyton has vetoed the bill passed by City Council Tuesday night
that would have put a ceiling on the tax rate of 8.48 mills. ...
<http://www.bizjournals.com/jacksonville/stories/2009/07/27/daily30.html>
See all stories on this topic:
<http://news.google.com/news/story?ncl=http://www.bizjournals.com/jacksonville/stories/2009/07/27/daily30.html&hl=en>

Middle class homeowners to be hit by council tax hikes
Easier (press release)
Government plans revealed this week to overhaul the council tax system
after the election will send a chill down the spines of middle class
homeowners, ...
<http://www.easier.com/view/UK_Property_News/General/article-262394.html>
See all stories on this topic:
<http://news.google.com/news/story?ncl=http://www.easier.com/view/UK_Property_News/General/article-262394.html&hl=en>

Mayor Vetoes Council's Tax Bill
News4Jax.com
JACKSONVILLE, Fla. -- The morning after City Council voted down a proposal
to increase the property tax rate by passing a resolution keeping the
current ...
<http://www.news4jax.com/news/20213291/detail.html>
See all stories on this topic:
<http://news.google.com/news/story?ncl=http://www.news4jax.com/news/20213291/detail.html&hl=en>

Cuts or rises: toxic claim 'will hit council tax payers'
Independent
He said: "If we were to settle in one go then it would cost us about a 150
per cent rise in council tax, which is unacceptable, cuts of the level
which is ...
<http://www.independent.co.uk/news/uk/home-news/cuts-or-rises-toxic-claim-will-hit-council-tax-payers-1764382.html>
See all stories on this topic:
<http://news.google.com/news/story?ncl=http://www.independent.co.uk/news/uk/home-news/cuts-or-rises-toxic-claim-will-hit-council-tax-payers-1764382.html&hl=en>

Reading List 12/07/09

2009-07-12T05:59:00.000+10:00

Low-carbon strategy will raise household energy bills by £200 a year
Council tax banding ... a suitable case for DIY
guardian.co.uk - UK
It claims to be able to do a search on local properties and identify
whether homeowners might be entitled to council tax rebates, sending a
report within 48 ...
<http://www.guardian.co.uk/money/2009/jul/11/council-tax-overcharge>
See all stories on this topic:

Benefits cheat made £17000 false claims - Blackpool Today
Between June 2005 and July last year she illegally claimed £17364 in
income support, housing and council tax benefits. John McLaren, defending,
said his client had no previous convictions. Cheetham's husband had not
lived at the family ...
<http://www.blackpoolgazette.co.uk/blackpoolnews/Benefits-cheat-made-17000-false.5450004.jp>
Blackpool Today - News
<http://www.blackpoolgazette.co.uk/NewsFront.aspx?SectionID=62>

…..Pikeys and Pigs. « And there was me thinking…..
By mummylonglegs
Pikeys don't have to pay things like council tax, etc and if they live in a
really pro-active area they will even recieve the odd party that they will
be paid £60 to attend. Pikeys can sleep safe at night knowing that local
councils are ...
<http://andtherewasmethinking.wordpress.com/2009/07/11/pikeys-and-pigs/>
And there was me thinking.....
<http://andtherewasmethinking.wordpress.com/]

Council Tax Buchanan Clark and Wells Advice needed The Consumer Forums
Hi everyone, I'm new here and looking for some advice. Recently I went to
the council tax office in Glasgow to pay money that was owed to them.
<http://www.consumeractiongroup.co.uk/forum/welcome-consumer-forums/208921-council-tax-buchanan-clark.html>

The source of ability-to-pay pay theory

2009-07-05T05:59:00.001+10:00

Taxation according to ability to pay means, therefore, taxation with the minimum of economic loss to the community as a whole. Hugh Dalton:

Principles of Public Finance, 1923 pp126.

Property bubble leads to crash landing

2009-03-28T00:02:00.008+11:00

Bryan Kavanagh March 28, 2008 - 12:02am THE AGE

WHEN it mattered, the US Federal Reserve, US banks and rating agencies failed the risk-management test — in much the same way that Australia is now failing it.

This is because none of these bodies comprehends the manner in which the real estate market leads the economy. Many considerations flow from this, because businesses and individuals borrow against the value of their property assets. So when real estate bubbles burst and banks and mortgagors are left exposed, analysts flounder with such hogwash as "business cycles and recessions are a natural part of the financial landscape". Another knee-jerk reaction to systemic failure is simply to blame banks and borrowers. It seems anything will do, rather than tackle the fundamental flaw in risk management.

Here is an unyielding truth. A country cannot go into recession unless there has been a real estate bubble. US land economist Homer Hoyt documented the fact back at the beginning of the 19th century. The Land Values Research Group recently defined and studied the effects of property bubbles in Unlocking the Riches of Oz: A Case Study of the Social and Economic Costs of Real Estate Bubbles, 1972 to 2006, which is freely available at www.lvrg.org.au. It concludes that the current residential bubble has hyper-inflated since 1999 and is about to burst, despite sophisticated financial derivatives, hedge funds, collateralised debt obligations, credit default swaps, all brought into existence to "insure" that it not burst. The failure of derivatives will compound the upcoming financial threat.

It is sobering, too, to note that the relative scale of our real estate bubble is greater than that in the US. It is therefore irresponsible and incorrect to blame a potential recession in Australia on some sort of spiritual emanations from US subprime mortgage lending. The truth is that we have an enormous debt bubble of our own and suffer the same vast hole in credit management that has again been exposed in the US. This will resolve itself with extreme prejudice to Australian society and requires immediate attention.

We may only solve the problem by shifting taxes off "goods", such as earning incomes, onto "bads", such as real estate speculation and escalating land prices. This, rather than the Reserve Bank continually raising interest rates, may actually get to grips with inflation and avert the folly of accepting bubble-inflated land prices as "security" for loans.

Although the relationship between Australia's total land values and gross domestic product has varied since 1911, it has averaged 1-to-1. Although it got to 1.56-to-1 in the 1930s Depression, it now stands at a menacing 2.5-to-1. This mirrors situations around much of the Western world, except France, which doesn't put real estate speculation on an untouchable pedestal as we have been inclined to do.

When viewed as a long-term analysis against rising GDP, it can be seen that land price bubbles are neither merely the result of population growth nor the undersupply of residential allotments, as argued on this page (BusinessDay, 13/3) by Alan Moran of the Institute of Public Affairs. Incredible numbers of existing vacant lots and underutilised sites would spill out into a genuine real-estate market if we redressed the imbalance between taxes on productivity and the puny levels of rates and taxes on socially generated land values that fail to deter speculative land banking.

What form should the "tax shift" take? First, we have to turn a deaf ear to the ever-insistent call from self-interested property groups for greater tax incentives, or for council rates and state land taxes to be reduced to a mere revenue appendage, "so that we may continue to provide housing for all Australians".

Rather, to encourage new housing construction and real wealth creation, we need to do precisely the opposite, by removing unproductive payroll taxes, stamp duties and up-front development charges, and recouping these revenues through state land tax systems. At the same time, we should seize the opportunity to reform state land taxes, removing their curious exemptions, thresholds, multiple rates and aggregation provisions, along the lines thoughtfully proposed in Victoria's 2001 Review of State Business Taxes ("The Harvey Report").

Arguably, the best option would be to hand the governance of reformed state land taxes to the RBA as a tool to complement interest rate policy. A single rate land tax would apply Australia-wide to all privately owned land, the revenue therefrom going back to the states and territories in direct proportion to the land values that raised it. By these means, it might be possible gradually to phase out more than rates, land tax and development charges from the 156 taxes recently condemned by the Business Council of Australia. Although a side effect would be to make housing more accessible and affordable for all Australians, the main thrust would be to reduce the private capture of publicly generated land values. This would finally close the loophole in credit management through which truckloads of new financial "products" have been driven. By eliminating land price bubbles, it would no longer be possible to offer bubble-inflated assets as "security" for loans.

If their children are unable to assist them, people who are asset rich and income poor would be permitted to defer their land tax liability by means of a charge on title for the revenue forgone, to be collected when they pass from this world. And if proper arrangements were made for rates and land taxes to be deducted from incomes in instalments, this would not convert them into income taxes, because it is the revenue base that is paramount in producing an equitable revenue system, not the process by which the revenues are collected.

The property lobby puts out the propaganda that rates and land taxes can be passed on in prices. But why should this trouble them, as it so obviously does, if they are able to pass them on in rents? The truth can be found in most economic textbooks: rates and taxes on land are the only form of revenue that cannot be passed on.

If we are to navigate the upcoming recession effectively, the public should understand the integral role played by perverse tax regimes in risk-management failure.

Bryan Kavanagh is a real estate valuer and honorary director of the Land Values Research Group.

First Home Buyer Grant working for whom?

2009-02-28T05:54:00.002+11:00

Victorian Council of Social Service's David Imber writes: I would have thought Richard Farmer would be more careful than to walk into the fog of spin currently circulating in our nation’s media around the first home buyers grant and not report this spin as fact. No-one with any awareness of the history and beneficiaries of the grant should be surprised that its chief supporters -- real estate agents and property developers -- are the very people currently promoting the benefits of the increased grant and then seeking that it be extended or made permanent. It’s just a shame that some in the media and many in government are so uncritically reporting and receiving this news as if it’s fact. The reality is that, rather than benefiting first home buyers, the grant is once again benefiting vendors and developers. All the credible evidence about the grant since its introduction almost a decade ago -- be it from bank economists or housing researchers -- has consistently demonstrated that the grant has gone straight into higher house prices. Given that the grant (in its $7,000 form as well as its stimulus-driven $21,000 form for new stock) is not means tested and broadly available, it is hardly surprising that it's simply allowed vendors to extract more money from first home buyers. And here’s the rub -- the vendors benefiting include all the developers and speculators who now have an increased grant to add to their land banks and staged releases. Investors and real estate agents can now time property sales to ensure that just enough property goes on the market each week, so just enough of it sells, that they can breathlessly report in Monday’s newspapers "property is surviving the boom!" Not to mention the favourite claim (made almost every week of every year) that “now is a great time to get into the market”. The first home buyers grant has no doubt been given to many first home buyers believing it has provided them with the little bit extra they needed to buy their first home. Yet those people forget that almost every other buyer has just increased their budget by the amount of the grant while investors have their own tax breaks to fund a higher purchase price. The grant has been used by the already well off children of well off parents for whom the grant has merely added to the amount that their family has been able to give them. It has also been rorted by those buying property in the name of their spouses, or by a range of first-time investors who have used the grant alongside tax breaks to buy into market. Some of this rorting has been found by State revenue offices, but much has undoubtedly gone unreported. At the same time, the real victims of the housing market, low income private renters, have seen property prices artificially inflated by a grant that actually puts their housing dream further out of reach. The housing market is not a fair and transparent market and the expansion of the grant has only exposed this anew. There is a reason to be concerned that at a time of economic downturn the construction industry is suffering. That is why the investment of over $6 billion into new public and community housing is the right counter cyclical measure (not to mention good, and long overdue, social policy). The $1.5 billion announced last year in expended first home buyer grants that top up the already poorly targeted $1 billion per annum is the wrong strategy. It is poorly targeted industry assistance for new housing and a complete waste of money when spent on existing housing. It would be more honest to call it a government-funded vendor housing payment. Which of course the Government would if it wasn’t such a politically attractive (though misleadingly) named grant. If, as a country, we want to support low and middle income earners entering the housing market then we should do so in a targeted way that helps those who need it without boosting house prices for everyone else. If governments want to subsidise builders and developers then they should do so transparently and see how popular it looks then. The media should look more critically at blatant spin from developers, investors and speculators that purports to protect the very people they’re seeking to make money off. 2009/02/28 David Imber is the Policy and Public Affairs Manager of the Victorian Council of Social Service and was formerly the spokesperson for Australians for Affordable Housing.

Mirvac: land is for hocking, not housing

2009-02-24T06:45:00.002+11:00

Crikey.com - 2009/02/28

Karl Fitzgerald writes: Real estate group Mirvac yesterday admitted what many affordability watchers know: the housing market is manipulated to suit shareholders over householders. Due to the fear that an $81.4m half-yearly operating profit is insufficient, first home buyers will have to pay higher land and housing prices to support Mirvac's Executive Incentive Scheme. Mirvac managing director Nick Collishaw admits to the immense power of land monopolists in Mirvac to delay land releases in existing estates: Effectively what we are doing for the bulk of the projects that we have in Victoria is managing a staged release -- rather than have a release with 100 lots in it, the stage sizes will be much smaller. This behaviour exhibits why Brumby's land supply handout to the property lobby will do nothing to assist affordability. Land and housing releases are manipulated to suit profiteering over people. What difference is there between this behaviour and the alleged Richard Pratt school of price fixers? Have a look at the HIA's Land Supply index and make your own decision. As Australia's affordability epidemic gets left behind in the backwash of the GFC, the genuine land supply issue is that controlled privately by land banking developers. Compounding these issues, the write-offs on Mirvac's investment properties total more than $800 million dollars. Top and tailing the benefits of the system, Mirvac has the power to drip feed land and housing to market such that home buyers of all generations are guaranteed to pay 40% of their income on rent or mortgages. And the government is silent on this market manipulation. Governments at all levels are complicit in the rights of land speculators over and above the future of its people. One need only refer to the recent AEC figures to understand the power of lobbyocracy. For the productive economy to survive, we must push for more effective public finance policy. Higher holding charges on land are needed to force land prices back to affordable levels. Spin-offs include the abolition of payroll, GST and a massive cut in income taxes. Investment in new infrastructure becomes self funding through land value capture. When this occurs, the land and housing market will no longer be seen as a casino. The risk of global meltdowns will be reduced when we no longer have to borrow so much to put a roof over our heads. Speculators will become producers, hopefully funding the inventions needed for a sustainable rather than sprawling society. Relatively speaking, who really benefits from rising land and housing prices?

Consumer Confidence Slips as Home Prices Drop

2009-02-24T06:42:00.002+11:00

By MICHAEL M. GRYNBAUM

Published: April 29, 2008

Americans’ confidence in the economy continued to plunge this month as their homes lost value at the fastest rate in two decades, according to reports released on Tuesday.

The New York Times

The data suggested that the housing slump was far from a recovery and the job market might continue to weaken, ratcheting up pressure on the Federal Reserve, which began a two-day meeting on Tuesday, to take steps to stave off a prolonged slowdown.

Institutes Urge Reforms to Reverse German Economic Slowdown

2007-11-22T07:45:00.001+11:00

Calls for more economic and labor reforms are not what Angela Merkel wants to hear

Leading economic institutes called on German Chancellor Angela Merkel's government on Thursday, Oct. 18, to step up reform and warned that Europe's biggest economy faced slowing growth next year.

The institutes told the government in their autumn report presented in Berlin on Thursday that German growth will slip back to 2.2 percent in 2008 from 2.6 percent this year, with a soaring euro, the global credit crunch and surging oil prices undercutting the nation's expansion rate.

Some economists are more pessimistic and believe Germany will be lucky to reach a growth rate next year of 2 percent. The International Monetary Fund said this week it expects German growth will slip to 2 percent next year from 2.4 percent for 2007.

Thursday's report was drawn up by four leading German economic institutes in conjunction with research groups from other European nations.

Criticism of ineffective reforms

Coming in the wake of criticism by German business about the failure of Angela Merkel's government coalition to press on with economic reform, the institutes said: "Much more additional work needs to be done rather than roll back the reforms so far discussed.

"The labor market reform course of the last few years has not progressed," the institutes added.

The US housing market crisis had a knock-on effect

The report comes as economists attempt to size up the ramifications of the shakeout in global share prices in August following the credit crunch triggered by the US housing market crisis.

At the same time, the institutes joined a growing list of forecasters who have revised down their growth outlook for Germany.

High oil prices, the strong euro and financial market uncertainty will "dampen growth," Roland Döhrn, an economist with the Essen-based Institute for Scientific Research (RWI), told a press conference following the release of the report.

In their last report in the spring, the institutes projected a growth rate for Germany of 2.4 percent in both 2007 and 2008, with strong export demand powering the nation's economic performance.

Export growth likely to decline

Since then, however, the euro has climbed to an all-time high of $1.43 as fears have set in about the US economic outlook, consequently fuelling concerns about the prospects for Germany's key export machine.

The institutes predict German export growth will decline to 3 percent in 2008 from 3.5 percent this year, with stronger private consumption emerging as a key pillar of growth.

The institutes are also forecasting private consumption to grow by 1.5 percent next year compared to just 0.2 percent in 2007.

The release of the institutes' report is expected to lead to the German government also scaling back its growth projections for the nation.

Germany emerged last year from a protracted period of stagnation, with a recent solid growth rate helping to ease the nation's high unemployment.

Larger reduction in unemployment that expected

German unemployment dropped in September

The number of people out of work in Germany fell more than expected in September, data released last month showed, with employers continuing to hire on the back of the economic upswing and years of wage restraint.

The institutes expect unemployment to continue falling to average 7.9 percent in 2008 compared to 8.7 percent in 2007. Germany's jobless rate stood at 10.3 percent last year.

Apart from the RWI, the German institutes involved in drawing up the report included the Kiel Institute for the World Economy (IfW), Halle Institute for Economic Research (IWH) and the Munich- based Ifo Institute for Economic Research.

DW staff / DPA (nda)

Technorati Tags: German, Slow-down

Melb council CEO resigns

2007-11-12T23:56:00.001+11:00

The Chief Executive of Melbourne City Council, David Pitchford is heading for Dubai. (ABC TV)
The Chief Executive of Melbourne City Council has resigned, to take up a position with a property development company in Dubai.

David Pitchford came under fire three months ago, when dozens of council staff were sacked, after an independent report criticised the council's financial management.

Mr Pitchford says the decision to leave is entirely his and the job cuts he ordered were necessary.

"I think that that's a good thing it happened under my watch because it was certainly well and truly needed," he said.

"It hadn't been done for 16 or 17 years and the fact that I decided to do it was a bold and brave move but I stand by the fact that it needed to be done".

Mr Pitchford says he leaves the council in a solid financial position.

"We've got over $3.5 billion in assets, $250 million in cash reserves," he said.

"We just delivered an operating surplus of $174.5 million and the situation couldn't be more sound".

hdgn16

2007-11-03T07:22:00.001+11:00

gettysburg address
Wednesday, September 19, 2007
ALBANY ― Albany Civic Center Director John Mazzola outlined plans to incorporate updated rates at the facility and create a better rate of recovery on tax money spent in what City Manager Alfred Lott jokingly referred to as Mazzola's "Gettysburg Address on the civic center" during an Albany City Commission work session Tuesday morning.

... They were debating tax yesterday morning: reduce the standard rate by 4p, cane the rich, but even that didn't excite them. They talked about VED, LIT, LVT and SVR, and everyone in the hall knew what they meant. But nobody even murmured, still less chanted, "What do we want? Site value rating! When do we want it? As soon as circumstances make it advisable!"
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State home prices expected to drop

2007-10-11T04:42:00.001+10:00

A real estate trade group says next year will see the first decline in more than a decade. By Annette Haddad, Los Angeles Times Staff Writer 9:20 AM PDT, October 10, 2007 Home values are expected to drop next year for the first time in more than a decade and sales will remain slow as California's housing market continues to languish, the state's top real estate trade group predicted today. The median price of an existing California home is expected to decline 4% to $553,000 in 2008, compared with a projected median of $576,000 this year, according to the California Assn. of Realtors forecast. Sales are likely to fall 9% next year, which would be the slowest rate of decline in two years. The forecast by the state Realtors comes as their national counterparts projected a steeper decline this year in existing homes sales nationwide than previously anticipated. The National Assn. of Realtors today revised, for the eighth consecutive time, its outlook of U.S. existing home sales, which are now expected to fall 10.8% compared to 2006. It would be the worst year for U.S. home sales since 2002. U.S. home prices are forecast to drop 1.3% to a median of $210,200 this year. The median is the point where half the homes sell for more and half for less. In California, lower-priced markets will remain especially weak next year thanks to the sub-prime mortgage meltdown, tighter loan-writing standards and discounting by new-home builders hoping to clear their inventory. "Geographically, more affordable regions such as the Central Valley and Inland Empire will experience greater softness in the resale market because of the large number of new homes coming onto the market in recent years," said Leslie Appleton-Young, the state Realtors group chief economist. But she warned that even higher-priced markets, including Los Angeles, Orange County and the Bay Area, where prices continue to appreciate and sales have been more robust, will start to show signs of stress, though to a lesser extent. "Higher-priced regions of the state will react more to affordability constraints," she said. Appleton-Young declined to offer any predictions for the state's housing market beyond 2008. The last time existing California home prices fell was in 1996, when the median price declined 0.5%, according to the Realtors' calculations. In 2003, 2004, and 2005, home prices rose more than 16% year over year. In 2006, home prices started to moderate, rising 6.2%. For 2007, the Realtors forecast a 3.5% price increase to a record $576,000, even as sales volume drops 23%. The biggest factor facing the state's housing market is the rise in the supply of new and existing homes for sale. In August, the Realtors group found that there were so many existing, single-family homes for sale in California that it would take 11.8 months to deplete the supply if no additional houses came on the market. The ample inventory has prompted the normally optimistic Realtors group to discourage homeowners from selling unless they absolutely must. "Now is not the time for homeowners to 'test the waters.' Only serious sellers should put their homes on the market in what will continue to be a challenging sales environment," said association President Colleen Badagliacco. The California Assn. of Realtors calculates its median price based on a sampling of data about existing-home sales supplied by real estate brokers around the state. The data don't include sales of newly built homes. annette.haddad@latimes.com Technorati Tags: California, Price Drop,
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Stressing on mortgages

2007-09-23T15:48:00.004+10:00

Liam Walsh

September 22, 2007 12:00am

JILLIAN Fletcher has been a financial counsellor since 2001 and she's seen how people try to manage "mortgage stress".

"They might turn the Foxtel off, they will stop going out, they will probably cut down on the takeaway," the Lifeline counsellor says. There are other cuts that people suffering "mortgage stress" make to cope with paying hefty proportions of their income to keep up with loan repayments. Insurance might go. "Not only the house, but their personal insurance, their car insurance, those sort of things will lapse -- certainly the rates notices as well," she says. Some even skip dental care or just bulk-up on credit cards to pay for groceries. Unfortunately, she could meet more people doing this in the credit crunch stemming from US mortgage woes. But lower spending on those extras is just one ramification for Australia.

Australia might see greater repossessions, less stock-market dabbling from mums and dads, or prolonged housing market malaise. The prices paid for businesses might dip and competition for takeovers dwindle. If things go really pear-shaped overseas, Australian economic growth could slow. But most see Australia's economy as remaining strong despite global shocks emanating from the US sub-prime lending woes. Such sub-prime loans are basically Australia's equivalent of non-conforming loans (those handed to people with bad credit history or the like). But a swathe of Americans have been unable to repay these debts. This triggered problems with big lenders, flowed to credit markets and spread globally. Only this month, British authorities moved to bail out beleaguered mortgage lender Northern Rock where worried customers queued to withdraw savings.

In the US this week, the Federal Reserve Board cut interest rates by 0.5 per cent to improve fund flows. In Australia, investors were so jumpy that a false rumour about Adelaide Bank seeking emergency funding knocked almost 7 per cent from its share price. That reflected a rough time for other financial stocks, although they rebounded the next day along with the market. But Intersuisse analyst Peter Russell says the volatility might prompt greater reluctance for people to invest new cash into shares. "While you might move your existing exposures around . . . it's difficult to see people adding a lot until the picture becomes a bit clearer," he says.

The cash some Australians have for investing might dwindle with mortgage costs rising. Higher costs have especially hit those using smaller lending institutions, which themselves are facing higher costs for funds. A JP Morgan/Fujitsu report this week said US sub-prime issues and subsequent increased cost of wholesale funding (for lenders) would lead to increased pricing for lending. "This will see the number of Australian households under severe stress rise from 70,000 to 113,000," it said, adding the caveat that banks might actually refrain from passing on increased funding costs.

Mortgage stress should mean less cash to spend, especially on those big-ticket items like plasma TVs. But so far, it hasn't crashed retailers like Harvey Norman which last month reported an "insatiable demand" for the latest technology products. Richard Gibbs, global head of economics at Macquarie, links this to Australia's robust employment market. But sub-prime jitters and higher oil prices will trigger greater caution in customers, he says. Gibbs also reckons less borrowing could sap the housing market. CommSec this week linked a slump in data on home sales -- an 8.6 per cent fall in August from the previous month -- on "the latest rate hike".
Fat Prophets senior equities analyst Greg Canavan says a possible slowdown in the mortgage industry could flow through, more slowly, to consumption because "you're not getting the housing wealth effect from rising property prices". But problems with mortgages and consumption might already lurk in credit cards. Figures from the Reserve Bank this week showed the average credit card balance was $3002 in July -- down from $3014 in June. But Australians still owed $41 billion on credit cards.

Lifeline's Fletcher has seen people boost credit card levels to cope with mortgage stress "to pay living expenses like groceries". The JP Morgan/Fujitsu report said that in 1997, the outstanding amount on a credit card equalled roughly one month's disposable income. By 2007, it was three months' worth. "Emerging mortgage stress is being hidden within the growing reliance on credit cards to increasingly fund day-to-day living," it said.

Intersuisse's Russell also points out that until recently, cheap debt had pumped prices of takeover targets. "But when that's changing, which it is, then prices relax back and the fringe competitors drop out," he says. Despite the gloom, Macquarie is predicting 4.25 per cent growth for Australia in fiscal 2008 and says predictions have not been tempered on any sub-prime concerns. "It doesn't seem to be slowing (growth),"
Macquarie's Gibbs says. The threat to Australia's economy lies in overheating, he says. That would be if wages jumped, economic competitiveness slipped and the RBA needed to avert adding easier credit into the system. But what about increasingly dire sub-prime scenarios? Gibbs says for the sub-prime to really smack Australian growth would require another wave of significant upheaval in US capital markets. That's because the Australian-US economic links are through the financial system and credit markets. "If there was major ongoing disruption there, then that would spill over," he says. But Gibbs feels this has probably been averted due to the Fed rate cut this week and promise of more if needed. Another dire scenario would be a complete "disengagement from risk-taking", he says. Overseas investors in that case could dump the Australian dollar, which is regarded as a risky asset. "We would then see the cost of capital into Australia to support the current account deficit increase enormously and that would really crunch the economy," he says. Gibbs argues Australia's real economic activity is more tied to greater Asia. While some might argue that a US collapse could sap China's imports to America, Gibbs says China has a large penetration into the US which adds to stability.

