Global devaluation really protectionism for property speculators

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Renegade Economists podcast 314

Recorded at 3CR November 13th, 2013
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David Collyer joins host Karl Fitzgerald to discuss the state of Australian housing market. In the process we consider global policy settings re the attempted protectionism inherent in devaluing national currencies ‘to create jobs’. Pushing down one’s currency is reliant upon lowering interest rates. This enables greater borrowing capacity, helping to fuel the speculative property bubble we see re-emerging around the planet. What creates more jobs? A lower exchange rate for an export orientated economy, or cheaper land for small business to start up?

Karl finishes the fast paced show discussing the latest financial weapon of mass deception – rental-backed securities. This is the new nemisis for those concerned about monopoly powers in housing. Infact it’s the antithesis of Georgism, with corporates now claiming the rents from land in both mortgage and rental spheres.

Doubling the pain is that instead of these rents financing government, they are being used to buy up even more of the earth. Compounding the issue further is the looming TPP agreement (the text released in full for the first time overnight by Wikileaks) outlawing reforms that impinge upon profits.

Monopoly power in housing is already leading to lobbying against property taxes in some US municipalities. Manipulating rents in both the mortgage and rental markets is a dangerous concentration of power on the road to, dare we say it, neo-serfdom.

Other points of note:
The practice of holding real estate for ransom (and acting as if it is perfectly ethical) shows up in vacancy figures. Here’s the US at 10.2%, helping force housing prices higher, faster.

Ironic that the National Housing Supply Council has been axed in the week following our 64,000 vacant homes finding.

Watching the casino debacle in Sydney’s Barangaroo, we see CEO John Talbot claiming ‘we got the same open space area on the ground, so the only way to do that was to borrow a bit of Darling Harbour'(AFR p10, Nov 6th). They reclaimed some of the harbour to placate the casino. Lets hope rent is being paid for assuming ownership of the water based commons with an expanded land mass!

The joys of privatisation: US prisoners up 1600% over 20 years. “Corrections Corporation of America recently offered to run the prison system in any state willing to guarantee that jails stay 90% full.”

Music

Tendersticks – Marbles

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