unlimited injections capacity suggests
the CB thru mediators could take over all payments not paid in cash
no more payables no more receivables
outside the CB system
recall IOU credit systems are open ended ...in theory
but subject to convulsive "phase change "
the wicked interconnectivity of the ad hoc payments grid
is inherently unstable
replace it
Tuesday, August 27, 2013
mainly mealy anti bankster hegemony salvo
Banks, economists and politicians: just follow the money
"Economics rightly comes in for a lot of stick for failing to appreciate the possibility of a financial crash before 2007/8. However it is important to ask whether things would have been very different if it had. What has happened to financial regulation after the crash is a clear indication that it would have made very little difference.
There is one simple and straightforward measure that would go a long way to avoiding another global financial crisis, and that is to substantially increase the proportion of bank equity that banks are obliged to hold. This point is put forcibly, and in plain language, in a recent book by Admati and Hellwig: The Bankers New Clothes. (Here is a short NYT piece by Admati.) Admati and Hellwig suggest the proportion of the balance sheet that is backed by equity should be something like 25%, and other estimates for the optimal amount of bank equity come up with similar numbers. The numbers that regulators are intending to impose post-crisis are tiny in comparison.
It is worth quoting the first paragraph of a FT review by Martin Wolf of their book:
“The UK’s Independent Commission on Banking, of which I was a member, made a modest proposal: the proportion of the balance sheet of UK retail banks that has to be funded by equity, instead of debt, should be raised to 4 per cent. This would be just a percentage point above the figure suggested by the Basel Committee on Banking Supervision. The government rejected this, because of lobbying by the banks.”
Why are banks so reluctant to raise more equity capital? One reason is tax breaks that make finance using borrowing cheaper. But non-financial companies, that also have a choice between raising equity and borrowing to finance investment, typically use much more equity capital and less borrowing. If things go wrong, you can reduce dividends, but you still have to pay interest, so companies limit the amount of borrowing they do to reduce the risk of bankruptcy. But large banks are famously too big to fail. So someone else takes care of the bankruptcy risk - you and me. We effectively guarantee the borrowing that banks do. (If this is not clear, read chapter 9 of the book here. The authors make a nice analogy with a rich aunt who offers to always guarantee your mortgage.)
The state guarantee is a huge, and ongoing, public subsidy to the banking sector. For large banks, it is of the same order of magnitude as the profits they make. We know where a large proportion of the profits go - into bonuses for those who work in those banks. The larger is the amount of equity capital that banks are forced to hold, the more the holders of that equity bear the cost of bank failure, and the less is the public subsidy. Seen in this way it becomes obvious why banks do not want to hold more equity capital - they rather like being subsidised by the state, so that the state can contribute to their bonuses. (Existing equity holders will also resist increasing equity capital, for reasons Carola Binder summarises based on the work of Admati and Hellwig and coauthors.)
This is why the argument is largely a no brainer for economists. [1] Most economists are instinctively against state subsidies, unless there are obvious externalities which they are countering. With banks the subsidy is not just an unwarranted transfer of resources, but it is also distorting the incentives for bankers to take risk, as we found out in 2007/8. Bankers make money when the risk pays off, and get bailed out by governments when it does not.
So why are economists being ignored by politicians? It is hardly because banks are popular with the public. The scale of the banking sector’s misdemeanours is incredible, as John Lanchester sets out here. I suspect many will think that banks are being treated lightly because politicians are concerned about choking off the recovery. Yet the argument that banks often make - holding equity capital represents money that is ‘tied up’ and so cannot be lent to firms and consumers - is simply nonsense. A more respectable argument is that holding much more equity capital would translate into greater costs for bank borrowers, but David Miles suggests the size of this effect would not be large. (See also Simon Johnson here, John Plender here and Thomas Hoenig here.) In any case, public subsidies are bound to be passed on to some extent, but that does not justify them. Politicians are busy trying to phase out public subsidies elsewhere, so why are banks so different?