Fat Prophet's Canavan, however, says there could be pain whether a threat is real or perceived. "Because everyone's jumping on to the resources story based on the long-term China thing, I think any news out of China that might spook the market might have an effect on your bigger commodity stocks or your base metals," he says. Tightening credit could mean tightening lending standards, and Lifeline's Fletcher says some borrowers thought they could transfer from a non-bank lender to a bank's lower rates after a few years. "I would suggest the banks are going to look pretty hard at the clients who are going to want to move over," she says. In that case, counsellors like Fletcher might find themselves busier.
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Homeless get younger

2007-09-23T15:38:00.001+10:00

Mary Bolling

September 21, 2007 12:00am

MELBOURNE'S homeless are getting younger, with more teenagers and families struggling to find a safe place to stay.

A new report by the Lord Mayor's Charitable Fund shows the number of people seeking homeless services jumped 26 per cent in the past five years.

Most are under 35, with many young women and children turning to emergency accommodation to escape domestic violence.

At the same time, charities that provide homelessness support have the highest turnaway rate of any emergency provider.

The report, based on consultation with 11 support agencies, calls for initiatives to get people out of the homeless cycle, including a "homeless hotline" and supported accommodation.

Today, the LMCF will gather many of those providers for a round table on the crisis.

The report and round table follow the group's Heart of Melbourne Appeal launch, which featured local celebrities in a soup kitchen lineup.

LMCF chief Andrew Chappell said that campaign, and the recent rise of the Choir of Hard Knocks, were changing attitudes to homeless people.

"The report lists the statistics, and I don't think it's hard to convince people that it's a tough situation," he said.

"People are really starting to lock into the stories, and realising that homeless people could just as easily be a relative or a friend."

"But the good news from this report is, the agencies know what needs to be done to fix it.

"There is really no need for anyone to be homeless in Melbourne, when we do live in such a wealthy society

"Even if it's complex and hard and expensive, we can really afford to turn this situation around."

Urban Seed is another agency determined to change attitudes. Chief executive Gordon Preece takes school and corporate groups on "Urban Issues" tours, identifying rough-sleeping haunts and syringe bins in city alleyways.

"They see the top end of the city, the opulence of the Paris end of Collins St, compared to the incredible need down the alleys -- and it's literally only a building that separates them," Mr Preece said.

Mr Preece is also keen to highlight the success stories.

Urban Seed's work includes managing Cafe Credo, a free lunch centre that attracts up to 90 people every day.

Old and young, and even a few babies in prams, gather around tables for the midday meal -- and Mr Preece said the family atmosphere gives disconnected homeless people a chance to reconnect.

Mr Preece said family breakdown, drugs, and especially an epidemic of binge drinking, were creating a new generation of homeless youth.

"There is a real binge drinking culture among a lot of teenagers, and parents often aren't equipped to deal with the sorts of drastic behaviour that it triggers," he said.

"So the kid might leave home and stay with friends for a while, but then the friends can't cope with it . . . and often the last place to go is the street."

More drug use is also resulting in more psychosis.

Last week, another survey of homeless people by Melbourne City Council found 56 per cent were between 15 and 34. And 8 per cent said they had children with them -- a total of 20 children with no permanent home.

Net link: www.heartofmelbourne.org.au
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Doors close on new home sales

2007-09-23T15:20:00.001+10:00

September 21, 2007 12:00am

NEW home sales tumbled in August after an interest rate rise exacerbated poor affordability amid a lack of supply, an industry body says.

Housing Industry Association figures show new home and unit sales among Australia's largest builders and developers fell 8.6 per cent in August to 7712 -- the lowest level since January when sales stood at 7963.

Detached home sales fell 8.9 per cent compared with the previous month, to sit at the lowest level since December last year.

Sales of apartments were down 6.8 per cent and continue to display a flat trend.

HIA chief economist Harley Dale said the main catalyst for the fall in new home sales during the month was the Reserve Bank of Australia's 25 basis point interest rate rise to 6.5 per cent at the beginning of August.

He said sales were always likely to fall, with July building approvals down 1.6 per cent, but the rate increase had added to the downside pressure.

"You had these specific factors of a rate rise and uncertainty out of the US on top of a difficult affordability environment," Mr Dale said.

Problems in the US sub-prime mortgage market spread in August to create an element of fear in global credit markets, resulting in a rise in interbank lending rates.

Mr Dale said the outlook for new home sales looked flat due to continued uncertainty about interest rates and global financial stability.

"New home sales are trending down again and a failure to arrest this decline could see sales levels hit fresh lows for the cycle by the end of 2007," Mr Dale said.

"There is a clear risk of another rise in interest rates in 2008."

The HIA survey showed the volume of new home sales was down in all states, with Victoria, NSW and Western Australia the worst hit.

Sales fell 19.1 per cent in Victoria, 8.5 per cent in WA, 7.6 per cent in NSW, 1.8 per cent in South Australia and 0.4 per cent in Queensland.

CommSec equities economist Martin Arnold said the August rate hike had delivered a heavy blow to the housing market.

"New home sales slumped, with prospective homebuyers put off by the further increase in the cost of owning a home," he said.

"The housing hangover is likely to remain for many months yet, as affordability issues plague the market."

The HIA new home sales survey is compiled from a sample of the largest 100 residential builders in Australia.

- AAP
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Homes squeeze hurting

2007-09-23T14:51:00.001+10:00

Ben Butler

September 22, 2007 12:00am

NEW home sales have slumped because of the housing affordability crisis, new figures show.

The Housing Industry Association said sales of new homes across Australia dropped 8.6 per cent in August.

And the mortgage squeeze shows no sign of slowing down in Victoria.

Supreme Court actions by lenders seeking to repossess land jumped by almost 50 per cent to 2700 in 2005-06.

Numbers rose last financial year, with 2734 actions.

Mortgage industry players blame each other for the pain.

Australian Bankers Association chief executive David Bell said non-bank lenders were at fault.

Mr bell said up to 80 per cent of court applications did not relate to banks, depending on the state.

But the boss of leading non-bank lender Wizard, Mark Bouris, attacked mortgage brokers.

"Unfortunately, a large number of mortgage defaults and repossessions can be attributed to a small group of irresponsible brokers and lenders who operate in the sub-prime market," Mr Bouris said.

Mortgage brokers take a commission for acting as intermediaries between lenders and borrowers.

The head of the brokers' peak body hit back.

Mortgage and Finance Association of Australia chief executive Phil Naylor said the blame game was disappointing.

"The reality is there's no information in the statistics that allows any of the finger-pointing to have any credence," Mr Naylor said.

Consumer Action Law Centre director of policy and campaigns Gerard Brody said there had been a drop in lending standards.

"It's been too easy for some lenders and brokers to go out and lend to consumers who can't pay back loans," Mr Brody said.

Some lenders give loans for the purpose of taking borrowers' houses when they cannot make the repayments.
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Reducing Whose Burden?

2007-06-13T04:32:00.001+10:00

Reducing Whose Burden?

Seasoned Lib Dem Conference-goers agree that the tax debate at Brighton in 2006 was one of the best since the Party was formed. The motion was passed by a clear majority, rejecting a 50% top rate of income tax and embracing a “Green Tax Switch” from productivity to pollution, with a call for “further policies on land taxation to be developed, including consideration of the Lyons Review when it is published”. Note that it did not merely ask for existing policy to be further developed.

FPC moved fast and before Christmas re-convened the Tax Commission (TC) that had brought us Fairer, Simpler, Greener (FSG), with a new Chair, to specifically address a number of outstanding issues. The December 2006 FPC agenda paper acknowledged that “by far the most controversial aspect [of the TC’s work] will be the land tax question”. Some TC members saw this as an opportunity to replace our commitment to Local Income Tax (LIT) with a form of land taxation, not necessarily just – or even at all - at local level.

ALTER has long made clear that it doesn’t object to LIT – or ‘localised income tax’, as we prefer to call it – so long as a domestic property tax is retained at national level. As FSG noted, replacing Council Tax with LIT “will leave the UK in a unique position internationally of having no direct taxation of property at all”. Under Mike Williams’ chairmanship in 2006, the TC accepted this would be a very bad idea, confirming in the same paper that “there is good reason in principle why taxation of property should be retained”.

Development had already begun on an alternative proposal from Vince Cable for a national ‘progressive [domestic] property tax’ to ensure the Green Tax Switch wouldn’t be seen as a sham. As it stands (thanks to LIT), our tax policy actually increases the burden on wealth creating wage earners by around 3% - despite Conference asserting that it “supports the principle of using taxes on resource usage to help cut taxes on wealth creation” by endorsing FSG!

The Brighton debate and outcome showed that Conference understands that “‘ability to pay’ can relate to income or wealth or both”, and that it wants tax policies which tap into wealth. And the most important untapped and rapidly growing source of wealth in Britain today is the land under our houses.

Regrettably, it has become ingrained in the minds of the Party’s economically illiterate that “Axe The Tax” means ‘no more domestic property tax’. Even senior figures in the Party have been convinced by their own unsubstantiated propaganda that abolishing Council Tax (CT) whilst introducing a national Land Value Tax (LVT) would be an electoral disaster. This claim is made without any polling evidence. All the Party has ever done is compare LIT with CT. No poll has asked voters if they might prefer a ‘fairer property tax’ to LIT. The limited real evidence we do have, from residents’ surveys conducted in Newbury over the past nine months, clearly indicate that an overall majority of voters would prefer a fairer property tax to all other options, with twice as many supporting this as LIT. “Interesting”, said Chris Rennard on hearing this.

Reducing the Burden is the title of the draft policy paper now emerging from a seemingly semi-detached TC under its new chair Dick Newby. It is highly doubtful whether it meets Conference’s wish to develop new land tax policies, and it will be interesting to see what the Federal Policy Committee (FPC) does about that. The draft paper does at least offer a solution to the duplicity of a 2p Green Tax Switch and a 4.5p LIT rate, which currently raises the overall burden on jobs. Let’s hope both FPC and Conference approve of that anyway!

But it is the absence of any coherent policy on taxing the unearned wealth accruing to the owners of landed property that continues to confound any Liberal Democrat claims to care about the young and economically excluded. Despite acknowledging in FSG that “tax reform should take account of inter-generational [wealth] issues”, there was nothing in FSG - and there remains nothing in Reducing the Burden - that actually does anything to address this.

The arbitrary and widely trailed million pound property tax is there, but it is a sorry shadow of what might have been achieved – without compromising LIT! It smacks of gesture politics and has already been dubbed an “envy tax”. The problem remains that, when CT is axed for LIT, the vast majority of homes will be untaxed. Average prices will rise by over £20,000 and this Party will have further exacerbated the growing generational crisis in affordable housing.

There are 2 other key policy papers also in production that will be debated by Conference this autumn; on Poverty & Inequality and on Climate Change. Although both will no doubt contain worthy attempts at reversing the rich-poor divide and rising global warming, the opportunity for the concurrent Tax paper to lead the way with a coherent fiscal thread now seems certain to be lost. Tax reform is fundamental to tackling wealth inequity and the efficient use of finite resources. Taxing land values is a critical part of the solution. While all 3 papers may nod in the right direction, none seem able or willing to commit.

Who cares? The young do for a start. By a majority of 10 to 1, the 2007 LDYS Spring Conference passed a motion calling for LVT and not LIT to replace CT. The next generation has a vested interest in shifting tax to a sustainable base – economically and environmentally. There are also many Green Lib Dems who will be unhappy to see no further developments on LVT – arguably the “greenest tax of all”. Every other eco-tax, with the exception of LVT, will erode its own yield. They must do, or they aren’t changing unsustainable behaviour!

Just before the TC was re-convened, no less an authority than UN-HABITAT asserted that “LVT is the appropriate instrument for the urgent fight against global inequality and poverty….. Without land tax there is a vast amount of land speculation which is pushing the price of land sky high, making it unaffordable for the poor in cities.” This was part of a contract to develop an on-line Global Land Tool to help public officials understand and implement LVT. It should be ready by August, the product of collaborative work by 30 experts in over a dozen countries, led by an American Green Party activist.

Yet we have a tax policy that will remain unsustainable and unfair to millions, despite two years of discussion and FSG’s highlighting the shortcomings, as well as the solution. A century ago, the great reforming Liberal Budget of 1909 was inspired by Henry George’s seminal work Progress and Poverty – in its very title encapsulating the essential truth: that wealth arising from economic progress which accrues, untaxed, to the ‘owners’ of land or natural resources will inexorably lead to inequality, inefficiency and growing injustice.

Average house prices have been rising by an amount equivalent to twice the average annual take-home wage. No wonder gambling attracts the poor and families in rented housing despair: social exclusion is largely the product of a failure to tax land values. Two hundred years after Parliament ended slavery, will Liberal Democrats wilfully flinch from ending the enslavement by poverty that failing to recover ‘economic rent’ inflicts on asset poor workers?

TC was directed by Conference and FPC to deal with the “practical issues which would have to be resolved to make a property tax workable”. Yet when it came to the scheduled TC meeting on domestic land and property tax, the Chair immediately called for and won a vote to stop ALTER’s detailed paper on the subject even being discussed! Apart from the aforementioned High Value Property Tax, which may or may not be billed in the paper as a step towards LVT, the TC has really only developed our existing policy to replace business rates with Site Value Rating, the local form of LVT. It remains the case that no “further policies on land tax” are in the new tax paper at all.

The first practical issue is the registration and valuation of all land sites. If we embark on LVT/SVR for commercial land only, we multiply the problems for valuers and tax administrators. Far simpler to assess all commercial and domestic land from the outset, leading to a single unified property tax system with no artificial boundaries between residential and non-residential land.

Since Labour came to power, the market value of the nation’s housing stock has tripled to over £3.5 trillion. There has been only a 5% increase in housing stock, so almost the entire rise in value has been due to land – not bricks and mortar. By levying a mere 0.5% annually of the increase in value under Labour (about £1000 on a £300k house) and assuming £100k tax-free ‘Homestead Allowance’, we could raise over £10 billion in revenue, allowing that sum to be cut from income tax and other economically damaging imposts. It would ensure a ‘soft landing’ when the house price bubble eventually bursts and we could aim to maintain house prices thereafter in line with inflation.

We can sell LVT as just, sustainable and economically sound: it needs to be introduced carefully but it is far more important to introduce it now. It would be contemptibly foolish if we allowed our only property tax, however regressive, to be abolished without a progressive replacement. We will have betrayed posterity as well as our Liberal past.

Unless we join up our thinking with LVT, the ‘reduced burden’ of taxes to which the TC’s draft policy paper refers will be enjoyed not by the poor, the young or tomorrow’s entrepreneurs, but by the asset rich, the comfortable and their unproductive tax advisers. The wealth divide will widen further and the climate – socially, economically and ecologically – will get a whole lot worse.

Tony Vickers is a lecturer in ‘green taxes’ and researcher on land policy at Kingston University, a councillor in Newbury and Chair of the Lib Dem campaign group Action for Land Taxation and Economic Reform (ALTER) www.libdemsalter.org.uk He has been a member of the Tax Commission since June 2005.
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Isreal 'can't work'

2007-06-10T22:18:00.001+10:00

Jerusalem - 9/6/2007- Avragan Burg former Speaker of the House from 1999 to 2003 in
a report in Haaretz was quoted as saying "To define the State of Isreal as a Jewish state is the key to its end; In his recent book Defeating Hitler he describes Isreal as a "Zionist Ghetto."
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BAGHDAD -- An al-Qaida-affiliated insurgent group is giving Christians in Baghdad a stark choice.

2007-06-10T22:04:00.001+10:00

Militant threat: convert or else

June 09, 2007 12:00am

Christian families flee a Muslim imposed Tax.

The 'jizya' pay it, convert or get out.
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Tower hunt for disease source

2007-06-10T21:45:00.001+10:00

Tower hunt for disease source. Footscray and Seddon Cooling Systems 1 of 16 out of order in area. Outbreaks of Legionella bacteria are linked to towers.
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Home buyers riding razor's edge

2007-06-10T21:35:00.001+10:00

Home buyers riding razor's edge

Mary Bolling

June 09, 2007 12:00amIRST home buyers are facing the highest prices, biggest loans, and longest mortgage repayments ever.

But as desperate families borrow close to 100 per cent of their home's price, experts predict looming interest rate rises could push plenty of family budgets over the edge.

Australian Bureau of Statistics data yesterday showed more people were borrowing to get into the market.

Earliest ABS figures available show Melbourne's average first-home loan size in July 1991 was $67,500.

Ten years ago, in March 1997, it had jumped to $101,300 and this March it was up to $231,600.

Swinburne University housing researcher Terry Burke said it's now normal for first-home buyers to sign 30-year mortgages, and to borrow 95 per cent of the price of their home.

"Many first home buyers are right on the margins and once they've secured their house, most of them have very little savings," Mr Burke said.

"It would only take a very small increase in interest rates to push them over the edge."

This month, Housing Industry Association figures showed the great Australian dream has never been more expensive, with the median first-home price at $370,000.

The average income of households buying their first home is up to $93,400.

Australians for Affordable Housing spokesman David Imber said those figures are clearly shutting out average Australians.

"House prices are growing at more than double the rate of income growth," Mr Imber said.

"We keep hearing about low unemployment, but the average Australian wage is $55,000 a year -- being in an average or above-average job doesn't allow home ownership."

Mr Imber said high prices were creating a social divide between home owners and renters.

"It really is quite shocking we could have a generation of renters" he said.

Mr Imber wants government policies to help first home-buyers compete against investors.

Recent first-home buyer Paul Carboon, 36, agrees young Australians need help entering the market.

With his wife Leanne, and two young children, Mr Carboon hunted for months before securing their Notting Hill home.

"Trying to buy is a full time job and it's very depressing -- first to sign up for a 30-year loan, then to keep missing out at auctions," he said.

"And the people who are buying their third and fourth investment property are the ones that we were competing against."
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Toorak mansion sold to mystery buyer for a record $18 million.

2007-05-29T18:40:00.000+10:00
After a knock on the door and a walk thru, an unknown buyer puts an offer. The buyers advocate compares the sale to an 1880's gold rush. The 100-square two-storey English style-mansion was sold about five years earlier for $5.4 million. A little later the parcel of land next door (a tennis court) was bought for another $1.2 million. About $1 million was spent on renovations. As is usual for titleholders of highly prized sites, criminal fines for insider trading, & allegations of tax evasion using a Charitable Foundation plagued the vendor. While the price is believed to be a record, it might be trumped by a bid for a similar site being marketed as Stonnington mansion. 29 May 2007 Craig Binnie and Nicole Lindsay Herald Sun
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April Foreclosure Filings More Than Double Over 2006

2007-05-09T11:28:00.000+10:00
(Update1)
By Bob Ivry May 7 (Bloomberg) -- U.S. homeowners entered the foreclosure process in April at more than double the rate of a year ago as tightening credit made it more difficult to refinance and a swelling supply of unsold homes made it tough to sell. The number of homeowners in all three phases of foreclosure rose last month over the same period a year ago, according to Sacramento-based Foreclosures.com, which gathers data from county courthouses nationwide. Those receiving their first notice of foreclosure from a bank climbed 127 percent, those with homes going up for sale by auction jumped 164 percent and those whose homes were repossessed by banks went up 40 percent. Eight of 10 subprime loans, given to borrowers with bad or limited credit histories, adjust over time to higher interest rates and many homeowners can no longer afford their mortgages. With existing home sales at a four-year low, it's more difficult to sell because there are so many homes on the market. ``The housing boom was a house of cards,'' said Alexis McGee, president of Foreclosures.com. ``A lot of people who are living beyond their means and borrowing from Peter to pay Paul find that it's starting to catch up with them. We're seeing the effects of aggressive lending and minimal standards for underwriting.'' The number of foreclosure filings decreased in April in all three categories compared with March, Foreclosures.com said. Notices of default dropped 16 percent, auctions decreased 12 percent and bank repossessions fell 14 percent. The March 2007 numbers compared with a year earlier were similar to the increases of April 2007 over April 2006. First filings increased 126 percent in March 2007 compared with March 2006, notices of auction climbed 121 percent and the number of bank repossessions grew 51 percent, Foreclosures.com said. Avoiding Foreclosure The numbers show that many homes that begin the foreclosure process don't end up owned by banks, McGee said. ``A lot of these homeowners are getting new financing or they're selling it before the auction,'' McGee said. ``The owner is able to figure out a way to get his house in order before his house is taken away.'' In the first four months of this year, homes in all three phases of the foreclosure process increased from the same period a year ago, Foreclosures.com said. Notices of default and auctions more than doubled, while bank takeovers, or REOs for ``real estate owned,'' rose 39 percent. Purchases of existing homes dropped in March to an annual rate of 6.12 million, from 6.68 million in February, the biggest decline since January 1989, said the Washington-based National Association of Realtors. Sales fell 11.3 percent compared with a year earlier. According to Zurich-based Credit Suisse, 82 percent of subprime mortgages have an adjustable rate provision, meaning that payments start with low or ``teaser'' rates and adjust to a higher rate after a set number of years. To contact the reporter on this story: Bob Ivry in New York at bivry@bloomberg.net . Last Updated: May 7, 2007 17:36 EDT
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What the gatekeeper saw

2007-05-08T16:15:00.000+10:00
Rate change will worsen rent squeeze 28/3/2007 At present, council rates in NSW are based on the value of land alone. If the rating base is changed to the value of land plus buildings, as suggested by Noel Taylor (ST Letters, 4 Feb 2007), the consequences will include the following: * Land owners who build new accommodation or extend existing accommodation will be penalized with higher rate bills. So there will be less building and extending. The shortage of rental accommodation will worsen, making rents less affordable, and jobs will be lost in the building industry. * Families who modify their homes at great expense for the benefit of disabled members will be hit with higher rate bills. * Valuations of buildings will become critical for tax purposes and will therefore need to be more accurate, hence more intrusive, involving more internal inspections. * Landlords will allow properties to deteriorate because run-down buildings will be taxed less than well-maintained buildings. Land-value rating avoids these problems because the land, unlike any buildings erected on it, is not the product of any human effort that can be deterred by taxation. — Rejected by the Sunday Telegraph (Sydney). Posted by G.R. Putland.
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No Spring Thaw for Housing

2007-05-07T11:02:00.001+10:00

Spring is usually the hot time for home sales. But this year, March results were terrible—and April and May don't look much better By Maya Roney Maybe you guessed it, but now it's official: The housing market has not hit bottom. Poor home sales in cold-and-quiet February may be excusable, but in March, April, and May, they are a sure sign of distress. The latest numbers indicate that the spring of 2007 will go down as one of the worst real estate seasons in years. ...a forward-looking indicator based on contracts signed in March, dropped 10.5% from March, 2006, and 4.9% from February, 2007, to 104.3, the lowest reading since March, 2003. ...existing home sales fell 8.4% year over year, marking the sharpest plunge in 18 years. ...Pat McPherron, housing economist for Moody's Economy.com says "If April doesn't go well, then that's it. This is the market." ...the National Association of Home Builders/Wells Fargo Index measuring builder confidence fell to 33 from 36 in March (a reading below 50 means most respondents view conditions as poor). ...house prices accelerated faster than incomes during the housing boom. "What [subprime lenders] have done is stopped the bleeding." says McPherron
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Godliness is close to speculation.

2007-05-07T10:22:00.001+10:00

As a Big Landowner Plans to Sell, Mouths Begin to Water

By JAKE MOONEY

Published: May 6, 2007

Brookyn Heights

In the lobbies of some of the buildings near the Brooklyn waterfront owned by the Watchtower Bible and Tract Society, visitors can pick up plastic-wrapped packets of postcards depicting the organization’s various properties. On one, an aerial view of Brooklyn Heights, it seems as if nearly every third building is a Watchtower dormitory.

Since 1909, the neighborhood has been home to Brooklyn Bethel, as the organization, whose members are known as Jehovah’s Witnesses, calls its world headquarters. Other postcards in the packet, though, tell a story of change: They show neatly dressed volunteers at work in a sprawling new complex north of the city in Wallkill, N.Y., where the Witnesses moved their Bible- and magazine-printing operations in 2004.

Now, the residential buildings are beginning to go, too: The Witnesses plan to sell six of their Brooklyn Heights residences, including the venerable 12-story Standish Arms Hotel building, as part of what they are calling an organizational consolidation. With the printing presses gone and the former warehouse and shipping facility at 360 Furman Street sold, Witnesses spokesmen said, the organization needs less space for members to live.

Besides the Standish Arms, at 169 Columbia Heights, between Clark and Pierrepont Streets, the buildings for sale include four-story and seven-story apartment buildings on the same street, and three 19th-century houses nearby.

The offerings, which were reported in The Brooklyn Eagle, have Brooklyn Heights residents buzzing about the potential for the new properties hitting the real estate market. Residents are also speculating about the future of the former Bossert and Leverich Towers Hotels, two other meticulously restored buildings the organization owns in the neighborhood.

“When people hear that they’re selling the Standish Hotel, they start drooling about the Bossert,” Robert Perris, district manager of Brooklyn Community Board 2, said of the opulent tower at Montague and Hicks Streets, where the Brooklyn Dodgers celebrated their victory in the 1955 World Series. “The speculation runs rampant.”

According to Richard Devine, a Watchtower spokesman, the organization is not working with an outside real estate agent and has no set asking prices, but it will evaluate offers as they come in, as it did with the sale of 360 Furman and three other buildings on Livingston, Hicks and Clark Streets that the organization recently sold.

As for the other 24 buildings that Watchtower owns in the Heights and nearby Dumbo, the organization, as it often does, is keeping its plans close to the vest.

