Miscellaneous from Recent Periodicals

I blogged reports of China's Real Estate Boom and land buggle. Many Chinese State owned companies are winning auctions for land on which they are building luxury residences and retail outlets. In 2008, 59% of land auctions was won by state-owned companies -- up to 82%. 90 of 125 state-owned firms have real estate divisions. Land prices jumped 750 per cent. State owned banks made 1.4 trillion loans, double the previuos numbers. Municipalities are part of the problem. They are forbidden from buying real estate directly. But they do borrow money to build infrastructure on land they already own. They hope to sell the land at greatly increased prices. (Page A1, A5, "State-Owned Bidders Fuel China's Land Boom", David Barboza) New York Times, Monday August Second 2010 Volume CLIX NO 55,120

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Paul Krugman has advocated in his blog increasing the money supply, monetary stimulus to overcome the inflatiohn. One in six Americans rates are v are unemployed or underemployed and the average length of joblessness is thirty-five weeks. Apparently, policy makers are defining our expectations downard accepting that. Foreign investors are still buying foreign bonds and federal interest. And he said that we should increase inflation to stimulate the economy. He suggests that we might allow inflation to reduce unemloyments. Dr. Krugman is concerned that in the near future, the government will declare the high unemployment structural, the long-term unemployed will lose their skills and social capital, making a self-fulfulling prophesy. An alternative is targetting spending.

Paul Krugman, "Defining Prosperity Down" Page A15 New York Times, Monday August Second 2010 Volume CLIX NO 55,120

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I reported earlier the Marmot study of WhiteHall employees, as people rose up the hierarchy, they had better health, even though all enjoyed job security and the same National Health Service. This argued against hierarchies, and possibly reporting to sortition juries rather than "a boss" is better for one's health. Wired reported that hierarchies in baboon's led to increased stress hormones and bad health. Dr. Elizabeth Gould showed that stresses reduces dramatically the birth of new neurons in the brain. Epidemiologic studies with humans, that showed that having control over one's job demands improves health, but having to follow orders is detrimental.

"Under Pressure" by Jonah Lehrer Wired, August 2010, 18.08, page 130 to 146.

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Factoid: The Average American House is 2,438 square feet. Page 074, Wired, August 2010, 18.08

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A Wired reader suggested that passengers in an airplane might collectively brainstorm to solve the world's problems as "they all just sitting there." They should collectively serve as the sortition jury, say on taxes that a person or business should pay or help choose a tax code. And the real source for crowdsourcing should be mass transit; mass transit takes longer than driving with starts and stops and not being able to take the most direct route. Of course, there is enough time outside travelling time and Participatory democracy can occupy the unemployed.

Wired, August 2010, 18.08 , Page 017

Chinese Real Estate ASset bubble

China inland cities (second and third tier such as Hefei) are suffering a real estate asset bubble with fifty percent increases and sales at $50,000 to $120,000 for places where the average annual income is two thousand dollars, one sixth of its workers doing construction, and half of the apartments owned by speculators without occupants. And local officials are encouraging this to gain fees from developer feesand to meet central government growth targets.

Mortgage Bailout--only adjusting payment not mortgage amount

According to an February 2009 posting, the federal government will simply allow the mortgage holder who has fallent into arrears to stay in the house--the payment will go down but the total amount of the purchase will remain the same. According to the article, they will become renters except they will be responsible for their own repairs.

However, as I have pointed out earlier, if they have a right to live in the house, have their families live there after they leave the area or pass on, or to rent it out themselves, that will give them a sense of connectivity to their residence and all the psychological advantages of renting. (I recall a Wall Street Journal article that reported on a natural experiment in Argentina of giving some people the right to live in their own home, and that found that those who owned their own home did much better in life. I found articles that found those who got land tenure in Uruguay avoided certain diseases. In Buenos Aires, a similar natural experiment, found that those who got title to their property were more likely to believe that "effort pays off" and that "money is important to be happy."