There is one simple explanation. The power of the banking lobby (and the financial industry more generally) is immense, from campaign contributions to regulatory capture of various kinds. It would be nice to imagine that the UK was less vulnerable than the US in this respect, but there are good reasons to think otherwise. [2] As a result, the power and influence of banks and bankers within government has hardly suffered as a result of the Great Recession that they played a large part in creating.
So to return to my original question, would it really have made much difference if more mainstream economists had been fretting about the position of the financial sector before the crisis? I think they would have been ignored then even more than they are being ignored now. The single most effective way of avoiding another financial crisis is to reduce the political influence of the banking sector. "
columbian strike over ruinous home market conditions produced by yankee trade pact
A nationwide strike in Colombia--which started as a rural peasant uprising and spread to miners, teachers, medical professionals, truckers, and students--reached its 7th day Sunday as at least 200,000 people blocked roads and launched protests against a U.S.-Colombia Free Trade Agreement and devastating policies of poverty and privatization pushed by US-backed right-wing President Juan Manuel Santos.
"[The strike is a condemnation] of the situation in which the Santos administration has put the country, as a consequence of its terrible, anti-union and dissatisfactory policies," declared the Central Unitaria de Trabajadores (CUT), the country's largest union, in a statement.
The protests and strikes, largely ignored in the English-language media, have been met with heavy crackdown from Colombia's feared police, with human rights organization Bayaca reporting shootings, torture, sexual assault, severe tear-gassing, arbitrary arrests, and other abuses on the part of state agents. Colombia's Defense Minister Juan Carlos Pinzon recently claimed that the striking workers are being controlled by the "terrorist" Revolutionary Armed Forces of Colombia (FARC), in a country known for using unverified claims of FARC connections as an excuse to launch severe violence against social movements.
"Violent clashes continue in rural areas where farmers and truck drivers have been setting up roadblocks since Monday, and the Santos administration has deployed 16,000 additional military personnel to 'control the situation,'" Neil Martin of the Colombia-based labor solidarity organization Paso International told Common Dreams Sunday. "There have not been deaths reported in relation to this violence, but human rights organizations and YouTube videos have documented military personnel beating protestors, stealing supplies, carrying out vandalism unwarranted arrests, and generally inciting violence."
Protesters are levying a broad range of concerns about public policies that devastate Colombia's workers, indegenous, and Afro-Colombian communities. The US-Colombia Free Trade Agreement has forced small farmers to compete with subsidized US products, made them more vulnerable to market fluctuations, and eroded their protections and social safety nets through the implementation of neoliberal policies domestically. Farmers are demanding more protections and services in a country beset with severe rural poverty.
Meanwhile, the Colombian government is handing out sweetheart deals to international mining companies while creating bans and roadblocks for Colombian miners. Likewise, the government is giving multinational food corporations access to land earmarked for poor Colombians. Healthcare workers are fighting a broad range of reforms aimed at gutting and privatizing Colombia's healthcare system. Truckers are demanding an end to low wages and high gas prices.
"This is the third or fourth large-scale non-military rural uprising this year," Martin told Common Dreams.
Colombian workers organizing to improve their lives are met with an onslaught of state violence: Colombia is the deadliest country in the world for union activists, according to the AFL-CIO Solidarity Center, and 37 activists were murdered in Colombia in the 1st half of 2013 alone, leading news weekly Semana reports.
Santos, who says he refuses to negotiate while the strikes are taking place, has so far been unsuccessful in his efforts to quell the swelling protests that are paralyzing much of the country, particularly in rural areas.
"[W]e just want solutions to our problems," Javier Correa Velez, the head of a coffee-growers association called Dignidad Cafetera, told the Miami Herald. "The strike is simply a symptom of an illness that the entire agriculture sector is suffering from
"[The strike is a condemnation] of the situation in which the Santos administration has put the country, as a consequence of its terrible, anti-union and dissatisfactory policies," declared the Central Unitaria de Trabajadores (CUT), the country's largest union, in a statement.
