Tuesday, October 15, 2013

Bubbles are always and everywhere a phenomenon of rising bank leverage, and anywhere that has high

How to spot a housing bubble before it bursts

Excellent article with links to The Bank of International Settlements database on private debt levels that finally makes it easy to compare the private debt levels of different countries and a database of house price indices.

Posted by pete green @ 11:26 PM (3279 views)
Please complete the required fields.



55 thoughts on “Bubbles are always and everywhere a phenomenon of rising bank leverage, and anywhere that has high

  • Steve Keen is the patron saint of getting it wrong. He used this half baked theory to predict a property price crash in his home market in 2009 (he confidently predicted that Australian property prices would fall by 40 percent). His forfeit for the bet was to do a 200km hike wearing a humiliating T shirt saying why he got it wrong. His property/debt theories consequently lost all credibility in his home country but he hired a part time programmer to improve his so called ‘model’ and he used these new and improved models to predict an Australian property crash in 2013. That hasn’t happened either so he’s even more of a joke now.

    Another thing he got spectacularly wrong was ZIRP and other assorted stimulus. He openly said that he expected them to be used but confidently predicted that they would have no effect. This made him even more of a joke amongst the Australian public and the serious economists who knew exactly what ZIRP would do

    He has lost so much credibility in his field that he even lost his job with his long-suffering overly-indulgent university in Western Australia. There was only so much humiliation and loss of credibility they could take. He has recently been begging on his blog for another university to hire him. The big mistake he made was to step out of his publicly funded comfort zone to produce incoherent amateur-hour ‘predictive’ theories like the one in this article. If he was anything but a no hoper he’d have been snapped up by a proprietary trading firm but of course he is and he wasn’t.

    A quick scan of this article should show even the most bamboozled layman ( his only followers) that the data sets are incredibility incomplete and inconsistent. It’s incredible that anyone would have the nerve to produce conclusions from such short term, spotty data but that is what the blog world allows people to do. He produces this stuff because he has fallen off the public funding teat and now scabbles for a living in the murky world of doomster blogs. Ad revenue is where it’s at for him since he was thrown off the public funding bandwagon that indulged his attention seeking for so long. He gets the occasional invite to speak somewhere but anyone who knows how that circuit works knows that people like him are invited to provide an amusing counterpoint to the serious speakers. An example of this is that ant/Pytel bloke who proudly claims on his blog that he was invited to speak in all sorts of important sounding places

    Reply
    Please complete the required fields.



  • Flash – the logic fallacy King, Ad Hominem – attack the man not the idea. His basic concept that most mainstream economic models do not understand the Heterogeneous nature of money is quite correct.

    Reply
    Please complete the required fields.



  • Yep no bubble, let’s normalise interest rates and see how we get on.

    Reply
    Please complete the required fields.



  • I think you might be conflating your logicalised fallacifications with your staw hominenn confationary straw flallacification. I suppose endlessly recycling the same four expressions is the green thing to do.

    As I made abundantly clear in my post, this Keen bloke used his models to make highly inaccurate predictions and his belief system caused him to make a fool of himself when he lectured that Zirp would have no effect. These are facts.

    His discredited spiel is lifted wholesale and blindly repeated on blogs like this one. Exposing his record is therefore fair game and essential for balance. Charlatans are always fair game because their stock in trade is fooling the gullible

    Reply
    Please complete the required fields.



  • “His basic concept that most mainstream economic models do not understand the Heterogeneous nature of money is quite correct”

    Is it? It’s quite correct that England won the 66 world cup but why is the above quite correct? Have you recently done revolutionary work that has conclusively proven that the worlds most credible economists are wrong? Or did you just take his word for it? I think people with no economics background are to easily mesmerized by words like heterogeneous. It’s a really big word and who cares if the bloke who used it has a history of using his theories to make incorrect forecasts?

    Reply
    Please complete the required fields.



