My del.icio.us bookmarks for May 9th
May 10th, 2008
These are my links for May 9th:
- BDO Seidman audits criticised by PCAOB - Accountancy Age - Unsurprising. Auditors don’t perform that task any more. They underwrite risk. And they take risk in that process. Getting chastsied occassionally is one such risk: but the client doesn’t mind
- Northern Rock shareholders take fight to High Court - Accountancy Age - Seems like they want to throw good money after bad. Equity requires that they lose. And it will guarantee that they will.
- FT.com / World - IMF warns on global inflation - I’ll nail my colours to the mast. We need inflation. It’s the only way to write off unsustainable debt. What we don’t need is property inflation. Getting these the wrong way round masively contributed to our current problems.
- FT.com / Companies / Consumer industries - Guinness could be taken out of Dublin - They can profit launder in Ireland but making the real thing - now that’s a lot harder
Re third item, I do wish all you economists would stop confusing land and capital. It’s not property price boom/bust which causes problems - it’s the land element of property. Buildings require constant investment to maintain their value, just like any other man-made object.
What we have is land market failure and there is a simple solution - annual land value taxation.
Carol
True - but only in part. That property that sits on the land does have a substantial impact on the land’s value.
Just look at stuff that has been contaminated for the evidence.
Richard
Capital should surely be considered as positive - an improvement. Man-made improvements cannot alter the value of the land on which the improvement is made, although it may affect the value of surrounding land.
Pollution is a negative and can indeed detract from land value, but it is entirely irrelevant to the property boom/bust cycle. Why complicate the simple argument?
Carol
I never complicate more than necessary
But this is not a simple issue
Nor is there a singlte simply solution
LVT is in my book part of a solution
It could never be more, in my opinion
But, I may be wrong. Some like to say I am, and sometimes they’re right!
Richard, I am NOT a single-taxer - I support the need for taxes on bads, profits, consumption and average wages. But if implemented at a high rate, LVT would undoubtedly stop land price boom/bust, which is a major component of the current financial crisis.
As mortgage providers, the banks are in effect collecting economic rent, whilst the speculators have enjoyed the capital gains - entirely unearned. The huge amount of money which has been piled into land speculation has starved industry of real investment. Germany has not seen a comparable property boom and their levels of investment in the real economy put ours to shame.