The protests and strikes, largely ignored in the English-language media, have been met with heavy crackdown from Colombia's feared police, with human rights organization Bayaca reporting shootings, torture, sexual assault, severe tear-gassing, arbitrary arrests, and other abuses on the part of state agents. Colombia's Defense Minister Juan Carlos Pinzon recently claimed that the striking workers are being controlled by the "terrorist" Revolutionary Armed Forces of Colombia (FARC), in a country known for using unverified claims of FARC connections as an excuse to launch severe violence against social movements.
"Violent clashes continue in rural areas where farmers and truck drivers have been setting up roadblocks since Monday, and the Santos administration has deployed 16,000 additional military personnel to 'control the situation,'" Neil Martin of the Colombia-based labor solidarity organization Paso International told Common Dreams Sunday. "There have not been deaths reported in relation to this violence, but human rights organizations and YouTube videos have documented military personnel beating protestors, stealing supplies, carrying out vandalism unwarranted arrests, and generally inciting violence."
Protesters are levying a broad range of concerns about public policies that devastate Colombia's workers, indegenous, and Afro-Colombian communities. The US-Colombia Free Trade Agreement has forced small farmers to compete with subsidized US products, made them more vulnerable to market fluctuations, and eroded their protections and social safety nets through the implementation of neoliberal policies domestically. Farmers are demanding more protections and services in a country beset with severe rural poverty.
Meanwhile, the Colombian government is handing out sweetheart deals to international mining companies while creating bans and roadblocks for Colombian miners. Likewise, the government is giving multinational food corporations access to land earmarked for poor Colombians. Healthcare workers are fighting a broad range of reforms aimed at gutting and privatizing Colombia's healthcare system. Truckers are demanding an end to low wages and high gas prices.
"This is the third or fourth large-scale non-military rural uprising this year," Martin told Common Dreams.
Colombian workers organizing to improve their lives are met with an onslaught of state violence: Colombia is the deadliest country in the world for union activists, according to the AFL-CIO Solidarity Center, and 37 activists were murdered in Colombia in the 1st half of 2013 alone, leading news weekly Semana reports.
Santos, who says he refuses to negotiate while the strikes are taking place, has so far been unsuccessful in his efforts to quell the swelling protests that are paralyzing much of the country, particularly in rural areas.
"[W]e just want solutions to our problems," Javier Correa Velez, the head of a coffee-growers association called Dignidad Cafetera, told the Miami Herald. "The strike is simply a symptom of an illness that the entire agriculture sector is suffering from
Monday, August 26, 2013
a great winner since THE GREAT HI FI CONVULSION..product price inflation
yup here's an easy forecast :
from now till whenever
secular PPI is not to be minimized even if stabilized
it might even go up to say 3% or 4%
opportunistic cyclical contraction triggered inflation rate reductions
will no longer become the new target number
secular rate reductions are over
targets will now have memory de facto
and some bursts of higher PPI will get built into policy reaction functions
this is not to say PPI policy has arrived at full debt load control
with cyclical bouts of serious financial "repression"
but knee jerk full court " PPI is a sin " ?
those days are over ...for now
from now till whenever
secular PPI is not to be minimized even if stabilized
it might even go up to say 3% or 4%
opportunistic cyclical contraction triggered inflation rate reductions
will no longer become the new target number
secular rate reductions are over
targets will now have memory de facto
and some bursts of higher PPI will get built into policy reaction functions
this is not to say PPI policy has arrived at full debt load control
with cyclical bouts of serious financial "repression"
but knee jerk full court " PPI is a sin " ?
those days are over ...for now
Sunday, August 25, 2013
more farmer Farmer on animal spirits and the belief function : " model animal spirits with a new fundamental the belief function. "
"Central banks throughout the world predict inflation with new-Keynesian models"
" after a shock, the unemployment rate returns to its so called “natural rate’."