  • flash – when he said “zirp would have no effect” was he saying “no effect on the ‘real economy’ but a large effect on asset prices”?

    Reply
    Please complete the required fields.



  • No it started with him claiming that FHOG would not rescue Australian house prices and then he moved on to claim that things like ZIRP etc would not stop the (Australian but others to ) economy from tanking to the depths. He believed that his theories and models showed that a great deleveraging and deflation were inevitable whatever they did. Instead of this we had inflation and the Australian economy and property market hardly missed a beat. That was him and his theories cooked.

    Reply
    Please complete the required fields.



  • [email protected] – can’t argue with any of that, except that the plural of stimulus is stimuli, which of course is highly relevant for the world we now live in 🙂

    Reply
    Please complete the required fields.



  • tt: 🙂

    Reply
    Please complete the required fields.



  • In fairness to Keen’s view on delation many commentators see both inflationary and deflationary pressures. In the US, for example, the deflationary ones include low velocity of money, big trade deficits (lots of dollars bleeding out), wages/salaries / GDP ratio historically low, and while W Buffett talks up stocks he sits on his biggest-ever cash pile. Fed money-printing, credit and high commodity prices as investors hunt for yield are the inflationary ones. The continuing need for ZIRP and QE as well as record stimulus policies in Japan indicates the continuing pull of deflationary pressures

    Reply
    Please complete the required fields.



  • Yes but they don’t get bored of being a minor lecturer and suddenly decide to do a Babe Ruth. The Babe could point his bat in the intended direction of his strike and make it happen. This plonker pointed his bat and immediately got struck out. He made firm predictions and insisted he’d be right no matter what the governments and banks did. Well he was wrong and his assertion that he knows more than every other person in his field has turned him into a figure of fun

    Reply
    Please complete the required fields.



  • Flashman – understanding economic processes is not just about a few specific predictions. It is about having theories which match reality over the long term and are able to inform policy makers. Keen’s economic models are useful in understanding economic cycles over the long term.

    His whole department was shut down and his job became redundant due to poor student numbers, which are in no doubt a reflection of the poor interest people have of economic science. I am not a devotee of Keen but find his work interesting. If you have any real mathematically our logic based criticisms of his actual methods, then please share them.

    I always had a liking for Minsky and Keen has just added some mathematical models to his observations.

    Reply
    Please complete the required fields.



  • Um, we’re noting that economists make incorrect forecasts?

    Reply
    Please complete the required fields.



  • @ Flashman – why don’t you deal with Keen’s basic argument that there is no long-term trend in the ratio of house prices to consumer prices? As I commented recently, the Nationwide’s assertion (on their graph) that there is an exponential trend is clearly nonsense; the fact that it even looks like it could be exponential at the moment is clear enough evidence that we’re on the ‘wrong side’ of any such long-term graph.

    I accept that all sorts of factors come into play in the short-term and that none of us will actually live to see the very long-term – so clearly it’s somewhere in the middle that we must look – and with interest rates still at ’emergency levels’ and governments using public money to shore up house prices, it doesn’t take a genius to work out that prices are above any sustainable medium-term position.

    They say that a crash occurs when the last bear turns into a bull: that last bear has to suffer some pretty harsh criticism in the run-up to the crash.

    Reply
    Please complete the required fields.



  • More like “poor interest” in a lecturer who’d made himself into a laughing stock. Why would anyone want to run up student debt to listen to someone like that? The credible head of departments have no problem attracting students

    You posted.him and you blindly repeat his spiel whenever possible so YOU prove that you understand his mathematical models. I don’t want to be unkind but we all know that you wouldn’t know where to start.

    While we’re at it, when are we going to see some numbers from one of the UKs four LVT fanboys? I’d particularly like to see who will pay how much tax. If you make it up I’ll pull it apart and if you tell the truth, we’ll all have a WTF moment.

    Reply
    Please complete the required fields.



  • Since when did making bad forecasts disqualify an economist? Forecasting seems to be the economist’s main business, or at least the main flag waving part of the enterprise. How many are proved timely, or even correct. Very few. And that could be by chance.

    Reply
    Please complete the required fields.



  • Babe Ruth said ‘I swing big with everything I’ve got, I hit big or I miss big’. Sounds like Flashy’s kind of guy.

    Reply
    Please complete the required fields.



  • One of my favorite reads about 5 years ago was Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets. I thought Talib did a better job on this for a statistically knowledgeable audience than his follow up work ‘The Black Swan’ which caught the zeitgeist a little more.

    In it he explored techniques to take randomness out of the results of speculation that would make any trader quake with fear.

    I thoroughly recommend it.

    Reply
    Please complete the required fields.



  • So just the usual rage filled bluster to cover up not being able to demonstrate any understanding of Keens “mathematical models”. Personally I wouldn’t post and recommend anything that I didn’t intimately understand (let alone not understand it at all).

    We also received no explanation for the bizarre statement:

    “His basic concept that most mainstream economic models do not understand the Heterogeneous nature of money is quite correct”

    Again I wouldn’t make a statement like that if I couldn’t argue it with the best of them. I questioned why it “is quite correct” but of course received no answer other than the usual rant containing ‘the four expressions’

    I think I’ve been fooled by the randomness of post 19?

    Keen has lost credibility because he boasted big and lost big. Why on earth shouldn’t that be pointed out when he’s put forward as someone who understands more than “mainstream models”. If anyone posts and recommends something then be prepared to have it questioned. If you’re too much of a baby for that then don’t post. If you can’t explain anything about your post then it might be wise to admit that up front or not post it at

    Reply
    Please complete the required fields.



  • Icarus, are you capable of producing some LVT numbers? You’re an LVT fan so you must have studied them exhaustively …or is it just something you think you might like?

    Babe Ruth was one of the best there’s ever been. Who’s your kind of guy?

    Reply
    Please complete the required fields.



  • Oh come on now. No-one understands economics yet we post about it every day

    Reply
    Please complete the required fields.



  • I do. Got a certificate on the wall and everything 🙂

    Reply
    Please complete the required fields.



  • Funny how one who is so inconsistent should accuse others of lacking deep understanding.

    Reply
    Please complete the required fields.



  • Deep understanding? I’d settle for a a hint of it from the likes of you.

    We’ve seen the disarray of the tax boys when put under the slightest pressure. So much conviction with so little comprehension.

    Now let’s get at the numbers.

    Reply
    Please complete the required fields.



  • Flashman – How did we get from Babe Ruth to LVT?

    One benefit of LVT is the old adage that factors of production resolve themselves into labour, capital and land – and only one of the three can’t run. International tax competition causes the other two increasingly to find ways of reducing their tax burden. So there’s one big number – the amount of tax revenue lost through tax accountants shifting profits around. Tax Research UK will give you numbers on that.

    Churchill wrote: “A portion, in some cases the whole, of every benefit which is laboriously acquired by the community is represented in the land value, and finds its way automatically into the landlord’s pocket. If there is a rise in wages, rents are able to move forward because workers can afford to pay a little more.” I believe Mark Wadsworth has numbers that show this.

    Australian states, the ACT and New Zealand have all had, at various times and to varying degrees, LVT, so it has worked. In some cases it’s been undermined by political lobbying for exemptions and the political clout of speculators but not by inherent faults in the system.

    And which numbers do you use to show that LVT is a bad idea?

    Reply
    Please complete the required fields.



  • Steve Keene (and a very few others) predicted the global financial crisis before it happened, a rather more important matter than the short run behaviour of the Australian housing market. As I recall Keene’s prediction was that prices would fall 40% once the GFC had played out. He was certainly wrong about the timing of that, and perhaps unwise to make such a specific prediction. But the jury is out on the rest, and Flashman is merely showboating as usual.

    Reply
    Please complete the required fields.



  • Icarus, that’s just it, you don’t know which numbers to produce. How can you support something on that basis? It’s all just idle posturing without knowing that the numbers would be feasible. I can categorically tell you that they are not (both practically and emotionally). You will have to wait for some brave fall guy to produce something here for me to demolish. I won’t give it any more respect than that.

    Reply
    Please complete the required fields.



  • flashman – Numbers? It depends what the question is. What’s wrong with the number I mentioned – the amount of tax lost compared with the amount lost if there were a single tax called LVT. Tax Research will have an estimate in the high tens of billions. It’s possible to produce figures on the extent to which salary increases end up in land price increases. What exactly do you want?

    And again, which numbers do you use to debunk LVT?

    Reply
    Please complete the required fields.



  • This was written by Henry Law in 2009 and scopes out the issues in such a calculation as the Georgist economic theory goes that all taxes are paid out of land rent:
    This question “how much could a land value tax raise” is constantly put to us. We in the LVTC have always answered with a vague “enough”, and then gone on to explain why we are vague on the subject. The question is in an inappropriate one. It is impossible to give a direct answer to the question because it depends on what existing taxes are removed.

    The rental value of land is a residual amount left over after all other expenses have been paid. A good demonstration of the principle was evident in the 1980s when the rates-free Enterprise Zones were in operation, when identical properties were available just inside and just outside the zones. The total occupation costs were the same. A similar phenomenon could be observed on the two sides of the Wandsworth (low rates)/Lambeth (high rates) boundary. The latter was the subject of a research project by a firm of consultants in Cambridge.

    At the present time, business rates and council tax are, whilst nominally levied on land and buildings, actually a deduction from the rental income stream. Which is why the amounts actually payable need to be added on to the valuations arrived at by market evidence eg from decapitalised selling prices and leases. When LVT is based on selling prices, this important point is lost sight of.

    When the government defend their opposition to LVT by saying that the rental value of land is already the subject of tax, they are correct. The real objection is that the tax liability is not assessed on the rental value of land, but “Rebus sic stantibus” – taking the thing as it is. That is what is wrong with the system. Vacant sites and under-used land is left out or under-valued, so that the burden is loaded onto efficient users of land. The question that needs to be thrown back at them is that if they are collecting land rental value then they should be assessing it properly and not some other value. It is a bit like levying income tax by counting the number of payments made into somebody’s bank account.

    What this means is that, first, there is no question that LVT could raise the same amount as all existing property taxes, and in addition, that most existing tax payers would end up paying less, because land presently contributing nothing would be made subject to tax. This was one conclusion of the Whitstable surveys, which you can read from the downloads section of the this web site.

    The second issue follows from the point that rent is a residual. All existing taxes depress profitability and reduce the size of the residual amount ie rental values. Which means that as existing taxes come off, rental values rise.

    Another and more rigorous way of viewing this is to observe what happens at the margin. As existing taxes come off, site presently sub-marginal can be brought into productive use. According to the Ricardian analysis, rents are the surplus production over the least productive site in use (the marginal site). If sites presently below the margin are brought into use, the rental value of all other sites increases.

    Which means that when we say that LVT cannot be passed on in higher rents, that is only part of the story. As existing taxes came off, rents would naturally tend to rise, whilst at the same time, the existence of the LVT would keep them competitive. There are forces acting in opposite directions.

    The eighteenth century Physiocrats argued that all taxes ultimately are at the expense of land rental value. Quesnay, who made this observation, was no socialist, and seems to have argued for land value taxation purely out of expediency, as France at that time was plagued by a plethora of troublesome taxes. But someone proficient in French really needs to go back to the original texts to find out what he really did say.

