Assets and Liabilities − Easy Money?
The costly regulations that discourages businesses from seeking legal registration is one of the explanatory variables of capitalism´s fail to bring development across many parts of the world. The poor lack legal title to their home or land, and therefore can not use them as collateral to obtain credit. Recent studies in South America (http://www.sebastiangaliani.com.ar/ Property_Rights.pdf) have found that property titles indeed matters, but it seems that the poor are not more likely to obtain a loan from a commercial bank. It has been left to “non-profit institutions” to provide micro-credit. History suggests that develpoment also depends on a healthy economic policies, an educated workforce and the ability to handle conflicts and minimizing the risk of investments.
Opposite, the housing boom in the United States (similar to the one in Norway) makes it possible for the proprietors to use their property as a cash machine. The consumers feel wealthier and take money out by borrowing against their capital gains. Over the past five years the total value of American homes has increased with 70 %. This bubble is the biggest in American history. It seems that the western economy has become addicted to pure price increase to keep the GDP growth last. While the dot-com bubble left behind a modern capital stock to yield productive gains, the property boom does little to help long-term growth.
Trechinsky – Reliable Source, significant-minority viewpoints
Categories: English, Finance and psychology, Viewpoints
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[...] Og nå har sentralbanksjefene (lille G og store G – Gjedrem og Greenspan) tydeligvis blitt blendet av lav inflasjon pga. import fra Østen. Og akkurat i disse tider betaler vi prisen. Inflasjonen har ligget langt under målet på 2,5 i de siste årene (Ben Shalom Bernanke er forøvrig blitt ny sentralbanksjef i USA, han skrev sin doktoravhandling om krakket i 1929), men hva med innenlands prisutvikling? I Norge har boligprisene steget med 250 % siden slutten av nittitallet! Er det god nok grunn til å ta opp et stort lån (for 3-10 år siden – til mycket lav rente) for å investere i eiendom – selvsagt… easy money. [...]
[...] 1930’s. It’s almost four times the size of GDP. _ The exception is of course Norway. Related articles _ Trechinsky – Reliable Source, significant-minority [...]