| Subject: | Re: [socialcredit] Re: Neo-Georgism--Replying to Chris Cook | | Date: | Tuesday, June 6, 2006 23:48:20 (+1200) | | From: | W. McGunnigle <wmcgunn @.........nz>
|
Comment on the argument between Chris Cook and William B. Ryan
Although there is a great deal of truth in the comments made by
William with respect to housing in the USA the same cannot be said for the
rest of the western world. In New Zealand <50% of the people own their own
homes (down from 67% in1926) and the figure is still falling. The same
applies to Britain and much of the EU. Perhaps it is only coincidence that
our mortgage rates are some of the highest in the developed world. As for
the developing world most of the population are lucky to have a tin shed as
housing rented from a landlord who makes the "Robber Barons" of old seem
like the very epitome of a philanthropist. The crippling debt burden forced
on countries like Indonesia, South America and Africa by theWorld Bank and
IMF is hardly an advertisement for our present system. Particularly
Indonesia that is asset rich, but cannot capitalise on that asset wealth
because it is owned by Foreigners, and has to spend much of its overseas
earnings on debt servicing and dividends to absentee landlords.
I am sorry William but I cannot support the validity of an argument
that only seems to apply to 179 million people(~70% of US population) in a
world of six billion of which some 4.2 billion (~70%) live below the poverty
line set by the UN. Much of that poverty being aggravated by exorbitant
interest repayments on loans from the IMF and World Bank. Admittedly some
their problems stem from misgovernment and civil war, but the attitude of
financial organisations in the western world is doing nothing to alleviate
those problems. However I do find Chris's arguments of doubtful validity
too. The truth I feel lies somewhere between the two. I feel you would both
benefit by considering some of the points raised in the mini-forum between
myself, John and Joe on interest rates and public spending in connection to
the money supply and how it is created.
I would appreciate constructive comments from both of you on the issue.
Please try to move out of your entrenched positions and place yourself
outside your present comfort range and try to see the problem from different
view point. I don't expect you to agree, but would like you to look for your
similarities and not your differences. That way we are far more likely to
find a workable premiss for our philosophy.
We are reformers after all dedicated to the most important reform of all
namely reforming our archaic outmoded obsolete monetary system that is
hamstringing human development,and causing untold misery throughout our
planet.
Respects to you both
Bill Mc Gunnigle
----- Original Message -----
From: "William B. Ryan" <w_b_ryan@yahoo.com>
To: <socialcredit@elistas.com>
Sent: Tuesday, June 06, 2006 5:54 PM
Subject: [socialcredit] Re: Neo-Georgism--Replying to Chris Cook
> Chris, this is truly a bizarre reply. It's as if I'm
> conversing with someone from another planet, if not
> another century. Let me start with this last sentence
> of yours:-
>
> "... the economic growth necessary for the system to
> continue lacks the availability of energy supplies to
> maintain it."
> ------------------------------------------------------------
>
> It's an article of faith of monetary cranks that
> growth is *compelled* by the financial system, rather
> than what is really the case, that growth is
> *facilitated* by the financial system. And then to
> juxtapose this article of faith in a false religion to
> the Malthusian false premise, the alleged limited
> availability of "land," and by extension, "energy
> supplies." In reality they are a function of discovery
> and development--that is to say, human activity, which
> in the modern world is facilitated through financial
> techniques and mechanisms, etc., which are themselves
> technologies.
>
> For god's sake, there are oceans of petroleum and
> mountains of coal beneath the ground, already
> discovered and waiting to be discovered. Underground
> is also natural gas in prodigious quantities. Because
> of environmental considerations, in my opinion, these
> "fossil fuels" should be increasingly reserved for
> fertilizers and plastics.
>
> We should rapidly introduce nuclear technology for
> energy production, a technology which has been in our
> possession for half a century.
>
> It is true that existing nuclear technology is limited
> to the availability of deposits of uranium, also in
> "limited" quantity.
>
> If conventional power plants are replaced by nuclear
> plants utilizing the once-through process, existing
> reserves of uranium (already discovered) will last
> some 25,000 years.
>
> If replaced by plants utilizing the breeder process,
> existing reserves will last some 100 million years.
> -
>
> "There are now entire generations with no prospect of
> ever owning a property because prices have inflated
> out of sight."
> ------------------------------------------------------------
>
> Let me now amend my earlier statement. It's as if I'm
> conversing with someone who has never read an ordinary
> newspaper or book, who apparently confines his
> "reading," such that it is, to the crank literature.
> There was an attachment to my post which evidently you
> didn't receive, a copy of an article from a recent New
> York Times.
>
> I append it below.
>
> It contradicts explicitly your assertion above.
>
> I also refer you to the work of Kevin Cahill, the
> distinguished author of the recently published, "Who
> Owns Britain?," and the forthcoming, "Who Owns the
> World?"
>
> --- cjenscook <cojock@hotmail.com> wrote:
>
> I would be interested to know exactly what it is that
> William has against the principle underpinning
> Georgism that those who have exclusive private use of
> a "Commons" - such as Land - should compensate those
> they exclude.
