People point fingers every time the land-price cycle heads south
Subprime Is Really SubCRIME: America's Deeper Financial Crisis
We trim and append this 2008 article posted on AlterNet, February 21. The author writes a blog for MediaChannel.org and is the author of Embedded: Weapons of Mass Deception: How the Media Failed to Cover the War on Iraq.
by Danny SchechterAt long last, the Democrats are talking about the economy and the need for serious relief and reforms. The reason is simple. The people are feeling the squeeze.
Reports the Baltimore Sun: "Since January alone, the public's perception about the state of the economy has plummeted -- with just 17% calling the nation's economy excellent or good -- down from 26% last month. The percentage rating the economy poor has grown from 28 to 45%."
Presidential candidates have come up with stop-gap measures from hikes in the minimum wage to middle-class tax cuts. All of these proposals will take time to implement and probably will be forgotten by the time one of them becomes president, if they do.
Meanwhile the economy is collapsing because of crimes and irresponsibility on Wall Street; who’s talking about that? An inequality gap and structural crisis compounded by profiteering in high places goes on and the media is not investigating. Prosecutors are not prosecuting.
According to Bank of America, the meltdown in the US subprime real estate market has led to a global loss of $7.7 trillion in stock market value since October. The credit crisis, which has spread beyond US shores to banks and other sectors worldwide, is one of the most vicious in financial history, possibly worse than 1929 and all the financial crises since.
Who is responsible for this? Who is being made responsible? Why is this issue not on the political agenda save for the efforts of a few advocacy groups and Ron Paul?
David Walker, until recently the comptroller of the currency, resigned in protest. Back in 2005 he had warned that: "Continuing on this unsustainable path will gradually erode if not suddenly damage our economy, our standard of living, and ultimately our national security." Now that it’s happening, very few public officials or political candidates are connecting the dots.
Notes scholar Lionel Tiger: Those who have been operating the managerial levers of the financial system have loaned money avidly and recklessly to people who couldn't pay it back. They fudged data to get loans approved and recalculated. They sausaged fragile loans into new "products" and sold them around the world to investors eager to enjoy the returns which often accompany fraud. The law has not held accountable those responsible for all this. And while the overseers of the bitter debacle may lose their jobs for a month, they nonetheless fill their wheelbarrows with company money and "severance" to tide them over until the next corner office becomes available.
Basil Williams, chief executive officer of Concordia Advisors, a hedge fund, says we need "a safety net for the innocent and a dragnet for the guilty." He says that the greedy should pay to help the needy: "The costs can be recouped by going after those who profited handsomely and unfairly from the multitude of transactions that touched the industry, including:
"Mortgage brokers who originated loans to those who didn't understand the conditions, couldn't afford them and should not have qualified. Appraisers who overvalued homes, knowing that the higher the value they gave a property, the more business they would reap from a dishonest broker. Banks and brokerage firms that purchased, packaged and resold the mortgages for huge fees."
He goes on to discuss ratings agencies and more. This is a litany that the candidates and activists should sign on to. With millions facing foreclosure, we have to expose those responsible and mount a movement for economic justice.
JJS: While we should throw the book at those well-dressed crooks, we should also note that even the more respectable ways to grab land value for oneself -- i.e., land speculation, withholding prime sites -- are not moral or beneficial to society, either. To take care of this broader problem -- people grasping for site rent by hook or crook -- we must realize that the worth of Earth is a social value that we must share among all members of society. We need to pay land taxes or land dues into the public treasury and get “rent dividends” and/or social services back. It’s right that people do get some land value. But the right way to do it is cooperatively, each of us paying in according to the value of the location we claim and getting back the same size slice as everyone else. Most people, claiming land of average value or less, would come out way ahead -- and forget about scheming to siphon off natural rent forever.
Jeffery J. Smith runs the Forum on Geonomics.
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