" That assumption is called the Natural Rate Hypothesis (NRH)."
" a body of work, published over the last decade is critical of the NRH."
" the NRH does not hold in the data "
" an alternative paradigm explains why it does not hold."
"replace the NRH with the assumption that the animal spirits of investors
are a fundamental of the economy"
" model animal spirits with a new fundamental the belief function. "
" to operationalize that idea construct an empirical model"
"compare performance to the new-Keynesian Phillips curve"
" model animal spirits with a new fundamental the belief function. "
" after a shock, the unemployment rate returns to its so called “natural rate’."
" That assumption is called the Natural Rate Hypothesis (NRH)."
" a body of work, published over the last decade is critical of the NRH."
" the NRH does not hold in the data "
" an alternative paradigm explains why it does not hold."
"replace the NRH with the assumption that the animal spirits of investors
are a fundamental of the economy"
" model animal spirits with a new fundamental the belief function. "
" to operationalize that idea construct an empirical model"
"compare performance to the new-Keynesian Phillips curve"
" model animal spirits with a new fundamental the belief function. "
Saturday, August 24, 2013
Friday, August 23, 2013
Thursday, August 22, 2013
back casting rates ...... breath taking gyro gear loose contrivance
"Regarding long-term real rates
theory tells us that these should be related to potential GDP growth."
"comparing an estimate of potential growth from the Congressional Budget Office
with our twenty-year real rate backcast"
" with the exception of the mid-1970s they track closely "
good fit ?
maybe after the Volcker dammerung
forget the mid 70's
notice the entire pre 83 interval
when reality gets interesting
pin head technicians " synthetic devices " flop on their noses
Wednesday, August 21, 2013
pk "What’s clear, however, is that the inner circle badly misjudged the scale of the problem — and their overoptimistic forecasts and pronouncements haunt them to this day."
mis judged ?
I doubt that
if so
when did they realize this alleged misjjudgment
and
why then
no serious attempt at a stim II ?
I doubt that
if so
when did they realize this alleged misjjudgment
and
why then
no serious attempt at a stim II ?
Monday, August 19, 2013
pk nk no ok
"Business cycle peaks are always times when the economy is operating at capacity; troughs are times when the economy is operating below capacity"
", but how far below varies from cycle to cycle."
"This is not at all what standard New Keynesian models say. In those models “potential output” is what the economy would produce if prices were perfectly flexible. "
(Leave on one side the question of whether flexible prices get you to full employment in a liquidity trap, especially with problems of debt overhang)."
" In the short run, however, prices are sticky,
so we’re often not at potential;
but the economy can run above as well as below potential
and in fact
there would be no necessary reason why underemployment
should be more common than overemployment."
"Largely thanks to this theoretical conclusion,
it has become standard to describe the job of monetary policy
as one of “stabilization”, rather than the achievement of full employment"
.
"Like Fatas and Mihov, however,
I don’t think this is right."
" Or more accurately, I don’t feel that it’s right."
" What lies behind that feeling?"
"Partly, I think, it’s the historical record:
booms are more similar than busts."
" To take the extreme case,
clearly we’ve never had a period when the economy
was as far above capacity as it was below capacity in the Great Depression."
" And even in the postwar record, if we look at unemployment rates,
troughs – local minima in the rate – are more closely clustered than peaks – local maxima:"
"This difference in spread would be even more pronounced, I believe, if we adjusted for changes in demography."
"There’s also the now very clear evidence
that the old notion that wages are sticky downward in a way they’re not sticky upward
is entirely true –"
" and downward nominal wage rigidity eliminates the symmetry
between over- and under-employment."
Here’s the SF Fed data:
"Last but maybe not least,
there’s the question of what’s supposed to be going on
when the economy is operating above capacity"
". How do you force people to work more than they would want to in equilibrium? "
"Now, NK models do have an answer of sorts:
they’re always models characterized by imperfect competition,
so prices are above marginal cost,
and there’s a sense in which the economy is always
operating with some excess capacity
in the sense that people are willing to produce more at current prices."
" But my vague sense is that this only gives you a limited amount of wiggle room,
and that really big upward deviations in output can’t happen,
while really big downward deviations can."
"So, why should you care?
Well, Fatas and Mihov have it right:
if the business cycle is a matter of the economy falling below capacity,
rather than fluctuating around potential output,
the costs of recessions are much bigger than often portrayed,
and focusing on “stabilization”
greatly understates the importance of good macro policy"
", but how far below varies from cycle to cycle."
"This is not at all what standard New Keynesian models say. In those models “potential output” is what the economy would produce if prices were perfectly flexible. "
(Leave on one side the question of whether flexible prices get you to full employment in a liquidity trap, especially with problems of debt overhang)."
" In the short run, however, prices are sticky,
so we’re often not at potential;
but the economy can run above as well as below potential
and in fact
there would be no necessary reason why underemployment
should be more common than overemployment."
"Largely thanks to this theoretical conclusion,
it has become standard to describe the job of monetary policy
as one of “stabilization”, rather than the achievement of full employment"
.
"Like Fatas and Mihov, however,
I don’t think this is right."
" Or more accurately, I don’t feel that it’s right."
" What lies behind that feeling?"
"Partly, I think, it’s the historical record:
booms are more similar than busts."
" To take the extreme case,
clearly we’ve never had a period when the economy
was as far above capacity as it was below capacity in the Great Depression."
" And even in the postwar record, if we look at unemployment rates,
troughs – local minima in the rate – are more closely clustered than peaks – local maxima:"
"There’s also the now very clear evidence
that the old notion that wages are sticky downward in a way they’re not sticky upward
is entirely true –"
" and downward nominal wage rigidity eliminates the symmetry
between over- and under-employment."
Here’s the SF Fed data:
San Francisco Fed Percentage of workers with zero wage change
there’s the question of what’s supposed to be going on
when the economy is operating above capacity"
". How do you force people to work more than they would want to in equilibrium? "
"Now, NK models do have an answer of sorts:
they’re always models characterized by imperfect competition,
so prices are above marginal cost,
and there’s a sense in which the economy is always
operating with some excess capacity
in the sense that people are willing to produce more at current prices."
" But my vague sense is that this only gives you a limited amount of wiggle room,
and that really big upward deviations in output can’t happen,
while really big downward deviations can."
"So, why should you care?
Well, Fatas and Mihov have it right:
if the business cycle is a matter of the economy falling below capacity,
rather than fluctuating around potential output,
the costs of recessions are much bigger than often portrayed,
and focusing on “stabilization”
greatly understates the importance of good macro policy"
is FED policy all about anchoring "output price inflation expectations" or tar pit-ing job markets ?
"anchoring and re anchoring inflation expectations"
what a con job that is eh comrades
these anchors look to be unable to hold us in place
even in the slightest of storm currents
but this anchor conceit
a bum figure anyway
its a drag not an anchor
a drag where?
in the calculator of market pricing deciders ?
we have no model of price setting
luckily for our professors from OZ
this is not a problem
up there in OZ
as if
with angelic grace
the OZIAN hosts
have self atomized both themselves
and
their N product and M job markets
making every agent into a complete price taker
chains across the oceans
" the value of imported inputs
as a percentage of total nonenergy inputs in manufacturing in the United States
reached
16.4 percent in 2010,
up from
12.5 percent in 1998
and
6.2 percent in 1984"
as a percentage of total nonenergy inputs in manufacturing in the United States
reached
16.4 percent in 2010,
up from
12.5 percent in 1998
and
6.2 percent in 1984"
conservatism must change over time as fast as progressivism
otherwise it would lose contact with social reality point...if any
conservative "thought" changes
traditional values change
even the caboose of social thought must move forward eventually
the number of intervening freight cars
between the most reactionary ie the clown caboose
and the lead engine
may vary over time
yes more cars can be added at the back end
but prolly not too many
conservative "thought" changes
traditional values change
even the caboose of social thought must move forward eventually
the number of intervening freight cars
between the most reactionary ie the clown caboose
and the lead engine
may vary over time
yes more cars can be added at the back end
but prolly not too many
john stew on the 4 compelling whys of civil free expression
if any opinion is compelled to silence, that opinion may, for aught we can certainly know, be true. To deny this is to assume our own infallibility."