“Currently we don’t have any plans to sell any more,” Mr. Devine said. “At least not at this time.”

ed.,So much for Lev 25:23

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Review of Steve Keen, Debunking Economics:

2007-05-06T12:54:00.001+10:00

The Naked Emperor of the Social Sciences, London: Zed Books, 2001 Geoff Harcourt (Cambridge University, UK) ~~Steve Keen's Debunking Economics is a provocative book;~~ deliberately so is my conjecture. The anti-Vietnam war movement in Adelaide dichotomised into either militants or moderates. I belonged to the second group, because I thought it the proper way for academics to play a public role in vital political and social issues. I also thought it would be counter-productive to do otherwise (no prize for guessing the respective weights attached to the two reasons). Steve, I'm sure, would have been a militant. Certainly that is his approach here. I worry that this may backfire, for I have sympathy with his aims and many of his arguments and judgements. Time will tell who is right (perhaps I could say that the militants wanted the Australian revolution to occur first, then the troops could be brought home and conscription abolished. The moderates thought it better to get an ALP government elected because these two objectives were core items in Labor's election manifesto). Keen's object is to go behind what is currently taught to economics undergraduates in order to reveal the conceptual bases of their instruction and the ideological purposes involved. He comes to his task with a thorough knowledge of the classics of the subject, of Adam Smith as well as of Karl Marx, and with considerable analytical skills of the modern sort. He is a graduate of the political economy movement at the University of Sydney, and his Ph.D. dissertation was an amalgam of the theories of Dick Goodwin and Hy Minsky, two modern maverick greats, both alas now dead. Goodwin was a pupil and then a colleague of Wassily Leontief and Joseph Schumpeter at Harvard, and a pupil of Roy Harrod and Henry Phelps Brown at Oxford. He was much influenced by Maynard Keynes's writings and by Richard Kahn, Joan Robinson and Piero Sraffa of his Cambridge, England colleagues in the post-war period. Though he ceased to be a member of the communist party by the 1940s he remained an informed fan of Marx's writings, especially of Marx's deep knowledge of how capitalism works. (Joan Robinson used to say of Schumpeter that he was Marx with the adjectives changes.) This background, together with his love of Wicksell's economics and teaching physics at Harvard during World War II, led to Goodwin's pioneering contribution of models of cyclical growth. They incorporated his insight that trend and cycle are indissolubly mixed, not separable and determined by different sets of factors, as usually happens in orthodox economics. ~~Minsky also knew his Marx. He worked with Oskar Lange as a young man.~~ His ~~great~~ contribution was to show how real and monetary factors interrelated to produce cycles ~~as capitalist economies evolved~~ through time. While he drew on the writings of Keynes and Michal Kalecki, his financial instability hypothesis associated with the analysis of the effects on firms and on the economy, of the non-realisation of the expected cash flows arising from investment projects, is highly original. It has proved of greater and greater value in our understanding in recent years of the financial instabilities and crises in the world economy. Keen's contribution is to put these two strands together to provide a structure for illuminating the malfunctionings of modern interrelated capitalist economies. He does this in a way which not only draws on the insights of our past masters but also employs the most modern of analytical techniques. ~~With such abackground~~ it is easy to understand his horror at the contents of modern textbooks.Increasingly they model the ~~capitalist~~ world as though it were conforming to the dictates of Frank Ramsey's benevolent dictator, choosing optimum paths of accumulation over time for all its citizens. Keynes's long run in which "we are all dead" (well, he's dead and we are in the long run, as an IMF wit recently put it) has returned to dominate our supposed understanding of what is happening.Short-term instabilities are viewed as mere aberrations, fluctuations around this long-period optimum trajectory. ~~Against this macroeconomic background,~~ modern microeconomics has a bias towards examining the behaviour ~~of competitive markets (as set out most fully and rigorously in the Arrow-Debreu model of general equilibrium),~~ not as reference points but as approximations to what is actually going on. Of course, departures from them are taught, increasingly by the clever application of game theory. Moreover, the deficiencies of real markets of all sorts are examined in the light of the implications, for example, of the findings of the asymmetric information theorists (three of whom - George Akerlof, Michael Spence, and Joe Stiglitz - have just (10/10/01) been awarded this year's Nobel Prize. From Amartya Sen on, the Nobel Prize electors seem to be back on track). While professional economists increasingly get to know of these and other developments, often through the pages of the excellent Journal of Economic Perspectives, the most used undergraduate textbooks are usually light years away from such enlightenment. Moreover, alternative approaches in our subject, economic history and the history of economic thought are either being marginalized in, or driven out altogether from most undergraduate courses. Keen's book is directed against these trends. He examines what is taught in macroeconomic and microeconomic courses and what their deficiencies and shortcomings are. And he suggest alternatives, some of which come out of the many influences on him and his own contributions. As I said, I understand his impatience and anger and I applaud his aims. I just worry that the tone of the book and, sometimes, his assertions may allow critics to sidetrack the arguments along byways which may seem plausible but ultimately miss the point - to the detriment of the training of future generations in what Keynes memorably called "our miserable subject". Nevertheless, if I were given a free hand to design a course, I would urge my pupils to read both Keen's book and Hugh Stretton's marvellous alternative text (Economics: A New Introduction, published by Pluto in 1999) as well as the best of the mainstream texts now available. (I would also urge them to read some of the great originals too!) Only then would I feel they had been introduced to the appropriate material with which to make up their own minds what approach(es) to take in their studies. As it is, without the insights of a Keen and a Stretton (and of the past greats), I fear we are likely to produce well trained but uncritical cogs, the better to fit the needs of our modern industrialised societies. It is not the proper role of university teachers either to be hired prize fighters or produce them. SUGGESTED CITATION: Geoff Harcourt(2002)“Review of Steve Keen, Debunking Economics: The Naked Emperor of the Social Sciences", post-autistic economics review : issue no. 11, January, article 5. http://www.btinternet.com/~pae_news/review/issue11.htm __________________ This review originally appeared in the Financial Review
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Review of Steve Keen, Debunking Economics:

2007-05-06T12:31:00.004+10:00
The Naked Emperor of the Social Sciences London: Zed Books, 2001 Steve Keen's Debunking Economics is a provocative book; deliberately so is my conjecture. The anti-Vietnam war movement in Adelaide dichotomised into either militants or moderates. I belonged to the second group, because I thought it the proper way for academics to play a public role in vital political and social issues. I also thought it would be counter-productive to do otherwise (no prize for guessing the respective weights attached to the two reasons). Steve, I'm sure, would have been a militant. Certainly that is his approach here. I worry that this may backfire, for I have sympathy with his aims and many of his arguments and judgements. Time will tell who is right (perhaps I could say that the militants wanted the Australian revolution to occur first, then the troops could be brought home and conscription abolished. The moderates thought it better to get an ALP government elected because these two objectives were core items in Labor's election manifesto). Keen's object is to go behind what is currently taught to economics undergraduates in order to reveal the conceptual bases of their instruction and the ideological purposes involved. He comes to his task with a thorough knowledge of the classics of the subject, of Adam Smith as well as of Karl Marx, and with considerable analytical skills of the modern sort.He is a graduate of the political economy movement at the University of Sydney, and his Ph.D. dissertation was an amalgam of the theories of Dick Goodwin and Hy Minsky, two modern maverick greats, both alas now dead. Goodwin was a pupil and then a colleague of Wassily Leontief and Joseph Schumpeter at Harvard, and a pupil of Roy Harrod and Henry Phelps Brown at Oxford. He was much influenced by Maynard Keynes's writings and by Richard Kahn, Joan Robinson and Piero Sraffa of his Cambridge, England colleagues in the post-war period. Though he ceased to be a member of the communist party by the 1940s he remained an informed fan of Marx's writings, especially of Marx's deep knowledge of how capitalism works. (Joan Robinson used to say of Schumpeter that he was Marx with the adjectives changes.) This background, together with his love of Wicksell's economics and teaching physics at Harvard during World War II, led to Goodwin's pioneering contribution of models of cyclical growth. They incorporated his insight that trend and cycle are indissolubly mixed, not separable and determined by different sets of factors, as usually happens in orthodox economics. Minsky also knew his Marx. He worked with Oskar Lange as a young man. His great contribution was to show how real and monetary factors interrelated to produce cycles as capitalist economies evolved through time. While he drew on the writings of Keynes and Michal Kalecki, his financial instability hypothesis associated with the analysis of the effects on firms and on the economy, of the non-realisation of the expected cash flows arising from investment projects, is highly original. It has proved of greater and greater value in our understanding in recent years of the financial instabilities and crises in the world economy. Keen's contribution is to put these two strands together to provide a structure for illuminating the malfunctionings of modern interrelated capitalist economies. He does this in a way which not only draws on the insights of our past masters but also employs the most modern of analytical techniques. With such a background it is easy to understand his horror at the contents of modern textbooks. Increasingly they model the capitalist world as though it were conforming to the dictates of Frank Ramsey's benevolent dictator, choosing optimum paths of accumulation over time for all its citizens. Keynes's long run in which "we are all dead" (well, he's dead and we are in the long run, as an IMF wit recently put it) has returned to dominate our supposed understanding of what is happening. Short-term instabilities are viewed as mere aberrations, fluctuations around this long-period optimum trajectory. Against this macroeconomic background, modern microeconomics has a bias towards examining the behaviour of competitive markets (as set out most fully and rigorously in the Arrow-Debreu model of general equilibrium), not as reference points but as approximations to what is actually going on. Of course, departures from them are taught, increasingly by the clever application of game theory. Moreover, the deficiencies of real markets of all sorts are examined in the light of the implications, for example, of the findings of the asymmetric information theorists (three of whom - George Akerlof, Michael Spence, and Joe Stiglitz - have just (10/10/01) been awarded this year's Nobel Prize. From Amartya Sen on, the Nobel Prize electors seem to be back on track). While professional economists increasingly get to know of these and other developments, often through the pages of the excellent Journal of Economic Perspectives, the most used undergraduate textbooks are usually light years away from such enlightenment. Moreover, alternative approaches in our subject, economic history and the history of economic thought are either being marginalized in, or driven out altogether from most undergraduate courses. Keen's book is directed against these trends. He examines what is taught in macroeconomic and microeconomic courses and what their deficiencies and shortcomings are. And he suggest alternatives, some of which come out of the many influences on him and his own contributions. As I said, I understand his impatience and anger and I applaud his aims. I just worry that the tone of the book and, sometimes, his assertions may allow critics to sidetrack the arguments along byways which may seem plausible but ultimately miss the point - to the detriment of the training of future generations in what Keynes memorably called "our miserable subject". Nevertheless, if I were given a free hand to design a course, I would urge my pupils to read both Keen's book and Hugh Stretton's marvellous alternative text (Economics: A New Introduction, published by Pluto in 1999) as well as the best of the mainstream texts now available. (I would also urge them to read some of the great originals too!) Only then would I feel they had been introduced to the appropriate material with which to make up their own minds what approach(es) to take in their studies. As it is, without the insights of a Keen and a Stretton (and of the past greats), I fear we are likely to produce well trained but uncritical cogs, the better to fit the needs of our modern industrialised societies. It is not the proper role of university teachers either to be hired prize fighters or produce them. Geoff Harcourt(2002) “Review of Steve Keen, Debunking Economics: The Naked Emperor of the Social Sciences", post-autistic economics review : issue no. 11, January, article 5. __________________ This review originally appeared in the Financial Review
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Tenants forced to give up pets.

2007-05-06T04:53:00.001+10:00
Wednesday, 25 April 2007, 15:09 GMT 16:09 UK People who rent property in Jersey have been forced to give up their pets because of restrictive contracts, said Jersey's Animal Shelter (JSPCA). Residents who rent houses or flats have to obey a clause not to keep pets. JSPCA's chief executive Stephen Coleman said the amount of animals left in their care had risen by 15-20%. He said there was a significant rise in cats. But letting agent Julian Cubbage said he did not think renting contracts were becoming more stringent. He said there had always been an historic sensitivity to animals and that pets were not allowed in homes because of the damage they may cause. "There's also a nuisance factor to other owners - it's not very satisfactory if every time you walk past a flat door you have a dog barking at you from the other side," he said. Mr Cubbage advised residents to question the contracts as compromises could be made.
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Real Estate Tax Levied On 300,000 Houses Up 90%

2007-05-01T05:50:00.001+10:00

donga.com APRIL 30, 2007 03:43 The publicly assessed values of apartment and row houses largely increased this year by an average of 22.8 percent from last year. Detached houses increased by 6.22 percent in value.
In particular, there has been a sudden rise in many areas within the Seoul Metropolitan Area, including Yangcheon-gu (46.1 percent) in Seoul, and Gwacheon City (49.2 percent) in Gyeonggi Province. As a result, the tax burden caused by holding real estate, including composite real estate taxes and property taxes, increased.
The Ministry of Construction and Transportation (MOCT) announced yesterday that this year’s publicly assessed value of 9.03 million apartment houses would be released on April 30. The publicly assessed value of 4.05 million detached houses will also be released by each municipal and regional office on April 30.
This publicly assessed value has been confirmed through an opinion hearing period last month. Any issues can be raised to the MOCT, municipal and regional offices, and the Korea Appraisal Board by May 30. The number of houses valued over 600 million won almost doubles- As the publicly assessed value rose remarkably, the number of houses valued over 600 million won, which is a basis for composite real estate taxes, increased to 300,711, up by almost 90 percent from last year (159,115). Among the houses valued over 600 million won, 99.8 percent of apartment houses and 97.1 percent of detached houses are located in the Seoul Metropolitan Area, including Seoul City. According to an estimate conducted by the National Tax Service (NTS), the number of households subject to composite real estate taxes amounts to 381,000 this year, up 149,000 from last year (232,000). This is just from taking into consideration houses owned by individuals and, if corporation-owned houses and land were also considered, composite real estate taxes would be imposed on 505,000 households. The reason why the number of households subject to composite real estate taxes is larger than that of houses valued over 600 million won is because publicly assessed values of all the houses owned by a household are added all together to determine on whether composite a real estate tax should be levied. For example, in cases when a husband and wife own 400 million won and 300 million won apartment houses, a composite real estate tax is not imposed on each apartment house. However, the household should pay composite real estate tax based on the total of each apartment’s value. Those who own only one house will pay 2.31 million won on average in composite real estate taxes- The composite real estate tax burden for households is expected to increase rapidly. According to the NTS, this year’s average composite real estate tax burden for households that paid the composite real estate tax last year amounts to 4,743,000 won, more than double last year’s (2,108,000 won). This is because publicly assessed value has increased remarkably and the taxable amount basis increased to 80 percent from 70 percent last year. Households subject to composite real estate taxes for the first time this year will pay 799,000 won on average. Also, among those who own only one house, 139,000 households became subject to that composite real estate tax this year. These households will pay 2,317,000 won composite real estate taxes on average. Property tax increased by 11.1 percent on average compared to last year, but the tax amount imposed on houses valued over 600 million won jumped by 39.3 percent on average. Accordingly, holding taxes, which are the sum of composite real estate taxes and property taxes, are expected to be close to the tax burden ceiling (three times the tax paid previous year) in many areas. In terms of some areas which local governments exempted from property taxes, real estate holding taxes will actually triple since the exempted amount is not considered when determining the tax burden ceiling. According to Kim Jong-pil, a tax expert, a 34-pyeong unit in Eunma Apartments in Daechi-dong, Gangnam-gu, Seoul was subject to holding taxes of 2.16 million won last year; that went up to 5.80 million won this year. The holding tax amount for a 35-pyeong unit in new town complex 3 located in Mok-dong, Yangcheon-gu will almost triple from 1.35 million won to 3.71 million won. Sudden decline in sale prices followed by civil appeal for “publicly assessed vale adjustments”- There are some areas where publicly assessed value is higher than market value. Some publicly assessed values were dated on January 1, 2007, a time when the market value was higher than now. The actual transaction price of a 34-pyeong unit Eunma apartment reported on April 16 was one billion won, which is lower than this year’s publicly assessed value (1.008 billion won). If house prices continue to fall, the publicly assessed value, which was determined based on 80 percent of market value, will highly likely become similar to or higher than present house prices. Due to a large decline in sale prices, there has been a wave of civil petitions to lower publicly assessed value. The number of petitions sent to the MOCT in the 20 days after March 14 amounted to 56,355, up more than six times from last year (9,000). The MOCT explained, “The publicly assessed value cannot be readjusted with house prices changes since the assessment basis date, according to the rules.”
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Fear of Foreclosure

2007-04-30T14:39:00.001+10:00

By VALERIE COTSALAS
Published: April 22, 2007

WHEN Matilde Amico’s employer cut back her overtime in September, her working hours as a dispatcher for an alarm company fell from a high of 70 hours a week to about 40.
November she had missed two mortgage payments on the three-bedroomranch in Mastic that she had bought as a single mother in 1989, and hadkept by working either two jobs or long overtime hours. She received anotice from her lender threatening foreclosure.
“At that point, I didn’t know what I was going to do,” Ms. Amico said recently. She lives in the house with her 24-year-old son, whose own small business recently failed. “I could see the sheriff coming and putting all of my things on the street.”
Ms. Amico told her story at a news conference held on April 12 by Suffolk County officials to announce that there is help available for homeowners facing foreclosure.
The county at first said the number of foreclosures on Long Island in 2007 was expected to total 18,854, citing data received from the office of Senator Charles E. Schumer.
But the senator’s office later said that the county had misinterpreted the figures and that the 18,000 represented mortgages whose interest rates are likely to rise substantially this year.
It is a big step from rising mortgages rates to foreclosure, however. In all of 2006, 192 homes were lost through foreclosure on Long Island, according to RealtyTrac Inc., a firm that tracks foreclosures nationwide. (Other homes, of course, may have been sold to head off legal action.)
Foreclosure actions are often a result of illness or loss of income, as in Ms. Amico’s case. But many also result from risky loans given to home buyers during the recent real estate boom, officials say.
Higher payments have come due on large numbers of subprime mortgages, putting more borrowers in difficulty. Such mortgages — which often start with low “teaser” rates and then spike up to higher levels after a few years — are usually made to borrowers who have poor credit backgrounds or whose income may not be high enough to comfortably afford larger monthly payments.
As Steve Levy, the Suffolk County executive, said at the meeting, “Now we’re starting to see that these folks are starting to fall behind on mortgage payments.”
One recourse, a service set up by the county, refers those facing foreclosure to counselors certified by the United States Department of Housing and Urban Development. The counselors can help homeowners take one of several possible paths, depending on the severity of their financial plight: renegotiate monthly mortgage payments; provide bridge loans that don’t have to be paid back until the house is sold or refinanced; refinance the mortgage to a lower interest rate; or sell the house and find other living arrangements. Nassau announced a similar program the same day. In Suffolk, the telephone number is (631) 853-4800; in Nassau, (516) 571-4663. The counseling and assistance are free.
In the three days after the announcement, Suffolk received nearly 300 calls from homeowners. Nassau reported 260 calls.
The county can also provide limited financial assistance, up to $1,000 per homeowner, from a federally financed homeless prevention program. “This isn’t throwing good money after bad,” Mr. Levy said. “Foreclosed homes become eyesores in the community; they devalue other homes nearby.”
A day before the Suffolk press conference, the Joint Economic Committee of Congress proposed in a report released in Washington that the government provide funds ($3,300 per household) to help prevent foreclosures nationwide.
In the report, Nassau and Suffolk Counties ranked 37th among the 50 metropolitan areas with the highest foreclosure rates in 2006. (Detroit-Livonia-Dearborn, Mich., was first.) Across New York, 13 percent of subprime loans were 60 or more days delinquent as of the end of February, up seven percentage points since February 2005, with the highest increases in Long Island, Dutchess County and New York City, according to the report.
While Ms. Amico had a fixed-rate 30-year mortgage, her situation illustrated how quickly even a solid homeowner can fall into dire straits. In her case, help came by way of a friend who referred her to the Long Island Housing Partnership, a nonprofit organization that provides free counseling and garners public funds to help build affordable housing.
Kisha Wright, a counselor at the partnership, called the lender who held Ms. Amico’s mortgage and tried to restructure the loan. When the bank turned Ms. Amico down, the partnership lent her $13,500 in New York State grant money. Together with $4,000 that Ms. Amico had saved, the amount covered seven missed mortgage payments. Meanwhile, Ms. Amico was able to restore her overtime hours.
Ms. Wright said that 59 homeowners facing foreclosure had come to the partnership for help in the last three months. In previous years, there would typically have been “only a handful” of such cases in the same period.
By the time Ms. Wright sees them, homeowners have typically missed 3 to 12 months of payments.
The situation is likely to worsen on Long Island and elsewhere in the country, local and United States government officials say.
“Subprime loan foreclosures are expected to increase in 2007 and 2008 as 1.8 million hybrid ARMs — many of which were sold to borrowers who cannot afford them — reset in a weakening housing market environment,” the Congressional report read. (Hybrid adjustable rate mortgages have rates that climb, but only after an initial rate that can be locked in for, say, 3, 5, 7 or 10 years.)
Borrowers with interest-only mortgages may eventually be saddled with an additional payment against the principal amount of the loan. That could as much as double monthly payments, according to Pearl Kamer, chief economist of the Long Island Association.
With a glut of homes on the market, she added, prices are declining, particularly for homes listed for more than $500,000. And lenders have tightened requirements for borrowers, fewer of whom can thus qualify for mortgages.
She said she believed all neighborhoods on Long Island would be affected, not only the less affluent ones. When real estate was booming, less affluent buyers “got into these more expensive homes with subprime mortgages,” Ms. Kamer said, often to move to a better school district.
As home prices drop, she said, many homeowners are stuck owing more money than they can recover by selling the house, which could lead to foreclosure if they are unable to keep up with the monthly payments.
Ms. Amico of Mastic said she was initially embarrassed to face Ms. Wright, the counselor who helped her. “I thought, what was this woman going to think of me?” she said.
But she later told her story publicly in the hope that others would swallow their pride and seek help. “She really helped me save my house,” Ms. Amico said of Ms. Wright. “She was with me from Step 1 all the way to the end.”
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ECONOMIX; A Word of Advice During a Housing Slump: Rent

2007-04-30T14:33:00.001+10:00

April 11, 2007, Wednesday

By DAVID LEONHARDT (NYT); Business/Financial Desk

Late Edition - Final, Section A, Page 1, Column 2, 1176 words

DISPLAYING ABSTRACT - Analysis of housing costs reveals that people who bought over last two years have paid more for their housing than renters; housing prices may not yet have fallen far enough for buying to look better than renting, except for people who plan to stay in a home for many years; realtors insist that now is time to buy, but skeptics point to extended slump in housing prices in 1990s, following last boom, and argue that buying has never been quite as beneficial as realtors and others who make money off home purchases would have you believes

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House flippers flop as market cools

2007-04-30T14:31:00.001+10:00

By RYAN NAKASHIMA, AP Business Writer Sun Apr 29, 8:01 PM ET

LAS VEGAS - In the rampant real estate speculation of the Las Vegas valley three years ago, people lined up outside Pulte Homes sales offices overnight as if they were waiting for the release of the latest video game console or hot new movie.
Having seen his house in an upscale part of suburban Henderson, Nev. jump $200,000 in value in 18 months, Sam Schwartz felt he couldn't miss any part of the boom.

He spent the night in the parking lot with TV, snacks and drinks, along with about a hundred other people.

Schwartz intended to buy a new home and then quickly sell it within the year — for a huge profit. Most people waiting were flippers just like him, he said.

"We had seen real evidence of what was possible in this crazy, inflated market, and we just wanted to get a piece of that investment equity," Schwartz said.

But when home prices unexpectedly took a backward step, many investors seeking to cash in quickly were left "upside-down," or owing more on their mortgages than what their homes were worth.

The result was a glut of homes in the marketplace, communities spotted with empty houses and for sale signs — and a foreclosure rate in Nevada that leads the nation as owners unable to sell became saddled with unbearable debt payments.

Foreclosure filings across the United States rose 47 percent last month from a year ago to 149,150 — one for every 775 households, according to statistics from Realty Trac Inc., a foreclosure listing service. And for the third straight month, Nevada's foreclosure rate led the nation when it rose 220 percent from a year earlier to 4,738 filings, or one in every 183 households.

In Clark County, which encompasses Las Vegas, one of every 30 homes began the process toward foreclosure last year.

The day Schwartz reserved his home, the sales staff was raising prices $20,000 after every fifth buyer came inside. The $500,000 house he and his wife were eyeing had shot up to $540,000 by the time they sat down. Somehow, it still seemed like a good deal.

"Everybody was thinking, 'Hey it's not the end of the world, because the homes across town are selling for $720,000. We have almost $200,000 in equity in the house and it isn't even built yet,'" Schwartz said.

He and his wife put down $5,000 on a home that would end up costing $560,000 with upgrades.

While the Schwartzes were able to cancel before closing on a property that suddenly was worth only $490,000 — and recoup their deposit on a legal technicality — others were less fortunate.

Schwartz, a 44-year-old life coach, said he "narrowly escaped financial disaster." But the effects of the housing crunch would reverberate for years, he said, something he expects to see among the clients he coaches to succeed in their lives and careers.

"There's going to be a lot of depression, a lot of anger. A lot drinking, gambling, and desperate stuff going on."

More than other states hit by the mortgage lending crunch, the high foreclosure rate in Nevada, California and Florida was driven by speculation, said Rick Sharga, vice president of marketing for Realty Trac.

"It was a combustible mix of risky loans and risky real estate deals," he said.

