… ALL BAD!

Hot on the heels of the Australian Bureau of Statistics updating its Australian System of National Accounts, my colleague Dr Gavin Putland, Director of the Land Values Research Group, has released another fascinating series of charts confirming the portents of the Kavanagh-Putland Index.

They show Australia has been set up for a financial bust as big as, if not bigger than, anywhere else in the world.

Unbelievable?

I’m confident time will shortly prove the statement correct, because Gavin Putland and I have put in years of work quantifying Australian real estate bubbles and their damning consequences. This one will put others to shame.

In bubbledom, we are the champions!

Who’s to blame?

We are. Australians are; particularly the baby-boomer generation. Many of us got a warm inner glow as our land prices shot up to nosebleed heights from 1999 to 2007 under the bubble-ignorant political leadership of John Howard and Peter Costello, only to be followed by the equally ignorant Rudd-Swan-Gillard regime.

The warm inner glow was sorely misguided, because future generations of Australians were being locked out of housing opportunities, and the X and Y generations began to realise the fact.

Most of the boomers didn’t care, though. Wasn’t their wealth increasing rapidly? Couldn’t they borrow  more against their assets?

Australia’s politicians, either ignorant of the realities of property bubbles, or with an eye to not losing baby-boomer votes, were not up to disabusing them of the notion that skyrocketing land prices were good for the nation.

So – no, Australia has most certainly not avoided the global financial collapse. We’re living on a rapidly diminishing band of borrowed time, and no one’s up for the simple fiscal adjustment that would turn this sad presentiment around.

The “Occupy” movement and unions do have an inkling, but they’re not even warm yet.

Howard Jarvis and Paul Gann are the men responsible for turning the once ‘Golden State’ of California into the economic basket case of the USA.

What did they do?

They garnered support for the “People’s Initiative to Limit Property Taxation”, otherwise known as “Proposition 13” to cut the property tax, ostensibly to stop the property tax from driving older Californians out of their houses, but in reality to appease the landlord lobby for whom Jarvis worked. Landlords had become increasing unhappy with the incidence of the property tax on their net yields, especially through the 1970s recessions.

The USA property lobby, then emboldened by the success of Proposition 13, got behind a similar push in 30 other states, most of which proved unsuccessful. This was promoted by selling the fact that cutting the property tax would help property owners. Nothing was said about how resultant budgetary shortfalls were to be financed.

The carrying of Proposition 13 in 1978, of course, meant that Californian budgets were forced to rely on alternative taxes which slowly but surely began to erode its prosperity.  Government spending excesses compounded the problem.

To this day it’s arguable that most Californians still can’t figure what happened to them.  Were they to examine the miscarriage that has become their property tax base, they’d get an inkling.

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Further reading:

The beginning: Mason Gaffney 1978

The middle: Mason Gaffney 1995

The end: California had the biggest property boom in the United States, the median property price in April 2005 being $500,000.  Orange County, Ventura County and the San Francisco Bay Area had median prices around $650,000.

As home prices plummeted in 2007 and 2008 after the housing bubble burst, many thousands of homes have been foreclosed.

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Well said, Tom!

And, of course, a flat rate charge on land values will pick up the mega rich (and the rest of us) quite nicely.  Problem is, the ultra wealthy push the poor widow to the fore to carry their argument against it–but she can be accommodated!–and the ‘two-bob toffs’ will also come out of the woodwork to object.  (The latter are quite used to being stolen from; taxed on all their comings and goings, so they don’t see there are PRINCIPLES involved.)

Land can’t flee overseas or be hidden.

The holding of other natural resources, too, is the complementary sine qua non, of course:  proper charges on oil, mineral, fishing, forestry & spectrum licenses, etc.

7 billion population?  More than ever, we need to ensure a thoroughgoing stewardship of the planet: that land is protected, used efficiently, isn’t monopolised or misused, nor held unreasonably out of use.

There IS an answer: the capture of economic rents and abolition of all arbitrary taxation imposed by those who would rape and abuse the planet.

The press normally publishes details of the Land Values Research Group’s Kavanagh-Putland Index when it is released. Not this time.  Have real estate advertisers got to newspaper editors, laying down the law against articles suggesting this is NOT the time to buy?

WITH mining States Queensland and Western Australia leading the real estate sales race to the bottom, Dr Gavin Putland said today “there will be a recession in 2011-2012” if the newly-updated Kavanagh-Putland Index fits the pattern.

Radio 3AW morning host Neil Mitchell is an interesting character.

He has abilities to describe and comment upon the shortcomings of the local Victorian community, our failing hospital and education systems, to bewail the losses in superannuation on air today with Tom Elliott (which are going to leave self-funded retirees with inadequate retirement incomes), yet manages to attack the very people who want to address these issues.