>
> --
> One simple example: the thirty-year home mortgage,
> mostly a post WW2 phenomenon, which has enabled family
> occupied home ownership to reach nearly 70% in the
> United States and the Western democracies, by far the
> highest it has ever been in the history of the world
> (several multiples of that now existing in the
> remainder of the world).
>
> And that's real value.
>
> Yes and no. Mortgage loans are not value, they are a
> claim over value. We have seen as a result of this
> wonderful mortgage tool a concentration of wealth (the
> houses created, and more to the point, the land in
> private ownership on which they stand) in the hands of
> those who are "credit-worthy" ie able to obtain from
> banks the claims over future wealth which they issue
> virtually without limit.
>
> There are now entire generations with no prospect of
> ever owning a property because prices have inflated
> out of sight. This may be comfortable for the moneyed
> generation of which William is presumably a member,
> but is not sustainable even in the medium term.
>
> This asset price inflation is caused by the virtually
> "value-less" lending known as "fractional reserve
> banking": it's that simple.
>
> William's view is that this is a triumph (I guess
> because he is a beneficiary), not a tragedy.
>
> I happen to disagree with him, for the simple reason
> that the economic growth necessary for the system to
> continue lacks the availability of energy supplies to
> maintain it.
>
> Best Regards
>
> Chris Cook
> -------------------------------------------------
> -----------------------------------------------
>
>
> F_A_I_R U_S_E C_L_A_I_M_E_D
>
> http://www.nytimes.com
>
> Copyright 2005 The New York Times Company The New York
> Times December 29, 2005 Twenty Years Later, Buying a
> House Is Less of a Bite By DAVID LEONHARDT and MOTOKO
> RICH
>
> PORTLAND, Me. - Despite a widespread sense that real
> estate has never been more expensive, families in the
> vast majority of the country can still buy a house for
> a smaller share of their income than they could have a
> generation ago.
>
> A sharp fall in mortgage rates since the early 1980's,
> a decline in mortgage fees and a rise in incomes have
> more than made up for rising house prices in almost
> every place outside of New York, Washington, Miami and
> along the coast in California. These often-overlooked
> changes are a major reason that most economists do not
> expect a broad drop in prices in 2006, even though
> many once-booming markets on the coasts have started
> weakening.
>
> The long-term decline in housing costs also helps
> explain why the homeownership rate remains near a
> record of almost 69 percent, up from 65 percent a
> decade ago.
>
> Nationwide, a family earning the median income - the
> exact middle of all incomes - would have to spend 22
> percent of its pretax pay this year on mortgage
> payments to buy the median-priced house, according to
> an analysis by Moody's Economy.com, a research
> company.
>
> The share has increased since 1998, when it hit a low
> of 17 percent before house prices began rising sharply
> in many places. Although the overall level has reached
> its highest point since 1989, it remains well below
> the levels of the early 1980's, when it topped 30
> percent.
>
> "This is a good deal - a good, fair price," Dale
> Ruttenberg, a 53-year-old bar manager said of a tan
> one-bedroom bungalow, with a remodeled kitchen and
> finished hardwood floors, that he is buying for
> $211,000 after having rented in Portland for most of
> the last decade. "Within a couple hours of being here,
> it was like, 'I'm home.' "
>
> In high-profile places like New York and Los Angeles,
> home to many of the people who study and write about
> real estate, families buying their first home often
> must spend more than half of their income on mortgage
> payments, far more than they once did. But the places
> that have become less affordable over the last
> generation account for only a quarter of the country's
> population.
>
> Elsewhere, families tend to spend far less on housing.
> In Dallas, the share of income needed to buy a typical
> house has fallen to 13 percent this year, from 14
> percent in 1995 and 31 percent in 1980. In Tampa, it
> has dropped to 21 percent, from 26 percent in 1980.
> Even in New England, where the soaring prices of the
> last decades have frustrated many young families,
> house values have still not reached the heights of the
> early 1980's, when calculated as a share of income.
>
> "Over 20 years, affordability has definitely improved
> because interest rates are much lower," said Kenneth
> T. Rosen, chairman of the Fisher Center for Real
> Estate and Urban Economic Research at the University
> of California, Berkeley. Houses have also grown bigger
> during that time, he said, so people are getting more
> for their money.
>
> Here in Portland, a smaller version of the big-city
> real estate boom has been in full swing until just the
> last few months. House prices have jumped since 2000,
> hundreds of new real estate agents have gotten their
> licenses and an old factory along the waterfront, once
> famous for making bright-red hot dogs, is set to be
> replaced with condominiums.
>
> With many suburban houses now selling for $300,000 and
> up, young families have a much harder time buying
> their first home than they did a few years ago. Still,
> housing has been less expensive this year - as a share
> of local incomes - than at any point during the
> 1980's, according to Moody's Economy.com.
>
> Beyond cost, many families who simply could not have
> bought a house 10 or 20 years ago find themselves able
> to do so, thanks to changes in the ways banks lend
> money. In the past, a home buyer often needed to make
> a down payment equal to 20 percent of a house's value
> to get a mortgage; today, little or no down payment is
> common.