Russ Valone, the chief executive of research firm MarketPointe Realty Advisors, said speculators in San Diego were putting deposits on downtown condo units under construction, assuming they could sell them at a profit when they were finished.
"There were guys out there that were rolling the dice just as if they were going to Las Vegas," Valone said.
When the market slowed, many buyers forfeited their deposits, or let their properties get repossessed by the banks. As a result, the inventory of unoccupied condo units downtown since early 2005 has soared fivefold, he said.
New home builders are slowing down the pace of new projects in Las Vegas and are giving agents commissions of up to 12 percent and up to $100,000 in upgrades such as pools, granite countertops and appliances.
"The speculators completely dried up," said Paul Murad, a real estate observer and author of "Manhattanizing Las Vegas."
In Miami, the rush of condo building and speculative buying has slowed to a crawl, said real estate agent Penni Hurley. Florida's foreclosure filings rose 54 percent from a year ago to 14,303 in March, or one filing for every 511 households.
"The market was on steroids and now it's going through a much-needed correction," Hurley said.
With forecasts of a nationwide 1 percent home price decline this year, there's no way to flip for a profit now, said Jay Brinkmann, vice president of research and economics with the Mortgage Bankers Association.
"One would have to logically assume that (flippers) are no longer in the market," he said.
But some are still feeling the pain.
Jason Beaver, a Sunnyvale, Calif.-based Apple Inc. programmer, got caught up in the talk of the hot housing market from friends who bought multiple homes in Las Vegas and made a killing.
His name was drawn in a buyers' lottery in the Solera subdivision and he put $35,300 down on a $353,000 home in February 2004. The community is restricted to people age 55 or older; the 37-year-old Beaver had no intention of moving in.
That summer, the housing market began to soften. He nervously put the house on the market for a break-even price the same day escrow closed. He got no offers.
A tight market had suddenly become flush with resale homes as investors sought to cash out. Pulte was one of several builders to slash new home prices, in some cases by as much as $80,000 in a single day. Beaver and others are suing, but the company has said it was simply reacting to new conditions in an overheated market.
Beaver has been renting the home out for about a $1,000 a month, despite monthly expenses around $2,000.
And the supply of available homes is growing.
In March, the number of resale listings for single family homes, condos and townhouses in the Las Vegas valley grew 30 percent from a year ago to 27,282, according to the Greater Las Vegas Association of Realtors. Sales and the value of homes sold were both down 38 percent from a year ago. About half the homes available have been on the market for more than two months.
"Two years ago, you'd set a price that looked right and you'd get offers that were $20,000, $30,000, $40,000 over your list price. You have to be more realistic today," said Devin Reiss, president of the Realtors association.
With Nevada's fast-growing population and an estimated 8,000 net new residents coming to Las Vegas every month, experts predict the glut of housing will be cleared in six months to more than a year.
State lawmakers are considering a range of bills that clamp down on the easy mortgage lending that helped heat up the market, including making it a crime for lenders to issue mortgages with little or no verification of a borrower's ability to pay.
"The biggest loan I ever saw, a person bought a $1 million property and only had to come up with $1,000 in cash," said Scott Bice, the state's commissioner of mortgage lending.
"I don't think anything will ever prevent speculation," he said, but added that new regulations and tighter credit requirements by lenders will eventually return the market to the good old days: "When it takes good credit and money in a transaction to close it."
For those caught up in the frenzy of a few years ago, the changes come too little, too late.
Beaver figures he has spent $50,000 on his investment home, and will have to come up with $30,000 more to pay off the mortgage after he sells it at a loss.
While he's not completely sworn off real estate investing, Beaver said next time he'll try a more traditional approach — to buy and hold for the long term.
"The fast-growth, make-a-quick-buck real estate investment, I don't think I'll try again," he said.
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British banks told to plan for 40% crash in housing

2007-04-30T14:28:00.001+10:00

By Patrick Hosking

The Times, London

Thursday, November 16, 2006

Banks in the United Kingdom have been ordered by financial regulators to assess how they would cope in the event of house prices crashing by 40 percent. The instruction to include a housing slump scenario in their stress-testing models comes after the Financial Services Authority found that some banks were failing to include gloomy enough assumptions in their modelling.

The FSA said yesterday that an "appropriate" benchmark was to assume property prices fell by 40 percent and that 35 percent of mortgages in default ended with homes being repossessed. It stressed that this was not a forecast but a "severe but plausible scenario" and one that banks should examine when deciding how robust their balance sheets were.

In a speech to the British Bankers' Association yesterday, Clive Briault, the FSA's managing director for retail markets, remarked on banks' differing views over the size and impact of a house market downturn, and hence the need for reference points.

He also warned bankers to ensure that they have properly stress-tested their mortgage portfolios in the wake of decisions by some to lend people greater multiples of their incomes.

In a letter to bank chief executives last month the FSA accused some of failing to consider scenarios in which they might be forced into losses, dividend cuts or capital shortfalls.

"We were struck by how mild the firm-wide stress events were at some of the firms we visited," wrote the FSA's director of major retail groups, David Strachan.

A few banks were "weak in all respects" in stress-testing.

House prices fell about 15 percent nationwide in, and in parts of East Anglia by 40 percent, leading to repossessions, write-downs, and bank losses.

Banks are obliged to stress-test hypothetical adverse movements in asset prices, interest rates, and exchange rates to ensure that they have a sufficient capital cushion. But stress-testing is only as robust as the assumptions made.

The FSA move came as UK house prices grew at their fastest for four years, according to new figures from RICS.

Enter your land price concerns as a quotable quote on the Site Rating Defence Alliance blog.
Enter your land price concerns as a quotable quote on the Site Rating Defence Alliance blog.

"Is It Too Late to Get Out?"

2007-04-25T04:48:00.000+10:00
Housing Bubble Boondoggle
April 24, 2007 By MIKE WHITNEY Treasury Secretary Henry Paulson delivered an upbeat assessment of the slumping real estate market on Friday saying, "All the signs I look at" show "the housing market is at or near the bottom." Baloney. Paulson added that the meltdown in subprime mortages was not a "serious problem. I think it's going to be largely contained." Wrong again. Paulson knows full well that the housing market is headed for a crash and probably won't bounce back for the next 4 or 5 years. That's why Congress is slapping together a bailout package that will keep struggling homeowners out of foreclosure. If defaults keep skyrocketing at the present rate they are liable to bring the whole economy down in a heap. Last week, the Senate convened the Joint Economic Committee, chaired by Senator Charles Schumer. The committee's job is to develop a strategy to keep delinquent subprime mortgage holders in their homes. It may look like the congress is looking out for the little guy, but that's not the case. As Schumer noted, "The subprime mortgage meltdown has economic consequences that will ripple through our communities unless we act." Schumer's right. The repercussions of millions of homeowners defaulting on their loans could be a major hit for Wall Street and the banking sector. That's what Schumer is worried about---not the plight of over-leveraged homeowners. Every day now, another major lending institution unveils its plan for bailing out the housing market. Citigroup and Bank of America have joined forces to create the Neighborhood Assistance Corporation of America which will provide $1 billion for the rescue of subprime loans. This will allow homeowners to refinance their mortgages and keep them out of foreclosure. The new "30- year loans will carry a fixed interest rate one point below the prime rate, putting it currently at 5.5 percent. There are no fees, and the banks pay all the closing costs." But why are the banks being so generous if, as Paulson says, "the housing market is at or near the bottom." This proves that the Treasury Secretary is full of malarkey and that the problem is much bigger than he's letting on. Last week, Washington Mutual announced a $2 billion program to slow foreclosures (Washington Mutual's subprime segment lost $164 million in the first quarter) while Freddie Mac committed a whopping $20 billion to the same goal. In fact, Freddie Mac announced that it "would stretch the loan term to a maximum of 40 years from the current 30-year limit." 40 years!?! How about a 60 or 80 year mortgage? Can you sense the desperation? And yet, Paulson says he doesn't see the subprime meltdown as a "serious problem"! Paulson's comments have had no effect on the Federal Reserve. The Fed has been frantically searching for a strategy that will deal with the rising foreclosures. On Wednesday, The Washington Post reported that "Federal bank regulators called on lenders to work with distressed borrowers unable to meet payments on high-risk mortgages to help them keep their homes". Huh? When was the last time the feds ordered the privately-owned banks to rewrite loans? Never--that's when. That gives us some idea of how bad things really are. The details of the meltdown are being downplayed in the media to prevent panic-selling among the public. But the Fed knows what's going on. They know that "U.S. mortgage default rates hit an all-time high in the first quarter of 2007" and that "the percentage of mortgages in default rose to a record 2.87%". In fact, the Federal Reserve and the five other federal agencies that regulate banks issued this statement just last week: "Prudent workout arrangements that are consistent with safe and sound lending practices are generally in the long-term best interest of both the financial institution and the borrowerInstitutions will not face regulatory penalties if they pursue reasonable workout arrangements with borrowers." Translation: "Rewrite the loans! Promise them anything! Just make sure they remain shackled to their houses!" Unfortunately, the problem won't be "fixed" with a $30 or $40 billion bailout scheme. The problem is much bigger than that. There is an estimated $2.5 trillion in subprimes and Alt-A loans---20% of which are expected enter foreclosure in the next few years. Any up-tick in interest rates or unemployment will only aggravate the situation. Kenneth Heebner, manager of CGM Realty Fund (Capital Growth Management), provided a realistic forecast of what we can expect in the near future as defaults increase. Heebner: "The Greatest Price Decline in Housing since the Great Depression" (Bloomberg News interview) "The real wave of pain and foreclosures is just beginning.subprimes and Alt-A are both in trouble. A lot of these will go into default. The reason is, that the people who took these out never really intended to fully service the mortgage---they were counting on rising home prices so they could sign on the dotted line without showing what their income was and then 2 years later flip into another junk mortgage and get a big profit out of the house with putting anything down "There's a $1.5 trillion in subprimes and $1 trillion in Alt-A the catalyst will be declining house prices which is already underway. But as we get a large amount of these $2.5 trillion mortgages go into default, we'll see foreclosed houses dumped on an already weak market where homebuilders are already struggling to sell there houses. The price declines which have started will continue and may even accelerate in some of the hotter markets. I would expect that housing prices in "2007 will decline 20% in a lot of markets". "What you are going to see is the greatest price decline in housing since the Great Depression..The one thing that people should not do, is go near a CDO or a residential mortgage backed security rated Triple A by Moody's and S&P because these are going to get down-graded by the hundreds of millions---because they are secured by subprime and Alt-A mortgages where there'll be massive defaults". Question: "Will the losses in the mortgage market exceed those in the S&L crisis?" Heebner: "They're going to dwarf those losses because the losses could easily approach $1 trillion---that dwarfs anything that has ever happened. Enron was $100 billion---this will be far greater than that..The good news is that most of these loans are owned by Hedge FundsYou hedge funds buying these subprime and Alt-A loans and leveraging them at 10 to 1. They buy a pool of mortgages at 8% and they borrow against it in yen for 3% and then lever it at 10 to 1so you have a lucrative profit And the hedge fund you are running, the manager is going to get 20% of the gain---so even if it's a year before you go broke; you get rich until the fund is shut down". Heebner added this instructive comment: "The brokerage firms created "securitization" they know the products are toxic. I don't think they are going to suffer losses; they simply passed them on to everyone else. The only impact this will have is the profits that flow from it will get less.But it is less than 3% of revenues in even the most exposed brokerage firm so THEY'RE NOT GOING TO GET CAUGHT." Although Heebner believes the brokerage houses will do fine; the same is not true for the small investor. Nearly 70% of subprimes have been securitized. That means that the vast number of shoddy "no down payment, no document, interest-only" loans (that are headed for default) have been transformed into securities and sold to hedge funds. As the housing market continues to falter, these funds will plummet at an inverse rate to the amount of leverage that has been applied. That may explain why, (according to Bloomberg Markets) the "wealthiest Americans have been bailing out" of hedge funds at an alarming rate. A report in last Thursday's New York Times stated: "Americans with a net worth of at least $25 million, excluding the value of their primary homes, reduced their exposure to hedge funds in 2006"-- The amount of money held by wealthy investors in hedge funds has dropped dramatically-- "The average balance, which was $2.8 million in 2005, was just $1.6 million last year, a 43 percent decline". So, what do America's richest investors know that the rest of us don't? Could it be that the over-leveraged hedge funds industry is about to get hammered by the subprime implosion? If so, it won't be the brokerage houses or savvy insiders who get hurt. It'll be the little guys and the pension funds that take a drubbing. In Henry C K Liu's "Why the Subprime Bust will Spread" (Asia Times) the author states that the bursting housing bubble will trigger a major pension crisis. After all, who are the "institutional investors? They are mostly pension funds that manage the money the US working public depends on for retirement. In other words, the aggregate retirement assets of the working public are exposed to the risk of the same working public defaulting on their house mortgages". (Liu) The origins of the housing bubble are complex, but they are worth understanding if we want to know how things will progress. The housing bubble is not merely the result of low interest rates and shabby lending practices. As Liu says, "the bubble was caused by creative housing finance made possible by the emergence of a deregulated global credit market through finance liberalization. The low cost of mortgages lifted all US house prices beyond levels sustainable by household income in otherwise disaggregated markets". The deregulated cross-border flow of funds (via the yen low interest "carry trade" or the $800 billion current account deficit) have played a major role in inflating the US real estate market. Liu adds, "Since the money financing this housing bubble is sourced globally, a bursting of the US housing bubble will have dire consequences globally."Since nearly 50% of "securitized" mortgage debt is owned by foreign investors; the subprime meltdown is bound send tremors through the entire global financial system. The housing decline is further complicated by Wall Street innovations in derivatives trading which has generated trillions of dollars in "virtual" wealth and is affecting the Feds ability to control inflation through interest rate manipulation. As Kenneth Heebner said, "You have hedge funds buying these subprime and Alt-A loans and leveraging them at 10 to 1. They buy a pool of mortgages at 8% and they borrow against it in yen for 3% and then lever it at 10 to 1so you have a lucrative profit." In other words, low interest foreign capital has flooded US markets and contributed to distortions in housing prices. In her recent article "War Drags the Dollar Down", Ann Berg refers to Wall Street's "swirling galaxy of exotic finance" which has "worked magic for the government and the elite", but has yet to weather a severe downturn in the economy. But how will market deal with sudden downturn in the hedge fund industry? Will the dodgy subprimes and shaky collateralized debt obligations (CDOs) trigger a crash or has the risk been wisely dispersed through derivatives trading? No one really knows. As Berg says, "Derivatives numbers are staggering. The Bank for International Settlements estimates that the notional amount of derivatives traded on regulated exchanges topped a quadrillion dollars last year and that the outstanding unregulated off-exchange (called over-the-counter OTC) amount stood at $370 trillion in June 2006. Because the OTC market is composed of endless strings of bilateral transactions the systemic risk is unknown." The comments of the President of the New York Fed, Timothy Geithner, help to clarify the abstruse activities of the modern market: "Credit market innovations have transformed the financial system from one in which most credit risk is in the form of loans, held to maturity on the balance sheets of banks, to a system in which most credit risk now takes an incredibly diverse array of different forms, much of it held by nonbank financial institutions that mark to market and can take on substantial leverage." Geither's right. The markets now operate as unregulated banks generating mountains of credit through massively leveraged debt instruments---a monster credit bubble larger than anything in the history of capitalism. So, where is all this headed? No one really knows. But when the housing bubble crashes into Wall Street's credit bubble,; we can expect the "big bang". That may explain why America's wealthiest investors are running for cover before the whole thing blows. (A number of investors have already cashed out and put there holdings into foreign funds and currencies) One thing is certain ---time is running out. With $1 trillion in subprimes and Alt-A loans headed for default the system is facing its greatest challenge. US- GDP has been revised to a measly 1.8%, foreign investment is down, and the dollar is losing ground to the euro on an almost weekly basis. Falling home prices have already precipitated a number of other problems. For example, Gene Sperling reports in "Housing Bust Meets the Equity Blues" that "The Fed data showed an amazing expansion (in Mortgage-Equity Withdrawal). In 1995, active MEW had been $37 billion. By the fourth quarter of 2005, it soared to $532 billion annualized, a 14-fold expansion". These equity withdrawals have translated into consumer spending which accounts for at least 1 full percentage point of GDP. Declining house prices means that extra boast for the economy will now disappear. Foreclosures are soaring and expected to get worse for the next two years at least. In California foreclosure filings jumped 79% in March alone. Other "hot markets" are reporting similar figures. The glut of new homes for sale on the market has slammed sales of the nation's major builders; most are reporting profits are down by 40% or more. The collapse of the subprime mortgage market is also pushing some big U.S. homebuilders toward Chapter 11. According to Bloomberg News, "Some builders are staying out of bankruptcy by relying on the profits they made when sales boomed" in 2004 and 2005. Starting next year they must begin to repay $3.6 billion in public debt in what will certainly be a falling market. The prospects don't look good. Also, Credit card debt is way up (nearly 7% in one year) and economists are predicting that the trajectory will continue now that home equity is vanishing. Americans savings rate is in negative numbers and the steep increase in credit card debt (with its high interest rates) only compounds the problem. The American consumer has now compiled more personal debt than anytime in history. The Grim Reaper Meets the Housing Bubble Those who follow developments in real estatehave heard many of the wacky anecdotes related to the housing bubble. Stories abound of young people buying homes just to pay off tens of thousands of dollars of collage loans with their "presto"-equity ---or low paid construction laborers securing 105% loans without any proof of income and a poor credit history. One of the stories that got national attention was about Alberto and Rosa Ramirez, who worked as strawberry pickers in the fields around Watsonville each earning about $300 a week. They (somehow?) qualified for a loan of $720,000 which paid for a "new" four-bedroom, two-bath house in Hollister. It's sheer madness! Obviously, those days are over. The speculative frenzy that was generated by the Fed's low interest rates, the banks lax lending standards, and the deregulated global credit market is drawing to a close. The fallout from the collapse in subprime-loans will roil the stock market and hedge funds, but, as Heebner says, the investment banks and brokerage firms will escape without a bruise. Where's the justice? Despite Hank Paulson's cheery predictions, we are no where "near the bottom". In fact, a recent survey showed that only 1 in 7 Americans believe that house prices will go down. Even now, very few people grasp the underlying issues or the potential for disaster. We're on a treadmill to oblivion and they think it's a merry-go-round. As housing prices tumble, more homeowners will experience "negative equity", that is, when the current value of their home is less than the sum of their mortgage. This is the very definition of modern serfdom. We can expect to see an erosion of confidence in the market, a rise in inventory, and a steady increase in defaults.More and more people will walk away from their homes rather than be hand-cuffed to an asset that loses value every day. This could transform a "housing correction" into a nation-wide financial calamity. Many peoples' futures are linked directly to the "anticipated" value of their homes.It is impossible to determine how shocked they'll be when prices retreat and equity shrivels. The housing flame-out has all the makings of a national trauma"another violent jolt to the fragile American psyche. So far, we're still in the first phase of a process that will probably play out for 10 years or more. (Judging by Japan's decades-long decline) None of the bailout plans are large enough to make any quantifiable difference.The numbers are just too big. Housing prices are coming down and the real estate market will return to fundamentals. That much is certain. The law of gravity can only be ignored for so long. Just don't count on a "soft landing". Special thanks to (Housing Crash News) See entire Kenneth Heebner interview at http://patrick.net/housing/contrib/future.html Mike Whitney lives in Washington state. He can be reached at: fergiewhitney@msn.com
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Sim City and John F. Kennedy

2007-04-01T09:15:00.001+10:00

Signs of the Times for Tue, 07 Nov 2006

Laura Knight-Jadczyk

Conservatives are fond of telling us what a wonderful, happy, prosperous nation this is. The only thing that matches their love of country is the remarkable indifference they show toward the people who live in it. To their ears the anguished cries of the dispossessed sound like the peevish whines of malcontents. They denounce as "bleeding hearts" those of us who criticize existing conditions, who show some concern for our fellow citizens. But the dirty truth is that there exists a startling amount of hardship, abuse, affliction, illness, violence, and pathology in this country. The figures reveal a casualty list that runs into many millions. Consider the following estimates. In any one year:

* 27,000 Americans commit suicide.

* 5,000 attempt suicide; some estimates are higher.

* 26,000 die from fatal accidents in the home.

* 23,000 are murdered.

* 85,000 are wounded by firearms.

* 38,000 of these die, including 2,600 children.

* 13,000,000 are victims of crimes including assault, rape, armed robbery, burglary, larceny, and arson.

* 135,000 children take guns to school.

* 5,500,000 people are arrested for all offenses (not including traffic violations).

* 125,000 die prematurely of alcohol abuse.

* 473,000 die prematurely from tobacco-related illnesses; 53,000 of these are nonsmokers.

* 6,500,000 use heroin, crack, speed, PCP, cocaine or some other hard drug on a regular basis.

* 5,000+ die from illicit drug use. Thousands suffer serious debilitations.

* 1,000+ die from sniffing household substances found under the kitchen sink. About 20 percent of all eighth-graders have "huffed" toxic substances. Thousands suffer permanent neurological damage.

* 31,450,000 use marijuana; 3,000,000 of whom are heavy users.

* 37,000,000, or one out of every six Americans, regularly use emotion controlling medical drugs. The users are mostly women. The pushers are doctors; the suppliers are pharmaceutical companies; the profits are stupendous.

* 2,000,000 nonhospitalized persons are given powerful mind-control drugs, sometimes described as "chemical straitjackets."

* 5,000 die from psychoactive drug treatments.

* 200,000 are subjected to electric shock treatments that are injurious to the brain and nervous system.

* 600 to 1,000 are lobotomized, mostly women.

* 25,000,000, or one out of every 10 Americans, seek help from psychiatric, psychotherapeutic, or medical sources for mental and emotional problems, at a cost of over $4 billion annually.

* 6,800,000 turn to nonmedical services, such as ministers, welfare agencies, and social counselors for help with emotional troubles. In all, some 80,000,000 have sought some kind of psychological counseling in their lifetimes.

* 1,300,000 suffer some kind of injury related to treatment at hospitals.

* 2,000,000 undergo unnecessary surgical operations; 10,000 of whom die from the surgery.

* 180,000 die from adverse reactions to all medical treatments, more than are killed by airline and automobile accidents combined.

* 14,000+ die from overdoses of legal prescription drugs.

* 45,000 are killed in auto accidents. Yet more cars and highways are being built while funding for safer forms of mass transportation is reduced.

* 1,800,000 sustain nonfatal injuries from auto accidents; but 150,000 of these auto injury victims suffer permanent impairments.

* 126,000 children are born with a major birth defect, mostly due to insufficient prenatal care, nutritional deficiency, environmental toxicity, or maternal drug addiction.

* 2,900,000 children are reportedly subjected to serious neglect or abuse, including physical torture and deliberate starvation.

* 5,000 children are killed by parents or grandparents.

* 30,000 or more children are left permanently physically disabled from abuse and neglect. Child abuse in the United States afflicts more children each year than leukemia, automobile accidents, and infectious diseases combined. With growing unemployment, incidents of abuse by jobless parents is increasing dramatically.

* 1,000,000 children run away from home, mostly because of abusive treatment, including sexual abuse, from parents and other adults. Of the many sexually abused children among runaways, 83 percent come from white families.

* 150,000 children are reported missing.

* 50,000 of these simply vanish. Their ages range from one year to mid-teens. According to the New York Times, "Some of these are dead, perhaps half of the John and Jane Does annually buried in this country are unidentified kids."

* 900,000 children, some as young as seven years old, are engaged in child labor in the United States, serving as underpaid farm hands, dishwashers, laundry workers, and domestics for as long as ten hours a day in violation of child labor laws.

* 2,000,000 to 4,000,00 women are battered. Domestic violence is the single largest cause of injury and second largest cause of death to U.S. women.

* 700,000 women are raped, one every 45 seconds.

* 5,000,000 workers are injured on the job; 150,000 of whom suffer permanent work-related disabilities, including maiming, paralysis, impaired vision, damaged hearing, and sterility.

* 100,000 become seriously ill from work-related diseases, including black lung, brown lung, cancer, and tuberculosis.

* 14,000 are killed on the job; about 90 percent are men.

* 100,000 die prematurely from work-related diseases.

* 60,000 are killed by toxic environmental pollutants or contaminants in food, water, or air.

* 4,000 die from eating contaminated meat.

* 20,000 others suffer from poisoning by E.coli 0157-H7, the mutant bacteria found in contaminated meat that generally leads to lifelong physical and mental health problems. A more thorough meat inspection with new technologies could eliminate most instances of contamination--so would vegetarianism.

At present:

* 5,100,000 are behind bars or on probation or parole; 2,700,000 of these are either locked up in county, state or federal prisons or under legal supervision. Each week 1,600 more people go to jail than leave. The prison population has skyrocketed over 200 percent since 1980. Over 40 percent of inmates are jailed on nonviolent drug related crimes. African Americans constitute 13 percent of drug users but 35 percent of drug arrests, 55 percent of drug convictions and 74 percent of prison sentences. For non drug offenses, African Americans get prison terms that average about 10 percent longer than Caucasians for similar crimes.

* 15,000+ have tuberculosis, with the numbers growing rapidly; 10,000,000 or more carry the tuberculosis bacilli, with large numbers among the economically deprived or addicted.

* 10,000,000 people have serious drinking problems; alcoholism is on the rise.

* 16,000,000 have diabetes, up from 11,000,000 in 1983 as Americans get more sedentary and sugar addicted. Left untreated, diabetes can lead to blindness, kidney failure and nerve damage.

* 160,000 will die from diabetes this year.

* 280,000 are institutionalized for mental illness or mental retardation. Many of these are forced into taking heavy doses of mind control drugs.

* 255,000 mentally ill or retarded have been summarily released in recent years. Many of the "deinstitutionalized" are now in flophouses or wandering the streets.

* 3,000,000 or more suffer cerebral and physical handicaps including paralysis, deafness, blindness, and lesser disabilities. A disproportionate number of them are poor. Many of these disabilities could have been corrected with early treatment or prevented with better living conditions.

* 2,400,000 million suffer from some variety of seriously incapacitating chronic fatigue syndrome.

* 10,000,000+ suffer from symptomatic asthma, an increase of 145 percent from 1990 to 1995, largely due to the increasingly polluted quality of the air we breathe.

* 40,000,000 or more are without health insurance or protection from catastrophic illness.

* 1,800,000 elderly who live with their families are subjected to serious abuse such as forced confinement, underfeeding, and beatings. The mistreatment of elderly people by their children and other close relatives grows dramatically as economic conditions worsen.

