Political Crossfire Forums

[ubikk]

beachbum bob wrote: ubikk wrote: beachbum bob wrote:
and you are right, Bernake and Bush will be blamed...while Greespan is directly responsible for not one, but two asset bubble crashes

Greenspan worked for the President. If a President really wanted him to cut interest rates, or raise them he would have done it.

In fact, even the financial industry pundits often remarked about how Greenspans actions did not seem to match reality or even what he claimed his own reasons were. They constantly questioned why he was raising rates in the 90s when there was no inflation and constantly questioned why he kept lowering them in the 00's despite the fact that there was not a serious, protracted recession and that inflation, particularly in food an energy, was rearing its head.

good questions...especially raising the rates in the runup to the 2000 elections...to around 7% if I remember...

That summer, gas prices spiked over $2 for the first time ever. The Bush campaign blamed Clinton and claimed that the democrats had no energy policy.

[Free Thinkr]

LeopardPM wrote: Free Thinkr wrote: ubikk wrote: Free Thinkr wrote: ubikk wrote: Free Thinkr wrote: chris_mthomas wrote: But this isn't indicative of "greed in the housing industry", just of the speculative nature of markets.
Ahhhhh. 8:)

hehe, what drives speculation? Greed!
But it's not in the hoouuusssing industry. It's not in industry at all, in fact.

OK then, the real estate speculation industry.
*ding* *ding* *ding*

Give this man a prize!



oh geez! give it a break! Yes, the big bad 'land speculators - everyone run and hide! Find another scapegoat, please!
Why should I, when it is speculators who cause the land costs to rise beyond sustainable rates, and thus halt production?

I suppose producers could always utilize land in Pluto or iron from the Kuiper belt, though, right? :lol:

[LeopardPM]

Free Thinkr wrote: LeopardPM wrote: Free Thinkr wrote: ubikk wrote: Free Thinkr wrote: ubikk wrote: Free Thinkr wrote: chris_mthomas wrote: But this isn't indicative of "greed in the housing industry", just of the speculative nature of markets.
Ahhhhh. 8:)

hehe, what drives speculation? Greed!
But it's not in the hoouuusssing industry. It's not in industry at all, in fact.

OK then, the real estate speculation industry.
*ding* *ding* *ding*

Give this man a prize!



oh geez! give it a break! Yes, the big bad 'land speculators - everyone run and hide! Find another scapegoat, please!
Why should I, when it is speculators who cause the land costs to rise beyond sustainable rates, and thus halt production?

I suppose producers could always utilize land in Pluto or iron from the Kuiper belt, though, right? :lol:

cute Kuiper Belt reference...

speculators cause the land costs to rise? How so? Are they creating value somehow? Or is it just more valuable to them to hold on to land ACCEPTING THE RISK OF DECREASE IN VALUE and wait for the possible profitable time to sell? You realize land values, just like any value, can decrease.

Another tact: OK, lets just play your game and assume that these land speculators are somehow gaining non-market or above-market profits... why doesn't everyone do this seemingly easy job? the reason is because it is NOT easy and requires knowledge and foresight. Speculators must make correct guesses at the future desirability of a parcel of land relative to its price today - most people who would be 'speculators' make the exact WRONG guess and lose money: it is not profitable to hold land off the market for 10 years and sell it for 5% (or even 10% considering taxation etc) above their purchase price - there is an opportunity cost involved which speculators are extremely aware of.

BTW: Speculators do not 'cause land prices to rise' - that is purely do to demand unless the speculators improve the property in some way. For instance, my father owned two parcels of property in rural Arizona. They were right across the road from each other. He developed one, put in a Plant Nursery, a Restaurant, and a Bed & Breakfast. On the other, he put nothing. He was able to sell the undeveloped land and make a decent profit directly due to his developing the first property. BUT, even though his actions were 'valued' more by others, he did not 'cause' the value to increase - he made a correct guess that people just might value such improvements... he could have, just as easily, made the wrong guess and not been able to gain any profits from the undeveloped land.

Speculators actually perform a vital function in the distribution of land - successful speculators withhold land from lesser efficient uses of it for more appropriate uses in the near (or later) future. Instead of ending up with a mobile home park today, they keep it off the market for an apartment building in 3 years. The ONLY way they could make money is if this were true, else they would all be going consistently bankrupt and less and less speculators would be around since it never seems to work out.

Speculation in Financial Markets:
http://www.mises.org/story/320

Recommended Reading for Georgists-
Rothbard on the Faulty Georgist Taxation:
http://www.mises.org/rothbard/mes/chap16c.asp

[beachbum bob]

there is a fine line between "speculators and fraud"....when appraisals are artificially inflated by ..$100,000...that aint speculation no more

also..to see "new home sales" in perspective...with the "revisions" made

[ubikk]

LeopardPM wrote:
BTW: Speculators do not 'cause land prices to rise' - that is purely do to demand unless the speculators improve the property in some way.



I disagree. Speculation can push up prices because the speculators are contributing to the demand. When you start to get a bubble, less knowledgable people start speculating on land. The speculation becomes more reckless. from about 2003 until probably last winter, I was constantly getting notes and letters from people wanting to buy my house. several times per month I would get door hangers or letters. Some of them tried to pass themselves off as "just me and my wife looking for a nice place in this neighborhood..." (Right). Suddenly, that's all stopped. Prices in my neighborhood are stable, though.