>
> The most money that Tim W. Gilbert has ever had in his
> possession was $15,000, he said, in the form of a
> check for a job he had done as a carpenter. But he and
> his wife, Marjorie, were still able to buy a 1936 Cape
> Cod-style house this year for $176,000 in Poland,
> about 45 minutes north of Portland.
>
> They took out two mortgages rather than making a down
> payment and they use Mr. Gilbert's $5,000 or so in
> pretax monthly income to cover $1,600 in mortgage, tax
> and insurance payments. Ms. Gilbert, a writer, home
> schools their daughters, ages 4 and 6. "I paid rent
> for 18 or 19 years," Mr. Gilbert, 38, said. "We waited
> years and years. We wanted to make this happen."
>
> If almost anything had been different - if interest
> rates had been higher or if the bank had required a
> down payment - the Gilberts would still be living in
> an apartment underneath a loud landlord, Mr. Gilbert
> said. Instead, their house sits on three acres, and
> they get their tap water from the same source as the
> Poland Spring Water Company.
>
> "We're making this work," he said. "It doesn't mean
> things are a lot easier, but finally we are in
> control. It's been a long time coming."
>
> The Moody's Economy.com calculations took into account
> the decline in down payment size in recent years. But
> even though these lower down payments mean home buyers
> are taking out loans equal to a larger share of a
> house's price than in the past, monthly payments have
> remained reasonable in much of the country.
>
> The sharp fall in mortgage rates - from above 10
> percent through most of the 1980's to less than 6
> percent in the last few years - is the main reason.
> Upfront mortgage fees have also dropped to about a
> third of a percentage point of a loan's value, from
> 2.5 percent 20 years ago. Computers have made lenders
> more efficient, and huge pools of global capital have
> brought more competition to a business that was once
> largely local.
>
> But when the list prices of houses are climbing as
> they have in recent years, it can be hard to imagine
> that real estate is more affordable than it once was.
> In a nationwide New York Times/CBS News poll conducted
> this month, 75 percent of respondents said they
> thought most families in their community spent a
> larger share of their income on housing now than in
> the 1980's. Only 5 percent said the share was smaller.
>
>
> One possible reason for the perception is that many
> families have recently taken on mortgage debt to pay
> for items other than housing. Some have folded higher
> interest loans, like credit card debt, into their
> mortgage, said Mark Zandi, chief economist at Moody's
> Economy.com. Others have used home equity loans to pay
> for a new car, tuition or even a vacation.
>
> This has caused mortgage payments to rise over the
> last generation - especially among high-income
> families, according to Federal Reserve data - for
> reasons besides the cost of housing.
>
> But the monthly payments needed to buy a house still
> seem to be dictating people's behavior, if not their
> perceptions. The number of home sales has reached a
> record this year, according to the National
> Association of Realtors. In the Times/CBS poll, 90
> percent of respondents said they were satisfied with
> their homes.
>
> "People aren't really shopping prices," said Bill
> Trask, a broker at Coldwell Banker Friends and
> Neighbors Realty in suburban Portland. "They're
> shopping payments."
>
> Christopher Muncie recently bought his first home, a
> 1,000-square-foot condominium with a sunken living
> room and exposed beams in Portland's West End, for
> $169,000. It is part of a house built in 1838; a
> similar apartment in the building sold for $81,000 in
> 1990, according to real estate records.
>
> That increase starts to look less striking, though,
> when viewed in light of family incomes that have grown
> more than 50 percent in Portland over the same span
> and interest rates that have fallen nearly in half.
>
> "I walked away thinking I'm getting a bargain," said
> Mr. Muncie, 36, a psychologist. "I was actually
> pleasantly surprised."
>
> The median-earning family in the Portland area would
> need to spend about 23 percent of its pretax income on
> mortgage payments for a typical house this year, down
> from about 27 percent for much of the 1980's. But it
> is up sharply from the low of 16 percent reached in
> 1999, and some people here said the cost of housing
> has become onerous again.
>
> With mortgage rates having inched up in recent months,
> houses are taking longer to sell, and asking prices
> have dropped. Homes that would have sold for $300,000
> this summer are now selling for about $285,000, said
> Rita Yarnold, president of Bay Realty.
>
> The market has also slowed in California and most
> other places where housing costs have risen far more
> rapidly than in Maine. In New York, the median-earning
> family would have to spend about half its income on
> the mortgage payments for a median-priced house, up
> from a third of its income in 1985. That will act as a
> drag on house prices in coming years, many economists
> say.
>
> "When you get affordability stretched so much, all the
> creative financing in the world can't stop some
> correction of house prices," Mr. Rosen, the University
> of California economist, said. "It happened in Hong
> Kong, Japan and England."
>
> It looks as if it may not happen, though, in most of
> the United States.
>
> David Leonhardt reported from Portland, Me., for this
> article and Motoko Rich from New York.
> -
>
>
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