Do you both admit that the term "land" is an economic concept and not a reality?
Then could you question whether there might be more "just" concepts that are better for the whole of humanity as well as the individual parts, the planet and the rest of life than the current concept and the system based upon it? REH From: [email protected] [mailto:[email protected]] On Behalf Of Arthur Cordell Sent: Monday, September 27, 2010 1:28 PM To: 'RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION'; 'Keith Hudson' Subject: Re: [Futurework] U.S. Bails Out Major Credit Unions - WSJ.com I often wonder the extent to which the rise of the 2 person worker household (women entering the workforce in great numbers) contributed to the bidding up in the price of land and therefore housing. The great paradox might be that rising unemployment will be one way for land values to settle again. And as employment rises, well land values will rise again. arthur From: [email protected] [mailto:[email protected]] On Behalf Of Harry Pollard Sent: Monday, September 27, 2010 1:10 PM To: 'Keith Hudson'; 'RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION' Subject: Re: [Futurework] U.S. Bails Out Major Credit Unions - WSJ.com Keith, About half of each bank loan was "secured" by land-value - a notoriously volatile value that would never be accepted as collateral back in the time of prudent banking. Improvement values normally don't much alter, but land-value can plunge - as it did. When economists melded land into capital rather than regarding it as a separate function, they lost the capacity to analyze the situation. Thus, we had a "housing" bubble rather than a "land-value" bubble. The only way out of the mess is to allow land prices to collapse, but that is not politically possible. Rather, the economists/politicians make serious efforts to maintain land prices thereby ensuring we enter a long period of stagnation. (They don't know they are maintaining land prices, but there is so much they don't know.) Perhaps the breakup of Obama's economic team is resignation in the face of a situation they don't at all understand. In any event, back in academia, they can again be pundits who can offer their certainties with little argument. Harry From: [email protected] [mailto:[email protected]] On Behalf Of Keith Hudson Sent: Sunday, September 26, 2010 12:19 AM To: RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION Subject: Re: [Futurework] U.S. Bails Out Major Credit Unions - WSJ.com At 01:42 26/09/2010 -0400, you wrote: More on U.S. banking problems - some think it's directly related to the bursting of the housing bubble. Barry http://online.wsj.com/article/SB10001424052748703499604575512254063682236.ht ml Yes, indeed. This is another instance of the US government (and ultimately all Americans) paying for the ineptitude of a (high) proportion of the banks and credit unions that validated the mis-selling of sub-prime mortgages by crooks. And, of those local banks and credit unions that have survived without immediately going broke, they're now finding that non-payments of the remaining mortgages are continuing. They're now foreclosing on those properties, but the process is being jammed in the courts because there are so many layers of derivatives wrapped around the initial mortgages that a huge backlog is building up. Too many deficiencies and illegalities are found in one or other of those layers that, by the time they're unwound (very few, if any, so far), houses generally will have lost even more value with even more negative equity and inability to pay. (I don't know what's happening in America but in the UK even the highest priced houses in London that still did well all through 2008/10 are now following the rest and falling in value.) We're now at the beginning of the perfect storm that started in 2008 and, recently, appeared to be resting awhile -- without the levels of unemployment of the 1930s -- yet! But, like tornadoes that touch shore briefly and then move out to sea and build up further strength for a while, we haven't seen anywhere near the worst yet. For those who want to read the WSJ story directly, I follow with it below. It's really peanuts compared with the still-remaining liabilities of the major banks -- 'cos they've got commercial property failures on their books, too. Keith <<<< CREDIT UNIONS BAILED OUT US backs $30 billion in bonds to stabilize key institutions; subprime legacy Mark Maremont and Victoria McGrane Two years after the peak of the financial crisis, the federal government swooped in to stabilize a crucial part of the credit-union sector battered by losses on subprime mortgages. Regulators announced Friday a rescue and revamping of the nation's wholesale credit union system, underpinned by a federal guarantee valued at $30 billion or more. Wholesale credit unions don't deal with the general public but provide essential back-office services to thousands of other credit unions across the U.S. The majority of retail credit unions are sound, but they will have to shoulder the losses through special assessments over the next decade. Friday's moves include the seizure of three wholesale credit unions, plus an unusual plan by government officials to manage $50 billion of troubled assets inherited from failed institutions. To help fund the rescue, the National Credit Union Administration plans to issue $30 billion to $35 billion in government-guaranteed bonds, backed by the shaky mortgage-related assets. Officials said the plan won't cost taxpayers any money. Still, it marks the latest intervention by the U.S. government into a financial system weakened by the real-estate bust. Bad bets on mortgage-backed securities have now killed five of the nation's 27 wholesale credit unions since March 2009. The federal government, which now controls about 70% of the total assets at such credit unions, said the surviving institutions will be reined in so that they take fewer risks with their investments. "Previously, we stabilized the system, and now we're resolving the problem and reforming the system," said Debbie Matz, chairman of the National Credit Union Administration, the U.S. agency overseeing credit unions. Members United Corporate Federal Credit Union in Warrenville, Ill., Southwest Corporate Federal Credit Union of Plano, Texas, and Constitution Corporate Federal Credit Union, Wallingford, Conn., which had a total of $19.67 billion in assets as of July, were taken into conservatorship by federal regulators. Wholesale credit unions, also known as corporate credit unions, invest money for retail credit unions and provide them with check clearing and other services. Since the start of 2008, 66 retail unions have failed, compared with more than 290 banks or savings institutions. Credit unions are member-owned cooperatives that act much like banks. Under federal rules, wholesale credit unions were supposed to invest only in safe, liquid assets. But some chased higher returns by loading up on securities backed by subprime mortgages or other risky loans. Their portfolios were decimated by the mortgage meltdown. Last year, regulators seized the two largest wholesale credit unions, U.S. Central Federal Credit Union, based in Lenexa, Kansas, and Western Corporate Federal Credit Union, San Dimas, Calif., after finding their losses were much larger than previously reported. Losses on the mortgage-backed securities held by the five seized credit unions are expected by regulators to total about $15 billion. Wiping out the capital of the failed institutions will cover a chunk of those losses. But the remaining $7 billion to $9.2 billion eventually will be passed along to the nation's 7,445 federally insured credit unions in the form of future assessments. The changes won't immediately affect customers of retail credit unions throughout the U.S. But it is possible that assessments on the industry could result in higher interest rates on loans and lower payouts on deposits, if credit unions can't otherwise cover their obligations. Bert Ely, a financial-industry consultant in Alexandria, Va., said regulators share some of the blame for the resulting mess, because wholesale credit unions were allowed to pursue a strategy that was "viable only because of what clearly has turned out to be excessive risk-taking." Ms. Matz, the nation's top credit-union regulator, said the investment losses reflect "unprecedented economic times" and "bad decisions" by regulators, credit-union managers and board members "by heavily over-concentrating in mortgage-backed securities." New regulations issued by the NCUA on Friday will make oversight of wholesale credit unions much tougher, she said, and are meant to fix any regulatory shortcomings. As part of the plan, regulators will eventually wind down the operations of the five failed credit unions. Together they had about $50 billion in shaky mortgage-backed securities on their books, according to Larry Fazio, NCUA's deputy executive director. Based on current market values, those securities are worth roughly half of their face value, representing a potential loss of $25 billion. In an effort to minimize and spread out losses that must be absorbed by the credit-union industry, regulators said they will move all the battered securities into a good bank-bad bank structure. NCUA officials will manage the $50 billion portfolio, or "bad bank," of the failed wholesale institutions. Federal regulators will allow the remaining "good bank" operations at the credit unions to continue for about two years while retail credit unions wind down their relationships with the failed institutions. Friday's moves could deepen tensions between regulators and retail credit unions that withstood the financial crisis and resent having to bear financial costs caused by the mistakes of wholesale institutions. >>>> Keith Hudson, Saltford, England
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