Chris, The days of prudent banking are way in the past. The problem is governmental regulations that take responsibility for bad decisions off the backs of those who make the decisions.
'Bailing out' in all its varieties merely sets up similar behavior in the future. If you're not going to pay for taking a risk with other people's money, you might just as well do it. If our citizens were Georgists instead of conservatives or socialists they would understand how the process works. Perhaps if they understood it was a land bubble and not a 'housing bubble' they would be more cautious in their actions. Actually, if we collected a large part of the land value -- the economic rent -- the land bubble would never have occurred. But we don't and it did. Obviously there were some overly enthusiastic mortgage salesman, and not a few crooks, involved in selling the sub primes. But they weren't responsible for the problems that were already in place. As soon as the banks found that they could unload some of the dodgy mortgages on to investors, they did. It's the investors who will suffer losses. Poorer people who should never have gotten a mortgage probably didn't lose a lot. Their credit rating may be affected but it wasn't very good anyway. 'Normal' high land prices exert a debilitating effect on the economy. Lots of people find they run out of wages before they run out of month. The urge to go into debt in order to obtain all the nice things provided at a low price by the American economy is strong. Many people can't resist it. The real crooks are the credit card companies. I got an American Express credit card because it gave me a discount at Cosco. I paid on the web. One day -- it was my fault -- I made a mistake with my payment of USD141. The next month the USD141 was still on my statement and a USD25 penalty was added. This seems to be a 213% "annual interest rate". I haven't used my American Express card since. The way out of this entrapment for poor people used to be bankruptcy. This was fairly easily done until the credit card companies got the bankruptcy act changed -- yet another example of Congress protecting the people. Now poor people who fall into the credit card debt trap have no way out. Compared to this crookery, the subprime salesmen who were bilking investors who should have known better are small potatoes. Harry ****************************** Harry Pollard Henry George School of Los Angeles Box 655 Tujunga CA 91042 (818) 352-4141 ****************************** -----Original Message----- From: [EMAIL PROTECTED] [mailto:[EMAIL PROTECTED] On Behalf Of Christoph Reuss Sent: Sunday, March 23, 2008 2:44 AM To: [EMAIL PROTECTED] Subject: Re: [Futurework] Yanks wuz conned and con artists got away across state line from lynch mob sayz Guardian... Harry Pollard wrote: > I guess I have to say it again and again. It's not a housing crisis - it > is a land crisis. It is always a land crisis. The problem with land values > is that they can be $100,000 today and a $1.95 tomorrow. Bankers know this > and back in the days of prudent banking they would never lend on land. Was it really for the first time in history that bank loans for homeowners included the land that the home was built on, and that land prices increased? (Did land prices really increase stronger than ever? Why, in a recession?) Or was the subprime crisis manifactured by speculators who made billions by taking the American "buy now, pay later (or never)" consumerism to new extremes? Those billions gotta go somewhere, they don't just disappear... Chris ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ~~~~~~~~~~~~~~~~ SpamWall: Mail to this addy is deleted unread unless it contains the keyword "igve". _______________________________________________ Futurework mailing list Futurework@fes.uwaterloo.ca http://fes.uwaterloo.ca/mailman/listinfo/futurework _______________________________________________ Futurework mailing list Futurework@fes.uwaterloo.ca http://fes.uwaterloo.ca/mailman/listinfo/futurework