* 1,126,000 of the elderly live in nursing homes. A large but undetermined number endure conditions of extreme neglect, filth, and abuse in homes that are run with an eye to extracting the highest possible profit.

* 1,000,000 or more children are kept in orphanages, reformatories, and adult prisons. Most have been arrested for minor transgressions or have committed no crime at all and are jailed without due process. Most are from impoverished backgrounds. Many are subjected to beatings, sexual assault, prolonged solitary confinement, mind control drugs, and in some cases psychosurgery.

* 1,000,000 are estimated to have AIDS as of 1996; over 250,000 have died of that disease.

* 950,000 school children are treated with powerful mind control drugs for "hyperactivity" every year--with side effects like weight loss, growth retardation and acute psychosis.

* 4,000,000 children are growing up with unattended learning disabilities.

* 4,500,000+ children, or more than half of the 9,000,000 children on welfare, suffer from malnutrition. Many of these suffer brain damage caused by prenatal and infant malnourishment.

* 40,000,000 persons, or one of every four women and more than one of every ten men, are estimated to have been sexually molested as children, most often between the ages of 9 and 12, usually by close relatives or family acquaintances. Such abuse almost always extends into their early teens and is a part of their continual memory and not a product of memory retrieval in therapy.

* 7,000,000 to 12,000,000 are unemployed; numbers vary with the business cycle. Increasing numbers of the chronically unemployed show signs of stress and emotional depression.

* 6,000,000 are in "contingent" jobs, or jobs structured to last only temporarily. About 60 percent of these would prefer permanent employment.

* 15,000,000 or more are part-time or reduced-time "contract" workers who need full-time jobs and who work without benefits.

* 3,000,000 additional workers are unemployed but uncounted because their unemployment benefits have run out, or they never qualified for benefits, or they have given up looking for work, or they joined the armed forces because they were unable to find work.

* 80,000,000 live on incomes estimated by the U.S. Department of Labor as below a "comfortable adequacy"; 35,000,000 of these live below the poverty level.

* 12,000,000 of those at poverty's rock bottom suffer from chronic hunger and malnutrition. The majority of the people living at or below the poverty level experience hunger during some portion of the year.

* 2,000,000 or more are homeless, forced to live on the streets or in makeshift shelters.

* 160,000,000+ are members of households that are in debt, a sharp increase from the 100 million of less than a decade ago. A majority indicate they have borrowed money not for luxuries but for necessities. Mounting debts threaten a financial crack-up in more and more families.

A Happy Nation? Obviously these estimates include massive duplications. Many of the 20 million unemployed are among the 35 million below the poverty level. Many of the malnourished children are also among those listed as growing up with untreated learning disabilities and almost all are among the 35 million poor. Many of the 37 million regular users of mind-control drugs also number among the 25 million who seek psychiatric help.

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Ministers stall radical shake-up of council tax

2007-03-31T15:09:00.001+10:00

· No revaluation or extra bands before at least 2011

· Tourist tax and levies on charity shops also blocked

David Hencke, Westminster correspondent

Thursday March 22, 2007

The Guardian

The biggest review of local government for 40 years yesterday proposed radical reforms of council tax, including new bands for the most expensive homes and levies on charity shops as well as farms and derelict properties.
The sweeping proposals provoked an immediate response from ministers who tried to avoid a political row by either postponing or scrapping many of the ideas, although the study was commissioned by the Treasury three years ago.

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Phil Woolas, the local government minister, kicked into the long grass proposals by Sir Michael Lyons, professor of public policy at Birmingham University, for a revaluation and rebanding of council taxes, until 2011 at the earliest.
The move would see multi-millionaires being asked for more than double the present amount of council tax - some paying £5,120 a year - for homes worth £2.5m or more. The decision also meant the poorest owners, living in properties worth less than £81,000, would continue to pay £846 a year.
Following furious reaction, the ministry also blocked plans to consider a new tourist tax on hotel beds and a proposal to look at ending council tax exemption for charities' premises, which would have raised £724m.
The British Hospitality Association said Sir Michael's tourism tax plan was "muddled and highly discriminatory" and amounted to another stealth tax.
Stephen Bubb, chief executive of the Association of Chief Executives of Voluntary Organisations, said: "This ill-judged recommendation will be bitterly opposed by the third sector. I have been in touch with the third-sector minister, Ed Miliband, to urge him not to implement the recommendation."
The government also blocked proposals to take council tax spending out of ministers' hands via an independent grants commission, and ruled out abolishing powers to cap huge council tax rises.
Ministers seized immediately on a proposal which would raise £1.3bn for local authorities by levying council tax on empty and derelict buildings. Although Sir Michael said this should be reviewed, Gordon Brown announced the first tranche of the new tax in the budget. The rest would follow. Ministers also committed to raising a further £450m by confirming they would review farmers' exemption from council tax, and will look at allowing councils to charge for rubbish collection.
Other proposals are to go to consultation. They include a plan, exclusively reported in the Guardian yesterday, for a supplementary business rate to pay for huge transport projects such as London's Crossrail, and Manchester's expanded tram system.
Sir Michael has wanted special help for pensioners and the low paid who claim council tax benefits. He proposed replacing the benefit with an automated rebate for all pensioners with savings of up to £50,000 a year. He said that the unclaimed £1.8bn could go to pensioners. Mr Woolas was not keen on immediately implementing this, preferring to promise to get councils to improve take-up of the benefit.
Launching the report in London, Sir Michael said: "Council tax is not 'broken' but is seen as unfair." He reluctantly accepted that the government's stance meant revaluation was "an issue for the future", but believed that any property tax should be revalued regularly.
His report said that local government needed to be more trusted by the public and lead regeneration, improve people's skills and have a big say on transport. "Central government needs to leave more room for local discretion ... while local government needs to strengthen its own confidence and capability ... and stop asking for central direction."
Yesterday the shadow local government secretary, Caroline Spelman, called the report a "tax bombshell" for working families and pensioners. "Nice neighbourhoods and the rising value of homes will all mean higher council tax bills. Regular revaluations will turn council tax into a home improvement tax - taxing your patio, your conservatory and garden."
She said "rubbish taxes" could damage public health and the environment, leading to a surge in fly tipping and backyard burning. "This isn't a green tax, it's an excuse to tax more by stealth."
Main points: Winners and losers
· Council tax to remain main source of local authority taxes. Local income tax rejected. Revaluation of all homes in England - above average income home owners will pay more, poorest less
· Three new top council tax bands for properties above £545,000 to £2.5m, new split lower tax band for lowest properties under £102,000
· Replace council tax benefit with an automated rebate with aim of giving £1.8bn unclaimed cash to pensioners and raise savings allowance to £50,000.
· Abolition of government capping of local authority council tax
· Examine removing council tax exemptions for farms and farm buildings to raise £450m. Examine removing council tax exemption on derelict and empty property to raise £1.3bn
· Examine removing council tax exemption on charity shops and HQs to raise £724m
· New powers to charge for domestic refuse collection to tackle waste
· New tourist tax
· New supplementary business rate to pay for major infrastructure projects from Crossrail in London to extension of metro in Newcastle and tram system in Manchester
· New powers for councils to co-ordinate and lead economic development and planning issues and to regulate bus services
· Independent grants commission to set local council spending levels

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Lyons' lost pride

2007-03-30T08:27:00.001+10:00

By shelving Sir Michael Lyons' recommendations on council tax reform, Gordon Brown has turned his back on a historic opportunity.
March 23, 2007 11:30 AM | Printable version
Gordon Brown should hang his head in shame. Not for the budget, but for the government's response to yesterday's side show, the convenient launch of the report he commissioned three years ago, calling for a radical reform of local government finance and powers.
The man who would be prime minister threw away an opportunity for a real change that would have hit the rich and helped the poor. Sir Michael Lyons, professor of public policy at Birmingham University, in a well-argued report, said the time had come for a radical overhaul of council tax. He proposed a really big increase for the multi-millionaire class in the amount - some 100-200% more - they contribute to the local community and some much needed help for the poorest first-time buyers, scraping to buy the last remaining homes worth less than £102,000 in England.
Phil Woolas, the local government minister, with Treasury backing, within hours of its publication threw out the plan for at least the next five years. This was great news for Russian oil tycoon and Chelsea football club owner, Roman Abramovich, and Labour donor and Indian steel magnate, Lakshmi Mittal, to name but two people with property worth in excess of £2.5m. They have saved paying anything up to an extra £3,000 a year - a cool £15,000 for the next five years. For magnates like them, this is loose change compared to the billions they spend every year, but no doubt they would be delighted that a Labour chancellor is so keen to make sure they avoid any unnecessary tax.
Rather surprising, though, is the reverse side of the coin of Gordon Brown's decision. By not doing anything, he has also mugged the wallets of the inner-city poor. For a chancellor who makes such a issue of taking millions of poor people and their families out of the poverty trap, he has actually thrown out, on Michael Lyons' figures, the chance of rebating £150 a year in council tax to those living in the cheapest property. Unlike the other group, I have a feeling they could find quite of lot of uses for the extra £750 they would have had for the next five years.
No doubt, Gordon will say that the poorest would be able to claim council tax benefit, anyway. But that case is crushed by Sir Michael as well, when he points out that there is £1.8bn unclaimed council tax benefit because of complications and stigma in filling in forms. He has a good answer for that: give them an automated rebate instead. But guess what? The government, faced with paying out with almost as much as they can raise on a 1p income tax, isn't keen on doing that immediately either.
If Gordon has wimped out on doing anything redistributive on council tax, the Tories have even been worse. Caroline Spelman, their spokeswoman, issued hysterical statements warning the middle class, Daily Mail readers, of tax bombshells if they repaved their patios. She appears to want to preserve the ludicrous 1991 valuations, which are presently used to work out council taxes (even for homes built in 2007), in aspic. No doubt, if council taxes had not been invented, she would still be defending medieval tithes, as the best way of raising taxes.
The Liberal Democrats' plan to replace the council tax with a local income tax is also exposed in the report as not being properly thought-out. This left Labour with a chance to be bold, to go out and argue that those who have made the most out of England's obession with ever-rising property prices should pay a little more tax. The change would have left those in the middle neither better-, nor worse-off. But I was forgetting that the old "s" word, socialism, is only used by Gordon as a bit of rhetoric at trade-union rallies.
sirmichaellyons gordonbrown philwoolas counciltax treasury chancellor carolinespelman propertyprices propertyvaluations
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Single mothers with three-year-olds may have to seek work

2007-03-30T08:04:00.001+10:00

By Andrew Grice, Political Editor

(Privilieged Champion)

Published: 06 March 2007

Single mothers could be forced to seek work when their youngest child reaches the age of three, or face benefit cuts under wide-ranging government plans to reform the welfare state.

At present, lone parents do not have to make efforts to find jobs until their youngest child is 16. That is expected to be reduced to 12 from next year under proposals by David Freud, an investment banker who reviewed the Government's welfare-to-work strategy.

Mr Freud said that Britain could eventually shift to a Scandinavian-style system where single mothers have to seek work when their youngest child is three. Ministers admitted that was only a long-term idea, but suggested the age could be lowered from 12 in stages as Labour honours its pledge to provide all-day child care from 8am-6pm from 2010.

If they did not try to find at least a part-time job, lone parents would face the same sanctions as the unemployed, who can lose benefits for refusing to attend job interviews or training.

Other elements in the Freud review include an expansion of the role of private and voluntary groups to help "hard to reach" jobless people back into work through one-to-one counselling. They will be paid a bonus if someone remains in work for three years, but trade unions criticised the "part-privatisation" of the benefits system and warned that jobs would be lost.

Another controversial proposal is for stricter tests for new claimants for incapacity benefit. The partners of the unemployed would face similar pressure to find work.

Gordon Brown, who is expected to become prime minister this summer, promised to "champion" the reforms set out in the Freud report and said they would be taken forward in his Budget in two weeks' time and a government-wide spending review this summer. The Chancellor launched the report yesterday along with Tony Blair and John Hutton, the Work and Pensions Secretary, in a clear signal that he would continue the reforms.

Mr Brown signalled a drive to prevent teenagers slipping through the net when they leave school. The 16-25 year-old age group could be offered special allowances, but they would lose them if they did not go into training, work or full-time education.

Mr Hutton said looking for work when a child reached the age of 12 was a "perfectly reasonable starting point", adding that there was a case for progressively reducing the age even further in the future.

But the plans have run into immediate controversy. Chris Pond, chief executive of One Parent Families, said: "Taking a strong-arm approach to these parents would be wholly counter-productive, intensifying the pressures on them while deterring those lone parents who are work-ready from coming forward for the excellent voluntary, New Deal scheme."

The Freud review recommendations

* JOBS

To achieve the Government's "extremely challenging" target of an 80 per cent employment rate, it should help get 1.3 million of the 3.1 million people who have been on benefits for more than a year into work - including 300,000 of the 780,000 lone parents on income support and one million of the 2.68 million people on incapacity benefit.

* PROVIDERS

Jobcentre Plus, the Government's network, should focus on the easier-to-place jobless while private firms and voluntary groups should tackle the hard-to-reach groups such as the long-term unemployed, who often suffer multiple deprivation and need one-to-one support.

* LONE PARENTS

The report's author, David Freud, said that "work is an escalator out of poverty" for single mothers. He proposed that they should have to seek work when their youngest child is 12, rather than 16 as at present, and said the age could be gradually reduced to as low as three. He cited the system in Denmark and Sweden, where the rate in effect is three but there is greater child care provision.

* SICK AND DISABLED

Stricter tests for new claimants of incapacity benefit should gradually be extended to all 2.68million people on the benefit. The system requires people capable of some work to take up job or training opportunities.

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Foreclosures May Hit 1.5 Million in U.S. Housing Bust (Update3)

2007-03-17T20:21:00.001+11:00
March 12 (Bloomberg) -- Hold on to your assets. The deepest housing decline in 16 years is about to get worse. As many as 1.5 million more Americans may lose their homes, another 100,000 people in housing-related industries could be fired, and an estimated 100 additional subprime mortgage companies that lend money to people with bad or limited credit may go under, according to realtors, economists, analysts and a Federal Reserve governor. Financial stocks also could extend their declines over mortgage default worries. The spring buying season, when more than half of all U.S. home sales are made, has been so disappointing that the National Association of Home Builders in Washington now expects purchases to fall for the sixth consecutive quarter after it predicted a gain just last month. ... Subprime lenders Ameriquest Mortgage Co. in Irvine, California; Ownit Mortgage Solutions LLC and WMC Mortgage Corp., a subsidiary of General Electric Co., in Woodland Hills, California; Mortgage Lenders Network USA Inc. in Middletown, Connecticut and Fremont General Corp. together have fired more than 5,600 workers in the past year...New Century already has cut 300 jobs and its 7,000 remaining employees are waiting to see if the company will survive. ...Defaults may dump more than 500,000 homes on a housing market already saturated with leftover inventory built during boom times, New York-based bond research firm CreditSights Inc. said in a March 1 report. ...Mortgage defaults may climb to $225 billion over the next two years, compared with about $40 billion annually in 2005 and 2006, according to debt strategists at Lehman Brothers Holdings Inc. The portion of subprime loans more than 60 days delinquent or in foreclosure rose to 10 percent as of Dec. 31, from 5.4 percentin May 2005, the highest in seven years, according to data compiled by Friedman Billings Ramsey Group Inc. of Arlington, Virginia. "What we're seeing in this narrow segment is the beginning of the wave, This is not the end, this is the beginning.'' Bies said.
To contact the reporter on this story: Bob Ivry in New York at bivry@bloomberg.net
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Supervisors Re-Examine Affordable Housing

2007-03-14T01:10:00.000+11:00
Mar 13, 2007 By Anthony Ha Hollister- The Board of Supervisors will discuss revising the county's affordable housing policies at its meeting today. County Planning Director Art Henriques said he will present a series of staff recommendations and ask the supervisors to provide further direction. Those recommendations include reducing the county's 30 percent inclusionary housing requirement, changes to its inclusionary housing fees and the addition of a full-time housing analyst to the county's planning staff. According to Henriques, the last sizable affordable housing development built in unincorporated San Benito County was the Riverview Estates, a development completed in 2002. The supervisors held a special study session on Jan. 30 to discuss affordable housing issues. At the meeting, planning staffers acknowledged that existing policies haven't led to the creation of much affordable housing - only three developers have paid the county's inclusionary housing fee since the fee was approved in 2003. And of those, two have received refunds. Many of the meeting's speakers were critical of the county requirement that developers sell 30 percent of their housing at less-than-market rates or pay in-lieu fees. Beverly Bryant, executive director of the Home Builders Association of Northern California, southern division, said the inclusionary housing requirement is too high and scares developers away from San Benito County. And since development is needed to fund affordable housing, everyone loses, she said. "I think what the county needs to do is look realistically at what it's set up," Bryant said. "If there has to be inclusionary zoning, there are ways to do it to make more housing available, more housing at lower cost." Henriques said the 30 percent requirement is much higher than that found in neighboring counties. "Our sense from surveys is that 15 to 20 percent is not unreasonable for communities in California that have (a similar) requirement," Henriques said. At January's meeting, county planner Byron Turner said that if the inclusionary housing fee is updated to match increasing affordability requirements, it could jump from $27,019 to $109,755 per unit. Henriques said Monday that the supervisors are interested in lowering the fee, as well as broadening it to include the builders of individual homes, not just the developers of large subdivisions. Henriques said the supervisors will need to tell staffers which efforts should take top priority. "Working on these issues takes staff time," he said. The lack of time, Henriques added, is the main reason he's recommending the addition of a full-time housing analyst who would both work on county housing issues and coordinate with the City of Hollister, local nonprofits and developers. "We don't have a person who can pull all this together," Henriques said. Supervisor Pat Loe said she's interested in looking at policies in other counties. She noted that - as described by Assemblywoman Anna Caballero in her recent visit to San Benito County - Salinas has an a flexible inclusionary housing requirement, ranging from 20 to 35 percent. Developers who provide more affordable housing also have more flexibility about how they build, Caballero said. "That's a good place to start," Loe said. Many believe that the supervisors aren't going to resolve the issue at today's meeting, or at their retreat next week. "The solutions are going to take a while," Bryant said. "They're not going to come overnight." Anthony Ha covers local government for the Free Lance. Reach him at 831-637-5566 ext. 330 or aha@freelancenews.com.
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GE Money: Time to put the low doc loans genie back in the bottle.

2007-03-13T04:19:00.000+11:00
Crikey.com Glenn Dyer writes: Some of the biggest names in US finance have been caught up in the spreading collapse of the so-called sub-prime mortgage market. These include Citigroup, HSBC, Goldman Sachs, GMAC and General Electric's finance arm, GE Money which operates in Australia and aggressively markets similar loans through the Wizard Home Loans operation it bought in late 2004. The crisis in the US sub-prime mortgage market (that's what we call no doc/low doc housing loans with no deposit) is worsening with the second biggest lender in the area likely to go bankrupt very shortly. It's just not an isolated event: the sub-prime mortgage market in the US has been responsible for much of the boom in home prices over the past two years as more and more money has been lent. Some US analysts say that it has been the single most important factor in the US housing boom, which peaked last year and then collapsed, threatening the rest of the US economy. Now billions of dollars of mortgages are going bad as default rates skyrocket, people lose their homes and new lending dries up. GE Money bought a small sub-prime lender called WMC Mortgage Corp in April 2004, fed it billions of dollars and watched it jump from number 12 to number five among sub-prime lenders. Last Friday it shut off new loans, closed several offices and laid off at least 20% of its staff, some 450 people, as the realisation grew that it is going to lose a lot of money for GE. The reason for the problems is that many loans were sold not only as 100% financings with no deposit and no or low documentation, but they contained cheap starter rates where the initial interest rate was held down for six months to more than a year. Those higher rates are now kicking in and many people can't afford them: as well as the value of their houses being dragged down by the fall in the overall housing market. It's a horrible double whammy that has seen the industry contract and turn off the lending tap in the space of a month. And why is this important in Australia? The purchase of WMC gave GE Money a taste for similar businesses and six months later it bought Wizard Home Loans and its parent, from a group of investors which included PBL, founder Mark Bouris and ABN Amro. Last weekend saw Wizard advertising a new offering of a no doc/low doc loan with 100% finance (ie, no deposit), the very product it has stopped offering in the US because the business is imploding. Here's the Wizard Website with its 100% finance offered in the banner headline at the top of the page. There are growing problems with no doc/low doc/no deposit loans here, especially in the suburbs of western and southwestern Sydney where foreclosures are still rising and house prices are falling. It's not the crisis it is in the US but it makes you wonder how GE can continue to offer this sort of finance here, with our problems, and knowing the problems that it has got itself into in the US.

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Rental Crisis

2007-02-27T11:46:00.000+11:00
Today's Perspective ABC Radio Natitional I hope I'm not the only one who sees the irony in Australia's economic crisis du jour-the chronic shortage of rental accommodation? A shortage of houses and apartments for rent? Hang on, didn't we just have Australia's biggest ever housing boom? Wasn't the boom driven by investors, rather than homebuyers? Weren't all those "Mum and Dad" investors building units for rental accommodation? If so, how come we've run out of rental housing, just two years after the boom ended in the Eastern States? And is the solution simply to drive rents up ten or twenty per cent, as seems to be happening? Or should we just abolish stamp duty to kick life back into the building industry and solve the problem with another round of speculative building, as the Property Council recommends? No way! What we should do instead is take stock of precisely why we've ended up in this completely senseless pickle. The root cause of the problem is that speculation, and not investment, has determined how many houses are built in Australia. So-called investors purchased apartments, not to rent them out, but to make a profit by selling them down the track for a higher price. In fact, they expect to lose on their rental income, because that earns a nice little tax break, from the combination of negative gearing and a 50% tax rate on capital gains. This scam worked a treat while housing prices went ever higher, and there was always another "investor" willing to grab the baton on this relay race into the stratosphere. But its days have come to an end. Prices have been driven so high that, not only can first home buyers no longer afford them, but even "investors" no longer believe that there will be other "investors" further down the track. As a result, the supply of new housing has dried up, and simultaneously we've realised that not all that much was being built anyway, relative to demand: why build a new place, when the negative gearing and capital gains tax trick work just as well on a second hand place? Let's face it: this was always a foolish way to run a property industry, and it was always going to come to grief. Many years ago, a certain prescient economist, writing of a similar period of economic madness, put it superbly: "Speculators", Keynes wrote, "may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done." Ill-done indeed! And the legacy of our speculation-driven property market is not restricted to the unpalatable combination of unaffordable houses, excessive rents and inadequate accommodation. The truly insidious side of the housing casino is the debt it's led us to accumulate. The Reserve Bank noted this week that housing prices rose 175 per cent from the mid-1990s. But mortgage debt rose by almost 450 per cent over the same period! As a result, if prices fall, many "investors" will have debts that exceed the value of their investments. We are now in the invidious situation of having house prices that we can't afford, and yet we also can't afford to have them fall. The solution is certainly not to alter policies so that the bubble resumes, speculators once again start building apartments in order to sell them to other speculators, and as a by-product, renters can once again find apartments rented by landlords who are losing money on the deal. Instead we have to find a way to have a housing industry that builds on the basis of demand for accommodation-and not on the basis of tax-supported speculative gains. That policy isn't likely to be found by looking in the Anglophile countries, all of which seem afflicted by the casino approach to property. It's more likely to involve rental arrangements similar to those of Europe, where tenants have-or had-greater rights and longer-term tenancies. Working out the details of such a policy, and introducing it into Australia's home-ownership obsessed culture, won't be easy. But ultimately something like it has to be done. What would be easier now, and what would have been impossible at any previous time, would be to abolish negative gearing and the preferential tax treatment of capital gains on property. Negative gearing, and the concession on capital gains, only work when property prices are rising-and not only is that the last thing we need, at the moment it's also the last thing most Australians expect. Guests Steve Keen Associate Professor Economics and Finance University of Western Sydney
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Venezuela to begin imposing tax on idle lands in April

2007-02-24T20:57:00.000+11:00

The Associated Press

Published: January 23, 2007

CARACAS, Venezuela: President Hugo Chavez's administration plans to impose an extra tax starting in April on landholders who fail to obey a government plan for their land, Venezuela's tax agency said Tuesday.

Under legislation approved in 2001, landholders must pay a tax if they fail to register their lands and put them to adequate use by following a government-designed production plan.

Jose Gregorio Vielma Mora, superintendent of the tax agency, told the local Globovision television channel that government officials have yet to establish rates for the levy.

The tax falls in line with Chavez's drive to establish what he calls "21st-century socialism," redistributing the country's immense oil wealth to the poor, the agency in a statement.

The government grades land into five different quality ratings based on soil, location and other factors. Owners must use land for products that are best suited to it. The new tax will be applied to those who fail to do so.
Chavez claims large landholdings are responsible for the failure of agricultural production in Venezuela, which depends heavily of oil production for economic development.

Government officials have begun inspecting large estates, many of which encompass more than 5,000 hectares (12,350 acres), to determine if they are underused or if their ownership may be legally disputed.
Critics of the land-reform initiative claim it violates property rights outlined in Venezuela's Constitution.
Vielma Mora said agency officials have not received details about Chavez's plan for a new luxury tax on property such as second homes, expensive cars and art collections. Chavez announced plans for the tax on Sunday during his weekly radio and television broadcast.

"I want you to know that there's no type of passion for taking away planes, helicopters, yachts, motorboats," he said. "We want those who make more (money), who have a superior quality of life, to contribute to improve our country through solidarity."

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Low-rent housing system to cover all Chinese cities, towns this

2007-02-16T16:49:00.000+11:00

People's Daily Online -- Low-rent housing system to cover all Chinese cities, towns this
UPDATED: 17:00, February 15, 2007 Low-rent housing system to cover all Chinese cities, towns this font size A low-rent housing system tailored to low-income earners will cover all Chinese cities and towns this year, sources with the Ministry of Construction said on Thursday. The sources said that by the end of 2006, 512 Chinese cities had established a low-rent housing system, accounting for 77.9 percent of the nation's total of 657. Money used to build low-rent houses cumulated to 7.08 billion yuan (919.5 million U.S. dollars) nationwide, nearly 50 percent more than the 2005 yearend level. By the end of last year, 547,000 low-income families had benefited from the low-rent housing system. Of the total, 219,000 households joined the system in 2006, a growth of 66.6 percent from 2005, the sources said. The system should cover the remaining 145 cities this year, according to a working agenda of the Ministry of Construction. Source: Xinhua
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British banks told to plan for 40% crash in housing

2007-02-16T16:44:00.000+11:00

By Patrick Hosking The Times, London Thursday, November 16, 2006 Banks in the United Kingdom have been ordered by financial regulators to assess how they would cope in the event of house prices crashing by 40 percent. The instruction to include a housing slump scenario in their stress-testing models comes after the Financial Services Authority found that some banks were failing to include gloomy enough assumptions in their modelling. The FSA said yesterday that an "appropriate" benchmark was to assume property prices fell by 40 percent and that 35 percent of mortgages in default ended with homes being repossessed. It stressed that this was not a forecast but a "severe but plausible scenario" and one that banks should examine when deciding how robust their balance sheets were. In a speech to the British Bankers' Association yesterday, Clive Briault, the FSA's managing director for retail markets, remarked on banks' differing views over the size and impact of a house market downturn, and hence the need for reference points. He also warned bankers to ensure that they have properly stress-tested their mortgage portfolios in the wake of decisions by some to lend people greater multiples of their incomes. In a letter to bank chief executives last month the FSA accused some of failing to consider scenarios in which they might be forced into losses, dividend cuts or capital shortfalls. "We were struck by how mild the firm-wide stress events were at some of the firms we visited," wrote the FSA's director of major retail groups, David Strachan. A few banks were "weak in all respects" in stress-testing. House prices fell about 15 percent nationwide in, and in parts of East Anglia by 40 percent, leading to repossessions, write-downs, and bank losses. Banks are obliged to stress-test hypothetical adverse movements in asset prices, interest rates, and exchange rates to ensure that they have a sufficient capital cushion. But stress-testing is only as robust as the assumptions made. The FSA move came as UK house prices grew at their fastest for four years, according to new figures from RICS.
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British banks told to plan for 40% crash in housing

2006-12-01T21:33:00.000+11:00

By Patrick Hosking The Times, London Thursday, November 16, 2006 Banks in the United Kingdom have been ordered by financial regulators to assess how they would cope in the event of house prices crashing by 40 percent. The instruction to include a housing slump scenario in their stress-testing models comes after the Financial Services Authority found that some banks were failing to include gloomy enough assumptions in their modelling. The FSA said yesterday that an "appropriate" benchmark was to assume property prices fell by 40 percent and that 35 percent of mortgages in default ended with homes being repossessed. It stressed that this was not a forecast but a "severe but plausible scenario" and one that banks should examine when deciding how robust their balance sheets were. In a speech to the British Bankers' Association yesterday, Clive Briault, the FSA's managing director for retail markets, remarked on banks' differing views over the size and impact of a house market downturn, and hence the need for reference points. He also warned bankers to ensure that they have properly stress-tested their mortgage portfolios in the wake of decisions by some to lend people greater multiples of their incomes. In a letter to bank chief executives last month the FSA accused some of failing to consider scenarios in which they might be forced into losses, dividend cuts or capital shortfalls. "We were struck by how mild the firm-wide stress events were at some of the firms we visited," wrote the FSA's director of major retail groups, David Strachan. A few banks were "weak in all respects" in stress-testing. House prices fell about 15 percent nationwide in 1989-1992, and in parts of East Anglia by 40 percent, leading to repossessions, write-downs, and bank losses. Banks are obliged to stress-test hypothetical adverse movements in asset prices, interest rates, and exchange rates to ensure that they have a sufficient capital cushion. But stress-testing is only as robust as the assumptions made. The FSA move came as UK house prices grew at their fastest for four years, according to new figures from RICS.
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Virtual Land

2006-11-13T16:40:00.000+11:00
Richard Siklos Fly, be free Fly, be free The Age: Games Review Philip Rosedale, chief executive of Linden Labs, the San Francisco company that operates Second Life, says that until a few months ago only one or two real-world companies had dipped their toes in the synthetic water. But more than 30 companies are now working on projects there and dozens more are considering them. "It's taken off in a way that is kind of surreal," Mr Rosedale says. ....Linden Labs makes most of its money leasing "land" to tenants, Mr Rosedale says, at an average of roughly $US20 per month per "acre" or $US195 a month for a private "island." The land mass of Second Life is growing at about 8 per cent a month and now totals "60,000 acres", the equivalent of about 246 square kilometres in the physical world. Linden Labs, a private company, does not disclose its revenue....As many as 10,000 people are in the virtual world at a time....(a US Congressional committee is reportedly considering taxing virtual assets and incomes). ...Sony BMG is also toying with renting residences in the complex and selling music downloads that people can listen to throughout the simulated world..."Users are the content - that's the thing that everybody has a hard time getting over," says Michael Wilson, the chief executive of Makena Technologies, which operates its own virtual world, There.com.
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Housing Affordability - The Other side of the debate

2006-11-07T14:58:00.000+11:00

Tuesday, November 07, 2006
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Water charging system defies logic

2006-10-28T03:56:00.000+10:00
Belfast Telegraph
22 September 2006 The decision to link water rates to the value of a home defies all logic. It seems that a system based on the actual usage of water would be fairer. I lived in Canada for 30 years and we paid our water bills based on usage plus sewer rates. I fail to see how this new system is fair if a home, valued at £100,000 with six people living in it and using more water, would pay less than a home valued at £200,000 with two elderly people. Is it not possible to install meters in every home? Taken on top of the new rates valuation system this may well force many elderly householders on fixed income to sell their homes. It's not their fault that real estate values have gone through the roof. I'll wager that if property values drop drastically you will not see a drop in your rates. For that we will have to fight them for it. S J Ross Belfast
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How Government Destroys Moral Character

2006-10-28T03:31:00.000+10:00
by Robert Higgs: "
...I thought about this matter for the umpteenth time when I read an October 15, 2006, Washington Post story by Gilbert M. Gaul, Dan Morgan, and Sarah Cohen, 'Aid Is a Bumper Crop for Farmers.' The story concerns the widespread practice of farmers' receiving, first, subsidies to purchase crop insurance, then payments from that insurance when their crops fall short, and then, on top of that payoff, additional government payments denominated 'disaster aid.' Many farmers routinely collect large amounts of money from the public treasury by means of this double-dipping – altogether they've extracted almost $24 billion from taxpayers to fund crop-insurance and disaster-aid programs since 2000. The reporters interviewed several farmers and others not only about the workings of these programs but also about their propriety. Although none of the recipients quoted in the article exactly gloated about his serial commission of the offense, none chose simply to condemn it, either. The prevailing attitude seems to be the one expressed by farmer Charles Fisher, of Tulare County, California: "Whether it's right or wrong, if they are offering it, you're foolish to turn it down." In that single sentence, Fisher has encapsulated the rotten core of the welfare state, and he has concisely expressed how such a state destroys the people's moral character. The loot is there for the taking; you're a fool not to take it, notwithstanding that your taking it may be wrong. Financial gain trumps moral probity. Don't be a chump; take the money. I don't know Charles Fisher, but if he is like a great many others who profit by despoiling their fellow man, with government acting as the facilitator of the crime, then I suspect that he is probably not the kind of man who would pocket his neighbor's wallet if he saw it fall to the ground unnoticed, and he is almost certainly not the kind of man who would wait beside the road to carry out an armed robbery of the first passer-by. Yet he will steal from countless strangers – in effect, a little bit from everyone who pays federal taxes – "whether it's right or wrong," simply to bulk up his income from farming. (Needless to say, the so-called disaster payments rarely go to anyone who has suffered a genuine disaster; like most of what the government does, this program is for the most part a sham from the get-go.) It would be tempting to attribute this agri-plunder to some idiosyncratic moral defect caused by the farmers' spending too much time in the sun. We might recall, for example, H. L. Mencken's trenchant description of the American farmer: "No more grasping, selfish and dishonest mammal, indeed, is known to students of the Anthropoidea." Unfortunately, however, the farmers are morally the same as countless others; they are simply more politically successful than most of the others. Sad to say, for every specific form of farmer swag, the government must open the door to a thousand other sorts of booty completely unrelated to agriculture. The moral rot is comprehensive, not confined to a few bad apples, and it defiles businessmen, doctors, lawyers, clergymen, students, retirees, and countless others along with the farmers. Virtually everybody has checked his morality along with his pistol at the entrance to the legislature. "The state," Frédéric Bastiat told us long ago, "is the great fiction by which everybody tries to live at the expense of everybody else." If only the great man could see us now. Even he might be amazed, and appalled, by the heights to which this futile quest has been raised. In fact, this hoary fantasy arguably has become the central truth about government in our time.
"
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Know it now.

2006-10-28T02:51:00.000+10:00
St. Petersburg Times | tampabay.com "
DAVIE, Fla. (AP) -- Democrat Jim Davis and Republican Charlie Crist each promised to do something about ...property taxes if elected governor, but criticized each other's approach to the problems during their first debate Tuesday. Crist supports changing the constitution to allow voters to double the homestead exemption county by county, and to make it easier for property owners to move without paying higher taxes on their more valuable homes. But Davis said the plan would take four years to help homeowners and would come at the expense of renters and business owners. He said he would propose a $1 billion property tax cut next year that would help all home and business owners.
"
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Urban Renewal's Final Implosion

2006-10-22T15:23:00.000+10:00
washingtonpost.com: "
CITIES IN RUBBLE By Jonathan Finer Page 4 NEW HAVEN, Conn. Veterans Memorial Coliseum, which for the past three decades has occupied -- some say blighted -- a downtown block of this oft-maligned city, is expected to be demolished next month. ...When the coliseum opened in 1972, New Haven officials had hoped that the 10,000-seat stadium would usher in a more prosperous era for a city with high rates of poverty and crime. But by 2002, after too many seasons with too few paying customers, the massive building was shuttered; local authorities projected that it would lose $50 million over 10 years, and that tearing it down would cost a fraction as much. The coliseum's destruction will be a depressing coda for Urban Renewal, the controversial nationwide movement that reshaped dozens of American cities from the late 1940s through the 1970s, claiming large swaths of rundown neighborhoods for huge government public works projects. Its foremost laboratory was New Haven, where officials spent $745 per resident on urban renewal projects from the 1940s through the late '60s, more than twice as much as the next most ambitious city (Newark, $277). The coliseum was the showpiece. Urban renewal spread quickly after a 1949 housing act authorized and partly funded the taking of private land by eminent domain. Flush with federal money, states and cities rushed to adopt the model perfected by Robert Moses, a mid-20th-century power broker responsible for most of New York City's modern infrastructure of bridges and tunnels, parkways and highways. His imitators around the country seized entire neighborhoods, bulldozed them flat, and constructed new roads and grandiose civic buildings. The goal was to provide "a decent home and suitable living environment" for all Americans by demolishing downtown slums, but the result was something different. Hundreds of thousands of residents, many of them black and poor or recent immigrants, were forced out. Much of Boston ($218 per resident, third on the list), including the historic West End neighborhood, was demolished to build apartment towers, a sprawling City Hall plaza and a giant elevated highway (the recent notoriously overdue and over-budget Big Dig was a costly effort to bury that roadway). Pittsburgh ($160, fourth place) built most of its downtown "Golden Triangle" during this time. In the District ($94, eighth among U.S. cities), acres of the southwest quadrant of the city were razed and rebuilt in this manner during the 1950s, with only a few stray markets, churches and townhouses left intact. In New Haven, as elsewhere, the results were mixed at best. In a book about the city's architecture written shortly after the coliseum was built, historian Elizabeth Mills Brown wrote breathlessly of its "gigantic scale" and the spectators' "experience of sheer spatial intoxication." But long before Bob Hope crooned at the building's debut concert, locals had already begun to carp that its design was a monstrosity, drawn from an aptly named architectural movement called Brutalism. Its three-story rooftop garage cast a bizarre silhouette on the skyline, and the spiral-shaped concrete parking ramps proved difficult to navigate. Two planned department stores never really took hold, and are now vacant. Today, the area is the deadest part of New Haven. "The day it was built," the Coliseum "already almost had the feel of a ruin to it," said Douglas Rae, author of a recent book about New Haven and urban development and a professor at Yale, whose leafy Gothic campus is half a mile up the street. "It is really an appalling thing to look at." ...At a series of public hearings in recent years, backers of the coliseum pitched redevelopment plans. But toward the end of a 2003 gathering, Mayor John DeStefano Jr. took the microphone. "Be realistic," he implored. "It never created any economic activity around it. It didn't even sustain a bar on the corner." As in many Northeastern cities that were once industrial centers, the coliseum's plight was but one symptom of the city's economic crisis. Even the gun manufacturer that made New Haven famous -- the U.S. Repeating Arms Co., producers of Winchester, "the gun that won the West" -- has finally ended a 140-year association with the city by closing a factory that was once the largest local employer. It was New Haven's last remaining major manufacturer. These days, theories of urban renewal have themselves been modernized. Urban planners now advocate community-oriented approaches to development, in which residents and business and political leaders are more involved in decision-making. But New Haven officials are still in love with the Big Idea. The latest large-scale scheme to transform the city is the $230 million Gateway Downtown Development Project, slated to include a sprawling community college campus, a theater and a hotel complex. There are also plans to spruce up nearby streets with wider sidewalks and antique lampposts, in the hope of reviving street life. "The city keeps putting all of its eggs in one big basket," Rae said. "I'd be happier if they subdivided the land the coliseum is on, sold it off and aimed lower -- shoe stores, bars, that kind of thing." Beny Mezza, who runs Coliseum News, a small cafeteria across George Street from what's left of the arena, said: "Whatever they put in here, I hope it gets this place going, or I'm out." During the noon lunch hour one recent weekday, there was one customer -- an elderly man watching raptly as the lottery numbers were announced on a wall-mounted television.
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McCarty says someone should sue the state over appraisals.

2006-10-19T17:08:00.000+10:00
Boca Raton News - The Leader in Local News Online:
Published Thursday, October 19, 2006 by By John Johnston For Commissioner Mary McCarty, problems with the current property tax system can be reduced to three main issues: • People who currently receive a homestead exemption are 'trapped in their homes' because to move would mean substantially higher taxes in a market that has seen real estate prices explode over the last five years. She advocates so-called 'portability' – transfer of the homestead exemption to another property. • Home renovations are also not being done, she said, 'because of the tax hit.' • And perhaps the single largest issue in McCarty's eyes is the latitude given to property tax appraisers in application of the eight state guidelines to follow in making property appraisals. In a skyrocketing real estate market, assessing a property on the basis of its 'highest and best use' is forcing landlords to either 'increase rents, or convert to condos,' she said. There is too much property appraiser discretion,' she said, having already gone on the record recently favoring both the current use of a property and its currently income as needing more weight in Palm Beach County Appraiser Gary Nikolits' appraisal formula. McCarty's comments came earlier this week during a general discussion among county commissioners to develop positions that County Legislative Affairs Director Todd Bonlarron could then use in Tallahassee lobbying efforts to in turn amend the state constitution. The discussion eventually supported McCarty's positions, although support for an additional $25,000 homestead exemption was added to the county's wish list. Commissioner Warren Newell also pointed out a pet peeve: the 'abuse' of agricultural land tax exemptions, but on which land 'there are only 3 cows.' Asked by commissioners for his view on the current climate in Tallahassee for property tax reform Bonlarron agreed 'there are inequities across the board' in the current property tax system.' I think the state of Florida is going to do something,' Bonlarron said. Nonetheless, McCarty wants to press the issue. 'I wish somebody would file suit,' she said. She wants someone to challenge the latitude sanctioned by the state, with some property tax appraisers giving much greater weight to 'highest and best use' standards in making appraisals, whereas other appraisers -- i.e., the appraiser in neighboring Broward County -- giving much greater weight to other standards. 'I don't know why somebody hasn't challenged this,' McCarty said. 'Instead of talking about how we structure homestead exemption, we need to talk about the real problems.' John Johnston can be reached at 561-549-0833, or at jjohnston@bocanews.com
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Value of land is worth more than money

2006-10-09T16:49:00.000+10:00
Sept. 28, 2006 12:00 AM: Not far from Pima Road, there is a place where saguaros still stand thick and stately, almost as if they belong. Where chollas still shimmer in the sunlight for mile after mile, uninterrupted by the unrelenting march of the inevitable brown house. There is nothing easy about this land. It juts and jars and dips and soars into a sky so blue that sometimes you can hardly bear to look atValue of land is worth more than money it.No, there is nothing easy about it. For a decade, Scottsdale has been trying to preserve this land. Laws have been passed and taxes have been raised, and still it sits there, just beyond our reach. Waiting to one day be auctioned off to the highest bidder. And here's a hint: It probably won't be us. Reach Roberts at laurie.roberts@arizonarepublic.com or (602) 444-6873. Read her blog at robertsblog.azcentral.com.
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Northern Ireland: Domestic Rating

2006-09-24T09:39:00.000+10:00
Currently each domestic property in Northern Ireland is assessed on the basis of its rental value (known as the net annual value) as at 01 April 1976. The basis of valuation is set out in Article 39 and Schedule 12 of the Rates (NI) Order 1977. Each domestic property has been valued in line with comparable properties in the same vacinity. The basis of valuation for domestic properties in Northern Ireland is to change to a rating system based on Capital rather than Rental Values. This means your rates bill will be based on the open market value of your property as at 1 January 2005. These changes come into effect on 1 April 2007. Domestic Rating Comment SRDA campaigns against both these bases in preference to site value only.
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Bought for $262,500 in 2003, sold for $95,000 last week

2006-09-23T23:20:00.000+10:00

Michelle Singer and Matthew Benns September 17, 2006 ...one-bedroom unit in Cabramatta sold at auction last week for $95,000. In November 2003 it cost $262,500. The mortgagee repossession sale is part of a trend, say real-estate agents and analysts, who are united in the belief falling house prices are more common in Sydney's west than elsewhere in the city. ... prices have come back $40,000 to $60,000 and the talk of interest rate rises terrifies them." "This was an opportunity to buy when the market is depressed...(buyer) as long as the rent comes near or covers the mortgage. Raine & Horne Cabramatta selling agent Vera Wang said: "In a boom-time market, prices go through the roof, nobody cares and nobody holds back. Michael McNamara, from Australian Property Monitors, said: "The drop since the height of the boom in Sydney has only been about 7 per cent, so to get a drop of that amount is highly unusual. However, it doesn't surprise us there's a certain part of the market that has quick sales." Ms Wang said the unit was likely to return $130 a week in rent…She is listing about three mortgagee repossession sales a month…"A lot of people are overcommitting themselves," she said. Macquarie Bank property research analyst Rod Cornish said defaults among mortgage brokers and low-documentation loans were higher than major banks. However, he said Australian Prudential Regulation Authority figures showed the number of loans across Sydney in default with the major banks had begun to rise. "You would expect the price impact on homes would be worse in the outer western suburbs where the rates rises and fuel rises would have a higher impact," he said. Elliott Shiner First National real-estate principal Angela Elliott said: "Everything that is selling now is selling for $40,000 to $50,000 less than it was in 2003. Properties have dropped by a good 30 per cent in value. "You can pick up properties in the Mount Druitt area for $180,000 to $200,000. There are real bargains to be had, but where are the buyers?”
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Record number of Iranians get nose jobs.

2006-09-23T23:05:00.000+10:00

Saturday Sep 24, 2006
For the whole of Britain 7,000 cosmetic surgery operation have been performed, while one Iranian Cosmetic Surgeon has performed 30,000. “The younger genertion doesn’t have enough work, so they chase girls”. says the surgeon.
News Hour BBC
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March against Coca-Cola unit

2006-09-21T09:00:00.000+10:00
Thursday, Sep 21, 2006 PALAKKAD: The Plachimada Solidarity Committee and the Anti-Coca-Cola Agitation Committee jointly organised a march on Wednesday to the office of the Ground Water Department here seeking action against the depletion of ground water by Coca-Cola unit at Plachimada. Inaugurating the march, the agitation committee patron Vilayodi Venugopal demanded that the Government take action against the Coca-Cola unit for depleting and polluting the ground water of Plachimada and surrounding areas. Solidarity Committee chairman R. Ajayan said the Ground Water Department notified Chittur taluk as water deficit area prohibiting exploitation of ground water. But the Coca-Cola unit located here exploited ground water indiscriminately depleting the water table. The Hindu ePaper

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Monopliconomy thrives on water rights.

2006-09-17T23:32:00.000+10:00
Water deals leave farmers in the dry Carmel Egan VICTORIAN water is being bought and hoarded by speculators... with no intervention from governments and water authorities. ...huge volumes of water are being traded and transferred away from districts that impose restrictions during droughts to areas where there are few, if any, controls. ... multimillion-dollar investment corporations to swoop on water as it is sold by desperate farmers. ... companies are estimated to have last year bought 85 per cent of water traded out of the state's largest authority, Goulburn-Murray Water. Timbercorp, a publicly listed company controlled by Melbourne racing industry identities, bought the lion's share and has been accused of manipulating the water market and distorting prices with its aggressive acquisitions. Established 10 years ago, Timbercorp is a multimillion-dollar Managed Investment Scheme (MIS) which entices investors by offering tax incentives against the management fees and establishment costs of large-scale agribusinesses such as hardwood plantations, almond and olive orchards. ...Since water trading began in Victoria in 1994, just under 150,000 megalitres in annual rights have been permanently sold. ...Water brokers estimate that up to 75 per cent of Goulburn-Murray water and up to 100 per cent of Lower Murray water sold this year has been bought by just three licensees — Timbercorp, SAI Teys McMahon and Macquarie Agribusiness. The companies are all MIS programs.
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Hanson defends new capital value rating system

2006-09-14T10:54:00.000+10:00
13 September 2006 Finance Minister, David Hanson MP has defended the new capital value rating system and reaffirmed his decision not to introduce a maximum limit, explaining that a cap would have to be paid for by other ratepayers. Launched earlier this month, the Northern Ireland Fair Rates Campaign wants household rates to be capped in line with the council tax in Great Britain. The first valuations were sent to householders in Northern Ireland at the start of July, and those who wish to challenge or query their rates estimate have six months to do so. More than 7,000 homeowners have already challenged the rateable estimates of their homes. Not everyone will have to pay all or any of the new charges. More than 175,000 households will pay a reduced rate or no rates at all. If a cap were to be set at a capital value level equivalent to the highest Council Tax Bills in England (those in Band H), it would benefit less than 3,000 properties here - less than half percent of the entire Northern Ireland housing stock. These households would have capital values of around £500,000 and over, as at 2005. Hanson commented: "In making the decision not to introduce a maximum limit, I was conscious that if a cap were imposed I would be asking other ratepayers to shoulder a larger share of the rates burden." Turning to the issue of those on low income, Mr Hanson said: "At present almost 175,000 low income households receive support with paying their rates. The new rate relief scheme aims to assist those just outside the housing benefit thresholds. Around 40,000 households could receive assistance, with on average £270 awarded. I am conscious that many older people may be reluctant to claim this relief for a number of reasons, but I would encourage anyone on low income to apply for this entitlement." Hanson also said that if politicians wished to express their concerns about the changes they could do so as long as they met the devolution deadline on November 24. Northern Island News Comment The economic intelligence of taxing improvements is absent in this article as with most. To tax the building is to fine it's construction, quality renewal and maintenance. The site is where the value of property is stored. This is best reflected when after demolition the vacant land attracts a higher price than when the building was standing. The above revenue measure is politically driven by monopoly privileged interests and is the cause of the slum category.

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Northern Ireland: Parties attend meeting on rates

2006-09-13T21:07:00.000+10:00
Wednesday, 13 September 2006, 06:54 GMT 07:54 UK Representatives from the main parties have attended a meeting called by the Northern Ireland Fair Rates campaign. It is calling for changes to proposed household rates legislation. UK Unionist leader Bob McCartney, who was at the packed meeting, says people should pay last year's rate plus 10% rather than the new rates."The people are not just going to wear this sort of extortion and they're quite right not to do so," Mr McCartney said. "That is not some sort of breaking of the law "If a law is patently and palpably unfair and unjust and is being used to bully people into a political situation I believe people have the right to peaceably and democratically object." Addressing the meeting in Belfast, Ann Monaghan from the campaign said plans being proposed here will give people a raw deal. She said the legislation which is currently out for consultation "does not provide for a similar system as to what operates in the rest of the UK". Part of the proposed laws leave it up to the assembly or executive to implement measures such as capping or relief for pensioners, she said. "What we're saying is we'll deal with whoever we need to deal with, but we are not going to be stuck between a rock and a hard place. "And we're not going to be treated differently to the rest of the UK," Ms Monaghan said. At the weekend, petitions against the new rating system were signed outside a number of churches in affluent south Belfast. People at both Catholic and Protestant services in the area, where some residents face bills of up to £6,000, were asked to lend their support. The petitions will be handed in to the Northern Ireland Office on Thursday. Cap Launched earlier this month, the Northern Ireland Fair Rates Campaign wants household rates to be capped in line with the council tax in Great Britain. Finance Minister David Hanson has insisted he is determined there will be no cap, but said his decision could be overruled if devolution returned by the November deadline. The first valuations were sent to householders in Northern Ireland at the start of July, and those who wish to challenge or query their rates estimate have six months to do so. More than 7,000 homeowners have already challenged the rateable estimates of their homes. Not everyone will have to pay all or any of the new charges. More than 175,000 households will pay a reduced rate or no rates at all. Anyone who wants to check the value of their home can do so by logging onto the Valuation and Lands Agency's website at www.mycapitalvalueni.gov.uk. Comment While buildings & sites are packaged in one tax, no intelligence can be compiled on land use policy, town planning & infrastructure investment. Regardless of the valuation of an asset, regardless of the amount collected in taxes. The call for capping, then, likely differentials as a compromise, or thresholds even exemptions are political decision which debase statutory land valuation theory. Taxation of buildings is the cause. Therefore both sides in this debate do not know what an economic condition and therefore to the extent to which they are from it. The community of Northern Ireland are further from being ratepayers and are more akin to local government taxpayers as a consequence. Only people and the products of people can be taxed. Only land can be rated.