" Second,
though the silenced opinion be an error, it may, and very commonly does, contain a portion of truth; and since the general or prevailing opinion on any subject is rarely or never the whole truth, it is only by the collision of adverse opinions that the remainder of the truth has any chance of being supplied. "
even if the received opinion be not only true, but the whole truth; unless it is suffered to be, and actually is, vigorously and earnestly contested, it will, by most of those who receive it, be held in the manner of a prejudice, with little comprehension or feeling of its rational grounds"
the meaning of the doctrine itself will be in danger of being lost, or enfeebled, and deprived of its vital effect on the character and conduct: the dogma becoming a mere formal profession, inefficacious for good, but cumbering the ground, and preventing the growth of any real and heartfelt conviction, from reason or personal experience."
why I don't hat tip
who cares about my hat tip
of course quotes are necessary to indicate
" these ain't my words pard "
of course quotes are necessary to indicate
" these ain't my words pard "
Sunday, August 18, 2013
the han party still lacks a coherent country wide Georgio-Marxist land policy
http://www.uli.org/wp-content/uploads/ULI-Documents/Mainland-China-Real-Estate-Markets-2013.pdf
the foundation should be a national policy of ground rent extraction
above the 90% line if plausible
existing experiments with local "property taxation look to be headed
way off the correct course
--- or so it would seem ---
--------------------------------------------------------------------------------------
here's a few out takes
from a recent Global Parnassian Press club take away :
"Efforts in China to broaden a pilot program that deploys property taxes
aimed at taming the real-estate market
are running into difficulties."
" for the past three years the party instituted a number of property-market control
including property-tax pilot programs in Shanghai and Chongqing,"
"aiming to head off risks of a bubble bursting and to improve affordability."
bubble pre emption is critical
but long run
affordability is a wrong headed goal.... of course it is !!!
"Proponents say a nationwide property tax
would increase the cost of holding property"
this is fallacious
a pure ground rent tax reduces market prices
ie
reduces pre existing re-sale values
" reduces incentives for speculators to buy"
cutting out the capitalized ground rent everywhere simultaneously
is perhaps operationalized in real land markets
only on a wack a mole basis
so
yes mistakes and losses will pile up
but
a whole very considerable class of rentier income can be scotched
with no long run curb on development
a land tax indeed would
" providing a more-permanent solution than the government's current reliance on administrative measures. "
property tax is an ambiguous composite of a user fee
a partial household wealth tax
and a ground rent tax
these three and what ever other objective might get rolled into a property tax
needs to be mutually articulated and separated
"Such a nationwide tax could also fit into China's pledge to stamp out rampant corruption"
yes by reducing local discretionary sale and credit activity
------------------------------------
"The eastern city of Hangzhou and the southern boomtown of Shenzhen could be the next cities to implement the property-tax trial"
"The State Administration of Taxation is studying the expansion of the property-tax trials."
"Shanghai levies a 0.4% to 0.6% tax on second-home purchases."
" Chongqing, the tax is levied on existing high-end homes and villas and ranges from 0.5% to 1.2%"
-------------------------------------------------
tallying up:
" the taxes are too low and too subject to a complex web of conditions to slow home-price appreciation."