Quote: Speculators actually perform a vital function in the distribution of land - successful speculators withhold land from lesser efficient uses of it for more appropriate uses in the near (or later) future.

Intelligent speculators do peform some function, but I think their value is limited, IMO.

Quote: Instead of ending up with a mobile home park today, they keep it off the market for an apartment building in 3 years.

People buy mobil home parks all the time around here and turn them into shopping centers and apartment complexes. In fact, they even like do news stories about the poor residents who get displaced.

Quote: The ONLY way they could make money is if this were true, else they would all be going consistently bankrupt

A good share of people do lose money. Some of them end up as pyramid schemes. This was a rampant problem back in the 1960s. They even did TV sit-com episodes about people who got suckered into buying land in the desert.

Quote: and less and less speculators would be around since it never seems to work out.

As long as people gamble, there will be speculators. I don't think they're going anywhere soon.

[Free Thinkr]

LeopardPM wrote: Free Thinkr wrote: LeopardPM wrote: oh geez! give it a break! Yes, the big bad 'land speculators - everyone run and hide! Find another scapegoat, please!
Why should I, when it is speculators who cause the land costs to rise beyond sustainable rates, and thus halt production?

I suppose producers could always utilize land in Pluto or iron from the Kuiper belt, though, right? :lol:

cute Kuiper Belt reference...
;)

Quote: speculators cause the land costs to rise? How so?
By decreasing supply.

Quote: Are they creating value somehow?
No, they're waiting until the productive potential of society increases, which would generally lead to an increase in the value of their land, at which point they reap the benefit.

Quote: Or is it just more valuable to them to hold on to land ACCEPTING THE RISK OF DECREASE IN VALUE and wait for the possible profitable time to sell? You realize land values, just like any value, can decrease.
So what? All you're saying here is that they're gamblers. Ok, and? What does society receive in return when they "lose?" Because it's clear what society loses when they "win." Actually, it's a type of gambling where society loses either way; it loses the use of productive land for the entire period the land is withheld.

Quote: Another tact:
Tack. Sorry, I'm a grammar dick.

Quote: OK, lets just play your game and assume that these land speculators are somehow gaining non-market or above-market profits... why doesn't everyone do this seemingly easy job?
Why doesn't everyone steal cars? I mean, why buy them, right? Because, if no one bought them or made them, there'd be nothing to steal. So with land speculation: there must be production to rob from. Just as there must be many wildebeest for every lion if lions are to be satiated, there must be many producers for every landowner if landownership is to be profitable.

Quote: the reason is because it is NOT easy and requires knowledge and foresight.
And large amounts of money available to be tied up; so, basically, you have to be fairly rich in the first place. It's sorta like being the dealer at blackjack; if you have enough money to open a casino, it aint a bad gig.

Quote: Speculators must make correct guesses at the future desirability of a parcel of land relative to its price today - most people who would be 'speculators' make the exact WRONG guess and lose money: it is not profitable to hold land off the market for 10 years and sell it for 5% (or even 10% considering taxation etc) above their purchase price - there is an opportunity cost involved which speculators are extremely aware of.
So what? From society's perspective, the use of the land is still lost.

Quote: BTW: Speculators do not 'cause land prices to rise' - that is purely do to demand unless the speculators improve the property in some way.
What happens when demand is constant, but supply is reduced? I'm not saying speculators cause the price of their land to increase, but land in general.

Quote: For instance, my father owned two parcels of property in rural Arizona. They were right across the road from each other. He developed one, put in a Plant Nursery, a Restaurant, and a Bed & Breakfast. On the other, he put nothing. He was able to sell the undeveloped land and make a decent profit directly due to his developing the first property. BUT, even though his actions were 'valued' more by others, he did not 'cause' the value to increase - he made a correct guess that people just might value such improvements... he could have, just as easily, made the wrong guess and not been able to gain any profits from the undeveloped land.
And his guessing right somehow entitles him to people's money?

Quote: Speculators actually perform a vital function in the distribution of land - successful speculators withhold land from lesser efficient uses of it for more appropriate uses in the near (or later) future. Instead of ending up with a mobile home park today, they keep it off the market for an apartment building in 3 years. The ONLY way they could make money is if this were true, else they would all be going consistently bankrupt and less and less speculators would be around since it never seems to work out.
Ubikk fielded this one already. It's silly to say that they perform some function that entitles them to the wealth they extract.

Quote: Speculation in Financial Markets:
http://www.mises.org/story/320

Recommended Reading for Georgists-
Rothbard on the Faulty Georgist Taxation:
http://www.mises.org/rothbard/mes/chap16c.asp
Oh, that second link is rich. I didn't make it very far before I happened upon this bit, and fell off my chair laughing:
Murray Rothbard wrote: Here a crucial Georgist fallacy is exposed clearly: ignorance of the true role of time in production. It takes time to save and invest and build up capital goods, and these capital goods embody a shortening of the ultimate time period needed to acquire consumers’ goods. India and China are short of capital because they are short of time. They start from a low level of capital, and therefore it would take them a long time to reach a high capital level through their own savings. Once again, the Georgist difficulty stems from the fact that their theory was formulated before the rise of “Austrian" economics and that the Georgists have never reevaluated their doctrine in the light of this development.
Ahh! So India and China a poor because they're "short on time." Makes sense; we all know how they are newly settled civilizations, especially compared with the likes of the US! :lol: