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| | |-+  "Land Reform"
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Author Topic: "Land Reform"  (Read 285 times)
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Angry_Weasel
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« on: August 25, 2012, 10:39:11 pm »
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As the recovery continues to be too conservative to fully recover the economy, we are stuck between Obama's apparent lack of power (even if he get reelected) and the Republicans overwillingness to jam down their plan down our throats (the very plans that got us into this mess in the first place) if they are restored to pwer.

Another alternative to simply waiting for a political situation or to a faster recovery, either of which may never come or come "too late" for many would be for the local Governments to seek a solution.

The problem right now is that there is so much negative equity remaining in the housing market that people cannot relocate or take out loans on their homes to consume or supply goods and services. The reason there is so much negative equity is that banks created loans on houses that were based on overvaluation. ie theres a bigger loan on a house than what anyone else is now willing to pay for it. One thing that a Local Government could do in an "underwater" communuty is to use their Eminent Domain powers to buy these mortgages at fair market value and then create a forced refinance of these houses as to give people a chance to move or take out a home equity loan. Perhaps if the owner is in foreclosure, the City or County then could buy the foreclosure from the bank and then condemn the vacant houses as to reduce supply to make more balanced market.

The downsize to this is that if banks cannot effective enforce their loans, they are basically banned from doing business because they would no longer be guaranteed the money they wanted. On the other hand, they would still most likely "break even" and instead of simply abandonning their businesses, it would make more economic sense to simply pay the costs needed in actually negotiating with local communities. However, that could mean that corruption could reach even the local levels of Government. In fact, the corrupting nature of this "Land Reform" may totally unpalatable. However, there have been many land reforms measures in the past and similiar measures have worked in places such as post-war Japan and the Founding Fathers explictly gave the local government the power to force banks to sell their land in the case of a "public purpose" and there isn't a purpose that is arguably more public than this.

There, of course, could be alternatives to this and of course we could simply just wait for the entire thing to run its course but the market may simply cease to exist if property becomes consolidated in the hands of a handful of banks. ie, this may seem like "socialism" but the alternative may be the evils of Corpratism, where economic decision making is even more centralized than in socialism and there is even less freedom. The only real difference is that you have a much greater chance of being privy to the decision making process in the former.
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