    One other way of looking at the issue may be helpful. The government takes in about 500 billion a year, (though nearly half is paid out again, but that does not matter for the purposes of this illustration). One way of collecting it would be as a poll tax, which would make every man woman and child liable to about £8,500 a year if my arithmetic is right. Income tax loads the weight in accordance with earnings as declared to the authorities. (with all the undesirable side effects that we all know about). LVT simply distributes the same (or a smaller) burden in a different way. Only the amount would be a lot smaller because existing taxes, as Fred Harrison has pointed out, reduce GNP by about 12%, and the tax system is itself a cause of poverty which then has to be alleviated by costly welfare schemes.

    Thus it is impossible to determine what land values would be if all other taxes came off. But it seems safe to say that all existing public revenue could be obtained from land value taxation instead. When surveys are done of existing land values, they are measuring a much-diminished amount. At best, they can estimate what land values would be if existing property taxes came off, and if the intention is that land values should, in the first instance, replace taxes such as the Council Tax and the Business Rate, it is essential that these deductions from the rental income stream are taken into account in the surveys. This is one important reason why land valuations should be an annual rental figure.

    Reply
    Please complete the required fields.



  • Back to the article: This graph is very interesting from the The Bank of International Settlements database:

    Reply
    Please complete the required fields.



  • Looks a good time to buy PG. Where’s my help to indebt myself mortgage?

    Reply
    Please complete the required fields.



  • @pete, I read that article earlier and I thought that chart was a bit of an eye opener. I also noticed on some of the other charts that prices could stay either high or low for quite a long time.

    Reply
    Please complete the required fields.



  • I’m pretty sure that most LVT types have never owned a business, employed people or invested heavily in a speculative venture. Thats why they tend to ignore the certain reaction of people, business and capital. These reactions are what make LVT such a nonsense. Quite apart from this reaction, it is easily apparent to people that most LVT types are fuelled by envy and hatred. We’ve seen it here in spades recently where honest work is called a ‘grubby little deal’ and old age homeowners are berated for nothing more than existing. Do you think people would think it a coincidence that most LVTers don’t own a house?

    LVT would effectively turn us all into renters (whether you formerly owned or not) with the state acting as landlord and rent collecter. The state would set the rents using an arbitrary set of values. Who’d trust the state to do that! Home owners would have to pay the (pre LVT crashed) value of their house in tax several times over during the course of their lives or mortgage term.

    Humans want to own a house to fulfil a deep seated instinct. LVT crashes against this instinct with its total state intrusion and control of housing. Ignore the typical dead-eyed, supposedly mathematical reaction of LVTers to this accusation. They will never understand that they cant expect to supress peoples emotions and instincts. That’s why people find LVT so obnoxious.

    Whenever I read the stuff written by one of the main LVT campaign groups they admit that there would have to be exceptions for poorer homeowners or for old people etc. They do this because they know that the burden would be too high for them to afford (there’s a clue here about the numbers). So what we are left with is the relatively tiny minority of rich people and corporations carrying the entire burden of state tax and expenditure. There are so few ‘rich’ people that the burden placed on them would be comedically huge ( think about the mind boggling state expenditure and divide it by a small number of people and corporations)

    Multinational corporations would re-jig their organisation to have as little presence here as possible. Perhaps a tiny satellite office and a few people working from home (that would enable them to pay almost no tax instead of much larger share than before). The main office would be moved to another country in a similar time zone. Modern communication makes this easy. Manufacturers like Nissan or Honda would move their manufacturing plants to another country in Europe because under LVT businesses that use a lot of land would be heavily taxed. Manufacturers use a lot of land.

    If people were refused permission to leave the country they would be falling over themselves to not own land or property or businesses that own land because to own anything would be to make you responsible for a gigantic share of the county’s tax bill. However if we assume that people could leave they’d be liquidating and running away with their capital as fast as they could. Rich foreign investors would run a mile. The city would close up shop and decamp to Frankfurt. This highlights one of the main problems with LVT. We live in a globalised heavily connected world. If all countries didn’t impose LVT simultaneously then capital would run to the nearest country without a bonkers tax regime.