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Real Wages Fail to Match a Rise in Productivity

2006-08-30T02:54:00.000+10:00
August 28, 2006 By STEVEN GREENHOUSE and DAVID LEONHARDT ...the current ... period of economic growth ... fails to offer a prolonged increase in real wages for most workers. The median hourly wage for American workers has declined 2 percent since 2003, after factoring in inflation. The drop has been especially notable, economists say, because productivity...has risen steadily over the same period. As a result, wages and salaries now make up the lowest share of the nation’s gross domestic product since the government began recording the data in 1947, while corporate profits have climbed to their highest share since the 1960’s. UBS, the investment bank, recently described the current period as “the golden era of profitability.” Since last summer...the value of workers’ benefits has also failed to keep pace with inflation, according to government data. At the very top of the income spectrum, many workers have continued to receive raises that outpace inflation, and the gains have been large enough to keep average income and consumer spending rising. In a speech on Friday, Ben S. Bernanke, the Federal Reserve chairman...warned that the unequal distribution of the economy... “threaten the livelihoods of some workers and the profits of some firms,” Mr. Bernanke said, policy makers must try “to ensure that the benefits of global economic integration are sufficiently widely shared.” ...Earlier this month, the University of Michigan reported that consumer confidence had fallen sharply in recent months... Economists offer various reasons for the stagnation of wages. ...the buying power of the minimum wage is at a 50-year low...health care is far more expensive than it was a decade ago, causing companies to spend more on benefits at the expense of wages. Together, these forces have caused a growing share of the economy to go to Companies (Ed., property speculators) instead of workers’ paychecks. In the first quarter of 2006, wages and salaries represented 45 percent of gross domestic product, down from almost 50 percent in the first quarter of 2001 and a record 53.6 percent in the first quarter of 1970, according to the Commerce Department. Each percentage point now equals about $132 billion. Total employee compensation — wages plus benefits — has fared a little better. Its share was briefly lower than its current level of 56.1 percent in the mid-1990’s and otherwise has not been so low since 1966. Over the last year, the value of employee benefits has risen only 3.4 percent, while inflation has exceeded 4 percent, according to the Labor Department. In Europe and Japan, the profit (Ed., read privilege: speculation, licences, patents, copyrights) share of economic output is also at or near record levels, noted Larry Hatheway, chief economist for UBS Investment Bank, who said that this highlighted the pressures (Ed., inequality) of globalization on wages. Many Americans, be they apparel workers or software programmers, are facing more competition (Ed., more desperate) from China and India. ...economists at Goldman Sachs wrote, “The most important contributor to higher profit (Ed., speculation) margins over the past five years has been a decline in labor’s share of national income.” ...Worker productivity rose 16.6 percent from 2000 to 2005, while total compensation for the median worker rose 7.2 percent, according to Labor Department statistics analyzed by the Economic Policy Institute, a liberal research group. Benefits accounted for most of the increase. (Ed., subsequently captured by land price) “If I had to sum it up,” said Jared Bernstein, a senior economist at the institute, “it comes down to bargaining power and the lack of ability of many in the work force to claim their fair share of growth.” (rent) Nominal wages have accelerated in the last year, but the spike in oil costs (Ed., monopolised resource rents) has eaten up the gains. Now the job market appears to be weakening, after a protracted series of interest-rate increases by the Federal Reserve. ...gains are a result mainly of increases (Ed., privileges) at the top of the income spectrum that pull up (Ed., corrupt) the overall numbers...workers at the 90th percentile of earners — making about $80,000 a year — inflation has outpaced their pay increases over the last three years, according to the Labor Department. “There are two (Ed., non-) economies out there,” Mr. Cook, the political analyst, said. (Ed., monopliconomy,) “One has been just white hot, going great guns. Those are the people who have benefited from globalization, technology, greater productivity and higher corporate earnings. “And then there’s the working stiffs,’’ he added, (Ed., poviconomy) “who just don’t feel like they’re getting ahead despite the fact that they’re working very hard. And there are a lot more people in that group than the other group.” In 2004, the top 1 percent of earners — a group that includes many chief executives — received 11.2 percent of all wage income, up from 8.7 percent a decade earlier and less than 6 percent three decades ago, according to Emmanuel Saez and Thomas Piketty, economists who analyzed the tax data. Original 1650 words
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Senate says tax cheating by super rich out of control

2006-08-30T01:02:00.000+10:00
August 1, 2006 Tax Cheats Called Out of Control By DAVID CAY JOHNSTON So many superrich Americans evade taxes using offshore accounts that lawenforcement cannot control the growing misconduct, according to a (US) Senate report that provides the most detailed look ever at high-level tax schemes. Cheating now equals about 7 cents out of each dollar paid by honesttaxpayers, as much as $70 billion a year, the report estimated. “The universe of offshore tax cheating has become so large that no one, not even the United States government, could go after all of it,” said Senator Carl Levin, the Michigan Democrat whose staff ran the investigation. ...The report details how, ...a tax shelter” using $9.6 billion “worth of fake securities transactions that were used to generate billions of dollars of fake capital losses.” ...Senator Levin said that when investigators asked for trading records they were first told the trades were private, over-the-counter transactions. He said investigators asked for trading tickets or other evidence of who owned the $9.6 billion worth of stock and were told the stocks were never owned by the parties involved. ...“They just wrote down numbers on paper and claimed losses,” he said. “It was just like fantasy baseball, except the taxes not paid were for real.” ...The investigation, which took 18 months, involved 74 subpoenas, 80 interviews and the collection of more than two million documents, and yet Senator Levin said “the six cases we present are just examples, just apinhole look.” The 400-page report recommends eight changes, some of them aimed at going after the law and accounting firms, banks and investment advisers that the report says enable tax schemes that rely on complexity, secrecy and compartmentalizing information so that advisers can claim they had no idea that the overall transaction was a fraud. “We need to significantly strengthen the aiding and abetting statutes to get at the lawyers and accountants and other advisers who enable this cheating,”Senator Levin said, adding that “we need major changes in law to stop the use of tax havens” by tax cheats. It also recommends new rules that strip away the underlying legal presumptions that make offshore tax havens like the Cayman Islands, Nevis, the Isle of Man and Panama attractive places for Americans to hide assets and income from the Internal Revenue Service. ...Senator Levin said the law “should assume that any transaction in a tax haven is a sham.” He said that during the investigation he grew angry as he learned how common cheating had become and how existing government rules aided tax cheats. He said that complex schemes were broken into discrete pieces, allowing professional advisers working on each piece to assert that they had no idea that, taken as a whole, a scheme was improper. “I get incensed by people who use tax havens to not pay their taxes while the average guy has to pay his taxes because they are taken out of his pay before he gets it,” he said. ...The technique involved a complex set of circular transactions using what the Senate report characterized as sham corporations in the Isle of Man with shell corporations given names like Jackstones. Their ownership was kept secret. “Ain’t capitalism great!” ... an e-mail message extolling the tax benefits of the deal. The report says that Credit Suisse First Boston, Lehman Brothers and Bank of America “all knew that the offshore entities” for which they made trades were associated ... but ignored rules requiring disclosure of these transactions and helped them hide the true ownership of the assets. ...(They)“ were counseled by an armada of lawyers, brokers, financial professionals and offshore service providers. 1392 word version
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Catchup Economy

2006-08-29T22:50:00.000+10:00
Jared Bernstein senior economist Economic Policy Institute August 22, 2006 Reminders.
...corporate profits as a share of the economy are at their highest level
on record...it has climbed to 12.7 percent in 2004, adding 5.4 million persons, including 1.4 million children to the ranks of the poor. ...an economic recovery that has produced an alarmingly large gap between growth and the living standards of most families. -- economic pollution ranking: Car backfire economic relevancy ranking: None 860 words version
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US housing slump fuels crash fears

2006-08-28T23:15:00.000+10:00
Floundering American property market could spark global slowdown worse than dotcom collapse The downturn will force businesses to slash 73,000 jobs a month in the new year. New homes sold in July was 22 per cent lower... prices...flat, fears are mounting.. will become a full-blown crash. 'Freefall' said Paul Ashworth, chief US economist at Capital Economics...The number of unsold new homes is now at a 10-year high....Capital calculates that 73,000 jobs a month will be lost. ...the long-expected housing market crunch. Stephen Roach, chief economist at Morgan Stanley...the slowdown will shave at least 2 percentage points off GDP growth next year, taking the US perilously close to recession, as construction spending plummets and homeowners lose. 'For a wealth-dependent US economy,...A bursting of the property bubble...for...an increasingly integrated global economy,' he added. Fionnuala Earley, group economist at Nationwide, said ...immigration suggests there's going to be tenant demand... people are going to think again about whether they should move and whether they should stretch themselves.' Heather Stewart, economics correspondent Sunday August 27, 2006 The Observer Monopoliconomy economists prefer not to use the terms, rent, site value & land values instead: "the cushion of extra wealth that comes from rapid price rises.' housing market, homeowners lose, another asset bubble, fragile housing sector, property supply constraints.'
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MaxedOut

2006-08-04T20:09:00.000+10:00
IN THEIR OWN WORDS: Quotes from the Film's Talking Heads "There's a lot of shame and a lot of guilt attached to the issue of money mismanagement...Everybody feels like the other couple has a perfect marriage and a perfect everything...Turns out, I've met Ken and Barbie and they're broke." -Dave Ramsey "Basically it's food, rent, and a bit of entertainment. Just survival. They're having a hell of a time." -Brian Lurie "The real point is the basics are driving families right to the edge. What it costs to have a house, to have health insurance, to have child care, to have two cars so that you can both get to work." -Liz Warren "Nobody would watch Lifestyles of the Poor and the Unknown." -Robin Leach "There's not as much money in Washington as they're used to be!" -George W. Bush "I guess if you look like you make money eventually you will." -Beth Naef "If you go to a vocational school or if you have a job, they [the credit card companies] don't want you. Maybe it's because they think you know the value of a dollar. It's the college students who get the cards. So we're setting up a two-tiered system here and I believe they're exploiting the college students. An easy market." -Janne O'Donnell "They [Bank One] wanted us to be the FirstUSA spokesguys...I guess how Bill Cosby is to Jell-O, that would be us to credit cards." -Luke McCabe "I know for a fact that [the banks] aren't looking for people with experience. They want people who have jobs at the mall. Their whole approach is they want someone who is retail-driven. They want people who can sell, sell, sell." -John Ballew "The bottom line is, the deck is stacked against you from day one. If you're smart enough to understand that and know that, God bless you; if not, boy are they going to make a lot of money off of you." -Bud Hibbs "I like to think of myself as a pirate and you're just walking that person out on the plank. And then you pull them back when you get what you want. Of course, sometimes, in the beginning, you're going to push a little too far." -Bob Johnson "Basically I was just a real big typographical error." -Doris Gohman "The size of our problem out there is very large. I regret to say that the word billion does not encompass the nature of the problem." -Alan Greenspan "Consumers think they have a right to privacy...The Constitution protects you from the government, but where is your right to privacy from an individual or a private company? Where is your right to privacy from me? And the truth is, there is no right to privacy." -David Szwack http://www.maxedoutmovie.com/about/index.html
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If only the Greens had developed more policies around this candidates arguement.

2006-03-25T06:41:00.000+11:00
..."Don’t try to tell me that the Liberals are interested in getting it right for all Tasmanians when they wanted to abolish land tax that would have benefited only those who own more than one property. A move that could never have guaranteed lower rental prices. I’ve never heard of a landlord that lowered the rent in my life." Toby Rowallan, Green candidate for Denison Tassie forum article link
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Land Tax to sell thirty-four properties for back taxes.

2006-03-22T18:31:00.000+11:00
Wednesday, 22 March 2006 The Barbados Land Tax Department has served notice that it will put some major properties on the auction block to collect millions of dollars in back taxes. Today the Barbados Land Tax Commissioner published a list of 34 commercial and residential properties which he intends to sell to recover land taxes owed to the department. The Commissioner of Land Tax has also announced that he intends to sell more than 20 residential properties located across Barbados. Caribbean Broadcasting
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Boldly Militarizing where no one has gone before.

2006-03-10T07:05:00.000+11:00
http://www.wired.com/news/technology/0,70303-0.html "Lobbyists from the fledgling commercial space industry are besieging Capitol Hill, hoping to persuade the government to hand out contracts to help put the U.S. military into orbit," reports John Lasker. The main "talking point" for the 50 to 75 lobbyists is "how the private sector can help the U.S. military build space-based weapons a lot faster and with a lot less of taxpayers' money." The Defense Department's report Joint Vision 2020 advocates for "Full Spectrum Dominance," or overwhelming power on land, sea, air and space. "We need to operate in the realm of space," a U.S. Space Command public affairs officer told Wired. Bruce Gagnon, the director of the Global Network Against Weapons and Nuclear Power in Space and an Air Force veteran, criticizes these plans. For that, he's been secretly monitored by NASA and the U.S. Air Force, according to court documents uncovered by the American Civil Liberties Union. Wired News, March 1, 2006
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What should replace flawed council tax?

2006-03-10T06:21:00.000+11:00
"Replace both the council tax and the uniform business rate (dummy, if it's against a business then it's a tax) !!! with a land value tax (LVT) or what really is a location rent, (take note of author's qualifier) since it is not so much a conventional tax as a charge for the space that we occupy" (Jerry Jones, "Morning Star", 27th. April 2005). "The value of land is created not by landowners but by what nature provides and by its position in relation to public utilities, communications and population. In other words, it is created by society, and therefore it should be society as a whole that receives the benefit." (ii) The latest version of that repeat failure, the development land tax, is the roof tax, "to be paid by developers at a rate of about £20,000 for each home they build" (Lech Mintowt-Czyz, "Evening Standard", 12th. April). "The plans are being piloted in Milton Keynes... The tax does not require legislation and can also be applied to commercial developments." Exactly why taxing the building of new houses is thought to be a good idea, is not explained. (iii) "The Deputy Prime Minister has met huge criticism for his plan to flatten houses in the North and Midlands and build a smaller number of modern homes" (Joe Murphy, He has only himself to blame. He should know by now that neither he nor anyone else in government need intervene. LVT will do the job, unaided. Faced by the annual demand for the land value duty, the landholder will set about appropriate re-development to secure tenants and thus an income from which to meet the tax bill; or he will sell out to someone else who will. "Evening Standard", 20th. May 2005).
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Women, The Most Efficient Partners in the Struggle to End Hunger: International Womens Day 2006

2006-03-10T05:38:00.000+11:00
blah blah....women are the main providers of food around the world; hence the solution to hunger ought to be found in consultation and participation with women. (but doesn't)... gender (read monopoly) analysis that recognizes power relations and the use and distribution of resources....blah blah....to better understand hunger in terms of causes...For more blah blah. http://www.actionagainsthunger.org/news/press/release_mar8_06.html
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Alexander Fraser Tytler in 1776

2006-03-10T05:33:00.000+11:00
"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years.
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Pentagon ok's propaganda for Iraq (and possibly elsewhere).

2006-03-03T06:57:00.000+11:00
Declaring it "within our authorities and responsibilities," the top U.S. general in Iraq, George Casey, announced that the Lincoln Group program that covertly places stories written by U.S. troops in Iraqi newspapers will continue. Van Buskirk's report "could pave the way for the Pentagon to replicate the practice ... in other parts of the world." http://www.latimes.com/news/nationworld/world/la-fg-infowar4mar04,0,1357115.story?coll=la-home-world
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USA: Tax thugs slam theft self-assessment software

2006-02-28T06:02:00.000+11:00
Arizona Republic “Using a computer program to figure income taxes takes longer than doing it by hand, the IRS claims, infuriating the tax-preparation software industry. The accounting profession also is protesting the agency’s estimates of the costs of having a professional calculate various types of returns. The outcries are in response to what the Internal Revenue Service introduced in its latest tax instruction booklets as a new, ‘more accurate’ method of estimating the time and cost of filing. The figures are based on a survey of 15,000 taxpayers and 400 tax professionals, IRS spokesman Raphael Turino said. Since publishing the figures, the IRS has issued a statement online saying they are all but useless. Calling the data ‘fatally flawed,’ a trade group representing the makers of such programs as TurboTax and TaxCut urged this month that the Internal Revenue Service Oversight Board investigate ‘this genuine mess.’” (02/23/06) http://tinyurl.com/qvqa3
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USA: Grounds for change? Land tax is best remedy, says Libertarian

2006-02-26T17:49:00.000+11:00
USA: Grounds for change? Land tax is best remedy, says Libertarian Debbie Gebolys Ohio could get rid of its slums, gain new buildings on vacant lots and stop suburban sprawl. It could even save the average homeowner a little money. So says retired Case Western Reserve economics professor Bill Peirce, the Ohio Libertarian Party candidate for governor. The way to change Ohio's landscape, Peirce says, is to throw out the property-tax system and replace it with another first proposed in 1880. Peirce doesn't harbor any illusions that he'll be living in the governor's mansion next year. But he hopes his maiden voyage into politics allows him to convey some alternative notions to voters. That's where land-value tax comes in. versions of the system are in place in Pennsylvania, Hong Kong, Singapore, Japan and Australia, among other places. It's been mentioned in Ohio several times in the last century, and people in Indiana, Maryland, Minnesota, Virginia and West Virginia are among those considering it. Here's how it would change things here: To make taxes fair, Peirce said, the state should abolish all tax incentives and allow market forces to dictate where construction goes. Then, it should upend the property-tax system, which has valued buildings at roughly three times the value of land for the last century or more. In its place should go a system in which land makes up at least half of the taxable value of a property. The value of buildings, if taxed at all, would be radically reduced. The result An end to tax policy that rewards owners of dilapidated and vacant properties with low tax bills and penalizes those who invest in their properties with higher tax bills. Since buildings become less important to total value, property owners don't pay higher taxes when they add a Florida room or build a 12-story office instead of a two-story. Owners of vacant lots or dilapidated buildings see their taxes rise to the level of similar-size properties nearby. The tax increase motivates slumlords to invest enough to pay the higher bill or sell out. When new buildings appear, surrounding land is worth more money, too. So as surban renewal beautifies neighborhoods, it raises their relative tax contribution. That means tax bills in other neighborhoods can come down. Since land becomes the prominent basis for taxes, people save tax money if they buy smaller lots. That could help stop sprawl. Does it really work like that? Joshua Vincent, executive director of two Philadelphia groups dedicated to land-value tax, said it does. He heads the Henry George Foundation of America, the lobbying arm of an international tax-reform movement, named for the 19 th-century inventor of the land-value tax. Vincent also runs the Center for the Study of Economics, which conducts feasibility studies for communities considering the tax system. "Everything we want, new buildings, improved buildings, is punished by taxation," Vincent said. "Land tax is the only way to tax without distorting anything." Of 19 Pennsylvania cities using landvalue tax systems, Scranton has been doing so longest, since 1913. All of the others adopted it since 1975, when the Midwest was becoming known as the Rust Belt. As the steel industry tanked in Pennsylvania, so did the fortunes of many of its towns. Cities like Altoona, Allentown, McKeesport and Harrisburg were in desperate straits when they adopted the tax system, Vincent said. "In one city, they couldn't pay the municipal light bill, so they turned off their street lights and stoplights. In Aliquippa, they laid off the entire police force," he said. "The reason they adopted land tax was to spare their citizens higher taxes, frankly." Land-value taxes accomplished at least one goal. Construction rose, and cities began to recover. "They're not in great shape now, but they're a hell of a lot better than they were," Vincent said. Pittsburgh used land-value tax until 2000, during its own severe economic decline. Several economists studied how it worked in Pittsburgh, where taxes on land were raised to more than five times the rate on buildings in 1979. They found that while Pittsburgh did have a 1980s building boom, other factors could have helped. Among them were tax breaks on new construction. Is Pennsylvania so much different from Ohio ? Candidate Peirce doesn't think so. "What we want is to make it easy for people to establish businesses and make them grow," Peirce said. "Let's get the economy moving enough so kids have a chance to stay at home rather than leaving the state." Ohioans need the urgency that prompted Pennsylvanians to change their system, he said. "The major (political) parties have our state in a perilous position with a difficult employment situation, a difficult economic situation and tax rates among the highest in the country," he said. Ohioans' state and local tax burden has skyrocketed in the past three decades, according to the Tax Foundation, a nonpartisan think tank in Washington that promotes lowering taxes and simplifying the tax system. In 1979, Ohio ranked 47 th nationally for the percentage of income people pay for state and local taxes. By 2004, Ohio had jumped to seventh. The state fared better when the Tax Foundation focused on 2002 property taxes per capita. Ohio's $933 per person ranked 23rd highest in the country. Pennsylvania ranked 28th, at $885 per person. Both were below the national average of $971. Ohioans before Peirce have proposed land-value taxation, most recently in the late 1990s. Gov. Bob Taft convened a committee to study how to make Ohio more attractive to businesses. A Cleveland State University economist suggested land value tax, said Frederick Church, deputy commissioner for tax policy in the Ohio Department of Taxation and a committee adviser. The idea was quickly discarded. "Land-value tax merits are a fairly abstract argument," Church said. "Completely overturning a property-tax system to encourage redevelopment of downtowns is a pretty blunt instrument for the problem at hand." Franklin County Auditor Joe Testa said taxpayers might have trouble accepting such a radical change. Neighboring houses on identical lots in Schumacher Place, for instance, are now valued at $150,000 and $500,000. "If you took away the building, because they are on the same size piece of dirt you would value them the same. Make them both what' Both $150,000 or both $500,000' " Peirce isn't saying exactly how tax bills would change, and that creates uncertainty for some observers. "Until you understand all the ramifications, it's hard to advocate one way or another," said David Beach, steering committee chairman of Greater Ohio, a land-use planning advocacy group. But in general, change could be good. "A different way of taxing land could have an impact on preserving our cities and towns," he said. "Tax policy is a very important issue, and it can influence where land is developed and whether it's easier to rebuild cities or build out in green areas." Because of that, "Peirce's idea is one that we might want to take a look at," Beach said... The Columbus Dispatch
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...Signs of Trouble in Foreclosures

2006-02-23T04:15:00.000+11:00
February 22, 2006 By VIKAS BAJAJ and RON NIXON ... The housing boom of the last decade helped push minority home ownership rates above 50 percent for the first time in 2004 and the overall foreclosure rate below 1 percent. But hidden behind such success stories lies a disturbing trend: in the last several years, neighborhoods with large poor and minority populations in places like Cleveland, Chicago, Philadelphia and Atlanta have experienced a sharp rise in foreclosures, in some cases more than a doubling, according to an analysis of court filings and other housing data by The New York Times and academic researchers. The increase in foreclosures could be the first of a wave of financial distress for many minority homeowners, experts say, because they are twice as likely as whites to have taken out expensive subprime mortgages, most of which will jump to higher interest rates in the next two years, according to an analysis of data that lenders disclose under the federal Home Mortgage Disclosure Act. ...Some housing experts worry that the minority foreclosure rate could worsen if the economy or the housing market, nationally or regionally, hits a rough patch as it has in industrial Midwestern states like Ohio. ...The Mortgage Bankers Association of America plays down the severity of foreclosures, noting that most new minority homeowners are doing well and that the Midwest is facing unique economic challenges. ...In Cuyahoga County, court filings by lenders seeking to foreclose on delinquent borrowers totaled more than 11,000 in 2005, more than triple the number in 1995. ...A similar pattern can be seen in Chicago, where foreclosure filings tripled, to 7,576, from 1993 to 2005. ... The same trends have been documented in Atlanta and Philadelphia, according to researchers from Harvard and the Reinvestment Fund. ...Almost 70 percent of subprime loans issued since 2001 will shift from low, fixed introductory rates to higher adjustable rates in the next two years, according to an analysis by Fannie Mae. ...Mr. Douglas G. Duncan, the chief economist, Mortgage Bankers Association and others in the industry say that higher foreclosure levels in the Midwest should not be seen as worrying signals for the nation because the region's economic problems are unique. Ohio lost 215,000 jobs from 2001 to 2005, with 63,800 of them coming from the Cleveland metropolitan area. The state unemployment rate was 5.6 percent in December, up from 4 percent in 2000. The jobless rate in Cleveland was 5.5 percent in December, up from 3.8 percent. The Cuyahoga County treasurer James Rokakis, his county's 17 percent foreclosure rate is creating blight in many neighborhoods. ...In Slavic Village, about 500 homes, or 5 percent of its properties, are vacant, Mr. Rokakis said. "Who pays for the damage done to these communities?" http://www.nytimes.com/2006/02/22/business/22home.html?_r=1&oref=slogin
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Executives Modified Enron Data, Jury Is Told

2006-02-23T03:44:00.000+11:00
By ALEXEI BARRIONUEVO Published: February 22, 2006 HOUSTON, Feb. 21 � The former chief executive of Enron, Kenneth L. Lay, took an active role in preparing misleading and often conflicting statements about financial conditions at the company, a former investor relations manager and board secretary testified on Tuesday. http://www.nytimes.com/2006/02/22/business/businessspecial3/22enron.html
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Questionable liens hit Arizonans

2006-02-22T04:59:00.000+11:00
Robert Anglen The Arizona Republic Feb. 22, 2006 12:00 AM A financial setup orchestrated by a convicted criminal has left more than a thousand homeowners in Arizona and California facing illegitimate liens on their homes. The liens are being used to force people to pay thousands of dollars to a California collection agency. In order to get the liens lifted, homeowners are told by the agency that they must pay credit-card debts that, in many cases, have already been paid, written off in bankruptcies or aren't actually owed. http://www.azcentral.com/arizonarepublic/news/articles/0222lienfraud0222.html ----------------------------------------------------------------------------------------- How is it that no one (except a mechainic) can but a lien on my car without my knowledge and consent while anyone, living anywhere in the world can put a lien on my house simply by filling out a few papers. This is nuts! If our law makers need some insentive to act on this, perhaps every homeowner in the state should put a lien on any property owned by every lawmaker. Once they realize that they have two hundred fifty thousand liens on their home the matter might be taken seriously. (William3700, February 22, 2006 05:49PM)
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Let the good times average out nicely