You might say he argues both sides of the question without being able to reconcile them, nor to see that change is essential if we are to repair these increasingly socially-devastating problems. His approach could be characterised as: ‘Politically, things are all right; it’s just that our services are falling apart.’

As he characterises most of the protesters in the City Square in Melbourne either as radical unionists or Greens, an intelligent woman calls in to let him know the gathering was clearly broader than this; but this was largely water off a duck’s back.

Prosper Australia (which says public funding for education, health, civil order and infrastructure can be vastly improved whilst we also abolish many taxes) was represented at “Occupy Melbourne”, and I can assure Neil that our members vote for the whole range of political parties. I think, however,  he would find this hard to accept, because it’s simpler to filter everything into black and white.

As with Andrew Bolt and Alan Jones, the economy is not Neil Mitchell’s long suit.

Like his Sydney counterpart Alan Jones, from whom he attempts to distance himself, Neil likes to pigeon-hole groups who suggest it may be possible to change things for the better. More often than not, he sees them as trouble-makers, especially if their protests have an ‘edge’ to them.

As rent-seekers pillage the common wealth that is the economic rent of our land and natural resources, and the world consequently collapses into financial instability, Neil has a message for protesters: “Go home! You’re blocking the City Square and affecting adjoining businesses!”

Maybe, Neil. But you’re pandering to a constituency frightened by anything resembling change, and that won’t improve our hospitals, education system, law and order, infrastructure or social welfare, will it?  We need a reformed economics to do that.  No?

We must call the rip-off rentier 1% to account, and change the system.  Oh, and Neil, that would lead to a genuine free enterprise system!

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“If anything is certain, it is that change is certain. The world we are planning for today will not exist in this form tomorrow.” – Philip Bayard Crosby

Well, I WILL add a comment (from ABC radio):

http://www.abc.net.au/pm/content/2011/s3345580.htm?

MARK COLVIN: Riot police with dogs, horses and capsicum spray have been out against Occupy Melbourne protesters today. Since last Saturday a small group of protesters had camped out in the city square protesting against corporate greed.

But things turned ugly at lunchtime today. The action to disperse the protesters closed off the inner city to traffic and trams for four hours. At least six protesters and two police officers were injured and at least 20 protesters were arrested this afternoon.

Alison Caldwell reports on the day’s events.

(Sounds of protesters)

ALISON CALDWELL: It was just before midday when around 400 police descended on the Occupy Melbourne protesters. Riot police with dogs and horses pushed the protesters out of City Square and up into Swanston Street on the corner of Collins Street.

Protesters who fell to their feet were dragged away by police. Some complained of being capsicum sprayed.

PROTESTERS (Chanting): We are Occupy Melbourne. We are the 99 per cent.

ALISON CALDWELL: The protesters who’d spent the past week camped out in Melbourne’s city square alongside a five-star hotel with luxury boutique stores and an American coffee chain; all symbols of corporate excess according to the protesters.

Karl Fitzgerald is with a group calling itself Prosper Australia.

KARL FITZGERALD: Our prime concern is the corporate control over our very lives. The influence of lobbyocracy distorting what was once known as democracy. And, of course, the big one, the dominance of speculative capitalism that is undermining so many people’s freedoms. You can’t do much when you’ve got no money in your wallet. And the housing boom is only good for a few people, not the majority.

ALISON CALDWELL: He says there was no need for police to be so heavy handed.

KARL FITZGERALD: People were, you know, really were staunchly defending what was once the city square. It’s now been cleansed, another corporate cleansing going on, and what a pity when we had such a festival of community going on for the last week.

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… OR, RATHER, DISCONTINUED!

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I WENT ALONG TODAY to “Occupy Melbourne”, with Karl Fitzgerald and the Prosper Australia team who’ve been there regularly.

What a great spirit was happening at the City Square!

Let some of the mainstream accuse the “Occupy” movement of this or that, but I was incredibly impressed and encouraged.

To those people bemused about what we’re on about when we’re clearly not as badly off in Australia as people in the USA, Ireland, Greece, Italy … etc.,  (yet), I would simply ask is it necessary to implode fully before we start to challenge the arrant nonsense that delivers Australians’ common wealth to rent-seeking parasites, whilst the 99% pays taxes on its comings and goings?

A great day, with a number of passers-by and inquirers agreeing that Prosper Australia and others at the City Square have much to recommend their ideas.

My day was surprisingly topped off for me when Alex’s groovy little band of musos gave the microphone to Karl Fitzgerald who then proceeded to do an incredible five minute rap on E-CON-O-MISTS.  And didn’t the crowd love it! Hidden talents, no longer, K2!

Good luck guys! The Melbourne City Council has been good so far.  I trust the Queen’s visit doesn’t have Lord Mayor Robert Doyle move in on you.