    I keep getting asked what figures I want to see. I already asked for them in an earlier post and there is a strong clue in this post. What I’ll get instead is more long disjointed posts quoting anything other than how much this tax will cost homeowners and businesses. I think most LVTers don’t know how much (which is kind of funny) and the one or two who do, would rather not say.

    Reply
    Please complete the required fields.



  • letthemfall, I think you might be too old to get a htb mortgage. They are all repayment mortgages and they don’t like payments being made after retirement

    Reply
    Please complete the required fields.



  • Only a fool would expect Steve Keen, or anyone else, to be able to predict the future movement of prices.

    Keen’s views (at least as I recall them) are however not entirely without merit.

    The expansion of credit has a limit beyond which it becomes increasingly deleterious. The expansion of credit tends to inflate asset prices and in particular property prices. High property prices and debt related to them tend to be bad for an economy as they limit income which would otherwise go towards consumption. QE was generally a bad idea and tended to benefit financial institutions. Better would have been for governments to “print” money and to give it directly to the people, requiring those in debt to pay down. This would also have the effect of shrinking financial institutions. All pretty sensible stuff.

    Reply
    Please complete the required fields.



  • I really couldn’t give a toss about this LVT stuff, or indeed any alternative schemes that are never going to happen. Despite endless posts on the topic I remained blissfully unaware of even the basics of LVT, and feel better for it.

    Flash I doubt “Humans want to own a house to fulfil a deep seated instinct”, but I can accept that people (especially once they get older) want (up to a point) to have a sense of belonging and permanence, which is largely impossible if you rent in the UK. I think too we have an instinct to outdo each other, and property is a great way to demonstrate status. Actually perhaps there is a deep seated instinct, and that’s just it.

    Reply
    Please complete the required fields.



  • bellwether:

    First sentence: yep but that’s exactly what he tried to do with his home brew debt model. Bit silly of him.

    Regarding handing out money to people. I was living in the States when the government twice sent me a cheque for a few hundred dollars. They were economy stimulus payments. This was a few years before the crisis and everyone got some. Not sure what it achieved or if it was better off in my hands or in the governments coffers. Also a bit silly in view of the surplus that was fast turning into a deficit.

    Reply
    Please complete the required fields.



  • @Flashman

    “Humans want to own a house to fulfil a deep seated instinct”

    Isn’t that instinct simply the desire to control territory which is almost universal in mammals and a frequent cause of conflict from the personal level right up to national warfare?

    “Whenever I read the stuff written by one of the main LVT campaign groups they admit that there would have to be exceptions for poorer homeowners or for old people etc. They do this because they know that the burden would be too high for them to afford (there’s a clue here about the numbers). So what we are left with is the relatively tiny minority of rich people and corporations carrying the entire burden of state tax and expenditure.”

    So the average working person somehow manages to pay income taxes, consumption taxes, rent or mortgage but would fold and collapse if asked to pay some LVT instead? That seems a bit over the top.

    I agree that LVT is politically dead but find your venom aimed at anybody who does likes the idea a bit odd. It’s not going to happen so why worry? The 1909/1910 People’s Budget was the last serious try. Property owners are the majority now.

    Reply
    Please complete the required fields.



  • quiet guy: when I suggest that the state could and would chuck us out of our homes, I am not specifically talking about them doing it through a LVT mechanism (they could however effectively throw you out using LVT because some local council thug could raise your tax arbitrarily for a bung or under the pretence of a spurious policy. Properly owning a house -current definition -makes it much more difficult for the state to single you out). What I am talking about in this context is the mindset of the LVT brigade. You could not have LVT without a certain mindset, so we have to examine what else would happen. You cannot have one without the other. An example of this is the casually vindictive attitude shown by these boys to the old (especially if they’ve had the cheek to make a few quid in their lifetime). Corruption and human misery goes hand in hand with policies driven by the envious haters of success and of anyone with more than them (the mask slips when they use words like ‘grubby’). Can you imagine what our country would be like if any of these people were in charge? Shudder. Fortunately it’s all theoretical and people like this are universally despised by the electorate of our great country

    Reply
    Please complete the required fields.



