Have you noticed? Prosper Australia is the ONLY Australian body which:

– forecast this financial collapse
– explained it, and
– proposed the capture of economic rent instead of taxes to turn economies around.

Our members are from all political parties and from none, from all religions and none – so we’re not pushing any party line nor religious barrow.

Unfortunately, by failing to capture adequate economic rent via municipal rates and land taxes, the Labor and Liberal parties are both complicit in why we are where we are. They preferred to tax people for working and to reward them for rent-seeking in real estate.

John Howard and Peter Costello presided over the first part of our real estate bubble (from 1999 to 2007), and the Rudd-Swan, Gillard-Swan governments have kept pumping it up from 2007 by means of ‘negative gearing’ and the First Home Owner Grant and First Home Owner Boost.

Ken Henry’s recommendations for Australia’s Future Tax System are a step in the right direction.

We want more members. You’d not be throwing over your political nor religious allegiances if you were to join us.

You ARE, however, required to want Australia’s revenue to come from its land and resource rents, instead of from taxes (and their attendant deadweight costs).

If you agree with our aim, why not join us? We need your help.

JOIN HERE

Your $30.00 membership includes a subscription to our 104 year-old journal, PROGRESS.

From Zero Hedge

Ben Bernanke FTMFW Quote Of The Day

Submitted by Tyler Durden on 02/10/2012 12:35 -0500

And the winner is…

• BERNANKE: HOUSING MAY NO LONGER BE VIEWED AS SECURE INVESTMENT

That’s right. He just said that. And with that, a Lewis Black moment is coming on…

He also said some other stuff.

• BERNANKE SAYS HOUSING IMPEDING FED EFFORT TO SPUR U.S. ECONOMY
• BERNANKE SAYS HOUSING SECTOR SUFFERS FROM `SERIOUS IMBALANCES’
• BERNANKE SAYS HOUSING IMPEDING FED EFFORT TO SPUR U.S. ECONOMY
• BERNANKE SPEAKS ABOUT HOUSING MARKETS IN ORLANDO, FLORIDA
• BERNANKE: TIGHT MORTGAGE CREDIT WON’T BE EASED QUICKLY, EASILY

As a reminder, shadow inventory is now at a record high. But Cramer just called the housing bottom. For the 7th time. For the masochists among our readers, his complete comments can be found here.

Thanks Bubblepedia!

In BUSINESS INSIDER the Huffington Post’s Dylan Ratigan says the only way out of the mess now is to write down, or write off, debt that CANNOT be repaid.  He’s right!

The first three letters in THE AGE today defend the banks.  The fourth from a person who doesn’t identify with the left of Australian politics is implicitly critical of the Reserve Bank for not lowering the cash rate from 4.25%.

Most banking people are undoubtedly good Australians, as I’m sure are the three bank defenders.

But we’ve got to look deeper if we are to see the terrible, terrible legacy with which the banks have left Australia – because we’re going to have to deal with it shortly.

This criticism goes more to what we and our governments ALLOW the banks to do to us, with which the first three letter writers are obviously unacquainted. It’s not good.  Therefore we, not the banks, are ultimately responsible for what is about to befall Australia.

No, we’re NOT different from the US and Europe which are on their knees. And I hear today that the UK which seems to have slipped under the European radar has pump-primed its economy to the tune of $500,000 billion. Half a trillion! That’s good?

So where did we and the banks go wrong?

Well, we’ve fallen for the pea and thimble trick with taxes. We’ve come to believe ‘the only certainties in life are death and taxes’, so taxes have to be paid for the necessary running of government.

But have you noticed how taxes have risen substantially as a proportion of GDP over the last hundred years? “That’s the price of the social contract’, do I hear you say?

Nonsense. Taxes destroy.

What’s the alternative? Land and resource rents – because they DON’T destroy. They can’t be passed on in costs like taxes.

Oh, and sometimes we get this right.  I see we’re raising $3 billion from spectrum licenses.

Back to the point. As we capture only a tiny amount of our land rent for revenue, Australia has amongst the highest land prices in the world. I’ve dealt with the crappy, specious argument that our land prices are a matter of inadequate supply.

For which block of land would you pay less?

Of course! The one WITH the misnamed land ‘tax’ on it.  (It’s a rent.)

Now, as we do NOT capture enough land rent publicly, it’s privately capitalised into higher and higher land prices.

Banks lend on a combination of the depreciated value of a home plus the increasing value of the land.

This is wrong. Especially during a bubble in land prices.

Banks don’t care. They’re happy to fund you moving into your home – even during a residential bubble.  Their risk management goes out the door. It shouldn’t. In this respect, they are certainly at fault.

So, letters writers, although WE are also to blame for our ignorance in not capturing more of our land rent to keep land prices down, banks are NOT blameless.

I guess that’s why, despite its billions in profits, the ANZ bank has moved its mortgage interest rates up today. It’s provisioning for the forthcoming rout.

Maybe, but I’ll bet our BIG 4 will STILL end up putting their hands out for a bailout – because “they’re too big to fail”.

I want such a business! Rake in capitalised bubble-inflated land rent in 30 year mortgages in the good times, expect a handout from we the people in the bad.

We’ve got to remedy this sickness. It’s beyond time we discovered economic rent.

Karl Case and Robert Shiller have done an excellent job sampling existing real house prices in US cities to present a compelling story.

Gavin Putland and I have put ALL of Australia’s real estate sales (residential, commercial/industrial and rural) over GDP to paint a similar picture of bursting real estate bubbles since 1972. [The Kavanagh-Putland Index]

These repetitive bubbles could be ended–and economies vastly stimulated–if countries captured more of the economic rent of their land instead of taxes. Too easy!

On ABC-TV last night Bob Katter said the Reserve Bank ought to have lowered interest rates yesterday. The cash rate should be 2%, half what it is now, he opined.

He’s right. Our high interest rates are keeping the AUD too high, and there aren’t many areas of the economy doing well.

Interviewer, Annabel Crabbe, asked Katter what this would do to real estate prices, however – Australia’s already being amongst the highest in the world.

He had an answer for that one.  He’d just seen a report by Malcolm Turnbull and “an Oxford Don” saying we should remove restrictions on the subdivision of land. That would fix the shortage of supply which has dogged our housing and made it so unaffordable.

…. What rot!

So, despite all the reports proving our high land prices are NOT the product of inadequate supply, it seems Katter, Turnbull and the Institute of Public Affairs (funded by Genghis Khan/Gina Rhinehart?) haven’t caught up with them yet, and still cling to this misbegotten belief – or maybe they don’t want to believe the facts?

Here’s one of the most recent reports to bring you up to date, guys. It shows the Australian residential market has actually become a Ponzi Scheme. Nothing to do with supply and demand.  Here’s a more technical one which fleshes out the theory.

Katter and the IPA are one thing, but you’d expect better from Malcolm Turnbull (if Katter is quoting him correctly).

Er, no, your Maj., it’s not just Freddy Goodwin – it’s the system.

Land prices wouldn’t exist if we captured the rent for revenue.  There’d be no need for taxes – at all.

But the system, especially banks, promote land prices, and therefore people are locked into mortgages with high land prices–impossible land prices during a bubble–and these have to be repaid with interest over 30 years.

It’s the way the system of which you are part, your Maj., keeps the 99.9% poor by capturing community-created land rents and privately capitalising them into land prices.

Professor Luis Garicano was talking arrant nonsense:  he’s an economist.

I hope this helps?

Happy 60 years!

UNFORTUNATELY, THE AUSTRALIAN TAX SYSTEM SUPPORTS THE FIRST

When I mentioned it was necessary to pay the rent under Mosaic Law, a correspondent reminded me that the Kingdom of Judah ruled by King Jehoiakim from 608 to 598 BC was forced to pay tribute, in turn, to the Egyptians, the Babylonians, and then the Egyptian Pharaoh again. The King saw to it, however, that the tribute was always levied fairly, striking the levy upon the value of his people’s landholdings.

Hey, IMF, World Bank, Europe and US! If the King of Judah could make the 1% pay their fair share in tough times, maybe there’s a lesson in it for us?

No? Why not? Ken Henry’s “Australia’s Future Tax System” panel believes there’s a very good case!

THE GREAT CAUSE OF INEQUALITY

The great cause of inequality in the distribution of wealth is inequality in the ownership of land.

The ownership of land is the great fundamental fact which ultimately determines the social, the political, and consequently the intellectual and moral condition of a people.  And it must be so.

For land is the habitation of man, the storehouse upon which he must draw for all his needs, the material to which his labor must be applied for the supply of all his desires; for even the products of the sea cannot be taken, the light of the sun enjoyed, or any of the forces of nature utilized, without the use of land or its products.

On the land we are born, from it we live, to it we return again – children of the soil as truly as is the blade of grass or the flower of the field.

Take away from man all that belongs to land, and he is but a disembodied spirit.  Material progress cannot rid us of our dependence upon land; it can but add to the power of producing wealth from land; and hence, when land is monopolized, it might go on to infinity without increasing wages or improving the condition of those who have but their labor.  It can but add to the value of land and the power which its possession gives.

Everywhere, in all times, among all peoples, the possession of land is the base of aristocracy, the foundation of great fortunes, the source of power.

– Henry George, “Progress and Poverty” Book 5, Chapter 2.

For decades, Mason Gaffney has stood out head and shoulders as the world’s foremost expert on land and resource economics.

He’s always had a gift for words and for challenging the economy’s excesses, as demonstrated in this 1942 The Freeman essay as a nineteen year-old.

Those who’ve taken my advice to read Gaffney’s “Neo-classical Economics as a Stratagem against Henry George” will have been rewarded by the detailed research and clarity of exposition, honed during his time as a reporter on TIME magazine.

Gaffney’s outspokenness on the land question has seen him survive a university board attempt to have him removed from his professorial duties when his students revolted to support him, presumably because they’d learnt things they’d never heard from anyone else.

Now, in a typically comprehensive and concise paper, “Reverberations between immoderate land-price cycles and banking cycles in Real-World Economic Review”, Mason Gaffney removes the veil from the stimuli behind the funding of the repetitive land booms and busts that led to this, the greatest land price bubble in history.  Enjoy his incisive brilliance.