"Shanghai's average new-home prices rose 11.9% in June compared with a year earlier,
while Chongqing's rose 6.8%"
trifles indeed !!!!
such that
"the existing pilot programs in Shanghai and Chongqing, begun in 2011,
have proved ineffective in holding down costs. "
which a ground rent tax would do
if costs here are market price for lots
" widespread opposition from local governments, officials, property developers,
are barriers to reform. "
just the sign it needs doing and pronto !!!!!
" increasingly vocal middle class are also a barriers to reform. "
then get it done NOW
at
"a key meeting of the Communist Party leaders in October"
since its already
" seen as an opportunity to roll out reforms."
-----------------------------------------
spade work ?
" The housing ministry is working on a nationwide database
of homeowner information that would aid the implementation of the tax."
"
alas not too encouraging so far
but but but
putting in the mere forms of extraction is still a first step ....
one li of a .thousand li journey
key incentive point to attack:
"Local governments prefer the lump sum revenue from land sales
to the slim pickings of property-tax income"
optimal answer since its a national tax
pay the local gub for the "right to inititiate a ground rent extraction"
and again each time rates increase
ie capital payments on the stream of revenues as they develop
--------------------------------------------------
.
"For China's middle class, a new tax would add to burdens
and
threaten the value of an asset now essential for their retirement saving."
add a burden ?
a ground rent tax ?
no not in the long run
but yes it threatens the market value of already owned lots
retirement savings
the answer there is of course the devilish details of an evolving
national pension system
at any rate
better to strike now
then later
when the massive minute vested interests
are onlygoing to get larger and larger
the foundation should be a national policy of ground rent extraction
above the 90% line if plausible
existing experiments with local "property taxation look to be headed
way off the correct course
--- or so it would seem ---
--------------------------------------------------------------------------------------
here's a few out takes
from a recent Global Parnassian Press club take away :
"Efforts in China to broaden a pilot program that deploys property taxes
aimed at taming the real-estate market
are running into difficulties."
" for the past three years the party instituted a number of property-market control
including property-tax pilot programs in Shanghai and Chongqing,"
"aiming to head off risks of a bubble bursting and to improve affordability."
bubble pre emption is critical
but long run
affordability is a wrong headed goal.... of course it is !!!
"Proponents say a nationwide property tax
would increase the cost of holding property"
this is fallacious
a pure ground rent tax reduces market prices
ie
reduces pre existing re-sale values
" reduces incentives for speculators to buy"
cutting out the capitalized ground rent everywhere simultaneously
is perhaps operationalized in real land markets
only on a wack a mole basis
so
yes mistakes and losses will pile up
but
a whole very considerable class of rentier income can be scotched
with no long run curb on development
a land tax indeed would
" providing a more-permanent solution than the government's current reliance on administrative measures. "
property tax is an ambiguous composite of a user fee
a partial household wealth tax
and a ground rent tax
these three and what ever other objective might get rolled into a property tax
needs to be mutually articulated and separated
"Such a nationwide tax could also fit into China's pledge to stamp out rampant corruption"
yes by reducing local discretionary sale and credit activity
------------------------------------
"The eastern city of Hangzhou and the southern boomtown of Shenzhen could be the next cities to implement the property-tax trial"
"The State Administration of Taxation is studying the expansion of the property-tax trials."
"Shanghai levies a 0.4% to 0.6% tax on second-home purchases."
" Chongqing, the tax is levied on existing high-end homes and villas and ranges from 0.5% to 1.2%"
-------------------------------------------------
tallying up:
" the taxes are too low and too subject to a complex web of conditions to slow home-price appreciation."
"Shanghai's average new-home prices rose 11.9% in June compared with a year earlier,
while Chongqing's rose 6.8%"
trifles indeed !!!!
such that
"the existing pilot programs in Shanghai and Chongqing, begun in 2011,
have proved ineffective in holding down costs. "
which a ground rent tax would do
if costs here are market price for lots
" widespread opposition from local governments, officials, property developers,
are barriers to reform. "
just the sign it needs doing and pronto !!!!!
