Rescue the economy or rescue ourselves?
Czech PM blasts 'stimulus' as The Guardian points a way out
What's hot are foreclosure sales but the economy still recedes while leaders fumble about. We trim, blend, and append five 2009 articles from: (1) Reuters, Mar 23, on home sales by Lucia Mutikani; (2) Washington Business Journal, Mar 30, on second-homes; (3) AP, Mar 26, on jobless claims by Jeannine Aversa and Christopher Rugaber; (4) BBC, Mar 5, on Czech PM; and (5) The Guardianís Series: Road to recovery, Mar 24, on taxing land by Phillip Inman.
by Mutikani, by Aversa & Rugaber, by the WBJ, by the BBC, and by Inman
US existing home sales rise
Sales of previously owned US homes rose 5.1% in February, their fastest pace since 2003 July. But about half the sales were foreclosure or short-sale transactions. And, the inventory of existing homes for sale rose 5.2% to a 9.7 month supply. The median national home price declined 15.5% from a year ago to $165,400, the second biggest decline on record.
The housing market is at the core of the economic and financial meltdown. Stability in the housing market is a key for recovery from a recession that started in 2007 December.
Second-home sales fall
The number of people buying vacation and investment homes fell 30% last year. Many of those who are buying are doing so with cash -- more than four out of 10 investment buyers and more than three in 10 vacation home buyers.
The market share of homes purchased for investment was 21% last year, unchanged from 2007, while an additional 9% were vacation homes, down from a 12% market share in 2007.
The median price of a vacation home was $150,000 in 2008, down 23.1% from $195,000 in 2007. The typical investment property cost $108,000 last year, which is 28.0% below the 2007 median of $150,000.
The typical vacation-home buyer in 2008 was 46 years old, had a median household income of $97,200, and purchased a property that was a median of 316 miles from their primary residence.
Investment-home buyers in 2008 had a median age of 47, earned $85,000, and bought a home that was close to home -- a median distance of 19 miles.
Jobless claims hit new high; GDP again down
For a 10th straight week, the number of people claiming jobless benefits increased, to 652,000 from the previous week's 644,000. The total number of people claiming benefits jumped to 5.56 million, a ninth straight record and the highest on records dating back to 1967. As a proportion of the work force, their number is 8.1%, its highest since May 1983, recession year.
The economy shrank 6.3% at the end of 2008, the most slowing since Q1 of 1982, a recession year. After-tax profits of US companies dropped 10.7% in the fourth quarter.
Consumers are cutting back under the weight of rising unemployment, falling home values, and shrinking investment portfolios. So companies slash production and jobs. All the forces feed on each other in a vicious cycle.
JJS: Is there anything government should be doing? Both Left and Right say spend, the Left to create jobs, the right to bail out banks. Both say, if that doesnít work, spend more.
Czech PM attacks Obama spending
The Czech prime minister condemned US President Barack Obama's economic recovery plans as "a way to hell". Mirek Topolanek was speaking in the European Parliament, in his capacity as EU president. Topolanek said the biggest success of last week's EU summit was its refusal to copy the US example.
JJS: Does so much deficit spending cause harm? In the US, the Right, by keeping alive zombie banks, crowds out community credit unions and others who do lend to prospective borrowers right now. The Left, by letting officials spend so much OPM instead of letting real producers spend savings and attract investors, get some public goods built but also many public bads.
Bigger picture, both sides miss two basic points. One is trickle down vs. percolate up; giving money directly to people -- via jobless compensation or Social Security or socialized doctoring or better yet via a straight cash payment -- is better than giving to the Rightís banks or the Leftís bureaucrats. And two, borrowing from the Fed which prints brand new money, sinking the US abysmally deeper into debt, is not necessary.
And there is a workable alternative.
Tax and mend: how to get pensions working again
A land value tax could be the best way to forestall a much predicted return to sharply rising property prices in 2011. A tax would drain 1-2% from the total value of land each year, encouraging landowners to be more productive. Combined with stricter lending rules on banks, this could end the British obsession with generating "magic" profits from dealing in land and property.
A land tax could replace capital gains tax and inheritance tax. Depending on the rate, it could also be used to abolish council tax and reduce corporation tax.
JJS: Actually, government can shift taxes more than that, and spending, too. Quit wasteful spending on elites and the empire and start recovering the commonwealth, the economic value of land and privilege, of things like downtown locations and corporate charters. Thereís trillions there, enough to run a government that defends rights and little else and have enough surplus leftover to pay citizens a dividend. Thereís a name for this shift of taxes and spending: geonomics.
Jeffery J. Smith runs the Forum on Geonomics.
Why do most of the media call good economic news bad?
Most Americans lose some savings and income
Conventional authorities admit to landís role in recession
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