2006-01-27T15:52:00.000+11:00
Random Walk, by Rob Peebles ...Take California home prices, the turbo charger on the newfangled engine. In fact, take the number of homes in California that sold for more than $1 million last year, and this is what you get: You get 48,666 million dollar homes. That’s 47% more million dollar homes sold in 2005 than in 2004, according to the Los Angeles Times. For the record, 48,666 million dollar transactions comes to 1 in 13 California home sales achieving status as a million dollar deal. That’s a nice ratio. And that ratio compares to “just” 1 in 20 in 2004. And that compares to 1 in 2, which is the ratio of Californians who want to quit their jobs to become real estate agents once they do the math on the commission involved in a million dollar transaction. According to DataQuick’s numbers quoted in the article, a million dollars in California will get you four bedrooms and 2,480 square feet, assuming you spring for the median million dollar home. Now 2,480 square feet is a fine sized home, but it wasn’t that long ago that for a million bucks you could get another couple of thousand feet and a butler. The LA Times notes that there were 2,902 condo sales in the $1 million or more category last year, up a smart 73% from 2004. Sure, California real estate is hot, but homes are hot nationwide. Apparently there are one million homes around the country now worth at least $1 million. That compares to only 350,000 as recently as 2000.
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'Doomsday' seed bank to be built

2006-01-14T01:20:00.000+11:00
Rice is one of the world's most important crops Norway is planning to build a "doomsday vault" inside a mountain on an Arctic island to hold a seed bank of all known varieties of the world's crops. The Norwegian government will hollow out a cave on the ice-bound island of Spitsbergen to hold the seed bank. It will be designed to withstand global catastrophes like nuclear war or natural disasters that would destroy the planet's sources of food. Seed collection is being organised by the Global Crop Diversity Trust. "What will go into the cave is a copy of all the material that is currently in collections [spread] all around the world," Geoff Hawtin of the Trust told the BBC's Today programme. Mr Hawtin said there were currently about 1,400 seed banks around the world, but a large number of these were located in countries that were either politically unstable or that faced threats from the natural environment. "What we're trying to do is build a back-up to these, so that a sample of all the material in these gene banks can be kept in the gene bank in Spitsbergen. The Norwegian government is due to start work on the seed vault next year, when it will drill into a sandstone mountain on Spitsbergen, part of the Svalbard archipelago, about 966km (600 miles) from the North Pole. Permafrost will keep the vault below freezing point and the seeds will further be protected by metre-thick walls of reinforced concrete, two airlocks and high security blast-proof doors. The number of seeds and types of plants in the bank would be determined by the countries wishing to use it. Rice paddy, AP http://news.bbc.co.uk/1/hi/sci/tech/4605398.stm
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Increasingly uncomfortable living in a material world

2006-01-12T23:20:00.000+11:00
Optimism about quality of life has slumped among Australians. ...In other words, we are seeing a profound loss of faith in a future constructed around notions of material progress, economic growth and scientific and technological fixes to the challenges we face. We no longer believe in the "official story" of the future on which our governments base their policies. Environmentalists and scientists have won the minds of the public. Now they need to win our hearts, to give us the courage to act on our convictions. Richard Eckersley is at the National Centre for Epidemiology and Population Health at the ANU, and is the author of Well & Good: Morality, Meaning and Happiness (Text, 2005). SMH
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Roseville to pry land from owners

2005-12-27T16:05:00.000+11:00
North Metro Insider Sarah McCann, Star Tribune The Roseville City Council voted 3-2 last week to approve using eminent domain to acquire four commercial properties needed for the Twin Lakes redevelopment project. The mixed-use development includes housing, retail and office space. Developer Rottlund Companies, which owns most of the land, has been trying to buy the properties but hasn't come to an agreement with some owners. The council vote approving eminent domain could result in more serious negotiations, as eminent domain procedures can be costly and time-consuming for all parties involved. If the property owners don't agree to sell, the city could file for eminent domain in court as early as January. Although many local government officials say they use eminent domain as a last resort, a U.S. Supreme Court decision last summer said it was OK for cities to use eminent domain for economic development http://www.startribune.com/142/story/144702.html
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Train Wreck of the Week: The end of the housing bubble.

2005-12-11T22:19:00.000+11:00
by Bob Chapman The housing bubble is in the early stages of implosion. We do not know for sure how long the adjustment will take or are we sure how deep it will be, but we do know it has to happen and that the risks to our economy and the world economy are enormous. The only thing the Fed can do is keep interest rates relatively low and keep increasing M3, money and credit at a 12% plus rate. The downside is hyperinflation. If they move interest rates higher and cut back on monetary aggregates, they’ll have a depression. If they keep doing exactly what they are doing now, the economy will slide downward and inflation will relentlessly increase. The housing boom has reached almost every area of the country, money fled a collapsing stock market and was lured by low interest rates into housing. Low rates were assisted by lax lending standards engineered by the Fed. Sub-prime loans now make up over 50% of mortgages and with those come all sorts of exotic mortgages that borrowers do not understand and eventually won’t be able to service. That means many millions of Americans will go broke and bankrupt over the next several years. $11 trillion in real estate values in just a few years time could become $6 trillion in value. Sixty-five million Americans own homes and many put zero to 5% down, plus they have ARMS and zero savings to bail themselves out. Their other personal debt has doubled over the past three years as well. In addition, never has our financial system been more vulnerable. Thirty-six percent of recently purchased homes were second homes or speculative purchases. That is accompanied by record fiscal and current account deficits, derivatives and a stock market that cannot stay up while real estate is falling. The consumer is 76% of the economy and real estate and stock dislocation means less consumption and a falling economy. Low interest rates, endless credit and monetary printing presses won’t stop the onslaught. Just look at Japan when their real estate and stock bubbles began to implode in 1989. They lost $12 trillion in real estate values and a 42,000 Nikki Dow became 7,600. Why would our collapse be any less vicious? As the real estate bubble breaks and the bear market in stocks resume, Americans are faced every day with the loss of good paying jobs via offshoring and outsourcing. Thus, we can only conclude that our elitist Fed planned it that way. How can any nation consciously allow free trade and globalization in an advanced high-income economy? It’s simply suicide. We have been set up to deliberately fail along with Canada and Europe. By bringing these economies to their knees, citizens will be forced to accept universal, fascist, one-world government. Today’s debt and leverage makes the 1920s look like child’s play. You cannot have an economy that is 60% dependent on real estate. Industries such as construction, commodities, lending, brokerage, mortgages and insurance are holding America economically together. The parallels between now and the 1970s are huge, only this time we have enormous debt and leverage. We have another guns and butter economy. Look at our weekly statistics from the Fed, which they are going to cancel in March. Tremendous amounts of moving is being absorbed by the real estate market. Once that demand declines we would expect those funds to find new homes, perhaps Treasuries, gold and silver would be options. If the stock market is falling not many would want to risk funds there. The options for placing funds will be limited. The real question is how much money will come out of real estate? How much can as the losses pile up? All that equity will be disappearing and the piggy bank will be empty. Consumption could easily fall back to 62-64% of GDP. How can a market be solid and safe when you have to have new buyers whose average down payment is 3%? They’ll walk away from negative equity in a nanosecond. How many had to have mom and dad dig into their own home equity to buy that house? Worse yet, 45% of first-time buyers put down nothing on their new digs. Vertically rising markets are inevitably followed by vertically falling markets. And, remember, houses are not liquid. You cannot sell them on the spot and get payment in three days. You can be financially entrapped in your home. What happens when home equity falls and the market falls and you have your house as collateral in your brokerage account? It’s called a disaster - wipeout. We are seeing all the classic assumptions of an asset bubble. This frenzy underway over the past two years has given us 1.1 million real estate brokers, up 36% in five years. What idiot really expects house prices to rise 20% annually in the next 10 years? They’d have to be on drugs, which unfortunately, many of them are on. Just to show you how docile homeowners have become, 77% believe real estate is much safer than the stock market. What fools, all investing is gambling. More signs of mania in real estate as ads in newspapers rose 45% in the second quarter. That is 25% of all ads. That is $4.15 billion of $16.6 billion in classified ad revenue nationwide. In addition, online real estate ads now make up 15.9% of the total real estate ad market. Are you one of the people interviewed by the University of Michigan Consumer Confidence Index who believes now is a good time to buy a house, because its risk-free and virtually guaranteed to keep rising? If you are, we are sure we have a bridge that we are sure you would be interested in. Building is still booming. This year 38.1% put 5% down on their new homes and 45% put down nothing. If that doesn’t concern you it should. Forty percent of Californians are paying about 40% of their take home pay on their mortgages. They call this affording the unaffordable. We believe real estate market prices are unsustainable. Interest-only mortgages nationwide average 31%. In California, they make up 61%, and in Santa Rose and Vallejo, where they are 77% and 78% respectively. Would you have ever believed that bankers and the Fed would let this distortion go that far? Next year, 2006, about $300 billion in mortgage debt will enter its adjustable period. Borrowers will have to begin repaying interest and principal at new higher interest rates. Then there are buyers who take out two mortgages at once to buy a home. Standards there are no standards. It’s whatever the lender wants to do. There are no qualifications for a loan. You can be blind, crippled, crazy, bankrupt, unemployed, have no credit or income or be an illegal alien. Mortgage related assets now make up 50% of total bank assets and in just last year alone 24% of loans were sub-prime. While all this officially sanctioned madness goes on, foreigners are clamoring to buy mortgage-backed securities. If we are right they are going to have a terrible financial hangover. They are prolonging the boom by chasing a very dangerous yield. That yield is guaranteed by Fannie Mae and Freddie Mac, both of which we believe will be bankrupt in three years. Do you really believe the government will make these securities good in a depression? We don’t think they will. It is not only foreigners who’ll get bagged, it will also be hedge funds, insurance companies, and pension funds. These purchasers of these mortgages are buying desirable and undesirable loans. Last year they bought over $400 billion in sub-prime loans. Last year 70% of these loans had less than full documentation of the borrower’s income and assets. You know if house prices fall these loans will be a bag of worms. In the last four years homeowners have removed $550 billion in equity from their homes. Cash out financings are over 18% this year of all refinancings. Home equity is now 56.3% of real estate value. Forty-seven percent of all residential mortgages by dollar volume are now non-traditional. Equity from refinancings is being used to put food on the table. The Fed says homeowner loans added $600 billion to consumer spending last year and who are we to contradict the Fed. That is 7% of disposable income versus 3% in 2000 and 1% in 1994. If it weren’t for this infusion we’d already be in recession. If you’ve been attentive you now know real estate is in for changes. Sir Alan Greenspan is telling us the truth on his way out. “In the US there is a pernicious drift towards fiscal instability and the adjustment process will be painful.” Sir Alan, along with our elected dolts in Washington and the neocon White House have buried the US economy. This is not fiscal and monetary instability; it’s been insanity. Sir Alan said Congress has to make significant adjustments, in reducing benefits for future retirees because the US has promised benefits it cannot afford. He said government demands for investment would squeeze private capital formation and cast an even larger shadow over growth of living standards. In the end, he warned, the consequences for the US economy of doing nothing could be severe. Web source: http://www.theinternationalforecaster.com/trainwreck.php?Id=103&PHPSESSID=9dab509e24326857b1c41f16545eb47a
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Curitiba: A Global Model For Development

2005-12-10T09:19:00.000+11:00
Tuesday, November 8, 2005 CommonDreams.org by Bill McKibben I could see as much green as I could concrete. And green begets green; land values around the new parks have risen sharply, and with them tax revenues. …At the moment, in the center of Novo Bairro, COHAB is building "Technology Street," an avenue of 24 homes, each built using some different construction technique-bamboo covered with plaster, say-so that people can get ideas for the kind of house they might want. The houses are all smaller than most Americans would want to live in, but they all say something about the people who built them. "It's a house built out of love," says the housing chief. "And because of that, people won't leave it behind. They're going to consolidate their lives there, become part of the city." …Hitoshi Nakamura is the city parks commissioner and one of Lerner's longtime collaborators. "We have to have communication with the people of the slums," he said one day as we were talking about the problems posed by settlers invading fragile bottomlands along the rivers. "If we don't, if they start to feel like falvelados, then they will go against the city....If we give them attention, they don't feel abandoned. They feel like citizens." Ed The most vaguest article I have ever read. To deliberate evade an explanation for the existence and perpetuating condition of vagabonds and pauperism and worse the author announces to the worlds Rentiers, 'there's a new crop of wage slaves ripe for the owning via the title to land they inhabit'. To not associate the cause of disparity, dispossession and inequality is an injustice. Instead reporting (pandering) to the speculative interests. Bloody typical. 4,000 word version

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French government agrees air tax

2005-11-24T15:24:00.000+11:00
Wednesday, 23 November 2005, 16:50 GMT The French government has approved plans for a new tax on airline tickets to boost aid for the world's poor. The tax, which needs parliamentary approval, would range from one to 40 euros depending on the distance travelled and type of ticket. Levied on every passenger boarding a flight in France, it could raise up to 210m euros ($248m; £144m) a year. President Jacques Chirac has been campaigning for an international air tax to help fight global poverty. He first raised the idea during the Word Economic Forum in Switzerland last January, saying an international tax of one euro should be charged on the 3 billion airline tickets issued each year. He has the support of the UK government, which has agreed to divert revenues from its existing Air Passenger Duty. In Chile, a $2 surcharge will be added to tickets on all outgoing flights from January 1 2006. http://news.bbc.co.uk/2/hi/business/4463204.stm
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House Cuts Food Stamps for More than 220,000 Vulnerable People While Poised to Cut Taxes for Wealthy

2005-11-18T00:18:00.000+11:00
WASHINGTON - The House of Representatives passed a budget bill yesterday that changes eligibility requirements for the Food Stamp Program, cutting benefits for approximately 220,000 to 250,000 vulnerable people. The budget reconciliation bill aims to cut the Food Stamp Program by $675 million. "We are disappointed that the House made cuts to the Food Stamp Program and are poised to cut taxes for the wealthy. Their choice takes food from families struggling to make ends meet and puts more money in the pockets of those who need it the least," said Rev. David Beckmann, president of Bread for the World. "This is morally wrong and will make Thanksgiving bleaker for hundreds of thousands of hard-working families." ..."With hunger on the rise and the forces of nature exposing poverty anew, plans to cut this vital, proven program make no sense. House leaders should be ashamed of trying to preserve tax cuts for our nation's wealthiest people at the expense of basic assistance for working families struggling to put food on the table," Rev. Beckmann said. Last month the U.S. Department of Agriculture released the statistics on hunger and food insecurity for 2004. The number of people living in food insecure households has risen by nearly 2 million people (from 36.3 million individuals in 2003 to 38.2 million in 2004). More than 13 million children live in food insecure households. The number of people who live in households that suffer from outright hunger rose from 9.6 million to 10.6 million. These increases in hunger and food insecurity are sharper than in previous years. http://www.commondreams.org/news2005/1118-01.htm
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Redistributing the Land, Hugo Chavez Style

2005-11-14T03:32:00.000+11:00
Published on Monday, November 14, 2005 by the Toronto Star Analysts say president's land-expropriation plan a world away from disastrous Zimbabwean program by Jens Erik Gould The privately owned, 1,200-hectare Santa Isabel farm has grown sugar cane for decades, but Antiaga says the Venezuelan government will help him use the land to grow pumpkins, beans and squash. Under a land redistribution campaign led by President Hugo Chavez, thousands of rural poor like Antiaga are being granted rights to farm arable land traditionally concentrated in the hands of wealthy landowners. But Artiaga isn't waiting for the government to take the lead. He and other farmers are slashing the Santa Isabel cane with machetes and laying claim to land they say is rightfully theirs. "We're obligated to take this land because it is state land," says Antiaga, clad in a torn shirt dirtied by the rich soil. "Commander Chavez is with our movement." Venezuela's land-reform campaign has won support from the rural poor but has sparked criticism that it could infringe on private property rights. "In Yaracuy, there is no rule of law," says Santa Isabel owner Vicente Lecuna, who accuses state officials of encouraging peasants to settle on his property. He says farming co-operatives like Antiaga's have destroyed 40 per cent of his sugar cane. Chavez insists his government respects private property rights and contends that the land expropriations are being carried out only for public use or for social necessity in a country where most non-state land is owned by a small elite. In the latest stage of what he calls the "new socialism of the 21st century," Chavez has called on state officials to take over private land deemed "idle" or lacking property titles dating back to 1848. Soldiers have enforced some of the takeovers, at times denying owners and workers access to the land. In recent months, the government has extended its campaign to corporate-owned land. One state government expropriated an idle tomato processing plant from U.S.-based H.J. Heinz Co. and another seized a silo installation from Empresas Polar, Venezuela's largest food company. The state government paid Heinz $256,000 (U.S.) for its seized plant, distinguishing Venezuela's reform from Zimbabwean President Robert Mugabe's massive land redistribution effort, which has not reimbursed thousands of white landowners for their seized farms. While critics say both the Venezuelan and Zimbabwean governments are giving land to peasants with little agricultural experience, Venezuela offers farming loans while Zimbabwean farmers severely lack resources to develop their land. With agriculture a small player in Venezuela's oil-dependent economy, it is unlikely that a fall in food production would cause the kind of food shortages and other crises it has in Zimbabwe, notes Orlando Ochoa, an economics professor at Andres Bello Catholic University in Caracas. Mugabe's reform also seized farms on the basis of race, targeting land owned by white farmers, while Caracas focuses on productivity and property titles, Ochoa says. Critics argue that the Venezuelan expropriations are concentrating more power in the government by giving peasants farming licences for — rather than ownership of — the land they farm. But Carlos Escarra, a constitutional lawyer and professor at the Central University of Venezuela, rejects this common criticism, saying peasants actually become property owners who lack only the right to sell their land. Chavez says that having co-operatives like Antiaga's farming on expropriated land will lessen Venezuela's dependence on imports by satisfying domestic deficits in food. And the government has launched a campaign to plant more than 200,000 hectares of new sugar cane and cassava to produce sugar-based ethanol gasoline. Yet Yaracuy farm owner Vladimir Rodriguez says it is ironic that the same government has not prevented co-operatives and extortionists from destroying more than $15 million worth of sugar cane on 33 farms in his state alone, according to his statistics. A state-run agrarian fund known as Fondafa also grants loans for farming machinery to co-operatives that have taken over private property without state permission and uprooted sugar cane crops. In one case of extortion, local delinquents — who farm owners say posed as landless peasants — murdered sugar cane farm owner Antonio Vieira after he refused to pay them to not destroy his crop. Yaracuy state secretary-general Col. Angel Yarza, who called on the government to take over 48 ranches, denied in an interview that he had seen large quantities of destroyed sugar cane. He assured that the state does not encourage land invasions, but will not intervene to protect privately owned farms. Antiaga says Yarza and other state officials are helping his group's long fight to take land away from owners like Lecuna, who for him represent a system of traditional land ownership that prevent the rural poor from acquiring farms or landing sustainable jobs. "We're human beings, too, and we have to eat," he says. But for farm owners, seizing private property and issuing loans to poor farmers is no solution to poverty and unemployment. "(The co-operatives) just want credits that they won't pay back," says Lecuna. "They're not going to produce." Copyright Toronto Star Newspapers Limited
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Henry George (1839-1897):

2005-11-07T16:11:00.000+11:00
For justice to be done between men it is not necessary for the State to take the land; it is only necessary to take its rent...Our primary social adjustment is a denial of justice. In allowing one man to own the land on which and from which other men must live, we have made them his bondsmen in a degree which increases as material progress goes on. Introduction: Protection or Free Trade A tax on land values is of all taxes that which best fulfils every requirement of a perfect tax. As land cannot be hidden or carried off, a tax on land values can be assessed with more certainty and can be collected with greater ease and less expense than any other tax, while it does not in the slightest degree check production or lessen its incentive. It is, in fact, a tax only in form, being in nature a rent - a taking for the use of the community of a value that arises not from individual exertion but from the growth of the community. For it is not anything that the individual owner or user does that gives value to land. The value that he creates is a value that attaches to improvements. This, being the the result of individual exertion, properly belongs to the individual, and cannot be taxed without lessening the incentive to production. But the value that attaches to land itself is a value arising from the growth of the community and increasing with social growth. It therefore properly belongs to the community, and can be taken to the last penny without in the slightest degree lessening the incentive to production. Progress and Poverty The way taxes raise prices is by increasing the cost of production and checking supply. But land is not a thing of human production, and taxes upon rent cannot check supply. Therefore, though a tax upon rent compels owners to pay more, it gives them no power to obtain more for the use of their land, as it in no way tends to reduce the supply of land. On the contrary, by compelling those who hold land for speculation to sell or let for what they can get, a tax on land values tends to increase the competition between owners, and thus to reduce the price of land. Book 8, Chapter 3.
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11,000 Brazilians Keep US$ 93 Billion Abroad, Mainly in Tax Paradises

2005-11-05T16:32:00.000+11:00
Written by Stênio Ribeiro Friday, 04 November 2005 A survey by the Central Bank found that 11,245 Brazilians possessed US$ 93.243 billion in foreign deposits, investments, and business assets as of December 31, 2004. This amount represents an increase of 12.8% over the US$ 82.692 billion declared a year earlier. This information was provided Thursday, November 3, by the head of the Department in charge of Combating Illegal Financial Assets and the Supervision of Exchange and International Capital, Ricardo Liao. Liao attributed the increment to the increased global insertion of the Brazilian economy, stimulated by the growth in exports in recent years and the variation in the number of individuals and firms that filed declarations of Brazilian Foreign Capital Assets (CBE). The number of declarations this year, referring to calendar year 2004, rose by 623 in relation to the number filed in 2004, referring to calendar year 2003. According to Liao, the US$ 10.6 billion increase in this year's declarations was heavily influenced by mergers between domestic and foreign firms, as well as a US$ 5 billion increase in inter-company loans and the enhanced market value of Brazilian companies abroad. Liao said that, as in previous years, the greatest concentration of Brazilian assets was detected in the so-called tax paradises, due to the "facility offered by these countries for movements of capital." The largest sums of Brazilian capital have traditionally transited through the Cayman Islands, the Bahamas, the British Virgin Islands, and Luxembourg.
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Soldiers are the state

2005-11-04T20:35:00.000+11:00
anti-state.com by Joel Wilcox "I find it strange, to say the least, that among those who call themselves anarchists, anti-statists, radicals and individualists, there are so many who are quick to defend soldiers who fight for the state while condemning those who take joy in the soldier's demise. The most common arguments are that we cannot blame the soldiers for the wars they fight because most of them are young and impressionable, brainwashed, impoverished or otherwise well-intentioned. It is demanded that the state is squarely to blame and, in fact, the soldiers themselves are additional victims. For this, we should compassionately give our sympathy and support to those who fight while reproaching that which they fight for. Now, I would expect these arguments from a dyed-in-the-wool statist or even a minarchist but again, from a self-described enemy of the state, such arguments are bizarre." http://tinyurl.com/bbskb
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The myth of a social contract

2005-11-04T20:33:00.000+11:00
Strike the Root by Jim Davies "Ever since monarchs first felt the rumblings of discontent, they reached for a way to justify their miserable existences in the eyes of those upon the product of whose labor they lived in luxury; for many centuries the 'Divine Right' theory did the job. ... The entire establishments of both State and Church did very nicely out of this scam for centuries. It began to unravel when a few bright minds began to wonder whether the underlying myth was supported by rational fact, and found it wanting; that enlightening process began in the 18th Century and came to full fruit in the 20th, by when few monarchies remained and none of those are more than figureheads (observe Charles and Camilla, currently on a US visit.) Alas, however, the dictators were replaced by an even more insidious myth: that of the 'Social Contract,' the idea that all members of a society have in some way agreed to bind themselves to certain standards and laws for the common good." http://www.strike-the-root.com/52/davies/davies7.html
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Aldous Huxley (1894-1963)

2005-11-01T20:35:00.000+11:00
If I were to re-write this book, I would offer a third alternative - the possibility of sanity - Economics would be decentralist and Henry Georgian. foreword to Brave New World
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Samuel Gompers (1850-1924)

2005-11-01T20:25:00.000+11:00
I believe in Land Value Taxation. I count it a great privilege to have been a friend of Henry George: First President American Federation of Labor:
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Confucius 551-479 BC

2005-11-01T19:26:00.000+11:00
Once, natural resources were fully used for the benefit of all, and not appropriated for selfish ends. This was the age of the Great Commonwealth of peace and prosperity.
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William Blackstone: 1723-1780

2005-11-01T19:02:00.000+11:00
The earth, therefore, and all things therein, are the general property of all mankind, from the immediate gift of the creator. ...there is no foundation in nature or in natural law why a set of words upon parchment should convey the dominion of land. Commentaries
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Avoid a VAT

2005-10-31T22:58:00.000+11:00
Ernest S. Christian/Gary Robbins Our current tax system runs to more than 60,000 pages of laws, regulations and rulings. It's so confusing that many, if not most, Americans mail their return with no idea whether or not they've filled it out properly. ...However, a handful of tax reforms would do more harm than good....The proponents of this scheme (the so-called two-track system) propose a high-rate, value-added tax (VAT) of the type used in Europe, which is a hidden tax on wages, dividends and consumer purchases. ...the two-track system is a prescription for enormous expansion of government and escalating tax rates. The increasing taxes will especially burden the minority of voters subject to income taxes as well as the VAT. .... It would place a surtax on hard work, productivity and success. It would penalize Americans who have already succeeded and discourage others from even attempting to succeed. That's because even if they worked harder and more productively, they'd know that income taxes would take a large bite out of their earnings. A reasonable person near the income-tax threshold would likely decide that the increased income wasn't worth losing his exemption from the income tax and, in his view, having to start "paying taxes" for the first time. The Washington Times: Commentary

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What you put online may be used against you!

2005-10-31T21:17:00.000+11:00
...An alarming trend is developing at many universities where officials are searching Facebook profiles and Webshots accounts for incriminating photos to use against students. By Heights Editorial Board
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