" increasingly vocal middle class are also a barriers to reform. "
then get it done NOW
at
"a key meeting of the Communist Party leaders in October"
since its already
" seen as an opportunity to roll out reforms."
-----------------------------------------
spade work ?
" The housing ministry is working on a nationwide database
of homeowner information that would aid the implementation of the tax."
"
alas not too encouraging so far
but but but
putting in the mere forms of extraction is still a first step ....
one li of a .thousand li journey
key incentive point to attack:
"Local governments prefer the lump sum revenue from land sales
to the slim pickings of property-tax income"
optimal answer since its a national tax
pay the local gub for the "right to inititiate a ground rent extraction"
and again each time rates increase
ie capital payments on the stream of revenues as they develop
--------------------------------------------------
.
"For China's middle class, a new tax would add to burdens
and
threaten the value of an asset now essential for their retirement saving."
add a burden ?
a ground rent tax ?
no not in the long run
but yes it threatens the market value of already owned lots
retirement savings
the answer there is of course the devilish details of an evolving
national pension system
at any rate
better to strike now
then later
when the massive minute vested interests
are onlygoing to get larger and larger
Saturday, August 17, 2013
its confirmed Royal is dead
what the hell was he doing in Paraguay
with three bullets in his head
snipet from solute to
" comrade paine "
" the world revolution has lost an asteroid "
central committee Nepal people's party
Thursday, August 15, 2013
thoma times
simon lewis works his base line model
pretty hard here
in particular the neutrality assumption NA
" •Why the Pigou Effect does not get you out of a liquidity trap - mainly macro "
NA is yet another of many attempts to smuggle in the class consequences of pareto neutrality
here its infinite horizon
inter temporal government budget balancing
yes as a iron rule of government action
okay in the base line model
where
the balance occurs over the infinite horizon
and is
faced by an infinite lived single rep agent
but
sustained within the fairly short run horizon
of real taxpayers and debt holders
which may possibly mean
within two cycle
this neutrality
this rebalancing looks onerous
and lopsidedly stacked against
adequate counter cyclical state fiscal action
an excessive build up of nominal state obligations
--even or should I say in particular fully monetized--
to fund recovery rate enhancing state to citizen pay outs
to meet the pledged neutrality
leads to a full off set
thru an expected inflation tax
answer
Pareto constraints are bunk
ie requiring that
everyone after implementing a policy program
ends up at least as well off as without said program
is a formula that favors the have class the exploiter class the corporate class in our set up
over the job class
class struggle is non Pareto optimal at all times
in other words
social reality in a class cloven society
is inherently non Pareto optimal
the neutral state favors the private exploiters
pretty hard here
in particular the neutrality assumption NA
" •Why the Pigou Effect does not get you out of a liquidity trap - mainly macro "
NA is yet another of many attempts to smuggle in the class consequences of pareto neutrality
here its infinite horizon
inter temporal government budget balancing
yes as a iron rule of government action
okay in the base line model
where
the balance occurs over the infinite horizon
and is
faced by an infinite lived single rep agent
but
sustained within the fairly short run horizon
of real taxpayers and debt holders
which may possibly mean
within two cycle
this neutrality
this rebalancing looks onerous
and lopsidedly stacked against
adequate counter cyclical state fiscal action
an excessive build up of nominal state obligations
--even or should I say in particular fully monetized--
to fund recovery rate enhancing state to citizen pay outs
to meet the pledged neutrality
leads to a full off set
thru an expected inflation tax
answer
Pareto constraints are bunk
ie requiring that
everyone after implementing a policy program
ends up at least as well off as without said program
is a formula that favors the have class the exploiter class the corporate class in our set up
over the job class
class struggle is non Pareto optimal at all times
in other words
social reality in a class cloven society
is inherently non Pareto optimal
the neutral state favors the private exploiters
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