  • sibley's b'stard child says:

    Flash, playing devil’s advocate here. How can you presume to speak on behalf of the electorate?

    Reply
    Please complete the required fields.



  • sibs: you know I though that as I typed it but them I took one look at the top two in government and realised that I indeed must be everyman 🙂

    Joking aside, I’m sure you are one of the few who realise that the last comment was served with a heavy slice of irony and mischief. Years of social engineering has disallowed us from saying things like “our great country”. I say things like that for fun and because it jars with the sort who caused the social engineering. Normally people just called me fleishmann and go into one. What’s with all the reasonable questions?

    Even more joking aside the electorate from all sides wouldn’t stand for it for all the reasons I’ve given above. I don’t think anyone sensible argues with this. I saw a study a few years ago that showed why redistribution type policies don’t get traction with even the people who don’t have much. It’s because they aspire to have something and mostly have have faith (and hope) in their ability to get what they want. That’s why we occasionally see left leaning politicos growing to hate their own target audience. They get frustrated and think that the people are too stupid to know whats good for them but its actually because the people don’t want to be the target audience

    Reply
    Please complete the required fields.



  • Sorry my mistake. I made the assumption because you told me that you resisted buying in the 80s.

    Reply
    Please complete the required fields.



  • Don’t think I told you anything about what and when I bought. I might have said I didn’t buy something in 1989 when everyone was rushing to.

    Reply
    Please complete the required fields.



  • Well that’s it for LVT. It can only really exist without context. As soon as the context of a globalised, highly connected world is applied, we see that it could not possibly work. There can be no sensible come backs to my last few posts because its all so obvious. Big money and big corporations are highly mobile in today’s world. We are no longer the center of the world and they really don’t need to be here. Our government works tirelessly to keep them here, while other governments try desperately to poach them. It is these big corporations and rich people/entities who would be the main target of LVT but they are the ones most able to escape it. The small businesses and normal houses etc who cannot escape would be left to shoulder the burden. In the meantime, Britain would be a basket case once all the multinational companies, big money and big financial institutions had fled.

    The original poster has retreated to Facebook to talk to himself about ‘flashman’ and to commit actionable libel while he’s at it (and qg wonders why I’m venomous about it!). I’m sure we’ll see some more LVT stuff here but I’m equally sure that there will be no new takers

    Reply
    Please complete the required fields.



  • Well done flash. You’ve convinced yourself that you’re right. “Well that’s it for LTV, there can be no sensible come backs to my last few posts because its all so obvious”. How many others have you convinced here? Most LVTers have just left you to rant on. With your insults (LVTers are filled with envy and hatred) and rants you simply don’t invite reasoned thinking on the subject. You’re still going on about somebody calling yours ‘a grubby little business’ but you don’t hesitate to hurl insults yourself (bitter failures, cowardly midgets, contemptible trolls etc. etc.).

    Reply
    Please complete the required fields.



  • Anyone with interest in this debate should google the popular comparisons made between the booming Texas and relatively stagnant California economies.
    While clearly, as always, there are multiple factors involved, it’s often noted that Texas is a low tax state with a higher proportion of taxes on property (and less on income) than most other US states, while California is the opposite.
    There is also a stark difference in experiences during the property boom – much less of a bubble in Texas, despite an domestic immigration boom there (and people leaving California).
    It also appears that manufacturing is very much on the up in Texas, accounting for much of its success.
    As I said, there are many factors and obviously the case is not conclusive, but the comparisons and studies are there, draw your own conclusions and compare to the arguments and predictions made by both ‘sides’ on HPC.

    Reply
    Please complete the required fields.



