Will Higher Handouts Help Uni Students?

Karl FitzgeraldCommentary1 Comment

Is marrying your housemate the way to survive uni? That’s the question Farrah Tomazin puts forward in today’s blockbuster edition of the Age as she discusses recomendations for higher Austudy payments. This will see a short term benefit for students being able to afford more food.

However, those versed in economics will understand that in the near future landlords will see that their tenants have a greater purchasing capacity. Rents on new leases will continue to climb. Just like the FHOG, any added purchasing power given through increases in Austudy is captured by those who already own land.

What is needed is a supply side solution to land and housing affordability. The minimal $1000 – $2000 in holding charges on land allow property to be withheld from the market because it makes economic sense. Consider a higher holding charge on land, in the name of a Site Rental. Then the 119,623 properties found vacant in the 2006 Census would be encouraged onto the market. Instead of owners being able to fat cat along and remain nonchalant about whether their asset is covering costs, now they would have to earn $5000 plus per annum to pay the Site Rental. The added supply of land, housing or rentable accommodation pushes down prices.
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Recessionary forces building fast – $5K US homes

Karl FitzgeraldCommentaryLeave a Comment

A home bought for $110,000 in Flint, Michigan (2005) was recently foreclosed and can’t be sold for even $5,000. In an ominous sign of financial troubles;

Fannie Mae acquired twice as many homes through foreclosure in the first quarter as it sold, regulatory filings show.

The oversupply of homes is now coming home to hurt the US and increasingly the global economy. As Phil Anderson explained on yesterday’s Renegade Economists, land prices play a unique role in the economy in that they are the security for the vast majority of bank lending. Thus if the property market falls, inferring that land prices are also falling (land makes up the majority of each housing price), then banks are limited in the credit they can supply.
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The Subprime Primer – Stickman style

Karl FitzgeraldCommentary2 Comments

With more banks reporting massive write downs this week (Bank of America reported a 41% drop in quarterly earnings), we thought it timely to publish this funny take on how the subprime banking model was supposed to work. Flick through this humorous powerpoint, complete with lively stickman descriptions on how this financial quagmire makes sense/ cents for some.

Please Note: For clear viewing, click on the presentation tag at the bottom of slide, then on slideshare website, press fullscreen (bottom r.h.s)

Subprime Primer

However, to get to the bottom of the credit crunch, listen to the interview with Phil Anderson of Economic Indicator Services on today’s Renegade Economist radio show. Podcast it and you’ll never miss out.

The True Cost of Food

Karl FitzgeraldPast EventsLeave a Comment

A kilogram of beef contains between 15,000 and 100,000 litres of embodied water. For every kilogram of wheat grown in Australia, seven kilograms of topsoil are lost. We give lip service to concerns about peak oil and greenhouse gases, yet our agricultural industry is utterly dependent on unsustainable quantities of polluting petrochemicals.

There’s no reason why this insanity can’t be quickly and effortlessly changed to a geoist system of economics which inherently recognises the true value of natural resources. The major obstacle to change actually lies with the peddlers of our current neoclassical economics. You can side with these peddlers and relax, ignore the food riots, have a beer and flick on the TV, or you can come and be prepared in the knowledge that will help in the transition away from the consequences of our dietary choices.

Speaker: Karl Williams (a.k.a. Mr. Ed)
Time: 7 pm, Friday August 1st
Venue: EarthSharing Australia, 1st Floor, 27 Hardware Lane, Melbourne

All welcome, light supper provided, gold coin donation,RSVP appreciated to Karl Fitzgerald or via 9670-2754

Recession-Plagued Nation Demands New Bubble To Invest In

Karl FitzgeraldCommentary1 Comment

The Onion’s satire is often needed in times like these!

The current economic woes, brought on by the collapse of the so-called “housing bubble,” are considered the worst to hit investors since the equally untenable dot-com bubble burst in 2001. According to investment experts, now that the option of making millions of dollars in a short time with imaginary profits from bad real-estate deals has disappeared, the need for another spontaneous make-believe source of wealth has never been more urgent.