  • Like I say, no serious come back ( in fact none at all). I think the problem here is that you really need to have worked with and around big capital/ big business to immediately know how they would react and why this stuff could not work in the here and now. However it’s super obvious once its pointed out. I sense that the credibility of the LVT argument was fading here anyway.

    shipbuilder: welcome back. Consider Florida. No income tax but property tax. One of the first into recession and one of the last out. Unemployment still very high. What does that prove? Nothing. What does Texas prove? Nothing

    Reply
    Please complete the required fields.



  • Well, I think the arguments in favour of LVT are compelling. Arguments against are – well there are no arguments against that I can see here. A lot of the usual aggression that I suspect has quite a few of us laughing by now.

    Reply
    Please complete the required fields.



  • Flashman, I’m happy to consider the readers of this blog to be capable of doing the reading and considering the arguments without prompting from either of us.

    You state your principal argument, again, that LVT would cause business to run for the hills, then follow it up, in the same post, by claiming that business flourishing in a state with relatively high property taxes proves nothing. Again, I’ll leave it to readers to judge.

    Not back on any sort of basis beyond just popping in to put forward what I thought was an interesting sidenote to the debate, particularly given the political shades of the states implementing these tax regimes, versus the oft-made claims for the motivation of property taxes in the UK.

    Reply
    Please complete the required fields.



  • shipbuilder, you put forward Texas and wondered if their success might be something to do with their tax regime. I merely pointed out that Florida had almost exactly the same tax regime but were a relative failure. My Florida point should only be taken in the context of showing that the success or otherwise of Texus and Florida is unlikely therfore to be down to the type of tax they pay.

    The above has absolutely nothing to do with my point about how big multinational business/capital would react to the prospect of paying more tax in one country that they would have to in another.

    Reply
    Please complete the required fields.



  • No come back what so ever on the arguments. Just the usual comments and agenda from non-contributors.

    Reply
    Please complete the required fields.



  • Flashman, while one would have to be insane to claim that the success of Texas is down to implementing property taxes (which is why your rebuttal is a straw man), what the Texas example does do is comprehensively trash your main points, laid out in this thread, against property taxes –

    – That property taxes cause business to flee
    – That property taxes are electoral suicide
    – That property taxes are the preserve of jealous, lefty statists

    and also that other one, which I’m not sure if you stated or not –

    – That property taxes never replace other taxes

    And I’ll leave it at that and wish you the best of luck with your new business venture and building crusade, with I wholeheartedly agree with.

    Reply
    Please complete the required fields.



  • shipbuilder, you have made errors in every part of your claim to have comprehensively trashed etc

    1. It is not any particular type of tax that causes business to flee. It’s paying MORE tax than they need to pay elsewhere that makes them flee. I think this is obvious.

    2. It is not property taxes that are electoral suicide. It’s the concept of turning home owning into a notional concept and instead effectively paying rent to the state. It’s silly to doubt that LVT is electoral suicide. Any long term campaigner will tell you how much hate they receive when they present their ideas.

    3. I never said PROPERTY taxes were the preserve of jealous lefty statists. There are already all sorts of property taxes. I will however now say that I am in the majority in thinking that some LVT types loosely fit that description. I don’t think of you in that way.

    That right, I didn’t say the last one.

    Glad your behind the building. Thanks for your best wishes. Same to you.

    Reply
    Please complete the required fields.



  • I think it’s important to put this tax concept debate into context. The concept of LVT is the single most hated tax concept in existence. It is universally loathed because it would effectively turn us into renters to the state.

    My vitriol against this tax accurately reflects the strength of public opinion. I actually do not care about this tax because it will never see the light of day in this country but no debate on this subject is complete without the majority opinion being expressed and the majority opinion is indignant.

    Reply
    Please complete the required fields.



  • >It is universally loathed because it would effectively turn us into renters to the state.

    Why would you prefer rents to be collected by private interests than public ones? I would rather rent I paid above necessary maintenance costs including normal profit to be recycled to the community. And especially so if, as LVT advocates prefer, other taxes would be reduced. Did you know that Milton Friedman was in favour of LVT as the most efficient tax?

    N

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>